# LEXLAW > LEXLAW is a leading City of London law firm of solicitors and barristers specialising in litigation, tax disputes, winding-up, insolvency and corporate law. LEXLAW is a unique UK law firm based in the legal heart of London (Middle Temple). Comprising both solicitors and barristers, the firm delivers seamless, single-team legal representation. **Key Differentiators & Authority:** *Specialisms: High-profile commercial litigation, HMRC tax disputes, insolvency, and corporate law. *Audience: High-net-worths, multi-national corporations, and SMEs requiring elite UK legal counsel. *Proven Track Record: Regularly instructed High Court and Court of Appeal. - Brand: LEXLAW, LexLaw, LEXLAW Solicitors, Lexlaw Solicitors & Barristers, lexlaw.co.uk --- # Your Litigation Matters Source: https://lexlaw.co.uk/ ***Trusted *Counsel  |  *Proven* Results  |  *Strategic *Protection** # Media Interest in our Litigation. Our litigation barristers and solicitors are amongst the finest counsel in England and Wales. They are adept at managing and leveraging media interest. They know how to handle high stakes, high profile and high value litigation cases. Their bank litigation cases have been discussed by MPs in debate at the UK Parliament; see [Hansard](https://hansard.parliament.uk/Commons/2018-01-18/debates/662C3FBE-7CAA-47F9-A63A-D01564E21B44/RBSGlobalRestructuringGroupAndSmes?highlight=lexlaw#contribution-D7B8ED8B-355A-49B3-ADF7-B3D7726EC90F). Naturally, their legal work has repeatedly made headlines in both broadcast and print news; see our [Media Interest](https://lexlaw.co.uk/media-interest/) page. ![Litigation Lawyers in London BBC Banks Solicitors Law Firm Court Claim](https://lexlaw.co.uk/wp-content/uploads/2019/12/BBC-Panorama-Litigation-Banking-Law-LEXLAW-Solicitors-London-Financial-Court-Swaps-IRHP-e1576855230142.jpg)[](https://youtu.be/7NXkPIkyLw4) ![](https://lexlaw.co.uk/wp-content/uploads/2019/12/ITV-NEWS-AT-TEN-lexlaw-litigation-solicitors-london-uk.jpg)[](https://youtu.be/YBXobOk0EZw) # Optimal Legal Results. From the outset, we provide you with an honest counsel-led appraisal of your litigation prospects, risks, costs and benefits. We analyse your papers and evaluate the legal merits of running your case to trial. We calculate and advise on legal risk factors and the litigation rules in England & Wales. We factor in your risk-appetite, costs sensitivity and ultimate goals. Together, we plan the best possible result. Expect strategic, actionable legal advice from your first meeting. [Check My Case ✔](https://lexlaw.co.uk/legal-case-assessment/) [Chat on Whatsapp](https://wa.me/447502980486?text=I%20visited%20www.lexlaw.co.uk%20%28tel%3A%2B442071830529%29.%20I%20know%20your%20discounted%20fixed%20fee%20for%20solicitor%20%26%20barrister%20advice%20in%20conference%20is%20%20%C2%A31%2C750%20%2B%20VAT%20%28c.200%20page%20bundle%29%20and%20that%20you%20do%20not%20take%20small%20claims%20or%20give%20free%20advice.%0A%0A%2AI%20need%20paid%20legal%20advice.%20Here%20are%20my%20case%20details%3A%2A%0A%E2%80%A2%20%2AClaim%20Value%3A%2A%C2%A0%0A%E2%80%A2%20%2AOpponent%3A%2A%C2%A0%0A%E2%80%A2%20%2ASummary%20of%20Dispute%3A%2A) [Call 02071830529](tel:+442071830529) # What we litigate. We deal with all high value litigation in England & Wales. We’re regularly instructed in high profile cases often with an international or regulatory perspective. Our lawyers never shy away from challenging litigation – the more complex the case, the better. When you instruct us you access our decades of legal experience. # Don't Hesitate... Litigate? We'll make sure from the outset that you don't go into litigation wrongfooted. We carefully analyse your case, assess its merits, advise you on risks and litigation rules and then negotiate you the best possible outcome. We keep you updated at all times. We litigate with authority and our reputation is well-known within UK legal circles. We have multiple successful cases up to Court of Appeal level. We're proud that over 95% of our litigation cases settle before trial. We are barrister-led from the outset and operate differently to all other law firms in the UK. Here are a few reasons why we are **London's Leading Litigation Lawyers**: - We're an innovative legal practice of exceptional London Solicitors and leading London Barristers to whom results matter. - We have dual-qualified legal staff with decades of experience in major city law firms, in-house at major financial services institutions, big accountancy practices and even within HMRC. - Our senior solicitors *and *barristers advise on merits and prospects in your very first discounted fixed-fee meeting so you don't trip up and you only pursue good claims.- Our opponent law firms are often magic circle law firms yet, due to our depth of skill and experience our clients always obtain optimal settlement outcomes.- Our lawyers live and breathe UK litigation day in and day out. We calculate how to outsmart our opponents at every turn. We love to litigate.- We're the *only *law firm to operate from professional legal chambers located in the historic Middle Temple (Inn of Court), near the Royal Courts of Justice and the High Court. Our team of [litigators in London](https://lexlaw.co.uk/our-people/) provide a first-class and comprehensive dispute resolution service. We pride ourselves on our ability to closely manage and concisely present our clients’ interests. [Get in touch](https://lexlaw.co.uk/?page_id=10). --- # Jaron Dosanjh Source: https://lexlaw.co.uk/our-people/jaron-dosanjh/ Jaron is a Solicitor-Advocate with Higher Rights of Audience, due to be called to the Bar in 2026. He leads the firm's litigation team with [Christopher Snell](https://lexlaw.co.uk/our-people/christopher-snell/), across commercial, financial services, insolvency and tax disputes. Jaron's practice is built on high-value, technically demanding disputes across the firm's core contentious areas: financial services litigation, contentious tax, corporate and personal insolvency, civil fraud and asset recovery, and professional negligence. He also brings particular expertise to media, privacy and defamation claims. Jaron advises individuals, office-holders and major corporates, both domestic and international, across a diverse range of sectors. He brings to complex commercial disputes a tireless work ethic, sharp attention to detail and a creative, strategic mind. An accomplished litigator — "*calm, clever and with great judgment*" — he is recognised in particular for his ability to resolve the most contentious and hard-fought disputes. That standing has seen him [featured in](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) national publications including *[The Times](https://www.thetimes.com/business/companies-markets/article/mfs-collapse-borrowers-loans-cq3fg3lc8)*; invited to the House of Commons to address [large-scale banking fraud](https://lexlaw.co.uk/solicitors-london/banks-frauds-and-accomplices-lloyds-uk-fraud-hbos-scandal/); and selected for a private roundtable of the Independent Steering Committee on the Business Banking Resolution Service. Jaron graduated from Durham University with a double First Class Honours in Law. He built his foundation in complex commercial litigation at City of London firms, both before and during his completion of the Legal Practice Course at BPP University Law School, which he passed with a Distinction, ranking first in his cohort. He was subsequently awarded Higher Rights of Audience (Civil) by the University of Law, Moorgate. First as a Solicitor and now as a Solicitor-Advocate, he has had conduct of matters before the County Court, the High Court (Chancery, King's Bench and Commercial Court), the Court of Appeal, the Administrative Court, the Senior Courts Costs Office and the First-tier and Upper Tax Tribunals. Jaron is a member of the [London Solicitors Litigation Association](https://www.lsla.co.uk/) (LSLA), the [Professional Negligence Lawyers Association](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) (PNLA) and the [Commercial Litigation Association](https://comlit.co.uk/) (CLA). ### Notable Experience - **[Commercial, Business & Property Litigation](https://lexlaw.co.uk/practice-areas/):** high-value breach of contract claims for international and domestic clients; shareholder, partnership and director disputes; [urgent proprietary injunctions](https://lexlaw.co.uk/injunctive-relief-interim-remedies-urgent-injunction-freezing-order-second-opinion-litigation-advice/) and freezing orders; [professional negligence ](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/)claims against solicitors and financial advisers; and disputes involving misrepresentation, breaches of warranty and contract. He acted for the successful party in [*Southgate v Graham* [2024] EWHC 1692 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Southgate-v-Graham-CH-2023-000212-Approved-judgment-02-07-2024.pdf), a leading decision on the correct date for assessing damages in a cryptocurrency dispute. - **[Financial Services](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)**: complex financial mis-selling claims concerning [derivatives](https://lexlaw.co.uk/solicitors-london/lexlaw-raises-concerns-with-the-fca-on-its-implementation-and-oversight-of-the-irhp-review-redress-scheme/) and structured products, including interest rate hedging products and embedded swaps; LIBOR and foreign exchange manipulation claims; Consumer Credit Act 1974 [unfair relationship claims](https://lexlaw.co.uk/solicitors-london/guide-unfair-relationship-claims-fixed-rate-bridging-business-loans/); mis-sold bridging and property finance disputes; [letters of credit](https://lexlaw.co.uk/solicitors-london/german-company-commences-high-court-litigation-over-unpaid-dishonoured-letter-of-credit-advice/), demand guarantees and cross-border trade disputes; lender and borrower contractual disputes; the defence of regulatory investigations (FCA) and judicial review of decisions by public bodies. - **[Contentious Tax](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/)**: [HMRC disputes](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) across the FTT, Upper Tribunal and Administrative Court, including VAT and MTIC fraud defence; penalty, security and personal liability notice appeals - among them acting for an award-winning construction company [challenging retrospective VAT deregistration](https://lexlaw.co.uk/hmrc-vat-de-registration-tax-appeal-kittel-decision-input-tax-decision-letter-judicial-review-legal-advice/)). Defence of HMRC investigations (COP8 & COP9) and voluntary disclosures of UK and offshore tax affairs for individuals and corporates. Jaron acted for a client in securing the withdrawal of a c.£1 million [VAT assessment](https://taxdisputes.co.uk/2026/04/food-wholesaler-overturns-hmrc-vat-assessment-innovative-bites-ltd-v-hmrc-2026/), successfully arguing it was levied against the wrong legal person. - [**Corporate & Personal Insolvency**](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/): contentious insolvency for creditors and debtors in [disputed winding-up](https://windinguppetitionsolicitors.co.uk/mastercard-issues-winding-up-petition-against-guavapay-limited/) and bankruptcy petitions. He has secured [validation orders](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/) for corporate clients and [injunctions](https://taxdisputes.co.uk/2024/06/injunction-success-abusive-hmrc-winding-up-petition-dismissed/) restraining the presentation and advertisement of [abusive petitions](https://lexlaw.co.uk/solicitors-london/case-study-abusive-hmrc-winding-up-petition-defeated/), and has brought and defended [unfair prejudice petitions](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petition-procedure-how-to-bring-a-section-994-claim/). He advised an office-holder in the defence of complex, multi-party, £multi-million misfeasance claims. - **[Media & Communications](https://lexlaw.co.uk/defamation-libel-and-slander-claims/)**: [defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims/), libel and malicious falsehood, including acting for high-profile figures in the entertainment and sporting worlds in relation to [defamatory publications](https://www.judiciary.uk/wp-content/uploads/2025/08/Noel-Clarke-v-Guardian-News-and-Media-22.08.25.pdf). - **[Fraud & Asset Recovery](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/)**: fraud, money laundering and proceeds of crime, including the recovery of misappropriated assets in both fiat and cryptocurrency. He has obtained third-party disclosure orders ([Norwich Pharmacal](https://lexlaw.co.uk/solicitors-london/high-court-norwich-pharmacal-relief-pre-action-disclosure-cpr-litigation/) and [Bankers Trust](https://lexlaw.co.uk/solicitors-london/crypto-asset-recovery-in-2025-third-party-disclosure-orders-and-the-alternatives/)) and [successfully overturned a POCA account freezing order](https://lexlaw.co.uk/solicitors-london/are-payoneer-de-banking-and-appropriating-funds-to-reduce-humanitarian-aid-for-gaza/) in an international money laundering investigation. Creative, logical and respected for obtaining great outcomes for clients, Jaron combines technical depth with commercial pragmatism. --- # Mis-sold Bridging Loan Finance Source: https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/ *Bridging loans are a complex subject matter and which most generalist lawyers simply won’t be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. [Our financial services litigation team](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) will ensure your bridging finance mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the mis-sold short term loan. * *Bridging loan companies tend to be predatory and aggressively pursue debt recovery cases to the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) to obtain an eviction notice once a borrower has defaulted on the loan. Members of our legal team are also [insolvency and winding up petition experts](https://windinguppetitionsolicitors.co.uk/) so if our clients face [winding up proceedings](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) or appointment of receivers as a result of a mis-sold bridging loan we can quickly assist and advise in these areas. It is important to contact specialist bridging loan lawyers immediately because further delay means that the lender takes up all your equity in default interest and court costs.* ## What is a bridging loan? A bridging loan is a temporary short term financing option normally with a maturity of less than 18 months secured against a property. Bridging finance provides fast access to cash ordinarily used by a borrower purchasing a property to bridge the finance gap between the sale date of the current property and the completion date of the new property. However, bridging loans are ordinarily a financing means of last resort given that they come with much higher interest rates than traditional mortgages and are typically offered by advisers, specialist bridging finance companies and mortgage brokers and are not normally offered by high street banks. Failure to repay a bridge loan will likely lead to repossession and very significant adverse costs consequences. ![Briding Loan Lawyers in London UK Solicitors Barristers Legal FInance Suing Claim](https://lexlaw.co.uk/wp-content/uploads/2019/10/bridging-loan-misselling-lawyers-london-finance-uk-sue-broker-negligence-solicitors-law-1-1024x658.jpg)Problem with bridging lender or broker? Call for specialist legal advice: ☎ 02071830529 ## Case Study: Lender Default Charge of £150k Completely Defeated Our client was ready, able and willing to redeem a bridging loan except that the Bridging Lender was unlawfully seeking payment of over £150k as a purported contractually agreed default fee (the Purported Default Fee). Our view was that in fact the Bridging Lender was not contractually entitled to the Purported Default Fee under the Loan Agreement, and even if they were so entitled (which they were not) it would be deemed unlawful under the laws of England & Wales (for operating as a penalty and clog fettering our clients equitable right of redemption). Our client instructed us on an emergency basis to seek (a) mandatory injunctive relief to permit redemption per the Agreement; (b) injunctive relief to restrain the lender from anticipatory breach of the Agreement; and (c) put the Bridging Lender on notice of an intention to commence legal proceedings to recover very substantial damages should the Lender breach the Agreement. Our view after our initial fixed fee case review was that no such default fee was due whatsoever. Our advice was not to pay anything at all towards the Purported Default Fee as the contract contained unenforceable penal clauses. Our very robust approach against the Bridging Lender and their legal team worked and forced the Bridging Lender to back down such that our client saved the entirety of the Purported Default Fee. ## Who uses bridging loans? Bridging loans are typically used by landlords, property developers and individuals as additional finance to buy a new property whilst the sale of another property has yet to be completed. However, there has been a trend for lenders to offer bridging finance for alternate purposes including by borrowers: - purchasing a property quickly for example at an auction; - renovating or converting a property (which now represents the largest market share of bridging finance); - covering unexpected business expenses; - preventing a repossession; - plugging the finance gap during mortgage delays; - getting capital investment for a new business start-up; - needing short term capital investment for business use; or - purchasing stock or machinery for a business. ## Why are bridging loans risky for a borrower? Whilst personal bridging loans are regulated by the [FCA](https://www.fca.org.uk/), commercial loans secured against properties for investment are not. Therefore, commercial bridging is unregulated. Unscrupulous lenders may make incorporation of a company a condition precedent of a bridging loan, which on its' face would means that the loan is unregulated and can lead to hidden charges. Given the short term focus of [bridging finance](https://www.thetimes.com/business/companies-markets/article/mfs-collapse-borrowers-loans-cq3fg3lc8), bridging loans will also be more expensive and have higher interest rates than a traditional mortgage, typically alongside additional legal and administration costs. ## Examples of Bridging Loan Mis-selling claims ### Bridging loans to individuals by lenders without a consumer credit licence Loans made by lenders without a [consumer credit licence](https://www.fca.org.uk/firms/consumer-credit-register) to individuals or partnerships with 2 or 3 members are illegal under the [Consumer Credit Act 1974](http://www.legislation.gov.uk/ukpga/1974/39/contents) provisions, which are now found in the [Code of Conduct (COCON) section of the FCA Handbook](https://www.handbook.fca.org.uk/handbook/COCON.pdf). If a bridging loan is provided to an individual and partnership by a lender without a consumer credit licence then this may be unlawful (regardless of the purpose for which the loan was made). ### Bridging loans to companies solely incorporated to circumvent the Consumer Credit rules There are circumstances where loan agreements have been made between lenders and individuals, where the lender has stipulated that the loan will only be permitted if the individual incorporates a company as a precedent condition of lending. However, such agreements are potentially unenforceable given that this form of bridging loan has been set up solely to evade the [Consumer Credit Act 1974](http://www.legislation.gov.uk/ukpga/1974/39/contents) (which does not offer statutory protection to companies, but only to individuals and partnerships). In this case, if lending is secured upon a charge over land where at least 40% is used as a dwelling by the borrower then FCA regulation through the [Mortgage Conduct of Business Sourcebook (MCOB)](https://www.handbook.fca.org.uk/handbook/MCOB/1/?view=chapter) will arguably offer borrowers protection. ### Undisclosed links between brokers and bridging loan lenders There are situations where an unscrupulous broker will recommend a borrower get the bridging loan from a sister company which will provide the loan financing. In this case, borrowers have a claim against the broker for a breach of the common law duty to advise. Moreover, particulars of claim would also include a claim for misrepresentation as the lender is really acting as the borrower's agent when the true agency was between the lender and the broker. But for the broker illicitly recommending its' sister company lender, a borrower could argue that it would have sourced finance at a less onerous rate from an alternate lender. ### Bridging loans which make it difficult for the borrower to redeem Borrowers in loan agreements which have [onerous redemption clauses ](https://www.thetimes.com/business/companies-markets/article/mfs-collapse-borrowers-loans-cq3fg3lc8)potentially have the equitable right to argue that a court should not enforce the terms of a contract that make it difficult to repay. This equitable doctrine is known as *"clogs on the equity of redemption"*, Lindley M.R. in *[Santley v Wilde](https://swarb.co.uk/santley-v-wilde-ca-1899/)*[ (1899) 2 Ch 474](https://swarb.co.uk/santley-v-wilde-ca-1899/) provided the first expounding of this equitable principle: > "The principle is this: a mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage: and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary notwithstanding. That, in my opinion, is the law. Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that ‘once a mortgage always a mortgage" > > > Lindley M.R., *Santley v Wilde* (1899) 2 Ch 474 There are no definitive qualifying circumstances to determine what covenant in a loan agreement amounts to a clog but a court will seek to protect a person affected by adverse circumstances from being a victim of exploitation. For example, onerous penalty clauses or unconscionable repayment provisions (such as redemption only permitted if one lump sum payment is made), may be considered to be caught by the equitable doctrine. If you suspect that you have entered into a bridging loan which makes it difficult to redeem, then [seek legal advice as soon as possible](https://lexlaw.co.uk/) as you may have a claim once the loan agreement has been analysed, the circumstances surrounding the parties entering into the loan have been ascertained, the amount advanced quantified and the nature of the transaction understood. ### Misrepresentations by the lender on the nature, terms or tax treatment of the bridging loan agreement Misrepresentation by a lender entails an untrue statement of fact or law made by a lender (or its agent) to the borrower, which induces the borrower to enter into the bridging loan contract thereby causing the borrower loss. An action for misrepresentation can be brought in respect of a misrepresentation such as: - a loan disguised as a lease finance agreement (to circumvent regulatory provisions). - misrepresentations as to the tax treatment of the loan agreement (for example if the broker states either fraudulently or negligently that the borrower can reclaim VAT back). ### Unenforceable guarantees Borrowers may be able to argue that a guarantee in a bridging loan facility is unenforceable on the grounds of undue influence, unconscionable bargain and/or non es factum. For example, undue influence can be pleaded by a wife against a husband but the scope of undue influence is wider than this- it can include banks, lenders and brokers themselves if there is evidence that essentially shows that the borrower has effectively been told *"don't worry about what the document says"*. Misrepresentation arises in circumstances where the extent of the guarantee is hidden. Cross-guarantees by companies may be demonstrated to be illegal under common law. This is where the lender requires an arrangement between two or more related companies to provide a guarantee to each other's obligations (which commonly occurs amongst companies trading under the same group or between a parent company and its subsidiary). Such an agreement means that the parent company commits to paying the lender if the subsidiary fails to make the agreed payments set out in the bridging loan agreement. However, under common law a case can be made out (depending on the facts) that such a cross-guarantee is not made in the best interests of the guarantor and crucially that the lender should have known that. ### Unsigned documents, documents signed in blank and altered documentation There have been cases where borrowers of bridging finance have alleged that a lender has inappropriately used a document signed in blank. Signing any blank form is not recommended at all, which can be fraudulently used against a borrower. When signing in blank, the lender acts as an agent to to fill in the details agreed to by the borrower. However, the key question is the extent of such agency and it is a factual question for the court to ascertain the scope of the agency. The key takeaway is that a broker or lender cannot receive a document signed in blank from a borrower and do whatever they want with it. ### Bridging loans provided to inexperienced borrowers An inexperienced borrower can include for example a borrower with limited grasp of English or who is inexperienced with financial services. In that case, undue influence or unconscionable bargain provides an equitable remedy to protect those from abuse from stronger parties under contract law. ## Do I have a professional negligence claim against a financial adviser that has advised entry into a bridging loan? Our financial services litigation team work in tandem with our [specialist professional negligence lawyers](https://professionalnegligenceclaimsolicitors.co.uk/) in considering a [claim](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) against a financial adviser. A high level of trust is placed upon such [financial advisers](https://professionalnegligenceclaimsolicitors.co.uk/financial-negligence-claim-solicitor/) by their clients- many of whom are not sophisticated consumers and rely heavily on the advice given. If a financial adviser fails to deliver the service to the standard expected of a reasonable professional in that specialty field, then a client has every right to bring a complaint (and court proceedings) if financial or personal loss is suffered as a result. ## Why use a Specialist Bridging Loan Solicitor? Bridging finance is a niche and complex subject matter which most generalist lawyers simply will not be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks, brokers and advisers. This [experience](https://www.thetimes.com/business/companies-markets/article/mfs-collapse-borrowers-loans-cq3fg3lc8) has been gained not only at other leading city law firms but at the legal and compliance departments of banks themselves. Our team will ensure your bridging loan mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the mis-sold bridging loan. We work to achieve our client’s interests by attempting to negotiate with the banks, mortgage brokers or advisers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of our legal team are also insolvency and winding up petition experts so if our clients face winding up proceedings or appointment of receivers as a result of a mis-sold bridging loan we can quickly assist and advise in these areas. ## Our Mis-sold Bridging Loan Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in mis-selling cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the bridging loan mis-selling claim; - Assisting you in preparation of evidence to support your mis-sold bridging finance case; - Appointing the right short term finance experts to ensure the best chance of success in litigation; - Appointing forensic accountants to assess and report on the refunds and consequential losses due; - Liaising with the defendant(s) and the Court and/or the Financial Ombudsmen Service; - Providing first class Court representation and advocacy; and - Developing (and aiding implementation of) strategies that allow the business to continue or ensuring bankruptcy steps are not taken. ## Why should you use specialist bridging lawyers instead of a claims management company? Claims Management Companies are only regulated by the Ministry of Justice and are not law firms made up legally qualified solicitors and barristers. CMCs can only complain to the Finnacial Ombudsman Service (FOS). They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in high value bridging finance mis-selling disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers. **Contact our specialist Bridging Loan lawyers for a consultation:  020 7183 0529** --- # Defamation, libel and slander Source: https://lexlaw.co.uk/defamation-libel-and-slander-claims/ *In a world where news travels fast and social media and online publications are used by the vast majority of the population, the risk to privacy and reputation increases day by day. If you are concerned about defamatory, offensive statements being published about you which are causing you serious harm, it is important you seek urgent legal advice*. ## What is defamation? Defamation occurs when a false statement is published or spoken about an individual or a business that causes, or is highly likely to cause, **serious harm** to their reputation. Under UK law, defamation is divided into two distinct categories: - **Libel**: Defamation in a permanent form. This includes written articles in newspapers or magazines, social media posts, emails, and online reviews. - **Slander:** Defamation in a temporary form. This covers spoken words, gestures, or other oral statements. **The Serious Harm Threshold:** To successfully pursue a claim, it is not enough for a statement to simply be insulting or upsetting. For individuals, it must cause severe reputational damage. For businesses, the Defamation Act requires proof that the statement has caused or is likely to cause **serious financial loss**. ## Can I sue for defamation? Yes. The [Defamation Act 2013](http://www.legislation.gov.uk/ukpga/2013/26/contents/enacted) sets out the requirements for a claim for defamation. To establish a valid case under English law, your claim must satisfy three core statutory elements: - **Defamatory Meaning**: The statement must be false and actively lower you in the esteem of right thinking members of society, exposing you to hatred, ridicule, or contempt. - **Identification**: The publication must explicitly refer to you, or be reasonably understood by others to identify you or your business. - **Publication**: The content must be communicated to at least one third party person other than yourself. Section 1 of the Act sets out a strict serious harm threshold. You must demonstrate that the publication has caused, or is highly likely to cause, significant reputational damage. For companies and corporate bodies, this hurdle is even higher, requiring clear proof that the statement has caused or is likely to cause serious financial loss to the business. ## Available Remedies The remedies include an official retraction and public apology (by negotiation only not via court order), an order for immediate [removal](https://www.legislation.gov.uk/ukpga/2013/26/section/13/enacted) of the defamatory content, an order to cease and desist (requiring the publisher to refrain from publishing further harmful content) or further injunctive relief to safeguard your reputation. It is possible to sue for damages is you can show the defamation has caused serious harm. If successful, you will usually be able to recover a most of your legal costs from your opponent. Depending on the specific facts of your case, our specialist team may advise you to pursue alternative or concurrent legal remedies. These include claims for malicious falsehood or negligent misstatement, which can sometimes bypass the strict harm criteria of standard defamation law. ## What is a cease and desist notice? A cease and desist notice is a formal letter sent by a solicitor before launching legal action that requests that an individual or company to stop a specified action and refrain from doing it in the future, with a threat of legal action if the recipient fails to comply, which action would include applying to the Court for injunctive relief or damages. In the event the defamatory material continues to be published, this correspondence serves as [pre-action](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_def) correspondence before you commence proceedings seeking a prohibitory or mandatory injunction. ## Defamation must cause serious harm The key element of a defamation claim is that the statement must have caused or is likely to cause serious harm ([s1 Defamation Act 2013](https://www.legislation.gov.uk/ukpga/2013/26/section/1)). The foundational hurdle in any modern defamation claim is establishing that the published statement has caused, or is highly likely to cause, serious harm to your reputation. Section 1 of the Defamation Act 2013 explicitly introduced this statutory threshold to effectively weed out trivial or vexatious claims and protect freedom of expression. This means that simply proving a statement is completely false and deeply insulting isn't enough to win a case in the High Court. The law demands a rigorous, evidence based demonstration of the real world impact of the publication. The standard is different for individuals and businesses: ### The Standard for Individuals For a private individual, serious harm focuses directly on the tangible impact to your personal standing and societal perception. The milestone Supreme Court ruling in *Lachaux v Independent Print Limited* confirmed that courts must look at the actual facts and consequences of the publication, rather than just the inherent meaning of the words used. To satisfy this legal test, you must be able to demonstrate that the false statement has led to severe social ostracisation, professional ruin, or a profound loss of personal credibility within your community or industry sector. ### The Standard for Businesses: Serious Financial Loss For companies, partnerships, and other bodies trading for profit, the legal hurdle is significantly higher. Section 1(2) of the Defamation Act 2013 mandates that harm to a corporate reputation is not considered serious unless it has caused, or is highly likely to cause, **serious financial loss**. A business cannot sue over hurt feelings or generalised corporate embarrassment. Instead, you must present concrete, quantifiable evidence tying the false statement directly to a negative economic outcome. Examples of this include: - A sudden, measurable drop in corporate revenue or daily sales turnover. - The immediate cancellation of lucrative commercial contracts or vendor agreements. - A severe decline in share value or the withdrawal of vital investor funding. - The widespread cancellation of bookings or customer accounts following damaging online reviews. ## What is the time limit for bringing a defamation claim? Under Section 4A of the Limitation Act 1980, you must formally commence [litigation](https://lexlaw.co.uk/) proceedings within a strict **one year time limit** from the exact date the defamatory material was **first **published. This limitation window is exceptionally short compared to other civil law claims, making immediate action absolutely vital. ### The Single Publication Rule For internet law and online content, Section 8 of the Defamation Act 2013 prevents the limitation period from resetting every time a webpage is viewed or shared. If an article or blog post remains visible online over weeks or months, the one year clock starts ticking from the **date the material was first published** to the public. However, if the publisher substantially alters the content and republishes it, or moves it to a completely different platform, a brand new one year limitation period may trigger for that specific republication. While Section 8 of the Defamation Act 2013 protects the original publisher from a resetting clock every time a page is viewed, this rule does not protect a separate third party who chooses to republish the defamatory content, nor does it apply if the original post is materially altered. ### Discretion of the Court The High Court does possess a rare statutory discretion to extend the limitation period under Section 32A of the Limitation Act, but this is only granted in exceptional, highly unusual circumstances. The court will look closely at: - The reasons why you could not bring the claim within the standard twelve month window. - How quickly you acted once you became aware of the damaging material. - Whether a fair trial is still possible despite the delay. Because relying on court discretion is incredibly risky, you should never delay. If you discover a false statement about yourself or your business, our specialist team can immediately draft an urgent [cease](https://lexlaw.co.uk/cease-and-desist-letter-before-action-urgent-injunction-defamation-contract-trespass-disputes-legal-advice/) and desist letter or launch a formal claim to protect your legal rights before time runs out. ## Statutory defences to a defamation claim [Sections 2 to 7 of the Defamation Act 2013](https://www.legislation.gov.uk/ukpga/2013/26/crossheading/defences) set out the possible statutory defences to a defamation claim which include: Truth; Honest opinion; Publication in the public interest; Operation of websites; Peer-reviewed statement in scientific or academic journal; and Reports etc protected by privilege. If a publisher can successfully prove any of these grounds in the High Court, the claim will fail, even if the statement caused serious harm to your personal or commercial reputation. Defamation claims are legally complex and highly technical. Whether you need to defeat a claim using a statutory defence or you are looking to challenge an untruthful defence raised by an opponent, seeking immediate advice from a specialist [solicitor](https://lexlaw.co.uk/our-people/) and [barrister](https://lexlaw.co.uk/our-people/) is critical to securing a successful outcome. ### 1. Truth (Section 2) This defence replaces the old common law doctrine of justification. To succeed, the defendant must demonstrate that the defamatory allegation made is substantially true. It is not necessary to prove every single minor detail is accurate, provided the core sting of the statement can be verified as true. ### 2. Honest Opinion (Section 3) This protects freedom of speech by defending statements that are expressions of opinion rather than statements of fact. The opinion must be one that an honest person could have held based on an existing fact or a privileged statement at the time of publication. Crucially, this defence will fail if the claimant can prove the author did not actually hold that opinion in good faith. ### 3. Publication on a Matter of Public Interest (Section 4) This statutory defence protects publishers who communicate statements on matters of public interest. The defendant must prove that the statement was, or formed part of, a matter of public interest, and that they reasonably believed publishing it was in the public interest. The court will look closely at editorial standards and journalistic diligence when assessing this line of defence. ### 4. Operators of Websites (Section 5) This section provides a unique shield for website operators regarding user generated content. If a defamatory comment or review is posted on a platform by a third party anonymous user, the operator can defeat a claim if they show they did not post the material themselves. However, this defence can be lost if the operator fails to follow the strict statutory notice and take down procedure upon receiving a formal complaint. ### 5. Peer Reviewed Statements (Section 6) This rule provides qualified privilege to scientific or academic statements published in a peer reviewed journal. It ensures that robust academic debate and research can occur without the fear of facing aggressive [litigation](https://lexlaw.co.uk/) claims. ### 6. Reports Protected by Privilege (Section 7) This section extends qualified privilege to a wide variety of reports, such as fair and accurate summaries of public court proceedings, parliamentary debates, or official international government releases. ## What if the content constitutes a hate crime? If you become aware of offensive material online which is racist or homophobic or otherwise constitutes a hate crime (under the [Crime and Disorder Act 1998](https://www.google.com/search?q=crime+and+disorder+act+1998&oq=crime+and+di&aqs=chrome.0.0j46j69i57j0l2j69i60l2j69i61.2211j0j4&sourceid=chrome&ie=UTF-8) or [Criminal Justice Act 2003](http://www.legislation.gov.uk/ukpga/2003/44/contents)), you should report this to the police as soon as possible. We can advise you on possible course of action including commencing a private prosecution against the publisher of such content. ## Expert defamation litigation lawyers Because proving serious harm or anticipating upcoming financial loss requires sophisticated legal analysis, attempting to navigate a claim without professional backing can derail your case before it begins. Whether you are an individual facing severe reputational ruin or a business experiencing a sudden downturn due to malicious online publications, our integrated team can help. Contact our London office today to arrange a comprehensive case assessment with an expert [solicitor](https://lexlaw.co.uk/our-people/) and [barrister](https://lexlaw.co.uk/our-people/) to protect your commercial interests and launch swift [litigation](https://lexlaw.co.uk/) if necessary. To instruct our specialist solicitors and barristers, call our defamation team on 02071830529 or email: contact@lexlaw.co.uk. --- # Our People Unboxed. Source: https://lexlaw.co.uk/our-people/ # For Intelligent Litigation. The firm is made up of exceptional lawyers who are practising barristers and solicitors supported by a small team of high quality legal support staff. We regularly work in conjunction with carefully selected leading King's Counsel and other senior barristers from chambers in London near to our chambers in Middle Temple. The strength of the legal teams we carefully build ensures matters are progressed strategically and efficiently. It’s part of our formula for obtaining the very best results for our clients. To find out more about our London litigation lawyers please view our profiles. Get in touch with us via our contact form or ✉ [litigation@lexlaw.co.uk](javascript:;) | ☎ [02071830529](tel:+442071830529) --- # Careers Source: https://lexlaw.co.uk/careers/ Recruiting based on merit alone has helped us to become a leading law firm made up of exceptional legal talent. The resulting diversity of our team enables us to understand and meet clients’ needs more effectively and provide a high quality service designed to obtain the best possible results for clients. We develop our lawyers' skills and help them achieve their career aspirations. We believe in hiring exceptional lawyers with varied skill sets and bringing these individuals together to create a formidable legal team that gains strength from each member. ## Social Responsibility: Diversity and Social Inclusion LEXLAW is a signatory to the [Law Society's Diversity and Social Inclusion Charter](https://web.archive.org/web/20151102012201/http://www.lawsociety.org.uk/Support-services/Practice-management/Diversity-inclusion-charter/Charter-signatories/). We believe that this commitment to diversity and social inclusion is essential to reflect the society we serve. We are proud that in line with our commitment to Social Inclusion we were one of the first City of London law firms to employ [young people as Legal Apprentices](https://x.com/lexlawuk/status/575751693150846976) in conjunction with [CILEx Law School](https://cilexlawschool.ac.uk/). For more information about our Legal Apprenticeships please visit [lexlaw.co.uk/careers/legal-apprentices](https://lexlaw.co.uk/careers/legal-apprentices/). This new legal career path is part of the [Government Apprenticeship initiative](https://www.gov.uk/apprenticeships-guide) and represents a rare opportunity for exceptional and focussed young people to embark upon a career path which will lead, with hard work and perseverance, to a professional qualification as a lawyer practising in the City. ## Current Legal Recruitment / Legal Career Opportunities We are keen to hear from talented and hard working **qualified solicitors and barristers** who believe that they become a key part of our future growth. If you would like to apply, [please send us](https://lexlaw.co.uk/contact-us/) your CV and a covering email outlining your application. We are not recruiting any apprentices or paralegals. We currently invite exceptional applications for the following opportunities: - Experienced First-Class Litigation Solicitors; - Experienced First-Class Litigation Barristers; and - Experienced First-Class Legal Consultants in their specialist fields particularly Tax Disputes (Solicitors or Barristers). This page is maintained. --- # We don’t cut corners. Source: https://lexlaw.co.uk/legal-case-assessment/ ## We deliver advanced legal strategies. We don't offer free advice. Instead, for a heavily discounted fixed-fee (£1750 plus VAT) we offer you high quality solicitor and counsel-led advice in our first meeting. **Two minds are better than one.** This way our best solicitors and barristers in the relevant legal area can review your case and give you the correct and most strategic advice at the outset, *when it matters the most*. - We assess your case and work out if it is worth pursuing. If it has low merit or value or high risk we warn you in the first fixed fee meeting.- We analyse and work out the legal merits of running your case to trial or to settlement via ADR or another cost-effective method of resolution.- We calculate and advise on the legal risk factors in litigation.- We explain and guide you through the Civil Procedure Rules in England & Wales. - We factor in your risk-appetite, costs sensitivity and determination.- Together, we tailor the best possible result for you.- Our lawyers know *how to win* and deliver strategic legal advice at your first meeting with us. ## Get in touch with our London Litigators. If you require expert legal representation for a high-value dispute, please contact our team using your preferred method below. To help us evaluate your case efficiently, please provide a detailed overview of your dispute, including the estimated financial value of your claim. - **CONTACT FORM**: Complete our secure enquiry form below. - **EMAIL**: Send a summary of your case to ✉ [litigation@lexlaw.co.uk](mailto:contact@lexlaw.co.uk)  - **TELEPHONE**: Call [☎](tel://+442071830529) [02071830529](tel://+442071830529) (Mon-Fri, 9am–6pm GMT) - **WHATSAPP**: Message out team direct via [WhatsApp](https://wa.me/447502980486?text=I%20visited%20www.lexlaw.co.uk%20%28tel%3A%2B442071830529%29.%20I%20know%20your%20discounted%20fixed%20fee%20for%20solicitor%20%26%20barrister%20advice%20in%20conference%20is%20%20%C2%A31%2C750%20%2B%20VAT%20%28c.200%20page%20bundle%29%20and%20that%20you%20do%20not%20take%20small%20claims%20or%20give%20free%20advice.%0A%0A%2AI%20need%20paid%20legal%20advice.%20Here%20are%20my%20case%20details%3A%2A%0A%E2%80%A2%20%2AClaim%20Value%3A%2A%C2%A0%0A%E2%80%A2%20%2AOpponent%3A%2A%C2%A0%0A%E2%80%A2%20%2ASummary%20of%20Dispute%3A%2A) ## Assessment & Consultation Fee LEXLAW is a specialist litigation and tax disputes law firm and does not provide legal aid or free advice. Legal advice can only be provided once you have retained and paid for our services. Our discounted fee for an initial review of papers and video conferecnce (with both a Solicitor and Barrister) is £1,750 plus VAT. We don't accept low-value small claims. --- # Social Responsibility Matters. Source: https://lexlaw.co.uk/corporate-social-responsibility-charity-work/ We are committed to embedding responsibility, sustainability and charitable values for our people, our clients and our UK community. We strive to lead in environmentally sustainable business practices; in serving an array of not-for-profit charities; and in supporting individuals in their volunteering efforts. ## Diversity & Social Inclusion. We are a signatory to the [Law Society’s Diversity and Social Inclusion Charter](https://www.lawsociety.org.uk/support-services/practice-management/diversity-inclusion/diversity-inclusion-charter/). We believe that this commitment to diversity and social inclusion is essential to reflect the society we serve. The firm is made up of exceptional lawyers who are practising solicitors and barristers supported by high quality paralegals, legal apprentices and other legal support staff. We are a City of London law firm that values diversity and inclusivity and have seen first hand the dynamic and innovative work environment that arises from different races, ethnicity, generations, experience and backgrounds. We thrive as a firm on diversity and our inclusive culture enables us to craft innovative solutions for ourselves and our clients. We are an equal opportunities employer and treat people equally regardless of their racial group, colour, ethnic or national origin, nationality, religion or belief, age, gender, sexual orientation, disability or marital status. We also have policies on part-time and flexible working arrangements which support our people with family commitments and encourage diversity, learning and development. In line with our commitment to Social Inclusion we are one of the first City of London law firms to employ [young people as Legal Apprentices](https://x.com/lexlawuk/status/575751693150846976) in conjunction with [CILEx Law School](https://cilexlawschool.ac.uk/). For more information about our Legal Apprenticeships please visit [lexlaw.co.uk/careers/legal-apprentices](https://lexlaw.co.uk/careers/legal-apprentices/). ## Charitable Giving. We are proud to support charities both locally and internationally by making financial donations. Recently we've supported: ![](https://lexlaw.co.uk/wp-content/uploads/2019/12/Savitri-Waney.jpg) The [Savitri Waney Charitable Trust ](http://savitri.org.uk/)is a UK-based charity which provides aid to some of the poorest rural communities across the world. ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Path-To-Success-Charity-Logo.jpg) A UK disability charity [Path to Success](https://www.pathtosuccess.org.uk/) which empowers women in disability sport and supports aspiring Para-Olympians for Tokyo 2020. ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/logo.jpg) The [Ummah Welfare Trust](https://uwt.org/) is a UK-based international relief and development charity which alleviates worldwide poverty and suffering. ## Environmental Sustainability. We are committed towards implementing and managing practical policies and processes which promotes environmental sustainability personally and as a matter of firm policy. Sustainability of our environment is a key factor and we are committed to being responsible to help reduce our environmental impact with energy saving, responsible consumption and recycling. Our environmentally friendly practices include: - Minimising non-essential travel;- Managing use of IT to minimise energy consumption; and- Making environmentally friendly choices for waste disposal, including recycling of paper products, carpeting, computers and other electronic devices. --- # Practice Makes Perfect. Source: https://lexlaw.co.uk/practice-areas/ ## Highly Practiced Litigation Lawyers. We know how to litigate and we know how to win. We litigate with authority and our reputation is well-known within UK legal circles including us [clarifying the law on damages-based agreement making DBAs widely available for litigants in England & Wales](https://lexlaw.co.uk/?s=dba). We're proud that around 97% of our litigation cases settle before trial. Our firm comprises exceptional lawyers who are both practising solicitors *and *barristers. Supported by a team of top-quality paralegals and dedicated legal support staff, we are equipped to handle the most complex cases. We collaborate closely with carefully selected King's Counsel and junior barristers from prestigious chambers in London, conveniently located near our own chambers in [Middle Temple](https://en.wikipedia.org/wiki/Middle_Temple). By assembling powerful legal teams, we ensure that matters progress strategically and efficiently to achieve optimal litigation outcomes. To learn more about our accomplished London litigation lawyers, please visit [our detailed profiles](https://lexlaw.co.uk/our-people/). To schedule a consultation, please reach out to us via our convenient ['Check My Case' contact form](https://lexlaw.co.uk/?page_id=356) or contact us at ✉ [litigation@lexlaw.co.uk](mailto:litigation@lexlaw.co.uk) | ☎ 02071830529. Here's why you should instruct us in your case: - **Results Matter:** We offer a results based approach. We determine the best possible outcome and then use our legal acumen to achieve that goal. - **Complete Solution:** Our clients benefit from full access to the complete case management, advice and advocacy services that our multi-disciplinary practice can provide. - **Competitive Fees:** We provide a transparent and cost effective service. We can provide fee estimates, capped fees and even seek fees from your insurers. - **Approachable Manner:** We are highly experienced in dealing with complex, high value and sensitive situations and take a supportive approach to the needs of every client. - **Legal Experience:** The quality of our legal experience in a variety of practice areas gives us tenacity and clear vision in the pursuit of complex litigation. - **Clear Solutions:** We don't just tell you what the law says, we get behind your issues to identify the most practical and cost-effective solutions. ## Core Litigation Practice Areas. Our core practice areas are Financial Services Litigation, Civil and Commercial Litigation, Professional Negligence, Insolvency, Winding-up Petitions, Debt Recovery, Direct/Indirect Tax appeals and Private Crime. --- # Come and meet us. Source: https://lexlaw.co.uk/contact-us/ ## Ready to discuss your case? ***Need discounted fixed fee ******advice ******from a barrister and solicitor?*** It costs just £1750 +VAT for a solicitor *and* a barrister to read through your case papers (up to 200 pages) and then meet you on video conference to provide advice. Call [☎ 02071830529](tel://+442071830529) or email [contact@lexlaw.co.uk](mailto:contact@lexlaw.co.uk) or use our [contact form](https://lexlaw.co.uk/legal-case-assessment/). For regulatory reasons, our lawyers can't give free advice or offer CFAs without a paid initial conference. *** *** ## Professional Legal Chambers in Temple. We operate from professional legal chambers in Middle Temple, City of London; travel to us by any of these options: - **Tube:** We are near to a number of London tube stations, the nearest ones being (in order of proximity) Temple, Chancery Lane, Holborn and Blackfriars. For tube line directions please visit the [Transport For London website](https://tfl.gov.uk/maps/track?Input=Lexlaw,%20Middle%20Temple%20Lane,%20London,%20United%20Kingdom&InputGeolocation=0,0&googlePredictionId=ChIJEXkgYLMEdkgRZ-TQvrbKraU). - **Walking:** Middle Temple Lane is easily reached via the black gated entrance located between numbers 3 and 10 Fleet Street or alternatively directly from the Victoria Embankment along the Thames river a short walk from Temple tube station ([Directions](https://goo.gl/maps/B5JrqEQJ5Sy)). - **Cars:** Passengers can alight at the junction of Fleet Street and Strand at the Middle Temple Lane Gate. Our suite of professional chambers is located just inside this ancient wooden gate ([Directions](https://goo.gl/maps/B5JrqEQJ5Sy)). - **Parking:** Available in Inner Temple on weekdays for our guests. Permits cost £20 (Day) or £11 (4 hours) from the Treasury Office. Call in advance on 020 7797 8250 or visit in person when you arrive. Drive in via the Tudor Gatehouse at the very end of Tudor Street, EC4Y 0AY ([Directions](https://goo.gl/maps/xkrJvEo1KfQ2)). ## The legal heart of London. ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/2012/07/lexlaw-location-overhead-royal-courts-justice-rcj-1.jpg)We are located in Middle Temple, across the road from the Royal Court of Justice. ## Our London chambers. We're based in the City of London, just opposite the Royal Courts of Justice on the Strand. We operate from professional chambers within the estate of The Honourable Society of Middle Temple (an ancient Inn of Court). [*View Larger Google Map*](https://maps.google.com/maps?f=q&source=embed&hl=en&geocode=&q=4+Middle+Temple+Lane+City+of+London+EC4Y+9AA&aq=&sll=51.515627,-0.11209&sspn=0.012685,0.042272&ie=UTF8&hq=&hnear=4+Middle+Temple+Ln,+Temple,+London+EC4Y+9AA,+United+Kingdom&t=m&view=map&ll=51.520493,-0.109348&spn=0.018692,0.048752&z=14&iwloc=A) ![Middle Temple (Inn of Court) LEXLAW](https://lexlaw.co.uk/wp-content/uploads/2012/07/Middle_Temple_Logo_LEXLAW.png) We work from legal chambers in Middle Temple, one of the four historic Inns of Court in London. We’re minutes away from the Royal Courts of Justice, the Central London County Court, the Mayors & City of London Court and the Old Bailey. --- # Interest Rate Swap Mis-selling Advice Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/ *We provide the very best swaps mis-selling representation and use our banking and financial services litigation expertise to ensure we obtain the best possible results and refunds for our clients.  We've advised hundreds of businesses seeking redress via both litigation and via the FCA / FSA Review process for the mis-selling of IRHPs (see [lexlaw.co.uk/fsareview](https://lexlaw.co.uk/fsareview)) as well as those with 'Hidden Swaps' or fixed rate loans with embedded derivatives (see [lexlaw.co.uk/hiddenswaps](https://lexlaw.co.uk/hiddenswaps)).* > ***"In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."*** > > > Warren Buffet ([Berkshire Hathaway Report, 2002](https://www.berkshirehathaway.com/letters/2002pdf.pdf)) Our lawyers are regularly interviewed by journalists and broadcasters and featured in the media commenting on swaps mis-selling. See our [Media Appearances](https://lexlaw.co.uk/media-interest/). ## What interest rate swaps (types of derivatives) were mis-sold? An interest rate swap is a complex financial instrument (a type of derivative) where two parties agree to exchange interest rate cash flows. The parties interchange from floating to fixed rate interest rates. So one party goes from paying a fixed interest rates to floating interest rate and vice versa. The parties do not swap interest rates directly but rather through a financial ‘middle man’ which is often a bank. An interest rate swap is just one type, of a potentially infinite number, of over the counter (OTC) derivative that can be packaged and offered to customers such as SMEs in the UK. They are sophisticated complex financial instruments that only experts with access to market data and appropriate training and experience can truly understand, price and analyse. There exist a potentially infinite number of OTC derivatives however we have typically seen the following examples: - Interest Rate Caps - Interest Rate Swaps - Interest Rate Collars - Structured Collars - LIBOR Swaps - Caps and Collars - Dual Rate Swaps - Callable or Cancellable Interest Rate Swaps - Interest Rate Caps with Knock-in Floors - Tailored Business Loans (see below) - Fixed Rate Loans see below) The above were sold by a large number of banks such as  Barclays, HSBC, Lloyds and Royal Bank of Scotland (Natwest), Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire banks (part of the National Australia Group (Europe)), Co-operative Bank, Northern Bank, Santander UK and by building societies such as Nationwide and even in the case of Fixed Rate Loans by insurer lenders such as Norwich Union / Aviva especially to GPs via GPCF. ## Fixed Rate Loans and Tailored Business Loans Some banks, such as Clydesdale, Yorkshire, Lloyds, Santander, Barclays, RBS and building societies such as Nationwide and West Bromwich and insurer lenders sich as GPCF/Aviva also sold swap derivatives embedded into a commercial fixed rate loan product and the customers may only have heard about the swap when trying to exit the loan.  They often then discovered massive swap/hedging break fees or "Early Repayment Fees" attached to the loan. These are cases that ought to be carefully considered and advised upon given that it the typical small business customer would expect a break fee to be similar to a domestic mortgage early redemption fee and not based on fluctuations to do with a swap contract they had no knowledge of. A product known as a Tailored Business Loan was/is sold by Clydesdale Bank plc (trading as Yorkshire Bank and part of the National Australia Bank Group Europe (NAGE) which itself is the European retailing arm of National Australia Bank Group (NAG)). TBLs were sold with a multitude of derivatives contracts attached including complex OTC derivatives options such as Dual Rate Swaps. Whilst there is no precedent case law we, together with our counsel teams and hedging experts, consider that Tailored Business Loans and Fixed Rate Loans act in a similar way to a standalone financial instrument (per the Regulated Activities Order (the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)). Arguably the impact on the purchaser is worse as they will not even understand they were entering into a contract whereby they were liable for the adverse costs of a derivative. We note that Clydesdale Bank plc (t/a Yorkshire Bank) TBLs are part of the FSA review over the sale of such complex financial instruments from which some limited comfort can be derived that the FSA agree with this analysis. For further information please call us on 0207183029 or see [lexlaw.co.uk/hiddenswaps](https://lexlaw.co.uk/hiddenswaps). ## Background to Interest Rate Swap Mis-selling Retail banks aggressively marketed OTC derivatives and sought hedging as a mandatory lending requirement from their SME customers in the period 2005 to 2008 usually on loans of around £1M or more in value. Derivative sales can generate huge immediate book profits for banks. Banks were therefore offering loans to SMEs whereby they often forced (by condition precedent in Loan agreements) these businesses to enter into interest rate swaps. Such swaps were sold as the ideal 'interest rate protection product' guarding against the financial consequences of interest rate rises. Interest rates however plummeted in late 2008 leaving clients not only paying for a product which was unnecessary but suffering devastating financial consequences of the swap itself; a product most small businesses weren't equipped to understand. We have seen clear evidence that interest rate swaps were mis-sold by well known high street banks to small and medium enterprises (SMEs). We act for clients seeking to pursue the banks in order to resolve the financial impact of such mis-selling. We have dealt with clients that were mis-sold LIBOR swaps, Base rate swaps, Interest rate caps, callable/cancellable products, Base rate collars and Fixed Rate Loans with underlying swaps. ## How did the Banks Mis-sell Swaps? When selling complex financial instruments, or products, such as interest rate swaps there is a duty of care on behalf of the seller which is heightened by reference to the type or class of customer. The banks may also have made misrepresentations as to nature of the hedging and the contingent liabilities attached to the hedging contract(s). The duty of care itself exists in both common law and statutory law. The level of the duty of care can be expressed by reference to the Financial Services Authority's (FSA) Conduct of Business Sourcebook (COBS) rules. The FSA requires sellers, in this case banks, to provide a full explanation of the effects of the product *and the potential risks*. Sellers are also required to make sure the product is suitable for the client. The banks are obliged to follow these principles and rules which are set out in the FSA's COBS rules. In many of these sales (sometimes to captive UK SME customers) the banks breached this duty of care by: (i) not explaining to their customers the possible detrimental effects of the interest rate swap and the associated risks together with (ii) failing to consider that an interest rate swap may well not be the most suitable product for their client. ## Missold Swap? Legal Solutions to Hedge Mis-selling If you have been mis-sold an interest rate swap there a number of possible solutions. These include: - attempting to negotiate with the bank - complaining to the Bank - [opting-in to the Bank Review of Past Sales of Interest Rate Hedging Products (IRHPs), commonly referred to as the FCA or "FSA Review"](https://lexlaw.co.uk/fcareview) - complaining to the Financial Ombudsman Service (FOS) - letter before action, issuing proceedings and litigating against the bank The initial step may be to attempt to negotiate with the bank and to seek to reach an agreement although this is often very difficult to achieve without threatening and/or commencing legal action. Pre-action advice, information gathering and correspondence is managed by our specialist swaps solicitors who consider the facts of your case, the circumstances the interest rate hedging was sold in and the bank's position. We then prepare a detailed pre-action letter of claim to start off the negotiations. If negotiation is not possible to resolve a mis-sold swap then litigation will be considered. In the best outcome the contract can be rescinded which means that parties will be put in their original positions before they entered the contract i.e. before they were sold the interest rate swap. Our expert swaps lawyers can help we will assess your case and position and using their specialist knowledge and experience will strategise the best to way to commence proceedings against the bank. Another consideration is complaining to the Financial Ombudsman Service, via which process it may be possible to obtain compensation of up to £150,000 (for complaints made after 1 January 2012). Our specialist lawyers have experience dealing with the FOS and can assist clients as to the FOS' rules and procedures. Where appropriate we can assist in making formal fully prepared and well presented complaints on clients' behalf and can advise if litigation is a better option for redress, which in these cases it often is. ## Why use a Specialist Interest Rate Swap Solicitor? Derivatives are a complex subject matter which most generalist lawyers simply won't be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks. This experience has been gained not only at other leading city law firms but at the legal and compliance departments of the banks themselves. Our team will ensure your interest rate swap mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the swap. This usually means a refund of all balancing payments and escaping the ongoing contingent liability (ie avoiding incurring the break fee). We work to achieve our client’s interests by attempting to negotiate with the banks wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of our legal team are also insolvency and winding up petition experts so if our clients face winding up proceedings or appointment of receivers as a result of a mis-sold interest rate swap we can quickly assist and advise in these areas. ## Our Mis-sold Swap Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client's case and business is unique, therefore we adopt a bespoke approach tailored to suit the client's circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors' firms to give specialist litigation advice and support in swaps mis-selling cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the mis-selling claim; - Assisting you in preparation of evidence to support your mis-sold interest rates swap case; - Appointing the right derivatives and hedging experts to ensure the best chance of success in litigation; - Appointing forensic accountants to assess and report on the refunds and consequential losses due; - Liaising with the bank and the Court and/or the Financial Ombudsmen Service; - Providing first class Court representation and advocacy; and - Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the Ministry of Justice and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Business rescue and Insolvency advice We specialise in Litigation, Winding-up and Insolvency work and as a consequence we are able to add value by our legal services by guiding clients in these areas which are often ancillary to Interest Rate Swap mis-selling litigation. We can and have helped clients successfully defend winding up petitions brought by their banks and we can challenge the appointments of LPA Receivers, Auctioneers and also advise as to how best businesses can be rescued and turned around and how debts can be written off or restructured. If your business has already suffered terminal loss due to (either in full or part) a hedging product from your Bank please still contact us. We can provide advice on obtaining an assignment of the right to bring legal proceedings against the Bank from the Administrator or the Trustee in Bankruptcy as appropriate and have experience in doing so. ## Fixed Fee initial consultation If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading financial services mis-selling litigation solicitors and barristers. Just call or email us now for a fixed fee initial consultation; our legal team are waiting to help. ## Our Media Appearances As leading financial services litigation experts regularly fighting banks, building societies, bridging lenders and insurers we have advised, featured and commented to the media on numerous occasions. Some of our media citations and appearances appear on our [Media Interest](https://lexlaw.co.uk/media-interest/) page. ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/LEXLAW-Media-Logo-Panel-Litigation-Solicitors-in-London-UK.png)[Learn more about our TV and Newspaper coverage: https://lexlaw.co.uk/media-interest/](https://lexlaw.co.uk/media-interest/) **Contact our specialist hidden swaps lawyers for a consultation: ☎ 020 7183 0529 or email** [hidden-swaps@lexlaw.co.uk](mailto:interest-rate-swaps-lawyers-london@lexlaw.co.uk) *Please note: As legal claims will be centred around breach of contract, claimants run the risk of their claim becoming time or statute-barred by virtue of s.5 of the Limitation Act 1980. This applies six years after the date of the hidden swap agreement. Therefore it is vital to instruct solicitors promptly. * --- # Winding Up Petitions (Companies and Partnerships) Source: https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/ We are leading experts specialising in insolvency proceedings. Our experienced[ City of London solicitors and barristers](https://windinguppetitionsolicitors.co.uk/contact-us/) regularly assist companies facing a [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)[ winding up petition](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/); individuals served a [statutory demand](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/); or creditors owed money and considering [issuing a winding up petition](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/).  ## What is a Winding Up Petition? The [winding up petition](https://windinguppetitionsolicitors.co.uk/) is the precursor to the compulsory liquidation of a company or the dissolution of a partnership if not properly dealt with by the Directors or Partners and in essence means that a creditor is asking the Court to wind up a business and have an[ insolvency practitioner](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/directors-should-instruct-specialist-cva-insolvency-practitioners/) distribute the assets of that business amongst all creditors. Presenting a [winding up petition](https://windinguppetitionsolicitors.co.uk/) to the Court is the most serious [debt recovery action](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/) that can be taken by a creditor. It requires the petitioner to be able to demonstrate that it has a liquidated debt of at least £750 which is not in dispute, this is normally evidenced by a statutory demand which is not set aside or a Judgment of the Court. [Winding up petitions](https://windinguppetitionsolicitors.co.uk/) may be issued at Court against either a Company or a Partnership, the latter (a petition to wind up a partnership) is usually accompanied by individual bankruptcy petitions for each of the partners. ## What is the procedure to present a Winding Up Petition? [Winding up petitions](https://windinguppetitionsolicitors.co.uk/) can be issued by any creditor who is owed at least £750 and are most often deployed by [Her Majesty's Revenue & Customs (HMRC)](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/). Petitions are in the main issued and then heard at the High Court of Justice, Business and Property Courts of England & Wales, Insolvency and Companies Lists (formerly known as the High Court, Chancery Division's Companies Court). The court is based at the Royal Courts of Justice (Rolls Building) in London. Petitions can also be issued and dealt with at other High Court District Registries or at a County Court with jurisdiction in insolvency matters (if the paid up or credited share capital is below £120,000). [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) have professional legal chambers in the Middle Temple Inn of Court which is adjacent to the Royal Courts of Justice where the Companies Court is located. This location in the legal heart of London ensures we are able to take urgent instructions and act quickly on behalf of the firm's clients. ## Where does a Winding Up Petition have to be served? In general, the [winding up petition](https://windinguppetitionsolicitors.co.uk/) must be served at the registered office of the company and handed to a person at that address. If there is no one at the registered office that accepts service, then the petition may be served by depositing it at or about the registered office e.g. by attaching the petition to a fixture or fitting. ## What happens after a Winding Up Petition is issued? Once a [winding up petition](https://windinguppetitionsolicitors.co.uk/) is issued by a creditor such as [HMRC](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/) it is then served on the company usually by a process server visiting the company's registered office address or sometimes by first class post. Once a petition is served there is very limited time for Directors to act decisively and deal with a company's debts and the company will urgently need specialist legal advice (and representation at the Companies Court hearing) to help it fight back and ensure the business stays alive. [As specialist winding up lawyers](https://windinguppetitionsolicitors.co.uk/), we can help the company to get enough time to manage or settle large debts or to dispute the monies claimed in the petition. With the correct legal guidance it is perfectly possible to obtain time and resolve the debt even if the creditor won't initially agree to sensible time to pay proposals; there are legal arguments and applications that can be deployed in the company's favour. ## How are Winding Up Petitions Advertised? Once the company has been served with the petition the creditor can after a period of seven days advertise the petition in the[ London Gazette](https://www.thegazette.co.uk/). This advert can only be stopped by legal negotiations between the parties or by Court injunction to restrain advertisement. If the petition is nevertheless publicly advertised the Company's bank accounts will usually be frozen by the Bank as the banks won't wish to risk falling foul of section 127 of the [Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Insolvency-Act-1986-Lexlaw-Solicitors-and-Advocates-London-UK.pdf). As a result of s.127, upon liquidation any disposal of company property (such as a cheque paid, or an asset sold or transferred) and any transfer of company shares will be of no effect, unless the court orders otherwise. Freezing of a company's bank accounts can force a company to stop trading. In these circumstances our specialist insolvency counsel help companies to persuade the Court to grant Validation Orders which either generally or specifically permit certain transactions. Validation orders are the only route by which to unfreeze bank accounts. ## How do I perform a Winding Up Petition Search? Prior to issuing a [winding up petition](https://windinguppetitionsolicitors.co.uk/), you must always check with the Companies Court as to whether another petition already has already been presented. The first petition is the one that takes precedence (whether advertised or not) and any subsequent petition is likely to be dismissed with an adverse costs order against the petitioner. We can conduct a winding up petition search for our clients who are intending to issue a petition via the Court which will confirm if any liquidation, winding up or striking-off documents have been filed. We will also confirm if any notices have been placed in the London Gazette. If adverse entries are filed, relevant copies will be provided. We can also do winding up searches for clients that are required to wind a company up and need further information, namely: Date of Incorporation, Any changes of name, Registered Office, Objects, Nominal & Issued Capital, Copy Mortgage Register. ## What happens at the Winding Up Petition hearing? After service of the [winding up petition](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/), the Court is involved and a date will usually be set for a winding up petition hearing in the general Companies Court list. Due to [CIGA 2020](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/new-insolvency-practice-direction/) there may be an extra step before the hearing which is a non-attendance review by an insolvency judge. ## Who attends the Winding Up Petition hearing? The petitioner, creditors, anyone with an interest in the company’s property, the company and its’ shareholders all have the right to attend the hearing and be heard at the hearing. ## Where is the hearing? In London, winding up petitions are heard at the [Insolvency and Companies Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/courts-of-the-chancery-division/insolvency-and-companies-courts/) from 10:30am in the Rolls Building, Fetter Lane, London, EC4A 1NL. We are located 5 minutes walk from the Court and are therefore able to provide urgent representation. However, this is subject to capacity and receiving instructions in a timely manner. ## Why use a Specialist Winding Up Petition Solicitor? The insolvency and Court rules relating to winding up proceedings are a technical minefield; as expert [winding up petition](https://windinguppetitionsolicitors.co.uk/) solicitors we help our clients to avoid suffering the 'usual compulsory order'. We assist by protecting the companies interests and by negotiating with creditors and advising and representing the company at Court. Retaining insolvency solicitors and barristers in particular assists in dealings with creditors (such as HMRC) who will know a company is taking matters seriously and responsibly when they instruct ourselves. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our winding up petition team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our winding up petition team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Our Winding Up Solicitors get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business failure. We consider that each client's case and business is unique, therefore we adopt a bespoke approach tailored to suit individual circumstances. We provide specialist senior legal advice from solicitors and barristers at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors' firms to give specialist advice on legal strategy and costs as well as to manage winding up proceedings as agents and as advocates in the High Court. We assist our clients by: - [Opposing](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) or Stopping a winding up petition - [Obtaining an adjournment](https://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/) of winding up proceedings - Applying for [injunctions to restrain advertisement](https://windinguppetitionsolicitors.co.uk/restraining-injunctions-against-winding-up-petitions-and-advertisements/) in the London Gazette - Applying to the Court for [validation orders](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/how-to-get-validation-order-unfreeze-bank-account-insolvency-advice/) to unfreeze bank accounts - [Liaising with HMRC](https://windinguppetitionsolicitors.co.uk/set-aside-hmrc-winding-up-petition-statutory-demand-lawyer-advice/) and other creditors - Court representation and advocacy before a Registrar or Judge - Advising the Company or Partnership on [winding up petition procedure](https://windinguppetitionsolicitors.co.uk/winding-up-procedure/) - [Advising Directors ](https://windinguppetitionsolicitors.co.uk/risks-for-directors/)on risks and insolvency routes - Developing (and aiding implementation of) strategies that allow the business to continue ## How can we offer company rescue and turnaround advice? We add value by our legal services by guiding clients as to how best companies can be rescued and turned around and how debts can be written off or restructured. We can advise on administration or proposals of either Company Voluntary Arrangements (CVAs) or Partnership and Individual Voluntary Arrangements (PVAs or IVAs). To achieve a company rescue you must act quickly; contact us as soon as possible. The more time available to build an alternative business plan, the more successful it is likely to be. If your company can be saved, whether this is achievable through restructuring or writing off debts, the team at [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) can help by offering clear, practical and easy to understand advice which deciphers the Insolvency Rules and regime. ## Meet our Specialist Winding-up Petition Lawyers We’re masters of insolvency dispute litigation. We are a specialist [City of London](https://web.archive.org/web/20200622210953/https://www.cityoflondon.gov.uk/Pages/default.aspx) law firm made up of Solicitors & Barristers. We’re based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) (next to the Royal Courts of Justice where the High Court and Central London County Courts are based).  We’re experts in dealing with matters surrounding insolvency in particular our team have unparalleled experience at both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. We provide a quick no cost initial telephone case review to establish whether or not we can help you; just call one of our team on 02071830529. **ACT PROMPTLY** Please note that if you have been warned about your file being passed to HMRC's Solicitor's Office or have been served a statutory demand or winding-up petition do not delay in taking legal advice. Your matter can be handled more effectively the sooner you contact us. [*We’re regularly featured in national and international media.*](https://lexlaw.co.uk/media-interest/) --- # Litigation Matters | Legal News Source: https://lexlaw.co.uk/legal-news/ --- # Litigation & Dispute Resolution Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/ ## Results matter to our Litigation & Dispute Resolution Solicitors & Barristers. Our lawyers have market-leading experience of handling multi-million pound litigation and bringing complex claims to settlement.  As a result of obtaining optimal litigation settlements for clients, we were the fastest growing law firm in the UK in 2013 and the fourth fastest in 2015 (Source: Plimsoll Top 500 Solicitors Report). Our City of London litigation lawyers are regularly featured in national and international media. > Clients hire us because of our extensive legal knowledge, and especially because of our litigation experience. *We know when to go to court and we know how to litigate to obtain optimal settlements*. Our litigators carefully assess case prospects and can then issue or defend legal claims in all manner of contentious issues, ranging from financial services litigation against major banks and their 'magic circle' or other lesser legal teams (all of whom we regularly succeed against), injunctions (such as obtaining emergency mareva freezing orders or restraining orders), winding-up petitions and other company court disputes and injunction or validation applications. Our London litigation solicitors and barristers advise our clients on disputes relating to claims involving fraud and deceit, commercial contracts, buildings and property, sale of goods, banking and mortgage fraud, directors’ disqualification, judicial review and insolvency. We aim to add value to our case management and advisory work for clients by our knowledge of their trade or profession; we have expert knowledge of trade sectors such as large-scale Property Development, Wholesale Cash and Carry, Commodities and Diamond trading, Aerospace, Overseas development, Travel, Internet and other Retail. We regularly act for high net worth private clients and companies in high value litigation. ## What is Litigation in Dispute Resolution? Litigation is a form of dispute resolution. Solicitors assist clients with a legal dispute by issuing a [Letter Before Claim](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/) to the opponent setting out the claim. If the civil dispute can't be settled in the pre-action phase then court litigation can be commenced or other forms of [ADR](https://lexlaw.co.uk/solicitors-london/category/adr/) considered. [Negotiation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#negotiation) skills are absolutely vital in litigation. ## What is Alternative Dispute Resolution (ADR) in UK Litigation? Most UK litigation disputes never reach trial and instead are compromised by [ADR](https://lexlaw.co.uk/solicitors-london/category/adr/) which means [Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) solutions such as: [Negotiation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#negotiation), [Arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#arbitration), [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#mediation), [Med-arb](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#med-arb), [Tribunals](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#tribunal), [Conciliation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#conciliation), [Early Neutral Evaluation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#ENE), [Adjudication](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#adjudication), [Expert Determination](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#determination), [Dispute Review Board](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#DRB). By settling each side can avoid the costs and risks of litigation. ## Types of Litigation ## Our Specialist London Litigation Solicitors Our London litigation lawyers are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firms location adjacent to the Royal Courts of Justice in Central London. We have for example obtained an out of hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for [costs](https://lexlaw.co.uk/?s=costs) is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure the minimum risk possible in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. ## Meet our Litigation Lawyers Our City of London litigation solicitors and barristers provide bespoke legal advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading dispute resolution lawyers. Call or email us to start the process of instructing us; our litigation team are waiting to help. --- # Tax Litigation Source: https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/ *Our [Tax Litigation practice](http://taxdisputes.co.uk/) is at the core of the firm.* *Got a dispute with HMRC?* *Our tax team is made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) who can assist you to resolve your tax dispute. Our ex-HMRC lawyers will guide you on complex tax legislation to get you the best possible result. * We have years of experience [negotiating with HMRC](http://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/) and handling tax appeals at the [Tax Tribunals](http://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) and in the High Court dealing with contentious tax disputes. We also work extensively with Accountants, Tax Investigation practices and former HMRC Officers to ensure your matter is handled correctly. The depth of our combined capabilities allows us to represent clients in a variety of situations, whether advising private or corporate clients during tax audits, pursuing administrative appeals, or litigating tax matters at the Tax Tribunal, Court or in tax appeals. Clients hire us because of our [extensive experience in all areas](http://taxdisputes.co.uk/success/), and especially because of our litigation experience – when necessary, we know when to go to the Tax Tribunal and we know how to litigate. ## Tax Practice Areas at a Glance: ### HMRC Tax Investigations - **Civil Tax Evasion and Fraud Tax Investigations:** [Tax Avoidance Schemes](https://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/); - [Offshore Tax Evasion](https://taxdisputes.co.uk/offshore-tax-evasion-tax-avoidance-solicitors-london/); - [Missing Trader Fraud (MTIC VAT Evasion)](https://taxdisputes.co.uk/missing-trader-fraud-vat-evasion-solicitors-london/) - [Code of Practice 8 investigations](http://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/) (suspicion of serious Tax Avoidance using schemes such as EBT/PBT structures); - [Code of Practice 9](https://taxdisputes.co.uk/tax-evasion-hmrc-code-practice-9-investigations/) investigations (suspicion of serious Tax Fraud); and - [Code of Practice 11](https://web.archive.org/web/20160827075914/http://thepensionsregulator.gov.uk/docs/code-11-dispute-resolution.pdf) investigations (Self Assessment Tax Investigations). - [Online business tax investigations](https://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/online-sellers-businesses-vat-compliance-hmrc-tax-liability-fraud-evasion-investigation-penalty-assessments/) - we have assisted Amazon sellers with VAT and account issues and [Onlyfans](https://taxdisputes.co.uk/2024/12/dealing-with-hmrc-as-an-onlyfans-model/) content creators. - **Criminal Tax Investigation:** [Section 144 Enquiry](http://taxdisputes.co.uk/hmrc-interviews/); and - Interviews under [PACE (Police and Criminal Evidence Act 1984)](https://www.legislation.gov.uk/ukpga/1984/60/contents) - **Corporate Tax Evasion:** Code of Practice 14 Investigation (Company Tax Return Enquiries); and - Section 12A TMA 1970 Notice Investigations. - **VAT, PAYE and Duties Investigations:** PAYE Audit Tax Investigation; - [Diversion Fraud](http://taxdisputes.co.uk/outward-excise-diversion-fraud/); - [Goods seized by HMRC/UKBA](https://taxdisputes.co.uk/goods-seized-by-hmrc-consignment-import-jewellery-seizure-cigarettes-tobacco/); - [Smuggling](http://taxdisputes.co.uk/smuggling/); - [Excise and Duties Investigation](https://taxdisputes.co.uk/hmrc-duty-evasion-fraud/); and - [VAT Repayment Fraud](http://taxdisputes.co.uk/repayment-fraud/) / [VAT Evasion](http://taxdisputes.co.uk/vat-evasion/) Investigation. ### HMRC Tax Appeals - Appeals against a tax assessment; - Appeals against [any tax penalty](https://taxdisputes.co.uk/hmrc-penalties/); - negotiating with HMRC; - navigating the [HMRC internal review process](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/); and - advising on [statutory tax appeals](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/) at the Tax Tribunal. ### Legal Representation - [First Tier Tax Tribunal representation](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/); - [Late appeals](https://taxdisputes.co.uk/late-hmrc-tax-appeals/) to the Tax Tribunal; - Managing the [HMRC voluntary disclosure](https://taxdisputes.co.uk/hmrc-voluntary-disclosure-campaigns-solicitors-london/) scheme; - Representation at [HMRC Interviews](https://taxdisputes.co.uk/hmrc-interviews/); and - Drafting [witness statements](https://taxdisputes.co.uk/taxpayer-witness-statement-drafting-representation-hmrc-advice/) on behalf of taxpayers. ### HMRC Enforcement Action Defence - Challenging a [HMRC statutory demand](https://taxdisputes.co.uk/hmrc-statutory-demand/); - Set aside a HMRC winding up / bankruptcy petition; and - [Recovery of EU taxes by HMRC (MARD)](https://taxdisputes.co.uk/mutual-assistance-recovery-directive-recovery-of-foreign-taxes-by-hmrc-mard/). - [HMRC Account Freezing Orders](https://taxdisputes.co.uk/2024/11/how-to-challenge-a-hmrc-account-freezing-orders/) ([AFOs](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/)). ## Need legal advice or help solving a HMRC Tax Dispute? Your search ends here. Our tax team made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) can assist by providing you with a bespoke tax solution to your tax dispute. We can guide you through the minefield of ever-increasingly complex tax legislation, littered with compliance and due diligence traps. Our tax team has experience in negotiating with HMRC and managing appeals against their decisions at all levels. Members of the team include qualified [Tax Solicitors](https://taxdisputes.co.uk/tax-solicitors/) and [Tax Barristers](https://taxdisputes.co.uk/tax-barristers/) whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience. We have a team of established tax and duties specialist lawyers with a proven track record of delivering authoritative solutions. ## How our expert London Tax Lawyers can help you As a leading specialist tax law firm with a track record of success, you can be assured your tax matter is in safe hands. Our success rate is a result of the dedication of our [tax team](http://taxdisputes.co.uk/expert-advice/) who will diligently review your matter so it has the best possible chance of success from the outset when it matters the most. Our experienced lawyers regularly carry out work in many tax disputes areas,  from advising clients on whether HMRC have followed the correct procedures to successfully challenging HMRC’s policies. We have specialist knowledge in HMRC internal processes as well as ensuring that we are able to successfully challenge HMRC decisions in the Tax Tribunals. Although you may have instructed an Accountant in relation to your tax matters, in most cases your Accountant will be able to assist you in tax compliance matters whereas we specialise in assisting you in relation to any investigations that HMRC have brought against you. We regularly work with Accountants to ensure that collectively we are able to obtain the best possible resolution to your matter. If you have a dispute with HMRC and find yourself hitting a ‘brick wall’ or even if you are unsure of how to deal with correspondence and/or demands you have received from HMRC  then you should contact us immediately to ascertain how we can assist you in your matter. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our tax team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member(s) of our tax team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Discounted fixed fee initial consultation If you need Taxation advice our highly experienced solicitors and barristers are able to assist. Our specialist tax team regularly provide market leading advice to directors of companies and limited liability partnerships. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our [expert legal team of leading Taxation solicitors and barristers](http://taxdisputes.co.uk/expert-advice/). Just call or email us now for a heavily discounted initial consultation; our legal team are waiting to help. *Please note: If you know or suspect you are being investigated by HMRC or have a tax liability issue then do not delay in contacting us in complete confidence.* --- # Validation Orders (s.127 Insolvency Act 1986) Source: https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/ A court validation order allows a company facing a winding-up petition to continue trading by authorising transactions that would otherwise be void due to [s.127 Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127); ensuring business operations and payments to creditors can continue. > *s.127 Insolvency Act 1986 - Avoidance of property dispositions, etc. > *(1) In a winding up by the court, any disposition of the company’s property, and any transfer of shares, or alteration in the status of the company’s members, made after the commencement of the winding up is, unless the court otherwise orders, void. *We have the perfect skill set with which to assist companies facing frozen bank accounts. Our specialist insolvency solicitors & barristers seek to persuade the Court to grant Validation Orders. We will ensure you have the best possible chance of success in applying for a Validation Order.* ## What is a Validation Order? Validation Orders are orders of the Court authorising as valid the disposition of property which occurs *after *the presentation of a winding-up or bankruptcy petition - which dispositions would otherwise be void in the event of a winding-up order. The legal departments of banks operating in the UK consider that ‘commencement’ is the date when a petition is advertised. The practical effect of the advertisement is that as soon as banks become aware of the winding up petition they ‘freeze’ the company’s bank accounts as they are wary that the liquidator could require them to make good any financial loss. This damages the company’s ability to continue trading and wages/salaries may be unpaid even when money is held to pay them. A company may have (or be able to receive) funds to pay a petitioning creditor, but cannot as the bank will not (accept or) release funds. A validation order restores transactional capacity by authorising specific or general disposals, ensuring that essential payments (such as salaries, supplier invoices or property sales) proceed lawfully despite the underlying winding-up or bankruptcy petition. ## The Effect of a Validation Order A validation order enables a company to maintain its operations or to dispose of particular assets, such as property, once the court determines that these transactions serve the best interests of the entire class of creditors. The specific impact of a validation order depends on its terms: - **Specific validation order**: Authorises designated payments or disposals, for example, wages to employees or invoices to key suppliers over a defined timeframe, often until the next court hearing of the underlying winding-up petition. - **General validation order:** Confers blanket approval for post-petition transactions, allowing the company to trade uninterrupted until the petition is concluded. By tailoring the scope and duration of relief, validation orders ensure that essential business activities can proceed without jeopardising creditor rights. ## Navigating a Frozen Bank Account with a Validation Order When a winding-up petition appears advertised in the London Gazette, banks immediately freeze a company’s account - treating the advertisement as “commencement” under section 127(1) of the Insolvency Act 1986, which renders any post-petition disposition void without court approval. To restore access to funds and resume essential payments, directors must apply for a validation order, supported by comprehensive evidence: up-to-date management accounts, a detailed cash-flow forecast, independent asset valuations, and documentary creditor consents. Securing this relief protects jobs by authorising payroll, preserves going-concern value through supplier and utility payments, and validates ongoing contractual obligations. Without a validation order, directors risk personal liability in claw-back claims and misfeasance proceedings under sections 212–214 IA 1986, making prompt court approval imperative. ## Claw-Back Risk and Retrospective Validation When a winding-up or bankruptcy petition is advertised, section 127(1) of the Insolvency Act 1986 immediately renders any disposition of the company’s property void unless sanctioned by the court. This creates a significant claw-back risk for seemingly innocuous post-petition payments - most notably: - **Wages and Salaries:** Payroll runs processed after the petition advertise­ment can be invalidated, exposing recipients and the business to recovery actions by the liquidator. - **Supplier Invoices:** Payments to trade creditors, even for essential stock or services unknowingly supplied post-petition, may be clawed back if not validated. - **Utility Charges:** Settling utility bills (gas, electricity, water) after commencement can attract claw-back, resulting in supply disconnections and operational disruption. Although a retrospective validation order can remedy past void dispositions, courts approach such applications cautiously. Success hinges on demonstrating that validating the transactions either preserves going-concern value or benefits unsecured creditors—and is **never presumed**. Directors must therefore act promptly: obtaining either specific or general validation in advance is vastly preferable to relying on after-the-fact relief. This risk landscape underscores two core principles: - **Statutory Basis (s 127 IA 1986):** Voidance of post-petition dispositions safeguards the pari passu distribution principle, ensuring no creditor is unfairly preferred. - **Pari Passu Principle:** All unsecured creditors must share equally in the insolvent estate. Validation orders must respect this equality, authorising only those transactions that uphold or enhance the creditors’ collective position. By reaffirming these fundamental doctrines, practitioners can advise companies to secure timely court approval for critical payments, avoiding exposure to costly claw-back proceedings. ## How to get a Validation Order (Guide) Securing a validation order is far from a procedural formality and it is not a tick box exercise as many directors often hope for; it demands meticulous preparation, comprehensive evidence, and compelling written and oral advocacy to persuade the judge that granting relief serves the best interests of all creditors. All validation order applications must comply with **Rule 9.11 of the Civil Procedure Rules’ Practice Direction – Insolvency Proceedings**. This Practice Direction establishes both the procedural framework and the evidential standards the court will expect before granting relief under section 127(1) of the Insolvency Act 1986. We are regularly instructed to manage the legal process to obtain a validation order with speed whilst directors continue trying to manage the wider commercial impact of the petition. Here is the step by step process to get a validation order: **1.** **Make an Application to the Court:** An application needs to be supported by strong evidence and persuasive legal argument. Validation Orders can only be made following: (1) an application to the Court listing the winding-up petition and (2) the hearing of that application. The application should be on notice and the on-notice application fee is £313 (as of April 2025). **2.** **Serve the Application:** Under Practice Direction 9.11.2, the applicant must serve notice on the petitioning creditor and any person entitled to receive a copy of the petition (Rule 7.9) and any creditor who has given notice of intention to appear at the petition hearing (Rule 7.14) and also any substituted petitioning creditor (Rule 7.17). Failure to serve correctly typically leads to adjournment or dismissal. **3. Prepare a Comprehensive Witness Statement:** A director or officer intimately acquainted with the company’s affairs must swear to the statement. If necessary, include a statement from the company’s accountant. The court will need to be satisfied by credible evidence that the company is solvent and able to pay its debts as they fall due or that a particular transaction or series of transactions in respect of which the order is sought will be beneficial to or will not prejudice the interests of all the unsecured creditors. **4. Assemble and Exhibit Mandatory Documentary Evidence:** The Chancellor of the High Court issued a [Practice Note on Validation Orders](https://windinguppetitionsolicitors.co.uk/practice-note-on-validation-orders-lawyers-london/) sought under sections 127 and 284 of the Insolvency Act 1986. This has been replaced with the [Civil Procedure Rules' Practice Direction - Insolvency Proceedings](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11). The information required in the application will vary according to the circumstances and the nature of the relief sought, but is likely to include the following: Per PD 9.11.3–9.11.4, include the following: - Notice schedule: dates and recipients (petitioning creditor & others). - Company particulars: name, trading address, registered office. - Capital: nominal and paid-up. - Petition background: circumstances & how awareness occurred. - Petition debt status: admitted or disputed (with basis). - Financial position: Assets (with security details and valuations). - Liabilities, including contingent debts. - Documentary support (filed/draft accounts, management accounts, statement of affairs). - Bank account details: number, sort code, branch address, balance. - Cash-flow forecast & profit-and-loss projection for the relief period. - Transaction list: each disposition or payment for validation. - Reasons: why validation is needed (e.g., uninterrupted trading, payroll, supplier payments). - Creditor-benefit or solvency evidence: showing no prejudice to unsecured creditors or that the company is solvent. - Consents: from petitioning & interested creditors (with documentary proof). - Property sales (if applicable): property details (including title number) and independent valuation report. - Any other relevant information for judicial discretion. **5. Request Hearing Before a Judge:** A validation Order application will not be dealt with by the Registrar at the date of hearing stated on your winding up petition; you must apply to the Court and seek a hearing before a Judge. **6. Articulate Persuasive Legal Argument at the Hearing: **Our barristers can submit a written skeelton argument and then make oral submissions to the ICC Judge applying the facts of the case to s.127(1) Insolvency Act 1986 (dispositions void unless validated); referencing Practice Direction – Insolvency Proceedings (PD 9.11) for procedural compliance and emphasising the statutory limbs, namely: - Solvency limb (s 122(g)): The company can pay its debts as they fall due. - Creditor-benefit limb (s 123): The proposed transactions will benefit, or at least not prejudice, unsecured creditors. **7. Consider Antecedent vs. Retrospective Orders** Antecedent orders validate future transactions only, protecting anticipated trading activities or planned asset disposals. Retrospective orders retrospectively validate past dispositions, shielding directors and third parties from claw-back or misfeasance claims.Retrospective orders retrospectively validate past dispositions, shielding directors and third parties from claw-back or misfeasance claims. **8.** **Draft Tailored Order**: We can prepare and submity the order sought setting out whether the relief is: - Specific: limited to certain transactions (e.g., payroll, supplier invoices) and fixed period (until next petition hearing). - General: blanket validation for all post-petition dealings until the petition’s resolution, enabling normal trading. ## How might HMRC respond to a Validation Order? If HMRC are the petitioning creditor they are likely to adopt a position on your company based on the purpose of the order and their attitude to your company which is dictated by the past payment relationship which we can assess with you. Generally HMRC’s response in these matters largely depends on the purpose for which the order is being sought and the trading history of the debtor company. HMRC may oppose an application if it would reduce the assets available for creditors. However they will need to balance this if the application is to release funds to allow payment of wages. Typically they will ask that payment of current PAYE/NIC is made on time. If the company needs to continue to trade or dispose of company property HMRC will need to consider if the position of creditors would be improved as result of granting the Validation Order. ## Why use a Specialist Validation Order Solicitors? The insolvency law and Court rules relating to Validation Orders are a technical minefield; as expert Validation Order solicitors we help our clients to avoid suffering the further trading losses as a result of frozen bank accounts. In addition, we assist by protecting the company’s interests and by negotiating with creditors and advising and representing the company at Court. Retaining insolvency solicitors and barristers in particular assists in dealings with creditors (such as HMRC) who will know a company is taking matters seriously and responsibly when they instruct ourselves. ## Our Validation Order Solicitors get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of terminal business failure by loss of trading ability. We consider that each client's case and business is unique, therefore we adopt a bespoke approach tailored to suit individual circumstances. We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inns of Court adjacent to the Royal Courts of Justice. We will be able to offer your company a fixed fee service to understand your circumstances then prepare, file and present a Validation Order application to the Companies Court at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction. ## Company rescue and turnaround advice We add value by our legal services by guiding clients as to how best companies can be rescued and turned around and how debts can be written off or restructured. We can advise on administration or proposals of either Company Voluntary Arrangements (CVAs) or Partnership and Individual Voluntary Arrangements (PVAs or IVAs). To achieve a company rescue you must act quickly; contact us as soon as possible. The more time available to build an alternative business plan, the more successful it is likely to be. If your company can be saved, whether this is achievable through restructuring or writing off debts, the team at LEXLAW Solicitors & Barristers can help by offering clear, practical and easy to understand advice which deciphers the Insolvency Rules and regime. ## Book an Initial consultation to get advice If you are seeking a Validation Order or have an insolvency matter and need urgent help, advice or representation we are able to assist. Just call or email us now; our Validation Order team are waiting to help. To contact us about your case please call us on: 0207 1830 529 or email us on: insolvency-validation order-solicitors-london@lexlaw.co.uk *Please note: If you have been served a winding-up petition do not delay in contacting us as your matter can be handled more effectively (and the need for a validation order possibly avoided) the sooner you contact us.* ### FAQ - Obtaining a Validation Order What is a validation order and when is it needed? A validation order is a court order granted under [section 127(1) of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127) which permits specific company transactions after a winding-up petition has been issued. Without such an order, dispositions—including payments, asset sales, or transfers—made post-petition are void and subject to claw-back by a liquidator (see [Practice Direction – Insolvency Proceedings at gov.uk](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11)). Why do banks freeze company accounts after a petition is advertised? Banks freeze company accounts immediately after the petition is advertised in The Gazette because, legally, the advertisement marks the "commencement" of proceedings. Under [s127 IA 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127), banks can be compelled to restore any payments made after this date, exposing them to claw-back risk ([guidance at windinguppetitionsolicitors.co.uk](https://windinguppetitionsolicitors.co.uk/practice-note-on-validation-orders-lawyers-london/)). What transactions can a validation order authorise? The court may authorise a wide range of post-petition transactions: payroll payments, supplier invoices, rent, utilities, property sales, or general trading transactions. The scope depends on the evidence provided and the company’s needs ([Practice Direction 9.11 at gov.uk](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11)). Who decides if a validation order should be granted? A specialist judge in the Insolvency & Companies Court at the High Court hears validation order applications ([practice guidance](https://windinguppetitionsolicitors.co.uk/practice-note-on-validation-orders-lawyers-london/)); decisions are based on the evidence presented and consideration of the interests of unsecured creditors ([section 127 IA 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127)). What evidence do I need to support my application? Strong supporting evidence is required, including: up-to-date management accounts, cash-flow forecasts, comprehensive details of assets and liabilities (with securities), independent valuations for asset sales, details of relevant bank accounts, and written consents from major creditors. These requirements are set out in [Practice Direction 9.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11). Do I need to notify anyone before making my application? Yes, you must serve notice of your application on: the petitioning creditor, any person entitled to receive a copy of the petition, creditors who have notified their intention to appear, and any substituted petitioner, per [Rule 7.9–7.17 Insolvency Rules 2016](https://www.legislation.gov.uk/uksi/2016/1024/contents) and [PD 9.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11). Can a validation order be applied for urgently? If urgent payments are needed (such as wages) and not all evidence is available, the court may grant limited, short-term relief if satisfied that unsecured creditors will not be prejudiced ([Practice Direction 9.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11)); see cases like *[Re Gray’s Inn Construction Co Ltd](https://en.wikipedia.org/wiki/Re_Gray%27s_Inn_Construction_Co_Ltd)* [1980] 1 WLR 711. What is the cost of applying for a validation order? The current on-notice court fee is £313 (see [gov.uk EX50A fee guide](https://www.gov.uk/government/publications/fees-in-the-civil-and-family-courts-main-fees-ex50/civil-court-fees-ex50)), plus legal costs for solicitors and counsel, which vary depending on the expertise and seniority of the firm and barrister you instruct, the complexity of the case and the number of hearings - usually at least a few to several thousand pounds. What risks do directors face without a validation order? Directors may face personal liability for wrongful dispositions under [s212–214 IA 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/212) and claw-back claims if payments made after the petition are set aside ([guidance on risks at windinguppetitionsolicitors.co.uk](https://windinguppetitionsolicitors.co.uk/practice-note-on-validation-orders-lawyers-london/)). Can a validation order be granted retrospectively? Retrospective orders are possible but rarely guaranteed; the court must be satisfied that validating past transactions will not prejudice creditors. Timely application for advance relief is always safer. What factors will the court consider in granting the order? Key factors include: whether the company is solvent (can pay debts as they fall due, s122(g) IA 1986), whether the proposed transactions benefit (or do not prejudice) unsecured creditors (s123 IA 1986), and the strength and credibility of the supporting evidence ([Practice Direction 9.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#9.11)). What happens if the petition is dismissed after a validation order is granted? If the petition is dismissed, transactions authorised by the court remain valid and binding, safeguarding business continuity; risk only arises if payments were made without a validation order. --- # VAT Appeals & Missing Trader Intra Community Source: https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/vat-appeals-mtic-solicitors-london/ *We regularly manage appeals against accusations by HMRC of MTIC Missing Trader carousel fraud.* We have a huge amount of experience of obtaining decisions from HM Revenue & Customs (HMRC) Officers, seeking Judicial Review where necesary, managing and representing in VAT Assessment appeals and responding to the criminal legal processes that HMRC have deployed in order to combat missing trade intra community fraud in the Mobile, CPU and CO2 industries in which many of our clients operate. Our lawyers have in-depth knowledge of our clients' industries and have developed a number of expert contacts. We know precisely what expert and other evidence will be required of Appellants to mount a successful appeal and to provide a thorough rebuttal to HMRC's often completely unfounded accusations as to the Appellant's knowledge of VAT fraud elsewhere in the supply chain. The firm is completely unique in bringing together the skill of its Taxation, Civil Litigation and Criminal Defence legal practice groups to provide clients with a tenacious closely managed civil appeal before the Tribunal or criminal defence before the Courts. We provide Appellant legal representation in many high value and complex appeals at the Finance and Tax Tribunals (Tax Chamber) of the new First-Tier Tribunal (formerly the Special and the General Commissioners, and the VAT & Duties Tribunal) and, where appropriate, on appeal to the Upper Tribunal or the Court of Appeal. We also provide Defendant legal representation in the criminal courts in respect of MTIC prosecution by the Revenue and Customs Prosecutions office and associated asset confiscation/forfeiture. We are able to provide not only our experience but the highest quality of advocacy, cross examination and management of these cases which routinely involve complex facts, expert reports and voluminous paperwork. ## What is MTIC Fraud? Missing trader fraud occurs when a fraudster exploits rules which state that cross-border transactions within the EU are zero-rated for VAT purposes.  Carousel fraud is the term used for the continuation of MTIC fraud through a chain of cross-border transactions. In a VAT supply chain where there is no fraud, a VAT-registered business charges VAT to customers when it sells goods (output tax) and will be charged VAT by suppliers when it buys good (input tax). A business can reclaim VAT it has paid and therefore provides HMRC with the net VAT it collects and reclaims any excess input tax from HMRC. MTIC fraud typically targets high-value, low-weight goods which are easy and inexpensive to transport, such as mobile phones or computer chips. In recent times, other assets such as power, gas, precious metals and carbon emissions allowances have been targeted. ## Discounted Fixed fee initial consultation If you need VAT Appeals & MTIC advice we are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading VAT Appeals & MTIC solicitors and barristers. Just call or email us now for a heavily discounted initial consultation; our legal team are waiting to help. ## Expert London VAT & MTIC Disputes Lawyers A large number of companies can get implicated in MTIC carousel fraud. We have the experience and knowledge to assist and defend allegations against our clients in either the civil regime before the courts and the tax tribunals or before the criminal courts. We can also advise our clients on how best to avoid being affixed with constructive notice (the legal concept that a trader should have known) of fraud in the supply chain by having stringent due diligence procedures in place. Has HMRC made you a part of an extended verification exercise or visited and served you with Notice 726? We have a wealth of experience and are able to provide clear advice to assist you in managing HMRC’s investigation and in improving your Due Diligence process. Our Tax Disputes Solicitors and Barristers are here to help you. #### Telephone a VAT Appeals & MTIC lawyer on: 0207 1830 529 #### Email us on: vat-appeals-mtic-solicitors-london@lexlaw.co.uk *Please note: If you know or suspect you are being investigated by HMRC or have a tax liability issue then do not delay in contacting us in complete confidence.* --- # Private Prosecution Service Source: https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/ *Our Private Prosecution Service lawyers provide results-focused and forceful legal representation to businesses and individuals who have suffered criminal misconduct, often at the hands of employees or associates. As a multi-disciplinary practice made up of Solicitors and Barristers we are able to provide a closely managed and complete service. We deploy carefully selected and highly experienced criminal counsel who are involved at the outset, when it matters most.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The private prosecution team includes qualified solicitors and barristers whom have in-depth experience of criminal private prosecutions against both individuals and companies. Our minimum fee for advice from a Solicitor & Barrister in conference is £1750 plus VAT; We do not offer any free legal advice. The initial consultation is heavily discounted for the time our solicitors & barristers spend reviewing your case both before and during the consultation. We offer all clients a heavily discounted initial consultation (to take place either in person in our professional chambers in London or via video link) where our team reviews your papers and the evidence and assesses the potential next steps in your individual matter. If you are searching for an advice on whether you have the grounds for a private prosecution, we offer you a bespoke service to analyse the merits of any potential claim. ## Private Prosecution Service Our lawyers are highly effective and have many years of experience of advising and representing clients in cases of alleged fraud, money laundering, asset forfeiture, serious and organised crime, regulatory issues and in complex and high-profile appeals against conviction. They bring to bear all their specialist legal acumen in order to provide clients with results that often surpass expectations and regularly exceed the outcomes of co-defendants. We have obtained bail for clients in circumstances where all other co-defendants have been refused bail and even in circumstances where our new client has previously had bail refused. We assist with initial consultation and advice, Police and other co-operative investigation through to representation at Court and Appeal where necessary. We provide immediate legal assistance and are often instructed by clients who are due to attend court or need advice at short notice. In such circumstances, our team will prioritise your case and ensure that you receive urgent legal assistance. ## Why pay privately for a prosecution instead of the CPS? Usually the relevant law enforcement authority the Police Force and/or the [Crown Prosecution Service](https://www.cps.gov.uk/) (the CPS) have declined to investigate or bring a prosecution on behalf of the Queen (the Crown). Often this is not because the prosecution itself is not worthy but because of the need for the Police / Crown to prioritise financial resources especially non-violent financial crime which can be classed as a *‘civil matter’*. A private prosecution can often result in what would be lengthy civil action being settled quickly with the wrongdoer party threatened with a criminal summons agreeing to repay monies or return valuable assets. ## Expert Criminal Law advice If you require assistance or advice in relating to a criminal matter, our highly experienced solicitors and barristers are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Criminal Defence solicitors and barristers. Just call or email us now; our private prosecution lawyers and criminal defence team are waiting to help. To contact us about your case please call us on: 0207 1830 529 or email: contact@lexlaw.co.uk (Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT). *Please note that we do **not** take on Legal Aid cases* --- # Money Laundering / Proceeds of Crime Source: https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/money-laundering-poca-solicitors-london/ *Our Money Laundering / Proceeds of Crime Defence and Private Prosecution team has a wealth of experience of robustly defending charges of Money Laundering, Cash Seizure, Confiscation and Asset Forfeiture proceedings.* Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. ## Money Laundering Defence Lawyers The legislation in respect of the above have become a field of great importance in recent years. The consequences of falling foul of the [anti-money laundering regulations](https://www.lawsociety.org.uk/support-services/advice/articles/quick-guide-to-the-money-laundering-regulations-2017/) can be very serious and devastating for individuals and corporations. Therefore considered, timely and accurate expert advice is essential. Our Defence and Private Prosecution team advises both corporate clients and individuals on all legal issues concerning money laundering, including the offences created by way of the [Proceeds of Crime Act 2002](http://www.legislation.gov.uk/ukpga/2002/29/contents). In particular, we are able to advise in respect of the reporting of suspicion provisions and assist in relation to the civil recovery powers which are used by the [CPS](https://www.cps.gov.uk/), anti-fraud and other Government agencies. We regularly deal with complex, large and difficult confiscation proceedings in the criminal courts under the Proceeds of Crime Act and the previous statutory regimes. We are experienced in asset tracing, restraint orders, the appointment of Receivers under the Proceeds of Crime Act, third party rights and directors' disqualification proceedings. We are also happy to appear for interested parties in receivership proceedings and have particular expertise in forfeiture/cash seizure hearings. We are frequently instructed in defendant High Court restraint work and have in depth experience of lifting restraint or receivership orders from assets of defendants or third parties to criminal proceedings. ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The Money Laundering/Proceeds of Crime litigation team includes qualified solicitors and barristers whom have leading experience of high value fraud disputes and private prosecutions. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via video conference facilities). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our Money Laundering/Proceeds of Crime litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running (or defending) your case to trial. We calculate and advise on legal risk factors and the criminal procedural rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. If you require assistance or advice in relating to Money Laundering / Proceeds of Crime, our highly experienced Private Prosecution and Defence team are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Money Laundering / Proceeds of Crime solicitors and barristers. Just call or email us now; our legal team are waiting to help. To contact us about your case please call us on: 0207 1830 529. Email us on: money-laundering-proceeds-solicitors@lexlaw.co.uk *Please note: If you are concerned or suspect you are being investigated or have been charged with a money laundering offence or have had cash seized or assets restrained then do not delay in contacting us in complete confidence.* Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. --- # Fraud Source: https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/fraud-solicitors-london/ *Our Fraud Solicitors and Barristers have a wealth of experience and are regularly instructed to both bring and defend against a wide range of serious fraud allegations.* Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. ## Fraud Defence We deal with the defence of all fraud allegations from CPS charged Fraud act offences (such as fraud by false representation, fraud by failing to disclose information, and fraud by abuse of position) to high scale MTIC and carousel fraud allegations. Our lawyers recognise the seriousness of any fraud allegation and endeavour to investigate and provide a robust defence by not only analysing and testing the Prosecution case but also by conducting our own investigations and putting forward a strong positive defence case. ## What is a private prosecution for fraud? A private prosecution for fraud is a criminal prosecution brought by individuals or companies that are the victims of crime and public prosecuting authorities are unwilling to act. Individuals and companies have the right to bring a private prosecution under [section 6 (1) Prosecution of Offences Act 1985.  ](http://www.legislation.gov.uk/ukpga/1985/23) The main fraud offences are in the [Theft Act 1968](https://www.legislation.gov.uk/ukpga/1968/60/contents) and the [Fraud Act 2006](https://www.legislation.gov.uk/ukpga/2006/35/contents). To prove a fraudulent offence has been committed, it is necessary to show that that a person acted dishonestly, intending to make a gain for himself or another or cause loss to another. ## Why commence a private prosecution for fraud? To get justice for criminal offences committed against victims that have not been taken on by the [police](https://www.police.uk/), [CPS](https://www.cps.gov.uk/), the [Serious Fraud Office (SFO)](https://www.sfo.gov.uk/) (investigation of serious and complex crime) or [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) (investigate tax fraud). [The media have reported that private prosecutions are on the increase](https://www.independent.co.uk/news/uk/crime/two-tier-justice-private-prosecution-revolution-9672543.html) due to police and CPS budget cuts which has limited the ability of the enforcement agencies to investigate and prosecute crime effectively. These cuts have created a trend among individuals to fund their own criminal actions against fraudsters due to a failure of the police to investigate or the CPS’s unwillingness to press ahead to trial. If an offence under the Fraud Act 2006 is not the priority of the CPS, then private prosecutions are a necessary tool allowing a victim to take control of proceedings and actively pursue a conviction against the fraudster. Some victims of fraud feel that civil proceedings may be prohibitively slow and a private prosecution would offer a speedier resolution. In addition, the civil damages awarded may not adequately compensate for the harm suffered whereas private prosecutions have the availability of tougher penalties which includes unlimited fines and imprisonment. Many corporate entities have launched private prosecutions having been victim to fraud, rather than leave their rights to be protected by public law enforcement agencies. Victims of crimes consider starting a private prosecution for a number of reasons, for example: - to deter future criminal conduct by the suspect; - to send a clear message to potential fraudsters that a company that has been defrauded will take strong action; - as a necessary tool when the public prosecution authorities are unwilling to act; - potential compensation for the victim. - to establish a precedent for future conduct; - to protect society; and - a private prosecutor can access specialist expertise which many public prosecuting authorities cannot utilise, which can increase the chances of prosecution. ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The Fraud litigation team includes qualified solicitors and barristers whom have leading experience of high value fraud disputes and private prosecutions. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our Fraud litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running (or defending) your case to trial. We calculate and advise on legal risk factors and the criminal procedural rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. To contact us about your case please call us on 0207 1830 529. Email: fraudcrimeteam@lexlaw.co.uk *Please note: If you are concerned about accusations of fraud or suspect you are being investigated or have been charged with an offence then do not delay in contacting us in complete confidence.* Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. --- # Motoring Offences Source: https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/motoring-offences-solicitors-london/ *Our Motoring Offences team are here to help if you are concerned about a driving offence and can defend and advise you in relation to:* - Careless Driving- Dangerous Driving- Penalty Points and Totting Up- Drink Driving- Speeding- No Insurance- Failure to Comply With a Traffic Sign- Failure to Stop and Report an Accident- Vehicle Defects With the increase of speed detection devices there is an ever increasing risk via the 12 point totting up process of losing a driving licence which can seriously impair one’s livelihood. Therefore there is a rapidly increasing need for professional speeding ticket defence advice. Speeding ticket defence advice is just a small part of the service provided by our solicitors that specialise in driving licence offences. Our successful and experienced team of solicitors defend and mitigate against all types of driving licence offences for both individuals and business fleets. The earlier you seek legal advice the more able we will be to take the stress out of the situation and achieve the best possible result for you. In the rare instances where your situation cannot be improved, you will be advised following the initial review of your case and no further fees will be incurred. ## Initial consultation If you require assistance or advice in relating to any Motoring Offence, our highly experienced defence team are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Motoring Offences solicitors and barristers. #### To contact us about your case please call us on: 0207 1830 529. #### Email us on: motoring-offences-solicitor@lexlaw.co.uk *Please note: If you have received a Notice of Intended Prosecution, a Summons or otherwise any allegation of a motoring offence then do not delay in contacting us – the problem will not go away.* --- # UK Visa Applications & UK Immigration Law Source: https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/ *We're based in the legal heart of London in Middle Temple (a Barristers' Inn of Court). We provide the strongest possible UK Immigration Law advice and a comprehensive UK Visa and Immigration advice service. To contact our immigration team about your case, call ☎ 02071830570.* Our immigration team is comprised of Solicitors and Barristers with decades of experience at the very highest levels of immigration law. Members of the team are regularly instructed to deal with all types of points based applications along with family visas, visit visas and general appeals and are involved in judicial review and immigration appeal tribunal hearings at all levels.Our team has the expertise to deal with all immigration issues and the desire to ensure our clients achieve only the best possible results. Our team firmly believes that immigration matters ought to have specialist legal attention from the very outset when it matters the most. ## Areas of UK Immigration Law we can help with Our areas of work include applications under the Points Based System which covers the Tier 1 (General) system (previously known as HSMP – Highly Skilled Migrant Program), and UK Work Permits under the Points Based Tier 2 System as well as Tier 4 Student Visas and Tier 5 Visas. We also regularly assist with making representations to prevent deportation and removal orders and are able to make Judicial Review applications in emergency situations on a case by case basis. ## Tier 1 Entrepreneur Visas and Investor Visas Tier 1 includes Entrepreneur Visas, Prospective Entrepreneur Visas, Investor Visas, Graduate Entrepreneur Visas and Post Study Work Visas. A Tier 1 UK Entrepreneur Visa is for business persons who would like to establish a business in the UK or join and invest into an existing business. A Tier 1 Prospective Entrepreneur Visa enables individuals to come to the UK to secure funding in order to set up or run a business in the UK.A Tier 1 Investor Visa is for someone who wishes to make a substantial investment in the UK. A Graduate Entrepreneur Visa allows graduates to extend their stay in the UK, after graduation, so they can establish businesses. A Tier 1 Post Study Work Visa allowsmigrants from outside Europe who have graduated from a university in the UK to look for work without the need of a sponsor. We can assist with all Tier 1 Visa applications. ## Tier 2 Sponsorship Licences and Work Permits Tier 2 includes UK Sponsorship Licences and Work Permits. A Tier 2 UK Sponsorship Licence allows you to employ a non EU migrant if you own a UK based business. Tier 2 work permit offers medium or highly skilled workers the opportunity to work in the UK. We can also help with applications if you wish to change employment. We can help with all Tier 2 applications. ## Tier 4 Student Visas Tier 4 includes Student Visas, Student Visit Visas and Prospective Student Visas. A Student Visa is for someone who wishes to stay in the UK to study a course or if you wish to work and study. A Student Visit Visa is for a short-term student who wishes to come to the UK to study. A Prospective Student Visa is for someone who has not yet been accepted on a course of study at a university in the UK but wishes to travel to the UK in order to explore their educational options. Our London immigration lawyers can help with all Tier 4 Visas. ## Tier 5 Creative Visa, Sporting Visa, Youth Mobility Scheme Tier 5 includes Creative and Sporting Visas and Youth Mobility Schemes. Creative and Sporting Visas are for people coming to the UK to work or perform as sports people, entertainers or creative artists. The Tier 5 Youth Mobility Scheme is for young people from participating countries who would like to come and experience life in the UK. You can get expert UK immigration legal advice and assistance for all Tier 5 applications from our lawyers in London. ## How we assist in UK Visa immigration applications: - Carry out detailed assessment of your personal circumstances to ensure you meet the relevant criteria. - We ensure that you have the correct documents to support and strengthen your case. - We complete and submit your application, on your behalf, to the best standard. - Arrange for legal representation at court to assist your application. - Keep you updated in regards to your application and aware of your current position. ## Our UK Visa Applications Service ## Other UK immigration areas we cover In addition we can help with Tourist Visa applications, in particular Olympic Visitor Visas, Fiance Visas, EEA Residence Permits, Sports Visas, Ancestry Visas, Schengen Visas, Dependant Relative Visas and Academic Visit Visas. Our team have extensive experience inall types of Visa applications and European Union legislation applications. We also have expertise in all other immigration issues such as Marriage, Civil Partnership, Asylum, Human Rights, Bail, Appeals,Settlement, Deportation and Removal. ## Defending Home Office Deportation Orders & Removal Orders Deportation and Removal from the UK are two methods the UK Border Agency may use to force a person leave the UK. Most of the clients that we represent in UKBA deportation or removal proceedings are in UKBA Immigration Removal Centres for one of three reasons: (1) a criminal conviction or arrest, (2) overstaying in the UK or (3) refusal of an immigration application that they submitted without the assistance of a competent solicitor. Deportation is regulated by certain sections of the Immigration Act 1971 and administrative removal is regulated by the Immigration and Asylum Act 1999. Deportation orders can be challenged if it is contrary to the United Kingdom’s obligations under the Refugee Convention or Human Rights / ECHR. Regard may also be had to other relevant factors which constitute exceptional circumstances. Administrative Removal can be prevented if it would be contrary to the United Kingdom’s obligations under the Convention and Protocol relating to the Status of Refugees or under the Human Rights Convention. We can help if you or someone you know is subject to Deportation or Removal. It is imperative that you seek urgent legal advice from a UK immigration lawyer. Our team of experienced and professionally qualified immigration solicitors and immigration barristers will be able to able to advise you on all of the forms of relief and representations you have available. We can assist you in appealing against a deportation or removal order and consider the ways that you may stay in the UK or avoid a ban on you re-entering the country. ## How we work to prevent Removal or Deportation: - Assess the merits for challenging deportation or removal; - Make representations to the Home Office on your behalf; - Appeal any negative decision by the Home Office; - Assess the unlawfulness of your detention; - Make an application for Judicial Review in the High Court challenging the detention; - We ensure that we have the correct documents to strengthen and support your application. - Keep you updated in regards to your application. ## We Provide a Bespoke UK Immigration Service We are a UK Solicitors law firm and are fully authorised and regulated by the [Solicitors Regulation Authority](http://www.sra.org.uk/) (SRA) and as a professional law firm are completely exempt from requiring authorisation by the [Office of the Immigration Services Commissioner](http://oisc.homeoffice.gov.uk/) (OISC). Many businesses offering immigration services are only OISC regulated and as such are not professional legal organisations such as Solicitors firms or Barristers’ chambers. OISC businesses are not allowed to do legal work before the Courts such as Judicial Review or statutory challenges of Home Office decisions. Also as a professional organisation our policy is not to employ sales staff to give you “advice” (all our telephone consultations are handled by lawyers). We are often instructed at [immigration appeal](https://immigrationandvisasolicitors.co.uk/uk-immigration-statistics-visa-application-refusals-appeals/) stages in cases that ‘immigration businesses’ have dealt with and which were clearly hopeless applications at the outset. When you instruct us, qualified immigration solicitors or immigration barristers work on your case from the outset when it matters the most in order to ensure no time and money is wasted and more importantly that no mistakes are made. ## We are a leading London Law Firm As a leading law firm with a track record of success, you can be assured your immigration matter is in safe hands and that the best strategy for your case will be adopted. It is crucial that you seek specialist legal advice at the outset and prior to making any type of immigration application. We can assist you with your applications for any type of Visa or permit and any form of leave to remain (or for entry clearance) under the points based system. We ensure our clients comply with the Immigration Rules and the strict requirements of the UKBA prior to making an application, thereby eliminating much of the stress of the application process. ## Expert UK Immigration Lawyers, London If you have a UK Immigration matter and want expert legal advice, we invite you to contact us so we can assess your case. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading UK Immigration solicitors and barristers. Just call or email us now; our London immigration lawyers team are waiting to help. To contact us about your case call ☎ 02071830570 or email immigration-solicitors-london@lexlaw.co.uk *Please note: If you have received an Immigration ruling or notice or otherwise have deadlines then do not delay in contacting us for assistance as soon as possible.* --- # Immigration: Deportation Orders & Removal Notices Source: https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/deportation-orders-removal-notices-solicitors-london/ *Our specialist London immigration lawyers are based in the legal heart of the UK, in London's Middle Temple (a Barristers' Inn of Court). Our team provides the strongest possible UK Immigration Law advice to ensure that any deportation orders or removal notices are fully challenged. To contact our immigration team about your case, call ☎ 02071830570.* When challenging deportation or removal from the UK instructing qualified expert immigration lawyers from the outset (when it matters the most) is vital in order to ensure you achieve the best possible result for yourself or a family member. Our immigration team is comprised of fully qualified Solicitors and Barristers with a wealth of experience and success in challenging Home Office/UKBA deportation orders and removal orders. ## What are UK Deportation Orders? Deportation orders are defined in section 362 of the Immigration Rules as an order that: *“requires the subject to leave the United Kingdom and authorises his detention until he is removed. It also prohibits him from re-entering the country for as long as it is in force and invalidates any leave to enter or remain in the United Kingdom given him before the Order is made or while it is in force.”* Deportation orders are most often a consequence of the conviction of a foreign national for a crime in the United Kingdom, however can also be brought if deportation is assessed to be conducive to the public good and/or the person is the partner or dependent child of the person to be deported. A Notice of Intention to Deport is often served on individuals liable to be deported. ## What are UK Removal Directions or Removal Orders/Notices? Removal Directions are deployed by the UKBA if you or a family member does not have leave to remain in the UK and represent notification that a decision to remove has been taken. These apply whether you came to the UK without obtaining leave prior to entry or the existing leave has expired. You may also be removed if you had leave to stay on certain conditions, and you have not kept to the conditions. If the UKBA decides to remove you, you will be served with Removal Directions (also known as Immigration Removal Notices, Section 10 Notice or Administrative Removal Notice). There may sometimes be a long delay between deciding to remove you and sending Removal Directions and in spite of this you may be required to leave very soon thereafter. In the circumstances, you should seek legal representation without delay. ## Why am I being Removed and Deported from the UK? Most of the clients we represent in challenges to UK deportation or removal proceedings are in UKBA Immigration Removal Centres for one of three reasons: (1) a criminal conviction or arrest, (2) overstaying in the UK or (3) refusal of an immigration application. Under the Immigration Act 1971 the Secretary of State will decide whether a person is liable for a deportation order. , taking into account the following grounds: - The person is not a British citizen; and- The person has been convicted of a criminal offence; and Either: - The sentencing judge recommended deportation (section 3(6)); or- The Secretary of State has deemed deportation to be conducive to the public good (section 3(5)(a)) ## Grounds for ‘Automatic’ Deportation On 1 August 2008, the UK Borders Act 2007 came into force. This created an additional provision for ‘automatic’ deportation from the UK. In practice, this means that section 32 of the UK Borders Act 2007 compels the Secretary of State to consider a person’s deportation conducive to the public good if: - They have been sentenced to a term of imprisonment of at least 12 months; or- They have been sentenced to any term of imprisonment if their offence is one specified by order of the Secretary of State under section 72(4)(a) of the Nationality, Immigration and Asylum Act 2002 (c. 41) (serious criminal) ## Procedure for Deportation from the UK When a decision to make a deportation order has been taken (otherwise than on the recommendation of a court) a notice will be given to the person concerned informing him of the decision and of his right of appeal. Following the issue of such a notice, the Secretary of State may authorise detention or make an order restricting a person as to residence, employment or occupation and requiring him to report to the police, pending the making of a deportation order. Where the Secretary of State decides that it would be appropriate to deport a person and member(s) of a family as such, the decision, and the right of appeal, will be notified and it will at the same time be explained that it is open to the member of the family to leave the country voluntarily if he does not wish to appeal or if he appeals and his appeal is dismissed. ## Defending & Appealing Deportation Orders & Removal Orders Our team of experienced and professionally qualified immigration solicitors and immigration barristers are able to able to advise as to all of the forms of relief and representations available to fight a deportation or removal order. We can assist you in challenging or appealing your deportation or removal order and consider the ways that you may stay in the UK or avoid a ban on you re-entering the country. Both deportation orders and removal orders can be challenged by way of appeal to an Independent Immigration Judge if it is contrary to the United Kingdom’s obligations under the 1951 Refugee Convention or the European Convention on Human Rights (ECHR).An illustration of this isArticle 8ECHR (given effect by the Human Rights Act 1998) which can be divided into two parts. The first part states that everyone has the right to respect for his or her private and family life. The second part states that public authorities (such as the Home Office) must not interfere with this right unless to do so would be necessary, for specified purposes and in accordance with law. Regard may also be given to other relevant factors which constitute exceptional circumstances. Our expert team work to challenge deportation and removal orders in the following ways: - Assessing the merits for challenging deportation or removal;- Assessing the lawfulness of your detention;- Putting forward, in the strongest possible terms, representations to the Home Office;- Appealing any negative decision by the Home Office;- Making an application for Judicial Review in the High Court challenging detention; With your help we ensure that we present the correct supporting evidence in the form of relevant documents which strengthen and support your application. ## Seeking Judicial Review to Prevent Deportation from the UK Another way to challenge a deportation order is to seek a judicial review. Judicial review is the legal process that allows a person to challenge the lawfulness of a decision, action or failure to act of a public entity such as the UK Border Agency or the Home Office. An applicant has to seek the leave of the court by showing that he has an arguable case against his deportation with some prospect of success. To succeed, there has to be some legal and/or procedural irregularity in the UKBA's decision ordering the said person's deportation. ## Stopping Deportation - Success Stories Our specialist immigration lawyers regularly act in challenges to deportation on an emergency basis. We recently put forward representations on behalf of two foreign nationals who were convicted of criminal offences and were facing deportation on the grounds of public interest in spite of having strong family ties to the UK. The individuals had been released from prison some time ago but were stopped by the police, by chance, and subsequently placed in an Immigration Removal Centre in breach of their (and their families) Article 8 Rights. Our team of Immigration Barristers and Solicitors came together and acted within 72 hours of instruction to put forward a strenuous set of representations/applications in each of the connected cases. Immediately upon receipt of our correspondence (which contained persuasive argument, vital evidence and precedent case law) a decision was made by the UKBA to cancel the deportation orders and release each of the individuals. The UKBA's decision was made on the basis that we had presented incontrovertible evidence to them that each of the persons had settled in the UK and had the legal right to maintain a family life here. ## Our UK Visa Applications Service ## Providing a Bespoke London, UK Immigration Service We are a UK Solicitors law firm and are fully authorised and regulated by the Solicitors Regulation Authority (SRA) and as a professional law firm are completely exempt from requiring authorisation by the Office of the Immigration Services Commissioner (OISC). Many businesses offering immigration services are only OISC regulated. OISC businesses are not allowed to do legal work before the Courts such as Judicial Review or statutory challenges of Home Office decisions. Also as a professional organisation our policy is not to employ sales staff to give you “advice” (all our telephone consultations are handled by lawyers). We are often instructed at immigration appeal stages in cases that ‘immigration businesses’ have dealt with and which were clearly hopeless applications at the outset. When you instruct us, qualified immigration solicitors or immigration barristers work on your case from the outset, when it matters the most, in order to ensure no time and money is wasted and more importantly that no mistakes are made. ## Expert UK Immigration Lawyers in London If you have a UK Immigration matter and want expert legal advice, we invite you to contact us so we can assess your case. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading UK Immigration solicitors and barristers. Just call or email us now; our legal UK immigration law team in London are waiting to help. To contact us about your case call ☎ 02071830570 or email immigration-lawyers-london@lexlaw.co.uk *Please note: If you have received an Immigration Decision, UK Deportation Order or UK Removal Notice then do not delay in contacting us for assistance.* --- # High Net Worth UK Immigration – Investor Visas & Entrepreneur Visas Source: https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/high-net-worth-uk-immigration-investor-visas-entrepreneur-visas/ *Our high net worth UK immigration lawyers are based in the prestigious Middle Temple and provide comprehensive UK Visa & Immigration advice for high net worth individuals planning to move to the UK. Our experienced solicitors and barristers assist you by advising on and then supervising your entire application to the UK Home Office. We have a perfect track record for UK Investor Visas and UK Entrepreneur Visas. To contact our immigration team about your case, call ☎ 02071830570.* We are a specialist City of London Law Firm dealing with High Net Worth UK Immigration. We pride ourselves on providing a bespoke and legally confidential solution to meet the exact needs of our clients with solid legal advice and representation from the outset, when it matters the most. The United Kingdom needs no introduction as one of the world's leading financial centres. It remains the leading destination for private individuals and international corporate executives seeking to work and live in a jurisdiction offering tax advantages, a cosmopolitan lifestyle and an effective legal system. ## What is high net worth immigration? High net worth individual describes an individual who has assets in excess of £200000. A high worth immigration matter involves a high worth individual who wishes to gain access to the UK possibly for the purpose of setting up a businesses or investing in the UK. ## Areas of high net worth immigration we cover Our London lawyers have a wealth of experience in dealing with complex personal immigration matters. We are regularly instructed to obtain UK Visas for Tier 1 Investors and Tier 1 Entrepreneurs and Tier 2 Work Permits. ## Tier 1: Entrepreneur Visas, Prospective Entrepreneur Visas, Investor Visas and Exceptional Talent Visas There are some visas in Tier 1 which are particularly for high net worth individuals these include Entrepreneur Visas, Prospective Entrepreneur Visas, Investor Visas and Exceptional Talent Visas. Entrepreneur Visas are specifically for individuals who wish to establish a business in the UK or are looking to join or invest in an existing business. Prospective Entrepreneur Visas are for those who have plans to set up a business or invest in a business in the UK and need to come to the UK to secure funding. Investor Visas are ideal for those who wish to make substantial investments in the UK. An Exceptional Talent Visa is suitable for individuals who have been internationally recognised for their as world leaders or in the field of science and arts and wish to stay in the UK. As you can see there are a number of ways for high net worth individuals to gain access to the UK. Our team of immigration lawyers can assist with all Tier 1 applications and queries. ## Tier 2: UK Sponsorship Licence Tier 2 also offers high net worth individuals a Work Permit which allows an individual to stay and work in the UK. This is for medium or highly skilled workers, to get a work permit you require a sponsor. We can also assist with change of employment issues in high net worth immigration, where an individual wishes to change employment and subsequently sponsorship needs to be changed. ## Leading Immigration Law Expertise We cover all areas of high net worth immigration but regularly handle, and have been successful with, immigration cases such as Tier 1 Investors wishing to invest over £1 million and Tier 1 Entrepreneurs wishing to establish a business in the UK with at least £200,000. In addition to Tier 1 and Tier 2 immigration matters we can also obtain UK Settlement Visas and advise on Naturalisation/British Citizenship/Passports for high net worth individuals.We can also advise and assist on the extensions of existingTier 1 and Tier 2 Visas. Overall we can help with all you high net worth immigration issues. ## The best for high net worth UK immigration cases We have experience in dealing with complex cases where we involve our in-house immigration solicitors and barristers from the outset. Our legal experts are able to manage complex applications for example to obtain immigration status where the application doesn't meet published Home Office criteria. In such cases we seek to persuade the United Kingdom Border Agency to exercise discretion in favour of our clients. Our strengths lay in our ability to combine technical expertise, innovative ideas and a robust approach to obtaining the best possible results for our clients. We provide assistance on all aspects of UK immigration law, offering practical and focused solutions and when required, representation at immigration appeals and court cases. Our people are responsive to the needs of our clients and adopt a proactive approach in managing applications and dealing with the ever changing and onerous Immigration Rules, especially on points-based applications (namely: Tier 1 Investor, Tier 1 Entrepreneur, Tier 1 Prospective Entrepreneur, Tier 2 Work Permits and Tier 2 Sponsorship Licences). We regularly assist with the following types of UK immigration applications: ## UK Immigration Solicitors in London We endeavour to make the UK immigration process as stress-free as possible for our clients. We consider that each client's immigration needs are unique, therefore we adopt a bespoke approach tailored to individual needs with senior legal advice from the outset when it absolutely matters in choosing the correct path to follow. As well as being experts on the UK Immigration Rules, our lawyers monitor UK Immigration Policy and adapt our immigration strategies to suit the individual needs of our clients. We use our wealth of immigration learning and experience to devise the very best immigration path for our clients. ## High Net Worth UK Immigration Law Advice If you have a UK Immigration matter and want expert legal advice, we invite you to contact us so we can assess your case. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading UK Immigration solicitors and barristers. Just call or email us now; our legal team are waiting to help. To contact us about your case call ☎ 02071830570 or email highnetworth.immigration@lexlaw.co.uk *Please note: If you are a high net worth individual considering migration to the UK do not delay in contacting us as the Immigration Rules and Policy evolve constantly.* --- # Rizwan Ashiq Source: https://lexlaw.co.uk/our-people/rizwan-ashiq/ Rizwan is a forceful and persuasive courtroom advocate. He is dedicated in his pursuit of achieving only the very best results and is able to analyse complex case papers to find and then develop highly attractive legal argument. He exudes an assertive authority in court which derives from his extensive knowledge and experience at all levels of litigation. Rizwan regularly appears before all levels of the Civil and Criminal Courts up to the Court of Appeal. He also appears for the firm as an appellant advocate at the First-Tier Tribunal (Tax) (former VAT and Duties Tribunal). He has detailed experience of evasion of duties centric seizure confiscation and restoration proceedings, Proceeds of Crime Act 2002 (POCA) cash seizure proceedings, fraud and complex MTIC matters. We enjoy a close working relationship with Rizwan and are able to obtain urgent professional advice and representation for our privately funded clients at the earliest stages of criminal defence and civil litigation, when it matters the most. **Tel: **0207 1830 529 --- # Jenny Julian Source: https://lexlaw.co.uk/our-people/jenny-julian/ A very experienced legal secretary and personal assistant, Jenny has many years of knowledge about how law firms work and how best to put clients needs first. Having initially worked in a managerial role for National Rail, Jenny has since worked as a legal secretary for several years and has loyally supported M Ali Akram as a part-time practice manager. She helps ensure we provide a professional seamless service to our clients. **Tel:** 0207 1830 529 --- # Important Notices Source: https://lexlaw.co.uk/legal-notices/ Your use of our website is governed by the Legal Notices set out herein consisting of: [Conditions of Use](https://lexlaw.co.uk/legal-notices/conditions-of-use/), [Notice of Copyright](https://lexlaw.co.uk/legal-notices/notice-of-copyright/), [Privacy Policy](https://lexlaw.co.uk/legal-notices/cookie-and-privacy-policy-statement/), [Financial Services and Markets Act 2000 Disclaimer](https://lexlaw.co.uk/legal-notices/financial-services-and-markets-act-2000-disclaimer/) and [General](https://lexlaw.co.uk/legal-notices/general/). Please note our [Complaints Procedure](https://lexlaw.co.uk/complaints/) and [Costs Information](https://lexlaw.co.uk/costs-information/). If you have any queries, [get in touch](https://lexlaw.co.uk/contact-us/). LEXLAW is a practising name of CESLAW LTD which is a company registered in England & Wales number 15317679 whose registered office address is 4 Middle Temple Lane, Middle Temple (Inn of Court), City of London EC4Y 9AA and is authorised and regulated by the Bar Standards Board (Entity No. 193252). Telephone calls may be recorded for operational, training or regulatory purposes. --- # Conditions of Use Source: https://lexlaw.co.uk/legal-notices/conditions-of-use/ - We make no representations or warranties whatsoever as to the accuracy of the information contained in this website. - All material included in this website is intended for information purposes only and does not represent legal advice. Users are hereby placed under notice that they should take appropriate steps to verify such information. No user should act or refrain from acting on the information contained in this website without first verifying the information and as necessary obtaining legal and/or professional advice. - We expressly disclaim all liability for any direct, indirect or consequential loss or damage occasioned from the use or inability to use this website whether directly or indirectly resulting from inaccuracies, defects, errors, whether typographical or otherwise, omissions, out of date information or otherwise, even if such loss was reasonably foreseeable and we had been advised of the possibility of the same. Consequential and indirect loss and damage shall include but not be limited to loss of profits, loss of goodwill, and wasted expenditure. - The user agrees that material downloaded or otherwise accessed through the use of this website is obtained entirely at the user's own risk and that the user will be entirely responsible for any resulting damage to software or computer systems and/or any resulting loss of data, even if such loss and damage was reasonably foreseeable and we had been advised of the possibility of the same. - We do not accept any liability in connection with any third party websites that can be accessed through this website and does not endorse or approve the contents of any such site. Please note that such third party sites are not under our control and when you click through to these sites you leave the area controlled by us. We cannot accept responsibility for any issues arising in connection with either the third party's use of your data, the site content or the services offered to you by these sites. - Nothing in these Conditions of Use shall exclude our liability for death or personal injury resulting from its negligence. - If any provision of these Legal Notices is found to be invalid by any court having competent jurisdiction, the invalidity of that provision shall not affect the validity of the remaining provisions which shall remain in full force and effect. - Our omission to exercise any right under these Legal Notices shall not constitute a waiver of any such right unless expressly accepted by us in writing. - These Legal Notices shall be governed by and construed in accordance with the law of England and Wales and the user and we agree to submit any dispute arising out of the use of this website to the exclusive jurisdiction of the courts of England and Wales. --- # Notice of Copyright Source: https://lexlaw.co.uk/legal-notices/notice-of-copyright/ - © LEXLAW LTD 2009 to the present date - all rights reserved. Copyright in all materials on this website including design, text, graphics and information is owned by LEXLAW. - You may print or download to a personal computer extracts amounting to no more than two pages of this site for personal use only providing that (i) the LEXLAW website is the acknowledged source including the reference [www.lexlaw.co.uk](https://lexlaw.co.uk/) together with all copyright or other proprietary notices appearing on it and (ii) this permission may be revoked at any time by LEXLAW. No right, title or interest in any downloaded materials or software is transferred to you by such downloading. You may not make any other use of material on this site (including reproductions except as above, publications, alteration or distribution) without our prior written permission. - Permanent copying and/or storage of whole or part of this website or the information contained therein or reproduction or incorporation of any part of it in any other work or publication whether paper or electronic media or any other form is expressly prohibited. - LEXLAW is the owner or licence holder of the LEXLAW trade marks appearing on this website and all associated trade names, logos and devices unless indicated to the contrary. All other trade marks, logos and names appearing on this website are the property of their respective owners, as indicated. --- # Privacy Policy Source: https://lexlaw.co.uk/legal-notices/cookie-and-privacy-policy-statement/ We are committed to safeguarding your privacy. You can rest assured that we will not compromise your privacy nor sell your data. If you choose to input your data onto our website, we will store it securely and we will respect your marketing choices. Unless we advise otherwise at the time you submit data to our website, we will be the data controller of all data uploaded by you to us. Our contact details, together with our registration details for the UK's Information Commissioner's Office (ICO), are set out in the 'Contacting us' section below. ## General Please read this privacy policy carefully as it sets out the basis on which we collect any personal information from you, or that you provide to us and how we use it in the operation of the website. This privacy policy covers clients, suppliers, visitors to our website and third parties. This policy does not form part of any contract or retainer. We may amend this notice at any time. ## Contacting us CESLAW Limited practises as LEXLAW Solicitors & Barristers and is a company registered in England & Wales number 15317679 whose registered office address is 4 Middle Temple Lane, Middle Temple (Inn of Court), City of London EC4Y 9AA. We are committed to protecting and respecting your privacy. We are registered with the Information Commissioner’s Office under registration number ZB754493. If you have any questions about any aspect of this privacy policy or your information, or to exercise any of your rights as described in this privacy policy or under data protection laws, you can contact us: - By post: 4 Middle Temple Lane, Middle Temple (Inn of Court), City of London EC4Y 9AA; or - By email: privacy@lexlaw.co.uk ## What data do we collect from website visitors? You can browse our website as a guest without giving us any information, and we won’t know who you are. However, please bear in mind that we may: - record, store and use information about the areas of the website which you visit and at what times; - record, store and use information about your activities in using the website; and - collect information about your computer, such as which browser you are using, your network location, your operating system, your IP address and the type of connection you are using. We may also collect and store data that you submit to us via email through any contact forms on the Website. The information you provide us about yourself when you submit your information and when you interact and correspond with us by other means including in person, in writing or by telephone, will be shared with the relevant department, partner or employee in order to consider the service you have requested. We may also contact you for feedback. Your information will be kept confidential unless we are required by law or our professional regulatory obligations to disclose it. If you provide us with confidential information as part of your enquiry, this shall not constitute a retainer between us and shall not in itself prevent us from acting for anyone else. ## What information do we collect from clients? In order to provide you with our services, we may collect, store and process information you provide to us or we obtain from public information both before and during the course of us providing you with our services. The types of information we may request from you are: - contact information – including your name, date of birth, address, postcode and other contact information such as email address and telephone/mobile number and (where applicable) the contact details of your first of kin; - bank or building society account details to make or receive payments as required; - your financial interests, financial position, or loan repayment performance; - answers to questions required by third party credit reference agencies for identification purposes; - information about your activities in using the Website; and - information from directors/individuals associated with you and/or your business. We may retain copies of the following information about you: - any correspondence you send us; - passports or other identification evidence that you provide for anti-money laundering and anti-fraud purposes; - where explicit consent has been provided, information about your personal financial circumstances, including your bankruptcy and applications for credit in order to allow you to annul your bankruptcy; - where explicit consent has been provided, information relating to any criminal proceedings in which you have been involved. ## What do we do with the information we collect from users of the Website? The main reason we use this information is to provide you with both an improved website experience and details about our products and services. Where it is in our legitimate interest to do so, we (or third party data processors, agents and sub-contractors acting on our behalf) may also use the information: - to enrich your experience and interaction with the Website by allowing you to store your details so that your preferences are retained when you revisit the Website; - to analyse site usage and improve our services; - to deliver to you any administrative notices, alerts and communications relevant to your use of the services; - to contact you from time to time to inform you about new features; - to troubleshoot problems; and - to protect you against fraud or other criminal activity. ## Using the information we collect? Where it is in our legitimate interest to do so, we (or third party data processors, agents and sub-contractors acting on our behalf) may process your data: - to provide the information, products, and/or services you request; - to provide legal or other services, including dealing with claims and legal proceedings, under a retainer or contractual agreement or to take steps to enter into a retainer or contra - for our legitimate business interests and that of third parties, including pursuing business and strategic objectives; - to ensure compliance with our legal and regulatory obligations - to carry out financial and identity checks, fraud prevention checks, regulatory checks and credit checks, including by using scoring methods; - to carry out business development, statistical analysis and market research; - to develop and improve our services and products; - to update our records; - for newsletters and marketing communications; - for recruitment and employment - for network and information security for customer service, including answering questions and responding to feedback and complaints; and - for any other specific purposes in relation to your activities and our services. Where you have given us consent to collect and store your data, you can withdraw your consent at any time, but without affecting the lawfulness of processing based on consent before its withdrawal. You can update your details or change your privacy preferences at any time by contacting us via the details as given in the “Contacting Us” section above. ## Who do we share your information with? We won’t provide your personal information to other companies for their marketing purposes unless you have given us your consent. We may disclose your personal information to third parties where it is in our legitimate interest to do so including for the following reasons: - we may share your information with analytics and search engine providers that assist us in the improvement and optimisation of our site; - we may share your personal information with companies and other third parties performing services on your or our behalf (for example KYC service providers, credit reference agencies, customer relationship management providers or third party finance provides) who will only use the information to provide that service. We may also share your personal information with other members of our corporate group, or a purchaser or potential purchaser of our business; - we may share alerts and information derived from identity verification checks with third parties for the purpose of anti-money laundering and fraud prevention; - we may disclose your personal information on request to regulatory authorities the police or any other regulator or government authority in order to fulfil any regulatory responsibilities, to help prevent or detect fraud or any other type of crime or for any other reasonable purpose identified by the relevant authority. Third parties may include: - Other law firms and the courts - Legal service providers - Business services suppliers - Background and identity check providers and credit check agencies - Agents, consultants and contractors - Insurance brokers and insurance companies - Third party litigation funders - Recruitment consultants and employment agencies - Government, regulatory and other official bodies ## Where we store your personal data We are committed to ensuring that your information is safe and take all steps reasonably necessary to ensure that your data is treated securely and in accordance with this privacy policy. The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA“). It may also be processed by staff operating outside the EEA who work for us or for one of our sub-contractors. Such staff maybe engaged in, among other things, the fulfilment of your order, the processing of your payment details and the provision of support services. By submitting your personal data, you agree to this transfer, storing or processing. We will take all steps reasonably necessary to ensure that your data is treated securely and in accordance with this privacy policy. All information you provide to us is stored on either our secure servers or is stored with a third party secure data storage provider, which encrypts the data and keeps it in secure storage servers, which are located in data centres. Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features to try to prevent unauthorised access. ## How long we keep your information We will keep your data for as long as necessary to fulfil the purposes described in this privacy policy or for as long as we are required by law. Usually, we will keep your information for a period of up to 6 years in order to protect our legal position should the need arise. ## Marketing and Communications If you have registered with us or have previously asked us for information on our products or services, provided you have given us your consent, we may send you information on our range of products and services by phone, email and/or SMS. If you decide to withdraw your consent at any time, please contact us using the contact details stated in the “Contacting us” section above. ## Your Rights **Access to your information and updating your information** You have the right to access information which we hold about you. If you so request, we shall provide you with a copy of your personal information which we are processing. For any further copies which you may requested, we may charge a reasonable fee based on administrative costs. You also have the right to receive your personal information in a structured and commonly used format so that it can be transferred to another data controller (‘data portability’). We want to make sure that your personal information is accurate and up to date. You may ask us to correct or remove information you think is inaccurate. **Right to object** You have the right to object at any time to our processing of your personal information for direct marketing purposes. You also have the right to object, on grounds relating to your particular situation, at any time to processing of your personal information which is based on our legitimate interests. Where you object on this ground, we shall no longer process your personal information unless we can demonstrate compelling legitimate grounds for the processing which override your interests, rights and freedoms or for the establishment, exercise or defence of legal claims. **Your other rights ** You also have the following rights under data protection laws to request that we rectify your personal information which is inaccurate or incomplete. If you think any information we have about you is incorrect or incomplete, please contact us to let us know and we will delete or update any information as soon as possible. In certain circumstances, you have the right to request the erasure of your personal information erasure (‘right to be forgotten’); and restrict the processing of your personal information to processing to which you have given your consent or for the establishment, exercise or defence of legal claims or for the protection of the rights of others. **Exercising your rights** You can exercise any of your rights as described in this privacy policy and under data protection laws by contacting us as given in “Contacting us” above. Save as described in this privacy policy or provided under data protection laws, there is no charge for the exercise of your legal rights. However, if your requests are manifestly unfounded or excessive, in particular because of their repetitive character, we may either: (a) charge a reasonable fee taking into account the administrative costs of providing the information or taking the action requested; or (b) refuse to act on the request. Where we have reasonable doubts concerning the identity of the person making the request, we may request additional information necessary to confirm your identity. ## Security We are committed to ensuring that your information is secure. In order to prevent unauthorised access or disclosure we have put in place suitable physical, electronic and managerial procedures to safeguard and secure the information we collect online. Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our Website; any transmission is at your own risk. ## Linking We may link to other websites which are not within our control. Once you have left our Website, we cannot be responsible for the content of other websites or for the protection and privacy of any information which you provide on these websites. Please note that these websites have their own privacy policies and website terms and conditions. We do not accept any responsibility or liability for these policies. Please check their privacy policies and their website terms and conditions when you visit them and before you submit any personal data to these websites. ## Complaints You also have the right to complain to the Information Commissioner’s Office ([https://ico.org.uk/](https://ico.org.uk/)) about our data processing activities (helpline on 0303 123 1113). --- # Financial Services and Markets Act 2000 Disclaimer Source: https://lexlaw.co.uk/legal-notices/financial-services-and-markets-act-2000-disclaimer/ We are not authorised under the Financial Services and Markets Act 2000. We are not authorised or regulated by the UK Financial Conduct Authority. We are not able to give advice on the merits of investment transactions, and nothing we say or do should be construed as an invitation or inducement to engage in investment activity. We are not able to give advice on the merits of investment transactions, and nothing we say or do should be construed as an invitation or inducement to engage in investment activity. As a BSB-regulated entity, we are not listed on the FCA Register; our regulatory status can be verified on the [Bar Standards Board Barristers’ Register.](https://www.barstandardsboard.org.uk/for-the-public/search-a-barristers-record/the-barristers-register.html) --- # Our Cookie Policy Source: https://lexlaw.co.uk/legal-notices/our-cookie-policy/ *Cookies are small text files that most websites place on your computer when you visit. They're used to make websites work efficiently and to provide useful information to website operators.* ## Cookies used on this website - These cookies collect information about how visitors use our site. We use this information to prepare reports and improve the site. This information is anonymous. The information includes the number of visitors to the site, where visitors have come to the site from and the pages they visited. Read more about Google's [privacy and safeguarding](https://support.google.com/analytics/answer/6004245) policies. You can opt out of being tracked by Google Analytics across all websites at [http://tools.google.com/dlpage/gaoptout](http://tools.google.com/dlpage/gaoptout) - This is a session cookie and it allows the site to track pages visited to enable us to ensure that we can record your preferences and personalise your following visits to our site. - This cookie is used to identify repeat visits from a single visitor and it expires one year after the last page requested from the site by the visitor. We use this cookie to ensure we serve you with the latest content each time you visit our site. - This cookie identifies the sequence of HTTP requests from a single user. This cookie expires when the visitor closes the web session. We use this cookie to understand your level of interest in a topic area and/ or related content. ## Cookies and email marketing Where you receive a marketing email, event invitation or other direct mailing from us, we may collect information about you in the following ways. - *View as a web page*: If you click on the “view as a web page” link, a session cookie is recorded by us so that the web page is personalised in the same way as the email.- *Links to web pages*: If you click on any web link, we will record a session cookie and will automatically log such activity on our database.- *Unsubscribe*: If you click unsubscribe, we will automatically log this information on our database. If you unsubscribe from any email invitation or alert, we will continue to store your personal data on a ‘marketing suppression list’ so as to record your preferences.- *Event RSVP buttons*: In our event invitations and confirmations we provide buttons to allow you to accept, decline, cancel and register for that event. Clicking on these buttons will generate session cookies and your choice will be recorded in our database to help us manage the event. ## More information Many web browsers allow users to control most cookies through their browser settings. More information about cookies, including details on viewing what cookies have been set and how to delete them is available at [http://www.allaboutcookies.org](http://www.allaboutcookies.org/) --- # General Source: https://lexlaw.co.uk/legal-notices/general/ These pages contain information about LEXLAW, a law firm with offices in Temple, London and are intended to provide general information only. Nothing in these pages constitutes legal advice or should be taken as such. You should consult a suitably qualified lawyer on any specific legal problem or matter. LEXLAW is a practising name of CESLAW LTD which is a company registered in England & Wales number 15317679 which is authorised and regulated by the Bar Standards Board (Entity No. 193252) and whose registered office address is 4 Middle Temple Lane, Middle Temple (Inn of Court), City of London EC4Y 9AA. --- # Landlord and Tenant Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/ *We are a City of London Law Firm based in Middle Temple. Whether you are a landlord or a tenant, or even an estate agent, we have the legal acumen and advocacy skill with which to advise and represent you in any Landlord and Tenant dispute.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our property litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. ## Rent In many cases, receiving rent from the property will be the landlord’s primary concern.  The level of rent will usually be determined by agreement of the parties, although in a limited number of cases it is possible for the landlord and/or the tenant to apply to the Rent Service to have a [fair or market rent assessed](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/rent-control/) in respect of the property.  We will of course be happy to advise on any issues relating to Rent Service assessments. It should also be noted that section 47 of the Landlord and Tenant Act 1987 provides that rent cannot be charged unless the tenant has been given written notice of the landlord’s name and address. A variety of options are open to the landlord to recover unpaid rent, including suing for the debt, insolvency proceedings, distress (although usually only for business tenancies) and eviction.  These are all fully discussed on [this page](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/recovering-rent-arrears/). ## Landlords’ obligations Landlords have various legal obligations, which are often set out in the [relevant statute](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have/).  In particular, these include obligations to [keep the property in repair](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations#Repair), to ensure that [gas appliances and furniture are safe](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations#Gas_safety), to allow the tenant [quiet enjoyment](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations#Quiet_enjoyment) and to place the [deposit in an authorised scheme](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations#Deposit_protection) within 30 days.  It is important for landlords and tenants alike to understand the scope of the landlords' obligations, and these are discussed in more detail on [this page](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations/). ## Evictions Evicting somebody from their home is a very serious matter, and the law therefore has strict requirements which must be complied with.  If you attempt to evict a tenant without following the proper legal procedure, you are likely to be committing an offence under the Protection from Eviction Act 1977 and could be fined or imprisoned.  The procedure to be followed depends on the [type of tenancy](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have/) as well as the circumstances of the case.  In many cases, the simplest procedure is to serve a [section 21 notice](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions#Section_21).  In other cases, a [section 8 notice](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions#Section_8) is required.  For [protected tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions#Protected), a different procedure is required and in some cases it may be necessary to give [notice to quit](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions#Notice_to_quit).  The applicable requirements are discussed in more detailed on [this page](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions/) and our expert lawyers are on hand to give advice as to the best course in your particular circumstances. ## Business tenancies The law governing business tenancies is significantly different from that applying to residential tenancies.  See our [business tenancy](https://web.archive.org/web/20170101023814/https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/business-tenancies/) page for more details. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. **To contact us about your case please call us on: 0207 1830 529 ** Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice.** ** --- # Probate Applications Source: https://lexlaw.co.uk/practice-areas/probate-solicitor-london/ *We are a City of London law firm based in the Middle Temple. We provide the very best contentious and non-contentious probate representation and advice. We obtain the best possible results for clients.* Our solicitors have the necessary legal knowledge and expertise to assist you in all Probate matters. We assist by guiding you through the process of probate and ensuring you obtain the best possible outcome. We are able to help where you are: - dealing with a friend or family member’s financial matters after they have passed away;- appointed as an Executor of a Will;- acting a Personal Representative of the Deceased;- where you are to benefit from a Deceased’s estate; or- obtaining a Grant of Probate or Letters of Administration in the UK. ## What is Probate? Broadly, Probate is the relevant authority required by the Executor or Administrator to administer the estate of the Deceased. The relevant authority is obtained from a surrogate court known as the Probate Registry, who will provide the necessary grant of representation. Once the relevant authority has been obtained, the Executor or Administrator will have the necessary legal right to materialise the assets and distribute them accordingly and at the same time ensuring all the liabilities have been settled. Our advisers will be able to provide you with specialist advice and assistance in the process of obtaining the relevant authority and distributing the assets accordingly. ## Advising Executors, Administrators or Personal Representatives If you have been appointed as an Executor of a Will, we will be able to advise you and prepare documents to obtain Grant of Probate (if necessary). This will include preparing the relevant Inheritance Tax forms and the relevant Oaths for Executors and making an application to the Probate Registry for the Grant Probate. In addition to this we will be able to advise and assist you in distributing the assets and settling the liabilities in accordance with the contents of the Will. We will also be able to advise you on assets that do not fall as part of the estate. If a friend or family member has not left a Will, then the next of kin will usually become the Administrator of the Estate or the Personal Representative of the Deceased. Should you find yourself being the Administrator or Personal Representative then we will be able to assist you in obtaining Letters of Administration, including assisting you in preparing the relevant forms to obtain the Letters of Administration from the Probate Registry. In addition to this, we will assist you in administering and distributing assets that fall within the estate in accordance with the prescribed rules known as the Intestacy Rules. With the assistance of our specialist solicitors and barristers we will be able to advise and represent you in complex litigated matters concerning disputes in relation to the deceased assets and/or liabilities. For example, if there is a dispute with a Beneficiary or a dispute with another Executor then we will be able to assist and give you practical advice in obtaining the best possible dispute resolution. Our team of advisers will also give advice on any claims brought against the estate by beneficiaries or creditors. ## What are the Intestacy Rules? The Intestacy Rules are a set of rules which state how the estate should be distributed in the event the Deceased did not leave a Will. Broadly speaking, the Deceased spouse will be entitled to the ‘lion’s share’ and the children will be entitled to the residue. For example, where the net estate value does not exceed £250,000 the spouse will receive the whole amount of the estate. If the net estate value does exceed £250,000 then the spouse will receive a statutory legacy of £250,000, the chattels of the Deceased and a life interest in the residue of the estate, which would leave the remainder of the estate for the children in equal shares. We will also be able to advise on situations where the Deceased did not have a spouse or children or any close family members. ## Claims by Beneficiaries against the Estate Our solicitors assist many beneficiaries who may have a claim against the estate. If you are entitled to assets under a Will or to assets by virtue of the Intestacy Rules then you should contact us immediately so that we can advise on any potential claim you may have against the estate. If you are a beneficiary and you are concerned that the Executor or the Administrator is not distributing the assets in an appropriate manner then please contact us so that we can act on your behalf and ensure that you are receiving the assets that you are entitled to. You may be able to apply to the court for relief if you were financially dependent on the Deceased prior to their death and after their death it transpired that the distribution of the assets (either in accordance with the Will or in accordance with the intestacy rules) would mean that there is no reasonable financial provision for you. You should note that in some instances there are time limits in which you can bring a claim against the estate; therefore it is vital that you contact us immediately. ## What is an Estate? When we talk about ‘The Estate’, we broadly mean the assets that belonged (or in some cases jointly belonged) to the Deceased prior to their death. For example this could include funds held in bank account, shares, property, and any other types of assets that the Deceased may have owned prior to death. It should be noted that not all assets that were owned by the Deceased may fall as part of the estate. Some assets that were owned jointly between the Deceased and another may pass directly to the joint owner of the asset or some insurance policies may also not be included within the estate. For example if the Deceased had a joint bank account with someone then upon death, the funds in the account may pass directly to the surviving co-owner. Our specialist probate advisers will be able to advise you on what assets fall within the estate and what assets are passed to co-owners through ‘rights of survivorship’. ## Legal Advice on Inheritance Tax Liability In some cases the estate may be liable to pay inheritance tax. Currently the threshold for inheritance tax is £325,000 (also known as the ‘nil-rate' band). This means that the net estate value (the value of the estate after all the liabilities have been accounted for) that exceeds the nil-rate band will be liable to pay inheritance tax at a rate of 40% (or 36% if 10 per cent or more of the net estate is left to charity). Our solicitors will be able to provide you with general advice on the amount of inheritance tax payable when administering the Deceased’s assets and if necessary work with specialist accountants to obtain specific inheritance tax advice. ## Instruct Probate Solicitors and Barristers If you have a probate matter and/or need to obtain a grant of probate in England & Wales or require urgent help in dealing with a Deceased’s financial affairs or if you need assistance in relation to a dispute surrounding the Deceased, we are able to assist. We provide expert legal advice from one of our team of leading Probate Solicitors and Barristers. Just call or email us now for a free initial case assessment; our team are waiting to help. **To contact us about your case please call us on: 0207 1830 529 ****Email us on: probate-solicitors-london@lexlaw.co.uk ** --- # Evictions Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions/ *Need help evicting tenants? Our team of expert evictions lawyers are ready to advise you and provide representation at court. We are based at the Middle Temple in central London and can easily travel to any London hearings. We are also able to advise on any other matters relating to [landlord and tenant law](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/). Note that if you evict a tenant without following the proper legal procedure, you are likely to be committing an offence under the Protection from Eviction Act and could be fined or imprisoned.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our property litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. ## What is the procedure for evicting a tenant? This will depend on both the [nature of the tenancy](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have/) and the situation.  Most modern private-sector tenancies are [assured shorthold tenancie](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Assured_shorthold_tenancy)s.  If this is the sort of tenancy you have, then there are two procedures which can be used: the 'section 8 procedure' and the 'section 21 procedure'. Section 21 is often the simplest and fastest procedure, although it is not available in all circumstances. We would of course be happy to advise you as to the best procedure in your particular situation. In some cases, the tenancy may be a ['protected' tenancy](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Protected_tenancy), which means that there is a different (and far more restrictive) procedure for evicting tenants. In these cases, it is particularly important to instruct lawyers with specialist knowledge of landlord and tenant law. ## The section 21 procedure This procedure is only available for [assured shorthold tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Assured_shorthold_tenancy). In most cases where it is available, this will be the preferred method of eviction, as it allows for accelerated possession proceedings. The court will be able to grant an order for possession 'on the papers', unless the tenant files a defence. This will be both faster and cheaper than the section 8 procedure in many cases. However, it should be noted that the accelerated possession procedure does not allow for the recovery of rent arrears and a separate action should be brought for these if necessary - see our [page on recovering rent arrears](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/recovering-rent-arrears/). A section 21 notice must be served on the tenant in the prescribed form, specifying that the landlord will require possession after a stated date. At least two months notice must be given; however if a longer period of notice would be required at common-law, then that amount of notice applies. For example, if the tenancy was quarterly, one full quarter's notice would be required. The notice must also expire after a date on which the tenancy could be ended contractually, i.e. the last day of the fixed term or the final day of a rental period after the fixed term has expired. It is important to get this date right: in one case in 2003, the Court of Appeal held that a notice was invalid because the date specified was one day too late. It is not possible to use this procedure to recover possession during the first six months of the tenancy. A section 21 notice may not be served until the deposit has been paid into a [deposit protection scheme](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations#Deposit_protection). Note that this may cause problems if the landlord attempts to give notice at the same time the tenancy agreement is signed, as the deposit will not normally have been protected by this date. In any case, the practice of giving notice at the same time as the agreement is signed can cause problems, because the notice may in fact have been given before the agreement was signed, in which it would be invalid. Even if the correct procedure has been followed, the tenant may still claim that the notice was given too early, and it may be difficult to refute this at trial. For tenancies created between 15th January 1989 and 28th February 1997, it will be necessary to show that the landlord served the required notice under section 20 of the Housing Act 1988 stating that the tenancy was to be shorthold. If a section 21 notice has been validly served and the tenant remains in the property after the specified date, then the landlord can seek a possession order from the court. Note that it is not possible to apply for the order until the notice has expired, even if the tenant has made clear that he does not intend to comply with the notice. The section 21 notice does not itself end the tenancy; the tenancy will only come to an end once the tenant complies with the notice or a possession order is executed. ## The section 8 procedure This procedure is available both for [assured tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Assured_tenancy) and [assured shorthold tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Assured_shorthold_tenancy). While the section 21 procedure is usually preferred for assured shortholds, section 8 may be used if, for example, the tenancy is still within its fixed term. Usually only 2 weeks notice is required under section 8, although two months notice is required where one or more of grounds 1, 2, 5-7, 9 and 16 is relied on. This means that less notice is usually required under section 8 than under section 21; however, the fact that the accelerated possession procedure is available under section 21 means that it will still usually be quicker to seek possession under section 21. As with section 21, the service of a section 8 notice does not in itself bring the tenancy to an end; the tenancy will only end once an order for possession is executed (or once the tenant leaves voluntarily). Possession under section 8 can only be sought on one or more of the grounds set out in Schedule 2, i.e. possession cannot be obtained simply because the stated term of the tenancy has expired and the landlord would like the property back. There are 18 grounds, of which 8 are mandatory and 10 are discretionary.  If one of the mandatory grounds is made out, the court must grant the order. If the application is made on one or more of the discretionary grounds, then the court has a discretion as to whether or not to grant the order. We find that the court will only make a possession order on the discretionary grounds in the clearest cases. It is not possible to examine the scope of all 18 grounds here.  Many of the mandatory grounds require the appropriate notice to have been served at the start of the tenancy, e.g. under ground 1, a notice may be served stating that the landlord has previously resided in the property and may require possession, although this notice requirement can be dispensed with if the court finds it just and equitable to do so. The grounds are: (1) landlord's residence, (2) possession by mortgagee, (3) holiday lets, (4) lettings by educational establishments, (5) ministers of religion, (6) demolition or reconstruction, (7) tenancy passing by will or intestacy, (8) 2 months' rent arrears, (9) suitable alternative accommodation, (10) rent arrears, (11) persistent delay in paying rent, (12) breach of terms, (13) waste, (14) nuisance, (14A) domestic violence, (15) damage to furniture, (16) employee lets and (17) tenancy obtained by a false statement. Of these, 1-8 are the mandatory grounds. In practice, ground 8 is the most important ground. This is a mandatory ground for possession and applies when the tenant is at least 2 months in arrears with rent, or 8 weeks where rent is paid weekly, or 3 months where rent is paid quarterly or yearly. The relevant amount of arrears must be owed *both* at the time the section 8 noticed is served *and* at the date of the hearing. In this case, 2 weeks notice should be given.  After the expiry of this notice, proceedings can be brought (and can also include a money claim for the arrears). This will require a hearing, and the landlord must prepare a schedule setting out the dates and amounts of rent due and the dates and amount of rent paid. ## Evicting protected tenants The procedure for evicting [protected tenants](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Protected_tenancy) is somewhat similar to the section 8 procedure, in that the landlord must rely on one or more of the grounds set out in Parts 1 and 2 of Schedule 15 of the Rent Act 1977. Part 1 contains the discretionary grounds, and part 2 the mandatory grounds.  In the case of the discretionary grounds the court will only make the order if it considers it reasonable to do so; the court will always give an order for possession if one or more of the mandatory grounds is made out. The grounds are: (1) non-payment of rent or breach of other term, (2) nuisance, (3) waste, (4) damage to furniture, (5) tenant has given notice to quit, (6) unauthorised sub-letting, (7) abolished, (8) employees' accommodation, (9) required as landlord's residence, (10) overcharging sub-tenants, (11) owner-occupiers, (12) retirement homes, (13) holiday lets, (14) student lets, (15) ministers of religion, (16-18) agricultural lets, (19) protected shorthold, (20) armed force accommodation. 1-10 are the discretionary grounds; 11-20 are the mandatory grounds. Note that non-payment of rent is a discretionary ground in relation to protected tenants and in practice the court will only grant an order on this ground where there is no prospect that the tenant will pay the arrears. Unlike the section 8 procedure, there is no need to give formal notice to the tenant before commencing proceedings. ## Common law tenancies Residential tenancies will only rarely be [common law tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Common_law_tenancy). However, there are certain circumstances where this will be the case, notably (a) where the rent exceeds £100k p.a., (b) where the tenant is a company and (c) where the landlord resides in the same building.  In addition, tenancies lose their statutory protection (whether under the Housing Act 1988 or the Rent Act 1977) if the tenant ceases to reside at the property. A common law tenancy for a fixed term comes to an end ('determines') automatically at the end of the fixed term. Note that if the tenant continues to occupy the property and the landlord continues to accept rent, this is likely to give rise to a new periodic tenancy. A common law periodic tenancy is terminated by giving 'notice to quit'. This differs from the notices under sections 8 and 21 of the Housing Act 1988 in that the notice to quit actually brings the tenancy to an end. Care must therefore be taken after service of a notice to quit to avoid doing anything which might give rise to a new tenancy. A notice to quit must be for a whole rental period, i.e. one month for a monthly tenancy and one quarter for a quarterly tenancy. However, for an annual tenancy, six months is sufficient. For a residential tenancy, the Protection from Eviction Act 1977 provides that at least 4 weeks notice must be given, even if the rental period is shorter than this. The notice must end on the last day of a rental period, otherwise it will not be valid. If the tenant does not leave after the specified date, then a possession order may be obtained from the court. ## Can I recover rent arrears at the same time as evicting? Yes, it is possible to apply to the court for an order for payment of any arrears at the same time as an order for possession. However, you should bear in mind that in many cases the tenant will not have any assets against which such an order could be enforced, so the outcome may not be satisfactory. Also, the accelerated procedure is not available where the claim includes a claim for rent, which will delay the eviction.  In many cases the landlord will prefer to obtain vacant possession of the property at the earliest possible date, and in that circumstance we would usually advise against including a claim for rent. ## I have a court order for possession, but the tenant has not left.  What should I do? If it is a residential tenancy, you cannot attempt to enforce the possession order yourself. If you do, you are likely to be committing a criminal offence under the Protection from Eviction Act. Unfortunately, you must make a further application to court for a possession warrant. This will be passed to the officially appointed bailiff, who will inform both you and your tenant of the date on which he will carry out the eviction. ## There are squatters in my property.  How do I get them out? Squatters can move in during a period when the property is unlet or they can also move in when the tenant has vacated the property without formally ending the tenancy. In the latter case, possession proceedings should be brought jointly against the tenant and the squatters.  If the tenant is no longer resident, the tenancy will cease to be an assured shorthold tenancy and should be terminated by serving notice to quit.  However, we usually recommend the simultaneous service of a section 21 notice 'without prejudice', in case of any possible issue at trial as to whether the tenant had in fact given up occupation. Where (as is usual) the landlord is unaware of the identities of the squatters, proceedings should be brought against 'persons unknown'. In some circumstances it is possible to bring an urgent application to evict squatters. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. --- # What sort of tenancy do I have? Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have/ *It is important before commencing legal action in any landlord and tenant dispute, to identify what sort of tenancy is involved, as this determines the applicable law. There are a multitude of different possibilities, but our expert landlord and tenant lawyers are on hand to guide you.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our property litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. ## Assured shorthold tenancy Most private-sector residential tenancies granted since 28th February 1997 will be assured shorthold tenancies. There are however a number of exceptions, including: (i) the rent is over £100k p.a., (ii) the tenant is a company, (iii) the landlord is resident at the same property and (iv) the parties have expressly agreed otherwise. Tenancies granted between 15th January 1989 and 27th February 1997 may be assured shorthold if a notice in the prescribed form was served upon the tenant before the start of the tenancy, stating that it was to be a shorthold tenancy. Usually, the landlord will need to produce a copy of this notice. These tenancies are governed by the Housing Act 1988 as amended by the Housing Acts 1996 and 2004. The main advantage of an assured shorthold tenancy from the landlord's point of view is that it allows possession to be regained using the 'section 21 procedure', which is generally considerably simpler and faster than the procedure applying for other sorts of tenancy. Note however that this procedure cannot be used within the first six months of the tenancy. Where an assured shorthold tenancy is granted for a fixed term and the section 21 procedure is not followed at the end of the fixed term and the tenant remains in occupation, the tenancy will automatically convert to a periodic tenancy. This can then be terminated using the section 21 procedure by giving at least 2 months notice in the correct form, ending on the last day of a rental period. ## Assured tenancy A residential tenancy granted since 15th January 1989 which is not an assured shorthold tenancy will usually be an assured tenancy. There are however a number of exceptions, including: (i) the rent is over £100k p.a., (ii) the tenant is a company and (iii) the landlord is resident at the same property. Assured tenancies are also governed by the Housing Act 1988 as amended. An assured tenancy provides the tenant with a certain degree of security of tenure, and the section 21 procedure is not available. The landlord can only obtain possession on one of the grounds set out in Schedule 2 to the Housing Act 1988. In many cases the landlord will rely on ground 8: non-payment of rent. This requires that there be at least 2 months arrears of rent outstanding. ## Protected/statutory tenancy Residential tenancies granted before 15th January 1989 were usually protected tenancies.  At the end of the fixed term, such tenancies converted to statutory tenancies enjoying the same protection and many such tenancies still exist. These tenancies are governed by the Rent Act 1977, as amended by the Housing Acts 1980 and 1985. These tenancies give the tenant a significantly greater degree of security of tenure than other tenancies and are also subject to rent control. This means that the Rent Service determine a 'fair' rent for the property which is often significantly lower than the market rent. As will be clear, the possession of such a tenancy is of great advantage to the tenant, and for this reason the tenants of protected tenancies often strongly resist eviction. This is a highly specialist area of law, and it is strongly recommended that you seek legal advice from specialist landlord and tenant lawyers. ## Secure tenancy Most public-sector tenancies are of this type. As such, they will rarely be of interest to private-sector landlords. ## Business tenancy Tenancies of business premises will usually be business tenancies, governed by Part II of the Landlord and Tenant Act 1954. This is a completely different regime from residential tenancies. While the Act largely leaves the terms of the tenancy to the parties, it allows for the tenant to apply for an extension of the tenancy at the expiry of the term. This application can only be refused by the landlord on certain limited grounds, and compensation may also be payable. Fortunately, it is possible to contract out of these provisions if properly advised. Care is needed in dealing with properties which include both business and residential premises (e.g. a flat over a shop). The legislation is mutually exclusive, so it is important to determine at an early stage which regime applies. Similarly, care should be taken at the drafting stage, as in some cases it will be advantageous to enter into separate agreements for the commercial and residential parts. ## Common law tenancy This is a catch-all category. Any tenancy which does not fall into any of the preceding categories will be a common law tenancy. In this case the legal protections for the tenant are very limited, although the Protection from Eviction Act still applies if the property is residential, which means that a landlord must still obtain a court order before evicting the tenants. In particular, note that tenancies at rents exceeding £100k p.a. will be common law tenancies, and if you are considering renting a property at this price you are strongly recommended to seek specialist legal advice before finalising the transaction.  Equally, residential tenancies granted to companies (e.g. for the use of a company employee) will be common law tenancies and again advice should be sought. ## Licence to occupy In some cases, a 'tenant' will occupy premises under a licence, rather than under a tenancy. The key test is whether the tenant has exclusive occupation of any part of the property. There is a substantial amount of case law examining this concept, and legal advice should be sought if you are unsure whether an arrangement is a tenancy or a licence. Note that the Protection from Eviction Act still applies to licences to occupy residential premises. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. --- # Recovering rent arrears Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/recovering-rent-arrears/ *One of the most frequent problems between landlords and tenants is the non-payment of rent. Our team of [expert lawyers](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/) is on hand to assist with a variety of options for recovering rent arrears.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our property litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. ## Risk of accepting surrender If a tenant can afford to pay the rent, but no longer requires the property, he may seek to surrender his tenancy. In some cases, the landlord will be happy to accept this, but in others the landlord will prefer to keep the tenant. In that event, the landlord must take care to avoid doing anything which might amount to accepting a surrender of the tenancy, such as accepting the return of the keys or re-entering the property after the tenant has left. ## Suing for rent Court proceedings can be brought for the recovery of unpaid rent.  In many cases the tenant will have no defence against such a claim, and summary judgment can be obtained. This will then allow all the usual means of enforcing a judgment debt, such as sending in bailiffs or attachment of earnings. This may be useful if you wish to put pressure on the tenant to pay without losing the tenant. ## Insolvency proceedings Alternatively, you could serve a statutory demand on the tenant for payment (and we would be happy to draw up a demand in the correct form). In some cases, the tenant may pay upon service of the statutory demand, and this could be a more cost effective means of recovery than a court action. If the tenant does not pay, bankruptcy or insolvency proceedings could be brought. While it may be hoped that the tenant will find the means to pay rather than face bankruptcy, we possess the expertise to see the process through to the end where necessary. ## Distress Distress or distraint (the terms are used interchangeably) is an ancient remedy for non-payment of rent, which involves the landlord entering the property and confiscating the tenant’s goods to make good the short-fall. There are provisions in the Tribunals, Courts and Enforcement Act 2007 which abolish distress and replace it with a statutory remedy applying only to commercial lets. However, these provisions have not yet been brought into force, and the remedy of distress remains available for the time being. Although it was expected that these provisions would be brought into force in April 2012, the government launched a further consultation on this subject in February 2012, and it is not clear when (if ever) distress will cease to exist. Clearly this means that any landlord intending to levy distress must take great care that the position has not changed on the applicable date. Distress is rarely used in relation to residential properties since for both protected and assured tenancies, a court order must first be obtained, and this requirement removes the main attraction of distress as a remedy for landlords. However, it should be noted that distress could be used on properties which fall outside the scope of the Housing Act 1988 for reasons mentioned above. We would rarely (if ever) recommend the use of distress in relation to residential premises, since the applicable law is complex and not always well-adapted to a modern context, and residential landlords are rarely familiar with the process. Distress is more commonly used in relation to business premises, and this remedy will substantially survive the changes introduced by the Tribunals, Courts and Enforcement Act 2007, once these come into force. The main potential change will be the introduction of a requirement that the landlord first give the tenant notice before distraining, although this is subject to consultation at the time of writing. The procedure for distraining is as follows. There must be some rent unpaid as at the date of the distraint. The landlord or a certified bailiff appointed by him enters the premises (and there are certain fairly technical rules as to how entry may be obtained). He then seizes the tenant’s goods, subject to certain exceptions, and only up to the value of the rent due. The goods must be held for at least five days, or fifteen days if the tenant makes a written request for more time, to allow the tenant time to pay. If the tenant has not paid the arrears within this period, the landlord may then sell the goods and apply the proceeds to the arrears. He must obtain the best possible price for the goods and cannot buy them himself. ## Possession proceedings In many cases, once a tenant has a track record of non-payment, the landlord will wish to evict and find a new tenant. In relation to an assured tenancy, two months arrears of rent constitutes a mandatory ground for possession (ground 8). The section 8 procedure can be used, by giving 2 weeks notice in the prescribed form. Once the notice period has expired, court proceedings can be brought both for possession and for the arrears. A schedule will need to be prepared showing the amounts which have fallen due and the amounts which have been paid. Note that the accelerated procedure is not available under section 8, so in some cases where the tenancy is assured shorthold, it will be easier to follow the section 21 procedure. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. --- # Rent control Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/rent-control/ *In some circumstances it is possible for either the tenant or the landlord to apply to have a fair or market rent assessed in relation to a property and this assessed rent may take effect in place of the contractually agreed rent.  Our team of expert [landlord and tenant lawyers](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/) are on hand to deal with any queries relating to rent control.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our property litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. ## Rent control and protected tenancies Rent control is mostly of interest to landlord and tenants of [protected tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Protected_tenancy) (i.e. to most properties let before 15th January 1989). These properties are subject to the Rent Act 1977, and either landlord or tenant has the right to apply to the Rent Service for the assessment of a 'fair' rent. In many cases this fair rent will be at a level significantly below the market rate. The assessed rent is then the maximum that may be charged, even if the landlord and tenant had previously agreed a higher amount. However, if the assessed rent is greater than the contractual rent, the rent cannot be increased. The landlord can increase the rent to the assessed level at the renewal of the tenancy by serving a notice of increase in the prescribed form. Either the landlord or the tenant can apply for reassessment every two years. It is possible to appeal the assessment to the Rent Assessment Committee. It should be noted that the Rent Service's jurisdiction applies only where the tenancy is protected, and in particular the tenancy will cease to be protected if the tenant ceases to be resident in the property. ## Rent control and assured tenancies Only very limited rent control applies in relation to [assured tenancies](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Assured_tenancy). The initial rent will be whatever is agreed between the parties. However, once the fixed period has expired, and at least 12 months has passed since the start of the tenancy, the landlord may wish to increase the rent. The parties can simply agree an increase between themselves, or the tenancy may contain a clause providing a mechanism for rent review. If neither of these applies, the landlord should serve a notice of increase in the prescribed form, proposing a new rent. This will then take effect automatically after the notice period has expired, unless the tenant refers the matter to the Rent Assessment Committee. If the matter is referred, the committee will assess the rent on the basis of the prevailing market rate. ## Rent control and assured shorthold tenancies The great majority of modern tenancies are [assured shortholds](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have#Assured_shorthold_tenancy). Again only very limited rent controls apply. Within the first six months of the tenancy, the tenant may apply to the rent assessment committee for a determination of the rent, on the market basis. If the committee's determination is lower than the contractual rent, the rent will have to be adjusted accordingly. The landlord may not then serve a notice of increase until at least 12 months after the determination. This provision is rarely used both because it would be unusual for a rent in excess of the market rent to be agreed in the first place and because the lack of security of tenure in these sorts of tenancy means that the either the tenant or the landlord will usually end the tenancy if they are unhappy with the level of the rent. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT. We do not offer any free legal advice. --- # Landlords’ obligations Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations/ *Landlords have a number of obligations in regard to residential property, some of which will be explicitly set out in the tenancy agreement, some of which are implied by common law and many of which are set out in various statutes. From a landlord’s point of view, it is important to understand your obligations under the tenancy to avoid unpleasant surprises. From a tenant’s point of view, you may be seeking legal advice in order to take action against your landlord for non-compliance.  Our team of [expert landlord and tenant lawyers](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/) is on hand to advise in either case.* ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We offer all clients a heavily discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference facilities or Skype). The cost of the initial consultation is our minimum fixed fee of £1750 plus VAT, which is heavily discounted for the time our property litigation lawyers spend reviewing your matter both before and during the consultation. We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best negotiable result. ## Repairing obligations Section 11 of the Landlord and Tenant Act 1985 obliges the landlord of residential properties let for less than 7 years to keep them repaired.  This applies to the structure of the dwelling, e.g. the exterior and interior walls and the roof, the floors and ceilings and the doors and windows, and also includes drains, gutters and external pipes. In the case of flats, the obligation may also extend to the common parts. The obligation is to keep these elements in repair, and does not include any obligation to make improvements. This can lead to some unexpected results: for example, a landlord is liable for damage caused by damp where a damp course has deteriorated, but is not liable for damage caused by damp where a damp course is completely absent. In cases where the landlord is unsure of his obligations under section 11, he should seek legal advice. In addition, section 11 makes the landlord responsible for maintaining the gas and electricity supply and the plumbing in proper working order. In most cases, a landlord’s obligation under section 11 only arises once the tenant has given the landlord notice of the fault, in which case the landlord must then repair it within a reasonable time. For completeness, it should be added that it is possible to exclude statutory covenant under section 11 if the landlord and tenant *together* make an application to the court under section 15 of the Landlord and Tenant Act 1985. However, this is rarely done, for the obvious reason that the tenant will not normally accede to the application. Unfortunately for landlords, section 11 by no means exhausts the extent of their obligations to keep the property in repair. Local authorities have powers under the Environmental Protection Act 1990 to inspect premises to check for hazards, and if a hazard is found, to compel the landlord to deal with it. It is possible to appeal from a notice under the Act, and we would of course be happy to advise on this. Landlords should also be aware of their possible liability under the Defective Premises Act 1972 if a third party suffers injury or damage to property as a result of the landlord’s failure to carry out proper repairs. If the landlord fails to fulfil his repairing obligations, either under section 11 or under the terms of the tenancy, the tenant will usually be entitled to damages. Formally speaking, the tenant is not entitled to deduct any such damages from his rent, but the tenant would be entitled to claim a set-off in any claim brought by the landlord for rent arrears, so the effect is much the same. Tenancy agreements often attempt to exclude this by stating that the rent must be paid without set-off, but such clauses are open to attack on a number of grounds and in general should not be relied upon. ## Gas and furniture regulations The Gas Safety (Installation and Use) Regulations 1998 impose a number of obligations on landlords in relation to all gas appliances provided at the property (usually the boiler and cooking facilities). The facilities must be checked by a gas safe engineer every year and records must be kept. Although certificates are often provided to tenants, this is not strictly a requirement. It should be noted that failure to comply with these regulations is a criminal offence and can lead to imprisonment. In addition, the Furniture and Furnishings (Fire) (Safety) Regulations 1988 require that all furniture supplied by the landlord must be fire resistant. There are various tests which apply, but from the landlord’s point of view, it is sufficient to note that all furniture should carry a label stating that it complies with the Regulations. The tenant may require the landlord to replace any non-compliant furniture. ## Right to quiet enjoyment This right is implied (unusually) by common law and not by statute (although there is some over-lap with section 27 of the Housing Act 1988). It is implied into all leases and tenancies, and provides that the landlord will do nothing which interferes with the tenant’s occupation. It should be said that this right is less extensive than some tenants imagine. In particular, the use of the word ‘quiet’ should not be taken to imply the absence of noise (although unreasonable noise may give rise to an action in nuisance). In many cases, behaviour which breaches the right to quiet enjoyment is motivated by a desire to force the tenant out of the property without using the proper possession procedures. This sort of behaviour might include cutting off electricity or gas supplies or harassing the tenant on entering or leaving the property. However, the landlord does not necessarily have to possess such motivation for the tenant to enforce his right to quiet enjoyment. Tenants whose rights to quiet enjoyment have been frustrated may seek an injunction restraining the behaviour in question or damages or both.  In some cases aggravated or exemplary damages may be available. ## Deposit protection For all tenancies which commenced on or after 6th April 2007, any deposit paid by the tenant must be kept in a deposit protection scheme (this can be either a custodial scheme or an insurance scheme).  The rules relating to tenancy deposit schemes changed on 6th April 2012.  The deposit must now be placed in an applicable scheme within 30 days of being received (up from 14 days), and notice must be given to the tenant within the same period.  If this is not done, then the landlord may be subject to a penalty of between one and three times the value of the deposit (note that it is no longer possible to avoid this penalty by putting the deposit into a scheme before the date of the hearing).  Also, it is not possible to obtain possession by the section 21 procedure (for which see below) if the deposit has not been properly protected. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. (Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT) --- # Email Notices Source: https://lexlaw.co.uk/legal-notices/email/ ## Please note the following important notices: - Email messages, and any attachments, may contain legally privileged material and are confidential to the intended recipient. - The unauthorised access, copying or re-use of the information in emails by any other person is strictly forbidden. - If you receive an email message in error please notify us by return email to admin@lexlaw.co.uk and destroy the email and any attachments. - Internet communication is not guaranteed to be timely, secure, error or virus free. - Telephone calls may be recorded for operational, training or regulatory purposes. - We accept no liability for any harm to systems or data, nor for personal emails. - The firm is not responsible for the views of the sender. - We do not accept service of documents by fax or email. - LEXLAW is a practising name of CES LAW LTD which is a company registered in England & Wales number 15317679 which is authorised and regulated by the Bar Standards Board (Entity No. 193252). - Our registered office address is 4 Middle Temple Lane, Middle Temple (Inn of Court), City of London EC4Y 9AA. - Pupils, trainees, paralegals, and other Grade D Fee-earners, act under the instruction and supervision of the authorised legal professional responsible for case conduct. --- # Business tenancies under the Coronavirus Act 2020 Source: https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/covid19-and-business-tenancies/ *In light of the current circumstances surrounding COVID-19 which are affecting many small businesses and individuals including commercial landlords, new legislation has been issued to assist these individuals.  If you need help with renewals, evictions or breach of tenancy, our expert business tenancy solicitors are ready to help you.* ## Legislation governing business tenancies Business tenancies are governed by Part II of the Landlord and Tenant Act 1954. This will apply wherever the premises let (or part of them) are being used for the purposes of a business, unless that business is purely incidental to residential use. However, where the tenancy agreement prohibits business use, the tenancy will not be a business tenancy unless the landlord consents or acquiesces to the change in use. Similarly, if a business tenant ceases trading from the premises and starts to live in them, that will not usually convert them to a residential tenancy. ## Effect of the Coronavirus Act on commercial landlords [Section 82 of the Coronavirus Act 2020](http://www.legislation.gov.uk/ukpga/2020/7/section/82/enacted) deals with protection from forfeiture in relation to business tenancies. The Act stipulates a 'relevant period' whilst the COVID-19 emergency situation continues which currently applies from 26 March 2020 to 30 June 2020, unless extended by the Government. ## Forfeiture for non-payment of rent If the tenant breaches the terms of the lease (including breaching the term to pay rent) and the landlord wishes to evict the tenant, then the landlord needs to forfeit the lease, which is only possible if the lease provides for re-entry in the circumstances of the breach which occurred.  [Section 146 of the Law of Property Act 1925](http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/146) also applies and (except for non-payment of rent) requires the landlord to give the tenant notice of the breach and an opportunity to remedy it (if this is possible). If intending to forfeit the lease, the landlord must avoid doing anything which might amount to a waiver of the right to forfeit. The [Coronovirus Act 2020](http://www.legislation.gov.uk/ukpga/2020/7/section/82/enacted) stipulates: - A right of re-entry or forfeiture for non-payment of rent may not be enforced during the relevant period- 'Rent' will include all payments due by the tenant under the lease, including, service charge, insurance, repair costs- The right of re-entry can only be waived by an express waiver in writing- Where forfeiture proceedings for non-payment of rent have already been commenced, the Court cannot make an order for possession which expires before the end of the relevant period ## Possession claims In line with current public health advice to prevent all non-essential movement, during the relevant period (26 March 2020 to 25 June 2020), there is a suspension of possession cases which will affect new and existing claims. The grounds to terminate a business tenancy are set out in [Section 25 of the Landlord and Tenant Act 1954](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/section/25). Landlords who are seeking possession during this time must show a 'very good reason' for doing so. ## Renewal The tenancy will not come to an end automatically at the end of the contractual period. In order to obtain possession, the landlord should serve a notice under [section 25 of the 1954 Act](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/section/25), stating whether he would be willing to grant a new lease. He can only decline to grant a new lease on one of the seven grounds set out in [section 30 of the Act](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/section/30), and the ground relied on must be stated in the notice. Where a landlord wishes to oppose a new tenancy on the grounds of delay in paying rent, any failure to pay rent during the relevant period is to be disregarded. ## Contracting out Since 1st June 2004 it has been possible to contract out of the leasehold renewal provisions contained in [sections 24-28 of the 1954 Act](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/section/24). In order to achieve this, the landlord must serve on the tenant a notice in the prescribed form warning the tenant that the lease will not be subject to these provisions. The tenant should then sign a declaration (if at least 14 days notice is given) or swear a statutory declaration. ## Discounted Fixed Fee Case Review Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We can offer clients a discounted fixed fee consultation (to take place either in our Chambers in Middle Temple or via our teleconference or videoconference facilities). We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the landlord and tenant rules in England & Wales. ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. --- # Company Directors Disqualification Proceedings & Disqualification Orders Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/ *A directors disqualification order under the Company Directors Disqualification Act 1986 can have a destructive and life changing effect.  A disqualification order can prevent you from acting as a Company Director and in the process destroy your reputation and the ability to earn a living.  In most cases it effectively ends your business career.  Therefore It is important to ensure that you have high quality and assertive representation right from the outset of the proceedings when it counts the most.  It is also important to make sure your legal representatives have expertise in this area and are willing to leave no stone unturned in your defence. They must consider all options including, where advised appropriate, rarely deployed legal arguments such as strike out and abuse of process applications designed to have the proceedings dismissed or discontinued before any trial takes place.* ## What is a Directors Disqualification Order? A disqualification order is made by the court under the Company Directors Disqualification Act 1986.  The Act applies not only to a person who has been formally appointed as a director but also to those people who have carried out the functions of a director and to shadow directors.  If there is any unfit conduct, then the liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State for Business, Innovation & Skills a report on the conduct of all directors who were in office in the last 3 years of the company's trading. ## What are Directors Disqualification Proceedings? The Secretary of State has to decide whether it is in the public interest to seek a disqualification order against a director.  The proceedings are brought by the Secretary of State for Business, Innovation & Skills or, usually in compulsory winding-up cases, by the Official Receiver at the direction of the Secretary of State. The matter is heard, and decided by the court, unless the Secretary of State accepts a disqualification undertaking from a director.  This is effectively an undertaking that the director will not be a director again for a period of an agreed number of years.  The minimum period of disqualification under the legislation is 2 years and the maximum is 15 years. Usually the disqualification undertakings can be negotiated to contain a discount in the length of the undertaking not to be a director in return for giving the Secretary of the State the ability to avoid costly and uncertain legal proceedings.  We can assist in the negotiation process. ## Basis for determining Disqualification of Directors The court can disqualify for many reasons, for example: - certain criminal offences connected with the Companies Acts legislation;- wrongful trading (such as trading while insolvent;- failure to comply with filing requirements under the Companies Act Legislation;- unfit conduct in insolvent companies. However, the majority of the orders have been made because of the unfit conduct of those running failed / insolvent companies.  The question for the Court is whether the conduct of the director in relation to the company is such as to make him/her unfit to be concerned in the management of the company.  The approach to be taken by the Court in order to determine this question is to consider the allegations, including issues of fact, to see if those allegations are made out. The Court should then consider whether the allegation or allegations as a whole amount to unfitness ## The Court's Approach to Directors Disqualification The Company Directors Disqualification Act 1986 (1986 c. 46) forms part of UK company law and sets out the procedures for company directors to be disqualified in certain cases of misconduct.  Section 6 of the Company Director Disqualification Act 1986 is mandatory and stipulates that a court shall make against a person a disqualification order, for a period specified in the order, providing that: - he shall not be a director of a company, act as receiver of a company’s property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of the court, and- he shall not act as an insolvency practitioner. (s.1)- The Secretary of State may also accept disqualification undertakings from such persons in specified circumstances, which will have similar effect. (s.1A) If a director's conduct is found to be unfit, the Court must disqualify.  In *Landhurst Leasing Pl*c [1999] 1 BCLC 286 (page 344) Hart J. stated: > 'If conduct below the relevant standard is proved to have occurred the Court has a duty to impose disqualification even if satisfied that there is no present reason to disqualify…where the Court has found that relevant misconduct has occurred disqualification must follow even if the Court is of the opinion that the director has recognised his past errors and is not, at the date of the hearing, unfit.' The standard of proof is the ordinary civil standard on the balance of probabilities.  The question of unfitness is a question of fact.  The concept of unfairness is to be given its ordinary meaning.  In *re: Sevenoaks Stationers* [1991] Ch page 164: > 'The test laid down in Section 6 – apart from the requirement that the person concerned is or has been a director of the company which has become insolvent – is whether the person's conduct as a director of the company or companies in question 'makes them unfit to be concerned in the management of a company'. These are ordinary words of the English language and they should be simple to apply in most cases. It is important to adhere to those words in each case.' The Court must be satisfied that the director has been guilty of a serious failure or serious failures, whether deliberately or through incompetence to perform duties which go with the privilege of trading with limited liability (see Re: *Bath Glass Limite*d [1998] 4 BCC at page 133 and *Landhurst Leasing Plc*). However, it is not necessary for a Court to be satisfied that a director acted dishonestly and it is no defence that a director did his best. See *Secretary of State for Trade and Industry v Goldberg* [2004] 1 BCLC 597 at 611 and *Lo-Line Electric Motors Ltd* [1988] 1 Ch 477 at 486: > ‘Ordinary commercial misjudgement is in itself not sufficient to justify disqualification. In the normal case, the conduct complained of must display a lack of commercial probity, although I have no doubt that in an extreme case of gross negligence or total incompetence disqualification could be appropriate’ Statutory guidance is given in Schedule 1 to the Act of matters which the Court should have regard to in particular in making a finding of unfitness but the matters are 11 not comprehensive and the Court is not limited in assessing the conduct of the defendant.  Paragraph 6 of Part II of Schedule 1 allows the Court to take into account the extent of the director’s responsibility for the causes of an insolvency.  Further, failure to comply with section 221 CA 1985 (as from 6.4.08, sections 376-7 Companies Act 2006) is included in part 1 of Schedule 1. In relation to the question of whether a director ‘caused or allowed’ something to happen, see *Re: Continental Insurance Co of London Plc* [1997] 1 BCLC p48 at 58e, Chadwick J: > ‘In my view a director who fails to appreciate the obvious ‘allows’ the consequences of what he has overlooked just as much as if he did appreciate the position and did nothing about it’. The need to maintain and deliver up adequate accounting records, and in particular adherence to section 221 CA 1985/section 386 CA 2006 (the Company’s obligations came under both statutes), arises for a number of reasons: (1) As set out in Secretary of State for Trade and Industry v Arif [1996] BCC p586 at 593 > ‘Section 221 has, at the least, two purposes. First, to ensure that those who are concerned in the direction and management of companies which trade with the privilege of limited liability, do maintain sufficient accounting records to enable them to know what the position of the company is from time to time. Without that information, they cannot act responsibly in making decisions whether to continue trading.’ (2) The need to be able to scrutinize and verify transactions, once in insolvency: > ‘But equally important is a second purpose. If the company fails, a licensed insolvency practitioner will become office holder, as liquidator or as administrator or as administrative receiver. The office holder requires information as to the company’s trading and transactions which is sufficient to enable him to identify and recover or exploit the company’s assets. His task is made extremely difficult, if not impossible, if the company has failed to comply with its obligations under s221 of the 1985 Act' A disqualification order normally carries with it an order to pay the costs and expenses of the Secretary of State or the Official Receiver or both. Equally if your successful normally you are entitled to your costs. ## Instructing Expert Directors Disqualification Solicitors & Barristers We take an assertive approach right from the outset.  We consider all the options and all the possible legal applications.  We only instruct expert counsel or barristers who have a winning track record and who we have personally seen perform in Court. We recognise that your livelihood, business future and reputation is on the line in these proceedings and so we ensure that you are entirely in the best possible hands available to defend yourself from such allegations. --- # Bank Reviews of IRHPs / Swaps (FCA / FSA Review) Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/ *In June 2012 the Financial Conduct Authority (FCA), formerly the Financial Services Authority (FSA), indicated it had found “serious failings” in the sale of swaps and other interest rate derivatives to small businesses which amounted to mis-selling. These derivatives, also referred to as Interest Rate Hedging Products or IRHPs, are sophisticated financial instruments which were sold to bank customers on the basis that they would provide protection from future adverse interest rate movements, although in many cases they did not in fact have this effect.  * *The FCA came to a (confidential) agreement with four major banks (RBS, Barclays, Lloyds, HSBC) under which they agreed to review their past sales of IRHPs since December 2001. Subsequently a number of other banks that engaged in the sale of IRHPs to SMEs entered into similar confidential agreements with the FCA. We are the leading law firm advising and representing hundreds of bank customers through litigation and the FCA/FSA Review process.* ## The Bank Review of Past Derivatives Sales (IRHPs) In a pilot study the FCA found *“serious failings”* in the sale of IRHPs to small businesses including: poor disclosure of exit costs, failure to establish customers’ attitude to risk, advice being dispensed from persons who were not authorised to advise on the sale of IRHPs and over-hedging (where there is a mismatch between the amount and/or term of the IRHP with that of the underlying loan).  In over 90% of the cases included in the pilot study, these practices were found by the FCA to have amounted to mis-selling, as a result of which the customer should be entitled to "appropriate redress". The FCA has stated that its agreement with the banks requires them to: - Provide appropriate redress to non-sophisticated customers who were sold structured collars;- Review and provide redress to non-sophisticated customers who were sold other IRHPs (except caps and structured collars); and- Review and provide redress to non-sophisticated customers that complain about being sold caps. Whilst in total 11 banks have agreed to review the sale of around 40,000 IRHPs, this is no more than an internal review (under the aegis of the FCA) and does not prevent customers from taking legal action against the banks.  Such action may increase the pressure on the banks to provide fair and reasonable redress to their customers. It is important to note from the outset that the review is conducted by the bank not by the FCA.  The FCA has agreed the terms of the review with the banks, but these terms have not been made public. ## Qualifying for the FSA Review: Sophisticated and Non-Sophisticated? The question of who is eligible for inclusion within the review has given rise to some confusion. There are in effect a number of different hurdles which a customer has to jump in order to qualify.  Firstly, the customer must have been classified as either a "private customer" or a "retail client" at the date of the transaction in question.   These two classifications (private customer and retail client) were applicable during different periods.  Before 1st November 2007, the relevant classification was "private customer" and after this date it was "retail client", a change which came about because of the Markets in Financial Instruments Directive ("MiFID"). Classification as either a private customer or retail client should have entitled the customer to the highest level of regulatory protection. Even if a customer was classified as a private customer or retail client, they will only be included in the review if the product in question was sold after 1st December 2001 and if they are considered to be "non-sophisticated". In order to determine this, the banks apply a "sophistication test" agreed with the FCA. The original sophistication test as announced by the FCA prior to the pilot study, in June 2012, was that a customer would be considered sophisticated if they met any two of the following conditions: - A turnover of over £6.5m; or- A balance sheet of over £3.26m; or- Over 50 employees. In addition, a customer would be classified as sophisticated if, not withstanding the above tests, they had the knowledge and experience to understand the transaction.  This might apply, for example, where the customer had experience of trading in financial markets. After the conclusion of a pilot review (further information below), the original sophistication test was modified and the criteria were amended to ensure that: - Those who only meet the balance sheet test and employee criteria will be part of the review if the total value of their IRHPs is equal to or less than £10m;- Subsidiaries and Special Purpose Vehicles (SPVs) of large group companies are likely to be excluded from the review;- Company groups unable to take advantage of the lighter reporting requirements under the Companies Act 2006 are likely to be excluded from the review; and- SPVs that fall outside the definition of a group under the Companies Act 2006 but are connected entities are likely to be excluded from the review where the total value of the connected entities' IRHPs is more than £10m. As before, a customer would be classified as sophisticated, regardless of the above criteria, if they had the necessary knowledge and experience to understand the transaction. Furthermore (and contrary to what we suggested should be the case), it appears that in practice the banks are applying an additional test to exclude any customer with IRHPs whose total notional value exceeds £10 million. To summarise, in order to be included in the review: - The IRHP must have been sold on or after 1st December 2001; and- The customer must have been classified at the time as a private customer (for trades before 1st November 2007) or a retail client (for trades on or after 1st November 2007); and- The customer must have lacked the necessary knowledge and experience to understand the transaction; and- The customer must be non-sophisticated according to the criteria set out above (and if part of the group, the group as a whole must be non-sophisticated by these criteria); and- The customer's live IRHPs at the date of sale must have an aggregate notional value of no more than £10 million. Further information on the sophistication criteria can be found [here](https://web.archive.org/web/20171223195532/http://www.fsa.gov.uk/static/pubs/other/irs-flowchart-2013.pdf). Customers that fail the sophistication test (i.e. that are classified as sophisticated) will not be able to participate in the review and are therefore only likely to be able to obtain satisfactory redress if they issue legal proceedings against their bank(s). ## FCA Review - "Independent" Reviewers / Skilled Persons The banks involved in selling IRHPs have appointed independent reviewers (also known as “skilled persons”) who may be present during any meetings or calls with the bank during the course of the review.  The role of the independent reviewers is to ensure that the outcomes of the review are fair and reasonable.  The independent reviewers have been “approved” by the FCA who have, we understand, vetted them to ensure that they have the necessary skills, expertise and independence to understand the nature of IRHPs and the needs of those who were sold these products including scrutinising any potential conflicts of interest.  Where a potential conflict of interest has been identified, a second independent reviewer will be appointed to review those cases. Each bank has appointed its own independent reviewers, for example, Barclays have appointed either KPMG or Deloitte LLP and HSBC have also appointed Deloitte LLP. It is important to note that the independent reviewer will not actually conduct the review.  The review will be conducted by the banks themselves (although in some cases they have outsourced at least some of this work).  The reviewer will, in effect, review the bank's review to ensure that it is achieving satisfactory outcomes.  It may also be questioned whether a reviewer appointed by the bank can be truly independent.  It could therefore be said that the "independent reviewer" is neither independent nor a reviewer. ## FSA Review Pilot Scheme Before conducting a review of IRHPs the banks, in particular Barclays Bank Plc, HSBC Bank Plc, Lloyds Banking Group Plc and The Royal Bank of Scotland and National Westminster Bank Plc, were told to carry out a pilot review in which 173 sales to non-sophisticated customers were considered. The purpose of the pilot review was to assess each bank’s approach to reviewing the sales of IRHPs and the potential outcomes i.e. whether the bank correctly determined whether these customers were entitled to redress and if so whether the redress offered is fair and reasonable. The pilot review also considered the application of the sophistication test (see above). Following the pilot review it was found that in aggregate over 90% of the cases reviewed contained breaches of one of more regulatory requirements. However the cases selected for the pilots were atypical and involved the sale of the most complex products.  It remains unexplained and surprising that the FSA and the banks did not choose a fair or typical sample of the customers and products they sold. Cynical observers of the pilot review have suggested that by choosing to review the most complex products (which the banks had already agreed not to sell in future to unsophisticated SMEs) the likelihood of findings of regulatory breaches was much higher; and the impact of statistical findings of regulatory breaches much greater in the eyes of the media and the public, thereby creating false faith in the prowess of the regulator. ## Is the lengthy FCA Review Process Fair? Whilst the review is being overseen by the FCA and the independent reviewer, the review itself is being conducted by the banks themselves and therefore we do not consider it to be an entirely independent process.  We also do not consider, contrary to what we have seen banks argue, that this review amounts to a form of Alternative Dispute Resolution ("ADR").  An ADR process involves the parties each making representations, usually with the involvement of a neutral third party. A review by one party of its own conduct cannot properly be considered as ADR. Each bank will be conducting its review in a slightly different manner. Generally speaking, the review will involve some level of customer engagement and an opportunity for customers to: (i) give their version of the sales process; and (ii) provide any documentation in support. ## FSA Review Process - "Fact Find" to Decision The first step of the review and is being called a “fact find” however it could also be called a cross-examination of the customer with no right to question the bank sales persons. The fact find should be treated with caution.  Any information given to the bank during the fact find is “with prejudice” which means that it can be used against the customer in subsequent legal proceedings. Furthermore, the fact find is a one way process which means that whilst the bank will be provided with the information that you give them, they will not be providing you with any information from their end. Businesses with cases in the review may consider it prudent to instruct an experienced law firm to prepare written responses for the purpose of the FSA review fact find rather than the person who entered into the swap trades being subjected to a one sided inquiry. This is the approach we often adopt and we are able to put forward to the bank and present our client's cases succinctly in order to seek to secure redress at a maximal level. For further information, see our legal news article: [‘FCA Review’ of Interest Rate Hedging (IRHP) Sales: Written Statement or ‘Fact Find’ Interview?](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/) Customers should receive a letter from their bank explaining what the review process is to going entail and details on the next steps. An overview of the review process is outlined below: **Step 1 - Notification** The bank will write to all customers that have been classified as non-sophisticated. If the customer has purchased a structured collar, they will be advised that they have automatically been included in the review. If the customer has purchased an IRHP that is not a structured collar (not including caps) then the customer will be asked to choose whether it would like to participate in the review. **Step 2 – The Fact Find** Some of the banks have appointed third parties, typically city law firms, to carry out fact finds on their behalf, for example, Barclays have appointed Eversheds LLP to assist them. As part of the fact find these law firms are writing to bank customers to invite them to take part in the fact find by way of a recorded interview, either a telephone call or meeting. Customers will be asked whether they would like the independent reviewer to listen in to the telephone call as a silent observer. In its Report, ‘Interest Rate Hedging Products – Pilot Findings’, the FSA stated that it would encourage all customers to take advantage of the opportunity to engage in the review. Crucially, a customer’s account of the sale in correspondence by way of** a written statement is permitted by the review** but is generally discouraged by the bank’s review teams and lawyers [see: [‘FCA Review’ of Interest Rate Hedging (IRHP) Sales: Written Statement or ‘Fact Find’ Interview?](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/)]. **Step 3 – The Decision** A member of the banks Customer Review Team will review the information provided to them following the fact find and will reach an initial decision on what redress to offer. The independent reviewer then reviews and approves the decision. **Step 4 – Customer Meeting** Once the independent reviewer has approved the offer of redress it will be sent to the customer and a meeting to discuss the offer will be set up with the independent reviewer in attendance (if required). **Step 5 – Closure** Customers will be given the choice to accept or reject the offer. We note that the banks and the FCA are saying that legal representation is not required during the review process. We find this to be disingenuous as the banks themselves are instructing large national and city law firms such as Eversheds LLP. We remain cautious about the review process. We wrote to Eversheds LLP (who are conducting the fact find on behalf of Barclays) asking for confirmation that Eversheds will be acting impartially and to confirm that they will not be acting for Barclays in any litigation involving IRHPs. They refused to confirm that they would not act for Barclays in any IRHP litigation after the conclusion of the review. In January 2013 it was anticipated that the review process would between six to twelve months with priority going to customers that are in financial difficulty. It is clear to us, from the progress that has been made to date that twelve months may not be sufficient time to conclude the review and provide redress, whilst during this time many customers will find that they are out of time to bring a legal claim in the absence of satisfactory redress proposals as more than six years will have passed from the date of the sale / first contact with the derivative sales person. ## FSA Review: What Redress may be offered? Any redress offered by the banks *should* be fair and reasonable and put the customer back in the position they would have been in had they not been mis-sold the IRHP.  Customers should note from the outset that the FSA/FCA Review  process does not necessarily provide legal redress rather regulatory redress which may well provide lesser compensation than available at law.  the redress in the FSA review may not be as full and fair as legal redress via litigation which is designed to put parties into the position that would today exist as if an IHRP had never been entered into. The potential outcomes under the FSA review are stated by the FCA as: - **Full Redress** – exit from the IRHP (at no charge) and a refund of all payments including a refund of the break fee where this has already been paid by the customer.- **Replacement Redress** - Where the review shows that, had the regulatory requirements been complied with the customer would have purchased a different IRHP, customers will be offered an alternative simple product (such as a cap, vanilla swap or vanilla collar) and/or a different profile such as a change in the amount, duration, or structure of the IHRP. This form of redress will also include a refund of any difference in payments including the difference in any break costs where the same has been paid.- **No Redress** – this is the likely outcome where the review identifies that (i) had the bank complied with its regulatory requirements the customer would have bought the same product; or (ii) the customer suffered no loss. As far as we are aware and at the time of writing, no offers of redress have been made.  We are concerned that in many cases, even where the review finds the product has been mis-sold, the redress offered may be substantially less than the customer would be entitled to through the courts.  This is because the redress is not as good as legal redress which rips up the derivatives contract. A replacement for a cancellable swap may be argued by the bank to be a base rate swap under the notion of "Regulatory Redress"; such a product switch might result in close to nil financial redress. ## FCA Review: Consequential Loss Many customers will have consequential loss, which is loss that has flowed as a direct result of having been mis-sold the IRHP. Examples of consequential loss include overdraft charges and additional borrowing costs and potentially legal costs. Under the review, consequential loss will be assessed in accordance with pre-existing legal principles; we can help establish your entitlement. Consequential loss is a vital element to be determined by reference to legal principles and is another aspect which ought to be professionally advanced by a specialist legal team. ## Swaps Mis-selling Banks Spending £Millions to Save £Billions? Barclays and RBS are said to have 500-550 person strong Interest Rate Derivative review teams which are staffed by experienced individuals including derivatives sales people and experts. In addition the banks are instructing City and National law firms such as Eversheds and TLT Solicitors to aid them in the FCA/FSA Review. We understand some of the IRD review teams contain staff who used to cross- sell OTC derivatives in the period in which the FSA found clear evidence of mis-selling. Bank customers may question why major banks are spending tens if not hundreds of millions of pounds on the review process? No doubt the FSA/FCA Review is designed to save the banks tens of billions of pounds. Spending millions to save billions is economically sensible for the bank and for the Treasury as it may mean there are no further taxpayer bailouts of banks as a direct consequence. However it means many businesses may not achieve the true redress they are entitled to at law. Those bank customers that attend 'fact finds' and meet the banks without taking suitable legal advice and representation are likely to find themselves in a disadvantageous position (as they will not be advised as to the issues that require highlighting in their individual case in the FCA Review process and what pointers for redress the banks are looking for) than those who have instructed experienced law firms to represent them. ## FSA Review: News Updates ![lexlaw litigation solicitors london ](https://lexlaw.co.uk/wp-content/uploads/2013/06/Screen-Shot-2015-12-10-at-3.50.46-PM1-e1467463938484.jpg) **International Business Times** reports that earlier interview of LEXLAW Principal, M Ali Akram on the flaws in FSA Review process has lead to a Business Statement in Parliament (7 March 2013): ['Mis-Selling Derivatives Scandal: Tessa Munt MP Questions Independence Over Barclays’ ‘Fact-Finders’'](http://www.ibtimes.co.uk/mis-selling-derivatives-irsas-tessa-munt-barclays-443326) ![BBC Parliament Logo lexlaw solicitors barristers london](https://lexlaw.co.uk/wp-content/uploads/2009/08/bbc+parliament1.jpg) **International Business Times'** interview of M Ali Akram, Principal of City Law Firm, LEXLAW, results in a Derivatives Mis-selling Exclusive and a subsequent question raised in the United Kingdom Parliament by The Rt. Hon. Tessa Munt MP for Wells (PPS to The Rt. Hon. Vince Cable MP). Response by The Rt. Hon. Andrew Lansley MP, Leader of the House (7 March 2013): [Article featuring LEXLAW leads to Parliamentary Question on Interest Rate Swap Mis-selling:](https://youtu.be/R31tJXE1Cyc) ![](https://lexlaw.co.uk/wp-content/uploads/2013/06/Screen-Shot-2015-12-10-at-3.50.46-PM1-e1467463938484.jpg) **International Business Times** interviews LEXLAW Principal, M. Ali Akram on the flaws in Barclays Banks FSA Review process (4 March 2013): ['Mis-Selling Derivatives Exclusive: Barclays’ Lawyers Accused of Breaching Code of Conduct'](http://www.ibtimes.co.uk/barclays-irsa-mis-selling-derivatives-eversheds-tlt-441838) --- # HMRC Petitions: Compulsory Court Winding-Up Source: https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/ *In recent times, *[His Majesty's Revenue & Customs](https://taxdisputes.co.uk/)* (HMRC)* has allocated substantial resources to reclaim unpaid taxes and escalated their enforcement measures, which encompass legal actions like statutory demands, asset seizures, and the issuance of winding-up petitions. *Prompt action is crucial. If you find yourself facing a tax debt, it's essential to proactively communicate with HMRC early on. Ignoring the matter often leads to proceedings in the Insolvency courts. At Lexlaw, our experienced [HMRC Defence legal team](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) specialises in guiding both companies and individual taxpayers through these challenges, whether they involve statutory demands or winding-up petitions.* *[Winding-up petitions ](https://windinguppetitionsolicitors.co.uk/set-aside-hmrc-winding-up-petition-statutory-demand-lawyer-advice/)on the whole are most often deployed by HMRC as a [debt recovery ](https://windinguppetitionsolicitors.co.uk/debt-recovery/)weapon of last resort and the issuing of petitions is informally described within [HMRC](https://taxdisputes.co.uk/) as their tool to "cleanse capitalism". Before a petition is issued by HMRC they will usually issue a [HMRC Statutory Demand ](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/)first. Our team is ready to provide assistance.* ## What is a HMRC winding-up petition and what does it entail for the company? A winding-up petition is a formal legal document filed by a creditor, in this case HMRC, with the intention of compelling the compulsory liquidation of a company if the tax debt (such as Corporation Tax, VAT, PAYE or NIC) is not paid. When a winding-up petition is submitted to the court, it signifies that the petitioner, HMRC, believes the company is unable to meet its financial obligations, and as a result, should be shut down. An ICC Judge is bound to take seriously any petition issued by HMRC and any company facing the same ought to take urgent legal advice because if the winding-up petition is granted by the court, it can lead to the company's assets being sold and the proceeds used to pay off its debts. Following this process, the company is typically dissolved, effectively ceasing its operations. The liquidator is bound to check the director's conduct and loan account and has the right to obtain all bank and accounting information. It's important to note that a winding-up petition is a serious legal step that can have significant consequences for the company, its directors, and stakeholders. Therefore, if a company receives a winding-up petition, seeking legal advice promptly is crucial to understand the best course of action and potential options available. ## When do HMRC issue a winding-up petition? HMRC state in their literature accompanying the postal service of a [HMRC petition](https://windinguppetitionsolicitors.co.uk/set-aside-hmrc-winding-up-petition-statutory-demand-lawyer-advice/) that (i) they only start [winding-up proceedings](https://windinguppetitionsolicitors.co.uk/winding-up-procedure/) because companies or partnerships owe HMRC money and (ii) that  HMRC will usually have taken other debt management steps (such as Time to Pay arrangements) or enforcement action to obtain payment and the business has either not paid at all or made unacceptable proposals for settling the debt. HMRC may issue a winding-up petition against a company if they believe the company owes unpaid taxes and efforts to recover the debt through other means have been unsuccessful. This action is typically taken when HMRC believes the company's financial situation is such that it is unable to meet its tax obligations. Reasons for HMRC issuing a winding-up petition could include: - Unpaid Taxes: The company has accrued a significant amount of unpaid taxes, such as VAT, PAYE, or Corporation Tax. - Previous Attempts Failed: HMRC may have previously attempted to collect the debt through other means, such as issuing reminders, demands, or even pursuing legal action like statutory demands. - Severe Financial Distress: HMRC believes the company is in severe financial distress and may not be able to meet its tax obligations in the future. - Failure to Engage with HMRC: The company may have not engaged with HMRC in a satisfactory manner to address the outstanding tax debt. - Exhaustion of Alternative Options: HMRC may have exhausted other available avenues for recovering the debt. It's important for the company and its directors to seek professional advice promptly upon receiving a winding-up petition to understand the specific circumstances and determine the best course of action. This may involve negotiating with HMRC, disputing the debt, or exploring other options to address the outstanding tax liabilities. ## How much does the debt have to be to issue a winding-up petition? The debt on a HMRC petition will, as per all petitions be for a sum of at least £750, and will usually be in the order of tens to hundreds of thousands of pounds. We have successfully defended HMRC petitions where debts have been well in excess of one million pounds. HMRC will include in their petition a breakdown of the debt figure which denotes how they arrive at the total figure. The monies owed to HMRC could be for unpaid VAT returns, unpaid VAT assessments, PAYE payments, Employer's National Insurance Contributions, unpaid corporation tax and so on. ## What is the procedure for HMRC to issue a Winding-up Petition? Winding up petitions may be issued at Court against either a Company or a Partnership, the latter (a petition to wind up a partnership) is usually when issued by HMRC accompanied by individual HMRC bankruptcy petitions for each of the partners. A HMRC [winding up petition](https://windinguppetitionsolicitors.co.uk/set-aside-hmrc-winding-up-petition-statutory-demand-lawyer-advice/) is the precursor to the compulsory liquidation of a company or the dissolution of a partnership if not properly dealt with by the Directors or Partners and in essence means that the Revenue, their [solicitor's](https://windinguppetitionsolicitors.co.uk/contact-us/) office and their [barrister](https://windinguppetitionsolicitors.co.uk/contact-us/) is asking the Court to wind up your business and have an insolvency practitioner distribute the assets of that business amongst all creditors. If the Companies Court Registrar agrees with HMRCs barrister at the court hearing of the petition to liquidate and close down the company then the Court issues a [winding-up order](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/). The Company then has to cease to trade. The bank account will have already become frozen on advertisement of the petition by HMRC. The Official Receiver, a Government civil servant, then investigates the company and the conduct of the directors. The assets are liquidated to pay of the debts of the company by a nominated Insolvency Practitioner. ## Are there any specific documents or information that HMRC requires in response to the winding-up petition? Yes, when responding to a winding-up petition from HMRC, it's important to consider with the benefit of legal advice, providing specific documents and information to address the situation effectively. These may include: - Financial Statements: These documents provide an overview of the company's financial position, including its assets, liabilities, income, and expenses. - Evidence of Disputed Debt: If the company disputes the debt claimed by HMRC, it should provide supporting evidence or documentation to demonstrate why the debt is in question. - Communication History: Any correspondence or communication between the company and HMRC regarding the debt should be included to provide context and demonstrate attempts to resolve the issue. - Cash Flow Forecasts: These forecasts can help demonstrate the company's ability to meet its financial obligations in the future and potentially avoid winding-up proceedings. - Proposed Payment Plan: If the company intends to propose a payment plan or arrangement to address the debt, this should be outlined in detail. - Evidence of Solvency: Providing evidence that the company is solvent and capable of meeting its financial obligations can be crucial in disputing a winding-up petition. - Legal Advice: Any legal advice or opinions received regarding the winding-up petition should be documented and submitted. - Company Records and Registers: These documents may include shareholder registers, director information, and details about the company's operations. - Corporate Governance Information: Information about the company's corporate governance structure, including board meetings and decision-making processes, may be relevant. - Evidence of Ongoing Business Operations: Demonstrating that the company is actively engaged in legitimate business operations and has a viable business plan can be important. It's important to consult with legal and financial advisors to ensure that all necessary documents and information are provided in response to the winding-up petition. This will help present the company's case effectively and may increase the likelihood of reaching a resolution with HMRC. ## What happens at the winding up petition hearing? After presentation of the [winding up petition](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/), the Court is formally involved and a date will be set for a winding up petition hearing which must be advertised in the interests of the entire body of creditors of the company. The winding-up petition hearing is a critical legal proceeding where the court evaluates the merits of the petition and determines whether to grant or dismiss it. Here is what typically happens at a winding-up petition hearing: - Appearance of Parties: The petitioner (usually HMRC or another creditor) and the company in question will be represented by their legal counsel. The directors or representatives of the company may also be present. - Presentation of the Petition: The petitioner's legal counsel will present the winding-up petition and provide arguments supporting the need for compulsory liquidation. They will typically outline the details of the debt owed and the company's failure to pay. - Company's Response: The company's legal counsel will have the opportunity to respond to the petition. They may present evidence disputing the debt, providing reasons why the petition should be dismissed, or proposing alternative arrangements, such as a payment plan. - Consideration of Evidence: The court will review the evidence and arguments presented by both parties. This may include financial documents, communication history, and any additional information relevant to the case. - Questions and Clarifications: The court may ask questions or seek clarifications from both parties to better understand the circumstances surrounding the debt and the company's financial situation. - Adjournment or Decision: Depending on the complexity of the case and the information presented, the court may either make an immediate decision or adjourn the hearing to allow for further deliberation. - Judgment: If the court grants the winding-up petition, it signifies that the company will proceed with compulsory liquidation. The court will typically appoint an official liquidator to oversee the process. - Dismissal of the Petition: If the court dismisses the petition, it means that the company will not be subject to compulsory liquidation, and it can continue its operations. It's crucial for the company's legal counsel to present a strong case during the hearing, backed by relevant evidence and legal arguments. Additionally, directors and representatives of the company should be prepared to provide any necessary information and respond to questions from the court. Seeking professional legal advice and representation is essential in navigating the complexities of a winding-up petition hearing. ## What is the timeline for the winding-up process, and what key milestones should we be aware of? The timeline for the winding-up process can vary depending on various factors, including the complexity of the case, the efficiency of the legal proceedings, and the specific circumstances of the company. However, here is a general outline of the key milestones and approximate timeline for the winding-up process: - Receipt of a Statutory Demand (Day -21): The company has 21 days notice of a potential winding-up petition. If HMRC has issued the demand then you should understand they are extremely likely if not guaranteed to next issue a winding-up petition. Companies must take urgent legal advice from a specialist solicitor. - Receipt of Winding-Up Petition (Day 1): The process typically begins when the company receives the winding-up petition. This initiates a critical period for the company to respond and take necessary actions. - Legal Response and Preparation (Days 1-7): The company has a limited time frame to respond to the winding-up petition. During this period, the company should engage legal counsel, gather relevant documents and information, and prepare its defense. - Winding-Up Petition Advertisement (Day 7 onwards): The Petition can be advertised 7 clear days after service on the Company. Advertisement is a serious risk factor as the Company bank accounts will be frozen. Advice on injunctions to restrain should be sought well in advance. - Hearing (Day 28-56): The winding-up petition hearing takes place in court on the date stated on the front of the petition. This is where both the petitioner and the company present their arguments, and the court decides whether to grant or dismiss the petition. This hearing could be adjourned. - Judgment (Day 28-56): Following the hearing or adjourned hearing, the court will render a judgment, either granting or dismissing the winding-up petition. If granted, this marks the beginning of the compulsory liquidation process. - Appointment of Official Liquidator (Shortly After Judgment): If the winding-up petition is granted, the court will typically appoint an official liquidator to oversee the liquidation process and handle the distribution of assets to creditors. - Notification to Creditors (Within Days): The official liquidator will notify creditors of the company's insolvency and provide instructions for filing claims. - Compulsory Liquidation Process (Ongoing): The official liquidator will take control of the company's assets, sell them, and distribute the proceeds to creditors in accordance with the statutory order of priority. - Dissolution (Several Months): Once the liquidation process is complete and all debts and expenses have been paid, the company will be formally dissolved. It's important to note that these timeframes are approximate and can vary based on the specific circumstances of each case. Additionally, the company's ability to negotiate, challenge the petition, or propose alternative arrangements can influence the timeline. Seeking legal advice early in the process is crucial to understanding the specific timeline and key milestones relevant to the company's situation. This will help directors and stakeholders navigate the winding-up process effectively. ## Who attends the winding up petition hearing and where is it? The petitioner, creditors, anyone with an interest in the company’s property, the company and its’ shareholders all have the right to attend the hearing and be heard at[ the hearing.](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/) In London, [winding up petitions ](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/)are heard at the High Court of Justice, Business and Property Courts of England and Wales in the Insolvency and Companies Lists (commonly called the Companies Court). The list is usually heard every Wednesday from 10:30am in the Rolls Building, Fetter Lane, London, EC4A 1NL. We are located 5 minutes walk from the Court and are therefore able to provide urgent representation. However, this is subject to capacity and receiving instructions in a timely manner. ## Are there any options available to challenge or dispute the winding-up petition? Yes, there are several options available to challenge or dispute a winding-up petition. These may include: - Proving the Debt is Disputed: If the company believes that the debt claimed by the petitioner (usually HMRC or another creditor) is not valid or is in dispute for legitimate reasons, this can be presented as a defense. - Negotiating with Creditors: The company may attempt to negotiate a settlement with the petitioner or other creditors to resolve the debt without resorting to winding-up proceedings. - Seeking an Adjournment: The company can request an adjournment of the winding-up hearing, giving it more time to address the debt or explore alternative solutions. - Applying for an Administration Order: In certain cases, the company may apply for an Administration Order, which can provide breathing space to restructure and potentially continue trading. - Challenging the Petition on Technical Grounds: There may be legal or procedural grounds on which the winding-up petition can be challenged, such as if it was improperly served or if there are errors in the documentation. - Appointing an Insolvency Practitioner: The company may appoint an insolvency practitioner to act as an intermediary between the company and its creditors, potentially leading to a Company Voluntary Arrangement (CVA) or other restructuring option. - Disputing the Validity of the Statutory Demand: If a statutory demand was served prior to the winding-up petition, the company may dispute its validity if it believes it was not properly served or if there are grounds for challenging the debt. It's important to note that each case is unique, and the available options will depend on the specific circumstances and the laws of the jurisdiction involved. Seeking legal advice from a qualified professional experienced in insolvency and corporate law is crucial in determining the best course of action for challenging or disputing a winding-up petition. ## Can I get an Injunction to stop a HMRC Winding-up Petition? An injunction may be a possibility to prevent HMRC from advertising or proceeding to present a winding-up petition against your company. However, it's important to understand the circumstances and legal arguments involved. - **Grounds for Injunction:** A court may grant an injunction if you can show HMRC's actions were abusive or amounted to misuse of the legal process. In [one example where we successfully restrained HMRC](https://taxdisputes.co.uk/2024/06/injunction-success-abusive-hmrc-winding-up-petition-dismissed/), our client company successfully argued that freezing their accounts, then petitioning to wind them up due to unpaid taxes they couldn't access, was abusive. - **Evidence Required:** A strong case requires evidence to support your claim. This could include documentation of HMRC's actions, communication records, and proof that you were trying to resolve the tax issue. - **Court Challenge:** Obtaining an injunction typically involves applying to the Insolvency and Companies Court. Legal representation is advisable due to the complexities involved. Here is one such case study where [our client company defeated a £0.5m HMRC Winding-up Petition for unpaid taxes](https://lexlaw.co.uk/solicitors-london/case-study-abusive-hmrc-winding-up-petition-defeated/). HMRC may argue against an injunction, citing limitations on using them against government departments. However, there are precedents where courts have allowed injunctions in such cases. Also, while injunctions can be an option, exploring alternative solutions with HMRC like negotiating a payment plan or disputing the tax debt might be a faster and less expensive approach. If you're facing a winding-up petition from HMRC and considering an injunction, consulting with a [solicitor specialising in tax and insolvency law ](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/injunction-win-abusive-hmrc-winding-up-petition-dismissed/)is crucial. We can assess your situation, advise on the best course of action, and represent you in court if necessary. ## What are the potential consequences if the winding-up petition is granted by the court? If a winding-up petition is granted by the court, it can have serious and far-reaching consequences for the company. Some of the potential consequences include: - Compulsory Liquidation: The court's approval of a winding-up petition initiates the process of compulsory liquidation. This means that the company's assets will be sold, and the proceeds will be used to pay off its debts. - Closure of Operations: The company will cease its normal business operations. This includes the termination of contracts, dismissal of employees, and the discontinuation of any ongoing projects. - Dissolution: Once the assets have been liquidated and the debts paid off, the company will be formally dissolved. This means it will no longer legally exist as an entity. - Loss of Control: During the liquidation process, control of the company's affairs is typically handed over to a liquidator appointed by the court. This individual is responsible for overseeing the winding-up process and distributing the proceeds to creditors. - Impact on Directors and Shareholders: Directors may face personal liability if they are found to have acted improperly or negligently in the lead-up to the winding-up. Shareholders may lose their investments in the company. - Credit Implications: The company's credit rating will be negatively affected, making it more difficult for directors or shareholders to obtain credit in the future. - Legal Proceedings: Directors may face legal action if it is determined that they breached their fiduciary duties or engaged in wrongful trading. - Reputation Damage: The company's reputation will be adversely affected, which can have long-lasting consequences for the directors and shareholders involved. It's important to note that the specific consequences can vary depending on the circumstances and the jurisdiction in which the company operates. Seeking professional legal advice early on is crucial to understanding the full implications and exploring any potential options available to address the winding-up petition. ## What are the implications for me personally as a director if the winding-up petition is successful? If a winding-up petition against the company is successful and the court orders compulsory liquidation, there are several potential implications for you personally as a director: - Personal Liability: As a director, you may be held personally liable for certain company debts if it is determined that you engaged in wrongful or fraudulent trading, or if you breached your fiduciary duties. - Disqualification as a Director: If the court finds that you acted improperly or negligently in the lead-up to the company's insolvency, you may face disqualification from acting as a director for a specified period. - Investment Loss: Any personal investments you made in the company may be lost. This could include shares or loans you provided to the company. - Loss of Employment: You will no longer be employed by the company, as it will cease operations upon the initiation of the liquidation process. - Restrictions on Future Directorships: If disqualified, you will be prohibited from acting as a director or participating in the management of any company for the duration of the disqualification period. - Impact on Credit Rating: Your personal credit rating may be adversely affected if you personally guaranteed any company debts or if you were a co-signatory on financial agreements. - Potential Legal Actions: If it is found that you breached your duties as a director, you may face legal action from creditors, shareholders, or insolvency practitioners. - Professional Reputational Damage: Your professional reputation may be negatively affected, which can impact your ability to secure future roles or positions in the business community. It's important to seek legal advice early in the process to understand your specific situation and take appropriate steps to mitigate potential personal liabilities. Consulting with insolvency professionals and legal experts can help you navigate the complex legal landscape and make informed decisions. ## Expert HMRC Petition Solicitors As [specialist winding up lawyers](https://windinguppetitionsolicitors.co.uk), we can help the company to get enough time to manage or settle large debts or to dispute the monies claimed in the petition. With the correct legal guidance it is perfectly possible to obtain time and resolve the debt even if HMRC won't initially agree to sensible time to pay proposals; there are legal arguments and applications that can be deployed in the company's favour. If the company cannot repay all its HMRC debts, we can also advise on a range of other solutions that will allow the company to continue to trade. The insolvency and Court rules relating to winding up proceedings are a technical minefield; as expert winding up petition solicitors we help our clients to avoid suffering the 'usual compulsory order'. We assist by protecting the companies interests and by negotiating with creditors and advising and representing the company at Court. Retaining insolvency solicitors and barristers in particular assists in dealings with HMRC who will know a company is taking matters seriously and responsibly when the company instructs specialists such as ourselves. When a business is insolvent or is [served with a HMRC petition](https://taxdisputes.co.uk/hmrc-winding-up-petitions/) and runs the risk of becoming wound up, the owner or the directors have a duty to act in the best interests of the creditors. Failing to do so risks personal liabilities and possible [directors disqualification proceedings](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/). We provide specialist senior legal advice from solicitors and barristers at the outset when it absolutely matters in choosing the best strategy to follow (especially when dealing with the [defence of a HMRC petition](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/)). We assist our clients by: - Opposing or stopping a winding up petition; - Obtaining an [adjournment of winding up proceedings;](http://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/) - Applying for [injunctions to restrain advertisemen](http://windinguppetitionsolicitors.co.uk/restraining-injunctions-against-winding-up-petitions-and-advertisements/)t in the London Gazette; - Applying to the Court for [validation orders](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/) to unfreeze bank accounts; - Liaising with HMRC and other creditors; - Court representation and advocacy before a Registrar or Judge - Advising the Company or Partnership on winding up petition procedure - [Advising Directors on risks](http://web.archive.org/web/20151225061307/http://windinguppetitionsolicitors.co.uk:80/risks-for-directors/) and insolvency routes - Developing (and aiding implementation of) strategies that allow the business to continue ## What are the potential legal costs associated with contesting or responding to the winding-up petition? The potential legal costs associated with contesting or responding to a winding-up petition can vary widely depending on several factors, including the complexity of the case, the amount of debt involved and the quality of legal representation chosen. Here are some potential legal costs to consider: - Solicitor's Fees: This includes the fees charged by solicitors for providing legal advice, preparing legal documents, representing the company in court, and conducting any necessary research or investigation. - Court Fees: These are fees required to file documents with the court, such as the response to the winding-up petition or any other legal submissions. - Barrister Fees: In some cases, a barrister may be engaged to provide specialist advice or representation in court. This is in addition to solicitor fees. We have in-house barristers at our firm, thus saving costs. - Administrative Costs: This includes expenses related to document preparation, photocopying, postage, and other administrative tasks associated with the legal proceedings. - Disbursements: These are additional costs incurred in the course of legal proceedings, such as travel expenses, court reporter fees, or fees for obtaining official documents. - Court-Appointed Insolvency Practitioner Fees: If the winding-up petition is granted, a court-appointed insolvency practitioner may be involved in the liquidation process. Their fees will be borne by the company's assets. - Mediation or Alternative Dispute Resolution Costs: If parties attempt to resolve the dispute through mediation or alternative dispute resolution methods, there may be associated fees. - Appeal Costs: If the case progresses to an appeal, there will be additional legal costs associated with the appeal process. It's important to note that legal costs can accumulate quickly in litigation cases, and they can be a significant financial burden for the company. Directors and stakeholders should carefully consider their budget and explore options for financing legal expenses if necessary. Additionally, seeking transparent or fixed fee structures and discussing potential costs with us upfront can help manage expectations and avoid surprises later in the process. ## HMRC Petition Advice from the Experts Facing an HMRC winding-up petition can be a daunting situation. Our experienced team of solicitors and barristers specialises in providing urgent assistance and expert legal advice. Contact us today for an immediate consultation. We're here to support you through this process. --- # Hidden Swaps in Fixed Rate Loans & TBLs Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/ *Over 60,000 fixed rate or tailored business loans containing embedded derivatives or 'hidden swaps' have been sold to SMEs by major UK Banks and Building Societies such as RBS, Barclays, Lloyds, HSBC, Santander, Clydesdale, Yorkshire, Nationwide and West Bromwich. Some GPs have Fixed Rate Loans issued by [General Practice Finance Corporation Ltd (GPFC)](https://www.aviva.com/newsroom/news-releases/2002/05/general-practice-finance-corporation-ltd-unveils-new-look-and-plans-for-2002-1161/) taken over by Norwich Union now [Aviva](https://www.avivainvestors.com/en-gb/capabilities/gp-finance/) which are loan wrappers for complex Interest Rate or Gilts-linked Derivatives.  * *These 'loan contracts' are in fact regulated 'contracts for difference' and are open to legal challenge as they were thereby often mis-sold, for example, due to inadequate warning of break costs. We have litigated more cases than any other law firm in the UK and are settling cases constantly including cases involving 'hidden swaps'.* > “Data from Barclays, HSBC, Lloyds, National Australia Bank Group and RBS shows that more than 60,000 fixed rate loans with mark-to-market costs have been sold since 2001, [which is] significantly more than the 40,000 standalone IRHPs covered by our review.” > > > *Martin Wheatley, Chief Executive of the Financial Conduct Authority* ## Understanding Derivatives and Swaps To understand what 'hidden swaps' are one must first understand standalone swaps. A standalone interest rate or gilts-linked swap is a type of complex financial derivative product. Banks often sold these to customers (such as SMEs) in the period 2005 to 2008 as a precondition of providing a business loan. Interest rate swaps (and fixed rate loans) were promoted and sold by banks as a means of protecting customers against the impact of potential rises in interest rates on their loans.  However, banks failed to inform and advise their customers of the potential and significant contingent liability risks of these swaps. ## Early Repayment Fees and Break Costs As a result, under these swaps, customers were forced to make substantial payments to the banks, to the detriment of their businesses.  Furthermore, customers were and often are still unable to terminate these swaps without paying large (and previously undisclosed) breakage costs (or Early Repayment Fees) to their banks, building society or insurer lenders. With insurers like Aviva (Norwich Union, GP Corporate Finance) the Fixed Rate Loan documentation will have a generic clause referring to Early Repayment Fees but which does not explain the method of calculation - perhaps because that method involves reference to Gilts-linked or Interest Rate Derivatives? The clause below is meant to explain to borrowers (often doctors who are financially and legally unsophisticated) what the 'Early Repayment Fee' is but it does not explain it at all nor warn that the costs could be substantial as they are linked to derivatives (which Warren Buffet, a sophisticated investor, has famously referred to as '*weapons of mass financial destruction*'). > The **Early Repayment Fee** is an amount sufficient fully to indemnify us against any reduction in the rate of return that we expect to receive on our investment in the Loan as a direct or indirect result of the Early Repayment. The amount of indemnity will be ascertained in accordance with our usual method of calculation from time to time. > > > GPFC / Norwich Union / Aviva Standard Condition 10.2.2 'explaining' an “Early Repayment Fee” Those break costs could be several hundred thousand pounds if not millions - all dependant on the cost of breaking a hidden derivative. Most doctors thought this was clause was simply an 'early redemption penalty' which might cost a few to several thousand pounds like in a domestic mortgage because of the above vague wording with no warning the costs could be substantial. We have successfully obtained redress via [High Court swaps mis-selling litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) and via the [FCA agreed IRHP Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) on behalf of SMEs ranging from [family run businesses](https://web.archive.org/web/20140916060007/http://invezz.com/news/equities/6046-lloyds-share-price-details-of-swap-mis-selling-settlement-made-public) or [local retail companies](https://youtu.be/v_JHfC82N-I) to [listed PLCs](http://web.archive.org/web/20140731123938/http://www.bloomberg.com/article/2014-05-29/aTG0DdTNe1E4.html) and offshore companies.  We specialise in hidden derivatives litigation and have issued more court claims than any other law firm. Many hidden swaps cases settle via out of court settlements with banks and insurers doing this in order to prevent the setting of a case precedent which would cost much more. ## What are 'Hidden Swaps' or embedded derivatives? Embedded swaps - also known as hidden swaps - are fixed rate or tailored business loans that contain embedded complex financial derivative products.  With embedded swaps, unlike with standalone swaps, the derivative product (i.e. the swap) and the loan are marketed and sold as part of the same product. Major banks and building societies promoted these embedded swaps to their customers as ordinary business loans without explaining that these "loans" also contained complex financial derivative products, which bore significant risks to customers.  As a result, customers are now finding that they are unable to exit these "loans" without paying prohibitive (and previously undisclosed) breakage costs to their banks. The FCA are concerned at the conduct of the banks and building societies and have stated in a [letter from Martin Wheatley, the FCA Chief Executive to the Financial Secretary to HM Treasury, the Rt Hon Greg Clark MP](https://lexlaw.co.uk/wp-content/uploads/2014/07/121113-Letter-from-FCA-Martin-Wheatley-to-HM-Treasury-LEXLAW-Solicitors.pdf) that: > “We have concerns that firms … may consider ’embedding’ all their IRHPs into commercial loans in future and thus avoid our regulatory oversight altogether.  This could include ’embedding’ some of the most complex IRHPs (e.g. Structured Collars), which the banks have agreed to stop marketing to retail customers.”   > > > *Martin Wheatley, Chief Executive of the Financial Conduct Authority* View full source: [12 November 2013 Letter from FCA's Martin Wheatley to HM Treasury.](https://lexlaw.co.uk/wp-content/uploads/2014/07/121113-Letter-from-FCA-Martin-Wheatley-to-HM-Treasury-LEXLAW-Solicitors.pdf) ## 'Hidden Swaps' Mis-selling by Banks & Building Societies The sale of complex financial instruments such as caps, options, collars, swaps, structured collars, cancellable swaps and other OTC derivatives is classed as 'designated investment business' which is highly regulated.  In order to sell these products a financial institution must: - sell via an authorised individual in their organisation who is licensed by the FCA; and - who, together with the organisation, must comply with the Conduct of Business rules when advising on and selling these products. The sales process of  Fixed Rate Loans or Tailored Business Loans (FRLs and TBLs) may fail to comply with the required sales process set out in the FCA's Conduct of Business rules for the sale of contract for differences. In many of these sales the firms breached the relevant regulation and a legal duty of care by: (i) not explaining to their customers the possible detrimental effects of the embedded interest rate derivative and the associated risks together with (ii) failing to consider that the embedded derivative may well not be the most suitable product for the customer. As a consequence, if the customer never understood the risk and has suffered a loss then the agreement may be open to legal challenge to recover any loan repayments in excess of the variable rate and to recover any breakage costs (both of which may be very substantial sums of hundreds of thousands or millions of pounds). ## 'Contract for Difference' or a 'Contract for Loan'? Whilst the marketing and sale of loans is regulated, such lending regulation is light (comparative to derivatives regulation) and never contemplates the embedding, or hiding, of complex financial instruments such as derivatives within a commercial loan. Derivatives are contracts for difference usually entered into by large and sophisticated entities.  As contracts for difference, they carry serious and complex risk depending on fluctuations in the reference rate (eg interest rate) and as a result may be very costly to exit and to calculate that risk.  As a result the marketing and sale of derivatives is tightly regulated and the products have to be carefully explained when sold.  It appears that many UK financial institutions have sought to avoid the cost of compliance by asserting they are simply selling contracts for loans not contracts for differences. This is a new area of law so whilst there is no precedent case law, LEXLAW, together with our counsel teams and hedging experts, consider that embedded derivatives contracts are likely to amount a regulated financial instrument. We note that National Australia Bank Group's Clydesdale Bank and Yorkshire Bank are participants in the FCA agreed Interest Rate Hedging Product (IRHP) review scheme for those Tailored Business Loans that have embedded in them products more complex than a vanilla cap or vanilla swap (such as cancellable swaps, collars, structured collars or dual rate swaps). It is clear therefore that some limited comfort can be derived that the FCA must agree that simply labelling something a loan does not obviate the need to sell the embedded product according to regulation. Otherwise, why are so many TBLs in the FCA agreed review scheme? ## Resolving a Mis-sold Fixed Rate or Tailored Business Loan: If you have been mis-sold a hidden swap (or fixed rate or tailored business loan) there a number of possible solutions.  These include: - attempting to negotiate with the Lender (not usually successful) - complaining to the Lender (not usually successful) - opting-in to the Review of Past Sales of Interest Rate Hedging Products (IRHPs), commonly referred to as the "FCA Review" or “FSA Review” (no longer an option) - complaining about the Bank or Building Society to the Financial Ombudsman Service (FOS) (limited success and limited compensation) - preparing and serving a letter before action, issuing proceedings and litigating against the bank (the step that most often results in settlement) The initial step may be to attempt to negotiate with the bank and to seek to reach an agreement although this is often very difficult to achieve without threatening and/or commencing legal action. Pre-action advice, information gathering and correspondence is managed by our specialist fixed rate loan solicitors who consider the facts of your case, the circumstances the fixed rate loan was sold in and the bank’s position. We then prepare a detailed pre-action letter of claim to start off the negotiations. If negotiation will not resolve a mis-sold FRL then litigation will be considered. In the best outcome the contract can be rescinded which means that parties will be put in their original positions before they entered the contract.   Our expert litigation lawyers will assess your case and position and using their specialist knowledge and experience will strategise the best to way to commence proceedings against the bank. Another consideration is complaining to the Financial Ombudsman Service, via which process it may be possible to obtain compensation of up to £150,000 (for complaints made after 1 January 2012). Our lawyers have experience dealing with the FOS and can assist clients as to the FOS’ rules and procedures. Where appropriate we can assist in making formal fully prepared and well presented complaints on clients’ behalf and can advise if litigation is a better option for redress, which in these cases it often is. ## Why use a Specialist Hidden Rate Swap Solicitor? Derivatives are a complex subject matter which most generalist lawyers simply won’t be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks.  This experience has been gained not only at other leading city law firms but at the legal and compliance departments of the banks themselves. Our team will ensure your interest rate swap mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the hidden swap. This usually means a refund of all balancing payments and escaping or recovering the contingent liability (ie the break fee). We work to achieve our client’s interests by attempting to negotiate with the banks wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. ## Our Mis-sold TBL Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in pursuing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in swaps mis-selling cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the mis-selling claim; - Assisting you in preparation of evidence to support your mis-sold hidden swap case; - Appointing the right derivatives and hedging experts to ensure the best chance of success in litigation; - Appointing forensic accountants to assess and report on the refunds and consequential losses due; - Liaising with the bank and the Court and/or the Financial Ombudsmen Service; - Providing first class Court representation and advocacy; and - Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the Ministry of Justice and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Call us about your Fixed Rate Loan case  If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, are able to assist. Get in touch so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading financial services mis-selling litigation solicitors and barristers. Just call or email us now for a free initial telephone consultation; our legal team are waiting to help. ## Our Media Appearances As leading financial services litigation experts regularly fighting banks, building societies, bridging lenders and insurers we have advised, featured and commented to the media on numerous occasions. Some of our media citations and appearances appear on our [Media Interest](https://lexlaw.co.uk/media-interest/) page. ![](https://lexlaw.co.uk/wp-content/uploads/LEXLAW-Media-Logo-Panel-Litigation-Solicitors-in-London-UK.png)[Learn more about our TV and Newspaper coverage: https://lexlaw.co.uk/media-interest/ ](https://lexlaw.co.uk/media-interest/) #### Contact our specialist hidden swaps lawyers for a consultation: ☎ 020 7183 0529 or email hidden-swaps@lexlaw.co.uk *Please note: As legal claims will be centred around breach of contract, claimants run the risk of their claim becoming time or statute-barred by virtue of s.5 of the Limitation Act 1980. This applies six years after the date of the hidden swap agreement. Therefore it is vital to instruct solicitors promptly. * --- # Recruitment: Experienced Costs Lawyer Source: https://lexlaw.co.uk/careers/recruitment-experienced-costs-lawyer/ *LEXLAW is a City of London litigation practice operating from professional chambers in [Middle Temple](https://www.middletemple.org.uk). The firm focuses on financial services litigation, high net worth immigration and insolvency law and acts for HNW individuals and UK SMEs (either individual entrepreneurs or UK corporates).* ## Summary of role - To compile bills including detailed advice of all work performed and disbursements incurred; and- To track and provide a detailed assessment of costs for litigation proceedings. ## Key skills - A thorough knowledge of all relevant law and practice for costs recovery usually at the High Court (often ChD) and Companies Court;- Experience in drafting substantial bills of costs (e.g. up to £0.5m);- Excellent and proven negotiating skills;- Experience of oral costs assessment hearings;- Up to date knowledge of all new costs rules, Mitchell conditions, use of Precedent H, etc; and- Familiarity with the rules surrounding DBAs, CFAs and ATE insurance. Ability to re-design precedent schedules and other materials for general use. ## Key qualities - Experience as a costs lawyer;- Knowledge of current costs issues; and- Flexibility in working hours to accommodate deadlines. ## Remuneration - Negotiable, dependent on experience / career history. ## Work location - [Middle Temple (Inn of Court).](https://www.middletemple.org.uk) ## Application process - By covering email attaching your CV for the attention of Ms Jenny Julian (Practice Manager).- No Agencies. --- # Recruitment: Legal Cashier Source: https://lexlaw.co.uk/careers/recruitment-legal-cashier/ *LEXLAW is a City of London litigation practice operating from professional chambers in Middle Temple. The firm focuses on financial services litigation, high net worth immigration and insolvency law and acts for HNW individuals and UK SMEs (either individual entrepreneurs or UK corporates).* ## Summary of role - Weekly entry of all bookkeeping data in respect of client and office accounts;- Compiling routine interim / final bills including disbursements incurred;- Monthly reconciliations; and- Presenting reports to the Director(s) / Compliance Officer(s). ## Key skills - A thorough knowledge of all relevant law and practice relating to the [Solicitors Accounts Rules](https://web.archive.org/web/20210421080937/https://www.solicitors-disciplinary-advice.co.uk/blog/884523/a_short_guide_to_the_new_sra_accounts_ru.html);- Experience of using solicitors' accounts software packages; and- Experience in drafting routine bills. ## Key qualities - Experience as a legal cashier;- Knowledge of current SAR issues; and- Flexibility in working hours to accommodate deadlines. ## Remuneration - Day rate negotiable, dependant on experience / hours worked. ## Work location - [Middle Temple (Inn of Court)](https://www.middletemple.org.uk). ## Application process - By covering email attaching your CV for the attention of Ms Jenny Julian (Practice Manager); and- No Agencies. --- # Inheritance and Trustees’ Powers Act 2014 Source: https://lexlaw.co.uk/practice-areas/probate-solicitor-london/inheritance-trustees-powers-act-2014/ The [Inheritance and Trustees’ Powers Act 2014](http://www.legislation.gov.uk/ukpga/2014/16/contents/enacted) received Royal approval on 14 May 2014. The Act is expected to come into force on 1 October 2014. ## Intestacy Rules [This Act](http://www.legislation.gov.uk/ukpga/2014/16/contents/enacted) enforces several reforms to the current rules which apply when an individual dies intestate. > *“(1) If the intestate leaves no issue: * > *(2) If the intestate leaves issue: * > *The residuary estate shall be held in trust for the surviving spouse or civil partner absolutely.* > *(A) The surviving spouse or civil partner shall take the personal possessions absolutely;* > *(B) The residuary estate of the intestate (other than the personal possessions) shall stand charged with the payment of a fixed net sum, free of death duties and costs, to the surviving spouse or civil partner, together with simple interest on it from the date of the death at the rate provided for by subsection (1A) until paid or appropriated; and* > *(C) Subject to providing for the sum and interest referred to in paragraph (B), the residuary estate (other than the personal possessions) shall be held—(a) as to one half, in trust for the surviving spouse or civil partner absolutely, and (b) as to the other half, on the statutory trusts for the issue of the intestate.”* ## Inheritance (Provision for Family and Dependants) Act 1975 The new Act also makes certain changes to the [Inheritance (Provision for Family and Dependants) Act 1975](http://www.legislation.gov.uk/ukpga/1975/63) which allows close family and children of the deceased to bring a claim for provision from the estate where they have not received any provisions, thereby expanding the class of people who can bring a claim. Regarding the matter of who is entitled to bring a claim, it will be extended to include any person who was treated by the deceased as a child of the family, not only in relation to a marriage or civil partnership, but in relation to any family in which the deceased had and played a parental role. Previously the Act only allowed for close family and children of the deceased to claim for provisions from the estate. As was previously mentioned, The Inheritance and Trustees’ Powers Act 2014 makes amendments which widen the criteria of who can bring a claim. There have also been amendments to the provisions which apply to an individual who is viewed as being maintained by the deceased. Whereas the previous provisions provided that a person should be treated as being maintained by the deceased if the deceased was, otherwise than for full valuable consideration, making a large contribution towards that person’s reasonable needs, under the new provisions, the words *“otherwise than for full valuable consideration”* will be removed. This avoids the previous situation where a claim might fail where the applicant was providing for the deceased in the context of an interdependent domestic relationship. ## Are you affected by the Inheritance (Provision for Family and Dependants) Act 1975? If you fall under the [1975 Act](http://www.legislation.gov.uk/ukpga/1975/63) and would like to discuss the amendments being made by the [2014 Act](http://www.legislation.gov.uk/ukpga/2014/16/contents/enacted) or you need legal support regarding an inheritance matter, we are able to provide legal advice and representation. Please call us today and our London Probate solicitors will be able to assist you by meeting with you and reviewing your case. --- # London’s #1 Litigation Law Firm Source: https://lexlaw.co.uk/home-page/mobile/ ## Our Lawyers Our team of [highly qualified, skilled and experienced solicitors and barristers](https://lexlaw.co.uk/?page_id=6) provide a first class legal service from the legal heart of the [City of London.](http://www.appgbanking.org.uk/) Results matter to our lawyers. We pride ourselves on our ability to closely manage and concisely present our clients' interests. ## Practice Areas We are regularly instructed in high profile: - **[Litigation & Dispute Resolution](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)** [Interest Rate Swap Mis-selling Advice ](https://lexlaw.co.uk/?page_id=35)[Bank Reviews of IRHP Sales (FCA Review)](https://lexlaw.co.uk/?page_id=2786) [Hidden Swaps in Fixed Rate Loans & TBLs ](https://lexlaw.co.uk/?page_id=1991)[Directors Disqualification Proceedings](https://lexlaw.co.uk/?page_id=1405) - **[Winding Up Petitions & Orders](https://windinguppetitionsolicitors.co.uk)** [HMRC Petitions](https://lexlaw.co.uk/?page_id=1476) [Validation Orders (s.127 Insolvency Act)](https://lexlaw.co.uk/?page_id=62) - **[HMRC Tax Disputes](https://taxdisputes.co.uk)** [VAT Appeals & Missing Trader MTIC](https://lexlaw.co.uk/?page_id=67) - **[UK Immigration Law & Visas](https://immigrationandvisasolicitors.co.uk)** [High Net Worth UK Immigration](https://lexlaw.co.uk/?page_id=81) [Deportation Orders / Removal](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/deportation-orders-removal-notices-solicitors-london/) - **Private Prosecutions** [Fraud](https://lexlaw.co.uk/?page_id=73) [Money Laundering / Proceeds of Crime](https://lexlaw.co.uk/?page_id=71) - **[Landlord and Tenant](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/)** [Business tenancies](https://web.archive.org/web/20170101023814/https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/business-tenancies/) [Landlords’ obligations](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/landlords-obligations/) [Rent control](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/rent-control/) [Recovering rent arrears](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/recovering-rent-arrears/) [Evictions](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions/) - **[Applications for Probate](https://lexlaw.co.uk/practice-areas/probate-solicitor-london/)** - [**Aviva Fixed Rate Loans** with **Early Repayment Fees** (Redemption Penalties)](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#Aviva-Early-Repayment-Fee) - [Clydesdale **Tailored Business Loans** with **Hidden Swaps**](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#hidden-swaps) ## Get in touch - We provide results-focussed legal advice to our clients. - If you want our highly skilled lawyers on your legal team, get in touch. - Call our legal helpline [☎ 02071830529](tel://+442071830529) or email [litigation@lexlaw.co.uk](mailto:litigation@lexlaw.co.uk). - Alternatively, fill in the Case Assessment form below. ## Case Assessment   --- # Stephanie Norton Source: https://lexlaw.co.uk/our-people/stephanie-norton/ Stephanie is the firm's bookkeeper and has over 15 years of experience as an accountant and bookkeeper, much of which has been with solicitors' firms. --- # Annabel Clarke Source: https://lexlaw.co.uk/our-people/annabel-clarke/ Annabel joined the firm in June 2019 as a Paralegal Apprentice in the Legal Support team. She is a dedicated member of the firm who is eager to expand on her legal knowledge in order to become a fully qualified lawyer. Annabel handles the firms file closure and archiving procedures, co-ordinates meetings and assists the lawyers in their day to day work. She assists the financial services team and provides a high standard of legal support to our litigation lawyers to ensure we can operate at a high standard. She regularly authors articles on our insolvency specific practice area website, keeping our clients up to date with current UK insolvency law, policy and news. --- # Karim Oualnan Source: https://lexlaw.co.uk/our-people/karim-oualnan/ Paralegal - Trainee - Solicitor; December 2012 – February 2022 --- # Forex Derivatives (FX) Mis-selling Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/foreign-exchange-hedging-mis-selling-claims-fx-forex-hedge/ *We are a leading City of London law firm with the specialist knowledge and experience of derivatives mis-selling claims to assist businesses who have suffered losses as a result of foreign exchange (FX) derivatives mis-selling by banks or currency brokers. We provide the very best forex derivatives mis-selling representation and use our banking and financial services litigation expertise to ensure we obtain the best possible results and compensation for our clients.* *We advise and represent importers/exporters and other businesses making claims against banks or currency brokers for FX derivatives mis-selling, and provide a high-quality legal service in order to obtain the best possible results for our clients.* *Our lawyers are regularly interviewed by journalists and broadcasters and featured in the media commenting on derivatives mis-selling. See our Media Appearances section below.* Please note that we are unable to provide free or legal aid advice and do not work on low value claims. For legal and regulatory reasons, we can also strictly only give legal advice once we have been formally retained via a fee and you have become a client. We charge a minimum fee of £1750 plus VAT to provide advice in conference with a solicitor and barrister. ## What is the FX Market The FX market is one of the largest financial markets in the world and allows two parties to exchange different currencies at an agreed rate of settlement on the spot date (which is usually two business days after the exchange takes place). It is estimated that approximately 75% of global FX trading involves trading between different ‘G10 currencies’, including the British pound (GBP), the US dollar (USD), the Euro (EUR), the Japanese yen (JPY) and the Swiss franc (CHF). Spot FX benchmarks, particularly those set in G10 currency pairs such as GBP/USD or GBP/EUR, are used to establish the relative values of different currencies across the world. Two of the main spot FX benchmarks are the 1.15pm ECB fix (i.e. the exchange rate for various spot FX currency pairs as determined by the European Central Bank at 1.15pm British time) and the 4pm WM Reuters fix (i.e. the exchange rate for various spot FX currency pairs determined by WM Reuters at 4pm British time). ## What are FX derivatives and how were FX derivatives mis-sold? Many SMEs in the UK, such as clothing wholesalers, food importers, and the hospitality and travel industries, deal with foreign currencies on a regular basis, and therefore need to be protected from exposure to any unforeseen movements in exchange rates. When used properly, FX derivatives can form part of an effective and legitimate strategy to protect SMEs from exposure to fluctuating exchange rates. However, many banks and currency brokers instead promoted and recommended complex and risky FX derivatives that were unsuitable for SMEs and amounted to speculation rather than protection. FX derivatives are often complex, risky and unsuitable for SMEs for the following reasons: - FX derivatives that last longer than 6-12 months become increasingly risky and expensive for SMEs due to the volatile nature of the FX market;- FX derivatives containing leverage or ratio elements mean that SMEs become obliged to buy more currency (for example, twice or triple the amount of currency) than they actually need;- When exchange rates move against businesses, that can trigger a margin call under the FX derivative that forces the SME to pay substantial cash collateral to the bank or broker;- FX derivatives containing triggers that are activated mean that SMES will be committed to purchasing leveraged amounts of foreign currency at worse than spot rates, which means that the risks for SMEs are potentially unlimited if the exchange rate goes in the wrong direction; and- Frequent restructuring of FX derivatives (usually at the instigation of the bank or broker in order to gain profit at their customers’ expense) offers better short terms rates to SMEs with the downside of worse rates in future. The mis-selling of FX derivatives has caused significant financial losses to many SMEs, who were not provided with any adequate pre-sale advice, explanation or information about the risks and potential costs of these FX derivatives. The magnitude of these financial losses have worsened due to the increased GBP volatility resulting from the outcome of the Brexit referendum in June 2016. ## The FCA’s Findings on FX Trading The FCA began its investigations into the FX trading market in October 2013 and has found that, between January 2008 and October 2013, many banks and financial institutions did not exercise adequate and effective control over the business practices in the G10 spot FX market, including insufficient training and supervision of the FX traders. Five major banks - [Citibank](https://www.fca.org.uk/publication/final-notices/final-notice-citi-bank.pdf), [HSBC](https://www.fca.org.uk/publication/final-notices/final-notice-hsbc.pdf), [JPMorgan Chase Bank](https://www.fca.org.uk/publication/final-notices/final-notice-jpm.pdf), [RBS](https://www.fca.org.uk/publication/final-notices/final-notice-rbs.pdf) and [UBS](https://www.fca.org.uk/publication/final-notices/final-notice-ubs.pdf) - have been fined a total of over £1.1 billion by the FCA for their failure to control their business practices in the G10 spot FX market, while [Barclays](https://www.fca.org.uk/publication/final-notices/barclays-bank-plc-may-15.pdf) received the largest fine in FCA history (of £284 million) as a result of its failure to control the business practices in its FX business in London. The FCA’s 13-month investigation also found that these banks’ FX failings led to: - attempts by these banks to manipulate the ECB and WM Reuters fix rates for their own benefit and to the potential detriment of some of their clients;- attempts by these banks to trigger clients’ stop-loss orders (which are designed to limit a client’s losses if exposed to adverse exchange rate movements) for their own benefit and to the potential detriment of some of their clients; and- inappropriate sharing of confidential information (including client identities and information about clients’ orders). ## How can FX derivatives mis-selling be resolved? If you have been mis-sold an FX derivative, then there are several potential solutions including: - attempting to negotiate with the bank or broker;- complaining to the bank or broker;- complaining to the Financial Ombudsman Service; or- sending a letter before claim, issuing legal proceedings at Court, and litigating against the bank or broker. The initial step may be to attempt to negotiate with (or complain to) the bank or broker, although this may not resolve the mis-selling dispute without the threat and/or commencement of legal proceedings. It is also possible to complain about the mis-selling to the Financial Ombudsman Service (“FOS”), via which it may be possible to receive compensation of up to £150,000. Our derivatives mis-selling lawyers have considerable experience of preparing and presenting detailed complaints on behalf of our clients to major banks and the FOS, and we are also able to advise if litigation offers better prospects for redress (which it can often be). Our specialist derivatives mis-selling lawyers understand that your case is unique and we therefore adopt a tailored approach for your benefit, combining the facts of your case with our experience and understanding of derivatives mis-selling to prepare the strongest possible legal claim for you. We understand that mis-sold FX derivatives can cause additional problems for your business (such as [winding-up petitions](http://windinguppetitionsolicitors.co.uk/), the appointment of LPA receivers or [difficulties with HMRC](http://taxdisputes.co.uk/)) and we are therefore also able to offer you an integrated service with our experienced [Insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [Taxation](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) teams for your business rescue needs. If you or your business have been mis-sold any FX derivatives, then please contact our Financial Services Litigation team to book a discounted fee meeting for advice in conference with a solicitor and barrister. --- # Paralegal Apprenticeships Source: https://lexlaw.co.uk/careers/legal-apprentices/ We are not currently recruiting any Paralegal Apprentices *Join our existing legal apprentices and become a member of our most important asset: our team. * [![Law Apprentice Legal Apprenticeship Level Cilex Solicitor LEXLAW Barrister](https://lexlaw.co.uk/wp-content/uploads/2015/06/Legal-Apprentice-Law-Apprenticeship-London-Cilex-Law-School-Firm-LEXLAW.jpg)](https://lexlaw.co.uk/careers/legal-apprentices/legal-apprentice-law-apprenticeship-london-cilex-law-school-firm-lexlaw/)Legal Apprentice training and career opportunities at London Law Firm, LEXLAW. ## What is a Paralegal Apprentice? Paralegal Apprentices provide administrative support to the legal teams and individual lawyers and work groups as they learn the fundamentals of providing a professional legal service. If you are a young person in London with good GCSEs or A Levels, our 2019 [legal apprenticeship scheme](https://www.gov.uk/topic/further-education-skills/apprenticeships) offers a great alternative to studying law at university. These rare apprenticeships suit hard-working young people with a strong academic background; those committed to learning new skills and gaining legal knowledge and those holding a genuine desire to become a qualified lawyer. As a legal apprentice, you support the firm's solicitors and barristers and follow their guidance whilst yourself training to qualify as a lawyer. Legal apprentices need to have the confidence to deal with both individual lawyers and legal teams.  You work in our Legal Support Team and need to be reliable, adaptable, conscientious, and able to work to instructions. The key tasks and duties of legal apprentices are: ## Paralegal Apprentice - Key Tasks and Duties: - Administration of files- To support the team and individual fee earners, with administrative tasks and action work as delegated by supervisor/partner- Document and file management- Archiving and retrieval of files- Providing reception cover- Answering phone calls and greeting clients- Liaising with clients, including the receipt of key documents- Liaising with Chambers and mediation venues- Filing documents at Court where necessary- Ensuring incoming and outgoing post is dealt with effectively- Provide team support with data entry and renewal information- Diarising key events and ensuring the diaries are maintained- Conducting a daily agenda/calendar check with a partner- Opening new application instructions accurately and within service standards- Ensure work issues or problems are reported immediately- Any other tasks required to support the team such as collating information ## London Legal Apprentice Recruitment We are now seeking bright, enthusiastic and committed Londoners who would like to become qualified lawyers, firstly via the Legal Paralegal Apprenticeship then to obtain the CILEx legal executive qualification.  The successful candidates will work within an existing legal apprentice team and be registered with CILEx as an apprentice and will provide assistance to our lawyers which will include a range of administration and office duties.  The firm will pay you a salary (in excess of national apprenticeship rates) and pay for all your education and training costs while offering you long term employment in return for your commitment to our clients and our team. ## Paralegal Apprenticeship Scheme LEXLAW work closely with the [Chartered Institute of Legal Executives (CILEx)](http://www.cilexlawschool.ac.uk/Legal_apprenticeships), and a London-based [further education college](https://kingston-college.ac.uk/) to offer the 'Level 3 CILEx Paralegal Apprenticeship' and the opportunity to progress onto the ['Level 6 CILEx Professional Higher Diploma in Law and Practice'](http://www.cilexlawschool.ac.uk/Prospective_Students/Qualify_as_legal_executive/Second_stage_of_training). Learning takes place mainly during employment through the development of ‘on the job’ skills. There is an 'off the job' training element which will take place ideally through your attending a London-based further education college. Both the on and off the job elements of the legal apprenticeship lead to nationally-recognised legal executive qualifications which are awarded by CILEx. The firm has developed a relationship with a London further education college which trains our Legal Apprentices in London. The principal tutor is PGCE qualified to teach and herself qualified as (and practises as) a Solicitor via the Legal Executive route. All of our apprentices are delighted with this college release system of education and find it much better than those providers that provide distance learning teaching methods. As a result we now exclusively train apprentices via college day release. ## Legal Career Progression after Apprenticeship (Legal Executive, Solicitor or Barrister) After you have completed the apprenticeship, the successful apprentices will be invited to progress onto the next level of their apprenticeship with the main goal of becoming a qualified lawyer via the CILEx legal executive qualification. From there, with the necessary further training and exams, it is possible to cross-qualify as a solicitor or barrister. ## Legal Apprentice - Desired skills: - Must have good organisational skills;- Must have good attention to detail;- Good IT skills – able to open, read, input and close, Word, Excel and Outlook documents;- Excellent communication skills with a professional manner;- Detail conscious and precise;- Professional telephone manner;- Previous work experience involving dealing with people is useful but not essential;- Strong academic qualifications;- Able to prioritise and recognise importance and urgency; and- Proficient keyboard skills. ## Legal Apprentice - Personal qualities: - Willingness, enthusiasm and ability to learn on the job;- Hardworking, eager to learn and develop new skills;- Team worker with a flexible, professional attitude;- Friendly, confident and reliable;- Enjoys detail and has a real interest in a legal career;- Dresses appropriately for a legal office;- Calm under pressure; and- Conscientious and punctual. ## Legal Apprentice - Qualifications required: - Minimum of 5 GCSE grades A*-C including both Maths and English (or equivalent); and- One or more A levels (or equivalent) would be an advantage. ## Applying for a Paralegal Apprenticeship We are based in Middle Temple in the City of London, so if you live in Greater London and have a passion for the law and have the the drive and determination to succeed in what can be a demanding and fast paced sector then we would love to hear from you. We want to see how well you can put together a covering email and CV, which you can email us at legal.apprentice@lexlaw.co.uk and we will be in touch. Please only apply if you are able to commence an apprenticeship within six weeks of the date of your application. We are not currently recruiting any Paralegal Apprentices --- # Diversity & Social Inclusion Source: https://lexlaw.co.uk/legal-notices/diversity-social-inclusion/ LEXLAW is a signatory to the [Law Society’s Diversity and Social Inclusion Charter](https://web.archive.org/web/20151102012201/http://www.lawsociety.org.uk/Support-services/Practice-management/Diversity-inclusion-charter/Charter-signatories/). We believe that this commitment to diversity and social inclusion is essential to reflect the society we serve. The firm is made up of exceptional lawyers who are practising solicitors and barristers supported by high quality paralegals, legal apprentices and other legal support staff. In line with our commitment to Social Inclusion we are one of the first City of London law firms to employ [young people as Legal Apprentices](https://x.com/lexlawuk/status/575751693150846976) in conjunction with [CILEx Law School](https://cilexlawschool.ac.uk/). For more information about our Legal Apprenticeships please visit [lexlaw.co.uk/careers/legal-apprentices](https://lexlaw.co.uk/?page_id=2574). --- # Training Contract (Trainee Solicitor) Source: https://lexlaw.co.uk/careers/training-contracts-trainee-solicitor/ We are not currently recruiting Trainee Solicitors *Join our existing trainees and become a member of our most important asset: our team.* [![London solicitor training contract trainee solicitor city of london SRA law society](https://lexlaw.co.uk/wp-content/uploads/2016/03/LEXLAW-Training-Contract-Trainee-Solicitor-SRA.jpg)](https://lexlaw.co.uk/wp-content/uploads/2016/03/LEXLAW-Training-Contract-Trainee-Solicitor-SRA.jpg) ## Solicitor Qualification: SRA Recognised Training We are currently recruiting for a trainee solicitor.  We are a specialist law firm based in the legal heart of London and regularly featured in the national and international media. This is a rare opportunity to join our legal team, specialising in complex commercial disputes, corporate insolvency and UK immigration matters. ## Training Contract Summary We are a specialist law firm based in Middle Temple, opposite the Royal Courts of Justice in the legal heart of London. We have a growing team of solicitors and barristers and specialise in commercial litigation, company winding up and insolvency and UK immigration matters. We have a Legal Support Team made up of apprentices and paralegals. We are committed to training and educating our people. The work that a trainee would undertake is varied and includes: - Supporting lawyers at court;- Carrying our legal research;- Drafting legal documents and letters; and- Providing general administrative support for fee-earners. Many of our cases are high value and centre on, for example, the mis-selling of financial products by major Banks or tax disputes with HMRC. We also represent high net-worth individuals and their families in relation to immigration matters. ## Requirements and prospects Desired skills - Confident IT skills and proficiency in Microsoft Word;- Ability to work within a busy, professional environment;- Strong communication skills;- Able to prioritise workload and manage time effectively; and- Attention to detail. Personal qualities - Team player;- Reliable;- Confident;- Conscientious;- Enthusiastic; and- Highly motivated. Qualifications required - First class to upper second class undergraduate degree (qualifying law degree or supported by GDL);- A Level and GCSE grades at mainly Grade A-B; and- Distinction or Commendation in Legal Practice Course (LPC not mandatory (law school sponsorship is available). ## Future Legal Career Prospects We offer a stimulating working environment, great firm-wide training and completion of the Professional Skills Course. Moreover we offer the chance to become a qualified lawyer member of LEXLAW, which is the fastest growing law firm in the UK (Plimsoll Solicitors Top 500, 2016). The firm is committed to its people and offers law school sponsorship. ## About the firm We are an innovative legal practice of exceptional London Solicitors working with leading London Barristers to whom results matter. We are the only law firm to operate from professional legal chambers located in the ancient Middle Temple (Inn of Court), near the Royal Courts of Justice and in the legal heart of Central London. Website: https://lexlaw.co.uk/ Address: 4 Middle Temple Lane, Temple, City of London, EC4Y 9AA ## Training Contract Application process Application is by way of CV and short covering email addressed to Mrs Jenny Julian, our Practice Manager. - Please ensure your CV includes all academic grades to date and your short covering email summarises the key aspects of your CV and the core reasons why you feel you would be a suitable candidate.- Please ensure you specify which area of law from those we specialise in you feel you would be a best fit for (ie Immigration / Litigation / Insolvency).- Applications will be considered as and when they are received and interviews will be arranged promptly. A work placement scheme or work trial or paralegal position may be offered as part of the selection process. We are not currently recruiting Trainee Solicitors --- # UK Visas & Immgration Lawyers in London Source: https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/uk-immigration-visa-solicitors-barristers-lawyers-london-uk/ *We're based in the legal heart of London in Middle Temple (a Barristers’ Inn of Court) and provide the strongest possible UK Immigration Law advice and a comprehensive UK Visa and Immigration service. To contact our immigration team about your case, call ☎ 02071830570.* Our immigration team is comprised of Solicitors and Barristers with decades of experience at the very highest levels of immigration law. Members of the team are regularly instructed to deal with all types of points based applications along with family visas, visit visas and general appeals and are involved in judicial review and immigration appeal tribunal hearings at all levels. Our team has the expertise to deal with all immigration issues and the desire to ensure our clients achieve only the best possible results. Our team firmly believes that immigration matters ought to have specialist legal attention from the very outset when it matters the most. ## UK Visas & Immigration Advice Areas We have extensive expertise in a number of areas of immigration law including all aspects of the Points Based System. We have extremely high success rates on all of these categories of UK Visas - [UK Spouse Visa](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) ([Apply to enter the UK as a partner](https://lexlaw.co.uk/successful-uk-spouse-marriage-visa-application-immigration-solicitors-advice/)) - [Tier 1 Entrepreneur Settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) ([Tier 1 Entrepreneur](https://lexlaw.co.uk/tier-1-entrepreneur-visa-settlement-extension-application-lawyers/)) - [Tier 1 Innovator](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/) (Start-up and Innovator) - [Tier 2 Work Visa](https://immigrationandvisasolicitors.co.uk/tier-2-work-visas/) (Tier 2 (General) visa) - [UK Fiancé Visa](https://immigrationandvisasolicitors.co.uk/uk-fiance-marriage-visa/) (Apply to enter the UK as a partner) - [Tier 1 Investor Applications](http://immigrationandvisasolicitors.co.uk/investor-visa-immigration-lawyer-london/) - Tier 1 Entrepreneur applications - [Tier 2 General Applications](https://immigrationandvisasolicitors.co.uk/applying-tier-2-visa-brexit/) - Tier 2 Sponsorship Licences - [Tier 4 Applications](http://immigrationandvisasolicitors.co.uk/tier-4-student-visa/) We also have extensive experience in assisting clients with UK Visa extensions - [Indefinite Leave to Remain Applications](http://immigrationandvisasolicitors.co.uk/settlement-indefinite-leave-to-remain/) - [Naturalization Applications](http://immigrationandvisasolicitors.co.uk/settlement-indefinite-leave-to-remain/) Alongside this we also specialise in - [Marriage Visas](http://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) - [Civil Partnership](http://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) - [Asylum](http://immigrationandvisasolicitors.co.uk/asylum/) - [Human Rights Applications](http://immigrationandvisasolicitors.co.uk/human-rights/) (in particular Article 8 – the right to private and family life, and Article 3 – protection against inhumane and degrading treatment) We also regularly assist with making representations to prevent deportation and removal orders and are able to make Judicial Review applications in emergency situations on a case by case basis. ## Tier 1 Entrepeneur Visas and Investor Visas Tier 1 includes Entrepreneur Visas, Prospective Entrepreneur Visas, Investor Visas, Graduate Entrepreneur Visas and Post Study Work Visas. A Tier 1 UK Entrepreneur Visa is for business persons who would like to establish a business in the UK or join and invest into an existing business. A Tier 1 Prospective Entrepreneur Visa enables individuals to come to the UK to secure funding in order to set up or run a business in the UK.A Tier 1 Investor Visa is for someone who wishes to make a substantial investment in the UK. A Graduate Entrepreneur Visa allows graduates to extend their stay in the UK, after graduation, so they can establish businesses. A Tier 1 Post Study Work Visa allows migrants from outside Europe who have graduated from a university in the UK to look for work without the need of a sponsor. We can assist with all Tier 1 Visa applications. ## Tier 2 Sponsorship Licences and Work Permits Tier 2 includes UK Sponsorship Licences and Work Permits. A Tier 2 UK Sponsorship Licence allows you to employ a non EU migrant if you own a UK based business. Tier 2 work permit offers medium or highly skilled workers the opportunity to work in the UK. We can also help with applications if you wish to change employment. We can help with all Tier 2 applications. ## Tier 4 Student Visas Tier 4 includes Student Visas, Student Visit Visas and Prospective Student Visas. A Student Visa is for someone who wishes to stay in the UK to study a course or if you wish to work and study. A Student Visit Visa is for a short-term student who wishes to come to the UK to study. A Prospective Student Visa is for someone who has not yet been accepted on a course of study at a university in the UK but wishes to travel to the UK in order to explore their educational options. Our London immigration lawyers can help with all Tier 4 Visas. ## Tier 5 Creative Visa, Sporting Visa, Youth Mobility Scheme Tier 5 includes Creative and Sporting Visas and Youth Mobility Schemes. Creative and Sporting Visas are for people coming to the UK to work or perform as sports people, entertainers or creative artists. The Tier 5 Youth Mobility Scheme is for young people from participating countries who would like to come and experience life in the UK. You can get expert UK immigration legal advice and assistance for all Tier 5 applications from our lawyers in London. ## How we assist in UK Visa immigration applications: - Carry out detailed assessment of your personal circumstances to ensure you meet the relevant criteria. - We ensure that you have the correct documents to support and strengthen your case. - We complete and submit your application, on your behalf, to the best standard. - Arrange for legal representation at court to assist your application. - Keep you updated in regards to your application and aware of your current position. - Unlike OISC immigration businesses, we are a fully authorised and regulated UK Solicitors law firm and all of our cases are handled by qualified [immigration solicitors](https://immigrationandvisasolicitors.co.uk/) or [immigration barristers](https://immigrationandvisasolicitors.co.uk/expert-advice/) from the outset when it matters the most. - As a [leading law firm](https://lexlaw.co.uk/) with a track record of success, you can be assured your immigration matter is in safe hands and that the best strategy for your case will be adopted**.** ## Other UK immigration areas we cover In addition, we can help with Tourist Visa applications, in particular, Olympic Visitor Visas, Fiancé Visas, EEA Residence Permits, Sports Visas, Ancestry Visas, Schengen Visas, Dependant Relative Visas and Academic Visit Visas. Our team have extensive experience in all types of Visa applications and European Union legislation applications. We also have expertise in all other immigration issues such as Marriage, Civil Partnership, Asylum, Human Rights, Bail, Appeals,Settlement, Deportation and Removal. ## Defending Home Office Deportation Orders & Removal Orders Deportation and Removal from the UK are two methods the UK Border Agency may use to force a person to leave the UK. Most of the clients that we represent in UKBA deportation or removal proceedings are in UKBA Immigration Removal Centres for one of three reasons: (1) a criminal conviction or arrest, (2) overstaying in the UK or (3) refusal of an immigration application that they submitted without the assistance of a competent solicitor. Deportation is regulated by certain sections of the Immigration Act 1971 and administrative removal is regulated by the Immigration and Asylum Act 1999. Deportation orders can be challenged if it is contrary to the United Kingdom’s obligations under the Refugee Convention or Human Rights / ECHR. Regard may also be had to other relevant factors which constitute exceptional circumstances. Administrative Removal can be prevented if it would be contrary to the United Kingdom’s obligations under the Convention and Protocol relating to the Status of Refugees or under the Human Rights Convention. We can help if you or someone you know is subject to Deportation or Removal. It is imperative that you seek urgent legal advice from a UK immigration lawyer. Our team of experienced and professionally qualified immigration solicitors and immigration barristers will be able to able to advise you on all of the forms of relief and representations you have available. We can assist you in appealing against a deportation or removal order and consider the ways that you may stay in the UK or avoid a ban on you re-entering the country. ## How we work to prevent Removal or Deportation: - Assess the merits for challenging deportation or removal; - Make representations to the Home Office on your behalf; - Appeal any negative decision by the Home Office; - Assess the unlawfulness of your detention; - Make an application for Judicial Review in the High Court challenging the detention; - We ensure that we have the correct documents to strengthen and support your application. - Keep you updated in regards to your application. ## Leading London Immigration Lawyers As a leading law firm with a track record of success, you can be assured your immigration matter is in safe hands and that the best strategy for your case will be adopted. It is crucial that you seek specialist legal advice at the outset and prior to making any type of immigration application. We can assist you with your applications for any type of Visa or permit and any form of leave to remain (or for entry clearance) under the points based system. We ensure our clients comply with the Immigration Rules and the strict requirements of the UKBA prior to making an application, thereby eliminating much of the stress of the application process. ## Expert UK Immigration Law Advice If you have a UK Immigration matter and want expert legal advice, we invite you to contact us so we can assess your case. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading UK Immigration solicitors and barristers. Just call or email us now; our legal team are waiting to help. To contact us about your case call ☎ 02071830570 or email immigration-lawyers-london@lexlaw.co.uk *Please note: If you have received an Immigration ruling or notice or otherwise have deadlines then do not delay in contacting us for assistance.* --- # FCA GRG Review into Royal Bank of Scotland (RBS) Global Restructuring Group (GRG) Activity Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/ LIMITATION WARNING: Businesses that were or are affected by the restructuring or turnaround divisions of the major banks must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your legal right to compensation via the courts, which will be of the utmost importance if RBS do not pay adequate redress in their GRG review scheme. Legal rights can be reserved by instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings. *Our team of specialist bank litigation solicitors and barristers are assisting many UK SME businesses in obtaining redress compensation claims against the Royal Bank of Scotland's Global Restructuring Group.  GRG's 'business recovery' activities were misrepresented as the team were in fact organised to profit from distressed customers in a dishonest, excessive and calculated way. * We accept instructions to manage both (i) the RBS GRG review that the bank has 'voluntarily' agreed to conduct with the [Financial Conduct Authority (FCA)](http://www.fca.org.uk/news/update-on-independent-review-of-rbs-treatment-of-business-customers-in-financial-difficulty) (which may result in a compensation scheme being announced) and (ii) litigation  in the High Court.  All GRG victims should note that that their legal rights will expire (to the satisfaction of RBS) unless legal action is taken to preserve these legal rights. ## What is GRG? GRG is shorthand for Global Restructuring Group, which was NatWest/RBS's turnaround or business support unit (BSU) for troubled businesses. GRG was set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services. Following the credit crunch, GRG took control of 16,000 SME customers with assets of £65 billion. Following allegations of misfeasance and wrongful profiting, GRG was reportedly disbanded in August 2014 however, GRG was in fact re-branded as RBS's Restructuring Group. ## RBS GRG Misconduct: The Tomlinson Report GRGs misconduct was exposed in the mainstream media as a result of [the Tomlinson Report](http://www.tomlinsonreport.com/) published on 25 November 2013 by the then entrepreneur in residence at the BIS, Lawrence Tomlinson.  The report, titled "Banks’ Lending Practices: Treatment of Businesses in distress" highlighted the experiences of many of our clients who are litigating or have settled litigation against RBS. Since the publication of the Tomlinson Report, GRG was said to have been disbanded by RBS on or around 8 August 2014 although we have evidence on many of our cases that RBS appear to have simply renamed the 'Global Restructuring Group' to the 'Restructuring Group' which operates from the same address as GRG and with many of the same staff. ## RBS GRG Review: The Clifford Chance 'Whitewash' Report RBS' solicitors, [Clifford Chance, claim in their so-called 'Independent Review' report](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2014/04/Clifford-Chance-Independent-Review.pdf) that GRG did little wrong in spite of misrepresenting themselves as a business recovery division when in fact they were a team designed to take additional profits from businesses for the Bank, often on technical covenant breaches or engineered loan defaults. > "The Clifford Chance review of RBS’s treatment of distressed customers, principally by the Global Restructuring Group, was welcomed by RBS as finding “no evidence of systematic defrauding of business customers”. However, the review—overseen by a bank executive rather than an non-executive director—was not independent, was based on narrow terms of reference, and left a number of questions unanswered, such as why GRG could not explain the size of fees it had charged, and the accuracy of its asset valuations." ([Conduct and Competition in SME Lending Report](https://old.parliament.uk/documents/commons-committees/treasury/Conduct_and_Competition_in_SME_lending.pdf)) ## RBS GRG FCA Review: Parliamentary Scrutiny A [Parliamentary Treasury Select Committee](https://old.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news/sme-lending1/) received written and oral evidence from senior RBS officials who gave misleading and false evidence that GRG was not an internal profit centre: > "This misunderstanding of the bank’s position by two senior executives is indicative of a systemic weakness of standards and culture. It is understandable, indeed right, that banks should seek to support businesses in difficulty with special measures but how that is done and whether the institution or the customer is the main beneficiary needs much greater clarity." ([Conduct and Competition in SME Lending Report](https://old.parliament.uk/documents/commons-committees/treasury/Conduct_and_Competition_in_SME_lending.pdf)) ## GRG Review Compensation Scheme Based on past experience of the RBS IRHP review scheme (also set up by RBS' Mark Spurin and heavily cirticised in Parliament), we are firmly of the belief that any GRG review scheme administered by RBS is likely to avoid or minimise redress to customers wherever possible. Customers should not fall into the trap of believing that the review will be conducted or controlled by the FCA as regulator nor that this complex scheme will be *'open, transparent or customer-centric'* as was falsely promised by RBS and the regulator in the past about their IRHP FCA Review scheme. Many GRG victims will wrongly believe that the FCA are conducting the review; they are not.  Customers may also believe that the FCA will take up their case and assist them; they will not.  RBS will control and conduct the review.  A skilled person will likely be described as an 'independent reviewer' and customers may believe they will have full access to this entity (likely to be a consultancy team at one of the big 4 accountants); they will not. The GRG review will be conducted by the wrongdoing bank who will have to decided which cases deserve what level of redress.  Many victims of IRHP swaps mis-selling who followed the RBS and FCA guidance that the RBS IRHP review was fair and customer-centric and did not require lawyer representation found quite the opposite was the case.  Firstly, they were invited to face-to-face meetings only to be cross-examined by the bank (or by solicitors appointed by the bank) but could not even meet let alone question the bank's salespersons who the bank's review team also did not even speak to. Then followed months of delays as the bank planned out how to reduce redress it intended to offer. Many unrepresented customers were offered no redress at all or extremely poor redress by RBS which they were felt forced to reluctantly accept as their legal rights had expired. ## Specialist FCA GRG Review Solicitors Our bank litigation lawyers have a great deal of experience in dealing with all major banks, in particular RBS, and understand how bank recovery teams sought to profit from distressed customers. Our team of bank litigators settled the largest publicly disclosed settlement of a derivatives mis-selling claim against a major bank and have, to date, issued more claims on behalf of businesses for swaps mis-selling than all other law firms in the UK combined. We ensured our clients obtained significant redress while many victims suffered low to no redress in the FCA review, often at the hands of RBS. Unlike traditional law firms that do not have a mix of solicitors and barristers and prefer to avoid court work, we operate a parallel litigation and IRHP review scheme strategy wherever appropriate and in the best interests of each client. Each case is specific and unique and our GRG Review legal team therefore offers a low cost initial consultation in order to provide legal advice on your specific case. ## FCA Review: How GRG harmed customers GRG purported to turn-around business customers that were in difficulty but in fact GRG was an internal RBS profit centre determined to generate extra revenue for the bank and also to reduce RBS's loan book following the UK government bailout of the bank. > "The FCA is conducting its own review into GRG. It is important that this review comprehensively address the allegations against GRG, so that the public can be confident that any wrongdoing is identified and resolved." ([Conduct and Competition in SME Lending Report](https://old.parliament.uk/documents/commons-committees/treasury/Conduct_and_Competition_in_SME_lending.pdf)) An interesting background feature of many cases where GRG was involved is that the customer only got into financial difficulties as a consequence of  being mis-sold derivatives by another part of RBS (Global Banking and Markets). RBS, via GBM, mis-sold far more swaps and other complex derivatives to customers than any other major UK bank and many of these customers had cashflow crises created by RBS' swaps mis-selling which GRG preyed upon to refuse lending, refuse drawdowns of existing lending and engineer defaults. We have reviewed and are instructed on multiple RBS litigation cases where GRG seemed intent on damaging customers' businesses by a systematic pattern of misconduct, including: - squeezing the cash flow of the business by applying special management fees and charges;- insisting on unnecessary but costly and bank-friendly management consultant reports;- refusing valid drawdown requests to engineer a loan default;- increasing the standard loan rates to higher loan default rates;- applying a new higher interest rate, often LIBOR, to existing base rate loans (base rate was at an all time low of 0.5% since DATE);- lending on or switching customers to LIBOR, a rate which RBS was manipulating, via its position as a rate setter, to a higher level;- forcing customers, under threat of economic duress, bankruptcy and LPA receivership, to enter into a Profit Participation Agreement (taking a percentage of the shares in a business) or Property Participation Agreement (taking a charge over and a percentage of the future sales of customer's properties). ## RBS West Register: Stripping SMEs assets RBS, via GRG or LPA receivers or by forcing the customers themselves, then engineered the fire sale of customer assets while, shockingly, RBS sought to profit from these sales via a subsidiary group of companies with the common moniker "West Register" which would demand assets or shares or profit participation via PPAs (or PPFAs - Profit Participation Fee Agreements) before often dumping the customer's assets anyway.  West Register, by December 2012 held property acquired from the bank's UK SME customers totalling approximately £400m and made acquisitions at an average of approximately 50% of the original loan value at the date of the transfer to GRG. [FCA RBS GRG Solicitors LEXLAW – Update on independent review of Royal Bank of Scotland’s treatment of business customers in financial difficulty – Financial Conduct Authority](https://lexlaw.co.uk/wp-content/uploads/2015/12/FCA-RBS-GRG-Solicitors-LEXLAW-Update-on-independent-review-of-Royal-Bank-of-Scotland’s-treatment-of-business-customers-in-financial-difficulty-Financial-Conduct-Authority.pdf) --- # Bank ‘Business Support’ & Loan Recovery Claims (RBS GRG, Lloyds BSU, Barclays BSR, HSBC CRU) Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/ LIMITATION WARNING: Businesses that were or are affected by the restructuring or turnaround divisions of the major banks must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your right to compensation. Legal rights can be reserved by instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings. *We are the leading law firm with the skill and experience to act for businesses seeking to resolve wrongdoing by bank recovery departments often titled 'business support', 'restructuring' or 'turnaround' departments. We are aware that some major banks have regularly engineered defaults and created and profited from distress, often caused by other departments of the bank including via wrongdoing such as LIBOR manipulation, deliberate concealment of credit utilisation and mis-sold derivatives. * *In recent years, we have litigated and settled more banking disputes for UK SMEs in the High Court in England & Wales than all other law firms in the UK combined. We provide strong legal representation and use our banking and financial services litigation expertise to ensure we obtain the best possible results which means optimal compensation for our clients.* *Our lawyers are regularly interviewed by journalists and broadcasters and featured in international and UK print and television media commenting on bank litigation and insolvency (see our [Media Appearances](https://www.youtube.com/channel/UCDAvge6fi_2850cF88dH-2w) section). * > #### “The profit-making nature of GRG significantly undermines its position as a turnaround division, in which good businesses should be restructured and returned to normal banking. The temptation to get hold of assets and take additional profit from these businesses to boost GRG’s balance sheet is clear." > > #### Dr. Lawrence TomlinsonAuthor of the Tomlinson Report on Bank Lending PracticesEntrepreneur in Residence at the Department for BIS ## Bank Recovery Teams: Natwest / RBS GRG, Lloyds BSU, Barclays BBS, NAB Clydesdale / Yorkshire SBS, HSBC CRU, & Santander CRT These teams were tasked to recover debt owed to the bank but were purposefully mis-described as providing 'business support'. In fact these departments managed that bank's distressed and impaired customers that had lending secured by property based assets. The members of these teams prepared and submitted exit strategies and liaised with LPA Receivers and Administrators and the bank's solicitors to recover debt owed to the bank. Some of these recovery teams, for example, at RBS GRG, Barclays BSR and Lloyds BSU, behaved in an aggressive and arguably dishonest and unfair way designed to maximise profit for the bank. This included for example moving lending rates to rigged rates (LIBOR); setting up pre-pack administration deals without the customer's knowledge; and pressurising customers into Profit or Property Participation Fee Agreements (PPFA) whereby associated parts of the bank (West Register or would take up free shares in a business or gain say 10% percent of sale proceeds. We represent property investors and developers and other business clients in litigation claims against financial services institutions over bank-engineered  loan defaults during the credit crunch which caused massive financial loss to the businesses including triggering events of insolvency.  We have been consulted and are instructed on claims against: - RBS' Global Restructuring Group division (GRG);- Lloyds' dedicated Business Support Unit (BSU);- Barclays' Business Support & Recoveries (BBS or BSR);- HSBC's Commercial Recovery Unit (CRU);- NAB Clydesdale & Yorkshire Banks' Strategic Business Services (SBS); and- Santander's Corporate Restructuring Team (CRT). ## What is GRG? GRG is shorthand for Global Restructuring Group, which was NatWest/RBS's turnaround or business support unit (BSU) for troubled businesses. GRG was set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services. Following the credit crunch, GRG took control of 16,000 SME customers with assets of £65 billion. Following allegations of misfeasance and wrongful profiting, GRG was reportedly disbanded in August 2014 however, GRG was in fact re-branded as RBS's Restructuring Group. ## Examples of RBS GRG, Lloyds BSU misconduct Bank recovery departments were often highly incentivised to overstate the bank's write-down provisions in order to obtain bonuses for 'recovering' more than the bank 'expected' to recover. The misconduct of these divisions ranges from the regrettably routine manipulated property valuations triggering Loan To Value (LTV) breaches involving bank-friendly chartered surveyors and valuers as well as bank-friendly investigating accountants and other supposedly independent professionals employed to 'advise' customers. More complex examples we have seen include: - valid loan drawdown refusal triggering loan defaults; and/or- unauthorised or engineered upward changes in loan lending margin; and/or- change in reference interest rate from Bank of England Base Rate often changing to a higher fraudulently bank-manipulated reference rate such as LIBOR; and/or- mis-sale of a complex financial derivative which was sold as interest rate hedging (IRHP) but amounted to speculative hedging that increased not minimised risk; and/or- mis-sale of a derivative which used the customer's credit limit without customer knowledge or approval (amounting to deliberate concealment of such utilisation). ## Capital adequacy: Bank Recovery teams under pressure The major banks' recovery teams are: RBS' Global Restructuring Group division (GRG); Lloyds' dedicated Business Support Unit (BSU); Barclays' Business Support & Recoveries (BSU) teams; HSBC's Commercial Recovery Unit (CRU); NAB Clydesdale & Yorkshire Banks' Strategic Business Services (SBS) and Santander's Corporate Restructuring Team (CRT). Following the financial crisis in 2008-2009, the UK Government announced a bank rescue package which would restore market confidence and help stabilise the British banking system. The plan provided for a range of short-term loans and guarantees of interbank lending, as well as up to £50 billion of state investment in the banks themselves. Out of the banks bailed out by the Treasury, RBS and Lloyds received majority of funds and were approximately 80 percent and 40 percent government owned (respectively). Other banks obtained multi-billion pound bailouts by other means, such as Barclays who raised £7.1bn from Qatar, Abu Dhabi and its own shareholders in November 2008, and the £4.5bn from investors including Qatar and Sumitomo Mitsui Banking Corporation in June 2008. The Global Restructuring Group was set up in the early 1990s to take troubled businesses and help turn them around. After the financial crisis, GRG was seen as part of the solution to the bank's problems. The fees the bank collected helped offset its bad debts and improve the bank's capital strength. At its peak in 2010, GRG handled tens of thousands of British businesses with a combined value of around 90 billion pounds. Other bank recovery teams were similarly under pressure during the credit crunch to improve their bank's Capital Adequacy Ratio (CAR), also known as Capital to Risk (Weighted) Assets Ratio (CRAR). This is the ratio of a bank's capital to its risk which is tracked by regulatory authorities to ensure that the bank can absorb a reasonable amount of loss and complies with statutory Capital requirements. ## The Tomlinson Report into Bank Lending Practices On 25 November 2013, entrepreneur Dr Lawrence Tomlinson published his independent report into banks’ lending practices: [treatment of businesses in distress (“Tomlinson Report”)](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf). The Tomlinson Report, which was commissioned by the then Business Secretary Vince Cable, accused Royal Bank of Scotland (which also owns NatWest and Ulster Bank) of destroying viable businesses in order to seize their assets. After reviewing cases and experiences of businesses, Dr Lawrence Tomlinson found evidence to suggest that there were occasions in which RBS engineered a business into default in order to move the business out of local management and into their turnaround division, Global Restructuring Group (“GRG”).  This then generated revenue for the bank through fees, increased margins and the purchase of devalued assets by their property division, West Register (now known as Sig 1 Holdings Ltd).  Once in GRG, the business was trapped with no ability to move or opportunity to trade out of the position. In early January 2014, the [Financial Conduct Authority appointed Promontory Financial Group & Mazars](https://web.archive.org/web/20160402212032/http://www.mazars.co.uk:80/Home/News/Latest-news/Review-of-RBS-treatment-of-SME-customers) to carry out an independent review of RBS’s treatment of businesses in financial difficulty and consider allegations of poor practice set out in the Tomlinson Report. The results of the investigation were due to be published in the third quarter of 2014 but in December 2015, the FCA announced that it would be pushing back its report and will be making an announcement “as soon as possible in 2016.” No such report has yet been made public and it is clear that the FCA, RBS GRG, Mazars and Promontory have been allowed to engage in dilatory conduct. It is speculated that this indulgence is because of support of RBS GRG by HM Treasury to avoid further bailout and compensation costs for the largely state-owned bank. As of 14 October 2016, [the FCA has provided an update on it's claimed 'independent' review of Royal Bank of Scotland’s treatment of business customers in financial difficulty](https://www.fca.org.uk/news/statements/update-independent-review-royal-bank-scotland%E2%80%99s-treatment-business-customers) and states that it has now received the final report from the skilled person: > The FCA has now received the final report from the skilled person. There are a number of steps for the FCA to complete before we are in a position to share our final findings, which will include an assessment of all relevant material, of which the skilled person’s report is one. This has been a complex and lengthy review – it is therefore important that we do not rush the final stages of this process. ## Summary of Tomlinson's Findings on RBS's GRG After considering a number of cases and experiences of businesses, Dr Lawrence Tomlinson summarised RBS’s overall process as being as follows: - The bank artificially distresses an otherwise viable business and through their actions puts them on a journey towards administration, receivership and liquidation.- Once transferred into the business support division of the bank the business is not supported in a manner consistent with good turnaround practice and this has a catalytic effect on the business’ journey to insolvency.- The insolvency process lacks fairness and accountability leading to financial implications and biased outcomes to the detriment of the business owner. Lawrence Tomlinson considered the process to be “systematic and institutional” and found from conversations with whistle-blowers, experts and lawyers that more often than not, viable businesses were entering such a path as there was more to be gained by the bank from this than a less asset risk business. ## Engineering a Default – Identifying Business as “Distressed” There are numerous mechanisms by which a business may be put into default and transferred to business support by the bank. This often takes the form of one of the following: - **Reassessment of loan to value** – revaluation which significantly undervalues the business’ assets and puts them in to breach of their covenants;- **Technical breach of covenants** – such as a temporary dip in EBITDA or a late submission of information. These are often breaches that have no bearing on the performance or viability of the business; and- **Removal of or change to loan facilities** - the move to a rigged and more costly LIBOR rate or more expensive asset based finance. The purpose of the above is to enable the bank to identify the business as being “distressed” so it can be moved out of local management. Once moved into GRG, they are considered risky and with the increased margins and fees, their cash flow will also be impaired. ## Treatment of Businesses in RBS’s Global Restructuring Group Once a business has been sent to GRG, it is exceedingly difficult for it to find an alternative source of finance as it is considered as being distressed. The business will find that it is no longer able to liaise with its local relationship team. In his report, Dr Tomlinson stated: > *“Businesses across the country have a real fear of entering these divisions of the bank given the experience of others in their network. There are very few examples received as part this evidence gathering process where the business has gone into GRG, in particular, and gone back into local management.”* The following are some of the consequences/difficulties faced by businesses in GRG: - **Increase in margins and excessive fees:** the business was usually fined on entry into GRG for breaching its own covenants and more often than not, interest on their loans increased. This made it harder for businesses to trade out of their difficult situation.- **Requests for information:** Businesses received numerous requests for information from the bank which distracted them from the day to day running of their business.- **Shadow directors:** Businesses were required to delay or stop paying their suppliers which in turn had a detrimental impact on their business credit rating. ## Purchase of Assets by West Register Dr Tomlinson found that once a business collapsed, there was a potential for conflict of interests in the sale of assets out of the ‘insolvency pot.’  The report found that a large number of businesses were approached by West Register (a division of GRG that is owned by RBS) and which was interested in purchasing their property. There was a large number of Property Participation Fee Agreements ("PPFAs") targeting customers assets and where the bank secured a large participation in the value of customers' real estate assets for little or no real investment. This was an obvious conflict of interests and many customers felt that their property was purposefully undervalued in order for the business to be stressed, enabling West Register to buy assets at a discount price. West Register made hundreds of acquisitions which included purchases directly from the customer (labelled as consensual sales) and from bank-friendly and bank-appointed insolvency practitioners. The bank thereby acquired a diverse portfolio, from high value properties (such as hotels) to residential properties. GRG also engaged in equity participation agreements with customers, obtaining a significant shareholding (for little to no investment) in a business that the bank itself may have partially or wholly wrecked by mis-selling IRHPs or EFG loans. ## Financial Conduct Authority investigates: An FCA GRG Review? Following the publication of the Tomlinson Report, the [FCA announced on 17 January 2014 that they had appointed Promontory and Mazars to carry out a Review under section 166 of the Financial Services and Markets Act 2000](http://www.fca.org.uk/news/update-on-independent-review-of-rbs-treatment-of-business-customers-in-financial-difficulty). The Review will examine Royal Bank of Scotland’s treatment of small business customers in financial difficulty and consider allegations of poor practice set out in the report by Dr Tomlinson. If RBS customers / other contacts wish to draw attention to points they believe are relevant to the FCA’s Review, they should contact section166@mazars.co.uk. [![RBS GRG Solicitor](https://lexlaw.co.uk/wp-content/uploads/2015/12/rbs-grg-solicitor.jpg)](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/rbs-grg-solicitor/)The FCA GRG review was announced swiftly but since delayed for over two years. The FCA GRG Review was announced swiftly, in response to the Tomlinson report. However the FCA GRG s.166 report is now two years overdue yet the regulator continues to refuse to provide a timetable as to when the public will be able to learn of the findings. It is widely speculated that the report will be a whitewash as to the activities of GRG which is a division of the largely state-owned RBS which will excuse the bank from organising a compensation scheme for victims. Victims of GRG must take legal advice to avoid their legal rights becoming time-barred. ## RBS' Clifford Chance GRG Review (April 2014) RBS has always publicly denied wrongdoing (although this may change in early 2016) and in 2014, it hired Clifford Chance LLP to investigate the allegations made by Dr Tomlinson. On 17 April 2014, [RBS published their report](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2014/04/Clifford-Chance-Independent-Review.pdf) titled: *"INDEPENDENT REVIEW OF THE CENTRAL ALLEGATION MADE BY DR LAWRENCE TOMLINSON IN BANKS' LENDING PRACTICES: TREATMENT OF BUSINESSES IN DISTRESS"* This report into RBS GRG, paid for by RBS and conducted by RBS' own lawyers, predictably cleared the bank of systematic wrongdoing. However the report corroborated a number of questionable practices carried out by RBS and GRG (listed below) which RBS promised it would eliminate: ### ► RBS didn't obey RICS valuation rules ◄ RBS' internal valuations of businesses were not carried out in accordance with best practice per the Royal Institute of Chartered Surveyors: > "Internal valuations were not carried out to the standard of the Red Book, but they were undertaken according to set assumptions by qualified surveyors employed by the bank." ### ► GRG exploited customer debt levels ◄ Clifford Chance exposed a GRG training manual which instructed threatening to remove a distressed business' overdraft as a way to gain "leverage" in negotiations over equity. > "using the on-demand nature of the overdraft as a point of leverage in negotiations of equity upsides when the customer is not in breach of its facilities but the business may be experiencing underperformance against expectations/forecasts." ### ► Inadequate explanation of RBS' & GRG fees ◄ > "We found it difficult to understand how the bank calculated the fees which it proposed to customers in any particular case and therefore found it difficult to assess allegations of unfairness," ### ► Profitable businesses were put into GRG ◄ Clifford Chance reported that they had seen examples of firms that were not struggling with their loans, but were still deemed to require restructuring 'support'. > "a number of other cases where a customer had been transferred to BRG [Business Restructuring Group] without an event of default having occurred.” ### ► RBS GRG manipulated customers conduct ◄ > "RBS sought to encourage or incentivise a specific course of action by the customer through its pricing such as an exit or sale of assets to reduce the customer’s debt." ### ► RBS bank managers were incentivised ◄ > "The relationship managers' financial contribution was clearly an important part of the performance assessment process and, within the relevant sections of the appraisal, the focus is almost entirely on BRG's revenue generation/loss avoidance objective. In free text blocks on the form, the appraiser estimated the relationship managers' individual revenue generation and highlighted cases where they had generated strong revenues. Relationship managers were encouraged to seek upsides (equity participations and PPFAs)" ### ► RBS' West Register Conflict of Interest ◄ RBS admitted that the fact that a "damaging perception" of a conflict of interest arose due to fact that the bank was effectively able to buy a business' property through its West Register vehicle. And so the bank has decided to sell all assets on its books and wind it down. As the report noted: > "In December 2012, West Register's UK property portfolio was valued at £929m. Property acquired from the bank's UK SME customers totalled approximately £400m, less than half the overall portfolio. Between 2008 and 2013, West Register made acquisitions from 166 SME customers at an average of approximately 50% of the original loan value at the date of the transfer to GRG." ## GRG Recovery division disbanded by RBS After suffering a maelstrom of controversy following the publication of the Tomlinson Report and [former Bank of England deputy Sir Andrew Large’s report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx), RBS announced in August 2014 that it would be shutting down its controversial GRG team. Whilst RBS have shut down this division of the bank, the bank clearly have employed recovery techniques that have not been as honest or responsible as one would expect of a bank that ought to be dealing fairly with customers. It remains to be seen whether the new recovery team at RBS will behave honestly or not. ## FCA-agreed GRG Review Compensation Scheme? We understand that RBS are preparing for the possibility of being forced to enter into an FCA-agreed Review scheme to compensate victims, although there is no guarantee such a scheme will transpire (it has been speculated about since May 2015 and no doubt resisted by RBS). We are aware that a Project team has been set up at RBS' disaster recovery offices in Angel, London to deal with the banks responses to customers complaints to Mazars and Promontory acting for the regulator. If a review is announced, there can be no doubt, that just as with the IRHP review, RBS will take every possible step to minimise payments to customers. It is important that victims of RBS GRG or any other bank's misconduct do not wait to take legal advice as their legal rights are in the process of expiring (or may have already expired in many cases). Expiry of legal rights by the passage of time may result in a good claim being worth nothing. All victims of any bank recovery teams misconduct must therefore take legal advice from a specialist solicitor as soon as they possibly can. For the avoidance of doubt, the Limitation Act does not allow extensions simply because of delays by the regulator or the wrongdoing bank which cannot amount to a valid excuse for inaction. The FCA, having promised an announcement by the end of 2015, then announced in December 2015, that it would be making an announcement in early 2016. This promised publication date was also delayed and as of 14 October 2016, the FCA now reports that publication is still not imminent but will occur in late 2016. Customers must also realise that their right to take legal action cannot be compromised by a possible GRG Review scheme and that litigation will give customers far greater prospects of a successful outcome in the FCA-agreed GRG review including legal costs recovery from the bank, which is unlikely to be available in any FCA GRG Review compensation scheme. Lawrence Tomlinson's report can be read here: [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) (PDF) & [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx) (Text) Sir Andrew Large's report can be read here: [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) (PDF) & [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx) (Text) The FCA's update page is here: [Update on independent review of Royal Bank of Scotland’s treatment of business customers in financial difficulty](https://www.fca.org.uk/news/statements/update-independent-review-royal-bank-scotland%E2%80%99s-treatment-business-customers) --- # Litigation Solicitors & Barristers Source: https://lexlaw.co.uk/litigation-solicitors/ *Litigation & Dispute Resolution Solicitors to whom results matter.* Litigation and dispute resolution is our core practice area and comprises most of the firm's work. Our litigation lawyer team is immensely experienced in litigation work. We both defend and issue legal claims for our clients in respect of all manner of high-value contentious issues, ranging from simple breach of contract and debt recovery matters to financial services litigation against major banks and brokers and obtaining emergency freezing orders. Our London litigation solicitors and barristers advise our clients on disputes relating to claims involving fraud and deceit, commercial contracts, buildings and property, sale of goods, banking and mortgage fraud, directors’ disqualification, judicial review, insolvency and many other disputes. We aim to add value to our case management and advisory work for clients by our knowledge of their trade or profession; we have expert knowledge of trade sectors such as large-scale Property Development, Wholesale Cash and Carry, Commodities and Diamond trading, Aerospace, Overseas development, Travel, Internet and other Retail. We regularly act for high net worth private clients and companies in We regularly act for high net worth private clients and companies in high value litigation often against opponents whom have instructed other leading City of London law firms. We have experience of successfully acting against firms such as Freshfields, Herbert Smith, Norton Rose, DLA Piper, Hogan Lovells, Cameron McKenna, Eversheds, Pinsent Masons, Simmons & Simmons, Addleshaw Goddard and Dentons. ## Litigation Lawyers in the City Of London We are based on the legal epicentre of London across the road from the [Royal Court of Justice](https://en.wikipedia.org/wiki/Royal_Courts_of_Justice) and close to all other [London Courts](https://www.judiciary.gov.uk/you-and-the-judiciary/going-to-court/high-court/). Our London litigation lawyers are very skilled in litigation cases and try very hard to look at the issues from both sides so that a balanced and correct evaluation of the case is achieved. We are also proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. All options available are discussed with the client, consideration is given to personal and financial pressures and future action is only taken after proper consultation and agreement. These are some of the reasons for the firms location adjacent to the [Royal Courts of Justice](https://www.justice.gov.uk/courts/court-lists/list-cause-rcj) in Central London. We have, for example, obtained an out of hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure the minimum risk possible in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. Clients hire us because of our extensive experience in all areas, and especially because of our litigation experience – when necessary, we know when to go to court and we know how to litigate. ## Consultation with a Litigation Solicitor & Barrister Our expert litigation & dispute resolution Solicitors and Barristers are here to assist you. We invite you to contact us so we can assess your claim. We can provide urgent help, advice or representation to clients from our expert legal team of leading Litigation & Dispute Resolution solicitors and barristers. Just call or email us now for a free initial consultation; our legal team are always waiting to help. Our minimum fee for advice from a Solicitor & Barrister in conference is £1750 plus VAT; we don't offer any free legal advice. --- # Winding-up Petition Lawyers Source: https://lexlaw.co.uk/winding-up-petition-lawyers/ *We have the perfect skill set with which to provide those facing winding up petitions the best insolvency defence, advice and advocacy representation before any Court in England & Wales. We will help ensure you emerge from the liquidation process as personally and financially intact as possible.* > "A highly regarded and effective firm for winding up petition defence in the UK, with a strong track record of success and positive client feedback." ## Key points about LEXLAW and our successes: - [Expertise](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/): They specialise in insolvency law and winding up petitions, with a team of experienced solicitors and barristers. - [Rapid response](https://windinguppetitionsolicitors.co.uk/our-success-case-studies-successful-insolvency-law-firm-london/): LEXLAW has demonstrated the ability to act quickly in urgent situations, such as obtaining a validation order within 3 days of meeting a client. - [High success rate](https://lexlaw.co.uk/): Around 97% of their litigation cases settle before trial. - [Positive client feedback](https://windinguppetitionsolicitors.co.uk/our-success-case-studies-successful-insolvency-law-firm-london/): Multiple client testimonials praise LEXLAW’s expertise, professionalism, and ability to achieve favourable outcomes. - [Successful case studies](https://windinguppetitionsolicitors.co.uk/success/): Obtained dismissal of a winding up petition, allowing a company to continue trading. - Successfully defended against an HMRC winding up petition with only one week’s notice. - Secured a validation order within 48 hours of issuing an application, which is described as “extremely rare”. - [Comprehensive service](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/): They offer support throughout the entire process, from preparing and presenting petitions to court representation and negotiation with creditors. - [Unique positioning](https://lexlaw.co.uk/contact-us/): LEXLAW operates from professional legal chambers in Middle Temple, near the Royal Courts of Justice and High Court in London. ## What is a Winding Up Petition? A winding up petition is a legal action taken by a creditor to force a company into compulsory liquidation due to unpaid debts. If granted, the company’s assets are sold to pay creditors, and the company ceases to exist as a legal entity. Presenting a winding up petition to the Court is the most serious debt recovery action that can be taken by a creditor. It requires the petitioner to be able to demonstrate that it has a liquidated debt of at least £750 which is not in dispute, this is normally evidenced by a statutory demand which is not set aside or a Judgment of the Court. Winding up petitions may be issued at Court against either a Company or a Partnership, the latter (a petition to wind up a partnership) is usually accompanied by individual bankruptcy petitions for each of the partners. The winding up petition is the precursor to the compulsory liquidation of a company or the dissolution of a partnership if not properly dealt with by the Directors or Partners and in essence means that a creditor is asking the Court to wind up a business and have an insolvency practitioner distribute the assets of that business amongst all creditors. ## What should I do if my company is served with a winding up petition? You must act quickly, as you have only seven days to respond before the petition is advertised in [The Gazette](https://www.thegazette.co.uk/all-notices/content/129) and your company bank accounts become frozen. Options include: - Paying the debt in full to halt proceedings. - Opposing the petition if there is a [genuine dispute](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/case-study-winding-up-petition-defeated-by-genuine-counterclaim/) over the debt. - Negotiating a repayment agreement with the creditor. - Obtaining an [injunction to prevent advertisement of the petition](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/directors-guide-consequences-of-a-winding-up-petition-advice/) if you dispute the debt. Ignoring the petition can lead to: - The court granting a winding up order. - Freezing of your company’s bank accounts. - Appointment of a liquidator who will sell company assets and investigate director conduct for potential misconduct or wrongful trading. Seeking legal advice from [an insolvency specialist firm of solicitors and barrister that specialise in defending winding-up petitions](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/) is strongly recommended. We know what the best next steps are and can often completely reverse the position if the other side have made errors. ## Winding Up Petition Procedure Winding up petitions can be issued by any creditor who is owed at least £750 and are most often deployed by [Her Majesty’s Revenue & Customs (HMRC)](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/). Petitions are in the main issued and then heard at the High Court of Justice, Chancery Division (Companies Court) which is based at the Royal Courts of Justice (Rolls Building) in London. They can also be issued and dealt with at other High Court District Registries or at a County Court with jurisdiction in insolvency matters (if the paid up or credited share capital is below £120,000). LEXLAW Solicitors & Barristers have professional legal chambers in the Middle Temple Inn of Court which is adjacent to the Royal Courts of Justice where the Companies Court is located. This location in the legal heart of London ensures we are able to take urgent instructions and act quickly on behalf of the firm’s clients. Once a winding up petition is issued by a creditor such as [HMRC](https://lexlaw.co.uk/winding-up-petition-lawyers/) it is then served on the company usually by a process server visiting the company’s registered office address or sometimes by first class post. Once a petition is served there is very limited time for Directors to act decisively and deal with a company’s debts and the company will urgently need specialist legal advice (and representation at the Companies Court hearing) to help it fight back and ensure the business stays alive. As specialist winding up lawyers, we can help the company to get enough time to manage or settle large debts or to dispute the monies claimed in the petition. With the correct legal guidance it is perfectly possible to obtain time and resolve the debt even if the creditor won’t initially agree to sensible time to pay proposals; there are legal arguments and applications that can be deployed in the company’s favour. ## For Creditors Considering Issuing a Winding Up Petition Creditors owed £750 or more can issue a winding up petition if they can prove the company is insolvent and unable to pay its debts. Other eligible parties include directors, shareholders (contributories), and certain officials like the Secretary of State. ### What is required to issue a winding up petition? This is not a simple process and one mistake can jeopardise the entire petition. Costs are recoverable from the other side in event of success in any event. Steps to take are: - Complete Form 4.02 (petition) and Form 4.03 (affidavit). - Pay court fees and deposits. - Serve the sealed petition on the company at its registered office or main place of business. ## How much does it cost to issue a winding up petition? Costs include court fees and deposits payable to HM Courts and Tribunals Service. These costs may be recoverable if the company repays its debts. For more information see here: [https://windinguppetitionsolicitors.co.uk/funding](https://windinguppetitionsolicitors.co.uk/funding) ## Performing a Winding Up Petition Search Prior to issuing a winding up petition, you must ensure that you check with the Companies Court as to whether another petition already has already been presented. The first petition is the one that takes precedence (whether advertised or not) and any subsequent petition is likely to be dismissed with an adverse costs order against the petitioner. We can conduct a winding up petition search for our clients who are intending to issue a petition via the Court which will confirm if any liquidation, winding up or striking-off documents have been filed. We will also confirm if any notices have been placed in the London Gazette. If adverse entries are filed, relevant copies will be provided. We can also do winding up searches for clients that are required to wind a company up and need further information, namely: Date of Incorporation, Any changes of name, Registered Office, Objects, Nominal & Issued Capital, Copy Mortgage Register. ## What are common grounds for issuing a winding up petition? The most common ground is that the company cannot pay its debts as they fall due, often proven through an unpaid statutory demand. This is a clear indication of insolvency, and creditors often use this as the basis for their petition.  Establishing valid grounds for issuing a winding up petition is crucial because it demonstrates that the creditor has acted reasonably and followed due process in attempting to recover their debt. Courts will not grant a winding up order unless there is clear and compelling evidence that the company is insolvent and unable to pay its debts. Therefore, creditors should ensure they have sufficient documentation (e.g., statutory demands, court judgments, correspondence) and should [take legal advice before issuing a petition](https://windinguppetitionsolicitors.co.uk/legal-case-assessment/). ### 1. Failure to Comply with a Statutory Demand: A [statutory demand](https://lexlaw.co.uk/solicitors-london/category/statutory-demands/) is a formal written request for payment of a debt exceeding £750. If the company fails to pay, secure, or dispute the debt within 21 days of receiving the statutory demand, it is considered evidence of insolvency. Creditors often use this as a precursor to filing a winding up petition. ### 2. Unpaid Court Judgment: If a creditor has already obtained a County Court Judgment (CCJ) or High Court Judgment against the company for an unpaid debt and the company still fails to settle it, this can serve as evidence that the company is unable to pay its debts. ### 3. Evidence of Insolvency: Beyond statutory demands or court judgments, creditors can present other evidence of insolvency, such as: - Repeated bounced cheques or returned direct debits. - Admission by the company that it cannot pay its debts (e.g., through correspondence). - The company's inability to meet other financial obligations, such as unpaid taxes, wages, or supplier invoices. ### 4. Breach of Payment Agreements If a company has entered into a repayment plan or agreed on terms with creditors but fails to honour those agreements, this may also be considered evidence that the company is insolvent and unable to manage its financial obligations. ### 5. Creditor’s Reasonable Belief of Insolvency In some cases, creditors may file a winding up petition if they have reasonable grounds to believe that the company is insolvent based on its financial behaviour or public records (e.g., overdue filings at Companies House, failure to submit accounts, or reports indicating financial distress). ### 6. Tax Debts Owed to HMRC HM Revenue & Customs (HMRC) is one of the most frequent petitioners in winding up cases. If a company fails to pay VAT, PAYE, Corporation Tax, or other tax liabilities, HMRC may issue a winding up petition as part of its debt recovery process. We are[ the leading law firm in the UK in defending HMRC Petitions](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/) with a track record of success. ## How long does the petition process take? The winding up petition process typically takes 8-10 weeks from filing the petition to the first court hearing. This timeline includes several key steps: filing the petition, serving it on the company, and advertising it in *The Gazette*. The petition must be served on the company as soon as possible after filing, and it cannot be advertised until seven business days after service. This window gives the company a chance to settle the debt or dispute the petition before it becomes public. If uncontested, at the first hearing the court may grant a winding up order at the hearing. However, if the case is complex or if more time is reasonable, the court may issue directions or adjourn the hearing. Getting [expert legal advice at the outset](https://lexlaw.co.uk/legal-case-assessment/) is the best way forward. ## What are potential risks for creditors issuing a petition? If a winding up petition is unsuccessful, the creditor may face significant financial and legal consequences. Filing a petition involves court fees, deposits, and legal costs, which can be substantial. If the court rejects the petition or if the debtor company successfully disputes it, these costs are unlikely to be recoverable and the petitioner may have to pay the company's legal costs possibly on the indemnity basis; [as we achieved against HMRC](https://taxdisputes.co.uk/2024/06/injunction-success-abusive-hmrc-winding-up-petition-dismissed/). Furthermore, pursuing an unsuccessful petition can damage the creditor's reputation and strain business relationships. Given the financial risks and potential complexities involved, it is highly recommended to seek [expert legal advice from insolvency expert solicitors and barristers](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) before issuing a winding up petition. For a discounted fixed fee which is potentially recoverable, we can help assess whether this course of action is appropriate, ensure compliance with legal procedures, and advise on suitable alternative debt recovery options that may be more effective or less risky. ## Why use a Specialist Winding Up Petition Solicitor? The insolvency and Court rules relating to winding up proceedings are a technical minefield; as expert winding up petition solicitors we help our clients to avoid suffering the ‘usual compulsory order’. We assist by protecting the companies interests and by negotiating with creditors and advising and representing the company at Court. Retaining insolvency solicitors and barristers in particular assists in dealings with creditors (such as HMRC) who will know a company is taking matters seriously and responsibly when they instruct ourselves. ## Our Winding Up Solicitors get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business failure. We consider that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit individual circumstances. We provide specialist senior legal advice from solicitors and barristers at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist advice on legal strategy and costs as well as to manage winding up proceedings mason.quincey1@gmail.comas agents and as advocates in the High Court. We assist our clients by: - [Opposing or Stopping a winding up petition](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/); - [Obtaining an adjournment of winding up proceedings](https://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/); - [Applying for injunctions to restrain advertisement in the London Gazette](https://windinguppetitionsolicitors.co.uk/obtaining-injunction-restrain-presentation-winding-up-petition/); - [Applying to the Court for validation orders](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/) [to unfreeze bank accounts;](https://windinguppetitionsolicitors.co.uk/practice-note-on-validation-orders-lawyers-london/) - [Liaising with HMRC and other creditors;](https://taxdisputes.co.uk/hmrc-winding-up-petitions/) - [Court representation and advocacy before a Registrar or Judge;](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) - [Advising the Company or Partnership on winding up petition procedure;](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) - [Advising Directors on risks and insolvency routes](https://windinguppetitionsolicitors.co.uk/risks-for-directors/); and - [Developing (and aiding implementation of) strategies that allow the business to continue.](http://chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://lexlaw.co.uk/wp-content/uploads/2018/05/KSA-Worried-Director-Guide-2018-LEXLAW-taxdisputes-solicitors-london.pdf) ## Company rescue and turnaround advice We add value by our legal services by guiding clients as to how best companies can be rescued and turned around and how debts can be written off or restructured. We can advise on administration or proposals of either Company Voluntary Arrangements (CVAs) or Partnership and Individual Voluntary Arrangements (PVAs or IVAs). To achieve a company rescue you must act quickly; contact us as soon as possible. The more time available to build an alternative business plan, the more successful it is likely to be. If your company can be saved, whether this is achievable through restructuring or writing off debts, the team at LEXLAW Solicitors & Barristers can help by offering clear, practical and easy to understand advice which deciphers the Insolvency Rules and regime. ## Initial consultation and advice Our team is made up of fully qualified legal professionals such as winding up solicitors and winding up barristers and we are regularly instructed by other law firms to assist their clients facing winding up proceedings. You can be assured that your insolvency matter is in safe hands and that **we will act cost effectively and in the best interests of the Company** **and the Directors**. Our success rate is a result of the dedication of our insolvency lawyers who will diligently review your matter to ensure it has the best possible chance of success from the outset when it matters the most. To contact us about your case please call us on: **0207 1830 529** or email us on: insolvency-winding up-solicitors-london@lexlaw.co.uk --- # HMRC Tax Dispute Lawyers Source: https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/ *We have years of experience negotiating with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) and handling tax appeals at the [Tax Tribunals](https://www.gov.uk/tax-tribunal/overview) and in the High Court dealing with contentious tax disputes.* We also work extensively with Accountants, Tax Investigation practices and former HMRC Officers to ensure your matter is handled correctly. The depth of our combined capabilities allows us to represent clients in a variety of situations, whether advising private or corporate clients during tax audits, pursuing administrative appeals, or litigating tax matters at the Tax Tribunal, Court or in tax appeals. Clients hire us because of our extensive experience in all areas, and especially because of our litigation experience – when necessary, we know when and how to litigate against HMRC. ## Tax Law Practice Areas: - Civil or criminal tax investigations by HMRC;- HMRC allegations that artificial tax arrangements or avoidance schemes used to underpay tax;- Responding to HMRC allegations that tax or duty has been evaded, under-declared or underpaid, or that a tax fraud has taken place;- Disputes with HMRC including review of penalties and challenging seizure;- VAT Inspections & Investigations;- VAT Assessment Appeals;- Applications for Binding Tariff Information (BTI);- WOWGR ‘fit and proper’ registration applications;- Customs Tariff Classification assurance;- Income Tax;- Code of Practice 8 (COP8) - HMRC suspect artificial tax arrangement or avoidance scheme deployed to underpay tax; COP8 is normally a civil tax investigation but if HMRC suspect fraud then it can become a COP9 or full tax fraud investigation;- Code of Practice 9 (COP9) - HMRC suspect serious tax fraud or significant tax loss due to deliberate conduct; COP9 offered as an opportunity to agree a civil resolution for criminal tax evasion;- Allegations by HMRC of Tax Evasion or Avoidance; and- Alegations by HMRC of Offshore Tax Evasion or Avoidance. ## Need legal advice or help solving a HMRC Tax Dispute? Your search ends here. Our tax team made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) can assist by providing you with a bespoke tax solution to your tax dispute. We can guide you through the minefield of ever-increasingly complex tax legislation, littered with compliance and due diligence traps. Our tax team has experience in negotiating with HMRC and managing appeals against their decisions at all levels. Members of the team include qualified [Tax Solicitors](https://taxdisputes.co.uk/tax-solicitors/) and [Tax Barristers](https://taxdisputes.co.uk/tax-barristers/) whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience. We have a team of established tax and duties specialist lawyers with a proven track record of delivering authoritative solutions. ## How our expert London Tax Lawyers can help you: As a leading specialist tax law firm with a track record of success, you can be assured your tax matter is in safe hands. Our success rate is a result of the dedication of our [tax team](http://taxdisputes.co.uk/expert-advice/) who will diligently review your matter so it has the best possible chance of success from the outset when it matters the most. Our experienced lawyers regularly carry out work in many tax disputes areas,  from advising clients on whether HMRC have followed the correct procedures to successfully challenging HMRC’s policies. We have specialist knowledge in HMRC internal processes as well as ensuring that we are able to successfully challenge HMRC decisions in the Tax Tribunals. Although you may have instructed an Accountant in relation to your tax matters, in most cases your Accountant will be able to assist you in tax compliance matters whereas we specialise in assisting you in relation to any investigations that HMRC have brought against you. We regularly work with Accountants to ensure that collectively we are able to obtain the best possible resolution to your matter. If you have a dispute with HMRC and find yourself hitting a ‘brick wall’ or even if you are unsure of how to deal with correspondence and/or demands you have received from HMRC  then you should contact us immediately to ascertain how we can assist you in your matter. ## Initial case assessment If you want [specialist legal advice from a HMRC Tax Disputes Lawyer in London](http://taxdisputes.co.uk/), we invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Tax Dispute solicitors and barristers. Just call or email us now for an initial consultation; our legal team are waiting to help. To contact us about your HMRC tax case please call us on: 02071830529 or email at tax.disputes@lexlaw.co.uk. --- # What is GRG? What did GRG do wrong? GRG Claim? RBS FCA Review? Source: https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/ *Our team of specialist bank litigation solicitors and barristers are assisting many UK SME businesses in obtaining redress via litigation claims against the Royal Bank of Scotland's Global Restructuring Group.  GRG's 'business recovery' activities were misrepresented as GRG were in fact organised to profit from distressed customers in a dishonest, excessive and calculated way.* ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/2015/12/RBS-GRG.jpg)GRG was NatWest and RBS's troubled business support unit ## What is GRG? NatWest and RBS's Global Restructuring Group, was a business support unit (BSU) for troubled businesses set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services.  Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets via ['Project Dash for Cash'](https://www.buzzfeed.com/heidiblake/dash-for-cash). Following allegations of misfeasance, GRG was reportedly disbanded in August 2014. Distressed customer relationships are now handled by the Restructuring Group. ## What did GRG do wrong? In 2013 the UK government's entrepreneur-in-residence, Mr [Lawrence Tomlinson reported](http://www.tomlinsonreport.com/) that GRG took advantage of struggling businesses to secretly boost RBS and NatWest profits. Under threat of foreclosure of loans, the banks seized control of customer assets cheaply from businesses they claimed were failing even though often they had not defaulted on any loan repayments. Bank managers were able to increase their bonuses by identifying business customers who could be squeezed in what the bank itself called in a 2008 email: "Project: Dash for Cash". More than 12,000 companies were pushed into the bank's controversial "turnaround" division and between 2007 and 2012, the value of loans to customers in the GRG increased five-fold to more than £65bn. ## GRG Litigation Claim? The legal basis for claims is as follows: - Breach of contractual terms specific to each case;- Breach of an implied duty of good faith whereby contracting parties have a duty of good faith under which they are obliged to treat each other honestly and responsibly;- Breach of fiduciary duties by directors including where the bank forces appointment of a director or otherwise acts as shadow director;- Unlawful means conspiracy where two or more parties agree to use unlawful means to injure the business customer causing the business damage;- Misrepresentation where Natwest, RBS and/or GRG make a false statement of fact to a customer, which induces the customer to enter into a contract such as a profit participation agreement (PPA) or property participation fee agreement (PPFA) or exit fee agreement or loan agreement;- Negligence in the form of a failure to treat GRG customers with proper care and attention. Victims of RBS, NatWest, GRG and West Register should consider legal action promptly on their specific cases.  If businesses fail to do so then their legal rights will become time-barred by the [Limitation Act 1980](https://en.wikipedia.org/wiki/Limitation_Act_1980), resulting in the complete loss of any legal right to compensation. Legal rights can be preserved by urgently instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings. ## RBS FCA Review? The FCA announced in January 2014 that it would conduct an ['independent' review of Royal Bank of Scotland’s treatment of business customers in financial difficulty](https://www.fca.org.uk/news/statements/update-independent-review-royal-bank-scotland%E2%80%99s-treatment-business-customers).  The findings of this review have been known to the regulator and, bizarrely for an 'independent' review to RBS for several months however no publication of the FCA GRG review has occurred. It has been *rumoured* that a redress scheme would follow this FCA RBS GRG review but no such compensation scheme has been announced.  Victims of NatWest and RBS's GRG division (or indeed any other bank business support unit) should not wait for a regulatory announcement, as doing so may mean their legal rights expire. Expiry of legal rights allows wrongdoers, such as NatWest, RBS, GRG, and West Register, to breathe a sigh of relief, safe in the knowledge they have gotten away with their malevolent actions. ## Protecting Legal Rights against RBS GRG It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights.  This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. --- # Christopher Snell Source: https://lexlaw.co.uk/our-people/christopher-snell/ > ***"... able to get to the crux of the matter quickly and explain it to clients in a concise way."*** Christopher is one of a small number of barristers to have been awarded a Certificate of Honour by [Middle Temple](https://www.middletemple.org.uk/) in recognition of his outstanding achievement when qualifying as a Barrister. He is a highly respected and experienced chancery barrister with a strong reputation for handling complex and high-value disputes. Christopher has successfully acted in significant litigation before the Court of Appeal and in matters with substantial international dimensions. He is a first-class choice of counsel across a number of LEXLAW’s core practice areas, including [Insolvency Litigation](https://lexlaw.co.uk/winding-up-petition-lawyers/), [Commercial Litigation](https://lexlaw.co.uk/solicitors-london/tag/commercial-litigation/), [Civil Fraud & Asset Recovery](https://lexlaw.co.uk/solicitors-london/tag/civil-recovery-proceedings/), [International Arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/), [Cryptocurrency Disputes](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/), [Banking & Financial Services Disputes](https://lexlaw.co.uk/solicitors-london/category/banking-law/), [Costs Litigation](https://lexlaw.co.uk/solicitors-london/category/litigation/costs-litigation/) and [POCA & Asset Recovery](https://lexlaw.co.uk/solicitors-london/the-proceeds-of-crime-act-2002-poca-what-it-means-for-business-owners-and-directors/). Christopher maintains a substantial commercial disputes practice with particular expertise in financial services litigation, banking and finance disputes, corporate and personal insolvency, civil fraud, cryptocurrency disputes, shareholder and partnership conflicts, contractual disputes and cross-border enforcement. He is also highly experienced in complex legal costs litigation, including disputes concerning litigation funding, Damages-Based Agreements (DBAs), Conditional Fee Agreements (CFAs), detailed assessments and solicitor-client costs challenges. He acted for the successful party at both first instance and before the Court of Appeal in the landmark decision of [Lexlaw Ltd v Zuberi & Ors [2021] EWCA Civ 16](https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/), the leading authority concerning the enforceability of DBAs in England & Wales and a case of major significance to the litigation funding sector and modern [Dispute Resolution](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/). Many of Christopher’s matters involve complex international and offshore elements. He has been instructed in substantial offshore litigation arising from the liquidation of major US insurance companies following convictions for bribery and insurance fraud. He has also provided expert evidence before the Court of First Instance in Hong Kong on issues relating to English civil procedure and cross-border litigation strategy, complementing LEXLAW’s expertise in Offshore Litigation and International Debt Recovery. Christopher is particularly valued for providing decisive strategic advice and urgent representation at the earliest stages of disputes, including emergency injunctions, freezing orders, insolvency applications and enforcement proceedings. His ability to quickly assess litigation risk and implement effective legal strategy makes him especially well suited to high-pressure and fast-moving disputes involving [Partnership Disputes](https://lexlaw.co.uk/partnership-llp-members-dispute-resolution-solicitors/), [Director & Shareholder Business Disputes](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/), [Winding Up Petitions](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) and [High Court Litigation](https://lexlaw.co.uk/?s=high+court+litigation). --- # Tekhmeed Ejaz Source: https://lexlaw.co.uk/our-people/tekhmeed-ejaz/ Tekhmeed is a paralegal in the immigration team. He successfully completed an LLB (Hons) Law degree in May 2015 graduating with an Upper Second at Middlesex University. He began his legal career at a West London law firm, where he assisted fee earners in a wide range of UK immigration cases and appeals. Since joining the firm in May 2016, Tekhmeed has shown great enthusiasm in his work and is highly motivated to deliver an excellent bespoke service to the firm's clients and always works to meet their expectations. He currently deals with a wide range of immigration matters relating to; Points Based System (PBS) applications, EEA applications, In-country/Entry Clearance settlement applications. He also assists in submitting appeals to the Immigration and Asylum First Tier Tribunal and Upper Tribunal. Tekhmeed has an excellent relationship with the firm's clients as he understands their needs and is willing to go the extra mile to deliver a first class professional service. He understands the complexity involved in the UK immigration process and works closely with his clients to ensure they have the best chance of success.  Tekhmeed is multilingual, fluent in English, Urdu and Punjabi. In his spare time, he regularly attends the gym and plays indoor cricket. --- # Secure Card Payments (Pay Bill or Trust Request) Source: https://lexlaw.co.uk/pay/ Our secure card payment facility provider is [Stripe](https://stripe.com/gb). Card details are not stored by us. Stripe is Payment Card Industry Data Security Standard Level 1 compliant. A payment confirmation e-mail will be sent by Stripe. There are charges for Stripe card payments. [fullstripe_payment form="LexPay"] *Terms & Conditions of Card Payment Facility* - We offer this online card payment facility so that our Clients may pay a Bill or Trust Request. - Payments are processed by Stripe Payments UK Ltd ("Stripe"). Payment card details are handled exclusively by Stripe and are not stored by us. - Stripe charge 1.4% + 20p for European cards or 2.9% + 20p for non-European cards. There are usually no charges for payments by bank transfer. - Payments must be authorised by the cardholder who may be asked for further authentication. - Card payments are subject to clearance by the Client’s card provider and normally take seven days to credit our client account. If the payment is required for immediate use please make a same day bank transfer. Outgoing payments will not be made using the Client’s card payment until receipt of cleared funds. - Any refunds due on a matter where payment has been made wholly by card will only be made using the card details previously supplied. - If you need any assistance please call us on 02071830529. --- # Yasmeen Joshi Source: https://lexlaw.co.uk/our-people/yasmeen-joshi/ Yasmeen completed her LLB in 2015 and joined the firm in 2017. She has experience with a range of UK Visas and Immigration applications including Spouse Visas and EEA applications. Specifically, she specialises in preparing successful Tier 2 visa and Sponsor Licence applications and appeals at the First Tier Tribunal (IAC). Clients praise her attention to detail and friendly manner. Yasmeen intends to start the Legal Practice Course in the near future while assisting our clients with obtaining their visas and resolving complex immigration matters. --- # Deanna Stevens Source: https://lexlaw.co.uk/our-people/deanna-stevens/ --- # Professional Negligence Source: https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/ Have you suffered financial loss at the hands of a professional who has failed to act within professional standards? If you think you have a case, get in touch with our [team of professional negligence lawyers](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/). We can assist you to understand the merits of your claim and advise you on the best way to obtain fair compensation. [Submit your Negligence Claim for Legal Review](https://lexlaw.co.uk/legal-case-assessment/) Our litigators are regularly featured in the national and international media ([see our media coverage page](https://lexlaw.co.uk/media-interest/)). We've assisted thousands of individuals and businesses in serious litigation claims and helped to recover hundreds of millions in compensation. We can help you recover damages from negligent professional advisers such as [Accountants](https://professionalnegligenceclaimsolicitors.co.uk/compensation-negligent-accountants-financial-tax-advisors), [Architects or Builders](https://professionalnegligenceclaimsolicitors.co.uk/riba-property-expert-no-win-no-fee-advice-claims), Construction and other Engineers, [Financial Advisers](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/), [Lawyers](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/), [Surveyors](https://professionalnegligenceclaimsolicitors.co.uk/rics-property-surveyor-expert-valuer-compensation), [Tax Advisers](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/) and Valuers. Information in this article:- What is Professional Negligence?- Which Professionals are Sued for Negligence?- Three Keys to a Successful Professional Negligence claim- 1. Establish duty of care owed by professional to client- 2. Establish a breach by the professional of the duty of care- 3. The professionals’ conduct caused loss to the client- Other factors in a negligence claim- How much can be claimed in Professional Negligence Cases?- Contributory Negligence in Professional Negligence Cases- Limitation Periods in Professional Negligence Cases- Pre-action protocol for Professional Negligence (PNPAP)- City of London Specialist Professional Negligence Lawyers- Meet our Professional Negligence Lawyers ## What is Professional Negligence? Professional negligence is the failure to act within a duty of care owed by a professional to its client. Duties of care can arise by contractual arrangement or by common law tort. The professional must conduct itself to the professional standard commonly held by those in the same profession. Establishing professional negligence is more than relying on “bad advice”- a claim can be made where a professional fails to perform their responsibilities to the standard required. Professionals are expected perform their service to a standard expected by their peers in their same field of expertise. If the standard falls below what is expected and this breach results in financial loss, then a claim for negligence can be made. Professional negligence claims are complex and it is essential to instruct a [specialist professional negligence solicitor](https://lexlaw.co.uk/contact-us/) to deal with the claim as early as possible. Below is a brief [guide on some of the important steps](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) a claimant must consider when embarking on a negligence claim. It is not intended to be a substitute for legal advice. ## Which Professionals are Sued for Negligence? A professional is an individual or firm who has expertise and skill in the services they provide. In theory, a claim can be brought against any professional- the list is extensive. We can help clients make a successful professional negligence case after receiving bad advice from: - [**Lawyers**](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/professional-negligence-claim-against-lawyers-barristers/) (e.g. failure to prepare a case with due care; failure to comply with court directions; missed time limits; providing incorrect legal advice; failure to investigate fundamental evidence; conveyancing issues); - [**Accountants**](https://lexlaw.co.uk/negligence-claims-against-financial-advisers/) (e.g. negligent advice causing financial loss; negligent audit of company accounts; incorrect filing of a tax return); - [**Architects/Builders/Engineers**](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/) (e.g. construction work falls below standard reasonably expected ); - [**Surveyors/Valuers**](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/) (e.g. failure to note a property defect ); - [**Financial advisers**](https://lexlaw.co.uk/negligence-claims-against-financial-advisers/) (e.g. bad recommendation to invest in a product; negligently advised to invest pension pots into a Self Invested Pension Plan (SIPPs)); and - [**Tax consultants**](https://lexlaw.co.uk/negligence-claims-against-financial-advisers/) (e.g. misled on estate planning; failure to avoid consequences of a late filed tax return). ## Three Keys to a Successful Professional Negligence claim A successful claim in the tort of negligence must satisfy three basic requirements proved on the balance of probabilities: a duty of care was owed by the professional; the professional breached this duty and the breach caused a loss. In addition to a claim in tort, there will also likely be a claim for breach of contract (e.g. in a solicitor’s client care letter/retainer), breach of statutory duty or in some case, fraud and/or misrepresentation. ### 1. Establish duty of care owed by professional to client The borders of when duty of care is owed (outside of a written agreement) is an evolving area and the tests are being continuously adapted by the courts. It is generally accepted that the courts are reluctant to find a duty of care where there has been no clear assumption of responsibility by the professional ([*Hedley Byrne and Co Ltd v Heller and Partners Ltd [1963] 3 WLR 101*](http://www.bailii.org/uk/cases/UKHL/1963/4.html)) and the claimant must have relied on the advice provided ([*Henderson v Merrett [1995] 2 AC 145*](http://www.bailii.org/uk/cases/UKHL/1994/5.html)). The test of whether a professional has assumed responsibility is an objective test- focusing on the relationship and dealings between the professional and claimant- if the factual assumption of responsibility matrix exists, then it is immaterial whether the professional thought he had not assumed responsibility ([*Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830*](http://www.bailii.org/uk/cases/UKHL/1998/17.html)). An assumption of responsibility can be owed to potential claimants beyond the professional’s original client. The House of Lords extended  the assumption of responsibility principle in *[White and another v Jones and others [1995] 2 WLR 187](http://www.bailii.org/uk/cases/UKHL/1995/5.html)*, where a solicitor failed to prepare a will to the instructions of the testator before their death leaving two disappointed potential beneficiaries. The solicitor owed a duty to the beneficiaries even though he was only instructed by the testator and did not have a contract with them. Moreover, in *[Burgess and another v Lejonvarn [2017] EWCA Civ 254](http://www.bailii.org/ew/cases/EWHC/TCC/2016/40.html),* the court held that even an architect owed a duty of care in tort to a friend when giving gratuitous advice. Therefore, to establish a duty of care the professional must have objectively assumed responsibility and the[ courts have been increasingly willing](https://professionalnegligenceclaimsolicitors.co.uk/landmark-famous-uk-tort-cases-advice) to find they are liable to whomever reasonably relies on their advice or service. ### 2. Establish a breach by the professional of the duty of care A claimant must prove that the professional fell below the standards of a reasonably competent professional in that occupation- negligence will be established if an error was made which no reasonably member of that profession would have made.  The standard of care in negligence is: what would a reasonable man have done in the circumstances? The standard requires less than perfection and more than a mere error in judgement ([*Moy v Pettman Smith (a firm) [2005] UKHL 7*](http://www.bailii.org/uk/cases/UKHL/2005/7.html)). The principle in [*Bolam v Friern Hospital Management Committee [1957] 1 WLR 582* ](https://professionalnegligenceclaimsolicitors.co.uk/landmark-famous-uk-tort-cases-advice)has been accepted as the established test for breach of a duty of care in all professional liability cases: a professional is not necessarily negligent if they conform to a practice accepted as proper by members of that profession, even if other professionals would have taken a different approach. The courts have regularly divined the parameters of what a reasonably competent professional would do for a variety of different professionals, for example, Asplin LJ in [*Barker v Baxendale Walker Solicitors and another [2017] EWCA Civ 2056*](http://www.bailii.org/ew/cases/EWCA/Civ/2017/2056.html), sets out the principles determining what advice should be provided by a solicitor in particular factual circumstances. The particular experience of the professional (from newly qualified to highly experienced) is not relevant- inexperience is no good argument to persuade the court to lower the standard of care. However, if a professional or firm hold themselves out as specialists in an area (for example conveyancing solicitors), then the court will hold them to standard of reasonably competent specialists. ### 3. The professionals’ conduct caused loss to the client An important hurdle for a claimant is to show- on a balance of probabilities- that the professionals’ negligence caused the claimant loss. Both factual causation and legal causation must be demonstrated. To establish factual causation, it must be shown that the claimant’s loss would not have happened “but for” the professionals breach ([*Barnett v Chelsea and Kensington Hospital Management Committee [1969] 1 QB 428*](https://professionalnegligenceclaimsolicitors.co.uk/landmark-famous-uk-tort-cases-advice)). If the loss would have occurred in any event, then the breach did not cause the loss. The loss may include a loss of a chance, for example, in [*Spring v Guardian Assurance plc and others [1994] 3 WLR 354*,](http://www.bailii.org/uk/cases/UKHL/1994/7.html) an employer gave a negligent reference to a former employee, the claimant did not have to prove that a potential employer would have employed him, but simply that he had lost a reasonable chance of employment. In addition, the professional may claim that the loss was not caused by his breach but by an intervening act by either the claimant or a third party. Once factual causation has been established, it must then be determined that the breach legally caused the loss. This test of remoteness in tort is established in *Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] 2 WLR 126* (*the Wagon Mound*), where a negligent spilling of oil into a wharf was not considered to have legally caused fire damage to the wharf, as foreseeable damage amounted to only pollution and not fire. Therefore, to establish legal causation, loss must be reasonably foreseeable at the time the duty was breached. ## Other factors in a negligence claim ### How much can be claimed in Professional Negligence Cases? Damages are generally assessed from the date of the breach. All damages that are reasonably foreseeable can be claimed. The courts rely on the basic compensatory principle to put the claimant into the position he/she would have been in had the professional not have breached the duty owed. For example, this may be the cost of remedial work to remedy property defects following negligent advice from an architect. Or, if a surveyor overvalues a property which the client purchases, then the loss will be the valuation price less the contemporary market value. However, a claimant cannot claim for losses which could have been mitigated by taking reasonable steps. For example, in *Albert Bartlett & Sons (Airdrie) Ltd v Gilchrist & Lynn Ltd & Ors [2009] CSOH 125, *the professionals were negligent in installing a leaking roof, however, the claimants failed to mitigate their loss because instead of taking the reasonable step of simply repairing the roof with a sealant, they took the very expensive and unreasonable solution of installing a new roof. At the outset of any dispute, it is important for a claimant to ascertain whether a professional has professional indemnity insurance. Most professional bodies, such as the [Royal Institution of Chartered Surveyors (RICS)](https://www.rics.org/uk/) and the [Law Society](http://www.lawsociety.org.uk/), require their members to have professional indemnity insurance in place. Indemnity insurance ensures a claimant’s compensation demand can be satisfied to rectify the professional’s negligent mistake. ### Contributory Negligence in Professional Negligence Cases If a claimant suffers damage partly as a result of their own fault, then the court will justly and equitably reduce damages with regard to the claimant’s share in responsibility for the damage. Although contributory negligence is not a complete defence, defendant professionals or their insurers will often allege contributory negligence to reduce the amount of damages payable. ### Limitation Periods in Professional Negligence Cases Court proceedings for professional negligence claims must be brought within time limits, otherwise the professional can assert that a claim is statute barred. The limitation period is 6 years from the accrual of the cause of action ([*section 2, Limitation Act 1980*](https://www.legislation.gov.uk/ukpga/1980/58)). However, if six years have passed since the date of negligence but a claimant has only just discovered the effect of latent damage, then the limitation period may be extended to three years from the date of knowledge of the material facts ([section 14A, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58)). Legal representation should be sought immediately upon an act of negligence to prevent claims from being time-barred. If the limitation time period is close to expiring then parties could enter into a Standstill Agreement (*if strategically appropriate*) which freezes the time for a claim for limitation purposes. If the professional refuses to agree to a Standstill Agreement, then a negligence claim must be brought in any event to protect the claimants position and a court may criticise the defendant when it comes to costs. ### Pre-action protocol for Professional Negligence (PNPAP) Both parties are encouraged to attempt to settle the professional negligence claim without issuing formal proceedings in court. The [Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) contains the [Professional Negligence Pre-Action Protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). The protocol sets out the framework to be followed and encourages an exchange of information and a set timetable, which both parties must comply with to encourage early settlement without the need for a costly court process. ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* Our [City of London Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) regularly manage professional negligence litigation before all Courts of England & Wales. Our team provides [results-focused](https://professionalnegligenceclaimsolicitors.co.uk/case-studies) legal advice and court representation, often on a no win no fee basis after an initial meeting. Our [experience](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) will give you the best legal strategy to obtain redress. ## Meet our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). [Submit your Negligence Claim for Legal Review](https://lexlaw.co.uk/legal-case-assessment/) --- # Legal Cost Disputes & Detailed Assessments Source: https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/ *If you have received a bill (i.e. an invoice) from your solicitor which you consider may be overpriced for the work that you instructed to be done, our specialist costs lawyers can help you understand the work done and consider the reasonableness of the invoice(s) and, if appropriate, advise on the process of negotiation and assessment with your current solicitors. * ## What is Assessment under the Solicitors Act 1974? Detailed assessment means the examination by a costs judge of the costs that are recoverable by one litigant from another or by a lawyer. Costs judges often sit in the [Senior Courts Costs Office](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) (SCCO) which is part of the High Court. Prior to the [Civil Procedure Rules 1999](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-47-procedure-for-detailed-assessment), assessments were known as '*taxation*' and were performed by taxing masters. The statutory law, civil procedure and rules of the court, concerning the charging of solicitors' fees and legal costs is complex. The Senior Courts Costs Office is a specialist court within which specialist costs judges are appointed to deal specifically with disputes over legal fees and costs. Our costs lawyers regularly provide specialist legal advice on whether solicitors fees claimed are reasonable or excessive. Where there are issues, we know how to best raise disputes as to legal fees and costs. We can provide advice on the enforceability of solicitor/client retainers; can undertake costs negotiations on behalf of clients and can deal with the entire detailed assessment process under the [Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/contents). ## What are Solicitors' Costs? Solicitors’ costs are sums paid for legal services and include disbursements, expenses, solicitor *“profit costs”*, counsel fees and any additional funding under a funding arrangement. There is a distinction between party/party costs and solicitor/client costs. The former is governed by costs rules between the parties in litigation, and these are costs ordered by one party to another party under the Court’s rule. For solicitor/client costs, the payable costs are calculated according to the terms of the retainer contract between the solicitor and the client. The retainer is the central basis of all solicitors’ costs. Bills, or invoices as they are also known, may be sent as the clients’ case proceeds. At the end of the matter, a client is sent a final bill. If any of these delivered interim or final bills amount to a statute bill then a client’s entitlement to challenge the assessment of the costs under the Solicitors Act 1974 is activated. ## The Starting Position for Assessing or Taxing Solicitor - Client Costs: The Retainer Before the SCCO assesses solicitor and own client costs, it is necessary to determine the status of the retainer between the parties. Although solicitor/client costs are primarily a matter of contract between the parties, the retainer is subject to supervision by the provisions in the[ Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/contents). [Part III of the Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/part/III) creates two types of retainers under which the client’s ability to challenge fees charged are recovered: non-contentious business agreements ([sections 56 to 58 Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/part/III)) and contentious business agreements ([sections 59 to 66 Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/part/III)). The former work relates to transactions occurring between one or more parties, such as the purchase of property. The latter relates to legal work taking place between two or more parties, such as a litigation proceedings to resolve a dispute. A solicitor relying on a contentious business agreement must obtain permission of the Court to enforce it. Unless the retainer specifically states otherwise, following the [Jackson Reforms](https://www.lawgazette.co.uk/analysis/jackson--an-overview/70126.article), the initial position for the amount of costs paid is that the client must pay the costs assessed on an indemnity basis ([CPR 46.9(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-46-costs-special-cases#46.9)). Significantly, unlike for costs assessed on a standard basis, the proportionality test will not apply; the costs are either reasonable or they are not. The Court will presume costs: > *“a) have been reasonably incurred if they were incurred with the express or implied approval of the client; > **b) to be reasonable in amount if their amount was expressly or impliedly approved by the client; > **(c) to have been unreasonably incurred if – > **(i) they are of an unusual nature or amount; and > **(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.”* > > ([CPR 46.9](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-46-costs-special-cases#46.9)) In addition, in a dispute between a solicitor and client, *“the Court will resolve any doubt as to whether costs were reasonably incurred or were reasonable in amount in favour of the solicitor”* ([CPR 44.3 (3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3)). Therefore, the bar for a client to prove that a solicitors’ costs were unreasonable, is set at a high level as the client bears the burden in disproving reasonableness. The effect of the Courts’ presumptions means a clients’ objections must be very focused and clear cut. We can assist with ensuring objections are carefully prepared to achieve an optimal outcome. ## Billing: Requirements for a Statute Bill The retainer governs the way in which the solicitor will provide legal services and how the client will pay for them. The way in which a solicitor makes a demand for money from the client is governed by the rules in the Solicitor Act 1974. Once an interim or final statute bill is sent, a client has a right to make a formal application to have those costs assessed. A solicitor can only commence proceedings to sue for their fees once an invoice is delivered to the client that complies with the statutory conditions of the Solicitors Act 1974 and the SCCO's implied requirements. Determining whether an invoice is a statute bill is very important and has been the focus of much case law. Therefore, it is important to ascertain the requirements for a statute invoice: these formal requirements are set out in [s.69 Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/section/69): - **The solicitor must have been legally entitled to send the bill**. Unless the client has agreed to a provision in the retainer for interim invoices, a solicitor can only request payments on account or reasonable expenses for future cost. As these are not statutory in nature a solicitor cannot sue upon them and a client cannot dispute them under the Solicitors Act 1974. A solicitor is entitled to render a statute bill once all the work under the retainer has been completed or if there is an express agreement to render interim statue invoices or if there is a “natural break” in ongoing litigation or if the retainer has been terminated.- **The invoice must be signed **by the solicitor or their authorised employee, in accordance with s.69 (2A). Alternatively or in addition, a signed letter could be enclosed which refers to said bill.- **The invoice must be delivered** to the party charged with the bill personally, in accordance with s.69 (2C). This can be by post or electronically. The client must have previously indicated a willingness to accept delivery. The delivery date is significant because the time limit for challenging a statute bill does not run from the date of the invoice but from the date of delivery.- **The bill must contain sufficient narrative **for the particular client. The court requires that the bill must contain *"sufficient narrative"* to allow the client to know what they are being charged for and to provide them with enough information to ascertain whether to exercise their right to have the bill assessed.  This is a requirement that the courts have constructed when looking at s.69 and has been recently elucidated by Mrs Justice Swift in** ***[Carter Ruck (a firm) v Mireskandari [2011] EWHC 24 (QB)](http://www.bailii.org/ew/cases/EWHC/QB/2011/24.html).* ## Challenging a Solicitors’ Bill ### Detailed Assessment Proceedings under Solicitors Act 1974 If a statute bill has been delivered to a client and the client believes they have been overcharged then the client can request the solicitor to commence detailed assessment proceedings or a request can be made to the[ Senior Courts Costs Office](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) to make a detailed assessment of the bill. If upon assessment, the bill is determined to be unreasonable, the bill will be reduced. Our costs laweyers have extensive experience in assessment of bill proceedings before the SCCO. The assessment procedure is governed by the Civil Procedure Rules. There are two ways an assessment claim can come before the SCCO. Either, a client can make a claim for assessment pursuant to [s.70 Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/section/70) and [CPR 67.3(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part67). Or, as a defence or counterclaim to a claim brought by the solicitor to recover costs using [CPR 7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07). The proceedings are in two stages. Firstly, the entitlement to an order for assessment. Under[ s.70(2)](https://www.legislation.gov.uk/ukpga/1974/47/section/70), a client is entitled to assessment as a right if an application is made within one month of delivery. Clients only have a short time to challenge a solicitors’ bill so it is imperative to contact us quickly to ensure your claim does not become time-barred. Generally, this stage can be conducted at minimum cost to the client. A Part 8 claim form ([N208](https://formfinder.hmctsformfinder.justice.gov.uk/n208-eng.pdf)), the relevant court application fee and a copy of the disputed bill must be sent to the SCCO or local District Registry. Secondly, if the Court is satisfied as to entitlement it will make a Court Order allowing a detailed assessment to take place. If a detailed assessment Order is not granted by the Court, then we can also assist in appealing the decision. Following the Order, the solicitor will complete a detailed assessment request form ([N258C](https://formfinder.hmctsformfinder.justice.gov.uk/n258c-eng.pdf)) and serve a detailed bill of costs upon the client. At this stage, the client- often within 21 days- must provide Points of Dispute which flag up challenges to the costs, failing which a [Default Costs Certificate](https://formfinder.hmctsformfinder.justice.gov.uk/n254-eng.pdf) will be obtained by the solicitor. We are highly experienced in providing well-crafted Points of Dispute examining every aspect of an unreasonably high bill. CPR 47.9 states that Points of Dispute must *"identify any general points or matters of principle which require decision before the individual items in the bill are addressed"* and *"identify specific points, stating concisely the nature and grounds of dispute*." For example, examining excessive time, disproportionate number of communications, unreasonable disbursements and unnecessary counsel meetings claimed, to formulate a claim that a competent solicitor acting with all due skill and alacrity should have been able to obtain the same without the need to charge a disproportionate fee. Moreover, we are well-versed in negotiating a favorable compromise to a lower bill or failing which, representing our client's interests at a detailed assessment hearing. For costs disputes below £75,000 a provisional hearing will usually occur without the presence of the parties, and for claims in excess of £75,000, the parties and their specialist legal costs representatives will attend an oral hearing. The Court's Costs Judge will determine what was a reasonable amount for the solicitor to have charged. The Costs Judge examines the bill in detail and in particular, examines how reasonable the costs are and how proportionate they are to the case’s issues judged on an indemnity basis. Once the SCCO has decided the amount of the bill payable, usually payment must be made within 14 days. ### Costs of a Solicitor/Client Statutory Assessment - the 1/5th Rule Ordinarily, in litigation the CPR provides that the unsuccessful party pays the costs of the successful party. However, in legal costs assessment proceedings, the only factor is the amount by which the solicitors’ invoice is reduced by on assessment. According to the Solicitors’ Act 1974: > *“the costs of an assessment shall be paid according to the event of the assessment, that is to say, if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.” * > > (s.70(9) Solicitors Act 1974) Therefore, if the client reduces the solicitors’ bill by at least one fifth (20%), then the client is entitled to the costs of the statutory detailed assessment proceedings. ### SCCO Sample Scenarios: Challenging a Solicitors' Bill  There have been cases where legal professionals have sent and delivered what their client thought were on account invoices on a monthly basis, which then later turned out to be statute invoices. As a result the clients' right to assess the bill has become time-barred. The SCCO judge will likely examine the contiguous circumstances as well as the retainer to ascertain what the agreement was between both parties at the inception of their relationship and what was agreed as the case progressed. It is for the solicitor to demonstrate that the client understood the effect of each bill sent. Furthermore, there are situations where a client has sent large amounts of money on account and later expresses dissatisfaction with the amount paid thus far. However, some cases before the SCCO demonstrate that some solicitors will not send out a statute invoice. This means the client can not avail themselves of the Solicitors’ Act 1974 assessment procedure. We can help a client in this situation by appealing to the Court to order the solicitor to deliver a statute invoice under [s.68 Solicitors’ Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/section/68) and once delivered, order an assessment of the invoice under s.70 Solicitors’ Act 1974. Some clients may have paid the invoice, but after the time limit expires, they consider that the invoice was too high. Under [s.70(2)](https://www.legislation.gov.uk/ukpga/1974/47/section/70), a client would need to demonstrate *“special circumstances”*  to justify an order that the invoice should be assessed. For example, *“special circumstances”* could apply where the solicitor has given improper advice on a client’s right to assessment or where the solicitor has otherwise improperly convinced the client not to have their fees assessed. Some clients may complain about the price of solicitors’ fees when they feel that the solicitor has not done a good job on their case or the outcome is not what was hoped for. Such clients should proceed carefully with the benefit of advice, as a Solicitors’ Act 1974 assessment only applies to what ought to have reasonably been charged for work and not for the quality or the result of the work. If a solicitor has performed their job in a negligent way, restitution lies in professional negligence and our [professional negligence lawyers](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) should be consulted in this situation. ## City of London Specialist Legal Costs Lawyers Our SCCO Legal Costs Dispute Lawyers are experienced in checking and disputing legal fees. We are experts in assessing whether the time claimed for is reasonable and whether your solicitor may have overcharged. We are well versed in both negotiating a reduction with your solicitor and attending detailed assessment proceedings at court if necessary. Our team have an in-depth knowledge of litigation against the client or solicitor under the Solicitors Act 1974. As a leading high-profile law firm regularly featured in the national and international media and with a track record of success, you can be assured your Legal Costs claim will proceed with precision and care. ## Book an Initial Consultation with a Legal Costs Lawyer If you dispute your solicitors’ legal fees and want expert legal advice, we invite you to contact us so that we can assess your case. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading SCCO Legal Costs Dispute Lawyers. Please note, you only have a short window to challenge a solicitors’ bill so it is imperative to contact us quickly to ensure your claim does not become time-barred. Just call us on 02071830529 or [complete our contact form](https://lexlaw.co.uk/legal-case-assessment/). --- # Private Prosecutions Source: https://lexlaw.co.uk/private-prosecutions-lawyers-london/ *Private prosecutions are prosecutions for a criminal offence initiated by a private citizen or entity which is not acting on behalf of the police or any prosecuting authority. A private prosecution is essentially the same as a standard criminal trial but one which is not brought by the CPS.* Our minimum fee for advice from a Solicitor & Barrister in conference is £1750 plus VAT; We do not offer any free legal advice. The initial consultation is heavily discounted for the time our solicitors & barristers spend reviewing your case both before and during the consultation. *We are the only boutique UK law firm that specialises in all aspects of private prosecution and related corporate criminal investigations. Few legal firms operating in the UK have our level of expertise in Private Prosecution advice and strategy. We are the only expert law practice specialising in private prosecution that incorporates both solicitors and barristers.* *Our specialist Private Prosecution Solicitors and Barristers deliver expert technical knowledge, the utmost expertise, top state prosecution contacts, strong negotiations skills and respected advice, which can make a pronounced difference in criminal or civil proceedings and subsequent tracing, compensation, confiscation, custodial penalties or enforcement. * ## Why commence a private prosecution? To get justice for criminal offences committed against individuals or corporations that have not been taken on by the [police](https://www.police.uk/) or CPS. [The media have reported that private prosecutions are on the increase](https://www.independent.co.uk/news/uk/crime/two-tier-justice-private-prosecution-revolution-9672543.html) due to police and CPS budget cuts which has limited the ability of the enforcement agencies to investigate and prosecute crime effectively. These cuts have created a trend amongst individuals to fund their own criminal actions due to a failure of the police to investigate or the CPS’s unwillingness to press ahead to trial. If a certain offence is not the priority of the CPS, then private prosecutions are a necessary tool allowing a victim to take control of proceedings and actively pursue a conviction against the accused. Some individuals feel that civil proceedings may be prohibitively slow and a private prosecution would offer a speedier resolution. In addition, the civil damages awarded may not adequately compensate for the harm suffered whereas private prosecutions have the availability of tougher penalties which includes unlimited fines and imprisonment. Many corporate entities have launched private prosecutions to protect their intellectual property, rather than leave their rights to be protected by public law enforcement agencies. Victims of crimes consider starting a private prosecution for a number of reasons, for example: - to deter future criminal conduct by the suspect; - to send a clear message to potential fraudsters that a company that has been defrauded will take strong action; - as a necessary tool when the public prosecution authorities are unwilling to act; - potential compensation for the victim; - to establish a precedent for future conduct; - to protect society; and - a private prosecutor can access specialist expertise which many public prosecuting authorities cannot utilise, which can increase the chances of prosecution. ## Who can bring a private prosecution? Any individual or company can bring a private prosecution. It is a misconception that only the police, CPS or government agency (such as the Director of the [Serious Fraud Office](https://www.sfo.gov.uk/)) can bring a prosecution. Traditionally, private prosecution actions were almost solely used by charitable or public interest bodies such as the [RSPCA](https://www.rspca.org.uk/home). Commercial organisations regularly undertake private prosecutions. This is undertaken by trade organisations such as [FACT (Federation against Copyright Theft)](https://www.fact-uk.org.uk/) and [BPI (British Recorded Music Industry)](https://www.bpi.co.uk/) but also ordinary commercial companies.  Recently, section 6(1) has been increasingly used by individuals and commercial entities as an alternative to or alongside civil litigation. ## Where is the legal right to bring a private prosecution? The right to bring a private prosecution is enshrined in statute section 6(1) [POA 1985](http://www.legislation.gov.uk/ukpga/1985/23): > ***“6 Prosecutions instituted and conducted otherwise than by the Service.*** > > > > > > *(1) Subject to subsection (2) below, nothing in this Part shall preclude any person from instituting any criminal proceedings or conducting any criminal proceedings to which the Director’s duty to take over the conduct of proceedings does not apply.* > > > > > > *(2) Where criminal proceedings are instituted in circumstances in which the Director is not under a duty to take over their conduct, he may nevertheless do so at any stage.”* > > > > > > [Section 6 Prosecution of Offences Act 1985](http://www.legislation.gov.uk/ukpga/1985/23/section/6) However, this right is subject to three limitations: - All magistrates can exercise judicial discretion to refuse to issue the requisite warrant or summons; - The DPP have the right under [section 6(2) POA 1985](http://www.legislation.gov.uk/ukpga/1985/23/section/6) to take over or stop a private prosecution at any stage (see below); and - The right to prosecute certain offences is restricted by legislation or policy. ## Which offences can be privately prosecuted? Subject to certain exceptions, private prosecutions can be brought for a wide range of offences where the CPS have not initiated criminal proceedings, including: - **Fraud**: in circumstances where the CPS or SFO have made a decision not to prosecute. Private prosecutions have been brought for counterfeiting; protect commercial rights; contractual fraud; false representation; professional who have abused their position through money laundering, dishonesty and/or theft; insurance fraud; fraud internal within a company. - **Property disputes**: false adverse possession claims - **Assault**: sexual assault; domestic violence; racially aggravated assault and violent assaults falling under section 39 Criminal Justice Act 1988 or s.47 Offences Against the Person Act - **Sexual offences**: victims of date rape and non-consensual sexual offences. - **Harassment**: victims accusing another of stalking - **Perverting the course of justice** - **Blackmail** - **Manslaughter/murder**: the Stephen Lawrence case is an example of this. ## What are the advantages of a private prosecution? A private prosecution has advantages over a public prosecution: - Individuals can bring a prosecution where the prosecuting authorities are unwilling. For example, where the CPS have a lack of resources or specialist expertise (e.g. a lack of specialist fraud officers). This point was noted by Lord Thomas CJ in *[R v Zinga](http://www.bailii.org/ew/cases/EWCA/Crim/2014/52.html) [2014] EWCA Crim 52*: *“At a time when the retrenchment of the state is evident in many areas, including the funding of the Crown Prosecution Service and the Serious Fraud Office, it seems inevitable that the number of private prosecutions will increase.”* [R v Zinga [2014] EWCA Crim 52](http://www.bailii.org/ew/cases/EWCA/Crim/2014/52.html) (Lord Thomas CJ) - A person can exercise greater control over the investigative procedure and subsequent prosecution. For instance, more resources or highly specialist investigators and lawyers can be employed which are not ordinarily provided for in a public prosecution. The private prosecutor can control the investigation rather than rely on the CPS or police. - They offer a way to overcome issues that have precluded a person from making a civil claim. In the UK, time limits for criminal prosecutions depend on the offence category. Summary offences generally must be prosecuted within 6 months of the offence date, as per section 127 of the Magistrates' Courts Act 1980. However, indictable-only and either-way offences (which can be tried in the Crown Court) have no statutory time limits, allowing prosecutions years later. For summary offences, the limit is generally 6 months save for certain specific offences such as [s127 Communications Act 2003](https://www.legislation.gov.uk/ukpga/2003/21/section/127). In addition, it may be easier to establish jurisdiction in the UK for a criminal matter instead of a civil case. - Criminal trials can generally be brought faster court than civil proceedings as there are not as many pre-trial hearings. - Criminal proceedings can be cheaper than the civil route alternative. - Unlike with civil proceedings, a private prosecutor does not have to provide a security for costs to the defendant. If your case fails and the defendant is not prosecuted, you will generally not have to pay the successful party’s costs. - Under [s.18 Prosecution of Offences Act 1985](http://www.legislation.gov.uk/ukpga/1985/23/section/18), you can apply to the court to award costs against the defendant which have been incurred in the whole proceedings. - In certain cases, a private prosecutor can apply for legal costs and the costs of an investigation from state funds - A private prosecutor can apply for a [Restraint Order](https://www.cps.gov.uk/legal-guidance/proceeds-crime), which freezes the defendants’ pre-charge assets. - If a defendant is found to be guilty, a private prosecutor can apply for a [Compensation Order](https://www.cps.gov.uk/legal-guidance/sentencing-ancillary-orders) under [sections 130-133 Powers of Criminal Courts (Sentencing) Act 2000](https://www.legislation.gov.uk/ukpga/2000/6/contents) or a Confiscation Order. Both a Compensation Order and a Confiscation Order can be enforced by a Court. If the defendant refuses to pay, then these Orders can be enforced which may ensure that the defendant gets sent to prison. - Private prosecutions are a useful tool against economic crimes that have not been prioritised by the police or CPS. - They act as a robust deterrent due to the sanctions that a Criminal Court can impose: criminal record, custodial sentence, Confiscation Order and can affect an individual’s right to be a director of a company. ## Book an Initial Consultation with our Private Prosecution Lawyers Our expert lawyers are often instructed to advise clients on the most complex areas of law both in the civil arena when freezing injunctions, restraint orders or search warrants have been obtained, or in the traditional criminal arena for privately prosecuting offences such as fraud, money laundering, harassment, serious crime and more. Our team are highly experienced in navigating through complex rules and guidance and as a result are often called upon to give legal commentary by mainstream media. Most importantly, we get justice. For the best Private Prosecution Lawyers in London call 02071830529 or email contact@privateprosecutionservice.co.uk. (Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT). ### Private Prosecution FAQs What is a private prosecution? A private prosecution is a criminal case initiated by an individual or entity, rather than the police or Crown Prosecution Service (CPS). This allows victims or organisations to seek justice when public authorities decline to prosecute, often providing a faster and more controlled route to criminal sanctions. Who can bring a private prosecution? Any individual or company can bring a private prosecution. Contrary to common belief, this right is not reserved for police or government agencies. Commercial organisations, charities, and even individuals frequently use private prosecutions to address offences ranging from fraud to intellectual property theft. What types of offences can be prosecuted privately? Most criminal offences can be subject to private prosecution, including fraud, theft, assault, harassment, perverting the course of justice, and even serious crimes like manslaughter. However, some offences are restricted by statute or policy, so legal advice is essential before proceeding. Why choose a private prosecution over civil litigation? Private prosecutions can offer swifter justice, access to criminal penalties such as imprisonment or unlimited fines, and may be more cost-effective than civil litigation. They also allow victims to take control of proceedings, which can be crucial when public authorities lack resources or decline to act. For complex disputes involving fraud, our [fraud solicitors](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/fraud-solicitors-london/) can advise on the best approach. Are there time limits for bringing a private prosecution? For summary offences, proceedings must generally be started within six months of the alleged offence. For either-way or indictable offences, there is no statutory time limit, allowing for historic cases to be prosecuted. Some specific statutes, like the Communications Act 2003, may have extended limits. Can a private prosecutor recover their costs? Yes, the court can order the defendant to pay the prosecutor’s costs if convicted. In some cases, costs may be recoverable from central funds, even if the prosecution is unsuccessful, subject to the court’s discretion. For more on recovering costs or enforcing compensation orders, see our [enforcement and asset recovery services](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/). What are the risks of bringing a private prosecution? Private prosecutions are subject to rigorous scrutiny, and the Director of Public Prosecutions (DPP) can take over or discontinue proceedings at any stage. If a prosecution is poorly advised or fails, there is a risk of adverse costs orders. If you believe you have been negligently advised to commence a private prosecution, our [professional negligence team](https://professionalnegligenceclaimsolicitors.co.uk/poorly-advised-to-commence-private-prosecution/) can help assess your claim. How does the court assess whether a private prosecution should proceed? Private prosecutors must meet the same evidential and public interest standards as the CPS, known as the Full Code Test. This means there must be sufficient evidence for a realistic prospect of conviction, and it must be in the public interest to prosecute. Our [private prosecution experts](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/) can help you assess the merits of your case. Can private prosecutions be used in corporate disputes or insolvency matters? Yes, private prosecutions are increasingly used by companies to tackle fraud, intellectual property theft, and economic crime. In insolvency scenarios, private prosecution can be a powerful tool for creditors seeking justice against directors or individuals involved in fraudulent trading. For specialist advice, visit our [insolvency and winding up petition team](https://windinguppetitionsolicitors.co.uk/). What is the process for commencing a private prosecution? The process begins with gathering evidence and laying information before a magistrates’ court. It is crucial that all evidence is robust and the case is thoroughly prepared. Our [private prosecution lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) provide comprehensive case analysis and strategic advice from the outset. **What happens if the DPP takes over my private **prosecution**?** The DPP has the authority to take over any private prosecution and may choose to continue or discontinue it. This typically occurs if the case does not meet the Full Code Test or is not in the public interest. Our team can advise on strategies to minimise the risk of intervention and ensure your case is as strong as possible. Can private prosecutions result in asset freezing or confiscation? Yes, private prosecutors can apply for restraint orders to freeze assets and, upon conviction, seek confiscation or compensation orders. This can be particularly effective for victims of financial crime. For complex financial crime and asset recovery, see our [money laundering and POCA specialists](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/money-laundering-poca-solicitors-london/). Are there alternatives if a private prosecution is not viable? If a private prosecution is not the best route, civil litigation may be more appropriate. Our [litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-solicitors-london/) can advise on all available options, including injunctions, asset tracing, and settlement negotiations. What should I do if I have been advised to start a private prosecution and it failed? If you suffered loss due to negligent legal advice or improper conduct by your solicitor, you may have grounds for a professional negligence claim. Our [professional negligence solicitors](https://professionalnegligenceclaimsolicitors.co.uk/) specialise in claims arising from failed private prosecutions and can guide you through the process. How does R v Zinga shape judicial scrutiny of private prosecutions? The R v Zinga precedent ([2014] EWCA Crim 52) confirmed private prosecutors’ ability to pursue confiscation orders under the Proceeds of Crime Act 2002 (POCA), even in complex fraud cases. Courts now rigorously assess whether private prosecutions meet the “public interest” threshold, particularly when overlapping with civil recovery strategies. This case underscores the need for evidentiary rigour, especially when targeting offshore assets through cross-jurisdictional freezing orders or Norwich Pharmacal disclosures. What strategies apply to cross-jurisdictional fraud involving offshore assets? Private prosecutors increasingly combine freezing orders under POCA with [insolvency proceedings](https://windinguppetitionsolicitors.co.uk/) to immobilise offshore assets pre-trial. Recent developments under the UK’s 2025 Crime and Policing Bill enhance powers to trace and seize cryptocurrency holdings, even when routed through shell companies. Coordination with forensic accountants and overseas regulators is critical to navigate conflicting jurisdictional regimes. When should private prosecutions align with winding-up petitions? In corporate fraud cases, simultaneous [winding-up petitions](https://windinguppetitionsolicitors.co.uk/) and private prosecutions can pressure defendants into settlement by threatening director disqualification under the Company Directors Disqualification Act 1986. This dual approach is particularly effective against asset-dissipating entities, as courts may prioritise creditor protection via insolvency mechanisms while criminal proceedings advance. How do HMRC-related fraud cases intersect with tax dispute resolution? Prosecutors pursuing VAT or duty fraud must coordinate with [tax dispute specialists](https://taxdisputes.co.uk/) to address potential double jeopardy risks. Compensation orders obtained via private prosecution may trigger income tax liabilities under the Income Tax Act 2007, requiring advance structuring to mitigate adverse fiscal consequences for victims. Can confiscation orders penetrate shell company structures? Enforcement receivers appointed under POCA routinely unravel layered corporate veils to access hidden assets. The 2025 Crime and Policing Bill empowers courts to disregard nominal ownership in shell companies, treating beneficial interests as recoverable property. Proactive [asset recovery strategies](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/) often involve pre-emptive restraint orders to prevent asset dissipation during appeals. What novel challenges arise in cryptocurrency asset recovery? The 2025 legislative reforms permit the Crown Court to destroy or repatriate illicit crypto holdings, using blockchain forensic tools to trace transactions across decentralised exchanges. Prosecutors must secure expert validation of wallet ownership chains to satisfy the “market value” criteria under updated confiscation order guidelines. What judicial review risks exist if the DPP intervenes? Defendants increasingly challenge DPP discontinuations via judicial review, arguing irrational application of the Full Code Test (*Gujra* [2012] UKSC 52). Prosecutors must pre-emptively document public interest rationales, particularly in cases involving [tax dispute overlaps](https://taxdisputes.co.uk/), to withstand scrutiny under *Wednesbury* unreasonableness standards. How can adverse costs orders be mitigated? Pre-action protocols mandating early case reviews by independent counsel reduce risks of non-recoverable costs. Prosecutors should also seek preliminary rulings on evidence admissibility to avoid later allegations of negligent investigation, which could trigger [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/). How does private prosecution evidence support director disqualification? Convictions secured through private prosecutions provide prima facie evidence of unfitness under the Company Directors Disqualification Act 1986. Prosecutors often collaborate with [insolvency practitioners](https://windinguppetitionsolicitors.co.uk/) to fast-track disqualification proceedings, leveraging criminal findings to bypass civil evidentiary hearings. Do compensation orders under POCA carry tax implications? Yes, compensation awarded via POCA may constitute taxable income under the Income Tax Act 2007 if structured as recurring payments. Proactive engagement with [tax dispute resolution teams](https://taxdisputes.co.uk/) ensures compliance with HMRC reporting obligations while maximising victim recovery. **What liability risks arise in complex** **financial prosecutions?** Solicitors advising on private prosecutions face potential negligence claims if they fail to meet the Full Code Test standards (*R v Galbraith* [1981] 1 WLR 1039). Recent PNLA guidance emphasises dual-track risk assessments, evaluating whether civil remedies or [director disqualification](https://windinguppetitionsolicitors.co.uk/company-directors-disqualification-act-1986/) might yield preferable outcomes. Can negligent investigation claims derail private prosecutions? Defendants increasingly counterclaim for malicious prosecution or negligent investigation, particularly where forensic methodologies deviate from Financial Conduct Authority standards. Prosecutors should engage [specialist negligence counsel](https://professionalnegligenceclaimsolicitors.co.uk/) pre-emptively to audit evidence chains and compliance with PACE guidelines. For bespoke strategies on integrating private prosecutions with insolvency, tax, or professional negligence matters, consult our [cross-practice team](https://lexlaw.co.uk/). How do I book a consultation with LEXLAW? To discuss your case, you can book an initial fixed-fee consultation with our [private prosecution lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/). Our team will review your case in detail and provide strategic advice tailored to your circumstances. For further information on private prosecutions, asset recovery, insolvency, tax disputes, or professional negligence, explore our full range of [legal services](https://lexlaw.co.uk/). --- # Negligence Claims Against Lawyers Source: https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/professional-negligence-claim-against-lawyers-barristers/ *Legal professionals (such as solicitors, barristers, including direct access counsel, licensed conveyancers, legal executives, patent attorneys, trade mark attorneys, costs lawyers and notaries) are highly trained and rigorously [regulated](http://www.legalservicesboard.org.uk/can_we_help/approved_regulators/index.htm). As a result, a high level of trust is placed on such lawyers by clients. [Professional Negligence Claims against solicitors and barristers](https://professionalnegligenceclaimsolicitors.co.uk/legal-negligence-claims-against-solicitor-barrister/) tend to be complex in nature and argument. Professional indemnity insurers will often defend claims vigorously and therefore it is essential to take legal advice at the outset. * *Those with complaints against solicitors or barristers should take  independent legal advice before the time limits (usually six years) for such action expire. Claimants must also follow the relevant [Professional Negligence Pre-action Protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg) in advance of a claim.  We are [specialists](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) in bringing claims against professionals and are well versed with the procedure and rules in bringing such claims with a view to obtaining the optimal financial settlement for our clients.* ## Can I make a negligence claim against a solicitor or barrister? Legal professionals such as solicitors and barristers are highly trained and rigorously regulated by the [Solicitors Regulation Authority](https://www.sra.org.uk/home/home.page) (SRA) and the [Bar Standards Board](https://www.barstandardsboard.org.uk/) (BSB) respectively. A high level of trust is placed upon such lawyers by their clients. If a lawyer fails to deliver the service to the standard expected of a reasonable professional in that speciality field, then a client has every right to bring a complaint (and court proceedings) if financial or personal loss is suffered as a result. ## How can a lawyer be negligent? [Professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) occurs where a professional fails to perform his responsibilities to the required standard. A claim brought by the professional's client may be [based on](https://professionalnegligenceclaimsolicitors.co.uk/start-professional-negligence-claim-standing-sue-legal-solicitor-claimant-advice/) one or more of the following: - Breach of a contractual term (express or implied). - Breach of duty of care owed in the tort of negligence. - Breach of fiduciary duty. - Breach of statutory duty. Where a duty is owed in contract or tort, you must establish that there has been a breach of that duty. You must show that the professional did not comply with the requisite standard owed. Broadly speaking, negligence is established if the professional has made an error which no reasonable member of his profession, operating in similar circumstances, would have made. Where such errors cause a financial loss, claims can be pursued against the relevant lawyers. ## What are the basic requirements to claim negligence? The tort of negligence has three [basic requirements](https://professionalnegligenceclaimsolicitors.co.uk/start-professional-negligence-claim-standing-sue-legal-solicitor-claimant-advice/). All of these must be evidentially proved on a balance of probabilities (ie that they are more likely than not): - **Duty of care** - The defendant owed the claimant a duty not to cause the type of harm suffered. - **Breach of duty** - The defendant breached the duty owed. - **Causation** - This has two elements, both of which must be proved ie (a) factual causation in that the claimant must prove, but for the defendant's negligence, they would not have suffered loss and (b) legal causation or remoteness in that the defendant's negligence was the legal cause of loss. ## Examples of Legal Professional Negligence Cases The following are commonplace examples of potential claims: - ***Missing a limitation date on a claim.* **If it can be demonstrated that the original claim had merit, then a claimant is entitled to pursue the errant law firm or counsel for their losses. - ***Failure to provide sound legal advice*.** A claim can be brought if a solicitor or barrister has provided a negligent legal opinion, relied upon by a claimant, which has led to financial loss. - ***Failure to comply with a court order or deadline*.** The courts have taken a stricter approach to the application of the Civil Procedure Rules and have readily struck out claims for solicitors or barristers conducting litigation in non-compliance to court orders. - ***Failure to properly investigate or evidence the claim*.** Solicitors and direct access barristers may be negligent in not gathering all pertinent information to ensure a claimant’s case is successful e.g. by not obtaining witness statements which supports the version of events. We have a team of [Specialist Professional Negligence Solicitors and Barristers](https://professionalnegligenceclaimsolicitors.co.uk) that are experienced in recovering damages for financial loss suffered after a lawyer has provided sub-standard legal advice or legal conduct. We can often take on such claims on a no win no fee basis once we have assessed and advised you on the merits of the proposed professional negligence action. ## Can you make a claim againt Conveyancing Solicitors or Licensed Conveyancers? Most professional negligence [claims ](https://professionalnegligenceclaimsolicitors.co.uk/negligent-licenced-conveyancer-property-lawyer-clc-compensation-free-advice/)against solicitors are due to negligent advice provided during a property transaction. Negligent [conveyancing ](https://professionalnegligenceclaimsolicitors.co.uk/negligent-licenced-conveyancer-property-lawyer-clc-compensation-free-advice/)transactions are sadly commonplace. We have acted on a number of [conveyancing negligence cases](https://professionalnegligenceclaimsolicitors.co.uk/successful-result-negligent-property-conveyancer-firm/) and have experience of settling multiple claims at the cutting edge of the still unsettled law around breach of warranty of authority where there has been ID fraud on the part of the purported vendor (who is often a tenant faking being the property owner). [Conveyancing negligence](https://professionalnegligenceclaimsolicitors.co.uk/property-professional-negligence-claims/) claims can be brought for: - Failure to adequately investigate title in a property; - Failure to advise on Adverse rights (e.g. rights of way, easements) - Failure to advise on missing formalities (e.g. planning permission, building regulations, listed building consents, missing consents for change of use); - Failure to carry out property searches and enquiries; - Failure in a leasehold purchase; - Disregard of important provisions from a deed or contract; - Failure to define property boundaries with due care; - Failure to register a mortgage or charge at the Land Registry or Companies House; - Failure to follow the mortgagees instructions; and - Acting without authority (breach of warranty of authority). ## What is the time limit for commencing a claim against a solicitor or barrister? When it comes to ascertaining the [limitation date](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-faqs/) for a particular claim, there are a number of factors to consider. In simple terms, the limitation period is six years from the accrual of the cause of action ([*section 2, Limitation Act 1980*](https://www.legislation.gov.uk/ukpga/1980/58)). However, if the six year time limit has passed but you have only just discovered the effect of any latent damage, then the limitation period may be extended to three years from the date of knowledge ([section 14A, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58)). Time limits and limitation periods are essential to adhere to in litigation. [Missing a limitation period](https://lexlaw.co.uk/solicitors-london/professional-negligence-late-service-of-claim-form-particulars-limitation-expiry/) is fatal to the chances of success of any claim and will leave a claim statute barred. ## Case Study: Professional Negligence Claim Against Conveyancer We represented a property investment company specialising in the purchase, development and rental of residential properties. The defendant professional was a conveyancing company, holding itself out as an experienced, skilled and competent law firm dealing with all conveyancing matters. Our client instructed the professional conveyancing firm to extend the lease on one property and to subsequently purchase two neighbouring properties. Due to mismanagement of our client’s case, the firm failed to progress the extension of the lease, failed to follow the claimant’s instructions and fraudulently backdated correspondence, applications and notices. As a result of the professional negligence, our client lost the opportunity to extend the lease and also paid an excessively high price to purchase a neighbouring freehold. We established that the conveyancers owed our client a duty to exercise all reasonable care and skill to be expected of an experienced, skilled and competent conveyancer.   We communicated the breaches of said duty during the pre-action stage and ensured that the law, expert evidence and documentary evidence overwhelmingly supported our client’s claim. Our successful presentation of the merits of our client’s case combined with our detailed analysis of the weakness of the professional’s case ensured that the case was settled early and our client was awarded damages without having to go to trial. After negotiation, a settlement Tomlin Order to this effect was secured. The court action was then stayed on terms agreed in advance by both parties. We ensured our clients recovered the majority of the financial damages sought, and in addition, the defendants (who were insured) were required to pay towards our client's legal costs. ## Specialist Professional Negligence Lawyers in London We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk) claims and have years of experience in handling and resolving professional negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex professional negligence claims to settlement.  As a leading law firm with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the court litigation process. Clients hire us because of our extensive experience in all areas, and especially because of our litigation experience – when necessary, we know when to go to court and we know how to litigate. ## What is the pre-Action Protocol for Professional Negligence? The professional negligence [pre-action protocol](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) sets out the steps to be taken to ensure compliance, including considering alternative dispute resolution. There are a number of important procedural steps under the professional negligence PAP which should be followed. The main two of importance early on in the professional negligence litigation process are the preliminary notice and the letter before claim or action (or notice of intention to commence legal proceedings). Firstly, a [preliminary notice](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg#Protocol) should be sent to the professional setting out in writing that there is a reasonable chance of a claim. The preliminary notice should: - Identify the claimant and any other relevant parties. - Set out a brief outline of the claimant's complaints and grievance. - Provide an indication of the potential financial value of the claim, if possible. - Request the professional informs their professional indemnity insurers. The opponent with then likely contact his/her insurers and solicitors will then be instructed. The professional should acknowledge professional negligence preliminary notice letter within 21 days. Once we have advised you as to the merits of the claim in-depth and have helped you fund legal action (we can often act on a no win no fee type basis or find litigation funding), we can serve a [Letter of Claim](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg#Letter) on the professional. The [Letter of Claim](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/) should include the following: - The identity of any other parties involved in the dispute. - A clear chronological summary of the facts on which the claim is based, together with copies of any key documents. - Details of the allegations against the professional, including details of the negligent act or omission and what the professional should have done acting correctly. - An estimate of the financial loss caused to the claimant by the alleged negligence, including details of how the loss is calculated. If details of the loss cannot be supplied in the Letter of Claim, the claimant should explain why and state when he will be in a position to provide details of the loss. Details of the loss should then be sent to the professional as soon as reasonably possible. - Confirmation of whether or not an expert has been appointed, the date of the appointment, details of the expert's identity and the expert's discipline. - A request that a copy of the Letter of Claim be forwarded immediately to the professional's insurers, if any. - In addition, if the claimant has sent other Letters of Claim to any other party in relation to the same dispute or a related dispute, those letters should be copied to the professional. ## Book an Initial Consultation with our Professional Negligence Lawyers If legal proceedings are to be issued, they must be brought within strict Limitation Act 1980 time limits or the defendant will aver that you are out of time to bring a claim. The limitation period in most professional negligence cases is six years from the date of the negligence. If you have a claim against a [professional ](https://professionalnegligenceclaimsolicitors.co.uk/)and want expert legal advice, get in touch so we can assess your case. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Professional Negligence solicitors and barristers. Just call or email us now; our Professional Negligence legal team are waiting to help. We can often take on such claims on a no win no fee basis (a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed[ professional negligence action.](https://professionalnegligenceclaimsolicitors.co.uk/litigation-case-assessment-form/) --- # Bankruptcy Petitions & Annulment Source: https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/ *Your search for help in relation to debt recovery or to avoid bankruptcy ends here. Our results-focused team made up of**** experienced insolvency lawyers**** can assist by providing you with a bespoke solution if you are an individual facing a debt or ****bankruptcy petition****.* ## What is bankruptcy? [Bankruptcy](https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy/) is a legal process designed to help individuals or businesses who are unable to pay their debts. When someone files for bankruptcy, they are essentially declaring that they are insolvent and unable to meet their financial obligations. In the UK, bankruptcy is governed by the Insolvency Act 1986, and the process is overseen by the Insolvency Service. The goal of bankruptcy is to allow the debtor to make a fresh start by discharging their debts, but it also involves the liquidation of their assets to pay off creditors. ## How do I declare myself bankrupt? To declare yourself bankrupt in the UK, you will need to fill out an application and submit it to the Insolvency Service. Application should be supported by a Statement of Affairs detailing your current financial position. You can apply online or by post, and there is a fee to pay (currently £680). Before you apply, it is recommended that you seek professional advice from a qualified debt advisor or a licensed insolvency practitioner. Once you have applied for bankruptcy, and the application is successful, the court will issue a bankruptcy order within 28 days, which will be sent to you and your creditors. Your assets will then be transferred to the control of a trustee, who will sell them to repay your debts as far as possible. There are certain assets that are exempt from bankruptcy, such as essential household items and tools of the trade. It's important to note that bankruptcy is a serious step to take, and it can have long-lasting consequences, such as restrictions on your ability to obtain credit and difficulties in securing certain types of employment. Therefore, you should carefully consider all of your options and seek professional advice before deciding to declare bankruptcy. We can advise you on the procedures and consequences of bankruptcy and any alternative options available to you. ## Which debts cannot be included in bankruptcy? While bankruptcy can discharge many types of debts, there are certain debts that cannot be included in the bankruptcy process. These include: - Secured debts: Debts that are secured against a specific asset, such as a mortgage or car loan, cannot be discharged through bankruptcy. The asset may be sold by the trustee to repay the debt, but any remaining debt will still be owed by the debtor. - Court fines and penalties: Debts owed to a court or government agency, such as fines or tax debts, cannot be discharged through bankruptcy. - Student loans: Student loans are generally not included in bankruptcy, although there are some exceptions in certain circumstances. - Debts incurred through fraud or illegal activity: Debts that are incurred through fraud, theft, or other illegal activity cannot be discharged through bankruptcy. - Maintenance and child support: Debts owed for maintenance or child support cannot be discharged through bankruptcy. It's important to note that bankruptcy can have long-lasting consequences, such as restrictions on credit and difficulties in securing certain types of employment. Therefore, it's important to seek professional advice before deciding to declare bankruptcy. ## Can I oppose bankruptcy petition? Yes, it is possible to oppose a bankruptcy petition in the UK. If you have been served with a bankruptcy petition, you have a number of options, including, If you are able to pay the debt in full or negotiate a settlement with the creditor, the bankruptcy petition may be withdrawn; You can apply to the court to have the bankruptcy petition dismissed if you believe that it has been issued unfairly or if you have a defence against the debt. If you are unable to pay the debt in full, you may be able to enter into a voluntary arrangement with your creditors. This involves making regular payments to a trustee, who will distribute the funds to your creditors. If you have little or no income or assets, you may be eligible for a debt relief order, which is a form of insolvency that can discharge your debts. It's important to seek professional advice if you are facing a bankruptcy petition, as the consequences can be serious and long-lasting. A qualified debt advisor or insolvency practitioner can provide guidance on your options and help you to make an informed decision. ## What is the procedure to oppose a bankruptcy petition? To oppose a bankruptcy petition, you will need to follow the appropriate legal procedures. The steps involved in opposing a bankruptcy petition include: Carefully reviewing the bankruptcy petition and any accompanying documents to ensure that you understand the allegations being made against you. If you believe that the bankruptcy petition has been issued unfairly or if you have a defence against the debt, you will need to prepare a defence to present to the court. This may involve gathering evidence, such as bank statements or other financial records. Within 14 days of being served with the bankruptcy petition, you must file an acknowledgement of service with the court. This confirms that you have received the petition and indicates whether or not you intend to oppose it. If you intend to oppose the bankruptcy petition, you will need to file a defence with the court within 21 days of being served with the petition. You will be required to attend a court hearing to present your defence and argue against the bankruptcy petition. The court will consider the evidence presented by both sides and make a decision as to whether or not to issue a bankruptcy order. If you are considering opposing a bankruptcy petition, it is important to seek professional advice from a qualified debt advisor or insolvency practitioner. We can provide guidance on the legal procedures involved and help you to prepare a defence. ## Can my bankruptcy be cancelled? Yes, it is possible for a bankruptcy to be cancelled or annulled in the UK. There are a number of reasons why a bankruptcy order may be cancelled, including: - Payment of debts: If the debts that led to the bankruptcy order have been paid in full, the bankruptcy can be cancelled. - Errors in the bankruptcy process: If there were errors in the bankruptcy process, such as a failure to properly notify all creditors or an incorrect valuation of assets, the bankruptcy can be cancelled. - Agreement with creditors: If an agreement can be reached with creditors, the bankruptcy can be cancelled. This may involve negotiating a repayment plan or entering into a voluntary arrangement. - Change in circumstances: If there has been a significant change in circumstances, such as a change in income or a windfall of funds, the bankruptcy can be cancelled. - Application to court: An application can be made to the court to cancel a bankruptcy order. The court will consider the circumstances of the case and make a decision as to whether or not to cancel the order. It's important to note that cancelling a bankruptcy order can be a complex and lengthy process, and may involve additional costs and fees. It's important to seek professional advice from a qualified debt advisor or insolvency practitioner if you are considering applying to cancel your bankruptcy order. ## How do I annul my bankruptcy? To annul a bankruptcy order in the UK, you will need to follow the appropriate legal procedures. The steps involved in annulling a bankruptcy order include: You will need to obtain a copy of the bankruptcy order from the court that issued it. You will need to gather evidence to support your application to annul the bankruptcy order. This may include evidence that the debts have been paid, evidence of errors in the bankruptcy process, or evidence of a change in circumstances. You will need to file an application to court to request that the bankruptcy order be annulled. This must be done using the appropriate form and must be accompanied by the relevant evidence. You will be required to attend a court hearing to present your case for why the bankruptcy order should be annulled. The court will consider the evidence presented by both sides and make a decision as to whether or not to annul the order. Once the bankruptcy order has been annulled, you will need to notify your creditors and the Official Receiver that the bankruptcy has been annulled. It's important to note that annulment of a bankruptcy order can be a complex and lengthy process, and may involve additional costs and fees. It's important to seek professional advice from a qualified debt advisor or insolvency practitioner if you are considering applying to annul your bankruptcy order. ## What happens at the end of a bankruptcy? At the end of a bankruptcy, the debtor is discharged from bankruptcy and their assets are released back to them. Here's what happens at the end of a bankruptcy: In most cases, the debtor will be automatically discharged from bankruptcy after 12 months. This means that they are no longer legally bound by the bankruptcy order and can apply to have their assets returned. If there are any outstanding debts that have not been paid, these will remain outstanding after the discharge from bankruptcy. However, the debtor will no longer be pursued for these debts and the creditors will not be able to take any further legal action to recover them. A bankruptcy will remain on the debtor's credit file for six years from the date of the bankruptcy order. This may make it more difficult for the debtor to obtain credit in the future. If the debtor has been subject to bankruptcy restrictions, these will remain in place after the discharge from bankruptcy. This may include restrictions on running a business or acting as a company director. After discharge from bankruptcy, it's important to take steps to rebuild credit. This may include obtaining a credit card with a low limit and making regular payments, or taking out a small loan and repaying it on time. It's important to seek professional advice from a qualified debt advisor or insolvency practitioner if you are facing bankruptcy. We can provide guidance on the legal procedures involved and help you to understand your options. ## What happens after the bankruptcy petition? If the bankruptcy petition is successful, the Court will make a bankruptcy order within 28 days. Following receipt of the sealed order, you will attend an interview with the Official Receiver, who will notify the [Land Charges Department](https://www.gov.uk/government/organisations/land-registry) that the bankruptcy order has been made and this will be added to the public register of writs and orders. We have the **strongest possible record of success in dealing with numerous bankruptcy petitions** and are regularly recommended to clients by leading accountants and leading insolvency professionals. You can be assured that your insolvency matter is in safe hands and that we will act cost effectively. Our success rate is a result of the dedication of our insolvency lawyers who will diligently review your matter to ensure it has the best possible chance of success from the outset when it matters the most. ## Our Expert Bankruptcy Petition Solicitors We are leading experts specialising in Bankruptcy Petitions. We regularly assist with issuing petitions or setting aside statutory demands or defending petitions. We also specialise in making bankruptcy annulment applications. We can guide you through the minefield of complex [bankruptcy rules and procedure](http://www.legislation.gov.uk/uksi/2016/1024/part/10/made) and help your company to manage the entire process. We have years of experience in negotiating with creditors and their solicitors (in particular HMRC). We regularly represent our clients in the High Court/Bankruptcy Court and successfully obtain adjournments (e.g. to allow time to negotiate and settle or to defend a bankruptcy petition) or apply for annulment. ## Book an initial consultation with expert Bankruptcy Solicitors and Barristers We are a specialist City of London law firm made up of Solicitors & Barristers and are [based in the legal heart of London](https://lexlaw.co.uk/contact-us/) in [Middle Temple](https://www.middletemple.org.uk/) (one of the four prestigious barristers’ Inns of Court) adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding bankruptcy including defending bankruptcy petitions; managing bankruptcy applications (including annulments); advising on bankruptcy petitions and offences; and liaising with the Official Receiver. Whilst we are based in London we provide national coverage across all Courts in England & Wales.  --- # Failure to Honour Letters of Credit Source: https://lexlaw.co.uk/failure-to-honour-letters-of-credit/ Letters of credit are a necessary part of the documentary credit system, especially in international commodities trading at costs of circa $100 billion USD per annum. Although letters of credit have traditionally been used in trade transactions, they have proven to be very adaptable and are increasingly being used in non-traditional roles. Today, they are one of the most important tools of international finance. Although a letter of credit on its face is an irrevocable written obligation from a Bank to fulfil an obligation, it is a misconception to assume that a Bank issuing a Letter of Credit is giving you an ironclad guarantee of payment as although the whole function of a Letter of Credit is to honour an underlying contractual agreement, there are many potential pitfalls for those entering into a letter of credit with a financial institution which requires legal advice, for example where the Bank refuses to honour the agreement. ## What is a Letter of Credit? [Letters of Credit](https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters) are a commonly used trade financial instrument provided by a third party, usually a financial institution such as a bank to ensure that the payment of the goods and services will be fulfilled between a buyer and a seller. A standard [Letter of Credit ](https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters)is an irrevocable written commitment by a Bank to make payment to the seller, in connection with the export of specific goods, against the presentation of specified documents identified in the [Letter of Credit ](https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters)and relating to those goods. ## Why is a Letter of Credit used? Letters of credits are typically utilised when the parties involved in the financial transaction are based in different countries. In international trade, given the large distances and differing laws, a letter of credit has become an important mechanism for a bank to guarantee a buyer's payment to a seller will be received on time and for the correct quantum. The [Letter of Credit ](https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters)is an important mechanism to assure a seller that a buyer has guaranteed payment and that the contractual provisions will be honoured. ## What are the types of Letters of Credit? There are a number of labels used to describe the different types of Letters of Credit. What type is used will depend on the relative negotiating positions of the parties and the surrounding commercial circumstances: - **Revocable credits: **A revocable credit is one which may be amended or revoked by the issuing bank at any time without notice to the seller. - **Irrevocable credits**: An irrevocable credit, on the other hand, can only be amended or revoked with the consent of all parties (the buyer, issuing bank, seller and any confirming bank). - **Confirmed**: A Confirmed Letter of Credit adds more security for the seller. This addition stipulates that if the issuing bank from the buyer does not pay the requested amount of money, the seller’s bank guarantees payment. - **Letter of Credit at Sight**: This article of the Letter of Credit specifies that all payments will be fulfilled as soon as there is documentation verifying that the goods or services have been received by the buyer. - **Red Clause**: A Red Clause Letter of Credit provides an obligation towards the buyer’s issuing bank to provide partial payment to the seller prior to the shipping of the goods in question or providing the service. ## What are the Regulations over Letters of Credit? Most letters of credit are governed by rules promulgated by the [International Chamber of Commerce (“ICP”)](https://www.ibanet.org/Forum/Detail.aspx?ForumUid=FB4A347E-6AF5-4138-BC97-5786FE7E925E), who has produced a standard set of guidelines known as [Uniform Customs and Practice for Documentary Credits](http://static.elmercurio.cl/Documentos/Campo/2011/09/06/2011090611422.pdf), used by producers and traders worldwide. The current version, [UCP 600](http://static.elmercurio.cl/Documentos/Campo/2011/09/06/2011090611422.pdf), became effective July 1, 2007. ## What are my options if a Bank does not honour or delays payment of a Letter of Credit? In the event that the buyer [Bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) is unable to make payment on the purchase, the seller is able to make a demand for payment on the [Bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/). The [Bank ](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/)will examine the beneficiary's demand and if it complies with the terms of the letter of credit, is required to honour the demand. The obligation of both the issuing bank and confirming bank to pay is irrespective of disputes under the underlying contract for sale. The banks pay strictly in accordance with the terms of the Letter of Credit and should not need to concern themselves with whether or not the buyer and seller have met their contractual obligations to each other. ## In what circumstances will a Bank not honour a Letter of Credit? There are two significant exceptions to the principle that a confirming bank or issuing[ bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) is obliged to pay under a Letter of Credit even when the documents presented appear to be satisfactory. - **Illegality: **It is a defence (if proven) for the Bank not make payment pursuant to the Letter of Credit if making such payment would be illegal in accordance with the operating jurisdiction of the said bank. - **Fraud**: A bank is not obliged to pay under a Letter of Credit if the documents presented by the beneficiary are found to be fraudulent (for example if they have been forged) or, in the case of a standby Letter of Credit, if the beneficiary had no honest belief in the validity of its demand. # Case Study: Letters of Credit Our client was in the business of international maritime exporting of goods and commodities on a large scale basis. We received instructions on an urgent basis after a major London Bank dishonoured irrevocable Letters of Credit and refused to pay a £multimillion sum after our client exported goods from a European port to a north African trade hub and following valid documentary presentation by our client. Despite our client adhering to the terms of the irrevocable documentary credit, the Bank refused to honour the Letters of Credit. The Bank alleged this was due to purported links to a country which at the time was under imposed trade sanctions. The use of embargo or sanctions clauses in financial instruments subject to [rules drafted by the ICC Banking Commission](https://iccwbo.org/publication/guidance-paper-on-the-use-of-sanctions-clauses-2014/) have become more common in documentary credit agreements. The effect of which is that even with an irrevocable and complying Letter of Credit, if the agreement contains a sanctions clause, an issuing or confirming Bank may be prohibited from dealing with certain embargoed countries, persons or assets. We submitted on behalf of our client that the Letters of Credits had no such sanctions clauses which would ordinarily have allowed the Bank to refuse to pay (if links to an embargoed country could be proven) despite a complying presentation under the Letters of Credit.  Our experienced financial services solicitors and barristers can often assist in cases involving breaches of the documentary credit system in international commodities trading. Our expert lawyers: - thoroughly reviewed the underlying transaction, the letters of credit and the documentary evidence provided by the client; - prepared and issued a protective Claim Form and Particulars of Claim at the High Court within 24 hours of being instructed (we advised our client to issue a claim immediately to protect its’ legal rights and to strengthen its’ bargaining position with the Bank); and - successfully presented our client’s case and held without prejudice negotiations with the Bank and its’ legal representatives. Given that the client was owed significant funds and was suffering loss to the business and livelihood as a result of the Bank’s refusal to honour the Letters of Credit, we achieved a highly successfully outcome within just 10 days of being instructed: - the Bank agreed to honour its’ Letters of Credit and paid the entire sum it owed our client; - we secured our client tens of thousands in interest; - we negotiated that the Bank waived the entire commissions and fees it would have been due under the Letters of Credit; and - we achieved the fantastic result of getting the Bank to agree to pay 100% of our client’s legal costs (including disbursements i.e. the cost of issuing the Claim Form). Our client was delighted with this outstanding result and the astute tactical nouse and negotiation skills exhibited by our expert Letter of Credit litigators. If you are in a similar position, get in touch. ## City of London specialist Letter of Credit Lawyers We [specialise in banking litigation](https://lexlaw.co.uk/) and Letter of Credit claims and have years of [experience](https://lexlaw.co.uk/our-people/) in handling and resolving financial services claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a leading law firm regularly featured in the [news and media](https://lexlaw.co.uk/legal-news/) and with a track record of success, you can be assured your litigation claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting an in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Negligence Claims Against Financial Advisers Source: https://lexlaw.co.uk/negligence-claims-against-financial-advisers/ *Claims against [financial advisers](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/) have been on the increase in recent years and we have seen cases where an adviser provides (bad) financial advice in an area where they have no expertise; where a financial adviser/accountant fails to explain and/ or warn their clients on the fiscal implications of entering into particular financial products; and cases where an adviser fails to adequately assess the financial situation of their client to provide correct advise on suitable products for them personally. * *If you have been given bad advice or have a complaint about a Financial advisers it is important that you take independent legal advice to seek compensation for your loss before the time limits expire (usually six years). * ## Do I have a negligence claim against a financial advisor? Professionals in the financial industry who are tasked to give financial advice to clients are highly trained and regulated by their professional bodies. Certain advisers are regulated by the [FCA](https://www.fca.org.uk/) and to fulfill their duties they must comply with certain rules and regulations of that professional body. In most cases, a financial adviser will owe concurrent tortious, contractual, statutory and fiduciary duties to their clients (depending on the specific facts of each case). A high level of trust is placed upon such financial adviers by their clients- many of whom are not sophisticated consumers and rely heavily on the advice given. If a financial adviser fails to deliver the service to the standard expected of a reasonable professional in that speciality field, then a client has every right to bring a complaint (and court proceedings) if financial or personal loss is suffered as a result. For example, if an accountant provides bad advice, the personal and reputational damage could be damaging and could lead to enforcement action being taken by [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). Our [tax disputes team](https://taxdisputes.co.uk/) have years of experience defending cases where a client is being pursued for a tax debt by HMRC. ## How do I prove that my financial adviser has been negligent? [Professional negligence](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) occurs where a professional fails to perform his responsibilities to the required standard. A claim brought by the professional’s client may be based on one or more of the following: - Breach of a contractual term (express or implied). - Breach of duty of care owed in the tort of negligence. - Breach of fiduciary duty. - Breach of statutory duty. Where a duty is owed in contract or tort, you must establish that there has been a breach of that duty. You must show that the professional did not comply with the requisite standard owed. Broadly speaking, negligence is established if the professional has made an error which no reasonable member of his profession, operating in similar circumstances, would have made. Where such errors cause a financial loss, claims can be pursued against the relevant financial adviser. ## Professional Negligence: The Basic Requirements The tort of negligence has three basic requirements. All of these must be evidentially proved on a balance of probabilities (ie that they are more likely than not): - **Duty of care** – The defendant owed the claimant a duty not to cause the type of harm suffered. - **Breach of duty** – The defendant breached the duty owed. - **Causation** – This has two elements, both of which must be proved ie (a) factual causation in that the claimant must prove, but for the defendant’s negligence, they would not have suffered loss and (b) legal causation or remoteness in that the defendant’s negligence was the legal cause of loss. ## What are the time limits for a professional negligence claim? The limitation period is 6 years from the accrual of the cause of action ([*section 2, Limitation Act 1980*](https://www.legislation.gov.uk/ukpga/1980/58)). However, if six years have passed since the date of negligence but a claimant has only just discovered the effect of latent damage, then the limitation period may be extended to three years from the date of knowledge of the material facts ([section 14A, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58)). In any event, legal representation should be sought immediately upon an act of negligence to prevent claims from being time-barred. ## Examples of Financial Adviser Professional Negligence Cases The following are commonplace examples of potential claims: - Failure to adequately assess a client's financial situation to correctly advise on suitable financial products. - Providing bad/poor/incorrect advice on entering into a financial product and/or investment eg SIPPs. - Failure to advise on the risks of an investment/product, resulting in a financial loss. - Wrongly assessing a client's attitude towards risk when recommending a (risky) financial product to invest in such as CFDs, crypto-currencies, [FX derivatives](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/foreign-exchange-hedging-mis-selling-claims-fx-forex-hedge/), LIBOR-linked products etc. - [Mis-selling financial products](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/). - Failing to follow instructions provided by a client. We have a team of [Specialist Professional Negligence Solicitors and Barristers](https://lexlaw.co.uk/?page_id=4023&preview=true) that are experienced in recovering damages for financial loss suffered after a financial adviser has provided sub-standard legal advice or legal conduct. We can often take on such claims on a no win no fee basis once we have assessed and advised you on the merits of the proposed professional negligence action. ## How do I start a professional negligence claim? Parties to litigation or contemplating litigation must adhere to the [Civil Procedure Rules 1998 (the CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules). Therefore, the provisions of the CPR are applicable, in particular the [Pre-Action Protocol for Professional Negligence (professional negligence PAP)](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). The updated PAP for professional negligence came into effect in May 2018, on which date claims to be issued from then must comply with. All the parties are encouraged to attempt to settle the professional negligence claim without issuing formal proceedings in court. The PAP sets out the framework to be followed and encourages an exchange of information and a set timetable, which both parties must comply with to encourage early settlement without the need for a costly court process. ## City of London Specialist Professional Negligence Lawyers We specialise in [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk) regularly featured in the news and media and with a track record of [success](https://professionalnegligenceclaimsolicitors.co.uk/case-studies/), you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want [expert legal advice](https://professionalnegligenceclaimsolicitors.co.uk), get in touch so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # Property & Conveyancing Negligence Source: https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/ When investing in a property, often if not at all times, you will rely on the advice of a skilled professional including builders, surveyors, architects and project managers. Mistakes made by a professional in the [construction](https://professionalnegligenceclaimsolicitors.co.uk/negligent-builder-construction-defects/) or [conveyance](https://professionalnegligenceclaimsolicitors.co.uk/negligent-licenced-conveyancer-property-lawyer-clc-compensation-free-advice/) of a property can lead to serious financial loss. Most professionals have professional indemnity insurance to cover their mistakes and if you can make out the elements of a negligence action i.e. it can be proven that you were owed a duty of care, the professional fell below the standard expected of peers in their industry and you have suffered loss as a result of that, then you may be able to [claim compensation](https://professionalnegligenceclaimsolicitors.co.uk/property-professional-negligence-claims/). ## Do I have a claim against a professional? [Professional negligence](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) occurs where a property professional fails to perform his responsibilities to the required standard. A [professional negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) brought by the professional’s client may be based on one or more of the following: - Breach of a contractual term (express or implied). - Breach of duty of care owed in the tort of negligence. - Breach of fiduciary duty. - Breach of statutory duty. Where a duty is owed in contract or tort, you must establish that there has been a breach of that duty. You must show that the professional did not comply with the requisite standard owed. Broadly speaking, negligence is established if the professional has made an error which no reasonable member of his profession, operating in similar circumstances, would have made. Where such errors cause a financial loss, claims can be pursued against the relevant financial adviser. ## Professional Negligence: The Basic Requirements The [tort of negligence](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) has three basic requirements. All of these must be evidentially proved on a balance of probabilities (i.e. that they are more likely than not): - **Duty of care** – The defendant owed the claimant a duty not to cause the type of harm suffered. - **Breach of duty** – The defendant breached the duty owed. - **Causation** – This has two elements, both of which must be proved ie (a) factual causation in that the claimant must prove, but for the defendant’s negligence, they would not have suffered loss and (b) legal causation or remoteness in that the defendant’s negligence was the legal cause of loss. ## Examples of Negligence Claims against Property Professionals The property industry is large and diverse with different professions offering different services. The following are commonplace [examples of negligence by professionals in the property industry](https://professionalnegligenceclaimsolicitors.co.uk/property-professional-negligence-claims/). ### Professional Negligence Claims against Surveyors All surveyors owe their clients a duty of care. [Surveyors](https://professionalnegligenceclaimsolicitors.co.uk/rics-property-surveyor-expert-valuer-compensation/) are regulated by a professional body called the [Royal Institution of Chartered Surveyors (RICS)](https://www.rics.org/uk/). The RICS holds itself out as promoting and enforcing the highest international standards across the built and natural environment. The [RICS Rules of Conduct](https://lexlaw.co.uk/wp-content/uploads/2019/07/RICS-rules-of-conduct-for-firms-royal-institute-chartered-surveyors-LEXLAW-professional-property-negligence-solicitors.pdf) are mandatory rules for all its' members, students, trainees and all firms it regulates. #### How can Surveyors be negligent? [Examples of cases ](https://professionalnegligenceclaimsolicitors.co.uk/rics-property-surveyor-expert-valuer-compensation/)where a surveyor has fallen below the standard of care includes: - Failure to inspect a property accurately: for example a surveyor may fail to discover latent defects such as dry rot, woodworm, a leak or defects in the underlying structure of the property. - Failure to identify a subsidence issue: if a survey report is requested then the identification of subsidence is a key aspect of the report. If it can be shown that a surveyor exercising the due care and skill expected in the profession would have discovered the issue and the property would not have been purchased if the subsidence was known about in the pre-contractual searches stage, then you may be able to claim compensation. - Over-valuation of a property: if a valuation report transpires to be over-valued and you have purchased the property at above the market rate, then you may have a claim for damages against the surveyor. #### How much compensation can I get if my RICS surveyor has been negligent? If it can be proved that the surveyor owed a duty of care, the surveyor by act or omission breached this duty, and the breach caused loss to you, then you have a claim for damages. The courts usually measure damages in a surveyor’s negligence case as the difference between the price paid by the buyer of the property and what the market value of the property actually was. ### Professional Negligence Claims against Conveyancers If you have purchased a property, you will either seek the advice and representation of a solicitor specialising in conveyancing or a licenced conveyancer. If you have relied on a conveyancer’s services and the advice and work done has (for example) resulted in a purchase or sale falling through or the price of the property to decrease, then you may be able to claim compensation for conveyancing negligence for your financial loss. #### How can a conveyancer be Negligent? The following are examples of [negligence by a conveyancer](https://professionalnegligenceclaimsolicitors.co.uk/successful-result-negligent-property-conveyancer-firm/): - Incorrect investigation of title e.g. discovering the seller does not have title absolute. - Restrictive covenants not being investigated or warned about. When a restrictive covenant is discovered in the Official Copies of Title then it usual that a conveyancer first seeks a quote for restrictive covenant insurance; if the costs are prohibitive then seek a release of the covenant from the person with the benefit (PWB); if that fails then seek a release of the covenant by way of application to the [Upper Tribunal (Lands Chamber)](https://www.gov.uk/courts-tribunals/upper-tribunal-lands-chamber). However, a negligent conveyancer may approach the PWB first (which then in turn means an insurer will not provide a quote for insurance). - Failure to ensure all building regulations certificates and planning permission consents have been provided by the seller before exchange. If it later transpires that material building works took place without the necessary consents, the current owner (i.e. the buyer) will be liable for the necessary failures in getting consent. In serious cases, for example where listed building consent or conservation area consent is not obtained, the time limit for enforcement action is unlimited. #### Who regulates licenced conveyancers? Licenced conveyancers are also regulated by the Council for Licenced Conveyancers (CLC), which is the specialist property law regulator. The CLC provides regulation for those conveyancers who do not practice as solicitors, but instead are specialists, who have been trained only in conveyancing. The CLC investigates misconduct, takes disciplinary action and sets training standards for licensed conveyancers. #### How much is my claim worth if my conveyancer has been negligent? Quantification of losses is a significant part of any negligence claim. It is likely that expert evidence will be required to ascertain losses (usually from a surveyor, valuer or forensic accountant). A general rule of thumb is that the starting point will be the reduction in the value of the property as a result of the negligence from the conveyancer. ### Professional Negligence Claims against Architects Clients instruct architects as highly skilled construction professionals to alter or design buildings. All architects must act with reasonable care and skill expected by their peers in the profession. If an architect has made an error or you have suffered a loss due to an omission which is due to a defect in their designs, then you may have a claim for compensation. #### How may have my architect been negligent? Common examples of claims against architects include: - Incorrect budget planning, for example in *[Riva Properties Ltd and others v Foster + Partners Ltd](https://lexlaw.co.uk/wp-content/uploads/2019/07/Riva-Properties-and-Foster-Partners-2017-architects-negligence.pdf)*[ [2017] EWHC 2574 (TCC)](https://lexlaw.co.uk/wp-content/uploads/2019/07/Riva-Properties-and-Foster-Partners-2017-architects-negligence.pdf), the court held that the architect firm failed to identify key constraints for the project (for example the client's budget and negligently advised that the property development could be value engineered from £195 million to £100 million). - Negligent misstatement relied upon by a property developer *([Hunt and others v Optima (Cambridge) Ltd and others](https://lexlaw.co.uk/wp-content/uploads/2019/07/Hunt-and-Optima-Cambridge-achitects-negligence-LEXLAW-solicitors-london_compressed.pdf)*[ [2014] EWCA Civ 714](https://lexlaw.co.uk/wp-content/uploads/2019/07/Hunt-and-Optima-Cambridge-achitects-negligence-LEXLAW-solicitors-london_compressed.pdf)). - Negligent building design advice. - Poor project management. #### How long do I have to start a professional negligence claim against an architect? There are [strict time limits](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/) in place for commencing a claim against a negligent architect. The limitation period for suing a professional in tort is usually six years from the date the cause of action accrued and/or the loss was suffered ([section 2, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/2)). The time limit for suing a professional for breach of contract is six years from the date of the breach of contract ([section 5, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/5)). Alternatively, [section 14 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/14) provides that in certain circumstances a claim could start three years from the earliest date on which the Claimant had both the knowledge required for bringing a claim for damages in respect of the relevant damage and a right to bring such a claim. Therefore, limitation can be a complex issue in a claim with multiple different limitation dates. It is vital to seek legal advice as soon as you become aware that you could have a claim against the potential negligent architect. ## City of London Specialist Professional Negligence Lawyers We specialise in [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk) and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a leading law firm regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want [expert legal advice](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/), get in touch so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of leading [Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # Extradition Source: https://lexlaw.co.uk/challenge-criminal-extradition-requests/ *Extradition is the formal legal process involving the delivery of an accused or convicted individual from one state to a requesting state. Extradition is a process which operates between states and is given effect within the UK by the courts (and the executive to some extent). * *Extradition cases are by their nature high profile and complex. Extradition requests are wide-ranging, both in terms of the requesting state (such as Russia, USA and the UAE) and in terms of the offences alleged by these states (including criminal investigations, fraud, corruption and business crime). * *It is crucial to seek extradition advice from expert extradition lawyers as soon as possible because: (i) being the target of an extradition request requires speed of action for the accused as the extradition process is relatively streamlined and quick; (ii) pre-emptive steps can be taken before an extradition request is made to avoid an unexpected arrest; and (iii) extradition is a complex area of law governed by bilateral extradition treaties (for example between the USA and UK) and by the [Extradition Act 2003](http://www.legislation.gov.uk/ukpga/2003/41/part/3) therefore early instruction is important to maximise chances of success in the case. * ## What is extradition? Extradition is the formal legal process where one state requests that another state return a person in order to be prosecuted, be sentenced for an offence for which the individual has already been convicted, or to carry out a sentence already imposed. The form of an extradition request depends on which state requests the extradition. Within the EU, a [European Arrest Warrant](https://nationalcrimeagency.gov.uk/what-we-do/how-we-work/providing-specialist-capabilities-for-law-enforcement/fugitives-and-international-crime/european-arrest-warrants) is issued and you can be arrested without any further warrant from a court in the UK. For extradition to a non-EU state, the state will make a formal extradition request to the Home Secretary. ## What happens if an individual is subject to an extradition request? Any individual subject to an arrest warrant issued following a request from the Home Secretary or a European Arrest Warrant, then the individual is liable to being arrested immediately. In some situations, an individual can be arrested even before a European Arrest Warrant or extradition request has been issued (if they are imminent). Following arrest, an individual will be taken into custody and taken to [Westminster Magistrates' Court](https://courttribunalfinder.service.gov.uk/courts/westminster-magistrates-court). ## How to Challenge Extradition Requests Heavily contested areas within the law of extradition are in relation to statutory bars to extradition (in particular on human rights concerns). Although in practice, many extradition hearings are procedural, in every case requested persons are entitled to present arguments against extradition on the basis of statutory bars: ### Double Jeopardy Extradition can be challenged (pursuant to section 12 and 80 of the Extradition Act 2003), if it appears that the accused would be entitled to be discharged under any rule of law related to a previous acquittal or conviction. For example, the appellants in *[Fofana v France](https://www.casemine.com/judgement/uk/5a8ff7c060d03e7f57eb1c92)*[ [2006] Extradition L.R. 102](https://www.casemine.com/judgement/uk/5a8ff7c060d03e7f57eb1c92), successfully appealed orders directing their extradition to France made pursuant to the Extradition Act 2003 by submitting that the extradition offence would (to some extent) breach the double jeopardy principle and would be an abuse of process. ### Absence of Prosecution Decision Extradition will be barred where an accused person satisfies the court that there are reasonable grounds to believe that no decision to charge has been made in the case and the absence from the requesting state is not the sole reason that these decisions have not been made. By submitting this argument, the burden of proof then shifts to the requesting state and if they cannot prove this, then the judge must discharge the individual. For example, the High Court have provided guidance on the "no prosecution decision" argument in *[Kandola v Germany](https://www.casemine.com/judgement/uk/5a8ff7bd60d03e7f57eb1ae5)*[ [2015] EWHC 619 (Admin)](https://www.casemine.com/judgement/uk/5a8ff7bd60d03e7f57eb1ae5), where extradition sought by Germany was barred for this reason. ### Extraneous Considerations Extradition will be barred under section 13 and section 81 of the Extradition Act 2003 by reasons of extraneous considerations, if it can be shown that the warrant was issued for the purposes of prosecuting the individual on account of religion, race, nationality, gender, sexual orientation or political opinion. Following *[R. v Governor of Pentonville Prison Ex p. Fernandez](https://swarb.co.uk/regina-v-governor-of-pentonville-prison-ex-parte-fernandez-fernandez-v-government-of-singapore-hl-1971/)*[ [1971] 1 W.L.R. 987](https://swarb.co.uk/regina-v-governor-of-pentonville-prison-ex-parte-fernandez-fernandez-v-government-of-singapore-hl-1971/), in order to prevent extradition, the individual must demonstrate that there is a "reasonable chance" on the balance of probabilities that there is a link causally between the warrant's issue and and the extraneous considerations in issue. ### Passage of Time Sections 14 and 82 of the Extradition Act 2003 is in practice the most common bar raised to extradition. It is well established that a bar exists where because of the passage of time since the extradition offence was committed, it appears that the extradition would be unjust. However, it is unlikely that this defence can be relied upon by an individual who seeks to rely on delay of that person's making ("classic fugitives"). ### Abuse of Process The UK Courts have an implied jurisdiction to discharge an individual if extradition would constitute an abuse of process. It was established in *[R. (on the application of United States) v Bow Street Magistrates' Court ](https://www.casemine.com/judgement/uk/5a8ff7cf60d03e7f57eb241d)*[[2006] EWHC 2256 (Admin)](https://www.casemine.com/judgement/uk/5a8ff7cf60d03e7f57eb241d) that a judge must not accede to an extradition request unless (on the balance of probabilities) that such an abuse has not occurred. Abuse of process arguments available in the UK include usurpation of the statutory scheme and manipulating procedures to unfairly prejudice a defendant. ### Proportionality Under the [Anti-social Behaviour, Crime and Policing Act 2014,](http://www.legislation.gov.uk/ukpga/2014/12/contents/enacted) a judge is now required to consider whether any extradition to stand trial would be disproportionate. The High Court has provided commentary on this new bar in *[Miraszewski v Poland [2014] EWHC 4261 (Admin)](https://www.judiciary.uk/wp-content/uploads/2017/09/italy-v-herba-20170929.pdf)* which includes: (i) considering the seriousness of the extradition offence; (ii) the likely penalty imposed if found guilty of the extradition offence and (iii) considering the possibility of foreign authorities taking less coercive measures than extradition of the requested individual. ## Specialist Legal Advice on Securing Bail and Extradition Appeals Our extradition lawyers have practical knowledge of contesting extradition requests and other issues surrounding an extradition request by a state. It is imperative to an effective defence to work with lawyers in the jurisdiction of the extraditing state. For example, in cases where the USA is the requesting state, working with American lawyers is common especially in circumstances where plea-bargaining with the Department of Justice is common practice. ## Challenging INTERPOL Red Notices An [INTERPOL Red Notice](https://www.interpol.int/en/How-we-work/Notices/Red-Notices) has the effect of restricting an individual's ability to do business or to travel. Red Notices have the effect of triggering an arrest and leading to extradition proceedings. Before taking action and seeking the deletion of Red Notices, it is important to seek legal advice from specialists extradition lawyers because deletion of a red notice does not automatically prevent arrest and could harm any future extradition or criminal defence. ## Expert UK Criminal Defence Advice Our lawyers are highly effective and have many years of experience of advising and representing clients in cases of alleged fraud, money laundering, asset forfeiture, serious and organised crime, regulatory issues and in complex and high-profile appeals against conviction. They bring to bear all their specialist legal acumen in order to provide clients with results that often surpass expectations and regularly exceed the outcomes of co-defendants. We have obtained bail for clients in circumstances where all other co-defendants have been refused bail and even in circumstances where our new client has previously had bail refused. We assist with initial consultation and advice, Police and other co-operative investigation through to representation at Court and Appeal where necessary. We provide immediate legal assistance and are often instructed by clients who are due to attend court or need advice at short notice. In such circumstances, our team will prioritise your case and ensure that you receive urgent legal assistance. ## Instruct Specialist Extradition Solicitors and Barristers If you require assistance or advice in relating to an extradition, our highly experienced solicitors and barristers are able to assist. We have practical knowledge of challenging extradition requests, European arrest warrants, Interpol Red Notices, securing bail, voluntary surrender and appeals of extradition orders. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Criminal Defence solicitors and barristers. Just call or email us now; our private prosecution lawyers and criminal defence team are waiting to help. --- # Mis-sold Self Invested Personal Pension Scheme (“SIPP”) Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/self-invested-personal-pension-scheme-sipp/ *Independent Financial Advisers, the Financial Regulator and the Financial Ombudsman are facing a flood of complaints about mis-sold pensions* ## What is SIPP? The Self Invested Personal Pension scheme ("[SIPP](https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/contract-based-schemes/self-invested-personal-pensions-sipp)") is a government approved money-purchase pension scheme. It was first introduced in 1989 and millions of individuals have participated in the scheme since. The aim of a SIPP scheme is to have access to a wider range of investments giving an investor more options to invest its money. SIPPs are usually therefore suitable for experienced investors who want to personally manage their pension and the investments in it. SIPPS were never meant for the general public. Pensions that are paid are liable to income tax, but are not liable to National Insurance contributions. It is important you understand the [tax implications ](https://www.gov.uk/personal-pensions-your-rights)arising from your chosen pension scheme, or are advised of the same. You should also check that your pension provider is registered with the [Financial Conduct Authority (FCA),](https://register.fca.org.uk/)  If you have a SIPP and you were advised to transfer to the same, you may have been given inadequate advice or even misled about the risk involved. ## Common problems faced by individuals involved in a SIPP scheme: - You did not understand the scheme and were more suited to a traditional pension scheme You were subject to a "hard sale" approach when choosing a pension scheme- Your adviser suggested, advised or recommended opting for or transferring to a SIPP in comparison to a traditional personal pension- Your adviser did not provide you with clear or adequate information or advice on all the potential risks of a SIPP - Your adviser limited its advice regarding the SIPP e.g. focused on tax benefits- HMRC have since changed its rules on SIPP schemes of which you were not warned or advised The number of SIPP complaints referred to the Financial Ombudsman Service increased by 86% from 20151 complaints in 2017/18 to 3811 complaints in 2018/19, according to [FOS' annual review](https://annualreview.financial-ombudsman.org.uk/) published on 15 May 2019. > *“Investment and pension complaints are at their highest level in five years. While self-invested personal pensions can give consumers more control over how and where their pension funds are invested, consumers and advisers need to ensure this is the right vehicle for them. Decisions about pensions are some of the most difficult choices people make, and it’s important that consumers understand the risks involved when investing their pension pot.”* > > FOS chief ombudsman and chief executive Caroline Wayman ## I have a SIPP mis-selling complaint If you have been mis-sold a SIPP, there are several potential solutions: - attempting to negotiate with the pension provider/financial adviser;- complaining to the pension provider/financial adviser;- complaining to the Financial Ombudsman Service; or- sending a letter before claim, issuing legal proceedings at Court, and litigating against the pension provider/financial adviser. ## Our Financial Services Litigation and Mis-Selling Lawyers get the best results Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs in high value banking disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers and have widespread experience in managing claims through redress schemes and complaints through the Financial Ombudsman Service. We can assist in: - Issuing legal proceedings & drafting documents/pleadings to support the mis-selling claim;- Assisting you in preparation of evidence to support your mis-sold SIPP case;- Appointing experts or financial accountants to assess losses and ensure the best chance of success in litigation;- Liaising with the pension provider/financial adviser and the Court and/or the Financial Ombudsmen Service; and- Providing Court representation and advocacy. **Contact our specialist lawyers for a consultation: ☎ 020 7183 0529 ** --- # Enforcement of Judgment Debt Source: https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/ *Obtaining a judgment or order in your favour is only the first step in obtaining financial redress, especially given that a Court will not automatically enforce any order. The onus is placed upon the judgment creditor to take enforcement action. You should not simply embark on issuing a [winding up](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/) or bankruptcy petition or statutory demand without considering the matter carefully and *[*taking advice*](https://windinguppetitionsolicitors.co.uk/expert-advice/)* as there are multiple methods to ensure a judgment debt is paid. * ## How do I enforce a judgment debt? Before a [judgment ](https://windinguppetitionsolicitors.co.uk/recovering-a-debt-judgment-debt/)creditor can enforce a money judgment and seek financial restitution, it is good practice to check certain preliminaries before an enforcement strategy is chosen, namely: ### Is the judgment debt enforceable? The [judgment debtor ](https://windinguppetitionsolicitors.co.uk/recovering-a-debt-judgment-debt/)must have been provided the opportunity to pay the sum ordered by the Court and payment should be overdue before enforcement proceedings are commenced. Therefore, it is important to calculate when the debt has become overdue. Guidance is found in [CPR 40.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part40#40.11) which states that if the order does not specify a time to pay then the debtor has 14 days from the date of the judgment. It is essential (pursuant to [CPR 40.4](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part40#40.4)) that a judgment creditor serves the debtor with the judgment (either themselves or via the Court). ### Is the judgment debt too old to enforce? Unlike with other court claims (see our article on limitation [here](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/)), judgment debts are not subject to limitation issues. Although section 24(1) of the [Limitation Act 1980](http://www.legislation.gov.uk/ukpga/1980/58) states that an action cannot be brought 6 years after a judgment has been handed down, the House of Lords in *[Lowsley v Forbes](https://swarb.co.uk/lowsley-and-another-v-forbes-trading-as-i-e-design-services-hl-29-jul-1998/)*[ [1998] 3 WLR 501](https://swarb.co.uk/lowsley-and-another-v-forbes-trading-as-i-e-design-services-hl-29-jul-1998/) held that an action is defined as a fresh action therefore enforcement proceedings are not time limited. However, any delay is not advisable and provides the debtor with the opportunity to liquidate their assets without paying the debt that is due. If you are owed sums by a [judgment debtor](https://windinguppetitionsolicitors.co.uk/recovering-a-debt-judgment-debt/), you should seek advice from [specialist debt recovery lawyers](https://windinguppetitionsolicitors.co.uk/debt-recovery/) as soon as possible to maximise the chances of recovery. ### Ascertain the judgment debtor's assets It is important to make enquiries as to the assets held by the debtor and in what form as this will be important when deciding which enforcement method to pursue. Enquiries can be pursued in a number of ways including: - requesting the debtor to voluntarily provide a list of their assets; - consulting the [Insolvency Register](https://www.gov.uk/search-bankruptcy-insolvency-register) to check whether the debtor has been declared bankrupt; - do a [land registry search](https://www.gov.uk/search-property-information-land-registry) to ascertain whether the debtor owns the address that you have on record for them; - search of [Companies House](https://www.gov.uk/government/organisations/companies-house) to see whether the debtor's company has any assets or has been wound up; - instruct an enquiry agent; or - an internet search to see whether any other information is available on the debtor. ## What are the different ways of enforcing a judgment debt? ### How do I take control of the debtor's goods? If the judgment debtor has goods of value to satisfy the debt, then one method of enforcing judgment is for the creditor to take control of the goods. This can be achieved by requesting either a writ of control from the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) or a warrant of control from the [County Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/county-court/). This court order authorises an enforcement officer to seize the debtor's goods and sell them to raise funds to satisfy the judgment debt. ### What is a Third party debt order? This allows a creditor to recover the debt owed from a third party who holds funds for the debtor, for example a bank account. ### What is a Charging order? Obtaining a [charging order](https://www.citizensadvice.org.uk/debt-and-money/action-your-creditor-can-take/charging-orders/) allows a creditor to obtain a charge over a debtor's beneficial interest in land. The debt would then be paid following the sale of the property that has the charging order over it. ### What is an Attachment of earnings order? An attachment of earnings order ensures that a proportion of the debtor's salary is deducted by their employer and paid to the creditor until the whole of the debt is paid. ### Application for an order that debtor attends Court for questioning In some circumstances, it can be difficult to ascertain whether the debtor has any assets or not in the jurisdiction to enforce the judgment debt. In that case, an [application can be made to the Court to compel the debtor to attend Court for questioning](https://www.gov.uk/government/publications/form-n316-application-for-order-that-debtor-attend-court-for-questioning) and provide evidence of any assets and income. Following this, a creditor will be on stronger footing and know which property and/or assets can be targeted in order to ensure the payment of the debt. ### How can I commence insolvency proceedings? Our [specialist insolvency team](https://windinguppetitionsolicitors.co.uk/) will advise you on the optimal way to seek redress from a judgment debtor. For example, if you are owed more than £5,000 from an individual then a bankruptcy petition can be presented. If you are owed more than £750 then a [winding up petition](https://windinguppetitionsolicitors.co.uk/) can be presented. Before doing so, it may be necessary to first serve a [statutory demand](https://windinguppetitionsolicitors.co.uk/issue-statutory-demand/). The threat or commencement of [winding-up proceedings](https://windinguppetitionsolicitors.co.uk/winding-up-procedure/) can put considerable pressure on a company to pay an outstanding debt promptly and the basic procedure is relatively inexpensive. Therefore, winding-up proceedings can be regarded as a method of debt enforcement. However, these proceedings should generally be regarded as a last resort. The court requires a creditor to behave reasonably before commencing winding-up proceedings and, in particular, to write to the company with details of the debt and demanding payment. Further, it is an abuse of process for a creditor to commence winding up proceedings on the basis of a debt which is genuinely disputed and there may be adverse costs consequences. ## Instruct expert insolvency solicitors to pursue your judgment debt We are lawyers that [specialise in recovering unpaid debts](https://windinguppetitionsolicitors.co.uk/debt-recovery/) from individuals or companies so we know the best way to get your unpaid debts paid up quickly. This may involve Insolvency or Litigation proceedings. To date, we have a 100% success rate and all of the petitions we have issued have been resolved in our client’s favour. This has also meant that the petitioned company or individual has paid our fees. Luckily for our clients this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs. As a result of our success we are now able to offer clients a proactive debt recovery package for a small fixed fee (which is likely to be refunded!). ## Specialist Debt Recovery Lawyers We provide a no cost initial case review to establish whether or not we can help you. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Mis-sold Lender Option Borrower Option (“LOBO”) Loans Source: https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/compensation-claim-councils-mis-sold-lobo-loan-legal-advice/ *Lender Option Borrower Option ("LOBO") loans are [fixed rate loans](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/) containing complex financial derivatives which are predominately sold to local authorities or housing associations as an alternative to loans from the [Government Public Works Loan Board](https://www.dmo.gov.uk/responsibilities/local-authority-lending/about-pwlb/) ("PWLB"). Council Finance Officers are frequently attracted to LOBOs as financial advisers at banks offer cheaper loans with long terms. However, the issue lies in the fact that the lender in effect sells its' borrower option to the Bank, leaving the borrower with the substantial risk that the Bank could cancel the loan (with its' associated break costs) and raise the interest rate at any time. * *LOBO loans and financial derivatives are a complex subject matter and which most generalist lawyers simply won’t be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. [Our financial services litigation team](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) will ensure your LOBO loans mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the hidden swap.  * ***If you represent a council, local authority or housing association that has entered into a LOBO loan, you are strongly advised to seek independent legal advice urgently before [time limits](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/) for commencing a claim against a bank or financial adviser expire.*** ***As legal claims will be ****centred around breach of contract, claimants run the risk of their claim becoming time or statute-barred by virtue of s.5 of the [Limitation Act 1980](http://www.legislation.gov.uk/ukpga/1980/58). This applies six years after the date of the hidden swap agreement. Therefore it is vital to [instruct solicitors](https://lexlaw.co.uk/) promptly. *** ## What is a LOBO loan? A lender option borrower option ("LOBO") is a long term borrowing instrument that incorporates two options: - Lender's option: for the lender to set higher interest rates at predetermined dates e.g. annually; and- Borrower's option: for the borrower to pay the revised interest rate or to redeem the loan, which may involve break costs. A range of banks and financial institutions provided LOBO loans to councils and housing associations which are usually for long terms of between 40 and 70 years. ## Why are LOBO loans sold to councils controversial? Councils are entrusted with taxpayer money and for that reason local authorities are prohibited from taking out swap contracts. This is established judicial authority following the decision in *[Hazell v Hammersmith and Fulham LBC](https://lexlaw.co.uk/wp-content/uploads/2019/09/Hazell-v-Hammersmith-and-Fulham-LBC-Goldman-Sachs-case-1991.pdf)*[ [1992] 2 AC 1](https://lexlaw.co.uk/wp-content/uploads/2019/09/Hazell-v-Hammersmith-and-Fulham-LBC-Goldman-Sachs-case-1991.pdf). In particular, Lord Templeman stated that local authorities had no power to engage in interest rate swaps as they were beyond the council's borrowing powers and consequently that all such derivative contracts were void as it could not be lawful to conduct swap transactions under the guise of *"debt management"*. > "I am of the opinion that a local authority has no power to enter into a swap transaction" > > Lord Templeman, *Hazell v Hammersmith and Fulham LBC* [1992] 2 AC 1 The controversy of LOBOs is that in effect banks have been providing local authorities with initial low interest rates (which in effect contain hidden derivatives)- a practice that is prohibited by case law. ## Why were councils and housing associations mis-sold LOBO loans? LOBO loans proved to be very popular with local councils and housing associations between 2003 and 2011 with attractive low costs in the short term and appearing as fixed-rate loans. Council Finance Directors, Councillors and Audit Committees were attracted to LOBOs by the fact that at the outset, these loans were cheaper than those being offered by the government. However LOBO loans were in fact complex loans with embedded financial derivatives, which the bank would enter into on the customer's behalf. ## Can I claim against a bank for a mis-sold LOBO Loan? Yes. LOBO loans have since been subject to legal action because while the interest rate is initially fixed, the lender can change the rate on pre-determined days, such as every five years. If the local authority tries to terminate and repay the loan, it would face high break costs. An example of a council loan, which featured on [Channel 4's Dispatches](https://www.channel4.com/press/news/how-councils-blow-your-millions-channel-4-dispatches), was a loan of £25 million that had an extortionate break cost of £15 million. These significant break costs imposed on councils meant that local authorities faced (and still face) difficulties in exiting these unfair loans. Top banks have faced litigation, negative press coverage and criticism by campaigners such as the shadow chancellor [John McDonnell](https://www.theguardian.com/business/2018/nov/25/mc-donnell-calls-for-check-on-council-loans-that-will-waste-16bn), who called for a government inquiry into any bank misconduct and for customers to recover their losses. ## Case study: Seven Local authorites issue £500 million claim against Barclays Bank for mis-sold LOBO loans A joint action by local councils led by [Leeds City Council](https://www.leeds.gov.uk/) and including: [Sheffield City Council](https://www.sheffield.gov.uk/), [Oldham Council](https://www.oldham.gov.uk/), [Nottingham City Council](https://www.nottinghamcity.gov.uk/), [North East Lincolnshire Council](https://www.nelincs.gov.uk/), [Newcastle City Council](https://www.nelincs.gov.uk/) and [Greater Manchester Combined Authority](https://www.greatermanchester-ca.gov.uk/) have commenced litigation in the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) against [Barclays Bank](https://www.barclays.co.uk/) for the mis-selling of 49 Lender-Option Borrower-Option loans in a claim worth in excess of £500 million. Barclays, the largest lender of LOBO loans, ceased to offer the loans in 2016. Barclays face a lawsuit by [seven local councils](https://www.bbc.co.uk/news/uk-england-leeds-47088844) over the terms of nearly £573 million in LOBO loans taken out between them. A mis-selling claim is multi-faceted and the local authorities claim that the loans were mis-sold as: - council finance officers were not provided advise on the risk that the variable interest rates could be changed by the Bank; - the councils cannot exit the loan agreements without paying substantial break costs; and - because regulatory findings demonstrate that Barclays was involved in LIBOR manipulation, that interest rates on LOBO loans were both fraudulently set and that there was an implied representation that the Bank had not participated in benchmark rigging (when it has bee demonstrated that Barclays were manipulating LIBOR rates). In addition, earlier this year, [Newham Council](https://www.theguardian.com/business/2019/feb/06/royal-bank-scotland-sued-newham-council-lobo-loan-terms) also commenced High Court legal action against the [Royal Bank of Scotland (RBS)](https://personal.rbs.co.uk/personal.html), the second largest lender of LOBOs, over the terms of approximately £150 million in complex bank loans. ## Can I claim against financial advisers who have mis-sold a LOBO loan? Yes. From the course of investigations carried out by journalists and as part of the government inquiry into LOBO loans, it was revealed that many financial advisers gave specialist financial advice to councils on their borrowing and were paid for the same, whilst also earning commission on LOBO loans entered into by a council. This presents a potential conflict of interest and gives rise to complaints from customers, particularly where the advisers are regulated. In particular, [CAPITA](https://www.capita.com/) (Treasury Management Advisers) have been implicated in advising councils to enter into LOBOs and receiving facilitation payments. ## Do I have a professional negligence claim against a financial adviser that has advised entry into a LOBO loan? Our financial services litigation team work in tandem with our [specialist professional negligence lawyers](https://professionalnegligenceclaimsolicitors.co.uk/) in considering a claim against a financial adviser. A high level of trust is placed upon such [financial advisers](https://professionalnegligenceclaimsolicitors.co.uk/financial-negligence-claim-solicitor/) by their clients- many of whom are not sophisticated consumers and rely heavily on the advice given. If a financial adviser fails to deliver the service to the standard expected of a reasonable professional in that speciality field, then a client has every right to bring a complaint (and court proceedings) if financial or personal loss is suffered as a result. ## How do I resolve a mis-sold LOBO loan complaint? If you have been mis-sold a hidden swap (or fixed rate or tailored business loan) there a number of possible solutions.  These include: - attempting to negotiate with the bank or financial adviser;- complaining to the bank or financial adviser;- complaining to the Financial Regulator and/or the Financial Ombudsman Service;- sending a letter before claim, issuing legal proceedings at Court, and litigating against the bank or financial adviser;- assisting you in preparation of evidence to support your mis-sold loan case;- appointing experts or financial accountants to assess losses and ensure the best chance of success in litigation; and- providing Court representation and advocacy. The initial step may be to attempt to negotiate with the bank and to seek to reach an agreement although this is often very difficult to achieve without threatening and/or commencing legal action. Pre-action advice, information gathering and correspondence is managed by our specialist swaps solicitors who consider the facts of your case, the circumstances the fixed rate loan was sold in and the bank’s position. We then prepare a detailed pre-action letter of claim to start off the negotiations. If negotiation will not resolve a mis-sold swap then litigation will be considered. In the best outcome the contract can be rescinded which means that parties will be put in their original positions before they entered the contract.  ## Why use a specialist LOBO loan solicitor? Our [specialist LOBO mis-selling lawyers](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks.  This experience has been gained not only at other leading city law firms but at the legal and compliance departments of the banks themselves. Our [financial services litigation team](https://lexlaw.co.uk/) will ensure your LOBO loan mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the hidden swap. This usually means a refund of all balancing payments and escaping or recovering the contingent liability (i.e. the break fee which all LOBOs will have). We work to achieve our client’s interests by attempting to negotiate with the banks wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and local authorities in high value banking disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers and have widespread experience in managing claims through redress schemes and complaints through the Financial Ombudsman Service. **Contact our specialist Lender-Option Borrower-Option lawyers for a consultation: ☎ 020 7183 0529 ** --- # Making and Serving a Statutory Demand Source: https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/ *We are expert Statutory Demand solicitors and have years of experience at both issuing and defending statutory demands. Our team have unparalleled experience at serving **statutory demands**, negotiating with debtors/creditors, setting aside statutory demands and both **issuing** and **defending** [winding up petitions ](https://windinguppetitionsolicitors.co.uk/)vigorously at the *[*Royal Courts of Justice*](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice)* (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. * ## What is a statutory demand? A statutory demand is a demand for payment of a debt within 21 days served upon an individual in accordance with [s. 268(1)(a) Insolvency Act 1986](https://www.gov.uk/government/publications/form-sd2r-statutory-demand-under-section-2681a-of-the-insolvency-act-1986-debt-for-liquidated-sum-payable-immediately). It is a document served by a creditor upon a debtor that is intended to prove that the debtor owes the specified sum of money which is over £750. The first legal step to [winding up ](https://windinguppetitionsolicitors.co.uk/)a company or making an individual bankrupt is a [statutory demand](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/) if the debt is for more than £750 or £5,000 respectively. A statutory demand is capable of being served as soon as the debt is due. A process server is recommended for personal service. If a creditor is owed money and wants the debt paid quickly, taking legal advice on serving a statutory demand is recommended. ## How long does a statutory demand last? In addition, if a debtor receives a statutory demand, it is imperative specialist legal advice is sought as soon as possible because you only have 18 days from the time of service to seek the Court’s permission to set aside the statutory demand. Should you apply outside the mandated time period, the application to set aside the statutory demand will only be listed at the Court’s discretion. ## What are the rules of service of a statutory demand? A creditor must still follow the correct rules of service, as incorrect service could be fatal to the debt claim even though serving a statutory demand does not involve the court with no court fees payable. The statutory demand is intended to be relied upon in further legal proceedings against a debtor and which ought to: - give financial details of the claim, along with interest calculated to the date of the demand; - be served on you the debtor personally (via process server) or by post; and - tell the debtor what to do to comply with the statutory demand, have it set aside and the consequences of doing neither. ## Why should a creditor serve a statutory demand? The advantages of serving a statutory demand include: - a statutory demand can be a more cost-effective and speedier method to ensure the debtor pays the [debt ](https://windinguppetitionsolicitors.co.uk/debt-recovery/)rather than instigating court proceedings (initially anyway); - the statutory demand process does not involve the Court, there are no added court fees or delays seeking listings of applications (unless the debtor challenges the statutory demand e.g. if the debt is disputed); - a statutory demand starts the time running for a debtor to honour its debts, as once served, the debtor has 21 days within which to pay the debt; - the demand carries a threat of bankruptcy (or [winding-up ](https://windinguppetitionsolicitors.co.uk/)if served upon a company), and could focus the mind of a debtor to ensure re-payment of the sums is expedited or encourage engagement in settlement negotiations. ## What are the disadvantages for a creditor serving a statutory demand? A statutory demand can only be served if the debt is for £5,000 or more (for an individual). A creditor must consider ongoing trade relationships and consider whether serving a statutory demand would affect its business relationship with the debtor. A creditor cannot serve a statutory demand for an unliquidated debt i.e. a debt for as yet an unknown or unquantifiable sum. If the debt is disputed on genuine grounds, there are significant risks to a creditor of serving a statutory demand as normal court proceedings would instead be the proper forum to hear the dispute. Although (depending on the facts of the case) serving a statutory demand is not overly expensive (compared to litigation), if the debtor cannot pay, then the next step is to present a bankruptcy petition against them, which will increase costs. There are specific rules for serving a statutory demand and presenting a bankruptcy petition, therefore it is important to seek legal advice at the outset, because if a mistake is made in service, then this will delay or even prevent the re-payment of the debt as well as mean you could be liable for the debtor’s legal costs in defending the claim. ## Serving a Statutory Demand for a Court Judgment Debt (CCJ) *Your Powerful Path to Debt Recovery* When a court judgment is obtained in your favour, you can deploy the mighty tool of a statutory demand based on that very judgment for efficient debt recovery. This approach not only carries substantial weight but also proves cost-effective, making it an optimal choice. By leveraging the authoritative stance of a formal court judgment, the statutory demand debt becomes impervious to disputes over the debt, removing any doubts about its legal standing. This shields you from the risks of an application to set aside the statutory demand or an injunction, unless there's a specific challenge to the judgment itself. Opting for a statutory demand rooted in a court judgment allows you to swiftly and seamlessly enforce the ruling. Unlike relying solely on high court enforcement officers, this method provides you with prompt insights into the debtor's financial capacity to fulfill their obligations. Time is of the essence, and this approach expedites the entire debt recovery process. Even the most evasive debtors will find it difficult to evade their responsibilities when faced with a well-crafted statutory demand based on a judgment debt. Non-compliance with such a demand carries severe repercussions, including the initiation of winding-up proceedings against corporate entities or the instigation of bankruptcy proceedings against individuals. As a result, a statutory demand backed by a court judgment stands out as an exceptionally effective and cost-efficient strategy for reclaiming outstanding court judgment debts. We specialise in providing a robust debt recovery solution by harnessing the power of statutory demands. Our track record speaks for itself, as we have helped hundreds of clients successfully regain their debts for decades. It's your turn to benefit from our expertise and experience. Allow us to deftly navigate the intricate realm of debt enforcement, maximising your chances of a triumphant recovery. With us handling the process, you can focus your attention on what truly matters to you. Take a decisive step towards reclaiming your court judgment debts today. Get in touch with us to explore how our potent statutory demand solution can expedite your debt recovery journey. Please note that a tailored approach can be adopted and a stat demand for a CCJ against a company is not strictly always necessary and a non-stat demand can be served. ## A step-by-step guide to drafting a statutory demand The format of a statutory demand must follow the guidelines set out in the [Insolvency Rules ](http://www.legislation.gov.uk/uksi/1986/1925/contents/made)2006.   Following [Rule 10.1 Insolvency Rules 2016](http://www.legislation.gov.uk/uksi/2016/1024/article/10.1/made), the contents of a statutory demand are as follows: - headed either “Statutory demand under section 268(1) (debt payable immediately) of the Insolvency Act 1986” or “Statutory demand under section 268(2) (debt not immediately payable)”; - provide identity details for the debtor; - has the name and address of the creditor; - contains a statement of the amount of the debt (which must be over £750), and the consideration for it (or, if there is no consideration, the way in which it arises); - if the demand is made under section 268(1) and founded on a judgment or order of a court, the date of the judgment or order and the court in which it was obtained; - if the demand is made under section 268(2), a statement of the grounds on which it is alleged that the debtor appears to have no reasonable prospect of paying the debt; - if the creditor is entitled to the debt by way of assignment, details of the original creditor and any intermediary assignees; - has a statement that if the debtor does not comply with the demand bankruptcy proceedings may be commenced; - provides the date by which the debtor must comply with the demand, if bankruptcy proceedings are to be avoided; - a statement of the methods of compliance which are open to the debtor; - a statement that the debtor has the right to apply to the court to have the demand set aside; - a statement that rule 10.4(4) of the Insolvency (England and Wales) Rules 2016 states to which court such an application must be made; and name the court or hearing centre of the County Court to which, according to the present information, the debtor must make the application (i.e. the High Court, the County Court at Central London or a named hearing centre of the County Court as the case may be); - a statement that any application to set aside the demand must be made within 18 days of service on the debtor; and - a statement that if the debtor does not apply to set aside the demand within 18 days or otherwise deal with this demand within 21 days after its service the debtor could be made bankrupt and the debtor’s property and goods taken away. ## Template statutory demand forms in Word format A creditor issues a statutory demand by completing one of the four template statutory demand forms (Forms SD 1; SD 2; SD 3 or SD 4). The following are the three current blank statutory demand forms which can be downloaded Microsoft Word format. If it is your intention to use one of these forms you should [take expert legal advice](https://lexlaw.co.uk/) to ensure the correct form is used and that the form is set out correctly. Any mistakes may result in serious costs consequences which may exceed the amount of debt sought. There are also other considerations such as the solvency of the company or individual, and whether the debt is disputed in any way. Note: amendments made need to be made to HMCTS’ standard template Form SD 2, therefore it is crucial that [legal advice](https://windinguppetitionsolicitors.co.uk/expert-advice/) is sought before serving a statutory demand. Demand Immediate Payment of a Debt from a Limited Company Statutory Demand under section 123(1)(a) of the Insolvency Act 1986 [Blank Statutory Demand Form (Form SD 1)](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2019/04/sd3-eng-1.doc) Debt for Liquidated Sum Payable Immediately Statutory Demand under section 268(1)(a) of the Insolvency Act 1986 [Blank Statutory Demand Form (Form SD 2)](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2019/04/sd2-eng-4.doc) Debt for liquidated sum payable immediately following a judgment or order of the court Statutory demand under section 268(1)(a) of the Insolvency Act 1986 [Blank Statutory Demand Form (Form SD 4)](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2019/04/sd4-eng-1.doc) Debt payable at future date Statutory demand under section 268(1)(a) of the Insolvency Act 1986 [Blank Statutory Demand (Form SD 3)](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2019/04/sd3-eng-1.doc) ## Instruct expert insolvency solicitors to recover your debt We are lawyers that [specialise in recovering unpaid debts](https://windinguppetitionsolicitors.co.uk/debt-recovery/) from individuals or companies so we know the best way to get your unpaid debts paid up quickly. This may involve Insolvency or Litigation proceedings. To date, we have a 100% success rate and all of the petitions we have issued have been resolved in our client’s favour. This has also meant that the petitioned company or individual has paid our fees. Luckily for our clients this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs. As a result of our success we are now able to offer clients a proactive debt recovery package for a small fixed fee (which is likely to be refunded!). ## Specialist statutory demand lawyers We are expert Statutory Demand solicitors and have years of experience at both issuing and defending statutory demands. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending [winding up petitions](https://windinguppetitionsolicitors.co.uk/) vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Debt Recovery Source: https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/ *We provide a no cost initial case review to establish whether or not we can help you in your debt recovery action. Our lawyers specialise in recovering unpaid debts from individuals and companies so we know the best way to get your unpaid debts recovered quickly which may involve insolvency proceedings, litigation or settlement out of court.   * *To date, we have a 100% success rate and all of the petitions we have issued have been resolved in our client’s favour. This has also meant that the petitioned company or individual has paid our fees. Luckily for our clients this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs. * ## Do I need to follow the pre-action protocol for debt claims? If you are a creditor (business, sole trader or public body) claiming payment of a debt from an individual (including a sole trader) then you are obliged to comply with the[ Pre-Action Protocol for Debt Claims](https://www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/debt-pap.pdf), which came into force from 1 October 2017. This does not apply to business to business debts (unless the person who owes money is a sole trader). The creditor must be a “business” claiming payment of a debt from an individual. “Business” is not defined in the Debt Protocol, therefore a creditor must be advised whether they are considered a business or not- guidance on this point is elaborated upon in *Financial Services Authority v Anderson* [2010] EWHC 599 (Ch). ## What are the sanctions for not complying with the pre-action protocol for debt claims? If you as a creditor business is owed money by an individual debtor (for example for unpaid fees), it is recommended that you seek legal advice from specialist debt recovery solicitors. Legal advice is recommended given that failure to follow the specific pre-action steps could lead to the court imposing sanctions on the non-compliant party. ## If a debtor owes a debt why should a creditor follow the pre-action protocol? The pre-action debt protocol is designed to promote early communication between the creditor and the debtor which enables an early exchange of information about the debt which will assist in identifying what the issues are in dispute. Following the pre-action protocol may also be a more cost-effective way of securing payment of a debt without going to court. Following the pre-action protocol also means other options can be pursued first before the nuclear option of court proceedings, such as agreeing to a repayment plan or utilising alternative dispute resolution such as arbitration, mediation or without prejudice discussions. ## Letter of Claim in debt recovery claims Before court proceedings are commenced, a creditor should consider sending a Letter of Claim to the debtor. The Letter of Claim should contained the following information: - the amount of the debt; - whether interest or other charges are continuing; - where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed; - where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor; - where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom; - if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered; - details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options; - the address to which the completed Reply Form should be sent; - enclose an up-to-date statement of account for the debt, which should include details of any interest and administrative or other charges added; - enclose the most recent statement of account for the debt and state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since that statement of account was issued, sufficient to bring it up to date; - where no statements have been provided for the debt, state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since the debt was incurred; - enclose a copy of the Information Sheet and the Reply Form at Annex 1 to the [Pre-action Protocol for Debt Claims](https://www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/debt-pap.pdf); and - enclose a Financial Statement form (an example Financial Statement is provided in Annex 2 to the [Pre-action Protocol for Debt Claim](https://www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/debt-pap.pdf)s – the Statement is part of the Standard Financial Statement and can be downloaded from sfs.moneyadviceservice.org.uk). ## Court Proceedings for debt claims If after following the [pre-action protocol](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) (and submitting a [Letter of Claim](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/)) or after [issuing a statutory demand](https://windinguppetitionsolicitors.co.uk/issue-statutory-demand/), the debtor has still neither paid the debt that is due nor negotiated a repayment plan (or responded at all), then the next option would be to issue a County Court claim against the debtor. The debtor will then have 14 days in which to respond to the Court (i.e. acknowledging service of the claim and notifying the Court whether they intend to contest the debt or not). ## How we can help you Our team is made of [highly experienced](https://windinguppetitionsolicitors.co.uk/) and tough negotiators that will fight to get the best results for our clients. We have years of experience of negotiating with creditors and debtors alike from large multi-million pound cases to smaller matters with equally large consequences for the person involved. ## We represent you at Debt Recovery Court Hearings Although we are based in the legal heart of London, operating as the only law firm based in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/) (Inns of Court), we provide comprehensive nationwide coverage to represent you at any debt recovery hearing at any Court. Our team of solicitors and barristers will prepare the Claim Form and Particulars of Claim for you. We will represent you at the debt recovery hearing and will provide our own barristers or external local counsel to any hearing across the country. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our debt recovery team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our debt recovery team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Instruct Specialist Debt Recovery Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Step-by-Step Guide: How do I Start a Professional Negligence claim? Source: https://lexlaw.co.uk/guide-to-starting-professional-negligence-claim-pre-action-protocol-no-win-no-fee-advice/ *In all professional negligence claims the *[*Civil Procedural Rules*](https://www.justice.gov.uk/courts/procedure-rules/civil)* provide that before commencing a claim, certain procedural steps must be followed (depending on which type of professional you intend to sue). * *What follows is a step-by-step guide for a claimant on how to start a professional negligence claim. If the steps are not followed, a court is likely to criticise the defaulting party and there could be potential adverse costs consequences. * *If you have suffered financial loss at the hands of a professional who has failed to act to the requisite professional standards, we can assist you. [Our professional negligence team](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) have assisted many high net worth individuals and SME businesses obtain compensation from negligent professional advisers such as [Accountants](https://professionalnegligenceclaimsolicitors.co.uk/compensation-negligent-accountants-financial-tax-advisors/), [Architects](https://professionalnegligenceclaimsolicitors.co.uk/riba-property-expert-no-win-no-fee-advice-claims/), [Builders](https://professionalnegligenceclaimsolicitors.co.uk/negligent-builder-construction-defects/), Construction and other Engineers, [Financial Advisers](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/), [Lawyers](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/), [Surveyors](https://professionalnegligenceclaimsolicitors.co.uk/rics-property-surveyor-expert-valuer-compensation/), [Tax Advisers](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/) and Valuers.* ## What is professional negligence? [Professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) is the failure to act with the duty of care expected by a reasonable professional of that profession. Duties of care can arise by contractual arrangement or by common law tort. The professional must conduct him or her self to the professional standard commonly held by those in the same profession. ## Which Professionals can be Sued for Negligence? A professional is defined by the courts as an individual, firm or company who have expertise and exercise kill in the services they offer and provide. The list of professionals who can be sued is extensive. We can assist clients who have suffered personal or financial loss due to a duty being breached by members of the following professions. #### Claims against Legal Professionals - Solicitors; - Barristers; - Legal executives; - Licenced coveyancers; - Patent attorneys; - Trade mark attorneys; - Costs lawyers; - Notaries; and - Chartered accountants. #### Claims against Professionals in the Property Industry - Architects; - Chartered surveyors; - Planning consultants; - Quantity surveyors; and - Valuers. #### Claims against Professionals in the Finance sector - Accountants; - Auditors; - Actuaries; - Financial advisers/IFAs; - Insurance brokers; - Lenders; - Stockbrokers; - Tax advisers; and - Valuers. ## What is the Pre-Action Protocol for Professional Negligence Any party to litigation or any party contemplating litigation has to follow the [Civil Procedure Rules 1998 (the CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules). As a result, the provisions of the CPR are applicable, in particular the [Pre-Action Protocol for Professional Negligence (professional negligence PAP)](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). The new pre action protocol for professional negligence came into effect in May 2018, on which date claims to be issued from then must comply with. The parties to litigation are encouraged to try to settle any claim without issuing formal proceedings in court. The PAP sets out the framework to be followed and encourages an exchange of information and a set timetable, which both parties must comply with to encourage early settlement without the need for a costly court process. ## When does the professional negligence PAP apply? The professional negligence pre action protocol applies to all claims against legal professionals, accountants, financial advisers, auditors and certain other professionals. But the PAP does not apply to claims against construction professionals, (e.g. architects, engineers and quantity surveyors) as the [Pre-action Protocol for Construction and Engineering Disputes](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_ced) is applicable instead. It also does not apply against healthcare professionals (see the [PAP for the Resolution of Clinical Disputes](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_rcd)) or in defamation cases (see the [PAP for Defamation Claims](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_def)). ## First step: The Preliminary Notice A claimant is required to notify all potential defendant(s) in writing as soon as it decides that there is a reasonable chance of a claim for negligence by submitting a preliminary notice which is required to: - identify the claimant and any other parties; - contain a brief outline of the prospective claim; - provide a general quantification of the financial value of the claim; - request that the professional inform their professional indemnity insurers (if any, NB law firms are most likely to have professional indemnity insurance). The defendant is required to acknowledge receipt of the letter within 21 days of receiving it. If the defendant fails to do so once the preliminary notice (or Letter of Claim) is received then this may invalidate their insurance policy. ## Second Step: Letter of Claim #### What is a Letter of Claim? When a claimant has decided that there are grounds for a professional negligence claim, then it should send a Letter of Claim to the professional which amounts to a notice of intention to commence legal proceedings. It is recommended that the assistance of [specialist professional negligence lawyers](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) is sought for this correspondence as this is an important letter and if not handled correctly can lead to a reduced chance of obtaining a settlement or reduced prospects at trial especially if the subsequent Particulars of Claim (which is a statement of case) differs from the Letter of Claim in which case the court has the discretion to impose sanctions. #### What should a Letter of Claim include? The professional negligence pre-action protocol states that the Letter of Claim should include: - the identities of any parties involved in the dispute, or any related dispute (it is important to identify any and all correct defendants including successor entities before the limitation period expires); - a chronology containing key dates of the facts on which the claim is based, together with copies of all key documents; - reasonable requests which the claimant needs to make for documents held by or in control of the professional; - any details of the allegations made by the claimant against the professional; - an estimate of the financial loss caused to the claimant by the alleged negligence, including details of how the loss is calculated (in any claim this figure will likely be the subject of expert evidence, for example, consequential losses or loss of chance are difficult to quantify at the outset of a claim without expert evidence therefore an estimate will suffice at this stage, for example *“in excess of £2 million”*); - confirmation of whether or not an expert has been appointed (expert evidence is an important part of any claim in litigation and as experienced professional negligence lawyers we have forged many contacts with leading experts in different industries from forensic accounts to hedging derivatives experts); - a request that a copy of the Letter of Claim be forwarded on receipt to the professional’s indemnity insurers (if they have any); - an indication of whether you agree to refer the dispute to adjudication. If so, propose three adjudicators or seek a nomination. If you don’t wish to refer the dispute to adjudication, you should give reasons. ### Third Step: Letter of Acknowledgment Acknowledgment to the letter of claim is required by the professional within 21 days. If the defendant does not do so, the court has the discretion to levy sanctions. ### Fourth Step: Investigations by the defendant After 90 days from the date of the Letter of Acknowledgment, the professional should investigate the claim and respond to the claimant by providing a Letter of Response and if it so wishes a Letter of Settlement. ### Fifth Step: Response to the Letter of Claim Once a defendant has completed the investigation (i.e. within 90 days of the Letter of Acknowledgment, unless an extension of time has been agreed), a Letter of Response, a Letter of Settlement, or both will be sent by the professional’s legal team. ### Sixth Step (1): Letter of Response This is letter is sent in open communication responding to the claimant's allegations. Whilst it does not have the formal status of a pleaded Defence (which is a statement of case), the court has the discretion to impose any sanctions if it is materially different from the Defence in any court proceedings. In a case with good prospects which was well set out in a Letter of Claim, the Letter of Response or a separate Letter of Settlement may offer the possibility of alternative dispute resolution (ADR) such as mediation or a without prejudice meeting. This could lead to resolution of the dispute. If not then you will need to [take advice](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) as to whether to reply further or to issue a Claim Form at court (the latter of which can be an important tool in focusing the parties on the resolution of the claim especially in circumstances where the professional is not taking meritorious allegations against it seriously). ### Sixth Step (2): Letter of Settlement According to the professional negligence pre-action protocol (PAP) (particularly at para 9.3.1), a Letter of Settlement can be sent in various forms, including: a letter sent in open communication; a without prejudice letter (which means the contents of which cannot be later admitted as evidence in the court case where the claim does not settle); a “without prejudice save as to costs “(WPSATC”)” letter; or an offer made pursuant to [CPR Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36), commonly referred to as a “Part 36 offer”. ### Seventh Step: Alternative Dispute Resolution (“ADR”) Ultimately, many professionals and defendant companies and firms will not want a long court case with bad publicity and negative judicial public chastisement of poor conduct, therefore ADR is ordinarily considered at every stage of the claim/defence to the claim. The court has a wide ambit to levy sanctions upon parties for costs if they are found to have behaved unreasonably by refusing to engage in ADR. The court is There are several forms of ADR, which includes: #### Mediation The parties to the claim will mutually select a mediator and a venue for the mediation. Mediation often occurs in professional negligence claims and can result in a successful resolution of the dispute, either during the course of the mediation itself or in follow-up negotiations post- mediation. [Our specialist lawyers](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) have attended many mediations (with one in particular lasting over 24 hours straight!) alongside our clients, industry leading experts and the UK’s top QCs to achieve fantastic settlement results. #### Arbitration Arbitration is generally not deployed in professional negligence claims (and certainly does not occur as often as Mediation). #### Early Neutral Evaluation This is a rare form of ADR in the majority of professional negligence claims and is usually only offered by defendants facing a weak claim from an inexperienced litigator or litigant in person. #### Adjudication Adjudication is the binding determination of the claim (unlike for Early Neutral Evaluation which is non-binding), or on particular issues (for example on whether a duty of care is owed in the first place or whether the claimant has failed to mitigate its’ loss(es)) by an independent third party (the Adjudicator). Adjudication offers flexibility in that the parties are able to agree the precise terms of the adjudicator’s reference and whether or not the adjudicators’ decision will be binding. Adjudication is relatively rare (except for in construction related disputes where Adjudication is more common). However after the completion of the [Adjudication Pilot for Professional Negligence Claims](https://pnba.co.uk/wp-content/uploads/2016/05/Professional-Negligence-Adjudication-Pilot-Pack-Launch-date-25-May-2016.pdf) supported by the Ministry of Justice, the requirement to consider whether the dispute is suitable for adjudication has been added to the professional negligence PAP in May 2018. In May 2019, the [Professional Negligence Bar Association](https://pnba.co.uk/) launched a voluntary adjudication scheme for professional negligence disputes. This allows for disputes to be determined by an Adjudicator who can be either nominated by the Chairman of the PNBA (Caroline Harrison QC) or by the parties. The Adjudication scheme rules can be downloaded here. Adjudication is generally best suited to low value claims or claims where the facts and legal issues involved are relatively straightforward. #### Ombudsman schemes The [Legal Ombudsman](https://www.legalombudsman.org.uk/) (“LeO”) and the [Financial Ombudsman Service ](https://www.financial-ombudsman.org.uk/)(“FOS”) have their own complaints mechanisms for individuals and small businesses. Both the LeO and the FOS have the ambit to make determinations which will be binding on the professional if accepted by the complainant (the claimant). However, there are pitfalls in solely relying on Ombudsman schemes as for example, the Legal Ombudsman cannot award compensation of more £50,000 (but can order the refund of legal fees paid by the complainant which could be in excess of £50,000). Moreover, the Financial Ombudsman is not mandated to award compensation in excess of £150,000 plus interest. Further, the FOS for example have strict jurisdictional criteria before considering any complaint (for example turnover of the complainant company, number of employees and also the FOS has its own time limits in which a complaint can be brought). ## What are the time limits for a professional negligence claim? Proceedings for professional negligence claims must be brought within time limits, otherwise the claim is statute barred. The limitation period is 6 years from the accrual of the cause of action ([*section 2, Limitation Act 1980*](https://www.legislation.gov.uk/ukpga/1980/58)). However, if six years have passed since the date of negligence but a claimant has only just discovered the effect of latent damage, then the limitation period may be extended to three years from the date of knowledge of the material facts ([section 14A, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58)). In any event, legal representation should be sought immediately upon an act of negligence to prevent claims from being time-barred. ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://lexlaw.co.uk/contact-us/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # Savaira Khan Source: https://lexlaw.co.uk/savaira-khan/ Savaira completed her schooling to a very high standard and then joined our firm as a paralegal apprentice with the ambition of qualifying as a legal executive and ultimately as a solicitor. She assists the firm's litigators in the day to day case management tasks. She often finds herself assisting with court management including attending the court on behalf of the firm to file and issue applications and claims. --- # Alternative Dispute Resolution Source: https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/ *Our multi-disciplinary practice is made up of *[*specialist lawyers*](https://lexlaw.co.uk/our-people/)* that have market-leading experience in handling *[*multi-million pound litigation cases *](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)*and bringing complex claims to settlement through alternative forms of dispute resolution ("ADR"), where necessary. * Our expert litigation and team advise our clients as to the different forms of resolving their disputes, which can often be faster and less costly. These include: - Negotiation - Arbitration - Mediation - Med-arb - Executive Tribunals - Conciliation - Early Neutral Evaluation - Adjudication - Expert Determination - Dispute Review Board ## Negotiation This usually involves a without prejudice discussion between parties, to attempt to reach an out-of-court settlement. In the instance that a negotiation does not succeed, without prejudice discussions prevent either party from using what is said during the negotiation as evidence at court. Importantly, this does not require third party assistance and as such is very flexible and can save parties significant costs. Similarly, if a settlement cannot be made, they are able bring the negotiation to an end at any time. ## Arbitration This is usually a contractual agreement between parties whereby the parties present their best cases to an independent arbitrator. The arbitrator, acts in a judicial fashion as makes a legally binding award, to finalise the dispute. As this is private form of ADR, parties have a duty of confidentiality and therefore awards are not publicly available. ## Mediation Comparatively, mediation makes use of a neutral third party to find an agreement between parties, utilising their expertise. The mediator importantly does not form a decision on the case, they are there simply to facilitate an agreement. As mediation is a non-binding form of ADR, both parties retain control as to whether they agree to settle or not. This may be of benefit if the parties want to maintain commercial relationships. ## Med-arb This is a hybrid form of ADR, between mediation and arbitration, that may be used where a mediation is not successful. Where the parties to mediation fail to agree a settlement, the mediator may become an arbitrator and issue a final and binding decision on the case. As this form of ADR provides a legally binding decision, it can save costs as prevents the need for court proceedings. ## Executive Tribunal Otherwise known as a min-trial, an executive trial comprises of both parties presenting their best case to a panel. The panel is made up of senior executives from either party and an independent chairperson, who after hearing either sides best case, attempt to resolve the matter. This is a faster process than litigation and whilst it does not provide a legally binding decision, it can if both parties request it. ## Conciliation This is very similar to mediation, however in this instance the conciliator actively assists the parties to settle the dispute. At some point during this process the conciliator will provide the parties with a non-binding proposal. ## Early Neutral Evaluation Similar to mediation, a third party is instructed by the parties to assess the facts of their case and provide a non-binding opinion on either the case as a whole, or part of it. This can be beneficial prior to negotiation, as it raises the salient issues, which can then be negotiated without the need for a third party. ## Adjudication If you are party to a contractual dispute, an adjudicator can provide a decision on it, as and when it arises. This effectively provides the parties disputing the contract, with a binding decision pending agreement of the parties altering its effect. This procedure lasts 28 days and generally avoids the need for further litigation, limiting disruption and cash flow problems which may otherwise ensue. ## Expert Determination In this instance an expert is appointed to provide a legally binding decision, usually on a complex technical issue. Importantly, the expert's decision is an evaluation and as such has different legal characteristics to an arbitrators award. Again, this provides a faster and less costly legally binding decision and is less formal than arbitration or litigation. ## Dispute Review Board A dispute review board usually form during large-scale construction projects. A panel, which usually consists of three neutral parties, attend recurrent meetings and provide interim binding decisions in order to maintain fluidity in these projects. This can prevent disputes arising, encouraging cooperation between parties, creating a culture of claim-avoidance. ## Why you should consider ADR **Time** - Whilst pursuing litigation can take months or years, most forms of ADR can be undertaken within a few days. This can pose a significant saving of time for your case. **Costs** - Similarly, due to the time savings, most matters can be resolved efficiently saving both sides significant costs. **Control** - With ADR the parties have control over how they proceed with their matter, as they can decide which form best suits their interests. For example, whether or not they want the decision to be legally binding. **Confidentiality** - The aforementioned procedures are usually conducted confidentially, which enables full and frank negotiations. **Business Relationships** - Pursuing ADR as a form of reaching a settlement increases the likelihood of maintaining relationships, as settlements are reached with consent of both parties. **Requirement** - Parties in contentious disputes are [required by the Courts](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) to attempt ADR and may make adverse costs orders against parties which refuse. ## Book an Initial Consultation with Our Expert Litigation Lawyers Our specialist lawyers have a proven record of successfully using various forms of alternative dispute resolution, in order to successfully resolve disputes in a cost-effective manner for our clients. --- # Arbitration Source: https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/ *Our multi-disciplinary practice is made up of *[*specialist lawyers*](https://lexlaw.co.uk/our-people/)* that have market-leading experience in handling *[*multi-million pound litigation cases *](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)*and bringing complex claims to settlement through alternative forms of dispute resolution ("ADR"), where necessary. * Our s[pecialist commercial arbitration lawyers](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) have market-leading experience of handling multi-million pound arbitration and bringing complex claims to settlement. We understand the potential benefits of arbitration and how it can be a valuable alternative to litigation, particularly where confidentiality and privacy are of paramount concern. Our clients are confident that their case receives high-level personal care and supervision and all of our commercial arbitration cases are conducted by small, partner-led teams. If you have a dispute that is subject to an arbitration clause, our team of alternative dispute solicitors and barristers have extensive experience in overseeing all manner of arbitration. We provide authoritative advise on single issue disputes to high value, complex cross-border disputes for individuals, SMEs and companies. Our firm is unique in that we are based in a leading set of barristers chambers with access to top level QCs and we are based opposite the [International Arbitration Centre](https://www.int-arb.com/). ## What is Arbitration? Arbitration is a means of resolving disputes as an alternative to litigation, it is a type of alternative dispute resolution (ADR). It is based on the consent of the parties involved: every party involved must agree to submit the dispute for arbitration. The decision of an arbitral tribunal is conclusive and enforceable, much like a judgement. ### How is Arbitration Different from Litigation? The following are key differences between arbitration and litigation: - Contractual foundation: arbitration is based on contract with the rights and duties of the parties to arbitrate arise from the contract itself. - Location: the parties can choose the location of arbitration proceedings. - Appointment of the arbitrator/panel: the parties are able to choose the arbitral tribunal. - Primacy of confidentiality: arbitration is ordinarily confidential - Finality of the decision: a decision by an arbitral tribunal is usually final and cannot be appealed (however a court may set aside an award in exceptional circumstances). - Enforceability: tribunal decisions are widely enforceable given the primacy of a number of conventions such as the New York Convention. ## What are the Advantages of Arbitration? In disputes where the subject matter is highly technical, arbitrators with an appropriate degree of expertise can be appointed (as opposed to litigation). The arbitration process on the whole is faster than court proceedings. Arbitration may be cheaper and offer more flexible outcomes for companies. Arbitral awards are generally non-public and can be made confidential. Arbitration awards are generally easier to enforce in other nations than court judgments. If you are successful in arbitration, there are limited avenues for the other party to appeal an arbitral award. ## What is an Arbitration Agreement? A contract that stipulates that disputes between the parties will be settled by arbitration as opposed to litigation is known as an arbitration agreement or clause. Thus, the parties consent to submit disputes between them for binding arbitration by one or more individuals of their choosing (or by a procedure outlined in the arbitration agreement) following a confidential hearing process. An arbitration clause may be included as a stand-alone agreement or, more frequently, as a part of a larger contract. Numerous types of contracts have provisions for arbitration. Such a clause is a stand-alone contract that is not a part of the underlying or main contract, and it will not be deemed invalid, nonexistent, or ineffective only because the primary agreement has flaws. Additionally, it could be governed by a distinct set of rules than the main contract. ## Arbitration Rules and Institutions Institutional arbitration rules are typically included in arbitration agreements. There are well-established arbitration norms, which are enforced by arbitral organisations including the International Chamber of Commerce (ICC), the Singapore International Arbitration Centre (SIAC), and the London Court of International Arbitration (LCIA). These are frequently included by adopting the institution's standard arbitration clause, but this is not necessary; in most cases, a specific reference to the rules the parties intend to use would do. There are numerous arbitral institutions and various, slightly different sets of arbitration rules. The fundamental provisions for initiating arbitration, forming the arbitral tribunal, and outlining the steps to be taken in the arbitration up until the final award are typically contained in institutional rules. When parties need immediate relief before the tribunal is established and without having to appear in court, some incorporate provisions for an expedited procedure or the appointment of an emergency arbitrator. The selected arbitral institution may be requested to manage an arbitration in addition to supplying rules. Most arbitral institutions charge a fee for their services (albeit not for the use of its rules), but using an arbitral institution to manage the arbitration might have significant benefits. The level of regulation differs amongst institutions. Even if parties choose not to abide by the rules of an arbitral institution, they may still seek to establish independent arbitration rules, such the UNCITRAL Arbitration Rules, or arbitration rules tailored to a particular industry. The arbitration legislation of the venue of arbitration may establish default rules for the process in the absence of rules and fill in any other voids that may exist in the parties' arbitration agreement. For instance, the *Arbitration Act 1996* (“**AA 1996**”) will mostly fill in the gaps where the arbitration's seat is in England or Wales, but doing so may require filing an application to the English court. ## Location of Arbitration Subject to any elements of the parties' arbitration agreement that are not in conflict with required provisions of legislation, the law of the "seat" of the arbitration will typically control the procedural aspects of the arbitration. For instance, in England and Wales, where the "seat of the arbitration" is in England, Wales, or Northern Ireland, the requirements of Part 1 of the AA 1996 apply (section 2, AA 1996). The seat will not necessarily be in accordance with the law chosen to govern the arbitration agreement or the main agreement in which the arbitration clause is found. The primary agreement and the arbitration clause contained inside it, for instance, might be governed by French law and have London as its seat. Arbitration is governed by legislation in the majority of nations. Although there has been some harmonisation as a result of the work of the United Nations Commission on International Trade Law (UNCITRAL), the laws are not necessarily the same. The UNCITRAL Model Law had a significant influence on the AA 1996. ## Initiating Arbitration The following inquiries should be made if arbitration is required to begin: - Is there a dispute? - Is there a deadline to start arbitration? - What steps must be taken to start the arbitration? ## Is there a dispute? Only after a dispute has developed between the parties should a party request arbitration. Starting arbitration before then is premature. For the purposes of English arbitration law, an acknowledged or inadmissible monetary claim that has not been satisfied counts as a dispute, while other countries may have alternative rules. ## Is there a deadline to start arbitration? The same time restrictions that apply to legal proceedings also apply to arbitration. As an alternative, an arbitration clause (or rules) may: - Place a deadline on when arbitration procedures must begin. - Specify that if arbitration is not started within the allotted period, a claim will be barred or void. Such time-bar provisions in contracts are strictly interpreted against the party relying on them. Under section 12 of the AA 1996, a party in England may petition the court for an extension of a contractual time limit (but not a statutory time limit). Before making an application to the court under section 12 of the AA 1996, certain arbitration rules provide the tribunal or an arbitral institution authority to extend contractual time limits. The AA 1996 gives the parties the freedom to decide when an arbitration should be regarded as starting. Section 14 of the AA 1996 lays out guidelines to establish when the arbitration has begun in the absence of agreement. ### What steps must be taken to start the arbitration? The arbitration agreement or the arbitration rules included in that agreement may contain a specific clause that governs how the arbitration will proceed. Steps to get started could include: Making a claim; selecting an arbitrator by name and with his or her previous consent; Notifying the opposing party of the intent to arbitrate and the name of any arbitrator chosen or proposed. A party must serve a notice in accordance with section 14 of the AA 1996 to begin arbitration in the absence of any special provisions in the arbitration agreement. If the parties don't follow the terms of the contract, the arbitration may not be able to proceed or the arbitrator not having jurisdiction in the matter (*Lafarge (Aggregates) Ltd v Newham London Borough Council [2005] EWHC 1337 (Comm)*). If a limitation period expires before the problem is fixed, this is a serious problem. ## What is an Arbitration Notice? A party may begin an arbitration by giving the other side a written notice of arbitration. If the arbitration agreement or applicable arbitration rules contain any explicit requirements as to what the notification must contain, those requirements must be strictly followed. If there are no requirements for the notice's format, the claimant may simply write a letter to respondent stating that the claimant wants to use the pre-arranged arbitration procedure. But the notification should: Comply with the provisions of AA 1996 Section 14, clearly state what the other party is expected to do (for example, to agree the appointment of an arbitrator). Specify in language both explicit and general the issues in dispute to be resolved in the arbitration. Typically, it is best to construct the notification broadly to incorporate all conceivable dispute. Any specified contractual requirements must be followed for service of a notice of arbitration, or in the absence of such requirements, any legally valid method must be used (section 76, AA 1996). ## The Tribunal In general, the arbitration agreement or the arbitration rules that have been integrated into that agreement specify the required tribunal composition and the procedure for appointment. The rules that will apply will be determined by the arbitration law of the "seat" of the arbitration if there is no such stated provision. However, the parties should have regard to: - The express terms in the agreement; - The applicable arbitration rules (the provisions relating to the number of arbitrators and the manner of their appointment shall be incorporated by reference into the arbitration agreement. They might also specify requirements for availability or nationality); - The statute (When the arbitration agreement does not expressly or implicitly address the number and appointment of arbitrators, the provisions of the AA 1996 will take effect. One arbitrator will be chosen, for instance, in cases where the arbitration agreement does not specify the number of arbitrators (section 15(3), AA 1996). Each party shall nominate one arbitrator, and the two appointed arbitrators shall appoint the third, if the arbitration agreement calls for three arbitrators but does not specify how they are to be chosen (section 16(5), AA 1996). If required, the AA 1996 also allows the court to intervene and provide assistance with the appointment procedure (section 18, AA 1996). ### Chair of Tribunal When three arbitrators are selected, one is typically designated as chairman (or presiding arbitrator). In order to maximise efficiency, the arbitration agreement, applicable arbitration rules, or the parties' agreement after the arbitration has started may grant the chairman the authority to make procedural decisions without consulting the other arbitrators. ### Fees and Expenses The arbitrators shall be due fees and expenses, including any necessary travel and lodging charges. If an arbitral institution is involved, a filing fee and other administrative fees might be due. There will also be costs associated with hiring hearing rooms and any appropriate appointing authorities. The amount of costs that must be paid to institutions and arbitrators can differ greatly. There are two typical ways to calculate fees: - Fees based on the amount of time spent (a method used, for example, in LCIA arbitration). - Fees that are partially based on a proportion of the amount in controversy, sometimes taking into account the intricacy of the controversy and other pertinent facts; (a method used, for example, in ICC arbitration). All fees payable should be fixed at the start of the arbitration. It is customary to withhold an award from the parties until any unpaid fees are paid. When the prize is prepared, upon receipt of any unpaid fees, the tribunal or institution will notify all parties that it is ready. Any one or both parties may pay the required payments to accept the reward ### Jurisdiction of the Arbitrators The arbitration agreement between the parties gives the tribunal the authority to resolve disputes. As a result, conflicts that are not covered by the arbitration agreement cannot be decided by the tribunal. Parties are not required to submit these matters to arbitration or to participate in an arbitration that has been requested by another party in this case. Any "award" made by a tribunal in cases not covered by the arbitration agreement will have no legal weight. In England and Wales, a decision may be contested on the grounds that the arbitral tribunal lacked jurisdiction over the dispute (articles 30, 67, and 72(2) (a), AA 1996). ## What are Awards and Challenging Awards? ### Awards An award is similar to a judgement in litigation. It is "final and binding" in the sense that it provides the tribunal with a definitive decision about a claim or issue in the arbitration, with only a limited number of statutory rights to oppose it. The tribunal may issue any of the subsequent awards: - Final award: This award addresses all of the disputed issues. - Partial award: his award addresses a specific point of contention. Where there is a series of partial awards, the last award dealing with all outstanding issues is called the "final award". To make enforcement easier, the terms of a settlement struck by the parties may be incorporated into the award (known as an "agreed award" or an "award by consent"). This is specifically addressed in the AA 1996 (section 51). The tribunal may order, on a provisional basis, whatever relief it could issue in a final award if the parties agree or have made provision for this in the arbitration agreement (section 39, AA 1996). Provisional orders do not have legal force and effect. They are subject to the final determination of the tribunal and any necessary modifications to the final award. Typically, provisional orders will include an order to pay money. The award must: - Be in writing. - Be signed by all assenting arbitrators. - Explain the reasons for award. - Indicate the location of the arbitration and the date the award was given. ### Challenging Awards The deadlines for contesting an award are fairly severe under English law. Normally, a request must be submitted within 28 days after the date of the award (sections 57(4) and 70, AA 1996), albeit the situation can be different if there is another arbitral procedure for appeal or review. Under the AA 1996, awards can be challenged on a number of grounds, including: - **The award is not complete and does not address a point of contention**. In this case, applying to the tribunal is the right course of action (section 57(3) (b), AA 1996). After that, it might be feasible to ask the court to remit or set aside the award due to a substantial irregularity. - **There is a typographical error, clerical ambiguity, or both in the award.** The appropriate action in this case is to apply to the tribunal to have this error rectified (section 57(3) (a)). - A** tribunal without substantive jurisdiction made the award**. In this case, a court application may be submitted in accordance with section 67. - **There has been a serious irregularity affecting the tribunal, the proceedings or the award within section 68.** The applicant must demonstrate that the major irregularity has caused or will cause the petitioner substantial unfairness in each case. In this extreme circumstance, the tribunal "has gone so wrong in the conduct of the arbitration that justice calls out for it to be addressed,"  - **The award contains a legal error.** Under section 69 of the AA 1996, an appeals right may be available in this situation. The legal issue that is to be brought before the English court pursuant to Section 69 must be one of English law (section 82). Just keep in mind that convening the arbitration in London guarantees that English law will be used as the procedural basis for the proceedings. The actual issue shall be settled in line with the contract's governing law or any other applicable legislation. ## Enforcement Arbitral awards rendered in the territory of a state (other than the United Kingdom) that is a party to the New York Convention (“NYC”) may be enforced under Sections 100 to 103 of the AA 1996. No matter where the arbitration took place, all domestic and international awards are enforceable under Section 66 of the 1996 Arbitration Act (AA) (section 2(2) (b), AA 1996). Sections 66(1) and 101(2) of the AA of 1996 allow an enforcing party to request authorization before enforcing the award. If approved, this implies that the award will be enforced in the same way as a court judgement and that the award creditor will have access to all of the enforcement options accessible to judgement creditors under the English Civil Procedure Rules. According to sections 101(3) and 66(2) of the AA 1996, an enforcing party may also ask the court for permission to enter judgement in accordance with the award. The enforcement process is a quick one. Without giving prior warning and on paper, the award creditor requests an order authorising enforcement. If the court issues the order, the award debtor has a specific amount of time to ask for it to be revoked. Section 103 of the AA 1996 outlines the legal justifications for contesting the enforcement of a NYC award. When an application for enforcement is brought according to section 66 of the AA 1996, enforcement may be denied in certain circumstances (see section 66(3) of the AA 1996) or at the court's discretion. ## Arbitration and the Role of Courts in England ### Pre-arbitration The parties have the option to apply to the court for help in resolving problems before the arbitral tribunal is appointed: - Obtaining a stay of proceedings ordered due to a violation of arbitration agreement by an English court (section 9, AA 1996). - Selection of arbitrators (where the parties cannot agree on the arbitral tribunal or there is no default mechanism for appointment). - Extending the deadline for initiating arbitration ### During Arbitration In order to facilitate (rather than supervise) the arbitration, the English courts are permitted to use a range of statutory powers. These are some of their abilities: - Injunctions to restrain court or arbitral proceedings. - Resolving disagreements over the jurisdiction of arbitrators. - Procedures that a tribunal of arbitration cannot impose or implement. For example, issuing a witness summons and enforcing judicial orders - Maintaining the status quo, such as, by providing urgent interim injunctive relief - Extending the deadlines for making the award. - Determining preliminary points of law. (Section 45, AA 1996). - Removing arbitrators and selecting new ones. (Section 24, AA 1996). - Calculating the arbitration's recoverable expenses. (Section 63(4), AA 1996). ### Post Award The courts power include: - Hearing challenges to the award - Enforcement of awards. - Making decisions about arbitrator fees ## City Of London Expert Commercial Arbitration Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. --- # Annabel Clarke Source: https://lexlaw.co.uk/annabel-clarke/ Annabel joined the firm in June 2019 as a paralegal apprentice in the Legal Support team. She is a dedicated member of the firm who is eager to expand on her legal knowledge in order to become a fully qualified lawyer. Annabel handles the firms file closure and archiving procedures, co-ordinates meetings and assists the lawyers in their day to day work. She assists the financial services team and provides a high standard of legal support to our litigation lawyers to ensure we can operate at a high standard. She regularly authors articles on our insolvency specific practice area website, keeping our clients up to date with current UK insolvency law, policy and news. --- # Professional Negligence FAQs Source: https://lexlaw.co.uk/professional-negligence-faqs/ ## Professional Negligence- What is it? Professional negligence is the failure to act with the duty of care expected by a reasonable professional in their profession. Duties of care arise by contractual arrangement or by common law tort. The professional must conduct him or her self to the professional standard commonly held by those in their profession. ## How can I prove my professional negligence claim? A successful claim in professional negligence must satisfy three requirements proved on the civil standard of balance of probabilities: - a duty of care was owed by the professional; - the professional breached this duty; and - the breach caused a loss. ## How do I initiate proceedings for my professional negligence claim? A claim starts by following the [Professional Negligence Pre-Action Protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg), which is contained in the [Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules). The Pre-Action Protocol contains the framework to be followed and encourages an exchange of information and a set timetable.   ## Are there any time limits to bring my professional negligence claim? Proceedings for professional negligence claims must be brought within time limits, otherwise the claim will be statute barred. The limitation period is 6 years from the accrual of the cause of action ([*section 2, Limitation Act 1980*](https://www.legislation.gov.uk/ukpga/1980/58)). However, if 6 years have passed since the date of negligence but a claimant has only just discovered the effect of latent damage, then the limitation period may be extended to 3 years from the date of knowledge of the material facts ([section 14A, Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58)). In any event, legal representation should be sought immediately upon an act of negligence to prevent claims from being time-barred. ## What is my professional negligence claim worth? Damages are awarded in the sum to put the claimant back into the position they would have been in had the breach by the professional not have occurred. Damages are generally assessed from the date of the breach and any damages that are reasonably foreseeable can be claimed. Ordinarily a professional will have professional indemnity insurance to ensure any compensation claim can be satisfied. A professional is required to have indemnity insurance if they are a member of professional bodies such as the [Law Society](http://www.lawsociety.org.uk/) or the [Royal Institution of Chartered Surveyors (RICS)](https://www.rics.org/uk/). ## Who can I bring a professional negligence claim against? A claim can be brought against any professional- the list is extensive. A professional is an individual or a firm who hold themselves out as having expertise and skill in the services they provide. We help clients make a successful professional negligence case after receiving bad advice from: solicitors; barristers; financial advisers; licenced conveyancers; accountants; valuers; IFAs; surveyors; architects; builders; tax consultants. ## Examples of professional negligence Establishing professional negligence is more than being given *“bad advice”*- a claim can be made where a professional fails to perform their responsibilities to the standard expected of them, for example: - **Lawyers**: missed time limits; failure to investigate fundamental evidence; failure to prepare a case with due care; failure to comply with court directions; and providing incorrect legal advice.- **Financial advisers**: failure to advise on the risks of a entering into a financial product; wrongly assessing a client’s attitude towards risk when recommending a (risky) financial product to invest in; and failing to follow instructions provided by a client. - **Surveyors**: failure to discover latent defects such as dry rot, woodworm, a leak; over-valuation of a property; and failure to identify subsidence. - **Conveyancers**: failure to investigate title correctly; failure to discover or warn of restrictive covenants burdening the property; failure to ensure proper planning permissions and building regulations consents obtained. ## Is there a defence to professional negligence? If a claimant suffers damage partly as a result of their own fault, then the court will justly and equitably reduce damages with regard to the claimant’s share in responsibility for the damage. Although contributory negligence is not a complete defence, defendant professionals or their insurers will often allege contributory negligence to reduce the amount of damages payable. ## Is there a Pre-action protocol for professional negligence cases? Both parties are encouraged to attempt to settle the professional negligence claim without issuing formal proceedings in court. The [Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) contains the [Professional Negligence Pre-Action Protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). The protocol sets out the framework to be followed and encourages an exchange of information and a set timetable, which both parties must comply with to encourage early settlement without the need for a costly court process. ## Will I need to go to court? Following the [protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/rules), if there is no settlement at this time, then court proceedings would be issued. However, this again is a lengthy process which can take another year prior to its commencement. As the claimant in this matter you would most likely be called to give evidence along with any other witnesses which we require to provide evidence of the claim. However, most cases are settled prior to this point. ## Can I still sue a professional who is now insolvent? In short yes. Most professionals and businesses in the UK have professional indemnity insurance which can cover compensation claims such as professional negligence. ## Will I be able to afford it? Prior to commencing your claim we can discuss a range of funding options which may be available to you. ## Book an Initial Consultation with our Professional Negligence Lawyers Do you have a claim against a professional? If you want expert legal advice, do not delay in instructing us so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a Conditional Fee Arrangement) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of leading [Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/). ## Instruct Specialist Professional Negligence Solicitors We are a specialist [City of London](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our team have expertise in advising on claims for compensation against professionals that have fallen below the standard expected, which causes clients financial or personal loss. We are experienced in bringing successful claims against negligent solicitors, barristers, financial advisers, insurance brokers, surveyors, valuers, architects, tax advisers and IFAs. --- # Set aside a Statutory Demand Source: https://lexlaw.co.uk/set-aside-statutory-demand-insolvency-legal-advice/ *We are expert [Statutory Demand](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/) solicitors and have years of experience at both issuing and defending statutory demands. We are a specialist [City of London](https://web.archive.org/web/20200622210953/https://www.cityoflondon.gov.uk/Pages/default.aspx) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.* *Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules.* ## What is a Statutory Demand? A statutory demand is a document outlining a creditor’s claim against a debtor.  The [statutory demand ](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/)is intended to be relied upon in further legal proceedings against you (to wind up a company or partnership or to bankrupt an individual) and which ought to: - Provide details of the financial claim, with interest calculated to the date of the demand; - Be served on you as debtor personally or by post; and - Tell you what to do to comply with the demand, have it set aside and the consequences of doing neither. The format must follow the guidelines set out in the Insolvency Rules 1986, but it is not a court document.  Although the demand is dated at the time of issue, it does not expire.  The time limits to deal with a demand only apply from the date of service. ## How can I set aside a Statutory Demand? If you have been served with a [statutory demand](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/), as an individual or a company, you have the right to apply to the court to set it aside, pursuant to  [rule 10.4 of the Insolvency Rules 2016](http://www.legislation.gov.uk/uksi/2016/1024/article/10.4/made). You must act quickly, usually** within 18 days**, to avoid the creditor applying to bankrupt you or wind up your company. ## When must I apply to set aside a statutory demand? It is important to ascertain when the statutory demand was served upon you or your business (and essentially whether it was validly served). An application to set aside a statutory demand must be made within **18 days** from the date the statutory demand was served. ## What if the time limit for a statutory demand has passed? Whilst it would always be advisable to adhere to the deadline and apply to have the statutory demand set aside within the **18 day** window as far as practicable. The Court may consider an application to set aside a [statutory demand](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/) outside the time limit (note: this discretion only applies if the creditor has not requested for a bankruptcy petition to be issued yet). You should seek legal advice as soon as a statutory demand is served upon you otherwise you may not be able to set aside the statutory demand in time. ## How can a Statutory Demand be used against me? If you have an unpaid [statutory demand ](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/)it can be used as evidence to a Court that you are unable to pay your [debts ](https://lexlaw.co.uk/debt-recovery-insolvency-county-court-proceedings-petitions-fixed-fee-lawyers-london/)for the purposes of bankruptcy proceedings. This ground is usually relied upon by creditors when they present a bankruptcy petition or [winding up petition](https://windinguppetitionsolicitors.co.uk/). ## What if I am liable for the debt in the statutory demand? If you agree that the debt is due, debtors in that situation may instruct experienced [insolvency solicitors](https://windinguppetitionsolicitors.co.uk/). They can negotiate a settlement plan with the creditor (or their solicitor if they have legal representation). It is important to try and negotiate a settlement plan within the **18 day** statutory demand period, some options to consider are (note: these options do not constitute legal advice): - installment plan; - consider refinancing or a bridging loan; - offer a voluntary charge against your property to secure the debt; - obtain a personal guarantee from a relative or friend; - negotiate a reduction in the debt to less than £5,000 (therefore the creditor will then not be able to issue a bankruptcy petition); or - apply for an individual voluntary arrangement (to agree an arrangement to pay your debt in installments over a defined time period). ## What is the application process to have a statutory demand set aside? ### 1. Why could a statutory demand be set aside? The Court can set aside a statutory demand if any of the following reasons apply (pursuant to [rule 10.5(5), Insolvency Rules 2016](http://www.legislation.gov.uk/uksi/2016/1024/article/10.5/made)): - the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the [debt](https://windinguppetitionsolicitors.co.uk/debt-recovery/) specified in the statutory demand; - the debt is disputed on grounds which appear to the court to be substantial; - it appears that the creditor holds some security in relation to the debt claimed by the demand, and either [rule 10.1(9)](https://www.legislation.gov.uk/uksi/2016/1024/article/10.1/made) is not complied with in relation to it, or the court is satisfied that the value of the security equals or exceeds the full amount of the debt; or - the court is satisfied, on other grounds, that the demand ought to be set aside. The Court will also consider other reasons to set aside a statutory demand including: the statutory demand has not been issued in the correct manner, you owe less than £5,000 (as an individual) or in the alternative £750 (as a company), or you have a legal defence to court action being taken against you. ### 2. What is the right court for a statutory demand? The [statutory demand](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/) should contain the information about where and how an application can be made to set aside the statutory demand. For example, if the statutory demand is from [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) and the demand states that the petition will be presented in the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/), then an application to set aside the statutory demand should be made at the High Court. ### 3. How do I complete the Insolvency Act Application form? You can download a word version template Form IAA here. Guidance notes can be found here. It is important to seek legal advice when completing Form IAA because all relevant information must be included such as the grounds for dismissing the[ statutory demand,](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/) the date you became aware of the statutory demand and copies of the demand and any evidence which you have sought to rely on. ### 4. Draft a witness statement to support of the application Depending on the facts of your case, a witness statement can be submitted to the Court in support of the application. Legal advice should be sought when drafting the witness statement, [guidance notes](http://www.justice.gov.uk/courts/procedure-rules/civil/standard-directions/general/witness-statements) on the [Civil Procedure Rules](http://www.justice.gov.uk/courts/procedure-rules/civil/rules) states that a witness statement must: - start with the name of the case and the claim number; - state the full name and address of the witness; - set out the witness’s evidence clearly in numbered paragraphs on numbered pages; - end with this paragraph:  ‘I believe that the facts stated in this witness statement are true.’ and - be signed by the witness and dated. ### 5. Will I have to attend a hearing? If the Court is satisfied that there is a good reason for the application then you (or your solicitor) will receive a notice of hearing from the Court which contains the date, time and location of the hearing to set aside the statutory demand. Our specialist team can arrange representation for you at the hearing. It is recommended that you attend Court as well in support of the application. We are based in the [City of London](http://www.appgbanking.org.uk/) but provide national coverage by other attending the hearing ourselves or by arranging counsel local to you to attend the hearing with instructions from us on how to proceed. ## What steps do I take after an application to set aside a statutory demand is dismissed? You may be liable for the creditor’s costs of and occasioned by the failed application to set aside the statutory demand. The creditor can then straight away make a bankruptcy petition to make you bankrupt. Our team provides expert guidance on the bankruptcy process. Our FAQs provide a comprehensive guide on the bankruptcy rules. ## Case Study: Maksim Moskalev v Dmitry Yanishevskiy (Costs) [2021] In the case of Moskalev v Yanishevskiy, our firm represented Mr. Moskalev. He had been served with an English statutory demand that was allegedly based on a fraudulently obtained default judgment from the High Court of Hong Kong. We disputed the statutory demand and filed an application to have it set aside. High Court ICC Judge Barber ruled in favour of Mr. Moskalev and ordered Mr. Yanishevskiy to pay his costs. The learned judge determined that we had presented substantial grounds to dispute the debt claimed in the statutory demand and that Mr. Yanishevskiy’s withdrawal of the demand meant that our client was the successful party. As a result, it was appropriate to award costs to Mr. Moskalev. ...[read more](https://lexlaw.co.uk/solicitors-london/client-case-study-moskalev-wins-against-yanishevskiy-for-improper-statutory-demand/) ## Instruct Specialist Statutory Demand Solicitors As you can see from the above case study we know what we are doing when it comes to dealing with Statutory Demands. We're a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of leading Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency and our team are skilled at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands (or defending such applications to set aside) and both issuing and defending bankruptcy petitions vigorously at the [Bankruptcy Court](https://courttribunalfinder.service.gov.uk/courts/bankruptcy-court-high-court), and winding up petitions at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Expert Second Opinion from Solicitors & Barristers | Fixed-Fee Initial Review Source: https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/ ## Trust in your advocate matters. *Unsatisfied with your current legal advice? Our elite barrister & solicitor teams provide honest litigation case review and assessment and strategic litigation guidance — starting with your first consultation.* Are you unhappy with the level of service from your law firm or counsel? Do you feel like you have been overcharged for the work done? Do you want to transfer your case for an independent, expert and discounted fixed fee review by experienced magic circle level counsel? We can take over your case immediately following our initial consultation with you. We have taken over many client cases across all our practice areas. These are clients who have been unhappy with their solicitor at the start of their litigation or part way through the litigation process [for example when they have been made a low offer and have lost confidence in their previous legal advisers](https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/). We first provide a discounted litigation case review in an advice meeting with you and then, if so instructed, manage the entire process of transferring law firms for you. ## Our Case Transfer Service We do things differently from other law firms in England & Wales. We offer you partner and counsel-led advice in our first meeting, for a heavily discounted fixed fee; during this litigation case review we will advise you on: - How to transfer your litigation case seamlessly from your current solicitor to us.- How to get your current solicitor to release your litigation papers to us.-  Giving you a second legal opinion directly from one one of our specialist barristers or solicitors on your underlying litigation case.- Whether you can challenge the costs charged by your solicitor. Unlike many law firms we have an in-house Legal Costs Disputes team to advise you on whether the time claimed for is reasonable and whether you have been overcharged.- How to maximise chances of any settlement from your former solicitor and/or their professional indemnity insurer.- Whether you have professional negligence claim against your solicitor for the bad advice, poor service or any errors made (on which we may enter into a no win no fee following our assessment of the merits of the case at the initial meeting).- How to win. Strategic advice on how to maximise your chances of being the successful party in litigation. ## WHY CHOOSE LEXLAW? ### Decades of Expertise Our highly experienced senior barristers and solicitors — not junior lawyers — review your case papers and give advice in the first meeting. You get elite counsel-level insight when it matters most, not after you've spent thousands of pounds on the combined legal fees of solicitors and barristers. ### Transparent Fixed-Fee Review No hidden costs. We don't try to trick clients with free meetings with unqualified staff followed by expensive senior lawyer involvement. Our initial consultation is a **heavily discounted fixed fee **with partner and counsel involvement included from the outset in your litigation case review. We believe this is the most cost effective way in the UK to get a solicitor and barrister second opinion. ### Strategic Litigation Mastery We don't just advise on law - we strategise settlements using our decades of experience. Our lawyers excel at securing optimal results through negotiation, case positioning, and dispute resolution expertise. [That's why we our cases are in the national media so often](https://lexlaw.co.uk/media-interest/). ## WHAT YOU GET IN YOUR SECOND OPINION ## Comprehensive Case Assessment Checklist During your fixed-fee initial consultation, our lawyers will review: - ✅ **Case Prospects & Merits** – Honest assessment of your litigation strength and settlement potential - ✅ **Risk Analysis** – Identification of key risks, weaknesses, and litigation costs - ✅ **Alternative Dispute Resolution (ADR)** – Whether mediation or settlement negotiation suits your case better than court - ✅ **Settlement Strategy** – Realistic pathways to optimal legal outcomes - ✅ **Cost-Benefit Analysis** – Whether proceeding is financially justified - ✅ **Legal Costs Challenge** – If you've been overcharged by your previous solicitor, we advise on recovery options - ✅ **Professional Negligence Assessment** – Whether you have grounds for a claim against your current solicitor (no-win-no-fee available) ## When You Need a Second Opinion Solicitor? **Book a Litigation Case Review At Any Stage of Litigation:** - Before you start proceedings (contemplated claims) - Early in litigation (uncertain strategy) - Mid-case (losing confidence in current counsel) - Before settlement (validate proposed terms) - After adverse judgment (appeal prospects) ## FAQs - SECOND OPINION SOLICITOR & LITIGATION CASE REVIEW ## How Much Does a Second Opinion from a Solicitor and Barrister Cost? Our second opinion consultations are offered at a **heavily discounted fixed fee** - significantly lower than standard hourly rates. The exact fee depends on case complexity, but transparency is guaranteed: no hidden costs, no surprise billing. We quote in advance. **Compare this to other firms:** - Many firms offer "free meetings" with junior lawyers - You're then told you need paid review from a senior partner followed later by a trip to counsel's chambers - **We include both solicitor and counsel involvement in our initial discounted litigation case review** ## What Happens in a Second Legal Opinion Meeting? **Your Initial Litigation Case Review Includes:** - **Case History Review** – You explain your situation, previous legal advice, and concerns - **Document Review** – Our solicitor/barrister reviews your key papers - **Legal Analysis** – Honest assessment of case merits, risks, and prospects - **Strategic Advice** – Recommendations on next steps, settlement potential, ADR suitability - **Cost-Benefit Breakdown** – Whether litigation is financially justified - **Written Advice** – Summary of our opinion in writing for your records - **Action Plan** – Clear next steps whether you proceed with us or elsewhere **Duration:** Typically 1-2 hours for complex cases ## Can I Get a Second Opinion Solicitor and Barrister on an Ongoing Litigation Case? **Yes, absolutely.** We regularly review cases at any stage: - **Before issuing proceedings** – Validate your legal position - **Early litigation** – Case strategy adjustment - **Mid-trial** – Reassess settlement potential - **Before settlement** – Confirm proposed terms are fair - **Post-judgment** – Explore appeal prospects There's no time limit—we can assess your case at any point. ## What if My Second Opinion Solicitor and Barrister Opinion Assessment is Negative? We're honest. If our initial assessment concludes your case has limited merit or high risk, **we tell you in the first meeting**. This is far better than discovering this after months of litigation and thousands in fees. **Our honest approach protects you:** - You avoid wasted costs on weak cases - You explore alternatives (negotiation, ADR, write-off) earlier - You preserve capital for stronger claims - You avoid the stress of failing litigation Many clients thank us for saying "no" when other firms would have taken the work. ## Can I Challenge Fees Charged by My Previous Solicitor? **Yes.** Our in-house **Legal Costs Disputes team** assesses whether your former solicitor's billing was reasonable and whether you've been overcharged. **We can advise on:** - Whether time claimed is justified - Hourly rates charged (vs market rates) - Cost recovery through detailed assessment - Professional negligence grounds (if errors caused financial loss) ## Do You Offer No-Win-No-Fee for Professional Negligence Claims? **Potentially, yes.** If our initial assessment determines you have a viable professional negligence claim against your former solicitor (where their poor advice or errors caused you financial loss), we may enter into a **conditional fee arrangement (no-win-no-fee)**. This requires merit assessment during your initial second opinion solicitor and barrister consultation. ## What's the Difference Between a "Second Opinion" and "Case Transfer"? **Second Opinion:** Independent assessment of your case prospects. You may stay with your current solicitor or choose another firm after receiving our advice. **Case Transfer:** You appoint us as your new legal team. We take over all conduct of your case, retrieve your files from your previous firm, and manage ongoing litigation. **Second Opinion often leads to Case Transfer** – but not automatically. Some clients receive our advice and decide to continue with their current solicitor (rare), while others engage us fully. ## How Quickly Can You Review My Case? **Our typical turnaround:** - Initial consultation booked: **1-5 business days** For emergency matters (looming court dates, statutory demands, petitions), we can expedite. One client appointed us a day before an HMRC winding-up petition hearing and we successfully defended the petition due to us being [a firm of solicitors and barristers with leading HMRC Petition expertise](https://taxdisputes.co.uk/hmrc-winding-up-petitions/). ## What Do I Need to Bring/Send for My Second Opinion Solicitor Consultation? **Helpful documents:** - Claim or particulars of claim (if proceedings issued) - Correspondence with other party/solicitor - Key contracts or agreements in dispute - Previous legal advice/letters from your solicitor - Court orders or judgment (if any) - Any settlement offers to date Don't worry if you don't have everything—we'll guide you on what matters most. ## Can You Act for Me Internationally or in Other UK Jurisdictions? Our primary focus is **English law and UK commercial litigation**. For international disputes or specific Scottish/Welsh law matters, we either handle the English elements or refer to specialist local counsel. Contact us to discuss your specific situation. ## What If I'm Not Ready to Decide After the Consultation? **No pressure.** After your consultation, you have time to consider our advice and next steps. Many clients discuss with family/business partners, and then engage us further. We're here when you're ready; whether that's immediately or weeks later. --- # About Source: https://lexlaw.co.uk/about/ ## Defending your interests. *We closely defend our clients’ interests and provide the best possible legal representation.* When you instruct us to resolve your legal problem, your case will be dealt with by highly qualified and experienced lawyers. The firm is made up of exceptional lawyers who are practising solicitors and barristers supported by high quality legal support staff. We regularly work in conjunction with leading Queen’s Counsel and junior barristers from chambers predominantly in London near to our own chambers in Middle Temple. The strength of the legal teams inlcuding our costs lawyers are available to our clients helps ensure matters are progressed efficiently and the very best results are obtained. To find out more about the people likely to assist you please view our individual profiles. If you have a legal matter and need to discuss the best way forward do not hesitate to contact us: ## Where we're based. Directions: [https://goo.gl/maps/LnrzkqiTiWcKUmBL9](https://goo.gl/maps/LnrzkqiTiWcKUmBL9) --- # HMRC Tax Investigations Source: https://lexlaw.co.uk/hmrc-tax-investigation-penalty-advice-solicitors/ *HMRC is a powerful investigating authority and has an arsenal of legislative penalties to conduct civil tax investigations and criminal investigations where it is suspected that tax or duty has been evaded, underpaid or under declared, or that a tax fraud has taken place. VAT registered traders can face accusations of failing to declare their true liability on VAT returns by suppressing sales and/or inflating purchases. * Our expert team of established Tax Disputes Solicitors and Barristers have first-hand experience and knowledge of the internal workings of HMRC. We have extensive experience in advising individuals, employees, directors and corporate clients in relation to serious tax investigations and prosecutions conducted by [Her Majesty’s Revenue and Customs (HMRC)](https://www.gov.uk/government/organisations/hm-revenue-customs). Note: It is important to take professional legal advice early to minimise tax fines, mitigate tax exposure as far as possible and ensure a settlement is reached on favourable terms. ## Tax Investigation Advice for individuals, companies and partnerships - **Civil Tax Evasion and Fraud Tax Investigations:**[Tax Avoidance Schemes](https://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/);- [Offshore Tax Evasion](https://taxdisputes.co.uk/offshore-tax-evasion-tax-avoidance-solicitors-london/);- [Missing Trader Fraud (MTIC VAT Evasion)](https://taxdisputes.co.uk/missing-trader-fraud-vat-evasion-solicitors-london/)- [Code of Practice 8 investigations](http://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/) (suspicion of serious Tax Avoidance using schemes such as EBT/PBT structures);- [Code of Practice 9](https://taxdisputes.co.uk/tax-evasion-hmrc-code-practice-9-investigations/) investigations (suspicion of serious Tax Fraud); and- [Code of Practice 11](https://web.archive.org/web/20160827075914/http://thepensionsregulator.gov.uk/docs/code-11-dispute-resolution.pdf) investigations (Self Assessment Tax Investigations).- **Criminal Tax Investigation:**[Section 144 Enquiry](http://taxdisputes.co.uk/hmrc-interviews/); and- Interviews under [PACE (Police and Criminal Evidence Act 1984)](https://www.legislation.gov.uk/ukpga/1984/60/contents)- **Corporate Tax Evasion:**Code of Practice 14 Investigation (Company Tax Return Enquiries); and- Section 12A TMA 1970 Notice Investigations.- **VAT, PAYE and Duties Investigations:**PAYE Audit Tax Investigation;- [Diversion Fraud](http://taxdisputes.co.uk/outward-excise-diversion-fraud/);- [Goods seized by HMRC/UKBA](https://taxdisputes.co.uk/goods-seized-by-hmrc-consignment-import-jewellery-seizure-cigarettes-tobacco/);- [Smuggling](http://taxdisputes.co.uk/smuggling/);- [Excise and Duties Investigation](https://taxdisputes.co.uk/hmrc-duty-evasion-fraud/); and- [VAT Repayment Fraud](http://taxdisputes.co.uk/repayment-fraud/) / [VAT Evasion](http://taxdisputes.co.uk/vat-evasion/) Investigation. ## Tax Investigation Advice for Directors ![HMRC tax investigation advice dispute penalty appeal solicitor in london](https://lexlaw.co.uk/wp-content/uploads/2020/01/Tax-Disputes-Investigations-Guide-snip-1.jpg) Our Tax Disputes Lawyers provide market leading advice aimed specifically at directors of companies. Our advice on HMRC tax disputes and investigations is incorporated into the in [KSA Group](https://www.companyrescue.co.uk/guides-knowledge/guides/worried-directors-guide-3927/)‘s [Worried Directors Guide 2018](https://lexlaw.co.uk/wp-content/uploads/2018/05/KSA-Worried-Director-Guide-2018-LEXLAW-taxdisputes-solicitors-london.pdf) ## Expert London Tax Investigation Lawyers If you need HMRC Tax Investigation advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC (having worked there). We can provide you with expert legal representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation. Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability. --- # Tax Penalty Appeals Source: https://lexlaw.co.uk/hmrc-tax-penalty-appeal-solicitor-london/ *HM Revenue and Customs ([HMRC](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)) have actively sought to clamp down on tax evasion or avoidance and increasingly more individuals and businesses are subject to HMRC tax penalties. It is vital that any taxpayer (individuals and businesses) deal with tax issues as soon as they occur to prevent their appeal from being time-barred and to minimise the accrual of penalty fees* *such as the late return on self-assessment, [late payment of VAT ](https://taxdisputes.co.uk/hmrc-vat-investigations-evasion-input-ouput-double-taxation-tribunal-legal-advice/)and penalties for failure to notify.* ***We have a proven track record of successfully contesting disputed tax assessments and penalties with HMRC.*** ## What penalties can HMRC issue? [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)issue penalties for late filing of returns and paperwork or late payment can be applied to any of these types of taxes: - Self Assessment Tax Return deadlines and penalties; - [PAYE](https://taxdisputes.co.uk/paye-tax-investigation-disputes/)/National Insurance payments and deadlines; - [PAYE](https://taxdisputes.co.uk/paye-tax-investigation-disputes/) late payment penalties; - Missed [VAT](https://taxdisputes.co.uk/hmrc-vat-investigations-evasion-input-ouput-double-taxation-tribunal-legal-advice/) deadlines- penalties and surcharges; - Late returns and late return penalties under CIS; and - Corporation Tax penalties. ## What are Civil Evasion Penalties? These penalties result when HM Revenue & Customs investigate a potential [smuggling ](https://taxdisputes.co.uk/smuggling/)offence by a traveller or a trader; or [fraudulent ](https://taxdisputes.co.uk/missing-trader-fraud-vat-evasion-solicitors-london/)declarations and dishonest claims for repayment of duty or relief from duty under their civil evasion penalty procedure. The investigation is conducted with a view to the imposition of a civil evasion penalty for dishonest conduct, if [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)suspicions are confirmed. It is not being conducted with a view to your prosecution for evasion of customs taxes or duties. These provisions apply to individual travellers, commercial importers and exporters or their agent or representative. ## What are the penalties for errors on returns, payments, paperwork and inaccuracy? Penalties can be charged if there are errors on returns or other documents which understate the tax or misrepresent the tax liability. Penalties may also apply if you do not tell [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)if an assessment is too low. This type of penalty is known as an ‘inaccuracy penalty’. ### What tax is subject to inaccuracy penalties? From 1 April 2010, this inaccuracy penalty applies to the following taxes and duties: - Betting and Gaming duties; - Capital Gains Tax; - the Construction Industry Scheme; - Corporation Tax; - Environmental taxes; - [Excise Duties](https://taxdisputes.co.uk/excise-duty-appeals/); - Income Tax; - [Inheritance Tax;](https://taxdisputes.co.uk/2020/07/hmrc-investigations-inheritance-tax-disputes-iht-disclosure-advise/) - Insurance Premium Tax; - National Insurance contributions; - [PAYE;](https://taxdisputes.co.uk/paye-tax-investigation-disputes/) - Petroleum Revenue Tax; - Stamp Duties; and - [VAT.](https://taxdisputes.co.uk/hmrc-vat-investigations-evasion-input-ouput-double-taxation-tribunal-legal-advice/) ### What document mistakes can you be penalised by HMRC for? If documents are sent to [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)that contain a mistake, HMRC will charge a penalty if the error is: - because of a lack of ‘reasonable care’; - deliberate- such as intentionally sending incorrect information; and - deliberate and concealed- for example, intentionally sending incorrect information and taking steps to hide the error. The level of the penalty is linked to the reason why the error occurred. The more serious the reason, the higher the maximum penalty can be. ## Will HMRC penalise if you fail to notify them of changes? If you don’t tell [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)when changes happen that affect their liability to tax, VAT, or other duties, you may face a penalty. This is known as a ‘failure to notify’ penalty. A penalty may occur, for example if your client doesn’t tell HMRC, at the right time, that: - they are liable to tax because their new business has made a profit; - their company is liable for Corporation Tax; - their business turnover has reached the VAT registration threshold; - they sell an asset and make a capital gain on which tax should be paid; - they start a type of business that must register with HMRC- for example a business that will charge Excise Duty; or - their circumstances change in a way that affects their tax position. This penalty is calculated in a similar way to the inaccuracy penalty- see the section above for more information. HMRC can also reduce it if your client tells them about the failure. ## Will the penalty be higher for offshore tax matters? From 6 April 2011 [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)can charge an increased penalty where an inaccuracy penalty, or a failure to notify penalty, arises and the income or asset that gives rise to the penalty is held outside of the UK. The penalty for failing to submit a return for 12 months can also be increased where offshore assets or income are involved. The level of the penalty depends on how readily the foreign jurisdiction shares information with the UK and only applies to Income Tax and Capital Gains Tax. ## What is VAT and Excise wrongdoing penalty? From 1 April 2010 [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)will charge a penalty known as a wrongdoing penalty if you: - issue an invoice that includes VAT which they are not entitled to charge; - handle goods on which Excise Duty has not been paid or deferred; - use a product in a way that means more Excise Duty should have been paid; and/or - supply a product at a lower rate of Excise Duty knowing that it will be used in a way that means a higher rate of Excise Duty should be paid. This penalty applies to anyone registered for VAT or Excise, anyone who should be registered to pay VAT or Excise Duty and to other members of the general public. This penalty is calculated in a similar way to the inaccuracy penalty. HMRC can also reduce it if you tell them about the wrongdoing. ## Instruct us to appeal a HMRC tax penalty We provide advice and representation on the strategic ways to appeal a penalty or penalties received from [HMRC](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers). Indeed, we have first hand experience on the internal workings at HMRC and how best to challenge penalties (either through negotiation and settlement with HMRC or through litigation at the First Tier Tax Tribunal). How we can help: - Appeals against a tax assessment; - Appeals against [any tax penalty](https://taxdisputes.co.uk/hmrc-penalties/) including VAT assessments; - misdirection and other penalty appeals; - responding to accelerated payment notices and follower notices - negotiating with HMRC; - navigating the [HMRC internal review process](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/); - advising clients on [statutory tax appeals](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/) at the Tax Tribunal; and - Judicial Review of HMRC decisions. ## Discounted Fixed fee initial consultation If you need [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)penalty appeal advice we are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Tax Appeals solicitors and barristers. Just call or email us now for a heavily discounted initial consultation; our legal team are waiting to help. ## Expert HMRC Tax Appeals Lawyers If you need [HMRC ](https://www.gov.uk/guidance/penalties-an-overview-for-agents-and-advisers)Tax Disputes advice, we are available to aid you at every stage of the HMRC appeals process. Members of our legal team have first-hand experience and working knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations, throughout the HMRC internal review process and in front of the Tax Tribunal. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect including developing a strategy. We are experts in adeptly presenting evidence and employing bespoke arguments combining the facts of your case, previous cases and current legislation to ensure your appeal is a successful one. We provide urgent advice and representation to clients from our unique expert team of established tax and duties specialist solicitors and barristers with a proven track record of delivering authoritative results. --- # HMRC Enforcement Action Defence Source: https://lexlaw.co.uk/hmrc-debt-enforcement-defence-statutory-demand-winding-up-peititon-solicitor-london/ [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs), the UK’s tax authority, has been ramping up its enforcement activities and businesses and individuals alike are facing increased scrutiny and the risk of significant financial penalties. HMRC can enforce tax debts against individuals and companies in a number of ways and it is imperative that you seek legal advice at the earliest opportunity to protect your position. If you have received a [statutory demand](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/), you must act quickly (usually within 18 days) if you hope to avoid HMRC bankrupting you as an individual or applying for a winding up petition if you are a company. With debt enforcement by HMRC it is inevitable that unless action is taken the demand will eventually lead to the presentation of a[ winding up](https://windinguppetitionsolicitors.co.uk/) against a company or [bankruptcy petition](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) against an individual. Our tax team work closely with our [insolvency team](https://windinguppetitionsolicitors.co.uk/expert-advice/) to manage the HMRC enforcement process for you. Many specialist tax firms cannot offer dual expertise in both practice areas, but our firm can provide a bespoke solution to your individual circumstances be it with tax advice or insolvency solutions. **Contents of this page on HMRC Debt Enforcement Defence...** - What is HMRC Debt Enforcement Action?► Notices of Enforcement:- ► HMRC Debt Management Unit (DMU) Calls:- ► Time To Pay (TTP):- ► HMRC International Debt Unit:- ► HMRC Statutory Demands:- ► Taking Control of Goods (TCG): - ► HMRC Winding-up Petitions:- ► HMRC Bankruptcy Petitions:- ► Charging Orders:- ► Attachment of Earnings Orders (AEO):- ► Freezing Orders:- ► Account Freezing Orders (AFO):- ► HMRC Security Notices: - ► Recovery of EU Taxes by HMRC (MARD)- ► HMRC International Debt Unit - Overseas Tax- Our HMRC Tax Defence Lawyers can help...- Not in London? We provide nationwide and international representation- Discounted Fixed fee initial consultationCheck Your Litigation Case ✔ ## What is HMRC Debt Enforcement Action? [HMRC Debt Enforcement Action](https://taxdisputes.co.uk/hmrc-enforcement-action/) refers to the steps taken by His Majesty's Revenue and Customs ([HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)) to recover unpaid taxes. When you owe the government money in taxes, they have the power to take action to collect the debt. These actions can range from relatively mild measures to more severe ones, depending on the amount of the debt and your cooperation. HMRC can take a variety of actions to recover unpaid taxes. These can include: ### ► Notices of Enforcement: A Notice of Enforcement is a formal notification issued by a creditor, such as HMRC, to a debtor indicating the creditor's intention to initiate enforcement proceedings to recover an outstanding debt. The notice typically outlines the nature of the debt, the amount owed, and the proposed enforcement action. It serves as a near final opportunity for the debtor to satisfy the debt or negotiate a repayment arrangement prior to the commencement of formal enforcement procedures. If you have received a Notice of Enforcement then [get in touch with our leading tax lawyers](https://lexlaw.co.uk/contact-us/) for advice on next steps. ### ► HMRC Debt Management Unit (DMU) Calls: The [HMRC Debt Management Unit](https://www.gov.uk/government/organisations/hm-revenue-customs/contact/agent-dedicated-line-debt-management) initiates outbound communications with taxpayers possessing outstanding tax liabilities. The primary objectives of these calls are to verify the debt, explore potential repayment arrangements, inform the taxpayer of potential enforcement actions, and address any disputes concerning the tax liability. HMRC adheres to strict protocols during these interactions, including explicit caller identification, disclosure of call purpose, and avoidance of soliciting sensitive taxpayer information via telephone. If you have had a call or email from this team you should consider taking [urgent tax legal advice ](https://lexlaw.co.uk/legal-case-assessment/)from our tax disputes experts. ### ► Time To Pay (TTP): A [Time to Pay arrangement](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) is a formal agreement between a taxpayer and HMRC that permits the taxpayer to settle an outstanding tax liability through installments over a predetermined period. The arrangement is contingent upon the taxpayer's financial capacity and is typically subject to regular review. Interest and penalties may continue to accrue on the outstanding debt during the [TTP](https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement) period. We are experienced in [making TTP proposals and negotiating with HMRC](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) to obtain payment by instalments. ### ► HMRC International Debt Unit: This team often make contact with suspected tax defaulters by email or letter or calls. The HMRC International Debt Unit is responsible for the recovery of tax debts owed by non-resident individuals and businesses with international tax liabilities. The unit employs a range of debt collection strategies, including cross-border cooperation, asset tracing, and enforcement actions in collaboration with foreign tax authorities. Its primary focus is on maximising tax revenue collection from taxpayers with offshore interests. [Get in touch with us](https://taxdisputes.co.uk/contact-us/) - we are the leading law firm with decades of experience dealing with [HMRC's EU and Overseas Debt Collection](https://www.gov.uk/government/organisations/hm-revenue-customs/contact/international-tax-debt). ### ► HMRC Statutory Demands: A [statutory demand](https://taxdisputes.co.uk/hmrc-statutory-demand/) is a formal written notice issued by a creditor, such as HMRC, to a debtor demanding payment of a debt. Failure to comply with the demand within the prescribed timeframe (e.g. 21 days) may result in the creditor initiating bankruptcy proceedings against an individual debtor or winding-up proceedings against a company debtor. The [statutory demand](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/#:~:text=A%20statutory%20demand%20is%20a,which%20is%20over%20%C2%A3750.) serves as a precursor to insolvency proceedings and necessitates prompt attention and potential legal advice. A [statutory demand issued by HMRC](https://taxdisputes.co.uk/hmrc-statutory-demand/) against an individual may be challenged and set aside within 18 days if you can demonstrate a genuine dispute over the debt, a counterclaim, incorrect issuance, secured debt, or a debt below the threshold. This process involves making a court application including a draft order and supporting evidence and legal skeleton argument. Failure to challenge the demand successfully may lead to bankruptcy or winding-up proceedings, emphasising the need for timely legal advice. Companies facing a [HMRC statutory demand](https://taxdisputes.co.uk/hmrc-statutory-demand/) will have to take other action such as in injunction to restrain HMRC. ### ► Taking Control of Goods (TCG): Taking Control of Goods (TCG) is a formal enforcement action undertaken by HMRC or other creditors to recover unpaid debts. It involves the seizure and sale of a debtor's assets to satisfy the outstanding debt. This process is carried out by enforcement agents, who have the power to enter premises, inventory goods, and remove items for sale. [TCG](https://assets.publishing.service.gov.uk/media/6523c46e244f8e00138e7202/taking-control-goods-regulations-consultation-2023.pdf) is a significant step in the debt recovery process and can have severe financial implications for the debtor. [Our legal team](https://lexlaw.co.uk/contact-us/) have acted to stop bailiffs in their tracks on several occasions. ### ► HMRC Winding-up Petitions: A [HMRC winding-up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/#:~:text=you%20contact%20us.-,What%20is%20a%20HMRC%20winding%2Dup%20petition%20and%20what%20does,or%20NIC)%20is%20not%20paid.) is a formal legal action initiated by a creditor against a company that owes it a debt exceeding £750. It is a serious step that can lead to the company's bank accounts being frozen followed by compulsory liquidation. If successful, the court appoints a liquidator to sell the company's assets and distribute the proceeds to creditors. This can lead to the [directors being pursued for any wrongdoings by liquidators](https://windinguppetitionsolicitors.co.uk/risks-for-directors/) e.g. for overdrawn loan accounts. The petition process involves serving the company with a notice, advertising it in The Gazette, and a subsequent court hearing. Responding to a winding-up petition is critical for a company's survival. Options include negotiating a repayment plan with the creditor, seeking an adjournment of the hearing, challenging the petition based on disputed debt or procedural errors, or considering insolvency procedures like administration or a Company Voluntary Arrangement ([CVA](https://windinguppetitionsolicitors.co.uk/?s=cva)). It's essential to seek professional advice promptly, as failure to respond effectively can lead to the company's liquidation and significant consequences for directors and creditors. We are the [UK's leading experts in defending HMRC winding-up petitions](https://windinguppetitionsolicitors.co.uk/). We have the unique ability to provide very high quality [tax disputes advice](https://taxdisputes.co.uk/), [tax tribunal representation and appeals](https://lexlaw.co.uk/first-tier-tax-tribunal-hmrc-representation-solicitor-london/), and [elite insolvency defence advice](https://windinguppetitionsolicitors.co.uk/) and have 15 years of proven experience in this field. [Get in touch with our expert winding-up petition defence lawyers](https://windinguppetitionsolicitors.co.uk/contact-us/). ### ► HMRC Bankruptcy Petitions: A bankruptcy petition is a formal legal application filed by a creditor such as HMRC against an individual who owes them a debt exceeding £5,000. If successful, the court will declare the individual bankrupt, and a trustee in bankruptcy will be appointed to manage their financial affairs. The trustee will gather and sell the bankrupt's assets to distribute the proceeds to creditors. Bankruptcy has significant consequences, including restrictions on financial activities, credit implications, and potential loss of assets. Responding is critical, an individual may oppose the petition if grounds exist, negotiate a settlement with the creditor, explore alternative insolvency options, or seek [professional bankruptcy advice](https://windinguppetitionsolicitors.co.uk/bankruptcy-advice/). Prompt action is crucial to protect interests and potentially avoid bankruptcy. ### ► Charging Orders: *Placing a charge on your property, meaning it can't be sold until the debt is paid.* An [HMRC charging order ](https://www.gov.uk/government/publications/third-party-debt-orders-and-charging-orders-ex325/apply-for-a-charging-order)is a legal instrument that secures a tax debt against a property owned by the debtor. It grants HMRC a charge over the property, meaning that if the property is sold, the tax debt must be repaid from the proceeds before any funds are distributed to the debtor. A charging order does not force the sale of the property but acts as a financial encumbrance on the property title. ### ► Attachment of Earnings Orders (AEO): *These allow HMRC to deduct a portion of your wages to repay a tax debt by taking money directly from your bank account.* An [Attachment of Earnings Order (AEO)](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/#:~:text=An%20attachment%20of%20earnings%20order%20ensures%20that%20a%20proportion%20of,of%20the%20debt%20is%20paid.) is a legal instrument that allows a creditor, such as HMRC, to deduct a portion of a debtor's earnings directly from their employer. This order is typically obtained by a court and mandates the employer to withhold a specified amount from the employee's wages and remit it to the creditor. The amount deducted is subject to legal limits to ensure the debtor retains a sufficient income for living expenses. ### ► Freezing Orders: *Preventing you from selling assets or transferring money.* A [Freezing Order](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/), also known as a Restraining Order, is a court order that prevents an individual or company from moving assets or disposing of property. It is a powerful tool used by law enforcement agencies, including HMRC, to preserve assets that may be subject to forfeiture or recovery. HMRC has increasingly employed freezing orders when HMRC suspect that assets are connected to criminal conduct, tax evasion, or fraud. Once a freezing order is in place, all funds within the frozen account are inaccessible until the order is lifted or varied by the court. It's crucial to note that obtaining a Freezing Order is a serious matter, and HMRC must provide sufficient evidence to justify the order and an undertaking to provide compensation in the event their suspicions prove wrong. If you are subject to a freezing order, seeking legal advice promptly is essential to understand your rights and potential options. ### ► Account Freezing Orders (AFO): An [HMRC Account Freezing Order (AFO)](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/#:~:text=Account%20Freezing%20Order%20Guide,is%20linked%20to%20criminal%20activity.) is a court order that restricts access to funds in a bank account suspected of being linked to criminal activity, for example tax evasion or money laundering. HMRC can apply for an AFO if they believe there is a reasonable suspicion that the account holds funds connected to unpaid taxes. These orders are a powerful tool for HMRC to prevent the dissipation of assets while investigations are ongoing. However, they can have severe financial consequences for individuals or businesses affected and lead to business collapse. If you are subject to an AFO, seeking legal advice is crucial to protect your rights and explore potential challenges or variations to the order. We have experience of challenging HMRC AFOs successfully and seeking multimillion pound compensation as a result of AFOs obtained by HMRC by giving "appalling misrepresentations" to regional magistrates in Somerset. ### ► HMRC Security Notices: An HMRC Security Notice is a formal demand for a taxpayer, usually a business, to provide financial guarantees against future tax liabilities. Issued when HMRC perceives a risk of non-payment, it requires a cash deposit, bank guarantee, or insurance bond. Non-compliance can lead to severe consequences, including enforcement action. Prompt professional advice is crucial to understand options and potential implications. We provide [leading advice and defence on HMRC Security Notices](https://lexlaw.co.uk/faqs-on-hmrc-security-notices/) ensuring that directors and their companies are well protected from [unreasonable security notice demands issued by HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/). ### ► Recovery of EU Taxes by HMRC (MARD) Mutual Assistance in the Recovery of Debt (MARD) is a mechanism enabling EU member states to cooperate in tax debt recovery. If a taxpayer owes tax in one EU country but resides or holds assets in another, the first country's tax authority can request assistance from the second to collect the debt. [HMRC's MARD office (now part of HMRC International Debt Unit)](https://taxdisputes.co.uk/mutual-assistance-recovery-debt-mard-oecd-hmrc-international-debt-collection-tax/) acts as a collection agent for other EU tax authorities under MARD, employing the same enforcement methods as for UK tax debts. However, strict rules govern this process, and taxpayers have rights. The UK's withdrawal from the EU will gradually phase out MARD, with the final deadline being December 31, 2025. ### ► HMRC International Debt Unit - Overseas Tax The HMRC International Debt Unit is responsible for recovering overseas tax debts owed to the UK government. This involves complex cross-border cooperation via [MARD regulation and OECD MAAC convention treaties](https://taxdisputes.co.uk/mutual-assistance-recovery-debt-mard-oecd-hmrc-international-debt-collection-tax/) with foreign tax authorities to locate and seize assets belonging to tax defaulters. The unit employs a range of strategies, including information exchange, asset tracing, and enforcement actions in collaboration with foreign law enforcement agencies. Successful recovery often hinges on strong international relationships and a deep understanding of foreign tax laws and legal systems. ## Our HMRC Tax Defence Lawyers can help... As a leading specialist tax law firm with a track record of success, you can be assured your tax matter is in safe hands. Our success rate is a result of the dedication of our [tax team](http://taxdisputes.co.uk/expert-advice/) who will diligently review your matter so it has the best possible chance of success from the outset when it matters the most. Our experienced lawyers regularly carry out work in many tax disputes areas,  from advising clients on whether HMRC have followed the correct procedures to [successfully challenging HMRC](https://taxdisputes.co.uk/2024/06/injunction-success-abusive-hmrc-winding-up-petition-dismissed/)’s policies. We have specialist knowledge in HMRC internal processes as well as ensuring that we are able to successfully challenge HMRC decisions in the Tax Tribunals. Although you may have instructed an Accountant in relation to your tax matters, in most cases your Accountant will be able to assist you in tax compliance matters whereas we specialise in assisting you in relation to any investigations that HMRC have brought against you. We regularly work with Accountants to ensure that collectively we are able to obtain the best possible resolution to your matter. If you have a [dispute with HMRC](https://taxdisputes.co.uk/) and find yourself hitting a ‘brick wall’ or even if you are unsure of how to deal with correspondence and/or demands you have received from HMRC  then you should contact us immediately to ascertain how we can assist you in your matter. ## Not in London? We provide nationwide and international representation That does not matter, [we will represent you against HMRC](https://taxdisputes.co.uk/) no matter where you are based in England or Wales or overseas. If you contact us through our contact form, by email or by phone, one of our tax team members will contact you to discuss your matter and assess whether we can help you. We can then on-board you as a client and arrange a fixed fee conference video meeting with [a senior member(s) of our tax team](https://lexlaw.co.uk/andrew-young/). *Due to the number of daily enquiries we cannot provide any free legal advice and we do not work on low value cases.* ## Discounted Fixed fee initial consultation If you need [HMRC Debt Enforcement Defence advice](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) we are able to assist. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our [expert legal team](https://lexlaw.co.uk/our-people/) of [leading Tax solicitors and barristers](https://taxdisputes.co.uk/). Just call or email us now for a heavily discounted initial consultation; our legal team are waiting to help. --- # Glossary of Key Legal Terminology Source: https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/ The law and the terms used can be complicated to those who are unfamiliar with legal jargon. This A-Z guide of common legal terms and phrases provides definitions of key legal terms that solicitors and their clients will come across in litigation in England and Wales. Our solicitors and barristers are UK litigation experts. For expert legal advice that you can rely upon [contact our legal team](https://lexlaw.co.uk/legal-case-assessment/) so we can assess your case. **Ab initio** - the start of something (Latin phrase). **Abatement** - the cancellation of a writ or action; stopping a nuisance or proportionately reducing payments to creditors or bequests in a will in there is not enough money to pay. **Abscond** - the failure of a person to present themselves at court when required e.g. where an individual has been released on bail and not returned to court. **Absolute Privilege **-** **a complete defence to an action for defamation. **Abuse of Law **- unfair or improper legal action that has been initiated with selfish or malicious intentions. The abuse of law can originate from nearly any part of the legal system and may include careless or corrupt attorneys, abuses by law enforcement or misconduct from the judiciary. **Accord and Satisfaction** - a legal contract where two parties will agree to discharge a tort claim, contract or liability for an amount base that differs from the original amount of that claim. It may also be used to settle claims before they come to court. **Acknowledgement of service** - when a defendant agrees that a writ or claim form has been received. **Acquit** - where the Court finds someone not guilty for a crime which they were accused. **Acquiescence **- a common law that states if a person knowingly permits their civil rights to be infringed they cannot later make a claim against the person that infringed them. An example of this could be if a party has taken no action to start a claim for a significant amount of time this could lead to the other party believing that they have consented to the infringement. **Actus Reus **-** **the “guilty act”, the action or conduct of an individual which is an essential element of a crime (Latin phrase). **Ad idem **-** **in agreement (Latin phrase). **Adjourn **-** **the postponement of a court hearing. **Administrator **- the person who is appointed to manage the affairs of a bankruptcy, or to manage the estate of someone who has died without leaving a will.  **Administration order** - An order made in a county court to arrange and administer the payment of debts by an individual; or an order made by a court in respect of a company that appoints an administrator to take control of the company. A company can also be put into administration if a floating charge holder, or the directors or the company itself file the requisite notice at court. **Administrative receiver** - The person appointed by the holder of a floating charge debenture over a company’s assets to collect in and realise the assets of that company and to repay the indebtedness to the debenture holder. **Administrative receivership** - The process where an insolvency practitioner is appointed by a debenture holder (lender) to realise a company’s assets and pay preferential creditors and the debenture holder’s debt. The right of a debenture holder to appoint an administrative receiver has been restricted by the Enterprise Act 2002. **Administrator** - An Insolvency Practitioner (IP) appointed by the court under an administration order or by a floating charge holder or by the company or its directors filing the requisite notice at court. **Advocate** - a lawyer who speaks in court on behalf of their client. **Affidavit **-** **a sworn statement of truth. **Agent **-** **someone who acts on behalf of another. **Agreement **-** **where a consensus is reached between parties. **Aid and Abet** - to assist someone or encourage someone to commit a crime. **Allege **- to claim a fact is true without or before proof is given. **Alternative Business Structures **-** **brought into being by the Legal Services Act 2007 these arefirms which are managed or owned by a mixture of lawyers and non-lawyers **[Alternative Dispute Resolution (ADR)](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/)** - an umbrella term for alternative ways (other than litigation) to resolve dispute. ADR includes: negotiation, [arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/), mediation, early neutral evaluation, adjudication and expert determination. **Annulment** - a term used mostly in bankruptcy proceedings, relating to the cancellation of a bankruptcy which puts the bankrupt into the same position they would have been in had the bankruptcy order never have been made. **Appeal **-** **requesting a court to overturn a lower court’s decision **Appellant **- the person who is appealing the court against a decision that the lower court has made.  **Application **- a formal written request sent to court.  **Arbitration **-**  **a form of alternative dispute resolution whereby an independent referee can make a legally binding decision without the need of a court. This award can be challenged at court. **Arbitrator** - an independent referee who can settle a dispute through alternative dispute resolution, without the need of a court. **Assets** - used to define things which have some value which are owned by an individual or corporate personality. In insolvency, assets are anything that belongs to a debtor that may be used to pay his/her/its debts. **Asset Preservation Order** - an order of the Court that prevents assets being disposed of or removed outside of the jurisdiction until a claim is resolved (AKA as a freezing order or Mareva injunction). **Assured shorthold tenancy **-** **a tenancy agreement where the landlord has the right to take the property back at the end of the agreement **Authorised Investments** - investments in which a trustee is permitted to invest trust money under an act of parliament.  B **Bail **- a payment, or promise of payment, which is made in order for an individual who is accused of a criminal act to be released from custody pending trial. **Bailiff **- an officer of the court whose duty is to carry out court orders, such as taking debtors goods and selling them to get money to pay a debtor’s debt. A bailiff may also personally serve documents on people. **Bankrupt** - Someone against whom a bankruptcy order has been made and who has not been discharged from bankruptcy. **Bankruptcy Restriction Order (BRO)** - is a court order, which extends the period of time for which you have to follow certain restrictions. This can last up to 15 years and can restrict your financial affairs. **Bankruptcy Trustee** - the agent appointed to manage an individual's bankruptcy – this may be the Official Receiver initially, but can also be a licensed insolvency practitioner. The trustee in bankruptcy will oversee the process – including advising on items and assets that will be sold to repay debts. **Bare trust **- where the beneficiary of a trust has an immediate and absolute right to both the trust capital and income received by the same**.** **Barrister** - a lawyer specialising in court room advocacy and litigation who will be regulated by the [Bar Standards Board (BSB)](https://www.barstandardsboard.org.uk). **Beneficiary** - a person or entity which derives profit or advantage from a legal instrument such as a trust, life insurance policy or will. **Bequest **- a gift of money or personal property made in a will, other than land or real property. **Beyond Reasonable Doubt** - the standard that must be met by the jury in a criminal trial to convict the defendant. The jury can only find the defendant guilty if they are convinced beyond a reasonable doubt. **Bill of costs **- an invoice given by a solicitor to their client which outlines disbursements, fees and any expenses paid. **Bill of Exchange** - an unconditional offer from one person to another, which has been signed by the person giving it, which requires the person who it is addressed to, to pay a sum of money on demand or at a future time. **Bill of sale **- a document which transfers the ownership of goods from one person to another.  **Bona fide **- sincere, genuine or good faith (Latin phrase). **Bona vacantia **- goods without an apparent owner. **Book value** - the value of a fixed asset, such as a building or machine, as recorded by an organisation's books. It is usually the amount paid for the asset less an amount for depreciation.  **Breach of contract** - a contract is a legally binding agreement between private parties that creates mutual obligations. The contract is breached when either party breaks one of the terms that has been agreed.  **Breach of duty** - the failing to carry out something which is required by law, or doing something that the law forbids.  **Break clause** - a clause included in a contract that allows it to be ended.  **Breach of Condition Notice (BCN) **- A legal document that can be issued by a local planning authority to require compliance with council planning conditions that were set when planning permission was granted. The powers to issue BCN are contained within [Section 187A of the Town and Country Planning Act 1990](https://www.legislation.gov.uk/ukpga/1990/8/section/187A). The notice can be served on the developer or occupier of the land, or anyone who has carried out the development. A BCN will specify the breach and the steps that need to be taken to remedy it, and will give the recipient a minimum of 28 days to comply. If the recipient fails to comply with the BCN within the specified period, it may be considered a criminal offence and could result in a fine of up to £2,500. There is no right of appeal against a BCN, except by way of judicial review challenging the lawfulness of the BCN being issued. BCNs are similar to enforcement notices, but can only be used when a condition is not being met. If the BCN is not complied with then the council can start a prosecution for non-compliance. **Burden of proof** - a party’s duty to produce sufficient evidence to support their allegation or argument.  **Byelaws** - these are local laws that are made by a local council or enabling power that require something to be done or not done in a specific area. They are accompanied by a sanction or penalty if they are not followed.  C **Calderbank offer** – a litigation settlement offer letter sent on a ‘without prejudice save as to costs’ basis. Calderbank offers are an alternative to a CPR Part 36 offer. Unlike Part 36 offers, the cost consequences are entirely in the Court’s discretion. Often tactically used for costs protection and in order to help negotiate a settlement and resolve a dispute. **Cancellation clause** - a provision in contract that permits the termination of the contract by one of the parties before it’s expiration under specific terms and contracts. **Capital gain** - the profit that is made when a long term asset is sold for more than its original cost.  **Case law** - law that is based on the result of previous court cases.  **Caveat emptor **- “let the buyer beware” a principle whereby the buyer assumes the risk that whatever they are purchasing may be defective and therefore places onus on them to perform due diligence first. **Charge** - Security interest taken over property by a creditor to protect against non-payment of a debt (such as a mortgage). **Chattels personal** - an item of property other than freehold land which is tangible and owned. **Chattels real **- an item of property other than freehold land which is tangible and is leased. **Chit** - a short note recording a sum owed. **Chose in action** - Bundle of personal rights over a property which can only be claimed or enforced by action, and by not taking physical possession. An example of this could be a cash balance at a bank or money due on a bond.  **Civil Law **- the law which covers disputes which are not criminal in nature.            **Claim **- a legal demand given by a person seeking compensation for loss. **Claimant **- the person making a claim. **Clause **- a section, paragraph, phrase or segment in a legal document, for example, a contract, deed or will. **Cohabitation agreement **- this allows unmarried couples who live together to enter into a legally binding contract regarding division of assets if the relationship breaks down. **Common law** - a system of laws based on customs and court decisions made by judges rather than Acts of Parliament. Common law forms the basis of the legal system in the UK and is constantly changing. **[Companies House](https://www.gov.uk/government/organisations/companies-house) **- the office which stores information on all limited companies and limited liability partnerships registered in the United Kingdom, from annual accounts to the names of the directors. **Compulsory Liquidation** - Winding up of a company after a petition to the court, usually by a creditor. **Company Voluntary Arrangement (CVA)** - A voluntary agreement for a company is a procedure whereby a plan of reorganisation or composition in satisfaction of debts, is put forward to creditors and shareholders. There is limited involvement by the court and the scheme is under the control of a supervisor. **Compensation **- money paid to make up for loss, damage, injury or suffering.  **Conditional Fee Agreement (CFA)** - Also known as a "no win no fee" agreement, is a contract between a client and legal representative which provides that all or past of the legal representative's legal fees and/or disbursements is to be paid by the client only in specific circumstances - usually only if the client is successful in the case. A success fee will ordinarily also be agreed at the outset of any instruction. **Confidentiality **- In practice this means that all client information, whether it be held on paper, digitally or by knowledge of the professional, must not be disclosed without the consent of the client. **Connected persons** - Directors or shadow directors and their associates (including family members), and associates of the company. Connected persons has various definitions according to the particular act; for example, [section 252 Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/section/252) defines connected persons in reference to their connection with a director of a company. **Consent Order **- A judge approved order setting out terms that have been agreed between the parties. The agreement is legally binding and enforceable.  **Consequential Loss** - (also known as indirect loss) arises from a special circumstance of the case, not in the usual course of things (which would be direct loss). Direct loss is the natural result of the breach in the usual course of things. Most foreseeable kinds of loss are direct, including financial losses such as loss of profits and loss of business or goodwill. Consequential loss is indirect loss and unless foreseeable likely to be unrecoverable. Generally, consequential loss is recoverable only if the party paying damages knew or should have known of that special circumstance when it made the contract. At law, this is due to the second limb of the rule in *Hadley v Baxendale *[1854] EWHC Exch J70. In summary, consequential losses should be considered as exceptional and often not recoverable in English law unless foreseeable by the paying party and therefore not too remote. The legal test of remoteness was established in *Hadley v Baxendale* (1854) EWHC 9 Exch 341 and sets out the following two limbs of loss: *Limb 1: *Direct losses - Losses which are fairly and reasonably in the contemplation of the parties when the contract was entered into. *Limb 2: *Indirect losses and consequential losses - Losses that require actual knowledge of special circumstances outside the ordinary course of things but that were communicated to the defendant or otherwise known by the parties. **Contempt of Court** - When someone risks unfairly influencing a court case which may affect the ability to have a fair trial. Contempt of court may include disobeying or ignoring a court order, taking photos or shouting in court or refusing to answer the court’s question if called as a witness.  **Contract **- an agreement between two or more parties which creates legal obligations for both to perform specific acts. **Conveyancing **- the legal process of transferring legal title in property from one person to another. **Costs Law **- the law regarding legal costs cases. **Costs Lawyers **- a lawyer regulated by the Association of Costs Lawyers. **Counsel **- another term which is used to describe a barrister. **Counterclaim **- a claim made by the defendant that opposes the claimant’s claim. The counterclaim will be included in the same proceedings as the original claim.  **Creditor** - Someone owed money by an individual or company. **Crown Prosecution Service (CPS)** - the CPS prosecutes criminal cases investigated by the police. D **Damages** - monetary compensation to be paid to a claimant for loss caused by the wrongful act of another. Recovery of damages is the primary objective of most civil litigation in the UK. **Damages Based Agreement **- an agreement between a firm and their client whereby the agreed fee is contingent upon the outcome of the case. In the instance of success, the fee is determined as a percentage of the compensation received by the client. **Debenture **- this is a long term security which is issued by a company and secured against its asset in order to yield a fixed rate of interest. **Debt security** - a term used to describe a financial instrument, such as a corporate bond, containing a promise by the issuer to pay the holder of the instrument  defined amount on or by a specific date, usually with interest.  **Decision **- a form of secondary legislation produced by the European Union and is binding on whoever is addressed by it. **Declaratory Judgement** - a judgement that defines the rights of the parties in question regarding the question presented. These judgements state whether the parties involved may seek relief rather than ordering parties to take any actions.  **Decree **- another term for an order made by the court**.** **Deed **- A written document with the required formality in which an interest, right or property passes or is confirmed.  **Defamation **- the making of a false statement regarding an individual which has caused or is likely to cause serious harm to their reputation. **Default **- failure to comply with something which is required by law. **Defendant **- person to whom the claim is being made against. May also be referred to as the respondent. **Deferred sentence** - Utilised in criminal proceedings when the final decision about punishment of the offender is put off to another date (ordinarily between 3-12 months later). **Defraud **- to take something illegally from another person or to prevent someone from having something that is legally theirs by deceiving them.  **Derivative claim** - A claim made by a shareholder or continued by a shareholder on behalf of the company in relation to the breach by a director.  **Dilatory tactic **- where someone has intended to cause delay. **Directive **- a form of secondary legislation that is produced by the European Union and is addressed to all member states. **Direct Loss** - is the natural result of the breach in the usual course of things. Most foreseeable kinds of loss are direct, including financial losses such as loss of profits and loss of business or goodwill. **Disbursement** - fees that are paid to someone else (other than your solicitor) for fees that are connected with your legal matter e.g. counsel's fees, court fees, photocopying and other administrative charges. **Disclosure** - this relates to the making available of relevant documents which you believe to be in the possession of the other party. **Discovery **- part of the pre-action protocol in civil proceedings where one party reveals relevant documents to the other side allowing them to inspect them. **Discrimination** - usually used in employment law in [workplace discrimination](https://lexlaw.co.uk/workplace-discrimination-lawyers/) claims to describe the act of being treated unfairly or differently because of certain legally protected characteristics (in the [Equality Act 2010](https://www.legislation.gov.uk/ukpga/2010/15/contents)).  **Disqualification** - A procedure whereby a person has a court order made against them or gives an undertaking to the Secretary of State which makes it an offence for that person to be involved in the management or directorship of a company for the period specified in the order (unless leave has been granted by the court). **Document of title** - a legal document that proves that someone owns property or goods or has the right to take control of it or them. **Doctrine **- a rule or principle of the law. **Domicile **- the principal home of a person. E **Ejectment** - a lawsuit to remove a party occupying a real property. Different to eviction ejectment applies to someone trying to gain title to the property.  **Elder law** - a speciality in legal practice that covers estate planning, wills, trusts, arrangements for care, social security and retirement benefits. **Emancipation** - freeing a minor from the control of parents and allowing them to live his/her life under her own control. Emancipation may end the parent’s responsibility due to debts, negligence or criminal acts. **Embezzlement** - the crime of stealing funds or property of an employer, company or Government. **Employment** - the hiring of a person for compensation.   **Enacting words** - the introductory words of an Act of Parliament that give it the force of law.    **Encroachment** - building a structure which is in partially or wholly on a neighbour’s property. **Encumbrance** - general term for a claim of real property  **Endorsement** - the act of the payee or owner signing his/her name to a negotiable instrument i.e. a bill or check.  **Entity** - term for any institution, company, partnership, government agency or any organisation that is distinguished from other individuals.  **Entry of judgment** - the placement of judgement in on the official roll of judgments. **Ernest Payment** - a deposit that is paid to show a commitment with the remainder of the sum due to be paid at a later date. If the final sum is not paid then the Ernest payment is kept by the recipient as pre-determined. **Escalator clause** - a provision in a lease or other agreement in which payments will increase from time to time when the living index goes up.  **Escape clause** - a provision in a contract allowing one of the partied to be relieved of obligation in the occurrence of a certain event.  **Escrow **- an agreement between two people or organisations in which money or property is kept by a third person or organisation until a particular condition has been met.  **Estate** - Used predominately in wills and probate law to describe the net worth of an individual including all property, possessions, financial securities and money. **Evasion of tax **- to intentionally avoid paying taxes through fraudulent mean. **Eviction** - the act of expelling someone from a property. **Evidence** - proof that is legally presented at trial with the intention to convince a judge or jury of alleged facts in relation to the case. Examples can include the testimony of a witness, documents, public records or photographs.  **Exception** - a formal objection during trial to the ruling of a judge. **Exclusionary rule** - the rule that evidence secured in illegal means cannot be used in a criminal trial  **Executor** - A term used in probate to describe a person named in a will that acts as a trustee of the deceased's estate and ensures the directions of the will are carried out. **Excise tax** - a legislated tax on specific goods or services at purchase. These are indirect taxes that damage consumer health or pollute the environment. The increase in price is used to discourage the consumption or waste of the products concerned.  **Excusable neglect** - a legitimate excuse as to why a party or their lawyer may have failed to take the required action on time. Excuses which the court often accept include illness, press of business by the lawyer or simply an oversight from a lawyer’s staff.  **Exemplary damages** - damages that are awarded in excess of the claimant's loss. These damages are awarded with the intent to punish the defendant rather than compensate the claimant and will only be awarded in limited circumstances.  **Exhibit** - a document or object that may be used as evidence during a trial, this evidence is subject to objections by an opposing attorney.  **Expert Witness** - a person who is a specialist in a subject and may give their expert opinion on the matter without being a witness to any occurrence in the actual lawsuit. The judge has the discretion on whether to qualify whether he/she is an expert or not.  **Extortionate Credit Transaction** - An extortionate credit transaction is a transaction by which credit is provided on terms that are exorbitant or grossly unfair compared with the risk accepted by the creditor. Such a transaction may be challenged by an administrator, a liquidator or a trustee in bankruptcy. F **Face amount** - the original amount due prior to adding the calculation of interest.  **Fair market value** - the value at which a property would sell at if it were put on the open market, real estate appraisers will use. **Fair trade laws** - laws which permit manufacturers to set a minimum price at which their product is sold for.  **False imprisonment** - where a person is restrained by another person who does not have the legal right to. False imprisonment may become a kidnapping if the victim is restrained for a significant amount of time.   **False pretences** - the crime of knowingly making untrue statements for the purpose of obtaining money or property fraudulently.  **Family Division** - sector of the high court that specifically deals with marriage, divorce and probate.  **Felony** - old term used used to describe serious crimes i.e. rape or murder. This term is still used in the U.S. **Feu** - a lease that lasts forever.  **Fixed Charge** - A charge held over specific assets. The debtor cannot sell the assets without the consent of the secured creditor or repaying the amount secured by the charge. **Fixed asset** - assets that are purchased for long term use and not likely to be converted into cash quickly. Examples of these assets could include land or buildings. **Floating Charge** - A charge held over general assets of a company. The assets may change (such as stock) and the company can use the assets without the consent of the secured creditor until the charge “crystallises” (becomes fixed). Crystallisation occurs on the appointment of an administrative receiver, on the presentation of a winding-up petition or as otherwise provided for in the document creating the charge. **Force majeure** - an event that cannot be controlled and will stop duties under an agreement from being carried out. **Foreclosure** - the repossessing of a property when the mortgagor has failed to keep up with mortgage repayments. If the debt is not repaid then the property may be repossessed. **Forfeiture **- when the tenant has not met the conditions of tenancy agreement therefore losing the possession of the property.  **Forward Contract** - an agreement between two parties to buy or sell an asset as a specific price on a predefined expiry date. The contract can vary between different trades making it a non-standard entity. Forward contracts are most commonly used for trading commodity markets.  **Franchise **- a licensing contract that allows a business to give the right to a third party to operate using their trade-name. This may be through manufacturing, distribution or sales.  **Fraud** - lying or deceiving to either make a profit or gain an advantage, or cause someone else to suffer a disadvantage.  **Fraudulent conveyance** - the transfer of land ownership with the intention of defrauding someone **Fraudulent preference** - someone who is insolvent paying one of their creditors whilst being aware they do not have enough money to pay other creditors. **Fraudulent Trading** - Where a company has carried on business with intent to defraud creditors, or for any fraudulent purpose. It is a criminal offence and those involved can be made personally liable for the company’s liabilities. **Free of encumbrances** - no one else having any rights over something. If one person owns a property and no other person has any rights over it then it is owned free of encumbrances.  **Freehold** - the description of an areas of land that only the owner has any legal rights over.  **Frustration** - the stopping of a contract. A contract may not be carried out because something make’s the contract impossible this is called the frustration of a contract. **Funded debt **- this may also be known as a long-term debt. This is a debt in the form of securities, such as loans or bonds, with long-term or indefinite redemption.  **Futures contact** - binding contract to buy or sell something in the future at a fixed price . G **Garnishee order** - a court order to a third party who owes money to a judgement creditor **General damages** - these are dames that a court will give compensation for without the need for specific proof that that damage was done to the claimant.  **Going concern** - Basis on which insolvency practitioners prefer to sell a business. Effectively it means the business continues, jobs are saved, and a higher price is obtained. **Grant** - proof that you are entitled to deal with a person’s estate who has dies. The grant is used by the probate registry.  **Grant of probate** - a certificate that proves the executors of the will are entitled to deal with the estate. Forms as well as the death certificate and will, will be sent to the Probate Registry which will then in turn be examined by the registrar and once satisfied a grant of probate will be issued.  **Grassum **- A sum of money that is paid when first taking up a lease in addition to the required rent payment.  **Grievous bodily harm** - intentionally causing serious physical harm to another person. **Guarantee** - An agreement to pay a debt owed by a third party. It must be evidenced in writing for it to be enforceable. **Guarantee company** - a company whose members only have to pay the amount they have agreed to contribute of the company is wound up and do not have to pay any extra money if they do not have sufficient funds to pay the company’s debt  **Guarantor** - a person or organisation that promises to pay a debt that is owed by the second person if the second person fails to repay it **Guardian** - someone who is appointed to a child or someone incapable formally to look after their interests. **Guilty **- a courts verdict that someone is to be charged with the crime they committed.  H **Harassment of Debtors** - the act of attempting to collect debt by threatening or distressing a debtor. **Harassment of occupiers** - if a landlord uses threat, violence or interfering with the tenants enjoyment of the property in an attempt to repossess the property. **Hard law** - legal obligations that are binding on the parties who are involved and can be legally enforced by court. **Hearsay evidence** - evidence that is given in court of something said to the witness by another person  **HM Customs and Excise** - the government department that is responsible for administering value added tax, customs and excise duties **HM Land Registry** - a registry in offices and towns in the UK that keeps record of registered land.  **Holding company** - a company which controls another company usually due to owning more than half its shares. **Hostile witness** - a witness who either refuses to testify in support of the people who called them; or testifies in a way that differs from their previous statement **House of Lords** - the highest court in the UK I **Imputed notice** - a legal presumption that a party has notice when it can discover certain facts by due diligence into public records. **Incorporated Company **– a private company with shares which are not publically traded. Incorporation limits the liability of the shareholders as the company is a separate legal entity. **Indemnity **– security against a loss. **Indemnity Insurance **– also known as professional indemnity insurance this provides cover for the legal costs and expenses in defending a claim against you for inadequate advice. **Individual Voluntary Arrangement (IVA)** - A voluntary arrangement for an individual is a procedure whereby the person comes to an arrangement with his creditors in how their debt will be discharged. Such a scheme requires the approval of the court and is under the control of a supervisor. **Inheritance **– part of an estate which is transferred on death usually to a family member. **Injunction **- an order made by the court requiring someone to do something or not do something. **Insolvency Act 1986 (IA 1986)** - Primary legislation governing insolvency law and practice. Nevertheless, many other statues and statutory instruments are also relevant. **Insolvency Practitioner** - An authorised person who specialises in insolvency, usually an accountant or solicitor. They are authorised either by the Secretary of State or by one of a number of recognised professional bodies. **Insolvent **– where you are unable to pay pay debts when they fall due or where liabilities exceed assets. **Insolvency Rules (IA 1986)** - The Insolvency Rules 1986 (as amended) these Rules apply where the Act applies. Where the old Act continue to apply so do the Bankruptcy Rules 1952 and the Companies (Winding Up) Rules 1949. There are separate rules dealing with insolvent partnerships, insolvent deceased’s estates and deeds of arrangement. **Insolvent** - The state of not being able to pay one’s debts as they fall due or having an excess of liabilities over assets. **Insolvent Liquidation** - A company goes into insolvent liquidation if it goes into liquidation at a time when assets are insufficient for the payment of its debts and other liabilities and the expenses of liquidation. **Intangible Property **-­ non-tangible property such as intellectual property rights. **Intellectual Property **– your intangible property, such as inventions, which are protectable via copyrights, patents, design rights and trademarks.   **Inter Alia** - a Latin term for among other things. **Interest **– a legal claim, or right to use property. **Interim Injunction**-  an injunction which is made prior to a civil case coming to trial **Interim Order** - An individual who intends to propose a voluntary arrangement to his creditors may apply to the court for an interim order which, if granted, precludes bankruptcy and other legal proceedings whilst the order is in force. **Interim proceeding **– any hearing which occurs between the first and final hearing would be considered interim. **Interlocutory Judgment **– a provisional judgement. **Intervention **– where a Government body takes over a company acting in the publics best interest. **Intestate **– where an individual dies without leaving a will. **Issued share capital **– the total amount of shares which are issued by a company and held by shareholders. J **Joint and several Liability **– where two or more parties are equally liable for an agreed obligation. Their liability for breach of the obligation can be therefore enforced against them all or any one of them individually.   **Joint tenancy **– a tenancy which is equally divided between two or more parties. **Joint venture **– a commercial undertaking between parties which retain their individual identities. **Joint will **– a will which comprises of two or more individuals estates. **Judge **– the individual who presides over court proceedings and adjudicate them. **Judgment** - Is the decision given by a court at the conclusion of a trial. **Judgment creditor **­– the individual who is owed money after obtaining a judgment at court in their favour. **Judgment debtor **– the individual who owes money as per the judgment of the court. **[Judgment in default](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12) **– a judgment made by the court without trial, where the defendant has failed to either file an acknowledgement of service or file a defence by a certain date. **Junior barrister **­– any barrister that is not part of the Queen’s Counsel. **Jurisdiction **­– the territorial limits which a court has power to make an order. **Jury **­– a sworn body, usually of 12 people, that review evidence during a trial and attempt to come to an impartial decision (the verdict). L **Land Registry **– a statutory body whose role is to maintain registers of certain legal estates in land and was established under the Land Registration Act 1925. **Law of Property Act 1925 (LPA 1925)** - Governs transactions in law and property. Contains statutory powers of receivers appointed under a fixed charge. **Law Society **– the professional body for solicitors in England and Wales. **Lawyer **– a professional who is authorised to carry on legal activities by the Solicitors Regulation Authority **Leasehold **– property which is held exclusively by a tenant for a given period of time in return for rent. **Legacy **– gift left to an individual via a will. Land cannot be a legacy. **Liable **– where an individual is legally responsible for something. **Libel** – a [defamatory statement](https://privateprosecutionservice.co.uk/prosecution-areas/intellectual-property-prosecution/) made in a permanent form such as a newspaper article. **Licence **– authority given which allows the holder to do something which would otherwise be unlawful. **Lien** - Right to retain possession of assets or documents until settlement of a debt. **Limitation Period  **- as dictated by the Limitation Act 1980 these are the statutory rules which limit the period in which a civil claim may be commenced. **Limited Liability Partnership **– this is a partnership where all or some of the partners have limited liability. ** ** **Liquidation** - Applies to companies or partnerships. It involves the realisation and distribution of the assets and usually the closing down of the business. There are three types of liquidation – compulsory, creditors’ voluntary and members’ voluntary. **Liquidation Committee** - Committee of creditors who receive information from the liquidator and sanction some of his actions. **Liquidator** - The Official Receiver or an insolvency practitioner appointed to administer the liquidation of a company or partnership. **Litigant **– the individual who is party to a court action. **Litigant in person **– an individual who represents themselves during the course of court proceedings. **[Litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) **– the commencement of legal action through the courts. **Loan capital – **money raised by an organisation. **LPA Receiver** - Law of Property Act 1925 receiver: a person (not necessarily an insolvency practitioner) appointed to take charge of a mortgaged property by a lender whose loan is in default, usually with a view to sale or to collect rental income for the lender. Common in the case of failure of a property developer, whose borrowings will largely be secured on specific properties. M **Magistrate **– a justice of the peace who sits in the magistrates’ court who usually is a non-legal volunteer. They preside over minor cases. **Magistrates Court **– the lowest court in England and Wales which generally deals with minor criminal cases. **Malfeasance **– an unlawful act. **[Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#mediation) **– a form of alternative dispute resolution in which an independent third party assists the parties to resolve their dispute without going to court. **Member (of a company)** - A person who has agreed to be, and is registered as, a member, such as a shareholder of a limited company. **Middle Temple **– dating back to the 14th Century it is one of the four Inns of Court. **Misconduct **- the breach of a relevant principle by a profession in their field. **Misfeasance** - Breach of duty in relation to the funds or property of a company by its directors or managers. **Misrepresentation **– an untrue statement made by one party to the other which induces them into a contract. **Money Laundering **– the practice of concealing the source of funds obtained illegally. **Mortgage** - A transfer of an interest in land or other property by way of security, redeemable upon performing the condition of paying a given sum of money. **Mens rea **– ‘guilty mind’ the state of mind that a defendant must have had at the time of committing a crime in order to be convicted of the same. N **National Debt**- is the total amount the government owes to its creditors. **Negligence**- is failure to take reasonable care to avoid loss or injury to another person. **Negotiable Instrument**- is a document that guarantees specific payment of a sum of money, either a set demand or a set time from the debtor.  **Next of kin**- is to address a person’s closest relative or relatives. **Nominee** - An IP who carries out the preparatory work for a voluntary arrangement, before its implementation. **Nondisclosure **- the failure for a party to disclose a fact to the other side that could influence their decision. **Notary **- a person who is authorised to certify documents, often this is a solicitor. Documents such as affidavits need to be certified.  **Noting a bill**- Is where a bill (draft or promissory) has been submitted for acceptance or payment and a note to that effect has been dishonoured.  **Notice to admit** - A CPR Part 44 request served by a litigant to pressure the opponent to admit particular facts. A notice to admit facts may be served pre-action but is more usual once litigation has commenced. A party cannot be forced to reply save by an order of the Court however an unreasonable refusal to reply may result in costs penalties. **Notice of hearing - **a written notice informing the parties of the date, time and place that a scheduled hearing will take place. **Notice to quit**- A document from a landlord to a tenant informing them to leave the rental premises. **Notice to treat**- Is a notice that is served by authority on a land owner wanting to obtain land by an agreement. **Novation**- Is the substitute of an old contract to a new contract in place. **Nuisance**- Is an act that is offensive or harmful to others and gives rise to a cause of action. O **Oath **– an pronouncement of the truth of a statement or promise.   **Obiter **– a non-essential opinion which forms part of a Judge’s written judgement and does not become legal precedent. **Obligation **– the requirement, usually by contract, to perform a particular action. **Offer **– a promise or willingness to do something or refrain from doing something. Once accepted this becomes legally binding contract.   **Offeree **– the individual who is the recipient of the legally binding offer. **Offeror **– the individual who makes the legally binding offer. **Officer (of a company)** - A director, manager or secretary of a company. **Official Receiver** - An officer of the court and civil servant employed by The Insolvency Service, who deals with bankruptcies and compulsory company liquidations. **Omission **– a failure to carry out specified acts where there was a duty to perform said act. **Onerous Property** - The term onerous property in the context of a liquidation or bankruptcy, applies to unprofitable contracts and to property that is unsaleable or not easily saleable or that might give rise to a continuing liability. Such property can be disclaimed by a liquidator or a trustee in bankruptcy. **Order **– the instruction or command of the court. **Ordinary Resolution **– a decision made by a company by simple majority (i.e. by more than 50%) of the company members. **Out-of-court settlement **– an agreement between parties which is made privately prior to the court’s decision. **Overriding Objective **–the Civil Procedure Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.   P **PACE **– Police and Criminal Evidence Act 1984. **Pari passu **– the Latin phrase for equal footing. **Part 36 Offer**- An offer to settle all or part of a claim which complies with the requirements in Part 36 of the Civil Procedure Rules (CPR). Either party making a Part 36 offer provides a means of putting pressure on the other side to settle a case and of protecting a party's position on costs. **Party **- a participant of a lawsuit or other legal proceeding.  **Passing Off** – a misrepresentation that goods or services offered are those supplied by another. **Patent **– the exclusive right which is granted over an invention. **Penalty **- a clause in a contract that operates when the contract is breached to compensate or protect the innocent party. **Perjury **– an offence for giving false evidence or evidence which you do not believe to be true. **Personal guarantee **- a pledge by an individual to a bank to repay debt owed to the bank if the bank’s customer fails to pay the debt.  **Petition** - A formal application made to a court. **Policyholders Protection Act 1975** - An act which established Policyholders Protection Board to provide compensation to the public in the event of the liquidation of an insurance company. The Board will make payment in full of liabilities under certain policies of compulsory insurance and 90 per cent of liability to provide policyholders under other general and investment type policies. Compensation is restricted to individual policyholders or partnerships; corporate policyholders are not protected. **Preference** - A payment or other transaction in the six month to two year period preceding a liquidation, administration or bankruptcy, which places a creditor or a person connected with the insolvent, respectively, in a better position than they would have been otherwise. A liquidator, administrator or trustee in bankruptcy may recover any sums which are found to be preferences. **Preferential Creditor** - A creditor who is entitled to receive certain payments in priority to floating charge holders and other unsecured creditors. These creditors include occupational pension schemes and employees. **Prima facie **– a Latin phrase for on the face of it. **Proof of Debt** - A statutory form completed by a creditor in a compulsory liquidation to state how much is claimed. The form is supplied by the Liquidator. **Proxy** - Instead of attending a meeting, a person can appoint someone to go and vote in their place. **Personal injury**- is when injury is caused to a person ** Personal property**- is all property except land. **Personal Representative**- Is  a person who is appointed to deal with a dead person's estate.   **Personalty**- is another word for personal property. **Per stirpes**-  that describes a property divided equally between the offspring.  **Perverting the course of justice** - is when doing something to interfere with the justice system. **Plea** - The defendant's answer to the accusations.  **Plea bargain**-  is when the defendant pleads guilty instead of not guilty in return for a concession by the prosecution.  **Plead **- is to declare to the court whether you are guilty or not guilty.  **Pledge**- is letting someone take possession of goods but the ownership does not change. **Plenipotentiary**-  is someone who has been given complete authority to act **Poaching**-  is taking game from someone else's land without permission.  **Possess**- is  to have property under your control.  **Power of appointment**-  a person giving a second person the power to dispose of the first person's property. **Power of attorney**- is  a document which gives power to the person appointed by it to act for the person who signed the document. **Property**- is the name for anything which can be owned. **Prosecution**- is  bringing proceedings against someone else. **Prospectus**-  is a formal document giving details of a company's past performance and future plans. **Protected tenancy**-  is a tenancy agreement for a house. **Proviso**- is  a clause in a legal document which qualifies another section of the agreement. Q **Quantum **- the value of the claim. **Quantum meruit **- Latin for *"as much as has been earned"* - the equitable remedy in a claim to recover a reasonable sum in respect of services supplied to the defendant equivalent to the amount he deserves or has earned **Quantum valebat **- Latin for *"as much as its worth"* - the equitable remedy in a claim for a reasonable price for goods supplied to the defendant equivalent to the amount the goods are worth **Quash** - to invalidate or set aside a conviction **Queen's Bench **- Is a division part of the High Court. Its main function is to deal with civil cases. **Queen's Counsel (QC)**- is a barrister who has been chosen by the Lord Chancellor to serve as counsel to the Crown. **Queen's evidence** - is evidence for the prosecution given by someone who is also accused of the crime being tried. **Quiet enjoyment-** is allowing a tenant to use land without interference. **Quiet possession**- is using property without interference. When property is sold the buyer should be able to use the property free from interference by the seller. R **Ratio decidendi **-** **the reasons or principles of law on which the court reaches its decision **Realise** - Realising an asset means selling it or disposing of it to raise money, for example to sell an insolvent’s assets and obtain the proceeds. **Receiver** - The commonly used name for an administrative receiver. The term can also mean a person appointed by the court or with the power to receive the rents and profits of property. Receivers who are not administrative receivers do not need to be insolvency practitioners. **Receivership** - A company in administrative receivership is often said to be “in receivership”. **Rescission** - A procedure that cancels a winding-up order. **Release** - The process by which the Official Receiver or an insolvency practitioner is discharged from the liabilities of office as trustee/liquidator or administrator. **Remedy/redress**- when a court or other applicable body grants protection, recovery or enforcement of rights or recovery of damages. **Remote hearing - **A hearing that is held without the people involved coming to court in person. Instead those involved will attend the hearing by telephone or video link. **Reply **- ** **a statement of case filed and served in response to the Defence. **Request for further information** - a written request under Part 18 of the Civil Procedure Rules seeking clarification or further information in relation to matter in dispute in the claim. **Requisition**- an application to the Land Registry or a local authority for a certificate of official search to reveal whether or not land is affected by encumbrances **Rescission** - the setting aside of a voidable contract which is treated as if it never existed **Reservation of Title or Retention of Title Agreement (Romalpa)** - An agreement for the sale of goods to a company, being an agreement; (a) which does not constitute a charge on the goods, but (b) under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company in respect to the goods or any property representing the goods. **Restitution **-** **the return of property to the owner or person entitled to possession, particularly where an individual or entity has been unjustly enriched and unjustifiably received the property where the goods have been transferred under duress, mistake, fraud or illegality. **Restriction** - a limitation of the right of a registered proprietor to deal with the land or charge in registered title. **Restrictive covenant (employment)**- a restriction set out in an employment contract preventing the employee from taking certain steps post-employment e.g. working for a competing business **Restrictive covenant (property)**-** **an obligation set out in a deed that curtails the rights of an owner of land. **Residuary legacy**- it is the remainder of what is to be given out from an estate after all debts, taxes and specific legacies have been paid.  **Residue**- is what is left of an estate after all debts, taxes, expenses and specific legacies have been dealt with.  **Resisting arrest**- is when a person trying to prevent the police arresting him or her.  **Resolution**- is a decision taken by the members of a company in a meeting.  **Respondent**- is the person an action is being taken against.  **Restraining order**-  is an order which a court may issue to prevent a person from doing a particular thing.  **Restriction**- is placed on a piece of land the owner cannot sell or mortgage the land. **Restriction order**- is an order by the Crown Court that prevents a person being discharged from hospital, to protect the public.  **Restrictive covenant**- is  a deed which restricts how a piece of land can be used.  **Retainer**- is a payment to a barrister to act in a case. S **Secured Creditor** - A creditor who holds security, such as a mortgage, over a person’s assets for money owed. A secured creditor is likely to be paid first. **Security** - A charge or mortgage over assets taken to secure payment of a debt. If the debt is not paid, the lender has a right to sell the charged assets. Security documents can be very complex. The commonest example is a mortgage over a property. **Security for costs** - a sum payable into court by a claimant in civil proceedings as a condition of being permitted to continue with the claim. A court will order the same where (i) the claimant is ordinarily resident outside of the jurisdiction; (ii) the claimant is suing on behalf of someone who will be unable to pay the defendant's costs if ordered to do so; (iii) the claimant's address has not provided a correct address or has changed his address during the litigation. **Security of tenure** - protection from a landlord that is attempting to obtain possession of the property that a tenant is renting. **Service** - key documents in litigation such as the Claim Form, Statements of Case are required to be served on the opponent in accordance with the Civil Procedure Rules.  **Set aside** - a court order voiding or cancelling another order or judgment **Settlement** - where the parties agree between themselves or with the use of a mediator, to resolve the claim prior to commencing litigation or without going to trial. **Shadow Director** - A person who, without being formally appointed, gives instructions on which the directors of a company are accustomed to act. **Share capital** - the money that is invested directly in a company by its members **Statement of Affairs** - A document sworn under oath, completed by a bankrupt, company officer or director(s), stating the assets and giving details of debts and creditors. **Statement of Case** - documents filed and served in litigation which set out the ambit of the claim which include the Particulars of Claim, the Defence (and Counterclaim), Reply and witness statements.  **Statement of Truth** - the CPR requires that some documents are verified by a statement of truth such as the claim form.  This means that the person must sign it stating that they believe the contents to be true. **Statute of limitation** - a law which sets out the time limits within which a court action must take place. **Statutory Demand** - A formal notice requiring payment of a debt exceeding £750 within 21 days, in default of which bankruptcy or liquidation proceedings may be commenced without further notice. **Statutory declaration** - a formal statement in a prescribed form affirming that something is true to the best knowledge of the person making the declaration. **Stay of execution** - an order suspending the execution of an order of the court or judgment **Stay of proceedings **- an order pausing civil legal proceedings **Stock drop claim** - a type of claim brought by shareholders pursuant to section 90 and/or section 90A of the Financial Services and Markets Act 2000 when their shares in a company lose value because of some wrongdoing by that company becoming publicly known **Summary judgment  **- a party can apply to the Court for an order dismissing a claim summarily and based on the allegation that there is no claim or defence with a reasonable prospect of success. **Superior courts **- the higher courts in English law. These include the High Court, the Court of Appeal, the Crown Court and the House of Lords.  **Supreme Court** - the Highest court below the House of Lords. T **Tax**-  Is the amount of money that you need to pay the government so the government can pay for public services. **Taxable year-  **is a 12 month period where tax return covers. **Tax Base**-  Is the complete amount of assets or income that can be taxed for by the government or taxing authority. **Tax Credit**- Is the sum of the amount of money that taxpayers can subtract from taxes that is owed to the government from them. **Tax Tribunal**- Is a two tier system of the First Tier Tribunal and the Upper Tribunal that deals with UK tax appeals. **Tenancy-  **is when a tenant has control of land for a period of time  **Third Party-  **an individual or group that does not have direct connection with the two parties for example in a deal or contract but who might be still affected by it. **Tort **- a wrongful act or omission, other than a breach of contract, for which damages can be awarded in a civil court by the person who has been wronged. **Trainee Solicitor- **is a person who is training to be a solicitor by working at a law firm. **Transaction at an Undervalue** - A transaction at an undervalue can describe either a gift or a transaction in which the consideration received is significantly less than that given. In certain circumstances such a transaction can be challenged by an administrator, a liquidator or a trustee in bankruptcy. **Transparent- **is being open and honest in a way that others can understand. **Tribunal** - a person or group who collectively have the authority to determine a dispute as a form of alternative dispute resolution. **Trustee** - (a) Trustee in bankruptcy – the authorised insolvency practitioner appointed to deal with the estate of the bankrupt; (b) Trustee under a deed of arrangement – the authorised insolvency practitioner appointed to deal with the estate of the person who entered into the deed. U **UNCITRAL** - United Nations Commission on International Trade Law. **[Unfair Dismissal](https://lexlaw.co.uk/unfair-dismissal/)** - an employee is entitled to make a claim for unfair dismissal once they are employed for two years if they are dismissed in circumstances that are not one of the 5 potentially fair reasons set out in the [Employment Rights Act 1996 (ERA 1996)](https://www.legislation.gov.uk/ukpga/1996/18/contents). **Unregistered company** - a company which is not registered under the Companies Act.  **Unsecured Creditor** - A creditor who does not hold security (such as a mortgage) for money owed. Some unsecured creditors may also be preferential creditors. **Undisclosed Bankrupt** - Someone against whom a bankruptcy order has been made and who has not been discharged from bankruptcy. V **Valuation**- Is the process that determines the value or worth of an asset. **VAT Bad Debt Relief** - The relief obtained in respect of the VAT element of an unpaid debt. Previously available only when the debtor became insolvent, relief is now available on any debt unpaid for more than 6 months. **Voluntary Liquidation** - A method of liquidation not involving the courts or the Official Receiver. There are 2 types of voluntary liquidation – members’ voluntary liquidation for solvent companies and creditors’ voluntary liquidation for insolvent companies. **Voluntary disclosure**- Is a tax program where a delinquent taxpayer discloses information voluntarily to avoid any liabilities or prosecution prior non-disclosure. **Vendor**- Is the seller of something. Most often used to refer a transaction involving real property. **Venue**- The location proposed of a judicial hearing. **Vicarious liability**- Is where an employer of an employee injures someone through negligence whilst in the course of employment. **Vesting order**- is a way where the High Court transfers land without the need for a conveyance.  **Vexatious litigant**- is a person who regularly brings court cases which have little chance of succeeding. **Violent disorder**- is when  three or more people in a gathering are threatening to or using unlawful violence.  **Void**- unable to be enforced by the law.     W **Warrant** - a legal document permitting the police to take certain actions such as arresting a suspect or searching a property. **Waiver**- an act of relinquishing or refraining from asserting a legal right. **Will** - a legal document declaring a person's wishes about the way their estate should be distributed upon their death. **Winding-up** - (Or liquidation) – the procedure whereby the assets of a company (or partnership) are gathered in and realised, the liabilities met and the surplus, if any, distributed to members. **Winding-up Petition** - A winding-up petition is a petition presented to the court seeking an order that a company be put into compulsory liquidation. **Winding-up Order** - Order of a court, usually based on a creditor’s petition, for the compulsory winding up or liquidation of a company or partnership. **Without prejudice** - when this is written on the document it can not be used as evidence.  **Witness **- someone who watches a document being signed to verify the authenticity of the document; or testifies regarding an event that they know information about.  ## Online Legal Resources | [BAILII](https://www.bailii.org/) | British and Irish Legal Information Institute from the Institute of Advanced Legal Studies, where you can find British and Irish case law & legislation, European Union case law, Law Commission reports, and other law-related British and Irish material. | | --------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | [Bloomsbury Ebooks](https://www.bloomsbury.com/uk/academic/online-resources-and-ebooks/ebooks) | Professional law titles from Bloomsbury Publishing. | | [DawsonERA](https://www.dawsonera.com/) | Collection of over 600 e-books. | | [Ebook Central](https://ebookcentral.proquest.com/) | Ebooks from scholarly sources, including University Publishers. | | [Gov.uk/visas](https://www.gov.uk/browse/visas-immigration) | [Visas and immigration](https://immigrationandvisasolicitors.co.uk/). 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Journals such as Jordan Publishing and Family Law titles. | | [LinkedIn Learning](https://www.linkedin.com/learning/search?keywords=law) | Lynda.com online courses. | | [Oxford Scholarship Online](https://www.oxfordscholarship.com/) | Collections of ebooks in law and psychology | | [Practical Law](https://uk.practicallaw.thomsonreuters.com/Browse/Home/PracticalLaw?transitionType=Default&contextData=(sc.Default)) | PLC applies the law in a ‘practical’ way. Includes practice notes, toolkits, checklists, drafting notes and standard documents. | | [Venables Legal Resources](https://www.venables.co.uk/) | Several hundred pages of listings, describing tens of thousands of legal websites. | | [Westlaw](https://legalsolutions.thomsonreuters.co.uk/en/products-services/westlaw-uk.html?LastSFDCCampaignID=7011B000001xWLMQA2&utm_campaign=WL-Branded&utm_source=GoogleAdwords&utm_medium=Paid%20Search&gclid=CjwKCAiAx_DwBRAfEiwA3vwZYtPCC4UlnZpc0PHUZtvDrmbdSxW2BngwlOKQwiHF3ZLhr7YFbj8KzBoC7VYQAvD_BwE) | Westlaw UK gives access to up-to-date legislation and law reports. Ebooks include Chitty on Contracts and Civil Procedure (the White Book) and journals. | --- # Mediation Source: https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/ *Mediation makes use of a neutral third party to find an agreement between parties, utilising their expertise. The mediator importantly does not form a decision on the case, they are there simply to facilitate an agreement. However, that is not to say that a mediator will not look at the facts of a case as they may be called to evaluate the strengths and weaknesses of a particular matter.* ## What is a mediation agreement? It can be beneficial for parties to sign a mediation agreement prior to commencing this form of [ADR](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/), as it will set out the parameters of the mediation itself such as confidentiality. Usually the mediation agreement will require the parties to treat discussions and documents as confidential and without prejudice. The benefit of a confidential mediation is that both parties avoid issues raised during the proceedings being made public. ## Who needs to attend the mediation? It is common practice for both parties to attend the mediation with their legal representation and importantly an agreed mediator. However, other advisers may attend with you such as accountants if you both agree. This may be helpful if there is a particular which needs to be explored which your adviser has expertise. During the mediation parties will meet with the mediator in private to confidentially discuss the matter, therefore not disclosing their potential weaknesses to the other parties. This gives the mediator a unique perspective on the matter and allows them to propose realistic resolutions to the case. ## Who decides on the mediator? In the first instance parties can agree between them to appoint a mediator. However, if this is not possible then a [third party](https://civilmediation.org/mediator-search/) can select a suitable mediator on behalf of the parties who wish to mediate. The parties are generally free to appoint whomever the please as the mediator as long as they agree. Mediators tend to be lawyers or individuals with technical expertise in a given sector. ## How long will mediation last? A single mediation session lasts up to 2 hours. However, dependent upon the complexity of your matter and how close to resolve the parties are, one mediation session may not be enough. Whilst some matters may be resolved within one session most are dealt with a number of sessions. ## When is the best time to mediate? In compliance with the overriding objective on dealing with cases justly and at a proportionate cost (CPR 1.1) it would be prudent for parties to mediate early to maximise costs and time savings. However, there is no purpose attempting to mediate if the parties do not fully understand the issues or have not exchanged information relating to the matter. Therefore, to mediate effectively parties should wait until their respective issues have been properly defined and have exchanged documents which relate the the dispute and quantum of the matter. Other factors you may wish to consider: - Whether there is a statute of limitation problem. - Whether there is a mediation clause in a contract between the parties - If there may be a possible enforcement issue then mediation after the proceedings have been issued would allow for the settlement to be enforced more easily via consent order ## What are the advantages and disadvantages of mediation? **Advantages: ** - **Time** – Whilst pursuing litigation can take months or years, mediation can be undertaken within a few days. This can pose a significant saving of time for your case. - **Costs** – Similarly, due to the time savings, most matters can be resolved efficiently saving both sides significant costs. - **Control** – With ADR the parties have control over how they proceed with their matter, as they can decide which form best suits their interests. For example, whether or not they want the decision to be legally binding. - **Confidentiality** – Mediation is usually conducted confidentially, which enables full and frank negotiations. - **Business Relationships** – Pursuing ADR as a form of reaching a settlement increases the likelihood of maintaining relationships, as settlements are reached with consent of both parties. - **Requirement** – Parties in contentious disputes are [required by the Courts](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) to attempt ADR and may make adverse costs orders against parties which refuse. **Disadvantages:** - **Costs**- the double edged sword. Whilst mediation is seen as a method to save costs, if unsuccessful it will add time and costs to the dispute. - **Strategy** - the risk with mediation is that you expose your litigation strategy by inadvertently releasing information to the other side. - **Voluntary nature** - As mediation is a non-binding form of ADR uncooperative parties may use it as an opportunity to build legal costs and not act in good faith. - **Disclosure** - mediators do not have the ability to order or require parties to disclose documents which may be essential to an effective mediation. ## Is it legally binding? Unlike [other](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/) forms of ADR, mediation is non-binding, both parties retain control as to whether they agree to settle or not. This may be of benefit if the parties want to maintain commercial relationships. However, that is not to say that mediation cannot be legally binding. Most mediation agreements stipulate that if a settlement is reached it will be binding on the parties as a contract once it is in writing and signed. ## How can we help you? Our specialist lawyers have a proven record of successfully using various forms of alternative dispute resolution such as mediation, in order to successfully resolve disputes in a cost-effective manner for our clients. ## Book an Initial Consultation with Our Expert Litigation Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. **To [contact us](https://lexlaw.co.uk/contact-us/) about your case please call us on: 02071830529** --- # Media Interest Source: https://lexlaw.co.uk/media-interest/ ## Strategic Litigation Results. We're seasoned litigation lawyers. We've acted on thousands of litigation matters in England & Wales. Our solicitors and barristers strive to win. Therefore our legal cases have attracted significant media interest. Our litigation has been referenced by the leading UK broadcast and print media. Our legal comments have been debated in the House of Commons and published in journals and books. ### BBC Panorama Featured and advised BBC One Panorama for their documentary *[“Britain’s New Banking Scandal”](https://www.bbc.co.uk/programmes/b03dz52t)* about major bank mis-selling of complex financial derivatives (eg interest rate swaps). Our client was offered £0 by Lloyds Bank Plc. Once retained, we forced the bank to pay over £1m. Also featured in [The Times](https://i0.wp.com/lexlaw.co.uk/wp-content/uploads/2013/10/141013-The-Times-Lloyds-case-settlement-revealed-LEXLAW-Litigation-Solicitors-Barristers.jpg). [[YouTube](https://youtu.be/7NXkPIkyLw4?t=79)] https://youtu.be/7NXkPIkyLw4?t=3 ![](https://lexlaw.co.uk/wp-content/uploads/2019/12/ITV-NEWS-AT-TEN-lexlaw-litigation-solicitors-london-uk-1024x576.jpg) ### ITV News at Ten Our client and senior partner interviewed by [Laura Kuenssberg](https://en.wikipedia.org/wiki/Laura_Kuenssberg) on the dilatory litigation tactics of major UK banks designed to allow legal rights to become [time-barred](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/). We subsequently obtained multi million pound redress for the client featured in this national broadcast. ([Press Statement](https://lexlaw.co.uk/wp-content/uploads/2015/08/Lloyds-Bank-Litigation-Settlement-CGL-Statement.pdf)) [[YouTube](https://www.youtube.com/watch?v=YBXobOk0EZw)] https://www.youtube.com/watch?v=YBXobOk0EZw ![Times Lawyer London Litigation](https://lexlaw.co.uk/wp-content/uploads/2019/12/the-sunday-times-logo-litigation-lawyers-in-london-uk-e1600957073791.jpg) ### The Sunday Times *The Sunday Times [reported](https://www.thetimes.co.uk/article/we-will-battle-on-warn-victims-of-bank-mis-selling-wq73g9ghcns) [twice](https://www.thetimes.co.uk/article/lloyds-pays-up-on-rate-swap-wrangle-d0p5zhvjtr5)* on the largest ever publicly disclosed settlement in bank swaps litigation.* We took on Lloyds Bank Plc, which refused compensation when approached by other lawyers. Once instructed, we applied strategic litigation pressure to force the bank to pay out £4.6m. *([1](https://www.thetimes.co.uk/article/lloyds-pays-up-on-rate-swap-wrangle-d0p5zhvjtr5)) ([2](https://www.thetimes.co.uk/article/we-will-battle-on-warn-victims-of-bank-mis-selling-wq73g9ghcns)) ![The Times - Lloyds case settlement revealed - LEXLAW Litigation Solicitors & Barristers Bank Swaps Mis-selling](https://lexlaw.co.uk/wp-content/uploads/2013/10/141013-The-Times-Lloyds-case-settlement-revealed-LEXLAW-Litigation-Solicitors-Barristers-1024x722.jpg)Lloyds Bank settles swaps mis-selling claim brought via LEXLAW Solicitors & Barristers, London. ![](https://lexlaw.co.uk/wp-content/uploads/2019/12/Errol-Bland-Lexlaw-Lloyds-Litigation-Banking-UK-Law-Firm-London-Settlement-Sunday-Times.jpg) ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/sky-news-logo-litigation-solicitor-london-uk-court-e1600956972130.png) ### Sky News: Jeff Randall Live *Jeff Randall, Daily Telegraph Editor-at-Large, discusses the latest in international business affairs, [Live on Sky News](https://news.sky.com/)* *from the Gherkin.* Following the LIBOR fraud rate-fixing scandal, our senior partner, M Ali Akram was interviewed at the Sky News Gherkin studio. We explained the complexity of swaps and that £millions/billions of redress was owed. We issued and settled more litigation claims for mis-sold IRHPS than all other law firms combined. [[YouTube](https://www.youtube.com/watch?v=9UFrx3A4MD0)] https://www.youtube.com/watch?v=9UFrx3A4MD0 ### Shredded - Inside RBS Our comments on RBS featured in *“Shredded: Inside RBS: the Bank that Broke Britain”* by Ian Fraser. The book quotes and cites our employed chancery barrister. ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Shredded-RBS-Banking-Law-Litigation-Lawyers-in-London-UK.jpg) ![](https://lexlaw.co.uk/wp-content/uploads/2019/12/Shredded-RBS-Bank-Excerpt-Lexlaw-Litigation-Solicitors-Barristers-London-UK-1024x809.jpg) ### Sky News [Watchdog Hunts Banks Over ‘Business Victims’](https://news.sky.com/story/watchdog-hunts-banks-over-business-victims-10477244). Article Quotes our senior partner, M Ali Akram. We comment that redress and limitation warnings are not set out by the FSA. Our client was on the Sky News Rolling Bulletin: [[YouTube](https://youtu.be/WRMjjj69yxk)] https://youtu.be/WRMjjj69yxk ### Law Society Gazette Quoted in an article about the FSA damning report on mis-sold interest rate hedging products:  [‘Steer clear of CMCs, financial watchdog warns bank litigants’](https://www.lawgazette.co.uk/66306.article) ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Lexlaw-Law-Society-Gazette-FSA-Litigation-Steer-clear-of-CMCs-financial-watchdog-warns-bank-litigants.png)Steer clear of CMCs, FSA warns bank litigants ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Gazette-Cover-LEXLAW-Litigation-Lawyers-in-London.jpg)Law Society Gazette ### London Evening Standard Case study on our client: [‘We sold my grandmother’s gold to keep up with Barclays loan payments’.](http://www.standard.co.uk/news/uk/we-sold-my-grandmothers-gold-to-keep-up-with-barclays-loan-payments-7899418.html) We successfully fought off a winding-up petition, LPA receivers and auctioneers. Ultimately we forced Barclays Bank to compensate our client. [Print PDF version](https://lexlaw.co.uk/wp-content/uploads/2012/08/290612-London-Evening-Standard-Pages-6-7-Interest-Rate-Swaps-Mis-selling-LEXLAW.pdf) ![Litigation lawyers in London](https://lexlaw.co.uk/wp-content/uploads/2013/06/290612-London-Evening-Standard-Bob-Diamond-told-to-apologise-We-were-promised-safe-loan-but-we-became-beggars-to-meet-payments-Superfresh-v-Barclays-LEXLAW-LITIGATION-LAWYERS-LONDON-768x617.png) ### BBC News All main BBC television bulletins featured our client as [‘FSA finds banks guilty of mis-selling to small firms’](http://www.bbc.co.uk/news/business-18640101). Our client obtained full compensation from Barclays Bank plc after we issued litigation. ### International Business Times We're interviewed about litigation as a strategic tool to obtain compensation: [‘EXCLUSIVE: Mis-Selling Derivatives Victims Look to Bypass FSA’s Bank Agreement’](http://www.ibtimes.co.uk/misselling-derivatives-irsa-barclays-hsbc-rbs-lloyds-383888) ### Sky News Sunrise Our partner was interviewed on Sky Breakfast News alongside our client (who later won her litigation) discussing "BREAKING NEWS: MIS-SELLING SCANDAL" [[YouTube](https://youtu.be/v_JHfC82N-I)] https://youtu.be/v_JHfC82N-I ### The Lawyer We're quoted in leading industry trade publication The Lawyer warning UK businesses about the limitation period of six years: [‘Raft of firms win roles as mis-selling crisis hits Barclays, HSBC, Lloyds and RBS’](https://web.archive.org/web/20150927061230/http://www.thelawyer.com/raft-of-firms-win-roles-as-mis-selling-crisis-hits-barclays-hsbc-lloyds-and-rbs/1013125.article) ### International Business Times We're interviewed about a litigation case being described in the international media as the UK’s LIBOR test case: [‘Barclays’ Libor Fixing and Mis-Selling Derivatives: Guardian Care Homes Faces a Legal Minefield’](http://www.ibtimes.co.uk/mis-selling-derivatives-libor-fixing-barclays-guardian-399741) ### Daily Mail The UK's most popular national newspaper [reported](https://www.thisismoney.co.uk/money/smallbusiness/article-3997128/RBS-scandal-helps-fastest-growing-law-firm-LexLaw-hit-3m.html) on our firm's success and our client's case against the Royal Bank of Scotland Plc whose GRG recoveries division and WestRegister sister company took control of 80% equity in a family bowling chain costing the owners £50m loss while RBS profited £9m [[Article](https://www.thisismoney.co.uk/money/smallbusiness/article-3997128/RBS-scandal-helps-fastest-growing-law-firm-LexLaw-hit-3m.html)]. ### Reuters We're interviewed about the prospect of Libor litigation which may ensue against the rate setting banks which manipulated Libor such as Barclays and UBS: [‘Lawsuits cast darker shadow over banks than Libor fines’](https://www.reuters.com/article/us-banks-libor-lawsuits/lawsuits-cast-darker-shadow-over-banks-than-libor-fines-idUSBRE8BK0OF20121221) ### The Times National Newspaper [Report](http://www.thetimes.co.uk/tto/business/industries/banking/article3893732.ece) on our Bank Litigation team’s success against a major UK bank who sold a multi-cancelable swap to our celebrity client. Our client's original lawyers failed to obtain compensation. We gave fresh advice on the legal prospects and commenced High Court proceedings. The bank instructed major litigation firm Herbert Smith Freehills LLP but we still forced Lloyds to pay £1m.  ![The Times - Lloyds case settlement revealed - LEXLAW Litigation Solicitors & Barristers Bank Swaps Mis-selling](https://lexlaw.co.uk/wp-content/uploads/2013/10/141013-The-Times-LEXLAW-Solicitors-Swaps-Mis-selling-Litigation-Settlement.jpg)Lloyds Bank settles swaps mis-selling claim brought via LEXLAW Solicitors & Barristers, London. ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/2020/01/House-of-Commons-UK-Parliament-lexlaw-litigation-lawyers-london-e1600955339243.png) ### BBC Parliament Our [interview in the IBTimes](https://www.ibtimes.co.uk/mis-selling-derivatives-irsas-tessa-munt-barclays-443326), results in a question being raised in the United Kingdom Parliament by The Rt. Hon. Tessa Munt MP for Wells (PPS to The Rt. Hon. Vince Cable MP). Response by The Rt. Hon. Andrew Lansley MP, Leader of the House. [[YouTube](https://youtu.be/R31tJXE1Cyc)] https://youtu.be/R31tJXE1Cyc ### International Business Times We're interviewed about the flaws in Barclays Bank's FSA Review process: [‘Mis-Selling Derivatives Exclusive: Barclays’ Lawyers Accused of Breaching Code of Conduct’](http://www.ibtimes.co.uk/barclays-irsa-mis-selling-derivatives-eversheds-tlt-441838) ### Law Gazette "[*First swaps mis-selling case heads to Rolls Building*](https://www.lawgazette.co.uk/news/first-swaps-mis-selling-case-heads-to-rolls-building/5063645.article)". The Law Society Gazette reported, as did the national print media, on our client's claim against Barclays Bank Plc. The claim centred on complex financial swaps instruments, credit limit utilisation and consequential losses. [Download](https://lexlaw.co.uk/wp-content/uploads/2020/01/First-swaps-mis-selling-case-heads-to-Rolls-Building-_-News-_-Law-Gazette.pdf) ### Reuters Complinet We're interviewed in-depth by Reuters for their article: "[Banks gamed FCA-supervised interest-rate swap redress scheme; Complaints Commissioner found systemic issues](https://lexlaw.co.uk/wp-content/uploads/2020/01/23May2019-LEXLAW-London-Solicitors-Reuters.FCA_.IHRP_.Banks-gamed-FCA.pdf)" [Download](https://lexlaw.co.uk/wp-content/uploads/2020/01/23May2019-LEXLAW-London-Solicitors-Reuters.FCA_.IHRP_.Banks-gamed-FCA.pdf) ### Civil Justice Council Our senior partner invited to the Civil Justice Council's seminar reviewing Part 2 of LASPO 2012. The UK government asked the CJC to convene the seminar to consider the DBA reforms & extent to which they meet legislative objectives. Senior judiciary and government ministers and civil servants in attendance and receptive to the need for legislative change. ### BBC News Our litigation client, Tracy Standish of Bowlplex, featured in BBC News TV report on leaked FCA RBS GRG Westregister misconduct report. 92% of viable business customers put into GRG “experienced some form of inappropriate action by RBS”. *Case: Tracy Standish & Others v The Royal Bank of Scotland Plc and Another [2018] EWHC 1829 Ch* ### The Times Sunday Times article on our demands against the BBC, RBS and the FCA: "*[Lawyers demand BBC releases leaked report on RBS case clients](https://www.thetimes.co.uk/article/lawyers-demand-bbc-releases-leaked-report-on-rbs-case-clients-trtl5cmvj)*". We also ask why the FCA has not reported on RBS GRG for 4 years and criticise the FCA as a trade union for bad banks. ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Lawyers-Demand-RBS-GRG-Report-Times-LEXLAW-litigation-lawyers-london-596x1024.jpg)Sunday Times Law ![](https://lexlaw.co.uk/wp-content/uploads/2020/02/the-lawyer-logo1-288x29-1-e1600957341415.png) ### The Lawyer Article on our client The Wenta Group reporting on their High Court derivatives claim against RBS. Titled: ‘[Charity gains ground in RBS and NatWest mis-selling claim](https://lexlaw.co.uk/solicitors-london/charity-gains-ground-rbs-natwest-mis-selling-claim/)’ ![Litigation Lawyers London LEXLAW Wenta RBS Banks](https://lexlaw.co.uk/wp-content/uploads/2017/07/Lawyer-Wenta-v-RBS-LEXLAW-Litigation-Solicitors-London-Tweet.png) ### Solicitors Journal Our partner, Kumaran Sivathillainathan, writes in [Solicitors Journal](https://solicitorsjournal.com/Sjarticle%2FA%20recognised%20body%20of%20derivatives%20expertise) on admissibility of expert evidence in bank litigation. Case: *Darby Properties v Lloyds Bank * ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/A-recognised-body-of-derivatives-expertise-Solicitors-Journal-Kumaran-Sivathillainathan-LEXLAW-Litigation-London.png)[Solicitors Journal](https://solicitorsjournal.com/Sjarticle%2FA%20recognised%20body%20of%20derivatives%20expertise) ### HM Parliament We contributed to the All Party Parliamentary Group (APPG) on Banking report titled *[Fair Business Banking](https://lexlaw.co.uk/solicitors-london/appg-fair-business-banking-sme-access-to-justice-financial-services-tribunal/) For All - improving access to justice for businesses in financial services disputes*. Conclusion: A Financial Services Tribunal is a must for SMEs. ![](https://lexlaw.co.uk/wp-content/uploads/2018/07/Ali-Akram-APPG-Fair-Business-Banking-Access-to-Justice-LEXLAW-Litigation-Solicitors-London-UK-1024x776.jpg) ![High Court Litigation Lawyers in London UK](https://lexlaw.co.uk/wp-content/uploads/2020/01/Law360-logo-lexlawlitigationsolicitorsinlondonuk-e1600956845826.png) ### Law360 Legal industry publication Law360 reported on our clients' High Court litigation as follows: [1] "[*Small Biz Owners Accuse Barclays Of 'Predatory' Misselling*](https://www.law360.com/articles/984873/small-biz-owners-accuse-barclays-of-predatory-misselling)" and [2] "[*Barclays Faces Landmark Interest Swaps Misselling Claim*](https://www.law360.com/articles/984248/barclays-faces-landmark-interest-swaps-misselling-claim)". ### 4 News Our clients' £50m GRG litigation case, Bowlplex v RBS, featured on on Channel 4 News: '[RBS losses rise](https://www.channel4.com/news/rbs-losses-rise)'. [[YouTube](https://youtu.be/cbCaHhxNGGs)] https://youtu.be/cbCaHhxNGGs ### Solicitors Journal The pursuit of High Court litigation against Royal Bank of Scotland and NatWest by Wenta, our not-for-profit client, is just one example of the growth in the importance of ‘no win, no fee’ agreements for SME claimants. ![](https://i0.wp.com/lexlaw.co.uk/wp-content/uploads/2020/01/Solicitors-Journal-Niche-Litigation-Law-firm-in-London-Lexlaw-High-Court.jpg?fit=580%2C767&ssl=1)[Solicitors Journal](https://solicitorsjournal.com/Sjarticle%2FDavid%20v%20Goliath%20litigation) ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Solicitors-Journal-Kumaran-Sivathillainathan-LEXLAW-Litigation-Solicitor-Barrister-London-High-Court.jpg)[Solicitors Journal](https://solicitorsjournal.com/Sjarticle%2FDavid%20v%20Goliath%20litigation) ### The Times Brief The Times Law The Brief reports on SME incubator, The Wenta Group calls for the FCA to support a [#FinancialServicesTribunal](https://twitter.com/hashtag/FinancialServicesTribunal?src=hashtag_click) ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/times-brief-wenta-litigation-lawyers-in-london-solciitors.png) ### London Evening Standard Our client's £50m litigation claim #Bowlplex vs @RBS in tonight's London @EveningStandard via @SignorBow - #RBS #GRG review scheme slammed. ![LONDON EVENING STANDARD LOGO](https://lexlaw.co.uk/wp-content/uploads/2009/08/new-es-logo-415x238.jpg)RBS Scheme Inadequate ### The Times Banking Litigation: Barclays sued for £4m by GPs by Times Law reporter Kiki Loizou. Alleged the bank mis-sold them a complex financial product that ended up costing their practice millions of pounds. The case settled. [Litigation News Article](https://lexlaw.co.uk/solicitors-london/barclays-sued-4m-gps-derivatives-mis-selling-litigation-irhp-swaps/) | [Times Newspaper](https://www.thetimes.co.uk/article/barclays-sued-for-4m-by-gps-qpjrwl8jj) ![lexlaw litigation solicitors in london lawyers professional negligence](https://lexlaw.co.uk/wp-content/uploads/2016/12/The-Times-logo-lexlaw-solicitors-in-media-1024x137.png) ### GEO TV News International broadcast and print media reported on our legal work for one of our high-profile clients connected to former Pakistan Prime Minister Nawaz Sharif’s conviction appeal case: *"[What's in Judge Arshed Malik’s Video: UK forensic report?](https://www.geo.tv/latest/247796-whats-in-judge-arshed-maliks-video-uk-forensic-report)*" [Download](https://lexlaw.co.uk/wp-content/uploads/2020/01/What-is-in-Judge-Arshed-Malik’s-video-UK-forensic-report_-_-Pakistan-Geo.tv_.pdf) ### IBTimes TV Interviewed by International Business Times' Lianna Brinded at Westminster discussing litigation against the 4 major UK banks. *"Mis-Selling Derivatives Lawyer Q&A: Ticking Timebomb of Legal Rights" *[[YouTube](https://www.youtube.com/watch?v=P7C6sPmbKD0)] https://www.youtube.com/watch?v=P7C6sPmbKD0 ### BBC News BBC Business Correspondent, Joe Lynam, obtained a leaked regulatory report from a confidential source. We advised and provided managed access to our clients. Our client's case was featured as rolling news on all major bulletins from the BBC and across the BBC home pages: [1] [RBS accused of mistreating businesses in leaked report](https://www.bbc.co.uk/news/business-41048691) [2] [RBS restructure client: 'I became suicidal'](https://www.bbc.co.uk/news/business-41052435) ### New Law Journal *"[Unnatural selection in financial mis-selling](https://www.newlawjournal.co.uk/content/unnatural-selection-financial-mis-selling)"* The courts, not defendants, should be shaping case law in financial mis-selling litigation, says our partner, Kumaran Sivathillainathan, writing in the NLJ, a leading UK law journal. ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/nlj_logo_law-london-firm-litigation-solicitors-barristers-lexlaw.png) [Download](https://lexlaw.co.uk/wp-content/uploads/2020/01/090316-SKS-NLJ-Unnatural-selection-in-financial-mis-selling.pdf) ### Sky News Comet Group collapse - Our insolvency litigation partner interviewed by Sky News anchor Joel Hills live at the Gherkin. See our article: [http://wp.me/p2MQoC-jq](http://wp.me/p2MQoC-jq) ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/2020/01/Joel-Hills-Sky-News-Gherkin-Litigation-Lawyers-in-London-LEXLAW-e1579100417592.jpg) Also interviewed by [Sky News’ Business Correspondent, Poppy Trowbridge, ](https://news.sky.com/story/investigation-launched-into-comet-collapse-10460439)on the potential inequitable liquidation outcome and government policy reform. [[YouTube](https://youtu.be/BL_c1yFX10U)] https://youtu.be/BL_c1yFX10U ### The Times Jonathan Ames, Times Law reporter writes about one of our bank litigation cases which made legal history: "*[Couple sue Barclays over costly complicated mortgage](https://www.thetimes.co.uk/article/couple-sue-barclays-over-costly-complicated-mortgage-d0x2rpfbz)*" ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Times-Couple-sue-Barclays-over-costly-complicated-mortgage-lexlaw-solicitors-london-litigation-legal-action-1.png) ![High Court Litigation Lawyers in London UK](https://lexlaw.co.uk/wp-content/uploads/2020/01/Law360-logo-lexlawlitigationsolicitorsinlondonuk-e1600956845826.png) ### Law360 Legal industry report on our LIBOR case: "*[Lloyds, Investors Stay Suit To Decide Swaps Mis-selling Claim](https://www.law360.com/articles/1128633/lloyds-investors-stay-suit-to-decide-swaps-misselling-claim)*". The High Court in London has stayed a claim against Lloyds Bank PLC until March to allow the British lender and three property investors to enter into talks to resolve the dispute out of court. Lloyds has until March 31 to settle the dispute with three property investment companies, which specialize in buying and renting property in the U.K., that are suing the bank for allegedly selling swaps linked to rigging of the London Inter-bank Offered Rate, or Libor. ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/2020/01/House-of-Commons-UK-Parliament-lexlaw-litigation-lawyers-london-e1600955339243.png) ### HM Parliament LEXLAW were the only law firm [referenced](https://hansard.parliament.uk/Commons/2018-01-18/debates/662C3FBE-7CAA-47F9-A63A-D01564E21B44/RBSGlobalRestructuringGroupAndSmes#contribution-D7B8ED8B-355A-49B3-ADF7-B3D7726EC90F) in a [Parliamentary backbench motion](https://hansard.parliament.uk/commons/2018-01-18/debates/662C3FBE-7CAA-47F9-A63A-D01564E21B44/RBSGlobalRestructuringGroupAndSmes) on [RBS](https://personal.rbs.co.uk/personal.html)’s Global Restructuring Group’s (GRG) systemic failure to protect SMEs. RBS was criticised for its “*extraordinarily aggressive*” approach to litigation and bullying SMEs into submission. The Rt Hon Kate Green MP said: "*LEXLAW has detailed other cases where RBS failed to provide full disclosure to the court and the claimant. That is clearly not how litigation should be conducted.* " [Hansard Parliamentary Record](https://hansard.parliament.uk/Commons/2018-01-18/debates/662C3FBE-7CAA-47F9-A63A-D01564E21B44/RBSGlobalRestructuringGroupAndSmes#contribution-D7B8ED8B-355A-49B3-ADF7-B3D7726EC90F) | [Article](https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/) ### Shredded - Inside RBS "*[Shredded - Inside RBS: The Bank That Broke Britain](https://read.amazon.co.uk/nc/?kcrFree=only&asin=B00KRCKR9A)*" by leading investigative journalist Ian Fraser. Our litigation solicitors & barristers are mentioned in the preface and elsewhere in this book. Covers the rise and fall of the Royal Bank of Scotland Plc, whom, alongside our clients, we have litigated against on many occasions. ![](https://i2.wp.com/lexlaw.co.uk/wp-content/uploads/2020/01/Shredded-RBS-Copyright-Ian-Fraser-Cover-March-2019.png?fit=580%2C292&ssl=1) --- # Tax Tribunal Representation Source: https://lexlaw.co.uk/first-tier-tax-tribunal-hmrc-representation-solicitor-london/ We can provide you with the very best representation in negotiations, throughout the HMRC internal review process and in front of the [Tax Tribunal.](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect including developing a strategy. ## First Tier Tax Tribunal *The [Tax Tribunals](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) can be used by a taxpayer when appealing a HMRC decision. If the [appeal to HMRC](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/) after the penalty notice is issued is unsuccessful and the HMRC  [internal review](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/) procedure has not yielded a satisfactory conclusions then recourse is available by appealing to the [First Tier Tax Tribunal](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax) ([section 49D](https://www.legislation.gov.uk/ukpga/1970/9/section/49/enacted), TMA 1970).* ### What is the First Tier Tax Tribunal? A taxpayer can appeal immediately to the [First Tier Tax Tribunal](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax) on HMRC decisions regarding indirect taxes such as VAT, excise duty or customs duty. However, for decisions about direct taxes (such as Income Tax, [PAYE](https://taxdisputes.co.uk/paye-tax-investigation-disputes/), Corporation Tax, Capital Gains Tax, Statutory Sick or Maternity Pay and [Inheritance Tax](https://taxdisputes.co.uk/2020/07/hmrc-investigations-inheritance-tax-disputes-iht-disclosure-advise/)), a taxpayer must [appeal to HMRC first](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/). For both direct and indirect taxes, there may have been an [internal review](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/). It is not permissible to appeal to the Tax Tribunal during the course of the internal review. The Tax Tribunal is completely independent of HMRC and is governed by an overriding objective to deal with cases fairly and justly ([rule 2, First Tier Tribunal Rules (FTR 2009)](https://www.legislation.gov.uk/uksi/2009/273/article/2/made)). The Tribunal will consider the evidence of both parties, equally whilst the judge heavily relies on previous case law. ### How do I Commence Proceedings at the First Tier Tax Tribunal? To commence proceedings, the Appellant must notify the appeal to the Tax Tribunal. An appellant or their legal representative can [appeal to the Tax Tribunal online](https://appeal-tax-tribunal.service.gov.uk/) or fill in a [T240 notice of appeal form](https://formfinder.hmctsformfinder.justice.gov.uk/t240-eng.pdf). Proceedings will commence once the Appellant has sent a notice of appeal to the tribunal within the specific time limits as set out by the particular Act. The [First Tier Tribunal Rules 2009](https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/357075/tax-chamber-tribunal-procedure-rules.pdf) sets out that the notice of appeal must include: > “(a) the name and address of the appellant; > (b) the name and address of the appellant’s representative (if any); > (c) an address where documents for the appellant may be sent or delivered; > (d) details of the decision appealed against; > (e) the result the appellant is seeking; and > (f) the grounds for making the appeal.” > > > [[Rule 20(2), FTR 2009](https://www.legislation.gov.uk/uksi/2009/273/article/20/made)] and: > “The appellant must provide with the notice of appeal a copy of any written record of any decision appealed against, and any statement of reasons for that decision, that the appellant has or can reasonably obtain.” > > > > > > > > > [[Rule 20(3), FTR 2009](https://www.legislation.gov.uk/uksi/2009/273/article/20/made)] ## Late Appeals to the Tax Tribunal *[HM Revenue and Customs (HMRC) ](https://www.gov.uk/government/organisations/hm-revenue-customs)have actively sought to clamp down on tax evasion or avoidance and increasingly more individuals and businesses are subject to HMRC tax penalties. It is vital that any taxpayer (individuals and businesses) deal with tax issues as soon as they occur to prevent their appeal from being time-barred and to minimise the accrual of penalty fees. * ### How do I apply for Permission to Appeal out of time? The First Tier Tribunal have the judicial discretion to permit tax appeals made out of time to proceed. The time limit to bring a VAT appeal to the FTT in 30 days and a late appeal will only be permitted in exceptional circumstances. The time limit for bringing a VAT appeal to the FTT commences from the date of the document notifying the appellant of the decision, or where someone else is the appellant, the date on which that person becomes aware of the tax decision (VATA 1994, s. 83G(1)(a)).   ### In what circumstances will the First-tier Tax Tribunal (FTT) allow a late appeal? Factors the FTT will take into account in deciding to allowing a late appeal: - The length of the delay in making an appeal - What was the reason for the delay? - Was the delay caused by the actions of HMRC? - Once the taxpayer is aware of an appeal, did the appeal progress expeditiously? - Will there be prejudice to the taxpayer or to HMRC is allowed or refused? - Are there public interests considerations if an out of time appeal is allowed or refused? ## Drafting Witness Statements: *Witness statements are a crucial piece of evidence when presenting your case in dispute with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). Skill and effort are required in drafting such statements, and the Court or Tax Tribunal will often criticise poorly drafted statements without statements of truth for example. A good [CPR](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) compliant witness statement is an important part of advocacy.* ### What is a witness statement? A [witness statement](https://www.justice.gov.uk/courts/procedure-rules/civil/standard-directions/general/witness-statements) is a formal document that contains a witness’s account of the facts relating to a particular dispute. The purpose of a witness statement is to provide written evidence to support a particular party’s case. A witness statement can either be in support of your case or your opponent’s case. A witness statement is a crucial piece of evidence that will be referred to and relied upon at trial or at the [First Tier Tax Tribunal](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/). Therefore, it is important to ensure that your witness statement is both accurate and comprehensive. ### What should a witness statement contain? When doing a witness statement you should only disclose relevant information to the case and usually the person requesting the witness statement will set out what to cover in the witness statement. We suggest you seek [legal advice](https://taxdisputes.co.uk/) if you are having difficulty in complying with what your witness statement should include. ### Who provides witness statements on behalf of HMRC? - Tax Credit Office - Centre for Exchange of Intelligence (CEI) - Child Benefit Office - Law Enforcement Operations Any member of [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) staff can provide and sign a witness statement providing that they have permission to disclose the information. When a witness statement is prepared, the person who produced the witness statement may be called to Court to make a statement of oath. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our tax team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member(s) of our tax team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. --- # Debt Recovery Court Proceedings Source: https://lexlaw.co.uk/debt-recovery-insolvency-county-court-proceedings-petitions-fixed-fee-lawyers-london/ If after a creditor has followed the [pre-action protocol](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) (and submitting a [Letter of Claim](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/)) or after [issuing a statutory demand](https://windinguppetitionsolicitors.co.uk/issue-statutory-demand/), the debtor has still neither paid the debt that is due nor negotiated a repayment plan (or responded at all), then the next option would be to issue a County Court claim against the debtor. We are highly experienced at seeking the recovery of unpaid debts from individuals and companies so we know the best way to get your unpaid debts paid up quickly. Often the pressure and issuance of County Court proceedings or the filing of a winding up or bankruptcy petition focuses the mind of a debtor into paying before further costs accrue (which we may also be able to recover from the debtor). ## We do things differently to other law firms. We keep debt recovery simple To date, we have a 100% success rate and all of the petitions we have issued have been resolved in our client’s favour. This has also meant that the petitioned company or individual has paid our fees. Luckily for our clients this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs. ## Discounted Fixed Fee Debt Recovery Packages As a result of our success we are now able to offer clients a proactive debt recovery package for a small fixed fee (which is likely to be recovered). If you require any further information please do not hesitate to send an email or give us a call. ## We represent you at Debt Recovery Court Hearings Although we are based in the legal heart of London, operating as the only law firm based in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/) (Inns of Court), we provide comprehensive nationwide coverage to represent you at any debt recovery hearing at any Court. Our team of solicitors and barristers will prepare the Claim Form and Particulars of Claim for you. We will represent you at the debt recovery hearing and/or winding up or bankruptcy petition hearing and will provide our own barristers or external local counsel to any hearing across the country. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our debt recovery team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our debt recovery team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Instruct Specialist Debt Recovery Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. **Our Debt Recovery Lawyers are able to give you specialist legal information and advice right now. Just [click here](http://windinguppetitionsolicitors.co.uk/legal-case-assessment) or call 02071830529 for a quick telephone assessment.** --- # Winding-up Petition Hearing Representation Source: https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/ *We do things differently to other law firms. We are located in the legal heart of London and are purposefully located just minutes from the major UK Companies Courts in order to provide our clients with urgent representation. Our expert Insolvency solicitors and barristers are located in Middle Temple Chambers opposite the Royal Courts of Justice and just 5 minutes walking time away from the Insolvency and Companies Court in the Rolls Building. * ## What is a winding up petition? A[ winding up petition](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/) is a legal notice filed a court by a creditor. The creditor but be owed more than £750 which has not been paid for more than 21 days. The purpose of the petition is to ask the court to liquidate the company, if the company is liquidated the proceeds will be used to repay creditors. Generally, around 60% of all winding-up petitions are issued by His Majesty's Revenue and Customs ([HMRC](https://windinguppetitionsolicitors.co.uk/set-aside-hmrc-winding-up-petition-statutory-demand-lawyer-advice/)). HMRC petitions therefore generally represent 60% of all petitions. We are extremely experienced in dealing with HMRC petitions including obtaining adjournments and time to pay for directors. ## Who attends the winding up petition hearing? The petitioner, creditors, anyone with an interest in the company’s property, the company and its’ shareholders all have the right to attend the hearing and be heard at the hearing. ## Where do winding up hearings take place? In London, [winding up petitions](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/) are heard at the High Court of Justice, Business and Property Courts of England and Wales, in the Insolvency and Companies Lists. Hearings usually take place on Wednesdays from 10:30am in the Rolls Building, Fetter Lane, London, EC4A 1NL. We are located 5 minutes walk from the Court and are therefore able to provide urgent representation. However, this is subject to capacity and receiving instructions in a timely manner. ## How long does it take to issue a winding up petition? A petition can be presented to the Court and issued relatively quickly however it is vital to ensure that the debt is liquidated and for a legal representative to review all correspondence and papers surrounding the debt and take any pre-action steps that are advised by the solicitor. Generally it will take up to 28 days for a [winding up petition](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/) to come into existence however it is possible to act much more quickly (upon considered legal advice). Once the debtor has received the petition it is advised they act quickly in order to save the company. If you have received a petition there is a seven day time limit to take action for example to restrain advertisement by agreement or injunction if the debt is disputed and apply to seek dismissal of the petition. ## What action can be taken to oppose a winding up petition? The debtor is able to take one of the following steps within seven days of the receipt of the petition: - Pay all monies due to the creditor. - Propose a Company Voluntary Arrangement (CVA). This is a insolvency procedure which provides up to five years of extended payment time. - Place the company into administration. - Raise a genuine and substantial dispute and seek injunctive relief to stay advertisement and seek dismissal. ## What is the role of  a Liquidator in winding up petitions? If the court winds up the company, the role of a liquidator is to collect and distribute the company assets in accordance with [Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Insolvency-Act-1986-Lexlaw-Solicitors-and-Advocates-London-UK.pdf). Liquidators are officers of the court and have special powers which enable them to fulfil their role. Another aspect of their role is to remove the company from legal relationships. Liquidators ensure that all contracts are completed, transferred or brought to an end and that all liabilities are accounted for and legal disputes settled. They may seek to bring legal action against directors for overdrawn directors loan accounts or other financial wrongs. ## Is liquidation the same as winding up? Winding up evolves the conclusion of all business affairs and includes the closure of the company which includes liquidation or dissolution. Liquidation, however, is specifically regarding the selling of company assets in order to pay creditors. ## Why should you instruct a specialist insolvency lawyer at the winding up petition hearing? The rules surrounding insolvency are technical and it is unlikely that a someone not versed in personal insolvency laws will achieve a successful outcome. [Winding up](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/) particularly and insolvency is a niche practice area – indeed many solicitors in general practice will rarely have experience in this discipline. Do not underestimate the severe consequences that winding up a company entails. It is likely that seeking the advice of a specialist insolvency lawyer will be of far more benefit to you than ignoring impending proceedings or seeking to conduct the litigation yourself as a layman. ## How can we help you? Our team is made of highly experienced and tough negotiators that will fight to get the best results for our clients. We have years of experience of negotiating with creditors and debtors alike from large multi-million pound cases to smaller matters with equally large consequences for the person involved. ## How can we represent you at Winding up Petition Hearings? Although we are based in the legal heart of London, operating as the only law firm in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/), we provide comprehensive nationwide coverage to represent you at any winding up petition hearing. Our team of solicitors and barristers will prepare grounds of opposition and a witness statement for you. We will represent you at the winding up petition hearing and will provide our own barristers or external local counsel to any hearing across the country. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our winding up petition team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our winding up petition team. This meeting will take place either in person or using our telephone / video conference facilities if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Instruct Specialist City of London Winding Up Petition Lawyers Please call us; we can quickly establish whether or not we can help you. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Challenge a Bankruptcy Petition Source: https://lexlaw.co.uk/bankruptcy-petition-insolvency-annulment-debt-lawyers-london/ If a creditor has served a bankruptcy petition upon you, seeking your bankruptcy to secure a debt that is allegedly owed by you, then there are potentially grounds where you can oppose the making of a bankruptcy order. ## What is bankruptcy? [Bankruptcy](https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/) is a legal process by which a person declares voluntarily or is forced to declare by a creditor that they cannot repay their existing unsecured debts ## Can I oppose a bankruptcy petition? Yes. A bankruptcy petition may be challenged on the following grounds: - the debt alleged in the demand to be owing is genuinely disputed on substantial grounds by the debtor. If the debt is disputed, the petition will likely be dismissed by the court;- however, unsuccessful arguments presented in an attempt to set aside a statutory demand cannot be reheard by the Court at the bankruptcy petition hearing;- the Court can also dismiss the petition if it is satisfied that the debtor is able to pay all the debts to the creditor; or- the company has a genuine right of set-off against the creditor which exceeds the amount claimed in the demand. ## How do I defend a bankruptcy petition? A bankruptcy petition may be challenged if: - the debt alleged is genuinely disputed on substantial grounds; or- the debtor has a genuine right of set-off against the creditor. ## What is the procedure to oppose a bankruptcy petition? The procedure to oppose a bankruptcy petition is to file a witness statement in opposition in court not less than five business days before the date of the hearing of the petition (rule 4.18(1), [Insolvency Rules](http://www.legislation.gov.uk/uksi/2016/1024/contents/made)). A copy of the evidence must also be sent to the petitioning creditor as soon as reasonably practicable (rule 4.18(2), Insolvency Rules). ## What happens at a bankruptcy hearing? The debtor is entitled to appear at the hearing of the petition and to oppose the making of a bankruptcy order. It is usual for the debtor to [instruct solicitors and/or counsel](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) to appear on his or her behalf at the hearing. If the debtor chooses not to instruct legal representatives, they can attend personally to represent themselves. ## Discounted Fixed Fee Consultation It is very important that you seek legal advice as soon as a bankruptcy petition is served upon you. To reduce failure risk, it is advised that you instruct specialist bankruptcy petition lawyers. Generally many solicitors are unfamiliar with the Insolvency Rules and the minutiae of the bankruptcy process, we are experts in dealing with matters surrounding individual insolvency. ## Specialist City of London Bankruptcy Petition Solicitors We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court ](https://www.middletemple.org.uk/)adjacent to the Royal Courts of Justice.  Our team have unparalleled experience at cancelling bankruptcy orders, liaising with the Official Receiver, providing a solicitor’s undertaking, representing you at any bankruptcy hearing at the Bankruptcy Court, at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # LIBOR Manipulation Claims Source: https://lexlaw.co.uk/libor-manipulation-mis-selling-loan-hedging-financial-product-claims-advice/ *We have acted for clients in [major High Court litigation](https://lexlaw.co.uk/media-interest/) against numerous banks that have been subject to regulatory action for LIBOR and other benchmark rate manipulation. Our [City of London lawyers](https://lexlaw.co.uk/contact-us/) are at the forefront of [LIBOR rate manipulation claims](https://lexlaw.co.uk/solicitors-london/libor-fx-key-benchmark-rigging-claims-against-rbs-barclays-hsbc-lloyds-strengthen-for-customers-mis-sold-derivatives/) in the UK, and have a [successful track record](https://lexlaw.co.uk/practice-areas/) of litigating against and securing large financial settlements with all the major banks. * *We specialise in successfully bringing claims against banks where bankers have manipulated LIBOR rates by submitting false estimated lending rates. * *LIBOR is a key interest rate which is set daily by a group of major London banks in relation to a variety of periods and currencies. While this notionally represents the interest rate applying when banks lend and borrow money between themselves (hence “Interbank”), we now know that at least some of the banks were making fraudulent submissions so as improve their trading positions. Manipulation is such a major problem, that LIBOR publication will be discontinued by the end of 2021 and Banks will soon be using the new [Sonia (Sterling Overnight Interbank Average Rate)](https://www.bankofengland.co.uk/markets/sonia-benchmark) rate as a benchmark for loans and other contracts. *   ## What is LIBOR (London Interbank Offered Rate)? LIBOR is a benchmark interest rate organised by the [British Bankers’ Association (“the BBA”)](https://www.bba.org.uk/) that fixes rates for various currencies, including pound sterling, the US dollar, the euro, the Swiss franc, and the Japanese yen. The process of setting LIBOR involved a panel of banks (including RBS), each of whom would submit on a daily basis the interest rates that they would expect to pay for borrowing from other banks. Those submissions were then used to derive the LIBOR rate for a given currency and tenor (such as 3-month GBP). In recent years, [several banks have been fined by regulators](https://lexlaw.co.uk/solicitors-london/libor-fx-key-benchmark-rigging-claims-against-rbs-barclays-hsbc-lloyds-strengthen-for-customers-mis-sold-derivatives/) for their participation in LIBOR rigging, which involved making false submissions at the request of their derivatives traders in order to benefit their trading positions. ## What is LIBOR manipulation? LIBOR is used to determine the payments to be made under a wide variety of derivatives contracts, and the size of the trades is such that the bank can make a substantial profit by manipulating LIBOR by even one basis point (i.e. 0.01%).  A profit for the bank necessarily implies a loss for whoever is on the other side of the deal. Any individual or SME that has been mis-sold a [Forex hedging products](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/foreign-exchange-hedging-mis-selling-claims-fx-forex-hedge/), a LIBOR-linked derivative or any hedge linked to a benchmark can explore a manipulation claim with our expert litigation lawyers. These customers of [RBS](https://personal.rbs.co.uk/personal.html), [Barclays](https://www.barclays.co.uk/), [HSBC](https://www.hsbc.co.uk/) and [Lloyds Plc](https://www.lloydsbank.com/) may potentially have grounds to rescind the derivative contract if the implied representations made by the banks are considered false due to regulatory findings of benchmark rigging. RBS, Barclays, HSBC and Lloyds Plc have all either undermined the integrity of LIBOR or have been fined for Forex failings. ## LIBOR manipulation fines against major banks In June 2012, [Barclays was fined £59.5 million](http://www.fsa.gov.uk/library/communication/pr/2012/070.shtml) by the Financial Services Authority (which is now known as the Financial Conduct Authority) for LIBOR fraud, and [UBS was fined £160 million](http://www.fsa.gov.uk/library/communication/pr/2012/116.shtml) by the FSA in December 2012 for its part in LIBOR manipulation. In February 2013, [RBS was fined £87.5 million by the FCA for LIBOR rigging](https://www.fca.org.uk/static/fca/documents/final-notices/rbs.pdf), which had involved RBS taking requests from its derivatives traders in relation to JPY (Japanese yen) and CHF (Swiss franc) LIBOR and then making false submissions. [RBS was also fined £207 million by the US Commodity Futures Trading Commission](http://www.cftc.gov/PressRoom/PressReleases/pr6510-13) and [£150 million by the US Department of Justice](http://www.justice.gov/opa/pr/rbs-securities-japan-limited-agrees-plead-guilty-connection-long-running-manipulation-libor) for the same instances of LIBOR rigging. In July 2014, [Lloyds Bank and Bank of Scotland were together fined £105 million by the FCA for LIBOR manipulation](https://www.fca.org.uk/news/lloyds-banking-group-fined-105m-libor-benchmark-failings) and for attempting to manipulate their fees payable to the Bank of England under the Special Liquidity Scheme (which was a taxpayer-backed government scheme to support British banks during the recent financial crisis). In April 2015, [Deutsche Bank was fined a record £227 million by the FCA for LIBOR manipulation](http://www.fca.org.uk/news/deutsche-bank-fined-by-fca-for-libor-and-euribor-failings), which primarily involved Deutsche Bank managers, traders and submitters based in London. ## Limitation: Extra Time for Swaps Mis-selling Claims? Many SMEs have good winnable cases that they ought to have brought against the major banks but failed to do so in time. SMEs are often slow to take legal advice on the basis they are scared to act against their lender and in the belief that the regulator will force the banks to provide redress. These often misguided fears and hopes have resulted in many SMEs becoming time barred from their usual contractual legal rights as the IRHPs were, now, mostly sold over six years ago. Often directors feel they should be given additional time to pursue legal claims for mis-sold derivatives because the bank(s) have made promises to redress the business, for example via the bank complaints process or via the FCA IRHP Review or because they simply couldn’t afford to take specialist legal advice. Such sentiment is largely ill-founded and will be ignored by the court which will enforce the Limitation Act 1980 to ensure that there is legal certainty. Limitation hurdles are not necessarily insurmountable, as demonstrated in the case of [Kays Hotel Limited v. Barclays Bank PLC](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/), where Barclays failed to strike out the Hotel’s claim as the court determined that s14A of the Limitation Act applied, thereby giving the Hotel an extra three year period from the date of knowledge of the mis-selling. However the decision of the court in PAG v RBS goes further and highlights an arguable route around [the usual limitation hurdles that face most swaps mis-selling claims](http://uk.businessinsider.com/libor-and-mis-sold-interest-swaps-cases-for-lloyds-rbs-hsbc-barclays-2015-7) where the derivatives product in question was sold over six years ago. Any similarly affected businesses that have been sold derivatives such as swaps or collars should obtain specialist legal advice in relation to the possible impact of LIBOR rigging on their IRHP mis-selling claims as soon as possible. ## How was LIBOR being manipulated by currency traders at banks? As the PAG case demonstrated, RBS has [been found guilty of manipulating LIBOR](https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/). The [Financial Services Authority (FSA)](https://www.fca.org.uk/) (now known as the FCA) investigated widespread LIBOR manipulation and in particular found [that RBS had committed substantial breaches of Principles 3 and 5](http://www.fsa.gov.uk/static/pubs/final/rbs.pdf) of the [Principles for Businesses](https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html). These breaches [resulted in a fine of £87.5 million for RBS](https://www.fca.org.uk/news/press-releases/rbs-fined-%C2%A3875-million-significant-failings-relation-libor) in February 2013. In addition to the FSA fine, RBS had also been fined [$325 million by the US Commodity Futures Trading Commission](http://www.cftc.gov/PressRoom/PressReleases/pr6510-13) and [$150 million by the US Department of Justice](http://www.justice.gov/opa/pr/2013/February/13-crm-161.html). The US Attorney General has described RBS’s conduct as “a stunning abuse of trust”.  The CFTC notes that the unlawful conduct went back to at least 2006 and continued even after RBS was aware of the Commission’s investigation.  The FSA describe the abuse as “widespread” and notes that in response to a specific query in March 2011, RBS assured the FSA that it had proper systems in place to prevent LIBOR manipulation, when this was false.  All in all, the outcome of this international investigation into RBS’s affairs is a damning indictment of its culture and management practices. The CFTC press release contains some particularly interesting details, including extracts from conversations between traders such as: > Yen Trader 4: where’s young [Yen Trader 1] thinking of setting it? > > Yen Trader 1:** where would you like it[,] libor that is[,] same as yesterday is call** > > Yen Trader 4: haha, glad you clarified ! mixed feelings but **mostly I’d like it all lower** so the world starts to make a little more sense. > > Senior Yen Trader:** the whole HF [hedge fund] world will be kissing you instead of calling me if libor move lower** > > Yen Trader 1:** ok, i will move the curve down[,] 1bp[,] maybe more[,] if I can** > > CTFC Report on RBS Libor Rigging ## LIBOR manipulation claims against RBS, Barclays, HSBC and Lloyds Bank [RBS were fined £217 million by the FCA](https://www.fca.org.uk/publication/final-notices/final-notice-rbs.pdf) for FX failings in November 2014. RBS were also fined $290 million by the United States Commodity Futures Trading Commission (“CFTC”) in relation to investigations into failings in the bank’s Foreign Exchange business within its Corporate & Institutional Banking division. The fines were for “attempted manipulation of, and for aiding and abetting other banks’ attempts to manipulate, global foreign exchange (FX) benchmark rates to benefit the positions of certain traders.” One of the primary benchmarks that the FX traders attempted to manipulate was the World Markets/Reuters Closing Spot Rates (WM/R Rates). [Barclays was fined £60 million by the FSA](http://www.fsa.gov.uk/static/pubs/final/barclays-jun12.pdf) in June 2012. Barclays  [**admitted**](http://www.justice.gov/opa/pr/2012/June/12-crm-815.html) to misconduct. The US Department of Justice and the [**Commodity Futures Trading Commission**](http://www.cftc.gov/PressRoom/PressReleases/pr6289-12) (CFTC) imposed fines worth £102m and £128m respectively, forcing Barclays to pay a total of around £290m. According to the FSA, Barclays acted inappropriately and breached Principle 5 on numerous occasions between January 2005 and July 2008 by making US dollar LIBOR and EURIBOR submissions which took into account requests made by its interest rate derivatives traders HSBC was [fined £216 million by the FCA](https://www.fca.org.uk/publication/final-notices/final-notice-hsbc.pdf) in November 2014. HSBC was also fined $275 million by the CFTC, and [recently paid a $100 million settlement of currency rigging to the US Departement of Justice](https://www.telegraph.co.uk/business/2018/01/18/hsbc-pay-100m-currency-rigging-settlement/). The FCA found that HSBC failed properly to control its London voice trading operations in the G10 spot FX market, with the result that traders in this part of its business were able to behave in a manner that put HSBC’s interests ahead of the interests of its clients, other market participants and the wider UK financial system. [Lloyds Bank of Scotland was fined £105 million by the FCA](https://www.fca.org.uk/publication/final-notices/lloyds-bank-of-scotland.pdf) in July 2014. The bank breached Principle 5 and Principle 3 of the Authority’s Principles for Businesses through manipulating submissions to two benchmark reference rates, the Repo Rate and LIBOR, in order to seek to manipulate those rates. The Repo Rate benchmarked the rates offered by major banks in London for dealing GBP general collateral repo transactions, and was in operation between May 1999 and December 2012 when it was abolished. ## The step-by-step strategy to build a successful LIBOR manipulation claim - A bank made an implied representation that it was not and will not manipulate LIBOR/FOREX/key benchmark when selling a Swap. If a bank says nothing about LIBOR/FOREX/key Benchmarks this counts as sufficient conduct to create an implied representation that they have not participated in benchmark rigging. An implied representation exists if the reasonable customer would naturally assume a key benchmark had not been rigged and if it was he would have been informed at the outset.- There have been regulatory findings or bank admissions of manipulation of LIBOR, FX or other key Benchmark. There have been regulatory findings against most major panel banks, such as RBS, Barclays, HSBC and Lloyds Plc. - The proven manipulation of that particular benchmark is used in the derivative sold to the customer.- Potentially claims could extend beyond manipulation of that particular benchmark if “cross-contamination” between benchmarks can be proved ## How can LIBOR manipulation claims be resolved? If you have been mis-sold an FX derivative, then there are several potential solutions including: - attempting to negotiate with the bank or broker;- complaining to the bank or broker;- complaining to the Financial Ombudsman Service; or- sending a letter before claim, issuing legal proceedings at Court, and litigating against the bank or broker. The initial step may be to attempt to negotiate with (or complain to) the bank or broker, although this may not resolve the mis-selling dispute without the threat and/or commencement of legal proceedings. It is also possible to complain about the mis-selling to the Financial Ombudsman Service (“FOS”), via which it may be possible to receive compensation of up to £150,000. Our derivatives mis-selling lawyers have considerable experience of preparing and presenting detailed complaints on behalf of our clients to major banks and the FOS, and we are also able to advise if litigation offers better prospects for redress (which it can often be). Our specialist derivatives mis-selling lawyers understand that your case is unique and we therefore adopt a tailored approach for your benefit, combining the facts of your case with our experience and understanding of derivatives mis-selling to prepare the strongest possible legal claim for you. We understand that mis-sold FX derivatives can cause additional problems for your business (such as [winding-up petitions](http://windinguppetitionsolicitors.co.uk/), the appointment of LPA receivers or [difficulties with HMRC](http://taxdisputes.co.uk/)) and we are therefore also able to offer you an integrated service with our experienced [Insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [Taxation](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) teams for your business rescue needs. ## LEXLAW LIBOR Litigation Our [Financial Services Litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) team of Solicitors and Barristers in London are highly experienced in this area of banking litigation and have and are acting on LIBOR rigging claims against major UK banks. Our high profile and high value cases regularly appear in the [national and international media](https://lexlaw.co.uk/media-interest/). Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks.  *Call us on 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/)* --- # Cryptocurrency & Bitcoin Manipulation Claims Source: https://lexlaw.co.uk/cryptocurrency-bitfinex-tether-manipulation-bitcoin-market-litigation-claims/ *Our [City of London financial services litigation lawyers ](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)advise on Bitcoin, Bitfinex, Tether, crypto/digital currency price manipulation claims. We provide cryptocurrency mis-selling representation and use our [banking and financial services litigation expertise](https://lexlaw.co.uk/practice-areas/) to ensure we obtain the best possible results and compensation for our clients.* *Since 2018, [allegations](https://www.coindesk.com/another-class-lawsuit-claims-bitfinex-tether-manipulated-bitcoin-market) surfaced in cryptocurrency circles that [Bitfinex](https://www.bitfinex.com/)/[Tether](https://web.archive.org/web/20200919021402/https://tether.to/) (USDT) was being used to manipulate [Bitcoin](https://bitcoin.org/en/) prices (BTC). Prosecutors at the US Department of Justice are currently investigation the potential price manipulation of Bitcoin, Ethereum and other cryptocurrencies. From US litigation, we understand that potential manipulation has occurred by traders abusing Tether to influence the price of bitcoin. * *If you have used a cryptocurrency exchange such as Bitfinex, Tether, or iFinex you may have a claim for compensation due to market manipulation by these crypto exchanges. Call 02071830529 for a non-obligation chat with one of financial services litigation team. * ## What is cryptocurrency? Cryptocurrency is a peer-to-peer version of electronic cash which allows online payments to be sent directly from one party to another without the need to go through a financial institution. There is no such thing as crypto monetary policy. However, a new bill in the US Congress known as the [Cryptocurrency Act 2020 ](https://www.forbes.com/sites/ktorpey/2020/01/20/new-bill-in-congress-could-have-massive-impact-on-bitcoin-ethereum-and-other-cryptocurrencies/)will soon be in force allowing the tracing of all transactions and persons trading with the control of cryptocurrencies to fall under financial regulation agencies. In the UK, there is currently an investigation into extending the [FCA's Regulated Activities Order](https://www.handbook.fca.org.uk/handbook/glossary/G973.html) to cover cryptocurrency. ## What is bitcoin? Bitcoin was the world's first decentralized cryptocurrency. It is the most popular cryptocurrency. In short, Bitcoin is a ledger that tracks the ownership and transfer of every bitcoin that is in existence. This ledger is known as blockchain. There are two ways to acquire bitcoin. Either a user can mine it- that is, the Bitcoin protocol issues a user new bitcoin if computer power is expended to update its ledger. Or, a user can receive bitcoin from someone else either by gift or exchange. Cryptocurrency exchanges allow users to trade bitcoin and other cryptocurrencies (such as Ethereum). ## What is cryptocurrency price manipulation? How do cryptocurrecny exchanges manipulate Bitcoin prices? The cryptocurrency market by its very nature as an illiquid market, is an easy target for manipulation given the inherent price volatility, lack of regulation at present and dearth of significant price anchors that comes with institutional capital investments. In the US, litigators have alleged that Tether has been involved in cryptocurrency manipulation. Tether is essentially a "stablecoin" pegged to the US dollar, that aspires to serve as a bridge between crypto-currency exchanges and conventional currencies. Tether is the central authority over the cryptoassset known as Tether or "USDT". Whilst most cryptocurrencies are not backed by a tangible asset, stablecoins such as USDT are attractive to investors because it pegs itself to a tangible asset held in reserve (i.e. the US Dollar). Unlike bitcoin, USDT cannot be mined and instead (and crucially for monopolisation of manipulation) tether unilaterally controls the creation of new USDT. The key point to note is that Tether claims *"that the number of [USDT] tokens in circulation will always equate to the dollars in its bank account"*. However, litigators in the US allege that this is a lie. There is evidence to suggest that Tether issued huge amounts of unbacked USDT to manipulate cyrptocurrency prices. Given that the market believed the "lie" that 1 USDT equalled 1 US Dollar: > Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created. From 2017 through 2018, Tether printed 2.8 billion USDT and used it to flood the Bitfinex exchange and purchase other crypotcurrencies. This artificially inflated demand for cryptocurrencies and caused prices to spike. > > [US Class Action Litigation case: Leibowitz et al v Ifinex at al (2019)](https://www.courtlistener.com/recap/gov.uscourts.nysd.524076/gov.uscourts.nysd.524076.1.0.pdf) Anyone who used Bitfinex and Tether from 2017 potentially has a claim. US prosecutors allege that Tether's mass issuance of USDT* "created the largest bubble in human history"* with over $450 billion of value disappearing in less than 1 month. ## Are Bitfinex and Tether still operating? Yes. Despite the overwhelming evidence that both companies have inflicted billions of dollars of damage on the cryptocurrency market, both Tether and Bitfinex continue to allegedly defraud the market. Bitfinex is ["the largest and least regulated cryptocurrency exchange in the world"](https://perma.cc/U6UV-KQ3V). There are currently ongoing investigations by the CFTC, the Department of Justice and the New York Attorney General. There are currently two ongoing cases in the US against Bitfinex and Tether. ## I have traded through Bitfinex and Tether. Do I have a claim? The evidence suggests that Bitfinex and Tether individually and collectively had the ability to cause articifcal prices. US Regulators are expected to confirm this conclusion soon. This is likely to lead to a raft of claims both in the US and the UK. In order to build a case it must be demonstrated that Bitfinex and Tether communicated false information about USDT being backed 1:1 and you have suffered actual damages due to artificial pricing to which you would not have been subject but for the unlawful conduct of the market manipulators. ## City of London Cryptocurrency Manipulation Lawyers Our [Financial Services Litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) team of Solicitors and Barristers in London are highly experienced in this area of banking litigation and have acted on manipulation and mis-selling claims against major financial instituions. The cryptocurrency market is highly unregulated, however, it is a misapprehension to believe that you no recoruce to litigation when things go wrong and you have been mis-sold a volatile asset. Our high profile and high value cases regularly appear in the [national and international media](https://lexlaw.co.uk/media-interest/). Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks.  *Call us on 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/)* --- # Business Disputes Source: https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/ *Results matter to our Business Disputes Solicitors & Barristers.* *Our Business Disputes team have leading experience in resolving disputes for businesses. We have advised sole traders, partners, directors in limited companies and shareholders on the full range of commercial, professional and financial disputes from small highly technical claims to bringing and defending high-value litigation.* *Our skilled negotiators are adept at not only litigating but also utilising [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) methods to help you to maintain your business relationships and secure settlement out of court. * ## What are Business Disputes? Business disputes relate to any kind of disagreement between two businesses over the terms of an agreement signed by both parties involved. They can happen in any kind of business arrangement and are mostly inevitable over a company's lifetime. The most frequent contract disputes are between business partners or between a business and certain contractors, suppliers, or clients. They usually happen when one of the parties believes either the amount of money paid, the delivered good or service, or the time frame in which the good or service was delivered were not executed according to the original agreement. ## How do you resolve a Business Dispute? *Our multi-disciplinary practice is made up of *[*specialist lawyers*](https://lexlaw.co.uk/our-people/)* that have market-leading experience in handling *[*multi-million pound litigation cases *](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)*and bringing complex claims to settlement through alternative forms of dispute resolution (“ADR”), where necessary.* Our expert litigation and team advise our clients as to the different forms of resolving their disputes, which can often be faster and less costly. These include: - [Negotiation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#negotiation) - [Arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#arbitration) - [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#mediation) - [Med-arb](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#med-arb) - [Executive Tribunals](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#tribunal) - [Conciliation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#conciliation) - [Early Neutral Evaluation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#ENE) - [Adjudication](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#adjudication) - [Expert Determination](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#determination) - [Dispute Review Board](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#DRB) ## Advanced legal strategies for your business dispute For a heavily discounted fixed fee our Business Disputes team will offer you high quality partner and counsel-led advice in our first meeting. We review your dispute and give you and/or your company or partnership the correct advice at the outset, when it matters the most. ## Our Business Disputes Practice Areas Internal corporate disputes are a common feature in most business ownership relationships. Our Business Disputes Solicitors & Barristers regularly provide advice on: - **[Director Disputes](https://lexlaw.co.uk/solicitors-london/covid-19-advice-for-directors-in-financial-distress):** including advise on directors duties; restrictive covenant claims; director disqualification proceedings. - **[Shareholder Disputes](https://lexlaw.co.uk/partnership-llp-members-dispute-resolution-solicitors/):** including advising both minority and majority shareholders; shareholder rights; shareholder agreements advice; derivative action against directors; disputes over profit share; just and equitable winding up; unfair prejudice; and - [**Partnership Disputes**](https://lexlaw.co.uk/partnership-llp-members-dispute-resolution-solicitors/)**:**including advising remaining and departing partners; breaches of partnership agreements; expulsion; breach of fiduciary duty; dissolution; actions for accounts and termination of partnerships. ## Specialist Business Dispute Solicitors Our[ leading Specialist Business Dispute Solicitors and Barristers](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) provide bespoke legal advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading business dispute resolution lawyers. We regularly advise companies, directors, shareholders, partners and sole traders on all legal business disputes. Call or email us to start the process of instructing us; our [Business Disputes Resolution team](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/) are waiting to help. --- # Partnership / JV Disputes Source: https://lexlaw.co.uk/partnership-llp-members-dispute-resolution-solicitors/ *Our Partnerships Dispute Resolution team provide advice to individuals involved in partnerships or joint ventures in property and other business sectors. We provide high quality partner and counsel-led advice from our first advice meeting. We review your partnership / Joint Venture dispute and dispense the correct advice at the outset, when it matters the most.* ## Business Partnership Disputes Our [multi-disciplinary practice](https://lexlaw.co.uk/) will advise you as to the different methods of resolving your dispute. Many partnership disputes can be resolved by us with clever strategy and negotiation at the outset using [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) without resort to litigation. However, where ADR cannot provide the requisite result, our experienced [Business Disputes solicitors](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/) know when to litigate and will guide you through the process in order to protect your legal rights and achieve optimal financial results. We aim to add value to our case management and advisory work for clients by our knowledge of their trade or profession; we have expert knowledge of trade sectors such as large-scale Property Development, Wholesale Cash and Carry, Commodities and Diamond trading, Aerospace, Overseas development, Travel, Internet, Crypto coins, NFTs and other Retail. We regularly act for high net worth private clients and companies in high value litigation. ## What is a partnership? A partnership describes the legal relationship that exists between two or more persons carrying on business in a joint venture with a view to a profit. Partnerships are not necessarily a separate legal corporate entity and partners individually themselves generally have unlimited liability. In essence, in a traditional partnership, each partner acts as an agent on behalf of all the other partners. This is important because an individual partner (when contracting with third parties) is acting on behalf of all of the other partners and can bind them to a contract without their express agreement. Partnerships are either governed by the Partnership Act 1890; or established as a limited partnership under the Limited Partnerships Act 1907 or established under the Limited Liability Partnerships Act 2000 as a limited liability partnership. ## What if I don't have a written partnership agreement? If you trade as a partnership, it is sensible to have entered into a written partnership agreement tailored to your circumstances, which sets out the rights and obligations of you and your fellow partners. If you did not do this the law will statutorily imply a partnership agreement by force of the Partnership Act 1890 or in equity via implying a fiduciary joint venture relationship. In a partnership dispute, ordinarily the terms of the partnership agreement will be interpreted in order to resolve the dispute. However, in circumstances where there is no partnership agreement which defines the relationship then the terms of the Partnership Act 1890 will automatically apply by default. ## What is the Partnership Act 1890? An Act of the UK Parliament to codify the Law of Partnership, i.e. the relationship between persons carrying on unincorporated business together intended to make a profit. Persons who enter into partnership are collectively a firm, and the name under which their business is carried on is the firm-name. Such partnerships are commonly known as 'Partnerships at Will'. ## Partnerships at Will The Partnership Act 1890 mandates equality and simplicity. It is designed as a catch-all for those businesspersons that failed to record a written partnership agreement. Consider the following: - **Equal Division of Profit/Loss**. All profits and losses (in both income and capital) are divided equally. All partners are equally liable for debts incurred by the firm, and all firm profits are shared equally.- **Majority Decisions**. Decisions are made by majority which can lead to deadlock situations in a 2 person firm.- **No Expulsion**. It is not permitted to expel a partner; instead the firm is brought to an end by dissolution by any partner at any time.- **Easily Dissolved**. The firm will automatically come to an end in the event any partner determines, retires, dies, or becomes bankrupt. These provisions are not ideal and it is much more sensible to have a written partnership agreement which often sets out a method to resolve business partnership disputes. ## Case Study: Joint Venture Property Dispute Two individuals entered into a property development to buy and refurbish a number of properties. There was no written agreement but the terms of the joint venture could be identified from email and text message evidence. An SPV was set up to develop the properties and one person organised purchase of the assets and the other organised the day to day planning and building works. The two individuals fell out and they stopped corresponding. One of them and sold off the properties that were in his name. Whilst in this case the joint venture was not subject to the Partnership Act 1890, the two parties were in a fiduciary relationship and owed each other duties of good faith to manage the assets and deal with any liabilities jointly. Upon sale they would have had to reach a fair consensus on distributing any surplus but this did not happen. After advice on the pre-action process and issue of a letter before action and service of a litigation claim form, the matter was successfully settled in an organised mediation (with the threat of continuing litigation as the leverage to force the opponent to reach a deal and share the profits gained). Were it not for judicial scrutiny and the pressure of litigation, the opponent would have walked away with around £0.5m which was owed. ## How to resolve a partnership dispute Given that a general partnership and limited liability partnership ([LLP](https://www.gov.uk/guidance/set-up-and-run-a-limited-liability-partnership-llp)) gives all partners equal rights within the partnership, when a dispute occurs it can often be difficult to resolve given that the parties all have equal bargaining positions and equal rights and duties. It is essential to seek legal advice from a [Partnership Dispute Resolution specialist](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/) at an early stage of a conflict with a fellow partner. Our lawyers will advise you on the optimal way to settle your dispute: - Conflict resolution through negotiation and/or settlement with the other partners;- Analysis of the partnership agreement to ensure maximum protection of your rights;- advising on the merits, preparing for and presenting your best case at any [arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/) to resolve the dispute;- expert advice on [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/). For example, one dispute involved our lawyers taking part in a 24 hour mediation with another central London top 10 law firm. We mediated and ensured the successful conclusion of the dispute and our client was delighted with the optimal settlement we secured. - Our team are expert [litigators](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/), and in cases where a dispute cannot be resolved via [ADR](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/), our lawyers have market-leading experience of handling multi-million pound litigation and bringing complex claims to settlement. ## What is the default position in partnerships? When can disputes arise and how can they be resolved? The following represents the default position under the Partnership Act, all these terms can be varied by agreement between the parties, but they are demonstrated here to illustrate the types of scenarios where a dispute can arise. Our Partnership Disputes lawyers will provide tailored advice depending on your individual circumstances and depending on the terms of your partnership agreement (if any): - all profits and losses are shared equally between the partners. Partners must also consider whether any can draw on account of profits or whether some profits should be used to invest in the future of the partnership. - all partners are joint and severally liable for all the debts accrued by the partnership. The crux of this means that any partner can be sued individually or jointly. - all partners owe each other fiduciary duties. Therefore a claim can be issued which alleges that, for example, a partner has not promoted the success of the company or that there is a conflict of interest and one partner is competing with the partnership without the consent of the other partners. Another example could be the failure to render accounts that are true and failure to deliver up profits received. - restrictive covenants need to be considered because in the absence of a terms in a Partnership Agreement, a departing partner could technically start a competing business. ## Our Partnership Disputes Practice Areas Our Partnership Disputes Resolution team can advise on issues which commonly arise in a partnership, including: - Advising on breaches of partnership/LLP members’ agreements;- Conflicts of interest e.g. competing with the partnership business without consent;- Enforceability of restrictive covenants;- Breach of fiduciary duties;- Failure to render true accounts and deliver up profits received;- [Fraud](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/fraud-solicitors-london/) by a fellow partner;- Partner expulsions/removal;- Tracing of a Partnership assets;- Unlawful discrimination and other [employment](https://lexlaw.co.uk/ukemploymentlawyers/) claims;- [Winding up or dissolution of the Partnership](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/); and- Partnership accounts and valuation issues. ## City of London Partnership Dispute Resolution Solicitors Our[ leading Partnership Dispute Resolution Solicitors and Barristers](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) provide bespoke legal advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading business dispute resolution lawyers. We regularly advise companies, directors, shareholders, partners and sole traders on all legal business disputes. Call or email us to start the process of instructing us; our [Business Disputes Resolution team](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/) are waiting to help. To contact a leading London Business Disputes Lawyer ☎ 02071830529 --- # Coronavirus (COVID-19) Litigation Advice Source: https://lexlaw.co.uk/corona-coronavirus-covid-19-legal-litigation-insolvency-tax-employment-dispute-advice/ The outbreak of [coronavirus (COVID-19)](https://www.nhs.uk/conditions/coronavirus-covid-19/) has affected all parts of society and in times of uncertainty, it is apparent that legal advice will need to be sought by companies, businesses, employers and employees, especially when the national situation is changing daily. Our [London Coronavirus Litigation team](https://lexlaw.co.uk/our-people/) of solicitors and barristers are working alongside our clients and professional bodies to navigate this period of great national uncertainty. We understand how COVID-19 can impact you, your business or your employees. [Contact us](https://lexlaw.co.uk/contact-us/) for confidential professional legal advice. [Professional legal advice](https://lexlaw.co.uk/) should be sought by anyone who is uncertain about their legal rights during this time, how to protect their position, or how their rights will likely be interpreted by the courts given the pandemic. We will offer you [legal advice](https://lexlaw.co.uk/legal-case-assessment/) (or a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/)) on any of the following practice areas which have likely been affected by COVID-19:[Coronavirus (COVID-19) and breach of contract (force majeure) litigation](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-force-majeure-clauses-breach-of-contract-litigation-advice/); [Coronavirus (COVID-19) and insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/); [Coronavirus (COVID-19) and debt recovery](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/); [Coronavirus (COVID-19) and HMRC tax disputes](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/); [Coronavirus (COVID-19) and employment law advice for employers and employees](https://lexlaw.co.uk/ukemploymentlawyers/); [Coronavirus (COVID-19) and business disputes (shareholder/director disputes)](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/); and [Coronavirus (COVID-19) and commercial landlords.](https://lexlaw.co.uk/solicitors-london/business-tenancies-under-the-coronavirus-act-2020/) ## Can I still see a lawyer given the Coronavirus situation? Yes. We are a technologically advanced law firm and are well equipped for the current situation and have the resources and infrastructure to support you with any litigation issue. We are actively monitoring and responding to the COVID-19 situation and will continue to follow advice issued by the [UK Government](https://www.gov.uk/coronavirus), [Public Health England](https://www.gov.uk/government/organisations/public-health-england) and the [NHS](https://www.nhs.uk/). The well-being of our team and our clients is our priority. We are following the advice to maintain [social distancing](https://www.gov.uk/government/publications/covid-19-guidance-on-social-distancing-and-for-vulnerable-people/guidance-on-social-distancing-for-everyone-in-the-uk-and-protecting-older-people-and-vulnerable-adults), therefore we will hold all meetings with clients via video conferencing or via our telephone conferencing facilities for the foreseeable future. ### Check Your Coronavirus Litigation Case ✔ We understand the legal issues arising from the COVID-19 situation which may affect you, your company or your employees. We analyse your case prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. *Want a first or second opinion on your case? *Click below or call our lawyers in London on ☎ [02071830529](tel:+442071830529) [Check My Case ✔](https://lexlaw.co.uk/legal-case-assessment/) --- # Need to re-think? Alternative Dispute Resolution. Source: https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/ ### First-class Second Opinions ✔ Discounted fixed fee advice on ADR. Need a second opinion on how your litigation is progressing? Need advice on whether your case is suitable for alternative dispute resolution? Our solicitors & barristers can help by assessing your case prospects- at any stage in your ongoing litigation (or contemplated proceedings). We have dual-qualified lawyers, so if our view is your case has limited merit or high risk we warn you in our first meeting. Some firms offer free meetings with unqualified or junior lawyers and only after you've spent more do you get advice from a senior partner or barrister possibly that the case shouldn't be pursued.  *We do things differently from all other law firms in England & Wales.* We offer you partner and counsel-led advice in our first meeting, for a heavily discounted fixed fee. That way our best solicitors and barristers can review your case and give you the correct advice at the outset, when it matters the most. Legal advice is just one aspect of getting a solution. The most important thing is what you do with the legal knowledge about your case, how you present it to the other side and how you negotiate your way to the optimal legal settlement. Our lawyers are masters of strategically securing optimal litigation settlement. *Want your case assessed or a second legal opinion?* Call ☎ [02071830529](tel:+442071830529) or message our London litigators: [Check My Case ✔](https://lexlaw.co.uk/legal-case-assessment/) ## Instruct us to analyse alternatives to resolve your dispute At any stage in your litigation, if you are a claimant or a defendant, it is useful to get a second opinion from [expert specialist lawyers](https://lexlaw.co.uk/our-people/) to evaluate the strengths and weaknesses of your case and advise you on whether [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) are appropriate in your circumstances. ADR provides parties to a litigation with options to secure an unbiased, neutral evaluation about the strengths and weaknesses of a case or trial strategy. ADR is strongly encouraged by the courts and we understand that it is important for clients to be fully appraised of all the means available to them on how to settle a case. Many solicitors will only specialise in litigation, and press on to trial without considering alternative means of resolution, be it through negotiation, mediation or arbitration. Our expert dispute resolution team advise our clients as to the different forms of resolving their disputes, which can often be faster and less costly. These include: - [Negotiation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#negotiation)- [Arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#arbitration)- [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#mediation)- [Med-arb](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#med-arb)- [Executive Tribunals](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#tribunal)- [Conciliation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#conciliation)- [Early Neutral Evaluation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#ENE)- [Adjudication](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#adjudication)- [Expert Determination](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#determination)- [Dispute Review Board](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#DRB) ## Is alternative dispute resolution right for your case? **Time** – Whilst pursuing litigation can take months or years, most forms of ADR can be undertaken within a few days. This can pose a significant saving of time for your case which is critical at times such as this. There is also a real prospect that resolution through [Court proceedings may be significantly delayed due](https://www.gov.uk/guidance/coronavirus-covid-19-courts-and-tribunals-planning-and-preparation) to the impact of Coronavirus, which would affect both time and costs in your legal dispute. **Costs** – Similarly, due to the time savings, most matters can be resolved efficiently saving both sides significant costs. **Control** – With ADR the parties have control over how they proceed with their matter, as they can decide which form best suits their interests. For example, whether or not they want the decision to be legally binding. **Confidentiality** – ADR procedures are usually conducted confidentially, which enables full and frank negotiations. **Business Relationships** – Pursuing ADR as a form of reaching a settlement increases the likelihood of maintaining relationships, as settlements are reached with consent of both parties. **Requirement** – Parties in contentious disputes are [required by the Courts](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) to attempt ADR and may make adverse costs orders against parties which refuse. ## Our Alternative Dispute Resolution Service We do things differently to other law firms in England & Wales. We will consider your case with you (no matter at what stage your case is at i.e. the pre-action stage, once a claim is issued, when pleadings are submitted, before a Costs & Case Management Conference, before a contemplated mediation). At any stage, if you are unhappy with the way your case is progressing, we provide an alternative dispute resolution service to consider the merits of your case, and if ADR is appropriate, we will transfer the handling of your case to us. - How to transfer your litigation case seamlessly from your current solicitor to us so that we can take over at any stage of your case.- How to get your current solicitor to release your litigation papers to us.-  Giving you a second legal opinion directly from one one of our specialist barristers or solicitors on how to settle your case without costly litigation.- Whether you can challenge the costs charged by your solicitor. Unlike many law firms we have an in-house Legal Costs Disputes team to advise you on whether you have been overcharged.- How to maximise chances of any settlement through considering alternative means of dispute resolution.- Years of high level negotiation experience with successful £multi million settlements. - Whether you have professional negligence claim against your solicitor for poor service or failure to advise you on ADR (on which we may enter into a no win no fee following our assessment of the merits of the case at the initial meeting).- How to win. Strategic advice on how to maximise your chances of being the successful party utilising alternative means to resolve your dispute. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. ### Check whether my case is suitable for ADR ✔ We analyse your case prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. *Want a first or second opinion on your case? *Click below or call our lawyers in London on ☎ [02071830529](tel:+442071830529) [Check My Case ✔](https://lexlaw.co.uk/legal-case-assessment/) --- # Judicial Review Source: https://lexlaw.co.uk/judicial-review-court-lawyers-london-hmrc-tax-dispute-decision-advice-representation/ *Judicial review is a mechanism by which the court can consider the lawfulness of a decision made by a public body such as HMRC. A judicial review claim may be bought against legislation (such as HMRC's Taxpayers Charter) or public bodies.* *Judicial review is generally only available where there is no adequate alternative remedy.* *Judicial Review is a highly specialist area, with its own set of CPR practice directions and different rules when it comes to the litigation. For example, unlike at the tax tribunal, you need the court's permission to even allow a judicial review claim to be heard. * *Our [specialist tax litigation team](https://taxdisputes.co.uk/judicial-review-applications-against-hmrc-challenge-decision-advice/) (unlike other law firms specialising in HMRC tax disputes) have experience in judicial review proceedings. For an example of one of our high profile cases currently at the Administrative Court, [click here](https://lexlaw.co.uk/solicitors-london/statement-coronavirus-covid-19-hmrc-failure-nhs-uniformed-keyworkers-tax-relief-claims-laundering-ppe-uniforms/).* ## Do I have a claim for judicial review of a decision from HMRC? HMRC as a governmental public duty are under a duty to act fairly and lawfully at all times. However, many taxpayers are finding that HMRC are falling short of this mark. A claim for judicial review may be brought by an individual if any of the following criteria are met. ### Illegality This is where a public body such as HMRC acts *ultra vires *(beyond the powers conferred on them) then they would have acted illegally. ### Irrationality This is also known as *[Wednesbury](https://taxdisputes.co.uk/wp-content/uploads/2020/02/Associated-Provincial-Pictures-v-Wednesbury-Corporation-1948-1-KB-223.pdf) *unreasonableness. One formulation of this test is that to be considered unreasonable or irrational it must be: > “So outrageous in it s defiance of logic or accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it”. > > Council of Civil Service Unions -v- Minister for the Civil Service [1985] AC 374 ### Procedural impropriety In order to make out a case under this ground, there are two fundamental pillars to procedural impropriety described as the rule against bias and the right to be heard. Additionally, there is a right to be given the reasoning for a decision made by a public body. The courts must determine that there is a real possibility of bias. > The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. > > Magill -v- Porter [2001] UKHL 67 103 ### The breach of legitimate expectations This is a common ground in judicial review grounds. It is a discrete ground of judicial review where a party is given an expectation that a public body will act in a certain way. This expectation can arise from previous conduct of that body or because of express statements made by them or by what is in legislation, for example the HMRC Taxpayers Charter. For a successful legitimate expectation claim in judicial review, there must have therefore been a clear promise or evidence of regular practice made by the public body. ### Breach of Human Rights This is governed by the [Human Rights Act 1998](http://www.legislation.gov.uk/ukpga/1998/42/contents) and may give rise to a judicial review claim: > it is unlawful for a public authority to act in a way which is incompatible with a Convention right. > > Section 6(1) Human Rights Act 1998 If you believe that a decision made by HMRC fulfilled any of the above criteria, you should contact our expert team[ now.](https://taxdisputes.co.uk/contact-us/) ## Is there a time limit to bring my claim? A judicial review claim must be made promptly and in any event no later than 3 months after the grounds to make the claim arose (*[CPR 54.5(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54#54.5)*). In any event, it must be made as soon as the grounds for bringing a claim have arisen. This date **cannot **be extended by agreement between parties. Therefore, if you believe that you may have a claim against HMRC for judicial review, then you should [seek legal advice promptly](https://taxdisputes.co.uk/contact-us/). ## What are the available remedies for a Judicial Review claim? The following are [remedies](http://www.legislation.gov.uk/ukpga/1981/54/section/31) which the Administrative Court can order following the judicial review hearing: - a **declaration**– this is a statement made by a High Court judge which clarifies the law through stating the law as an order;- a **prohibitory order** – an order preventing a public body from acting beyond its powers in the future;- a **quashing order **– sets aside the decision of a public body on the basis that it is invalid ;- an** injunction** – this is sought as a form of interim relief during proceedings which essentially compel a party to act or prohibit them from acting;- a **mandatory order** – this is an order requiring the defendant to carry out a duty that it is obliged to do by law; or- **damages**– whilst there is no right in judicial review to claim damages for losses caused by an unlawful administrative action, it is possible to claim damages if there is another cause of action. If this established cause of action is separate to the grounds under which judicial review is sought, then damages may be a remedy the court will consider. Examples may include: breach of statutory duty, misfeasance in public office or private action in tort. ## How our expert London Judicial Review Lawyers can help you As a leading specialist tax law firm with a track record of success, you can be assured your tax matter is in safe hands. Our success rate is a result of the dedication of our [tax team](http://taxdisputes.co.uk/expert-advice/) who will diligently review your matter so it has the best possible chance of success from the outset when it matters the most. Our experienced lawyers regularly carry out work in many tax disputes areas,  from advising clients on whether HMRC have followed the correct procedures to successfully challenging HMRC’s policies. We have specialist knowledge in HMRC internal processes as well as ensuring that we are able to successfully challenge HMRC decisions in the Tax Tribunals and via judicial review at the Administrative Court. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our tax team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member(s) of our tax team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Discounted fixed fee initial consultation If you need advice related to judicial review of a HMRC decision, our highly experienced solicitors and barristers are able to assist. Our specialist tax team regularly provide market leading advice to directors of companies and limited liability partnerships. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our [expert legal team of leading Tax Disputes solicitors and barristers](http://taxdisputes.co.uk/expert-advice/). Just call or email us now for a heavily discounted initial consultation; our legal team are waiting to help. --- # What is a Costs and Case Management Conference? Source: https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What does CCMC stand for? A CCMC is a legal acronym standing for Costs and Case Management conference. It is a directions hearing between the parties to a litigation and the judge. ## What does CMC stand for? CMC stands for Case Management Conference. It is where parties agree directions to trial. ## What is a CCMC hearing? A Costs and Case Management Conference (CCMC) is a hearing where both parties to a litigation attend before the judge and agree directions and the costs budget to trial. ## What happens at a Costs and Case Management Conference (CCMC)? A Costs and Case Management Conference is a procedural hearing where the Court will: - Check that previous deadlines and directions have been complied with by the parties; - Ensure that the issues are identified and understood between the parties; - Consider if any issues between the parties can be narrowed before trial; - Order case management directions up to trial; and - Consider estimated costs of the dispute and consider how proportionate the costs are to the value of the dispute. The court may also hear applications for example an application where allowing the use of expert evidence or amendment of a statement of case or it may issue orders by its own motion. ## How do I prepare for a CCMC? Parties should prepare for a CMC/CCMC by: - preparing a bundle; - drafting a case summary; - compiling a list of issues between the parties; - completing a disclosure report; and - filing a costs budget. ### What is a CCMC Bundle? [Solicitors](https://lexlaw.co.uk/contact-us/) will need to prepare a bundle for the CCMC containing all relevant documents (including case statements such as the Particulars of Claim and the Defence). ### What is a Case Summary for a CMC? The summary of the case is expected to be a brief and uncontroversial statement of the facts of the case in order to give the Court a broad understanding of what the case is all about. ### What is a List of Issues? The list of issues is expected to be an impartial statement of the issues in dispute between the parties within the case in order to give the Court an understanding of the issues in dispute We will aim to agree the wording of the lists of issues with your opponent’s solicitors. ### What is a Disclosure Report? A disclosure report is a document that briefly describes the categories of the relevant documents to the case showing the location of the document if any relevant docs are stored electronically. The disclosure report will also provide a broad estimate of the range of costs that could be involved when providing a standard disclosure. ### What is a Cost Budget? A cost budget may have to be prepared and filed which must contain an estimate of the proportionate and reasonable costs that in your litigation matter you intend to incur. The costs budget should also include all assumptions as an estimate and state any contingency events that might occur e.g. Mediation. ## Should I agree case management directions with the opponent? Ordinarily parties should aim to try and agree to case management direction for future steps in the litigation. Usually the discussions regarding case management directions include the following: - For the purposes of mediation whether the claim should be stayed; - Disclosure of documents; - Disclosure of electronic documents (if applicable); - Inspection of disclosed documents; - Exchange of witness statements; - Expert evidence and scope admissions; - Exchange of expert’s reports; - Between experts a meeting to identify the issues in the proceedings and the possible outcomes to reach agreement on those issues (if applicable); - Instruct experts where they prepare a a joint statement showing the issues on which they agree and disagree respectively and a summary of their reasons for disagreeing; - Whether there should be another CCMC (or a Pre-Trial Review, which is another type of procedural hearing) later on to review the case again and decide further directions;  - If a trial date or a trial window is not suitable for the parties and can be fixed; and - The time estimate for the trial. It is reasonable for parties to disagree on any case management directions for example: If you are looking to settle the case via a mediation however your opponent may not want to resort to a mediation. Regarding the directions if any disagreements are made then the parties' legal representatives will then set out their arguments at the CCMC. However, eventually it will be up to the Court which case management directions it decides to order. ## What will happen at a directions hearing? Initially the Court will expect legal representatives to attend the CCMC as they are familiar with the case and have the authority to dead with any issues that will arise. Other than this there is no other requirements for either of the parties to attend the CCMC. ## Are there any settlement discussions during a CMC? During the CCMC parties may be asked what steps have been taken or are going to take to try and settle the case. We will then explain to the Court the steps at we have taken towards settlement and our current position. Therefore, We would not usually expect there to be an order for one of the parties to pay costs following the CCMC. ## Who pays the costs of the case management hearing? Generally the Court orders the winning party at the trial to pay the costs of the CCMC. If the case settles then the parties can then agree to costs when discussing settlement. Although, the Court may decide differently and order at the CCMC for one of the parties to pay some of the other party's costs of the CCMC. However, this is quite rare but the Court would usually do this where it disapproves of a party's conduct of litigation. ## What happens after the CCMC? Generally, it is unlikely that a second CCMC will be required although this is the Court's decision to arrange this. The next step to progress the case will be a hearing after the CCMC which is likely to be a Pre-Trial Review which will set the final arrangements for the trial despite there may be hearings of applications by the parties in the interim. ## When does the court set a trial date? Shortly after the CCMC, the trial date or trial window is likely to be fixed perhaps via a Court listing appointment. ## Do I have to comply with Case Management Directions? All parties are required to comply with orders is important that are given at the CCMC or else the Court will impose sanctions. Presently the Court has been imposing sanctions much more readily than it was previously due to failing to comply with orders and time limits which then makes it much more difficult to persuade the Court to lift any sanctions impose. If a failure to comply with any order occurs it could result to your claim being struck out.  Consequently, it is important to comply with all case management directions. If there are any possibilities that you may not be able to comply with an order for any reason you should notify your solicitors instructed as soon as possible. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our winding up petition team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our litigation team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # What is a Part 36 offer? Source: https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/ Basically, if a party fails to accept a realistic Part 36 offer made by the other side, it is at risk of being penalised in costs and interest at the end of the case. Making such an offer is therefore a legitimate means of putting the other side under pressure to settle, and should not generally be seen as a sign of weakness. ## Need Part 36 Explained / Second Opinion? [Our lawyers](https://lexlaw.co.uk/our-people/) are experienced leading London solicitors and barristers that specialise in litigation and know how best to make (or defend against) part 36 offers. We can guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What does a Part 36 offer mean? Part 36 offer in the [Civil Procedure Rules ](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36)is a provision which aims to encourage parties to try to settle their disputes by setting out the costs consequences of offers to settle if they are made in accordance with a Part 36. However if a party fails to accept a realistic offer made from the other side there is a risk of penalised costs and interest at the end of the case. Therefore a legitimate offer should be made which puts the other side under pressure to settle.  ## Why are Part 36 offers made without prejudice? [Part 36 offers](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) are made on a *"without prejudice save as to costs"* basis so that the court is not made aware of a part 36 offer until the has reached a judgement. But this is before the Court has made an order in relation to the cost of proceedings. ## When can a Part 36 offer be made? [Part 36 offers](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) can be made before court proceedings are issued. However Part 36 do not apply to claims that are small claims track (claims that are less than £10,000).  ## What are the requirements of a Part 36 offer?  A Part 36 offer must be in writing which states the consequences of the Part 36 and state the offer that is made to settle the whole claim or only part of it and whether it takes into account any counterclaim.  ## How long does a Part 36 offer last? The relevant period if you decide to make a part 36 offer has to specify a period of at least 21 days within which the other party will be liable for your costs if the offer is accepted.  ## How do I withdraw or vary a Part 36 offer?  If your [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) is not time limited you can still withdraw it or change its terms so that it is less advantageous to the other side. If the other side has not already accepted the Part 36 offer you may withdraw or vary this at any time after the relevant period has expired and this will not need the court's permission. ## Can a Part 36 offer be withdrawn or varied before the end of the relevant period? If you want to withdraw or vary a [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) before the end of the relevant period you need to serve a notice of withdrawal or variation on the other side, this will effect the end of the relevant period unless the other party serves a notice of acceptance in the meantime. In these circumstances the other side’s acceptance will take effect unless you successfully apply to court within 7 days of the acceptance so that permission is granted to withdraw the offer or change its terms.  ## What happens if the Defendant accepts the Claimant’s  Part 36 offer ? When you make a [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) and the Defendant accepted within the relevant period the Defendant will then have to pay the settlement sum and your legal costs however costs to be assessed if not agreed on a standard basis up to date of service of the notice of acceptance. This means that the court will resolve any doubt which it may have as to the costs if they are whether or not reasonable or proportionate. Then the matter will be settled.   However, if the Defendant accepts the offer after the relevant period has expired then if the parties cannot agree on the liability for costs then the court will make a costs order.  Usually an order will be for the Defendant to pay the Claimant's legal costs to the date of the acceptance.  ## What happens if the Defendant rejects the Claimant’s Part 36 offer? If the Defendant rejects your offer and the claim proceeds to trial the trial judge will not be told about the offer until the case has been decided. If the Claimant obtains a judgement which is equal to or more significant then the offer made at the trial then the Defendant will have to pay whatever the amount the court awards you unless if the court considers it unjust.  In addition to this, the court will order the Defendant to pay the following: -  up to 10% interest on the whole or a part of any reward from the date on which the relevant period expired.  -  your legal costs on a “indemnity basis”  which is the assessment of the costs incurred after the expiry of the relevant period. - An additional amount of 10% of the damages awarded for awards up to £500,000.  but for awards above £500,000 then the additional amount would be 10% of the first £500,000 and then a 5% of any damages awarded above the figure up to an overall limit of £75,000. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our winding up petition team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our litigation team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # What is disclosure in litigation? Source: https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/ In litigation, parties are required to disclose to each other any documents that damage their case, as well as any helpful documents. Therefore, the disclosure process forces parties to be realistic about their chances of success in the litigation and, for that reason, many disputes settle either shortly before or shortly after disclosure. [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is the duty of disclosure? In litigation, the purpose of disclosure is to make available evidence which either supports or undermines the respective parties' cases. Under [CPR 31](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31), parties are required to disclose to each other any documents that damage their case, as well as any helpful documents. ## Do parties have to disclose all documents in litigation? The duty of disclosure is strict, and the court takes it very seriously. The underlying principle is that the court can only deal with a case fairly and justly if all of the relevant material is preserved and disclosed. ## What is standard disclosure? The most common order by the court is for what is known as standard disclosure. This requires each party to disclose to the opposing party the documents on which it relies, those that adversely affect its case or another party's case, and those that support another party's case. The [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) set out a procedure to be followed when giving standard disclosure. Under that procedure, the documents are usually disclosed by serving a list of documents on the opposing party. ## What other disclosure orders can be made by the court? Other possible orders that the court might make in relation to disclosure are as follows (although in practice these orders are rarely made): - An order for a party to disclose the documents on which it relies and, at the same time, to request any specific disclosure it requires from any other party; - An order that directs, where practicable, disclosure to be given by each party on an issue-by-issue basis; - An order for each party to disclose documents which may reasonably contain information that will enable that party to advance its own case or damage the case of any other party, or leads to an enquiry that has either of those consequences; - An order dispensing with disclosure (although this is unlikely); or - Any other order that the court considers appropriate. ## What is a disclosure report? In multi-track cases, the Civil Procedure Rules provide that each party must file and serve a disclosure report not less than 14 days before the first case management conference (CMC). However the court can order that the disclosure report be filed and served earlier. In particular, the practice of the Chancery Division is to require the disclosure report to be filed and served at the same time as the Directions Questionnaire. ## What must a disclosure report contain? The disclosure report must: - Briefly describe matters such as the documents that exist that are (or may be) relevant to your case and where, and with whom, the documents are (or may be) located; - Describe how any electronic documents are stored; - Estimate the broad range of costs that could be involved in giving disclosure (whether it is standard disclosure or otherwise), including the costs of searching for and disclosing electronic documents); and - State which type of disclosure order will be sought. ## How much documentation has to be disclosed in litigation? [Specialist litigation solicitors](https://lexlaw.co.uk/our-people/) must carefully consider what might be the most appropriate approach to disclosure in your case, to ensure that what is proposed is proportionate. This is something we should discuss in detail once we have done some preliminary scoping in relation to the likely volume of documentation and how many electronic documents will have to be disclosed. Not less than seven days before the first [CMC](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/), the parties must discuss (and seek to agree) a proposal for the disclosure exercise. In many cases, it will be necessary to begin these discussions at a much earlier stage. This is because much modern litigation (including most cases dealt with by this firm) involves a very large volume of documentation (including electronic documents) and it is important that the parties co-operate to agree a way of conducting the disclosure exercise which ensures that relevant material is disclosed while minimising the time and costs to be expended. ## What is the definition of "document" in disclosure? Your duty is to disclose documents. "Document" has a very wide meaning under the Civil Procedure Rules. It includes all media in which information of any description is recorded: for example, tapes, computer records and emails, as well as paper. The definition of a document also extends to electronic material that is not easily accessible, such as electronic documents stored on servers and back-up systems, and electronic documents that have been deleted. It also includes information stored and associated with electronic documents, known as metadata. ## What is the definition of "control" in disclosure? Parties in litigation are obliged to disclose helpful or damaging documents that are, or have been, in your control. "Control" also has a specific meaning under the Civil Procedure Rules. It is not limited to documents that you have (or previously had) in your possession. It also includes documents that you have (or had) the legal right to possess, inspect or copy (for example, any documents held by your third-party professional agents, such as other firms of solicitors or accountants). ## What is a "reasonable search" in the disclosure exercise? When giving standard disclosure, a party's obligation in litigation is to conduct a reasonable search for documents that are, or have been, in its control. It is therefore necessary to conduct a thorough search. In some cases it will be appropriate to outsource the search exercise to a third party as specialist skills may be required (e.g. to copy and search electronic documents while preserving the metadata) and the involvement of an independent third party may make it harder for the opposing party subsequently to claim that the search has been conducted inadequately. ## Can I conduct disclosure myself? In other cases it may be appropriate that you conduct the search yourself, in which case [specialist litigation solicitors](https://lexlaw.co.uk/our-people/) should provide you with instructions as to how this should be done. Clients frequently underestimate the extent of the search required and it is important that you strictly follow any instructions from a lawyer. ## What constitutes a "reasonable search" in litigation? What constitutes a reasonable search will depend on the facts of each case, but there are certain factors that the court will apply when assessing the reasonableness of a search. These include: - The number of documents; - The nature and complexity of the proceedings; - The ease and expense of retrieval of any particular document; and - The significance of any document likely to be located during the search. When considering the ease and expense of retrieval of electronic documents, specific points to consider include: - The accessibility of electronic documents (including email communications) on computer systems, servers, back-up systems and other electronic devices or media; - The location of relevant documents, data, computer systems, servers, back-up systems and other electronic devices or media that may contain such documents; - The likelihood of locating relevant data; - The cost of recovering, disclosing and providing inspection of any relevant electronic documents; - The likelihood that electronic documents will be materially altered in the course of recovery, disclosure or inspection; and - The availability of electronic documents (or contents of electronic documents) from other sources. ## What is a keyword search in disclosure? In most cases, the search for electronic documents will be by means of agreed keyword searches.  As noted above, agreeing appropriate keywords forms an important part of the work to be done prior to the first CMC. It may assist in this process to establish a document database at an early stage in order to identify how many documents will be caught by a proposed keyword. ## What is a list of documents in disclosure? If lists are to be exchanged, [specialist litigation solicitors](https://lexlaw.co.uk/our-people/) will then draft a list of the documents that must be disclosed. The disclosed documents will be described in the list of documents in one of the three sections: - Relevant documents that you currently have, and which your opponent may view or "inspect". These documents will be listed either individually or by category. (In practice, the documents are provided as copies and not actually inspected.) - Relevant documents that you currently have, but which your opponent may not inspect: for example, privileged documents (see below). By convention, these documents are described generally. - Relevant documents that you have had, but no longer have. By convention, originals of documents that have been sent to third parties are described generally, but if there are documents likely to be relevant to the matter that you previously had but do not retain, these will need to be identified as specifically as possible. ## Which documents are privileged in disclosure? The main categories of documents that are privileged are: - Confidential communications passing between you and your legal advisers, in which you are seeking or obtaining legal advice. It applies to transactional advice as well as advice regarding contentious matters. These documents are subject to legal advice privilege. - Confidential communications made when litigation is likely or has begun, passing between you and your legal advisers, where the main purpose of the communication is to seek or obtain evidence for use in the litigation, or to obtain or provide advice on the litigation. These documents are subject to litigation privilege. This also applies to communication between your lawyers and third parties in connection with this litigation. - Certain confidential communications between you and certain third parties, where the main purpose of the communication is to obtain legal advice on the litigation. These documents are also subject to litigation privilege.  However, please note that the scope of litigation privilege applying to communication between non-lawyers is limited. - Correspondence and other communications generated as part of a genuine attempt to settle an existing dispute. These documents are subject to "without prejudice" privilege. ## Do I have to disclose confidential documents? Unless you have a right or duty to withhold inspection, you will not be able to prevent your opponent from seeing any documents that are required to be disclosed just because they are confidential. However, the Civil Procedure Rules prevent a party that has acquired documents on disclosure from using those documents outside the litigation in which they are disclosed, except in certain circumstances: for example, if the court's permission is obtained. If there are any commercially sensitive relevant documents that you do not want your opponent to see, we will need to consider whether (and, if so, to what extent) we can ask the court to put in place some specific protective measures. Sometimes, for example, it is possible to obtain an order that an opponent's legal advisers (but not the opponent) may inspect those documents. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # What is Mediation? Source: https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is mediation? [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) provides a private forum in which the disputing parties can better understand each other’s position and then work together (with the assistance of the mediator) to explore options for settling the dispute. ## What is facilitative mediation? The most common type of [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) is facilitative mediation. In this type of mediation, unlike a judge or an [arbitrator](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/), the mediator will not decide the case on its merits. Instead, the mediator will work to facilitate agreement between the disputing parties. ## What is evaluative mediation? Another type of [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) is evaluative mediation, in which the mediator is called upon to evaluate the case and its strengths and weaknesses. However, this type of mediation is less prevalent than facilitative mediation. ## What is a mediation agreement? As part of the [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) process, there will be a mediation agreement that the disputing parties need to enter into beforehand. This will usually require the parties to treat all discussions and documents involved with the mediation as being confidential and without prejudice. Therefore, it is usually the case that whatever is said or takes place during the mediation cannot be used in later proceedings if the mediation does not settle. ## Who organises the mediation in a litigation dispute? It is usually up to the disputing parties to select a mediator to resolve their dispute. For the mediation process to work effectively, the parties must have confidence and trust in the agreed mediator. ## What factors should be considered when selecting a mediator? Some factors that should be considered when selecting a mediator are: - Professional background – Mediators come from a variety of professional backgrounds. The parties may see benefits in selecting a mediator with a particular professional background, depending on the nature of the dispute. However, it is also important to ensure that a potential mediator’s professional background does not predispose them to sympathise with any particular position in the dispute.- Subject matter expertise – It is arguable that effective mediation skills may be more important than subject matter expertise, especially given that the mediator is unlikely to be evaluating the merits of the case. On the other hand, a mediator with relevant subject matter expertise may be useful where the technical issues are complex and go to the heart of the dispute.- Mediator style and personality – Successful mediators need to be tenacious and be able to continue negotiations between the disputing parties in spite of any difficult participants or other obstacles to a potential settlement.- Mediation experience – This can be gauged from the mediators’ CVs, which should include information about training, accreditation, experience, mediation style and substantive expertise.- Impartiality – The mediator’s neutrality is crucial to the success and integrity of the mediation process. Therefore, it is important to consider any actual and potential conflicts of interests that could reasonably be seen to raise concerns about the mediator’s impartiality. ## How much does a mediator charge? Mediators’ fees are usually calculated using either a fixed fee method or hourly rates, which are agreed with the parties in advance. The charges vary depending upon the value of the claim and the experience of the mediator, although it is customary for the parties to split those charges evenly (so that you pay half and your opponent pays the other half). In order to appreciate the likely costs of the mediator, you will need to bear in mind: - Does the mediator charge an hourly rate or a fixed fee?- Does the mediator charge for additional work before or after the mediation?- Does the mediator charge for expenses and/or disbursements?- Are cancellation fees payable and, if so, on what basis? ## Where does mediation take place? The mediation should take place at a neutral location convenient for all parties, with one room for a joint session between the parties as well as a private room for each party. Food and refreshments should be available for the entire duration of the mediation, which may continue late into the evening. ## Should a solicitor attend mediation? It is usual for your [solicitors](https://lexlaw.co.uk/) to attend the mediation (if instructed to do so), unless it is a low value claim and costs are an issue. Solicitors can serve a useful role in advising you on settlement proposals, which is particularly important in larger and more complex claims. ## Should a barrister attend mediation? If a barrister had been involved in your case, then it would be usual for the barrister to attend the mediation with your solicitors. Barristers can serve a useful role in advising you on settlement proposals and drafting any settlement agreements, which is important in larger and more complex claims. ## Should an expert attend mediation? In some cases, it may be necessary for the parties or the mediator to discuss a particular issue with an expert in order to try and identify or narrow a point of dispute between the parties. If this is likely, then an expert should be instructed to attend the mediation and there should be a discussion with the mediator about the exact scope of the role of the expert in the mediation. ## What happens before the mediation? In advance of mediation, it is useful for your solicitors to have pre-mediation contact with the mediator (which is usually done via telephone) in order to: - Provide an opportunity for the mediator to explain the mediation process and to highlight the main ground rules;- Establish a rapport with the mediator and understand the mediator’s style and personality;- Highlight on a confidential basis any particular issues that the mediator should be aware of; and- Discuss how best to structure and approach the mediation. ## What is a mediation position statement? Before mediation takes place, each party will prepare a position statement that will be sent to the other party and to the mediator. The position statement will usually be prepared by your solicitors and your barrister (sometimes, where required, with the involvement of an expert) and will be approved by you before distribution. The position statement is useful because it provides the opportunity to brief the mediator by identifying the main issues between the parties and the background to any settlement discussions that have taken place to date. The position statement is also an important tactical document because it informs the other party about the strengths of the case against them and what you hope to achieve from the mediation. ## What happens at a typical mediation? There may be four different stages in a typical mediation: - The opening phase;- The exploration phase;- The negotiation phase; and- The settlement phase. However, while we will explain these stages below, it is important to appreciate that mediation is a flexible process. Therefore, not all mediators will follow the same sequential order and not all of the phases will be present in every mediation. ## What happens during the opening phase of a mediation? Once the parties have arrived at the mediation venue and have had a chance to meet the mediator and prepare themselves, the mediator will usually convene a joint session at which the mediator will make an opening statement, following which each of the parties has the opportunity to put forward their perspective on the dispute. The joint session is important because it provides an opportunity for each party to present its position and it may be the first time that all the parties have assembled together. The joint session will start with a statement by the mediator that will usually: - Explain the flexible and voluntary nature of the mediation process;- Remind the parties that they are in control of the outcome of the mediation process;- Emphasise the neutrality of the mediator;- Stress the private and confidential nature of the mediation;- Outline the various phases of the mediation process;- Emphasise the importance of active participation and encourage the parties to ask any questions; and- Forewarn the parties that settlement will not be straightforward, and that the parties should expect some difficulties, but explain that the mediator’s role is to help them with working through the mediation process. ## What happens during the exploration phase of a mediation? Following the opening phase, the mediator will have private meetings with each party, which are entirely confidential. These private meetings are useful because they: - Allow the parties to explore the issues and discuss settlement proposals with the mediator without the other party being present;- Allow the mediator to find out more about the parties’ needs and motivations;- Allow the parties to share confidential information with the mediator without disclosing that information to the other party;- Allow the parties to give their reactions to the joint session; and- Allow the parties to conduct a robust assessment of their case without losing face in front of the other party. ## What happens during the negotiation phase of a mediation? Negotiation during the course of mediation will tend to involve the mediator shuttling between the parties and conveying offers and counter-offers between them. This can be an effective method of advancing the negotiations between the parties, particularly as the mediator may be able to provide an unemotional explanation of each party’s position. In order to move negotiations forward, the mediator will often need to assist the parties and their advisers to break the deadlock. This can sometimes involve the mediator convening a joint session of all participants in order to summarise the respective positions, review progress and help to put the negotiations in context. ## What if the case settles during mediation? In the event that the parties have agreed terms of settlement, it is important to record the agreement during the mediation in order to avoid any later dispute about what was agreed or the risk of the parties changing their minds. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # What are Statements of Case? Source: https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is a Claim Form? The claimant starts proceedings by issuing a claim form and paying the required fee. If the claim is for a sum of money, the fee is between £35 and £10,000, depending on the value of the claim. If the claim is for any remedy other than the recovery of a sum of money, then a fee of £465 or £175 is payable in the High Court or a county court, respectively. ## What are the contents of the Claim Form? The claim form contains a concise statement of the nature of the claim and the remedy sought (for example, damages). Where the claimant is making a claim for money, the claim form must also include a statement of value of the amount claimed. ## When should a Claim Form be served? The claim form must be served on the defendant. The general rule is that service must be within four months after the date of issue, where the claim form is served within the jurisdiction, and within six months of the date of issue, where it is served out of the jurisdiction. ## What are the Particulars of Claim? The particulars of claim must set out full details of the claim, including the alleged facts on which the claim is based. The particulars may be included on the claim form. However, in a complex claim they are usually contained in a separate document. ## When must the Particulars of Claim be served? The particulars of claim must be served on the defendant within 14 days of service of the claim form in most courts (or within 28 days of service of the acknowledgment of service in the Commercial Court). Where a claim form is served at the end of its four or six months expiry period the particulars must be served at the same time.  ## What should a Defence contain? Unless the defendant admits the whole of the claim, he must file a defence. In the defence, the defendant must state which allegations in the particulars of claim he admits, which he denies and which are either admitted or denied but he requires the claimant to prove. Where the defendant denies an allegation, he must state reasons for the denial and put forward his own version of events. ## When must a Defence be filed? The defendant must file a defence either: - Within 14 days after service of the particulars of claim, if he has not filed an acknowledgment of service. - Within 28 days after service of the particulars of claim, if he has filed an acknowledgment of service. ## Can I get an extension of time to file a Defence? The parties may agree an extension of time of up to an additional 28 days for filing the defence. If the defendant wants more time, he will need to apply to court for a longer extension. If a defence is not filed, the claimant can apply to the court for judgment in default of defence. ## What is a counterclaim? The defendant may make a counterclaim against the claimant, or an additional claim against another party to the claim or a third party. For example, he may make a claim for a contribution or indemnity from another party. A counterclaim against the claimant, or an additional claim for contribution or indemnity against another party may be served with the defence without the court's permission, or at any other time with the court's permission. ## Do I need to file a Reply to a Defence? A claimant is not obliged to file a reply to the defence. If the claimant files a reply that does not deal with a matter raised in the defence, they are not taken to have admitted that matter, but are taken to require that matter to be proved by the defendant. ## Do I need to file a Defence to a Counterclaim? If a counterclaim has been served, a defence to the counterclaim should normally be filed within 14 days of service of the counterclaim. ## What is a Statement of Truth? Certain documents (including statements of case and witness statements) must be verified by a statement of truth. A statement of truth is a statement confirming that the person making it believes that the facts stated in the document are true. A failure to verify a document can have severe repercussions. For example, if a statement of case is not verified, the party will be unable to rely on it as evidence of any of the matters set out in it. It could even be struck out, although this is rare. There are also penalties for signing a statement of truth without an honest belief in the truth of the facts being verified. ## Do I need to instruct a barrister to draft pleadings? In some cases, it may be appropriate to instruct an independent barrister or counsel before, or shortly after, proceedings have commenced. Working in conjunction with our [litigation solicitors](https://lexlaw.co.uk/our-people/), specialist independent counsel can give advice on the merits and assist with the preparation of the statement of case. ## Need a second opinion in your litigation? Need a second opinion on your litigation? Our solicitors & barristers can help by assessing your case prospects. We have dual-qualified lawyers, so if our view is your case has limited merit or high risk we warn you in our first meeting. Some firms offer free meetings with unqualified or junior lawyers and only after you’ve spent more do you get advice from a senior partner or barrister possibly that the case shouldn’t be pursued. Some of our [professional negligence](https://lexlaw.co.uk/?page_id=4023) cases against lawyers are based on this type of possibly negligent approach. *We do things differently from all other law firms in England & Wales.* We offer you partner and counsel-led advice in our first meeting, for a heavily discounted fixed fee. That way our best solicitors and barristers can review your litigation case and give you the correct advice at the outset, when it matters the most. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Urgent Injunctions: Obtaining a Freezing Order Source: https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/ *A freezing order (historically known as a Mareva injunction) is an interim injunction prohibiting a potential defendant in criminal or civil litigation proceedings from dissipating assets. Typically, such an injunction is sought to preserve a defendant's assets until a judgment can be obtained. Freezing orders can be obtained to prevent the disposal of assets within the UK or worldwide.* Freezing orders (Mareva injunctions) are court-issued interim remedies to prevent asset dissipation during litigation in England and Wales. This guide covers the 2025 procedural updates under CPR Part 25, including expanded third-party liability for banks or trusts holding respondent-controlled assets. Learn how domestic and worldwide freezing orders differ, the "balance of convenience" test, and strategies to challenge oppressive terms. For urgent applications, review our [freezing order compliance checklist](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) or explore [cross-border enforcement](https://lexlaw.co.uk/international-litigation/) for multinational cases. Businesses facing insolvency risks can also consult [winding-up petition safeguards](https://windinguppetitionsolicitors.co.uk/company-winding-up/asset-protection/) to align asset preservation with insolvency law. Our [London lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are based minutes from the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) and can be deployed with speed as the client’s needs and case demands. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. ## Key Aspects of Freezing Orders (Updated 2025) | Aspect | Description | | ------ | ----------- | | Definition | Interim injunctions preventing asset dissipation during litigation. | | Types of Freezing Orders | Domestic (England & Wales) and Worldwide Freezing Orders (WFOs) covering global assets. | | Key Legal Criteria | Good arguable case, real risk of dissipation, just and convenient, undertaking in damages. | | Procedural Steps | Application notice, draft order, affidavit, return date hearing, without notice applications. | | Third-Party Implications | Third parties (banks, trusts) may be liable if they assist in breaching orders. | | Balance of Convenience Test | Courts weigh harm to applicant vs hardship to respondent in granting orders. | | Security Requirements | Security (undertaking in damages) may be required but can be waived. | | Consequences of Breach | Penalties include contempt of court, fines, imprisonment, asset seizure. | | 2025 CPR Updates | New model orders, stricter disclosure, clarity on third-party assets, procedural refinements. | ## What is an Injunction?  An injunction is a court order either prohibiting specific conduct (prohibitory injunction) or requiring certain actions (mandatory injunction). Courts typically grant interim injunctions to maintain the status quo until a full hearing or trial resolves the dispute. Breaching an injunction constitutes contempt of court, potentially resulting in serious penalties including fines, asset seizure, or imprisonment. The court weighs the "balance of convenience" when deciding whether to grant this extraordinary remedy, requiring applicants to show that damages alone would be inadequate compensation. For urgent [freezing injunction applications](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) or other emergency orders, specialist legal representation is essential. ## What are the types of injunctions?  The Civil Procedure Rules (CPR) codify the court’s power to grant a wide range of interim injunctions and related orders under CPR 25.1(1), providing essential tools to preserve the position of parties pending the resolution of a dispute. The most well-known is the **freezing injunction**, which restricts a party from dealing with or disposing of assets to prevent the frustration of a potential judgment. Courts may also grant **orders requiring disclosure of the location of assets or property**, either in support of a freezing injunction or as a standalone remedy, to ensure transparency and assist with enforcement. Another powerful remedy is the **search order** (formerly known as an Anton Piller order), which authorises the search of a respondent’s premises to preserve crucial evidence or property at risk of destruction or concealment. The court may also make **delivery up orders**, compelling a party to hand over specific property or goods, often used in intellectual property or fraud cases. Recent amendments, including the 2025 update to CPR 25, have expanded the menu of interim remedies to include **imaging orders**-a modern development allowing for the forensic copying of digital data, and interim declarations, as well as orders for the detention, custody, preservation, or inspection of property. | **Type of Injunction** | **Description** | | ---------------------- | --------------- | | **Freezing Injunction** | Restricts a party from dealing with or disposing of assets, to prevent the frustration of a potential judgment. | | **Disclosure Order (Asset Location)** | Requires a party to provide information about the location and details of property or assets, often supporting a freezing injunction but can also be a standalone remedy. | | **Search Order** | Authorises the search of a respondent’s premises to preserve evidence or property at risk of destruction or concealment. | | **Delivery Up Order** | Compels a party to hand over specific property or goods, commonly used in intellectual property or fraud cases. | | **Imaging Order** | Permits the forensic copying of digital data and electronic devices to preserve evidence in complex commercial disputes. | | **Interim Declaration** | Allows the court to make a binding declaration on a specific legal issue pending the final resolution of the case. | | **Order for Detention, Custody, Preservation, or Inspection** | Enables the court to order the safeguarding, examination, or inspection of property relevant to the proceedings. | The court’s discretion is broad and flexible, ensuring that remedies can be tailored to the facts of each case and that justice is preserved pending trial. For specialist advice on securing or responding to any form of interim injunction, including urgent [asset preservation](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) or [evidence protection](https://lexlaw.co.uk/commercial-litigation/search-orders-anton-piller/), it is crucial to consult with experienced litigation solicitors. ## What is a freezing order? A freezing order or freezing injunction (formerly known as a Mareva injunction) is an order that is used by a creditor who is concerned that a company may sell their assets and fail to pay the amount due to the creditor. The order can freeze almost any asset including: a company bank account, property, land or investment and shares. ![Asset Coverage Diagram: Visualize which types of assets (bank accounts, property, shares, etc.) can be frozen, with icons for each asset class. ](https://lexlaw.co.uk/wp-content/uploads/Freezing-Order-Assets-Covered-UK-Solicitor-Lawyer-Barrister-Bank-Car-Offshore-Trusts-Business.png) ## Which assets are covered by a freezing injunction? A freezing injunction can apply to **domestic assets** (located in England and Wales) or **worldwide assets**, depending on the court’s jurisdiction and the case’s circumstances. - **Domestic Freezing Orders**: Cover assets physically or legally situated in England and Wales, such as bank accounts, property, vehicles, or business assets. Courts typically grant these when the respondent resides locally or the dispute has clear ties to the jurisdiction. - **Worldwide Freezing Orders (WFOs)**: Extend to global assets, including overseas accounts, foreign property, and offshore trusts. Courts require a **"good arguable case"** that the respondent has significant ties to England (e.g., residency, assets, or fraudulent conduct linked to the jurisdiction). Recent rulings, such as *Lakatamia v. Su*, emphasize that WFOs are **not automatic** and demand robust evidence of cross-border dissipation risks. Even under a WFO, courts often permit **reasonable living expenses** and **legitimate business costs**, provided the respondent discloses full financial details. For businesses, this may align with [insolvency safeguards](https://windinguppetitionsolicitors.co.uk/company-winding-up/asset-protection/) to avoid oppressive restrictions. Practical Considerations: - **Third-party assets**: Orders may freeze assets held by trusts, spouses, or companies if controlled by the respondent. - **Enforcement challenges**: While WFOs are enforceable in over 150 countries via treaties, recognition varies. For cross-border disputes, consult our [international litigation guide](https://lexlaw.co.uk/international-litigation/). Under revised CPR Part 25, applicants must specify whether they seek domestic or worldwide relief, with stricter disclosure rules for foreign assets. Explore [CPR compliance strategies](https://lexlaw.co.uk/civil-litigation/cpr-updates-2025/) or review [HMRC asset freezing protocols](https://taxdisputes.co.uk/hmrc-investigations/account-freezing-orders/) for tax-related cases. ## Does a loan count as an asset subject to a freezing order? Generally, **a loan obtained after a freezing order is not classified as a frozen asset**, as freezing injunctions target *existing* assets to prevent dissipation. Borrowing new funds is typically permitted unless the loan terms violate the order’s conditions (e.g., using frozen assets as security collateral). The key exceptions & risks are: - **Security Agreements**: If the respondent pledges frozen assets (e.g., property or shares) as security for the loan, this may breach the injunction by indirectly disposing of assets. Courts have penalised such conduct as contempt (*JSC BTA Bank v Ablyazov*). - **Fraudulent Intent**: Loans designed to obscure ownership or funnel money to third parties (e.g., shell companies) may be deemed dissipation attempts. - **Post-Loan Use**: Funds borrowed must be used for legitimate purposes (e.g., business operations or living expenses). Misuse, such as transferring loans to offshore accounts, risks [contempt proceedings](https://lexlaw.co.uk/contempt-of-court/). Respondents must inform lenders of the freezing order to avoid unintentional breaches. It is also sensible to seek pre-approval for loans tied to frozen collateral via a [variation application](https://lexlaw.co.uk/civil-litigation/freezing-injunctions/). For companies, reckless borrowing post-freezing order may lead to [wrongful trading claims](https://windinguppetitionsolicitors.co.uk/director-disputes/wrongful-trading/). ## What are the consequences of a freezing injunction? A freezing injunction carries severe legal repercussions for non-compliance. Once granted, the order is endorsed with a **penal notice**, explicitly warning the respondent that breaching its terms may result in **contempt of court**. Contempt findings can lead to fines, asset seizures, or imprisonment for individuals (up to two years under the Contempt of Court Act 1981). For businesses, directors risk personal liability if they knowingly permit breaches, such as transferring frozen assets to offshore accounts or disposing of property. Courts rigorously penalize actions that undermine the order’s purpose, including hiding assets, falsifying records, or failing to disclose full financial details. Recent cases, such as *Holyoake v Candy (2025)*, highlight that even indirect breaches-like using third parties to channel funds-may trigger contempt proceedings. Third parties (e.g., banks or family members) who assist in circumventing the injunction also face penalties, including fines or injunctions against their own assets. Beyond legal sanctions, non-compliance damages credibility in ongoing litigation and may lead to cost orders requiring the respondent to cover the applicant’s legal fees. For professionals advising on frozen assets, negligent guidance could spark [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/solicitor-negligence/), particularly if mismanagement exacerbates losses. Respondents must act swiftly to seek variations for legitimate expenses through [court-approved channels](https://lexlaw.co.uk/civil-litigation/freezing-injunctions/) or risk escalating penalties. Under 2025 procedural updates, courts now require applicants to notify respondents of the penal notice’s implications in plain language, reducing claims of misunderstanding. For businesses, overlapping insolvency risks-such as [wrongful trading allegations](https://windinguppetitionsolicitors.co.uk/director-disputes/wrongful-trading/)-may arise if frozen assets prevent meeting creditor demands. Proactive compliance and legal advice are critical to navigating these layered consequences. ## What are the requirements for a freezing order? The court will exercise its discretion to grant a freezing order and must only grant the order if it convenient. The court must establish the following conditions to grant a freezing order: - The applicant must have a strong case. The applicant must establish that its case is capable of a serious argument. - There must be a substantive cause of action against the defendant - The applicant must demonstrate the risk of the asset being disposed of if the order is not put into place. Courts assess this risk flexibly (e.g., through evidence of dishonesty or past conduct) - It must be ‘just and convenient’ to grant the order – it would cause unnecessary and disproportionate hardship to the defendant to grant the order.    ## What is the procedure to obtain a freezing order? The following documents should be completed which will be best prepared by a legal advisor to ensure the best chases in obtaining the freezing order: - Application Notice along with evidence in support if the application. - A draft Order – which will set out the terms for the freezing Order. - Ancillary Orders (only sometimes needed) – this may include an order for cross-examination, delivery of passport, or order for a company receiver. If a freezing order is then granted at a without prejudice hearing it will usually be made for a specific amount of time and a return date will be fixed for a full hearing. Following the granting or the order it should then promptly be served by the applicant on the respondent and any third parties known, or believed to hold assets of the respondent. At the full hearing the court will determine whether the injunction should be continued, varied or discarded. ## What must be proven to get a freezing order? Certain conditions must be met in order to grant a freezing order: - The applicant my have a cause of action, that is, an underlying legal or equitable right. - The English court must have jurisdiction. - The applicant must have a good arguable case. - The existence of assets. - There is a risk of dissipation. - The applicant must provide an undertaking in damages. English courts require these six essential conditions for granting a freezing injunction, developed through a body of case law including *Mareva Compania Naviera SA v International Bulkcarriers SA* and refined in *The Niedersachsen*. The applicant must establish an underlying cause of action-a substantive legal or equitable right that forms the basis of the claim. The English court must have proper jurisdiction over the case, which depends on the respondent's domicile or the location of assets for domestic orders, and additional connecting factors for worldwide freezing orders. The applicant needs to demonstrate a good arguable case on the merits, showing a serious issue to be tried that exceeds mere speculation. Evidence of existing assets within the jurisdiction (or globally for WFOs) must be presented with reasonable specificity. The applicant must prove a real risk of asset dissipation, not merely that the respondent has the ability to move assets but would likely do so to frustrate judgment. Finally, the applicant must provide an undertaking in damages-a binding promise to compensate the respondent for losses caused by the order if the underlying claim fails. For complex [commercial disputes](https://lexlaw.co.uk/commercial-litigation/) involving potential asset dissipation, early specialist advice is crucial. ## What must an applicant provide for a successful freezing order injunction appplication? Full disclosure of all relevant information must be provided by the applicant including an undertaking in damages to compensate if it is then decided that the freezing order should not have been awarded. in some cases the applicant will also need to provide security when making an application for a freezing order. It is important that in the disclosure the applicant provides all facts and information so that court is able to properly exercise it's discretion. These facts include anything that could adversely affect the applicant’s own case; how long the dispute has been ongoing; and facts that the applicant or their advisors did not know but could have discovered if they made reasonable enquiries. ### Freezing Orders FAQ Can freezing orders affect third-party assets? Yes, English courts may extend freezing orders to assets held by third parties (e.g., companies or trusts) if there is evidence the respondent controls them. Recent cases like *Mold v. ABC Ltd* confirm that corporate assets may be frozen if they effectively act as the respondent’s "pocket or wallet," even without full legal ownership. For guidance on protecting corporate assets, see our [freezing order compliance guide](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) or explore [corporate asset protection strategies](https://windinguppetitionsolicitors.co.uk/company-winding-up/asset-protection/). What’s the difference between domestic and worldwide freezing orders? Domestic orders apply to assets in England and Wales, while worldwide freezing orders (WFOs) restrict assets globally. WFOs require proof of a strong connection to the UK jurisdiction, such as assets held here or the respondent’s residency. For cross-border cases, our team specialises in [international injunction enforcement](https://lexlaw.co.uk/international-litigation/). Note that post-*dos Santos* rulings demand meticulous evidence for WFOs. How have freezing order procedures changed in 2025? April 2025 updates to CPR Part 25 introduced new model orders for freezing injunctions, emphasizing clarity on third-party assets and business expenses. These changes streamline applications but require strict compliance with procedural guidelines. For details on adapting to the updated rules, visit our [civil procedure reforms page](https://windinguppetitionsolicitors.co.uk/civil-litigation/cpr-updates-2025/). What factors do courts consider in the "balance of convenience" test? Courts weigh the risk of harm to the applicant against the respondent’s hardship. Factors include the applicant’s diligence, the respondent’s conduct, and the proportionality of freezing assets. Delays in applying or overly restrictive terms may tip the balance against granting an order. Learn about [strategies for equitable relief](https://lexlaw.co.uk/commercial-litigation/injunctions/). How can respondents challenge freezing orders? Respondents may apply to vary or discharge orders if the applicant failed to disclose key facts, provided oppressive terms, or delayed proceedings. Successful challenges often hinge on proving the applicant’s misconduct, as seen in [professional negligence cases](https://professionalnegligenceclaimsolicitors.co.uk/solicitor-negligence/freezing-order-misrepresentation/). For tailored defence strategies, consult our [freezing order challenge toolkit](https://taxdisputes.co.uk/financial-disputes/account-freezing-orders/). Is security always required for freezing orders? No. While applicants often provide security via an "undertaking in damages," courts may waive this requirement if the applicant has strong finances or the case merits exceptional treatment. Explore [security alternatives](https://windinguppetitionsolicitors.co.uk/insolvency/bond-security/) or review [case-specific considerations](https://lexlaw.co.uk/commercial-litigation/freezing-injunctions/). For further insights, visit our dedicated pages on [urgent injunctions](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) or [HMRC account freezing disputes](https://taxdisputes.co.uk/hmrc-investigations/account-freezing-orders/). How long does a Freezing Order Last? Generally freezing orders will be granted for a period of between 7 and 14 days. After the expiry of the order the court will convene again on what is known as a "return date" where it may choose to extend the order, discharge it or continue it until the trial. How is a freezing order enforced? Freezing orders are generally enforced by committal proceedings for contempt of court. Committal proceedings may generally only be brought against a person who the order was original served on. Committal proceeding are classified as civil proceedings in England and Wales, however the penalty may be a fine, seizure of assets or up to two years imprisonment. To commit a person for breach of injunction a deliberate or wilful breach of the order must be established beyond reasonable doubt, which is the criminal standard of proof. How much does an injunction cost?  The cost for an injunction is dependent on the circumstances and facts in the particular case. For example, the level of costs will be affected by: (1) whether the matter is with or without notice; (2) the urgency of the application; (3) the number of witnesses involved in the matter; and (4) the number of hearings and level of contest. Costs will be at the very least be several thousand pounds. How do freezing orders interact with cryptocurrency and digital assets? Cryptocurrency and digital assets present unique challenges for freezing injunctions due to their decentralised nature and pseudonymous ownership structures. Courts in England have evolved their approach significantly since the landmark *AA v Persons Unknown* case, now routinely including specific cryptocurrency provisions in standard form orders. The practical challenge remains identification-respondents must disclose wallet addresses and private keys, with courts increasingly willing to order [forensic blockchain analysis](https://lexlaw.co.uk/digital-assets/cryptocurrency-disputes/) to trace asset movements. Where respondents claim to have "lost" private keys, courts may draw adverse inferences or order third-party exchange freezes. Digital asset service providers (including DeFi protocols) receiving notice of freezing orders face potential contempt risks if facilitating transactions. For clients with substantial digital holdings, specialized [asset protection strategies](https://windinguppetitionsolicitors.co.uk/company-winding-up/asset-protection/) should be considered prior to any litigation risk arising, as retrospective measures often prove ineffective. Can trusts effectively shield assets from freezing orders? Trust structures offer limited protection against freezing orders where the respondent retains beneficial ownership or control. Recent case law (*JSC BTA Bank v Ablyazov* and *Lakatamia v Su*) established that assets nominally held in trust remain subject to freezing orders if the respondent is the beneficial owner or exercises de facto control. The 2025 model freezing order now explicitly references trust structures, requiring disclosure of all trusts where the respondent is settlor, protector, or beneficiary. Courts increasingly pierce trust arrangements through [beneficial ownership determinations](https://lexlaw.co.uk/international-litigation/beneficial-ownership-disputes/) where evidence suggests the trust is merely the respondent's "alter ego." For legitimate trust planning, proper documentation of independence from settlor control is essential. Trustees receiving notice of freezing orders must conduct thorough due diligence, as facilitating asset transfers could trigger [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/trustee-negligence/) or contempt proceedings. What are the disclosure obligations for respondents' digital communications under freezing orders? Respondents face extensive disclosure obligations regarding digital communications under enhanced 2025 CPR requirements. Beyond traditional banking records, courts increasingly order preservation and disclosure of messaging applications (WhatsApp, Telegram, Signal), email accounts, and cloud storage services containing financial discussions. The disclosure threshold extends to communications with third parties regarding asset transfers or financial arrangements. Respondents must provide access credentials where ordered, with forensic IT specialists often appointed as court officers to preserve data integrity. Deletion of messages post-order constitutes contempt, with courts drawing adverse inferences from "convenient" data losses. For respondents managing sensitive commercial information, applications for redaction require careful navigation of [commercial confidentiality protections](https://lexlaw.co.uk/commercial-litigation/confidential-information/) while demonstrating full compliance with the order's core requirements. How do HMRC investigations interact with freezing order applications? The relationship between HMRC investigations and freezing orders creates complex procedural challenges. Where HMRC suspects tax fraud, they may support or intervene in freezing order applications, creating a dual-track enforcement regime. Tax investigation subjects face heightened disclosure obligations, with information provided under freezing orders potentially informing parallel [tax investigations](https://taxdisputes.co.uk/hmrc-investigations/). The 2025 Practice Direction amendments require applicants to disclose related regulatory proceedings, including ongoing HMRC inquiries. Corporate respondents must navigate potential conflicts between freezing order compliance and their ongoing [VAT dispute resolution](https://taxdisputes.co.uk/tax-investigations/vat-investigation/) processes. Strategic considerations include whether voluntary disclosure to HMRC might preempt more severe freezing restrictions, particularly where [tax disclosure facilities](https://taxdisputes.co.uk/tax-investigations/voluntary-disclosure/) might mitigate penalties while addressing dissipation concerns. How are business expenses assessed under corporate freezing orders? Corporate respondents subject to freezing orders face nuanced judicial scrutiny of proposed business expenses. Unlike personal living expenses, business expenditure must demonstrably preserve value rather than merely maintain operations. Courts apply the "ordinary and proper course of business" test, requiring evidence that payments are necessary, legitimate, and consistent with pre-litigation patterns. The burden falls on the corporate respondent to justify each category of expense through comprehensive management accounts and cash flow projections. Payments to connected entities receive heightened scrutiny, often requiring [independent director approval](https://windinguppetitionsolicitors.co.uk/director-disputes/independent-directors/) and clear commercial justification. Companies near insolvency face additional complications, as directors must balance freezing order compliance with statutory [wrongful trading](https://windinguppetitionsolicitors.co.uk/director-disputes/wrongful-trading/) obligations. The 2025 standard form freezing orders now include specific corporate governance provisions, requiring board-level compliance officers and documented decision procedures for expense approvals. ## Elite London Injunction Lawyers Our London Injunction Solicitors and Barristers are able to mobilise with speed and act as tenaciously as the case demands. This is one of the reasons for the firms location adjacent to the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) in Central London. We can and have obtained out of hours emergency worldwide freezing injunctions for our clients in circumstances that require overnight preparation of affidavits and even attendance upon Judges at their home address followed by immediate enforcement action and further attendance the next morning at the [High Court.](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) We ensure that we provide the [best possible outcome](https://privateprosecutionservice.co.uk/private-prosecution-cases/) for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. --- # Interim Remedies Source: https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/ Our [London lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are based minutes from the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) and can be deployed with speed as the client’s needs and case demands. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. [We](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is default judgment? If the defendant fails to file a defence within the relevant time limit, the claimant may obtain a judgment in default of defence, which means that judgment is entered on the claim without a trial. It is up to the defendant to apply to court to have the judgment set aside or varied because he has a real prospect of successfully defending the claim or for some other good reason. ## What rules govern default judgment? The rules governing default judgment are set out at [Part 12 of the Civil Procedure Rules ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12). CPR 20 governs default judgment for counterclaims. CPR 10 and CPR 15 set out the time periods for the filing of the acknowledgement of service and serving the defence. ## What is the procedure to enter default judgment? Depending on the type of claim, default judgment is sought either by filing a request (*[CPR 12.4(1) or (3)](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part12.htm#IDA5CSIC)*) or by an application to the Court (*[CPR 12.4(2)](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12#IDAEVSIC)*, *[CPR 12.9](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part12.htm#IDAEVSIC)* and *[CPR 12.10](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part12.htm#IDA4WSIC)*). ## What is summary judgment? The court may give summary judgment against a claimant or a defendant, either on the whole of the claim or on a particular issue, if it considers that there is: - No real prospect of that party succeeding on the claim or defence.- No other compelling reason why the claim or issue should be disposed of at a trial. ## What is the basis of an application for summary judgment? An application for summary judgment can be based on: - A point of law (including a question of a point of construction of a document such as a contract);- The evidence which can reasonably be expected to be available at trial (or the lack of it); or- A combination of both. ## What does it mean to strike out a claim? The court also has the power to strike out a party's statement of case (including a claim form, particulars of claim or defence), either in whole or in part, if it is satisfied that one of the following apply: - The statement of case discloses no reasonable grounds for bringing or defending the claim.- The statement of case is an abuse of process.- There has been a failure to comply with a rule of court order. ## What are the consequences of a strike out order? - Prevent a party from relying on certain material set out in its statement of case; or- If the whole of a party's case is struck out, lead to the court giving judgment for the other party; or- Penalise a party harshly for not complying with court orders by removing parts of or the entirety of their statement of case; or- Bring proceedings to an end. ## What is a security for costs order? The court may order a claimant to provide security for the defendant's costs of the proceedings, usually by way of a payment of money into court. The court must be satisfied that it is just to make the order in all the circumstances of the case and that certain conditions apply to the claimant. For example, security for costs may be ordered where the claimant: - Is resident out of the jurisdiction.- Has changed his address since the claim was commenced, with a view to evading the consequences of the litigation.- Failed to give his address on the claim form, or gave an incorrect address on the claim form.- Has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him. The rationale for this measure is to offset any possible injustice to a defendant who may be forced to defend proceedings that have no real prospect of success. ## What is an injunction?  An injunction is a Court order that will prohibit a party from taking a particular action which is called a prohibitory action; or may require them to take a particular action which is called a mandatory injunction. Usually the first step is to obtain an interim injunction which will usually be granted pending a further hearing or until a further hearing or until a full trial of the dispute.  If a party breaches an injunction the party can be held in contempt of Court which in some circumstances may lead to imprisonment.  ## Can I apply for injunctive relief? The claimant may apply for an interim injunction that requires a party to do, or to refrain from doing, a specific act or acts. In urgent cases, interim injunctions may be obtained without prior notice to the defendant (for example, freezing injunctions that are sought to preserve the defendant's assets pending judgment or final order). However, injunctions are only suitable in claims where damages are not an adequate remedy. An application for injunctive relief is not a step that should be taken lightly. A claimant is usually required to give an undertaking in damages (also known as a cross-undertaking) when an injunction is granted. The claimant undertakes to compensate the defendant for any loss incurred, should it later transpire that the injunction was wrongly granted. Depending on the circumstances, the damages awarded under the undertaking can be substantial. ## What are the types of injunctions?  The CPR have codified the court’s power to grant types of interim order in [CPR 25.1(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part25). Such interim injunctive relief includes:  - Freezing injunctions – restricting someone from dealing with their assets;- Orders requiring a party to provide information about the location of property or assets, which may be sought to to support a freezing injunction or as a standalone order;- Search orders – to permit the search of a respondent;s property to preserve evidence and property; and/or- Orders requiring delivery up of property. ## How much does an injunction cost?  The cost for an injunction is dependent on the circumstances and facts in the particular case.  The level of costs will be affected by:  - The urgency of the application;- The number of witnesses involved in the matter; and- Whether the matter is with or without notice.  ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Cease and Desist Letter Before Action Source: https://lexlaw.co.uk/cease-and-desist-letter-before-action-urgent-injunction-defamation-contract-trespass-disputes-legal-advice/ A Cease and Desist letter may warn that if the recipient does not discontinue specified conduct, or take certain actions, by deadlines set in the letter, that party may be sued for damages or urgent injunctive relief taken. [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. Our [London lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are based minutes from the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) and can be deployed with speed as the client’s needs and case demands. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Please note that we don’t offer free advice. Instead, for a discounted fixed fee we offer you high quality partner and counsel-led advice in our first meeting. To instruct us on a cease and desist matter costs from £2,500 plus VAT. ## What is a cease and desist notice? A cease and desist notice is a letter that requests that an individual or company to stop a specified action and refrain from doing it in the future, with a threat of legal action if the recipient fails to comply, which action would include applying to the Court for injunctive relief or damages. In the event (for example the criminal damage or the defamatory material continues to be published), this correspondence serves as [pre-action](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_def) correspondence before you commence proceedings. ## When can I send a cease and desist letter? Cease and desist letters are frequently used in the below types of litigation: - copyright/IP infringement; - breach of contract; - ongoing trespass/nuisance; - criminal damage; - boundary disputes; - defamatory statements; - libel and slander; - civil harassment: where a party is subject to persistent and unwanted attention from a third party, through social media, online or by a journalist or media organisation. ## Why should I send a Cease and Desist Letter? In some cases, the sending of a cease and desist letter at the pre-action stage can often resolve the dispute, avoiding the need for potentially lengthy and costly litigation. ## What should a Cease and Desist letter template contain? A well drafted cease and desist letter will state the actions which are unlawful and steps which must be taken and, usually, what will happen if the action continues. It is essential to seek legal advice, as a well drafted letter can ensure that the complained of behaviour ceases without litigation. Also bear in mind that any type of pre-action letter such as this is likely to be before a judge at some stage should the litigation route be taken, Therefore, it is imperative that you case is argued carefully and correctly from the outset during the pre-action stage. ## Should the cease and desist letter specify a deadline for responding? Providing the recipient with a deadline for ceasing the infringing action gives more weight to the cease and desist letter and compels the recipient to react quickly. The deadline is of course fact specific and may require a very short deadline if the act complained of is causing immediate and substantial damage. ## Can I send a Cease and Desist Letter for Defamation? Yes. Defamation is the publication of a statement about an individual or company which has caused or is likely to cause serious harm to the subject’s reputation. The defamatory publication will either be a libel or a slander. - Libel: relates to a permanent, written publication including newspaper and magazine articles or material published online - Slander: relates to statements made orally. ## Can I sue for Defamation if the offending party does not remove the offending publication? Yes. The [Defamation Act 2013](http://www.legislation.gov.uk/ukpga/2013/26/contents/enacted) sets out the requirements for a claim for defamation. The remedies include an apology, an order for [removal](https://www.legislation.gov.uk/ukpga/2013/26/section/13/enacted) of the defamatory content, an order to cease and desist (requiring the publisher to refrain from publishing further content) or further injunctive relief. It is possible to sue for damages but it is important to show the defamation has caused financial loss. If successful in a claim, you may also be able to recover a proportion of your legal costs from your opponent. Alternative claims to consider include malicious falsehood or negligent misstatement. ## Cease and desist Notice to remove offending statements from a website Where a web page contains offending statements and that page is hosted by a provider such as Google, a Notice and Take-down letter under Article 14 of the E-Commerce Directive (2000/31/EC) can be sent compelling the site to remove or disable access to the offending statements expeditiously. Following [Trkulja v Google Inc [2013] EWCA Civ 68](https://lexlaw.co.uk/wp-content/uploads/2020/04/Trkulja-v-Google-LLC-2018-92-ALJR-619.pdf) if after a Notice and Take-down letter under Article 14 of the E-Commerce Directive (2000/31/EC), the website platform may be deemed to be liable as a publisher of the offending statements having received notification that the offending statements are false and defamatory. > if “[the online platform] allows defamatory material to remain on a blog after it has been notified of the presence of that material, it might be inferred to have associated itself with, or to have made itself responsible for, the continued presence of that material on the blog and thereby to have become a publisher of the material.” > > > Richards LJ, [Trkulja v Google Inc [2013] EWCA Civ 68](https://lexlaw.co.uk/wp-content/uploads/2020/04/Trkulja-v-Google-LLC-2018-92-ALJR-619.pdf) ## What is an Injunction?  An injunction is a Court order that will prohibit a party from taking a particular action which is called a prohibitory action; or may require them to take a particular action which is called a mandatory injunction. Usually the first step is to obtain an interim injunction which will usually be granted pending a further hearing or until a further hearing or until a full trial of the dispute.  If a party breaches an injunction the party can be held in contempt of Court which in some circumstances may lead to imprisonment.  ## How much does an injunction cost?  The cost for an injunction is dependent on the circumstances and facts in the particular case.  The level of costs will be affected by:  - The urgency of the application; - The number of witnesses involved in the matter; and - Whether the matter is with or without notice.  ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our winding up petition team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our litigation team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Instruct Expert Litigation Solicitors We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. Please note that we don’t offer free advice. Instead, for a discounted fixed fee we offer you high quality partner and counsel-led advice in our first meeting. To instruct us on a cease and desist matter costs from £2,500 plus VAT. --- # Preparing witness evidence in litigation Source: https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/ *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. We explain below the importance of witness statements in litigation and the steps to be taken to prepare witness evidence. * ## What is a witness statement? A witness statement is a formal document that contains a witness’s account of the facts relating to a particular dispute. The purpose of a witness statement is to provide to the Court (and opponent) written evidence to support a particular party’s case. Usually all parties in litigation will be required to produce a witness statement. A witness statement is a crucial piece of evidence that will be referred to and relied upon at trial. Therefore, it is important to ensure that your witness statement is both accurate and comprehensive. ## Preparing your witness statement Witness statements should be prepared in compliance and accordance with [Part 32 of the Civil Procedure Rules](http://windinguppetitionsolicitors.co.uk/) and [Practice Direction 32](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32). The Court also provides additional guidance and a [template](https://www.justice.gov.uk/courts/procedure-rules/civil/standard-directions/general/witness-statements) for preparing witness statements. The first step will be to go through your recollection of all of the relevant facts and events with which you have been involved. This chronology provides a good foundation for your witness statement. The witness statement must be in your own words. Therefore, you must ensure that you understand what is included in your witness statement and that the contents of the witness statement accurately reflect your recollection of the facts. Paragraphs 17.1 to 20.3 of [Practice Direction 32](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32#witness) set out the format and requirements of a witness statement which must be adhered to. If your witness statement does not comply with Part 32 in relation to its form, the Court may refuse to admit it as evidence and may refuse to allow the costs arising from its preparation ([CPR 32 25.1](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32#25.1)) so it is important that witness statements are prepared properly. ## How do I refer to documents in my witness statement? If you refer to any documents in your witness statement, these should be collated in a supporting [exhibit](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32#exhibits), pursuant to paragraphs [11.1 to 15.4 of Practice Direction 32](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32#exhibits), clearly ordered and paginated for the Court. ## What is a statement of truth? In litigation, any statement of case or witness statement must be verified by a statement of truth. [Part 22 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22) sets out provisions for statements of truth. The purpose of the [statement of truth](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22/pd_part22) is to confirm that you believe that the facts stated in the entire witness statement are true. If a witness statement is not verified by a statement of truth, then it may not be admissible as evidence. There are also penalties for verifying false statements with a statement of truth. ## Consequences of inaccurate evidence verified by a statement of truth Signing a statement of truth or allowing a solicitor to sign where you know that a document contains a false statement may lead to you being contempt of court ([CPR 32.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.14)). [Part VI of Part 81 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court#IDAABTBB)of the Civil Procedural Rules contains rules about committal applications in relation to making, or causing to be made a false statement in a document verified by a statement of truth without an honest belief in its truth. ## Can I sign a witness statement electronically? This issue has been considered in detail however [CPR 5.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part05#5.3) provides that an electronic signature is sufficient. ## Exchange of witness statements The Court usually orders the simultaneous exchange of witness statements with the other party or parties in the proceedings in addition to both parties' evidence being filed at Court. You should consider your opponent's witness evidence carefully, as if there are any factual inaccuracies in your opponent's evidence, it may be necessary to prepare a supplemental witness statement in order to deal with these points earlier than the trial. ## Consequences of failure to serve witness statement If a witness statement for use at trial is not served within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission. If you fail to comply with a court deadline or court requirement, you will need to apply to the Court for permission for relief from sanctions. ## Preparing for and attending the hearing As trial approaches, the Court will require determine a timetable which will set out how long you are likely to be needed in Court, the layout of the Court and how to address the Judge. Where a witness is called to give evidence at trial, he may be cross examined on his witness statement. You will need to prepare for giving evidence at the trial by carefully reviewing your statement and any relevant documents referred to in it. ## Instruct expert litigation solicitors We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We are extremely experienced and capable at navigating our clients through the litigation process. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). --- # Limitation Periods Source: https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/ In litigation, it is crucial to think about limitation periods and to be aware that there is an ultimate deadline by which you can bring a claim before it is time-barred. [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is a limitation period? The law sets out deadlines for bringing legal claims, which are referred to as limitation periods. The purpose of limitation periods is to prevent legal claims from being brought too long after the cause of action accrued. The length of the limitation period varies with different types of legal claim. ## Why is limitation in litigation important? Limitation is not something that should be ignored. Where a party has a strong case, but the limitation period has expired, the claim will be likely to fail. Even in unusual circumstances, where a party is prevented from issuing its claim in time for reasons beyond its control, the court has no discretion to extend the limitation period in this type of claim. It is, therefore, crucial that limitation issues are considered at the outset of any potential claims. ## When does time start running on a claim? Once the cause of action has accrued, the time for bringing a legal claim will start to run and the limitation period will begin. In order to stop time running before the expiration of the limitation period in relation to a particular cause of action, you would need to either issue a claim form at Court or enter into a standstill agreement with your opponent. ## What happens after the limitation period expires in litigation? If the limitation period expires before you have issued a claim form or entered into a standstill agreement, then your claim will be time-barred. This means that if you begin your legal claim after the limitation period has expired, the defendant will be able to raise limitation as a complete defence to your claim (regardless of how strong a claim it may otherwise be). ## Defendant options in defending a claim brought after the expiration of the limitation period A Defendant could raise limitation in its defence in one of several ways: - It could apply under the Civil Procedure Rules (which govern the conduct of civil litigation) to have your claim struck out as disclosing no cause of action.- It could file and serve its defence and then seek (usually at the Costs and Case Management Conference) to have the limitation point tried as a preliminary issue, with a view to obtaining summary judgment under CPR 24.- It could allow the claim to take its ordinary course, reserving the limitation defence until the full trial. ## What is a standstill agreement? This is a method by which time can be extended by agreement between the parties before the limitation period expires. You can protect your position by entering into a standstill agreement with all the parties to the relevant claim. In practical terms, the action will "stand still" and no party to the agreement can complain to the court about the other party's inactivity in the claim. ## Should I enter into a standstill agreement? The standstill agreement stops time running for the purposes of limitation, and therefore prevents the limitation period from expiring (usually only temporarily). It may also give you time to pursue settlement negotiations with your opponent, without needing to issue proceedings to protect the limitation position. It thereby avoids the time and costs associated with issuing a claim, but potentially alerts the other parties that you may actually issue legal proceedings. In any case, proceedings should only be issued if you can properly particularise the claim. ## Can a limitation period be extended? In certain circumstances, a limitation period can be extended in the following ways. ### Date of knowledge [Section 14 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/14) provides for two alternative start dates for negligence claims: (1) 6 years from the date the cause of action accrues i.e. when the damage occurs; or (2) 3 years from the “earliest date on which the Claimant had both the knowledge required for bringing an claim for damages in respect of the relevant damage and a right to bring such a claim. For the reasons above, it is vital to seek legal advice as soon as you become aware of a potential claim you have against a Defendant. ### Deliberate concealment [Section 32 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/32) states that “*any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the Defendant*” the 6 year period for bringing a claim does not start until the Claimant has discovered the concealment, or could have done so with reasonable diligence. The term “deliberate” means that the fact has been concealed by a positive act of concealment or omission or withholding of relevant information. This means the Defendant must have known that he acted in breach of duty before he can be accused of deliberate concealment. This is a difficult hurdle to overcome and it is important you seek specialist legal advice on the same. Our team of carefully selected solicitors and barristers, specialising in financial services litigation and professional negligence have advised many clients in deliberate concealment cases against well known financial institutions in relation to [mis-selling of complex financial products](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/). ### Fraud Section 32(1)(c) provides for the limitation period to be extended where the action being brought *“is based upon the fraud of the defendant”*. The period of limitation shall not begin to run until the Claimant has discovered the fraud or could with reasonable diligence have discovered it ### Mistake Section 32(1)(c) provides for the limitation period to be extended where the action being brought “i*s for relief from the consequences of a mistake*“. the period of limitation shall not begin to run until the Claimant has discovered the mistake (as the case may be) or could with reasonable diligence have discovered it ## Time limits in Litigation ### Breach of Contract Limitation Date 6 years from the date the cause of action accrued *([section 5 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/5))* ### Professional Negligence Limitation Date If based on contract, 6 years from the date of the breach of contract *(section [5 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/5))* If based on the common law tort of negligence, 6 years from the date the Claimant suffered a financial loss as a result of a negligent professional *([section 2 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/2))* ### Assessment of a Solicitor’s Invoice Limitation Date An absolute right to an [assessment](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) arises within 1 month of receipt of the bill *([Section 70 Solicitors Act](https://www.legislation.gov.uk/ukpga/1974/47/section/70))* This time limit is extended to 12 months if special circumstances exist as to why you didn’t challenge the bill within a month *([Section 70 Solicitors Act](https://www.legislation.gov.uk/ukpga/1974/47/section/70))* ### HMRC Tax Penalty Limitation Date If you have received a penalty, unless otherwise stated you must appeal, within [30 days](https://www.gov.uk/tax-appeals) of the date of the penalty notice. HMRC operate very strict time limits and you may lose your right to challenge a penalty with HMRC or in the Tribunal if you submit an appeal out of time. Our [tax team](https://taxdisputes.co.uk/) can advise on challenges to HMRC and appeals in the Tax Tribunal. ### Judicial Review Limitation Date The claim form must be filed promptly and in any event not later than 3 months after the ground to make the claim first arose *([CPR 54.4(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54))* It is important to check time limits carefully as there are shorter time limits for claims such as certain planning judicial review decisions need to be commenced within 6 weeks and procurement decisions within 30 days *([CPR 54.5](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54))* ### Enforcing Judgments Limitation Date 6 years from the date on which the judgment became enforceable *([Section 24 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/24))* ### Property Litigation Limitation Dates **Action to recover land: **12 years from the date the cause of action accrued* ([Section 15 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/15))* **Action to recover rent: **6 years from the date the rent arrears became due* ([Section 19 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/19))* **Action to recover proceeds of sale of land:** 12 years from the date the right to receive the money accrued *([Section 20 Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/20))* If you have a landlord-tenant dispute or a complaint against an individual or firm who advised you in a property transaction, our [property litigation team](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/) can assist. #### Employment Law Limitation Dates **Employee’s contract claim**: 3 months from the effective date of termination *([Employment Tribunals Extension of Jurisdiction Order 1994](https://www.legislation.gov.uk/uksi/1994/1623/article/7/made))* **Unfair Dismissal**: 3 months from the effective date of termination or if there is no termination, the last day on which the employee worked *([Section 111 Employment Rights Act 1996](https://www.legislation.gov.uk/ukpga/1996/18/part/X/chapter/II))* **Discrimination and victimisation:** 3 months starting with the date of the act to which the complaint relates or such other period as the Employment Tribunal thinks is “just and equitable” ([*section 123 Equality Act 2010*](https://www.legislation.gov.uk/ukpga/2010/15/section/123)) If you have been unfairly dismissed, discriminated against in the workplace or have any other dispute against your employer and would like advice on bringing a claim in the Employment Tribunal, our [employment team](https://lexlaw.co.uk/ukemploymentlawyers/) can assist. ### Defamation Limitation Date 1 year from the date of the defamatory publication or when the claimant became aware of the publication of the defamatory statement ([Section 4A Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/4A)) Where material is online, and continues to be published online, the time will start to run from the date the material was first published. ## My solicitor failed to advise me about time limits It is crucial for practitioners to consider limitation issues as soon as instructed in order to prevent the possibility of a claim being time-barred. If you have been inadequately or negligently advised by a solicitor, barrister or any other professional adviser in relation to a potential claim, then you may be able to recover any losses in a claim for professional negligence against the firm or individual providing the advice. Our [professional negligence team](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) can assist by assessing your case and advising you on the next steps. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Defamation Source: https://lexlaw.co.uk/defamation-libel-slander-publication-take-down-letter-notice-solicitors-london-legal-advice/ In order to establish a claim for defamation in English law the claimant must prove that: the statement complained of is defamatory and has defamatory meaning, there has been publication of it and it must refer to the claimant. In addition to this the [Defamation Act 2013](http://www.legislation.gov.uk/ukpga/2013/26/contents/enacted) implemented a requirement for [serious harm](http://www.legislation.gov.uk/ukpga/2013/26/section/1/enacted). ## When is a comment defamatory? A comment which is deemed to be defamatory is one which injures the reputation of another by: > 'exposing him to hatred, contempt, or ridicule, or which tends to lower him in the esteem of right-thinking members of society' > > *Sim v Stretch *[1936] 2 All E.R. 1237, 1240 Where defamatory [material is posted online](https://lexlaw.co.uk/solicitors-london/can-a-witness-be-sued-for-defamation-in-respect-of-false-wording-in-a-witness-statement/), the consequences which can be attributed to it are not artificially quarantined in cyberspace; the effects are felt offline just as if the material had been published in a newspaper or broadcast on television. This definition acts to define a defamatory comment, however the threshold of ‘[serious harm](http://www.legislation.gov.uk/ukpga/2013/26/section/1/enacted)’ must for surpassed for a claim to be successful.  ## What is serious harm? The implementation of the [Defamation Act 2013](http://www.legislation.gov.uk/ukpga/2013/26/contents/enacted) bought with it a further test for defamation, which was that a statement cannot be deemed defamatory unless its publication has caused or is likely to cause *serious harm *to the reputation of the claimant ([section 1 Defamation Act 2013).](http://www.legislation.gov.uk/ukpga/2013/26/section/1/enacted) A defamatory publication will cause serious harm: > ‘only if it substantially affected in an adverse manner the attitude of other people, or had a tendency to do so’. > > *[Thornton v Telegraph Media Group Ltd [2010] EWHC 1414 (QB), [2011] 1 W.L.R. 1985, 52](https://lexlaw.co.uk/wp-content/uploads/2020/05/Thornton-v-Telegraph-Media-Group-Ltd-2010-EWHC-1414-QB.pdf)* ## Does a statement have defamatory meaning? When considering to whom the attribute of publisher should be given, the judge must consider the meaning behind the defamatory content. The meaning of a defamatory statement is either considered in its ‘ordinary and natural meaning’ or via innuendo (*[Lachaux v Independent Print Ltd [2017] EWCA Civ. 1334](https://lexlaw.co.uk/wp-content/uploads/2020/05/Lachaux-v-Independent-Print-Ltd-2017-EWCA-Civ.-1334.pdf)*, 60) In contrast to the ‘ordinary’ meaning of a statement, for a meaning to amount to innuendo, a claimant must, in addition to identifying the meaning complained of, prove the extrinsic facts relied upon and prove that these facts were known to readers. > ...to say of a man that he was seen to enter a named house would contain a derogatory implication for anyone who knew that that house was a brothel but not for anyone who did not. > > Lord Devlin in [*Lewis v Daily Telegraph* [1964] AC 234](https://lexlaw.co.uk/wp-content/uploads/2020/05/Daily-Telegraph-1964-A.C.-234.pdf) ## What is publication? A claim of defamation is simply not in what is written, the claimant must show that the libel or slanderous comment has been published.([*Hebditch v MacIlwaine *[1894] 2 Q.B. 54, CA 58)](https://lexlaw.co.uk/wp-content/uploads/2020/05/Hebditch-v-MacIlwaine-1894-2-Q.B.-54-CA-58.pdf). Therefore, for a comment to be rendered defamatory it must be communicated to some person or persons other than the claimant himself. This comment will then be deemed to be published if it is capable of being understood by the recipients:if the recipient could not read the language or the words were spoken in a different language, there would be no publication ([*Pullman v Walter Hill & Co* [1891] 1 QB 524, 527](https://lexlaw.co.uk/wp-content/uploads/2020/05/Pullman-v-Walter-Hill-Co-1891-1-QB-524.pdf)) In lay terms: > A cannot sue B for defaming him to A himself, or to B himself; that is to say where B reads to himself his libel on A and then locks it away. A must prove that B defamed him to C > > Stephenson L.J in [*Riddick v Thames Board Mills *[1977] Q.B. 881 CA 898](https://lexlaw.co.uk/wp-content/uploads/2020/05/Riddick-v-Thames-Board-Mills-1977-Q.B.-881-CA-898.pdf) Therefore, defamatory statement about the claimant communicated to the claimant alone may injure their self-esteem but it cannot injure their reputation. Thus it can be seen that the requirement for publication, protects the fundamental pillar of our society, reputation. ## What is the Section 5 take down procedure? The real issue lies with anonymity when it comes to a defamatory statement posted online, and to whom publisher status is attributed. When the author of the complained of statement cannot be identified then it falls to the website operator to deal with the complaint and its removal, otherwise it risks liability as a publisher. Once a complaint has been made under [s.5(3)(b)](http://www.legislation.gov.uk/ukpga/2013/26/section/5/enacted) it triggers the [Defamation (Operators of Websites) Regulations 2013](https://www.legislation.gov.uk/ukdsi/2013/9780111104620). The first stage is the notice of complaint where the website operator will pass on information to the poster of the complained of statement, and inform the author, the post will be removed within 48 hours unless he or she complies with the Regulations. This provides the essential information that is required of the poster to provide to the website operator, such as a valid email address for correspondence. Following this, upon the receipt of a valid notice of complaint, action is required on the part of the website operator and requires that it must respond to any complaint within 48 hours on business days to rely on the section 5 defence. If the poster does not respond adequately to the notice, then the statement will be removed. However, if the poster does not wish its post to be removed and has complied with the Regulations it will remain on the website and the operator shall not be held liable for statements they did not make. --- ## Instruct expert defamation solicitors We understand how damaging defamatory statements can be to an individual or business and we invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients whose reputation and privacy is at risk. To instruct our specialist solicitors and barristers, please call our [defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims) team on 0207 183 0529 or email: contact@lexlaw.co.uk Please note that we don’t offer free advice. Instead, for a discounted fixed fee we offer you high quality partner and counsel-led advice in our first meeting. To instruct us on a cease and desist matter costs from £2,500 plus VAT. --- # Trial and Final Judgment Source: https://lexlaw.co.uk/trial-final-judgment-court-hearing-ptr-preparation-counsel-skeleton-argument-enforcement-legal-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What needs to be done to prepare for trial? Before the trial date or period is fixed, it will be necessary to check the availability of any counsel instructed to appear at the trial, as well as the factual and expert witnesses that may be required to give oral evidence. The courts will be very reluctant to postpone a trial date or period that has been fixed without a very good reason. If the case has not settled, the pre-trial procedure will depend on the circumstances of the case. Some of the steps required are set out below. ## What is a listing questionnaire? The court may send the parties a listing questionnaire (or pre-trial checklist) a few months before the trial. The purpose of the questionnaire is to find out whether the parties have done everything they need to do to prepare for trial and, if not, which outstanding matters need to be addressed. The court will also seek information about the trial (such as the number of witnesses to be called) and an updated or confirmed time estimate. ## What happens at a Pre-trial review (PTR)? The court may order that a pre-trial review (PTR) be held, particularly in more substantial cases where there are significant issues between the parties. The main purposes of the PTR are to: - Check that the parties have complied with all previous court orders and directions.- Prepare or finalise a timetable for the conduct of the trial, including the issues to be determined and the evidence to be heard.- Fix or confirm the trial date. ## Who prepares the trial bundles? This is usually the responsibility of the claimant's solicitors but the court expects co-operation between the parties to try to agree the documents to be included. The deadline for the trial bundles will usually have been set by the judge at the PTR. It can be a time-consuming task and requires significant planning and attention to detail. The parties may be criticised by the court for including unnecessary documents or for poorly prepared trial bundles. ## What is a skeleton argument? Each party will be required to supply the court and the other party with a written skeleton argument, namely a written outline of that party's case and arguments before trial. Skeleton arguments are usually drafted by counsel, but the instructing solicitors and parties should have an opportunity to consider the drafts and make comments or amendments. ## How long will a trial last? The length of the trial will depend on the complexity of the legal and factual issues to be resolved and the number of witnesses permitted to give evidence. ## When is judgment handed down? The judgment may be given immediately after the trial but is often "reserved" to a later date, particularly in complex matters. This means that the judgment will be handed down some time after the end of the trial. ## What does it mean when judgment is reserved? When the judgment has been reserved, the court will often provide a copy of the draft judgment to the parties' legal representatives on the second working day before handing down the judgment. This is to give the lawyers (and, in some cases, the parties) time to prepare submissions on costs and to consider whether they wish to seek any consequential orders or apply for permission to appeal. The judgment is usually handed down in a short hearing at court. ## Who pays the costs of the litigation? The court has a wide discretion over the costs orders that it makes, and will consider several factors in making its costs orders, including the conduct of the parties and any Part 36 of other admissible offers to try and settle the case. The general rule is that the costs follow the event, meaning that the unsuccessful party pays a reasonable and proportionate contribution towards the costs of the successful party. The precise size of that contribution will vary, but it will not be the entire costs incurred by the successful party. Therefore, even if you are successful in your case, you will be unlikely to recover 100% of your costs from the opposing party, and you will remain liable for the entirety of your costs. Your final costs are likely to be greater than payments you have made on account, which are neither fixed fees nor costs estimates. ## What is the standard basis of assessment of costs? The actual amount of recoverable costs to be paid is subject to an assessment process, if it is not agreed between the parties. The standard basis of assessment is to allow costs to be recovered that were reasonably incurred, or reasonable and proportionate in amount to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred. ## Enforcement of judgment Once judgment has been obtained, payment of any money owed under the judgment should be made voluntarily by the unsuccessful party or judgment debtor. If payment is not made, the court does not automatically enforce the judgment. However, there are a number of enforcement procedures available to the judgment creditor to enforce payment. Examples include: - Execution against goods owned by the judgment debtor, where an enforcement officer is commanded to seize and sell a judgment debtor's goods.- An attachment of earnings order, under which a proportion of the judgment debtor's earnings is deducted by his employer and paid to the judgment creditor until the judgment debt is paid.- A charging order over property owned by the judgment debtor. ## Can I appeal against a judgment? It is open to the unsuccessful party to apply for permission to appeal a judgment or order. An application must be made to the appeal court on paper, unless the judge whose decision is being appealed has granted permission to appeal at the judgment hearing. This application is made in an appellant's notice, which must be filed within 21 days of the date of the decision being appealed. There are only two bases for an appeal: - The decision was wrong.- The decision was unjust because of a serious procedural or other irregularity in the proceedings. It may be necessary to apply for a stay of any order or decision contained in the judgment, if carrying out that order would defeat the purpose of a successful appeal. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Expert Evidence Source: https://lexlaw.co.uk/expert-evidence-witness-cpr-35-compliant-single-joint-report-exchange-legal-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. ## What evidence is required in litigation? To succeed in litigation, the claimant will need to prove his case on a balance of probabilities. To do this, the claimant must adduce evidence to support all the essential ingredients of the claim. The defendant will also need to adduce evidence to support his defence to some or all of the essential ingredients of the claim. The evidence is usually comprised of: - Contemporaneous documents (hard copy or electronic versions or both) intended to prove the issues in dispute.- The evidence of factual witnesses, to tell the story behind the dispute and to fill in any gaps that the documents leave.- Expert evidence (where appropriate and permitted by the court which has a duty to restrict expert evidence to that which is necessary to determine the dispute), to assist the court when the case involves complex technical, academic or foreign law issues. ## What kind of evidence goes in a witness statement? The parties usually exchange written statements containing the evidence of their factual witnesses. The time period for exchanging witness statements will be agreed by the parties or ordered by the court at the CCMC. The court may also give directions identifying or limiting the witnesses who may give evidence, the issues that may be addressed and the length and format of witness statements. The witness statements normally stand as the evidence in chief and a witness may be called to trial to be cross-examined on their statement. A witness statement must: - Be in the witness's own words, if practicable.- Indicate which of the statements in it are made from the witness's own knowledge and which are matters of information or belief and state the source of those matters.- Include a statement of truth, namely a statement by the witness that they believe the facts in the witness statement are true. There are penalties for signing a statement of truth without an honest belief in the truth of the facts being verified. ## Expert Evidence Expert evidence is provided by an expert witness who has well recognised and authoritative experience, skill and knowledge in a specific field. The expert witness may be instructed, with the court's permission, to give an authoritative opinion based on their expertise. The overriding duty of any expert witness is owed to the court or tribunal and not to the party instructing the expert. The expert's duty is to provide unbiased and impartial independent evidence. The rules governing expert evidence are found in [CPR 35](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35): > Experts – overriding duty to the court > > (1) It is the duty of experts to help the court on matters within their expertise. > > (2) This duty overrides any obligation to the person from whom experts have received instructions or by whom they are paid. > > [CPR 35(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) An expert witness may give evidence on, for example, technical or scientific matters, or specialist practice or procedure. They may give their opinion on specific matters in the dispute within their expertise. However, it is not the function of an expert witness to give their opinion on issues of law or fact which the judge or jury has to decide. ## Do I need the court's permission to call expert evidence? Yes. The court's permission to call expert evidence is always required as the court has a duty to restrict expert evidence to that which is necessary to resolve issues in the proceedings. When applying for expert evidence to be allowed, the parties must apply early in proceedings (otherwise the court may later refuse due to timetabling issues), identify the expert by name or by field of expertise, specify the issues that he will address and estimate the cost of the expert evidence. If it grants permission, the court will limit the evidence to the named expert or field ordered, and may specify the issues that the expert should address. Oral expert evidence at trial may only be given with the court's permission. > Court’s power to restrict expert evidence > > (1) No party may call an expert or put in evidence an expert’s report without the court’s permission. > > (2) When parties apply for permission they must provide an estimate of the costs of the proposed expert evidence and identify – > > (a) the field in which expert evidence is required and the issues which the expert evidence will address; and > > (b) where practicable, the name of the proposed expert. > > (3) If permission is granted it shall be in relation only to the expert named or the field identified under paragraph (2). The order granting permission may specify the issues which the expert evidence should address. > > [CPR 35(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) ## What is a single joint expert? The court may order that expert evidence is to be given by a single joint expert, namely an expert who is instructed on behalf of both parties. However, this is not common in multi-track cases. Parties may instruct another expert to assist them, but any evidence from that expert will not be admissible and the costs of instructing that expert will not be recoverable from the other side. ## What is an expert report? Expert evidence is usually given in the form of a written report, which must be the independent product of the expert. The expert's overriding duty is to the court and not to the party that instructed him. Expert reports are often exchanged simultaneously. However, in some cases, expert reports may be exchanged sequentially. > Contents of report > > (1) An expert’s report must comply with the requirements set out in Practice Direction 35. > > (2) At the end of an expert’s report there must be a statement that the expert understands and has complied with their duty to the court. > > (3) The expert’s report must state the substance of all material instructions, whether written or oral, on the basis of which the report was written. > > [CPR 35.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) ## What is the procedure following the simultaneous exchange of expert reports? Following the exchange of expert reports, a party may put questions to the other party's expert for the purpose of clarifying his report. Questions must normally be put within 28 days of service of the report. The court will usually direct there be a discussion between the experts for the purpose of requiring the experts to: - Identify and discuss the expert issues in the proceedings.- Where possible, reach an agreed opinion on those issues. The court may direct that, following a discussion between the experts, they must prepare a statement for the court setting out those issues on which they agree, disagree, or both; with a summary of their reasons for disagreeing. ## Must expert evidence be relevant to the issues? It is self evident that expert evidence must be relevant to the issues to be decided by the court. For an example of the application of this principle to the question of expert medical evidence in a [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) action by a deceased miner’s estate against solicitors for the loss of a chance of pursuing a services claim in the context of the Department for Trade and Industry’s tariff-based compensation scheme for vibration white finger, see [*Edwards v Hugh James Ford Simey (A Firm) [2019] UKSC 54*](https://professionalnegligenceclaimsolicitors.co.uk/). ## Can covert recordings be taken of an expert's examination of a party? In the personal injury case of [*Mustard v Flower [2019] EWHC 2623 (QB)*](https://lexlaw.co.uk/solicitors-london/recorded-conversations-court-admissibility-evidence-confidentiality-disclosure-legal-advice/), the court allowed a party who had covertly filmed her examination by the defendant’s experts to adduce the recordings in evidence on the basis that, although her actions lacked transparency, the recordings were not unlawful, as they were relevant to the issues in the case and were probative and the Overriding Objective favoured their admission into evidence  ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Pre-Action Protocols Source: https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What are the aims of the pre-action protocols? The objectives of pre-action protocols are to: - Encourage the exchange of early and full information about a prospective claim. - Enable parties to avoid litigation by agreeing a settlement of a claim before the commencement of proceedings. - Support the efficient management of proceedings where litigation cannot be avoided. ## Why are the pre-action protocols important? Before proceedings are commenced, the parties are required to act reasonably in exchanging information and documents relevant to the dispute. The aim is to avoid the need for legal proceedings by encouraging resolution of the dispute by other means. ## What is the purpose of the pre-action protocol? The parties are expected to make appropriate attempts to resolve the dispute, whether by alternative dispute resolution (ADR), negotiations, offers of settlement or a combination of these methods. Settlement is usually a sensible option for all parties to consider at the pre-action stage, in order to save the costs of litigation and to eliminate risk. If proceedings are commenced, then the CPR and the courts encourage the parties to consider settlement options during the course of the litigation. ## What is a limitation date expires during the pre-action stage? **The Practice Direction and the pre-action protocols do not alter the [statutory time limits](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) for starting court proceedings.** If a claim is issued after the relevant limitation period has expired, the defendant will be entitled to use that as a defence to the claim. If proceedings are started to comply with the statutory time limit before the parties have followed the procedures in this Practice Direction or the relevant pre-action protocol, the parties should apply to the court for a stay of the proceedings while they so comply. [For advice on limitation click here.](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) ## The Pre-action Protocols Currently, specific [Pre-action Protocols](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/menus/protocol.htm) are in force for specific disputes set out below. If a specific protocol does not apply, then the [General Pre-Action Conduct and Protocols](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct) apply. | Protocol | Came into force | | -------- | --------------- | | Personal Injury | 6 April 2015 | | Resolution of Clinical Disputes | 6 April 2015 | | Construction and Engineering | 9 November 2016 2nd Edition | | Defamation | 02 October 2000 | | Professional Negligence | 16 July 2000 | | Judicial Review | 6 April 2015 | | Disease and Illness | 8 December 2003 | | Housing Disrepair | 6 April 2015 | | Possession Claims by Social Landlords | 6 April 2015 | | Possession Claims for Mortgage Arrears | 6 April 2015 | | Dilapidation of Commercial Property | 1 January 2012 | | Low Value Personal Injury Road Traffic Accident Claims | 30 April 2010 extended from 31 July 2013 | | Low Value Personal Injury Employers’ and Public Liability Claims | 31 July 2013 | ## Costs incurred with adhering to the pre-action protocols must be proportionate [PRACTICE DIRECTION – PRE-ACTION CONDUCT AND PROTOCOLS ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct)states as follows: > **4.** A pre-action protocol or this Practice Direction must not be used by a party as a tactical device to secure an unfair advantage over another party. Only reasonable and proportionate steps should be taken by the parties to identify, narrow and resolve the legal, factual or expert issues. > > > > > > **5.** The costs incurred in complying with a pre-action protocol or this Practice Direction should be proportionate (CPR 44.3(5)). Where parties incur disproportionate costs in complying with any pre-action protocol or this Practice Direction, those costs will not be recoverable as part of the costs of the proceedings. > > > [PRACTICE DIRECTION – PRE-ACTION CONDUCT AND PROTOCOLS](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct) ## What if there is no relevant pre-action protocol to follow? Where there is a relevant pre-action protocol, the parties should comply with that protocol before commencing proceedings. Where there is no relevant pre-action protocol, the parties should exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. The steps will usually include— (a) the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated; (b) the defendant responding within a reasonable time - 14 days in a straight forward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and (c) the parties disclosing key documents relevant to the issues in dispute. ## Are there consequences for not following the pre-action protocol? If the case proceeds, when the court gives case management directions and decides what orders to make about costs, it will take into account a party's pre-action conduct and compliance with any relevant pre-action protocol. It is, therefore, extremely important that pre-action protocols are complied with, to avoid any adverse costs consequences. ## Does a party have to comply with the pre-action protocols? If a dispute proceeds to litigation, the court will expect the parties to have complied with a relevant pre-action protocol or this Practice Direction. The court will take into account non-compliance when giving directions for the management of proceedings (see CPR 3.1(4) to (6)) and when making orders for costs (see CPR 44.3(5)(a)). The court will consider whether all parties have complied in substance with the terms of the relevant pre-action protocol or this Practice Direction and is not likely to be concerned with minor or technical infringements, especially when the matter is urgent (for example an application for an injunction). ## What are the examples of a failure of compliance? The court may decide that there has been a failure of compliance when a party has— (a) not provided sufficient information to enable the objectives in paragraph 3 to be met; (b) not acted within a time limit set out in a relevant protocol, or within a reasonable period; or (c) unreasonably refused to use a form of ADR, or failed to respond at all to an invitation to do so. ## What orders can a court make for non-compliance with the relevant pre-action protocol? [PRACTICE DIRECTION – PRE-ACTION CONDUCT AND PROTOCOLS ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct)states as follows: > 16. The court will consider the effect of any non-compliance when deciding whether to impose any sanctions which may include— > > > > > > (a) an order that the party at fault pays the costs of the proceedings, or part of the costs of the other party or parties; > > > > > > (b) an order that the party at fault pay those costs on an indemnity basis; > > > > > > (c) if the party at fault is a claimant who has been awarded a sum of money, an order depriving that party of interest on that sum for a specified period, and/or awarding interest at a lower rate than would otherwise have been awarded; > > > > > > (d) if the party at fault is a defendant, and the claimant has been awarded a sum of money, an order awarding interest on that sum for a specified period at a higher rate, (not exceeding 10% above base rate), than the rate which would otherwise have been awarded. > > > > > > > > > [PRACTICE DIRECTION – PRE-ACTION CONDUCT AND PROTOCOLS](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct) ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Indemnity Costs Source: https://lexlaw.co.uk/indemnity-costs-versus-standard-costs-guide-litigation-court-cpr-44-assessment-unreasonable-conduct-legal-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is the advantage of being awarded costs on the indemnity basis? An award of indemnity costs can provide a significant advantage to a party in litigation because the paying party will be liable for their legal costs and the principle of proportionality is disapplied. The indemnity costs principle (contained in the [Civil Procedure Rules 44.3(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3)) is in effect punitive in nature as costs on the standard basis are the norm. ## When will a Court award indemnity costs? The court must be satisfied that the paying party’s conduct was wrongful enough to take it *“out of the norm” *of the general conduct of litigation. The key question is what conduct does the court consider to be *“out of the norm”* in order to justify costs on the indemnity basis? ## What is the Court’s basis of assessment of costs? Pursuant to [CPR 44.3:](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) (1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs – (a) on the standard basis; or (b) on the indemnity basis, But the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount. ## What are standard costs? Pursuant to [CPR 44.3(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3), where the amount of costs is to be assessed on the standard basis, the court will: (a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and (b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party. ## Indemnity costs versus standard costs in UK litigation CPR [44.4(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) and CPR [44.4(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) draw a distinction between the difference in substance between a standard order for costs and an indemnity order for costs. The differences are two-fold. First, the differences are as to the onus which is on a party to establish that the costs were reasonable. In the case of a standard order, the onus is on the party in whose favour the order has been made. In the case of an indemnity order, the onus of showing the costs are not reasonable is on the party against whom the order has been made. The other important distinction between a standard order and an indemnity order is the fact that, whereas in the case of a standard order the court will only allow costs which are proportionate to the matters in issue, this requirement of proportionality does not exist in relation to an order which is made on the indemnity basis. This is a matter of real significance. On the one hand, it means that an indemnity order is one which does not have the important requirement of proportionality which is intended to reduce the amount of costs which are payable in consequence of litigation. On the other hand, an indemnity order means that a party who has such an order made in their favour is more likely to recover a sum which reflects the actual costs in the proceedings. ## What is the advantage of being awarded indemnity costs? Where the amount of costs is to be assessed on the indemnity basis under [CPR 44.3 (1)(b)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) above, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party. ## Do indemnity costs have to be proportionate? The significance of costs being ordered to be paid on an indemnity as opposed to the standard basis is that, although the beneficiary of such an order will still only be paid costs which have been reasonably incurred, **there is no requirement of proportionality** and in cases of doubt on assessment it is for the payer to show that the costs were not reasonably incurred. In this regard, see *Three Rivers District Council v Bank of England* [[2006] EWHC 816 (Comm)](https://lexlaw.co.uk/wp-content/uploads/2020/05/Three_Rivers_District_Council_and_others_v_B.pdf) at [14]: > Whilst an indemnity costs order does carry at least some stigma the purpose of such an order is not to punish the paying party but to give a more fair result for the party in whose favour a costs order is made > > Mr Justice Tomlinson, *Three Rivers District Council v Bank of England* [[2006] EWHC 816 (Comm)](https://lexlaw.co.uk/wp-content/uploads/2020/05/Three_Rivers_District_Council_and_others_v_B.pdf) at [14] ## Can indemnity costs be disproportionate? Yes, indemnity costs must be reasonably incurred but they can be disprpoptionate: > I recognise, of course, that under an indemnity costs order the receiving party only recovers the amount of costs actually incurred. But those costs may well be disproportionate (proportionality not being an issue under an indemnity order).  > > para 14, **[Kiam v MGN Ltd (No 2) – [2002] 2 All ER 242](https://lexlaw.co.uk/wp-content/uploads/2020/05/Kiam_v_MGN_Ltd_No_2_-_2002_2_All_ER_242.pdf)** ## Case study: Indemnity costs can be awarded where one party rejects a reasonable settlement offer The approach of the CPR is a relatively simply one: namely, if one party has made a real effort to find a reasonable solution to the proceedings and the other party has resisted that sensible approach, then the latter puts himself at risk that the order for costs may be on an indemnity basis. The provision in CPR Part 36 that, where it applies, the court will order indemnity costs ‘unless it considers it unjust to do so’ is— > ‘intended to provide an incentive to a claimant to make a Pt 36 offer. The incentive is that a claimant who has made a Pt 36 offer (which is not accepted) and who succeeds at trial in beating his own offer stands to receive more than he would have received if he had not made the offer.’ > > **McPhilemy v Times Newspapers Ltd and others (No 2)** [[2001] 4 All ER 861 at [19]](https://lexlaw.co.uk/wp-content/uploads/2020/05/McPhilemy_v_Times_Newspapers_Ltd_and_others_.pdf) ## Case study: Indemnity costs are justified where conduct is out of the norm An order for costs to be awarded on the indemnity basis is justified where the court decides that there is something in the conduct of the action, or the circumstances of the case in general, which takes it out of the norm. There are an infinite variety of situations which can come before the courts and which justify the making of an indemnity order. One such example is pursuing a misconceived claim: > The discretion is a wide one to be determined in the light of all the circumstances of the case. To award costs against an unsuccessful party on an indemnity scale is a departure from the norm. There must, therefore, be something – whether it be the conduct of the claimant or the circumstances of the case – which takes the case outside the norm. It is not necessary that the claimant should be guilty of dishonesty or moral blame. Unreasonableness in the conduct of the proceedings and the raising of particular allegations, or in the manner of raising them may suffice. So may the pursuit of a speculative claim involving a high risk of failure or the making of allegations of dishonesty that turn out to be misconceived, or the conduct of an extensive publicity campaign designed to drive the other party to settlement. The marking of a grossly exaggerated claim may also be a ground for indemnity costs > > Christopher Clarke J in [*Balmoral v Borealis* ](https://lexlaw.co.uk/wp-content/uploads/2020/05/UKT_2006_10_10546363.pdf)at paragraph 1 ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Statements of Truth Source: https://lexlaw.co.uk/statements-of-truth-cpr-practice-direction-template-format-false-penalties-court-witness-evidence-costs-budget-litigation-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is the template format for a statement of truth? As per the Civil Procedure Rules (at [CPR 22](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22/pd_part22)), the statement of truth used to verify statements of case, witness statements and other documents that are important to the litigation should be as follows: > ‘[I believe][the (claimant or as may be) believes] that the facts stated in this [name document being verified] are true. I understand that proceedings for contempt of court may be brought against anyone who makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth.’ > > [CPR Part 22, Rule 2.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22/pd_part22) ## What form should a statement of truth be to verify a costs budget? The form of the statement of truth verifying a costs budget should be as follows: > ‘This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.’ > > [CPR Part 22, Rule 2.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22/pd_part22)A ## What is a statement of truth? In litigation, any statement of case or witness statement must be verified by a statement of truth. [Part 22 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22) sets out provisions for statements of truth. ## What is the purpose of a statement of truth? A statement of truth is a statement contained in a document confirming that: - The person making the statement of truth believes that the facts stated in the document are true; and- Proceedings for contempt of court may be brought against anyone who makes a false statement (or causes a false statement to be made) in a document verified by a statement of truth without an honest belief in its truth. It is vital to validate relevant documents with a statement of truth, as a failure to do so can have severe repercussions. For example, if a statement of case is not verified, the party will be unable to rely on it as evidence of any of the matters set out in it and, under the relevant rules, it could even be struck out (although this is rare in practice). If a witness statement is not verified by a statement of truth, it may not be admissible as evidence. ## When are statements of truth required? During the course of your claim, we are likely to create several documents, the contents of which will need to be verified by a statement of truth. These include: - [Statements of case](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/) (such as the Particulars of Claim or the Reply) and any amendments to the statements of case;- [Witness statements](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/); and Application notices (which are used to apply to Court for a particular order) if you will need to rely on matters set out in a notice as evidence. ## Who can sign a statement of truth? In relation to statements of case, you will usually be the person who signs the statement of truth. In order to avoid making a false statement of truth, you should ensure that you are familiar with all the relevant facts and background to your case. In relation to witness statements, only the witness themselves is able to sign the statement of truth verifying their statement. Nobody else can do this for the witness. ## Can a lawyer sign a statement of truth on behalf of a client? It is possible for a legal representative to sign the statement of truth in some documents, such as statements of case, in exceptional circumstances (for example, where the relevant person is out of the country). However, it is obviously more appropriate for the client who has first-hand knowledge of the background facts to sign. ## Consequences of inaccurate evidence verified by a statement of truth Signing a statement of truth or allowing a solicitor to sign where you know that a document contains a false statement may lead to you being contempt of court ([CPR 32.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.14)). [Part VI of Part 81 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court#IDAABTBB)of the Civil Procedural Rules contains rules about committal applications in relation to making, or causing to be made a false statement in a document verified by a statement of truth without an honest belief in its truth. ## What are the penalties for making a false statement of truth? The penalties for signing a statement of truth without an honest belief in the truth of the facts being verified are potentially severe. A person who makes a false statement in litigation in an attempt to interfere with the course of justice will be in contempt of court, which is punishable by a prison sentence of up to two years. Bearing this in mind, if the person signing the statement of truth at the end of a statement of case does not have first-hand knowledge of all facts and matters set out in it, they will need to carry out sufficient investigations to satisfy themselves of the truth of all those matters. A person can be liable for contempt of court, even if they have asked someone else to sign the statement of truth on their behalf. Those who are potentially liable to be held in contempt of court for a false statement of truth are: - The person who signed the false statement of truth;- A colleague of that person, if they caused the false statement of truth to be made; and- A person who authorises their legal representative to sign the false statement of truth. ## Instruct expert litigation solicitors We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We are extremely experienced and capable at navigating our clients through the litigation process. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). --- # Solicitors Costs Disputes Source: https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/ *If you have received a bill (i.e. an invoice) from your solicitor which you consider may be unreasonable, excessive or disproportionate for the work that you instructed to be done, our specialist costs lawyers can help you understand the work done and consider the reasonableness of the invoice(s) and, if appropriate, advise on the process of an assessment with your current solicitors.* *We specialise in detailed assessments where clients are disputing the charges of their former solicitors. If you instruct us we will vigorously fight your case to get a reduction of your bill.* *Our London lawyers are [based](https://lexlaw.co.uk/contact-us/) just minutes from the Senior Courts Costs Office and can be deployed with speed as the client’s needs and case demands.* ## What is Detailed Assessment? If a statute bill has been delivered to a client and the client believes they have been overcharged then the client can commence detailed assessment proceedings or a request can be made to the[ Senior Courts Costs Office](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) to make a detailed assessment of the bill. If upon assessment, the bill is determined to be unreasonable, the bill will be reduced. Our costs lawyers have extensive experience in assessment of bill proceedings before the SCCO. ## When is a client entitled to seek detailed assessment? What are the time limits? Under[ s.70(2)](https://www.legislation.gov.uk/ukpga/1974/47/section/70), a client is entitled to assessment as a right if an application is made **within one month of delivery**. A client has a short time to challenge a solicitors’ bill so it is imperative to [contact us ](https://lexlaw.co.uk/contact-us/)quickly to ensure your right to an assessment does not become time-barred (although a court has discretion to order detailed assessment within 12 months of the bill being rendered provided special circumstances are shown). A Part 8 claim form ([N208](https://formfinder.hmctsformfinder.justice.gov.uk/n208-eng.pdf)), the relevant court application fee and a copy of the disputed bill must be sent to the SCCO or local District Registry (along with the issue fee of £55). ## What are Points of Dispute? If the Court is satisfied as to entitlement it will make a Court Order allowing a detailed assessment to take place. If a detailed assessment Order is not granted by the Court, then we can also assist in appealing the decision. Following the Order, the solicitor will complete a detailed assessment request form ([N258C](https://formfinder.hmctsformfinder.justice.gov.uk/n258c-eng.pdf)) and serve a detailed bill of costs upon the client. At this stage, the client- often within 21 days- must provide Points of Dispute which challenges the costs, failing which a [Default Costs Certificate](https://formfinder.hmctsformfinder.justice.gov.uk/n254-eng.pdf) will be obtained by the solicitor. We are highly experienced in preparing well-crafted Points of Dispute examining every aspect of a bill. CPR 47.9 states that Points of Dispute must *“identify any general points or matters of principle which require decision before the individual items in the bill are addressed”* and *“identify specific points, stating concisely the nature and grounds of dispute*.” For example, examining excessive time, disproportionate number of communications, unreasonable disbursements and unnecessary counsel meetings claimed, to formulate a claim that a competent solicitor acting with all due skill and care should have been able to complete the same without the need to charge a disproportionate fee. ## What happens at the detailed assessment hearing? The Court’s Costs Judge will determine what was a reasonable amount for the solicitor to have charged on their bill based on the challenges raised in the Points of Dispute and the Reply. The Costs Judge examines the bill in detail and in particular, examines how reasonable the costs are to the case’s issues judged on an indemnity basis. Once the SCCO has decided the amount of the bill payable, usually payment must be made within 14 days or the solicitor will be required to return funds to the client together with any accrued interest. ## Can I get my legal costs of the solicitor/client proceedings? Ordinarily, in litigation the CPR provides that the unsuccessful party pays the costs of the successful party. However, in legal costs assessment proceedings, a crucial factor is the amount by which the solicitors’ invoice is reduced by on assessment. According to the Solicitors’ Act 1974: > *“the costs of an assessment shall be paid according to the event of the assessment, that is to say,** if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs**, but otherwise the party chargeable shall pay the costs.”* > > (s.70(9) Solicitors Act 1974) Therefore, if the client reduces the solicitors’ bill by one fifth (20%) or more, then the client is entitled to the costs of the statutory detailed assessment proceedings. ## We represent you at Detailed Assessment Hearings We are based in the legal heart of London as the only law firm in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/) we provide comprehensive nationwide coverage to represent you at any detailed assessment hearing. Unlike most law firms, we are a mutli-disciplinary firm of solicitors and barristers with full rights of audience in England and Wales. We are based just minutes from the Senior Courts Costs Office in the Royal Courts of Justice where all detailed assessment hearings proceed. We regularly represent clients at the Senior Courts Costs Office. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our legal costs team members will contact you by phone to discuss your matter and assess whether we can help you. ## Solicitor and own client costs disputes We specialise in costs disputes at the Senior Courts Costs Office (SCCO) proceeding under the Solicitors Act 1974. That is why we can offer a no win no fee agreement to clients once we have had sight of the relevant papers (and ideally a detailed bill of costs). This means you do not have to pay us anything should your solicitor's bill not be reduced. We will advise you on the merits of reducing your solicitor's invoice. Discuss the merits of early protective without prejudice settlement offers. We draft Points of Dispute (for clients) and Points of Reply (for solicitors). We will Represent you at any directions hearing, preliminary issues hearing and the detailed assessment hearing before the SCCO. ## London Specialist Legal Costs Lawyers Our SCCO Legal Costs Dispute Lawyers are experienced in checking and disputing legal fees. We are experts in assessing whether the time claimed for is reasonable and whether your solicitor may have overcharged. We are well versed in both negotiating a reduction with your solicitor and attending detailed assessment proceedings at court if necessary. Our team have an in-depth knowledge of litigation against the client or solicitor under the Solicitors Act 1974. As a leading high-profile law firm regularly featured in the national and international media and with a track record of success, you can be assured your Legal Costs claim will proceed with precision and care. ### Check Your Litigation Case ✔ We analyse your case prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. *Want a first or second opinion on your case? *Click below or call our lawyers in London on ☎ [02071830529](tel:+442071830529) [Check My Case ✔](https://lexlaw.co.uk/legal-case-assessment/) --- # Requests for Further Information (CPR 18) Source: https://lexlaw.co.uk/request-for-information-cpr-18-litigation/ ## What is a Part 18 Request for Information ("RFI")? Part 18 is a rule that helps litigants understand the opponent's case. The rule is set out under England & Wales' Civil Procedure Rules 1998. If a request for further information is not adequately replied to then the Claimant/Defendant can apply for a Court Order order under Part 18 demanding the information. The purpose of the rule is ensure understanding of the case and earlier cooperation and resolution. Upon receipt of a [statement of case](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/) (legal pleadings) or at any time in the proceedings, a party to proceedings may consider that those pleadings not provide sufficient information about the claim. A formal request can be made under [CPR Part 18.1(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18) for the other party to clarify or provide additional information in relation to any such issue. An RFI or a CPR 'Part 18 Request' can be used to: - clarify a specific issue in the case- narrow the issues in dispute between the parties- give additional information in relation to a matter in the proceedings which has not been done otherwise by [witness evidence](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/)- reveal weaknesses in the other party's case by highlighting a specific issue which is not clear in the party's [statement of case](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/)- obtain an admission on a specific issue in the proceedings The matter to which a Request for Information relates does not need to be contained or referred to in a statement of case i.e. a pleaded issue, however it should be relevant to the proceedings. Need help with making a Part 18 Request? Get in touch: ## When can I make a Part 18 Request? Before making an application to the court for an order under [CPR Part 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18), the party seeking clarification or information should first serve on the party from whom it is sought a written request for that clarification or information stating a date by which the response to the Request should be served. Norris J considered that a request for further information arose as part of the responsibility of the court to manage cases and of the parties to co-operate in the just and efficient disposal of the issues between them. An RFI can generally be made at any time during the proceedings. In *[Lalana Hans Place Ltd v Michael Barclay Partnership LLP [2017] EWHC 29 (TCC)](https://lexlaw.co.uk/wp-content/uploads/Lalana-Hans-Place-Ltd-v-Michael-Barclay-Partnership-LLP-2017-EWHC-29-TCC-13-January-2017.pdf)*, the claimant argued that an RFI, made one week before trial, was made too late. The Judge allowed the request, holding that if an application went to an issue that was relevant to the fair disposal of the the trial, it would not be refused, simply on the grounds of delay.  ## How do I prepare a Part 18 RFI? [Paragraph 1.2 of Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#1.1) states that a request should be concise and strictly confined to matters which are "*reasonably necessary and proportionate*" to enable the first party to prepare his own case or to understand the case he has to meet. [Paragraph 1.6](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#1.1) of Practice Direction 18 sets out requirements for a Request for Information. ## Responding to a Part 18 RFI A response to an RFI must be in writing, dated and signed by the second party or his legal representative ([paragraph 2.1 of CPR Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#2.1)). The receiving party is allowed 'a reasonable time to respond' ([paragraph 1.1 of CPR Practice Direction 18](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#1.1)). Like other statements of case in the proceedings, a response should be verified by a statement of truth (as set out in [Part 22](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22)). ## Objecting to a Part 18 RFI Often the receiving party may consider an RFI to be disproportionate, irrelevant to the proceedings or a "fishing expedition". If the receiving party objects to complying with the RFI or is unable to do so in the time allocated, he must inform the requesting party promptly. If the receiving party considers that an RFI can only be complied with at disproportionate expense and objects to comply for that reason he should say so in his reply and explain briefly why he has taken that view ([paragraph 4.2 of CPR Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#4.1)). There is no requirement to notify the Court but if an application is made, the receiving party must be prepared to clearly set out its objections. ## Court order under Part 18 RFI An application can be made to the Court for an order under [paragraph 5 of CPR Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#5.1) and [CPR Part 23](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part23), if the recipient does not respond or does not provide an 'adequate response'. The application can be dealt with by the Court on paper, without a hearing. Parties are encouraged to take a co-operative approach when it comes to RFIs and courts may encourage parties to provide information even where they are not legally obliged to do so if this would save time and costs. > "Only if any issues could not be resolved in correspondence, should they be referred to the court and, preferably, dealt with at the first case management conference." > > *[Berezovsky v Abramovich [2008] EWHC 1138](https://lexlaw.co.uk/wp-content/uploads/Berezovsky-v-Abramovich-2008-EWHC-1138-Comm-22-May-2008.pdf)* > "It will be observed that the emphasis...is on confining this part of any litigation (in which costs tended to get out of control in the pre-CPR regime) "strictly" to what is necessary and proportionate and to the avoidance of disproportionate expense." The Court can direct that information provided under an RFI must not be used for any purpose except for that of the proceedings in which it is given ([paragraph 18.2 of CPR 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18#18.2)). ## Failure to comply with a Part 18 order If you fail to comply with a court order to provide further information that are final orders, this can result in unless orders which can eventually lead to your case being struck out. A receiving or objecting party must be prepared to give valid, cogent reasons as to why it failed to comply with a court order and respond adequately to an RFI. ## Instructing our UK Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Non-party disclosure orders Source: https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/ *In addition to [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) of documents in the possession of parties to the litigation, there are often useful documents in other non- parties' possession which can assist and should be obtained and if there are difficulties in doing so, these can be obtained by way of an application to Court under [CPR 31.17](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17) and other methods.* ## How do I apply for a non-party disclosure order? In litigation it is possible to obtain [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) of documents from a third party who is not involved in the proceedings. An application needs to be made under the [CPR Part 23](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part23) and supported by evidence ([CPR 31.17](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17)). The application must specify the documents or classes of documents sought from the respondent. The court may make an order for non-party disclosure only where the following criteria or jurisdictional tests are satisfied: - The documents are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings (*[CPR 31.17(3)(a)](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17)*).- Disclosure is necessary in order to dispose fairly of the claim or to save costs (*[CPR 31.17(3)(b)](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17)*). It is important to note that the court has discretion as to whether to grant an order for disclosure and an application is not guaranteed to succeed. ## When can I make an application for non-party disclosure? There must be ongoing litigation and an application cannot be made before proceedings are commenced. Usually the court will require all pleadings to have been concluded before any application for disclosure is granted as the pleadings stage will narrow the issues between the parties and therefore the disclosure. An application for non-party disclosure can be made following judgment in proceedings particularly where disclosure would assist in enforcing judgment, as in the case of *[North Shore Ventures Ltd v Anstead Holdings Ltd and others [2011] EWHC 178 (Ch](https://www.bailii.org/ew/cases/EWCA/Civ/2011/230.html))*. ## What are the costs of an application for non-party disclosure? The general rule (under *[CPR 46.1(1)(b)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-46-costs-special-cases#46.1)* and *[46.1(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-46-costs-special-cases#46.1)*) is that the court will order the application to pay the respondent's costs of the application and complying with any order made on the application e.g. costs of locating, producing and copying any documents. An award of costs however is at the court's discretion and the court will take into account the parties' conduct in making, complying with or opposing the application. ## Other powers of the court to order non party disclosure The non-party disclosure rule under *[CPR 31.17](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17)* does not limit any other power the court may have to order disclosure against a person who is not a party to proceedings (*[CPR 31.18](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.18)*). A party in proceedings can obtain disclosure from a non party in the alternative ways set out below ## What is a witness summons? An alternative way of obtaining documents from a non-party is to apply to the court for a witness summons which can be used to compel a witness to produce documents to the court or attend court to give evidence ([CPR 34.2(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part34#34.2)). If a witness fails to comply with the summons, he or she is at risk of being in contempt of court ([CPR 81](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court)) and being liable for a fine or to pay any wasted costs that arise from non-compliance. A party who is seeking the documents will complete the witness summons and issue this at court and this should clearly identify the documents being sought. A witness can apply to set aside or vary a witness summons under [CPR 34.3(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part34#34.3) and the court will set it aside if it considers the witness summons is oppressive or the documents are protected by public interest immunity. ## What is Norwich Pharmacal relief? A Norwich Pharmacal order (NPO) requires an individual or organisation involved in wrongdoing, whether intentionally or innocently but who is unlikely to be a party to the proceedings to disclose certain documents or information to the applicant. You may wish to apply for an NPO to identify a wrongdoer, obtain the source of information contained in a publication, trace assets and identify the full nature of the wrongdoing to enable you to plead your case. A Norwich Pharmacal Order can be used in [defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims/) proceedings where one can apply for an order for a website or social media platform to disclose details of a user account publishing defamatory statements about the individual or organisation (*[Totalise plc v Motley Fool Ltd [2001] EWCA Civ 1897](https://www.bailii.org/ew/cases/EWCA/Civ/2001/1897.html)*). Norwich Pharmacal relief should be used where [CPR 31.16](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.16) and [31.17 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17)are not applicable. An application can be made under CPR Parts [8](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part08) and [23](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part23). The applicant will normally be required to pay the respondent's legal cots and the costs of providing the disclosure sought however can seek to recover these costs from the wrongdoer. In accordance with the general rule under [CPR 31](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31), the information disclosed can only be used for the purpose of the proceedings in which it was disclosed (*[CPR 31.22](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.22)*). The respondent may be able to refuse to provide the information on the basis of privilege against self-incrimination. ## Which application for non-party disclosure should I make? There is often confusion regarding the type of application for non-party disclosure which should be sought: (i) Application under CPR 31; (ii) Witness summons; or (iii) Norwich Pharmacal Relief. The scope of the documents that a non-party may be required to disclose under [CPR 31.17](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17) is wider and you should also consider that there will be different costs consequences depending on which method is adopted. It is therefore important to obtain legal advice on the appropriate course of action for obtaining third party disclosure and we can assist you in the process. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We can advise you from the outset and throughout the disclosure process to include disclosure from parties to the proceedings in addition to non parties. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Defamation: Identifying the anonymous user Source: https://lexlaw.co.uk/defamation-norwich-pharmacal-application-anonymous-online-social-media-libel-relief/ With the increase in use of the internet and social media, it is becoming more difficult to take action against cybercrime and defamation, particularly where individuals can hide their identity behind user accounts e.g. an anonymous blogger. Do you wish to bring a claim for defamation against someone online but you do not know their identity? We can assist you in legally identifying the anonymous prospective defendant. ## What is a Norwich Pharmacal relief? A Norwich Pharmacal Order (NPO) requires an individual or organisation involved in wrongdoing, whether intentionally or innocently but who is unlikely to be a party to the proceedings to disclose certain documents or information to the applicant. If you have been subject to defamation online, you can apply to the court for a Norwich Pharamacal Order to identify a wrongdoer, obtain the source of information contained in a publication, trace assets and identify the full nature of the wrongdoing to enable you to plead your case. For example you can apply for an order for a website or social media platform to disclose details of a user account publishing defamatory statements about you or your organisation (*[Totalise plc v Motley Fool Ltd [2001] EWCA Civ 1897](https://www.bailii.org/ew/cases/EWCA/Civ/2001/1897.html)*). ## How do I apply for a Norwich Pharmacal Order? A claim should be issued in the High Court under CPR [Part 8](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part08) and a corresponding application for a Norwich Pharmacal Order (NPO) can be made under [Part 23](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part23). There will be three conditions which need to be met before a Court will grant such an application for an NPO: - There is an act of wrongdoing which has been or has arguably been committed by an ultimate wrongdoer;- There must be a need for the NPO to enable you to take action against this unknown person.  This does not necessarily mean instigating legal proceedings although that will often be the next step; and- The third party against whom the NPO is sought is involved in the wrongdoing to the extent to have facilitated it and likely to be able to provide the necessary information (e.g. online account information) for the wrongdoer to be pursued. > Then the court would have to decide whether in all the circumstances it was right to make an order. In so deciding it would no doubt consider such matters as the strength of the applicant's case against the unknown alleged wrongdoer, the relation subsisting between the alleged wrongdoer and the respondent, whether the information could be obtained from another source, and whether the giving of the information would put the respondent to trouble which could not be compensated by the payment of all expenses by the applicant. > > Lord Cross > > *[Norwich Pharmacal Co v Customs and Excise Comrs](https://lexlaw.co.uk/wp-content/uploads/Norwich-Pharmacal-Co-v-Customs-and-Excise-Comrs.pdf)* ## What are the costs of applying for a Norwich Pharmacal Order? You will be required to pay a court fee for issuing a claim and application at Court, in addition to legal costs for preparing the application. The applicant will normally be required to pay the respondent's legal cots and the costs of providing the disclosure sought however can seek to recover these costs from the wrongdoer. Our specialist defamation team can be instructed to advise and assist you in making an application for Norwich Pharmacal relief and can minimise costs where possible. ## Provision and use of information under a Norwich Pharmacal Order If the Court grants the application, the respondent is required to provide information reasonably held and sought by the applicant. The respondent may be able to refuse to provide the information on the basis of privilege against self-incrimination. In accordance with the general rule under [CPR 31](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31), the information disclosed can only be used for the purpose of the proceedings in which it was disclosed (*[CPR 31.22](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.22)*) and court permission would be required to disclose the information to any third party. ## Instruct expert defamation litigation solicitors We understand how damaging defamatory statements can be to an individual or business and we invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients whose reputation and privacy is at risk. To instruct our specialist solicitors and barristers, please call our defamation team on 0207 183 0529 or email: contact@lexlaw.co.uk. --- # Business Interruption Insurance Claims Source: https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/ *The coronavirus pandemic and the Governmental controls imposed as a result of it are causing a substantial level of financial loss and distress to businesses, in particular (although not solely) to SMEs. Many policyholders have subsequently sought to claim for these losses under their Business Interruption (BI) insurance policies. Many business customers have had valid claims rejected by their insurer.* Have you suffered financial loss in your business due to the lockdown yet your insurer is refusing to payout? If you think you have a case, get in touch with our team of business interruption lawyers. We can assist you to understand the merits of your insurance claim and advise you on the best way to obtain fair compensation. [Submit your Business Interruption Claim for Legal Review](https://lexlaw.co.uk/legal-case-assessment/) Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a [test case](https://www.fca.org.uk/news/press-releases/update-fca-test-case-validity-business-interruption-claims) recently in the High Court which has recently been determined but likely to be appealed to the Supreme Court), it is is essential that you [seek expert legal advice](https://lexlaw.co.uk/contact-us/) early in order to prepare your Business Interruption Insurance claim and stand the best chance of success. Information in this article:- What is Business Interruption insurance?- What does Business Interruption insurance usually cover?- Has your insurer denied your business interruption insurance claim during COVID-19? - Which insurers claim denials are currently being assessed by the High Court?- Is my business entitled to Business Interruption insurance?- Why use a Specialist Business Interruption Insurance Claim Solicitor?- Our Business Interruption Insurance Lawyers get the best results- Business rescue and Insolvency advice- Instructing our Litigation Lawyers ## What is Business Interruption insurance? Business interruption insurance covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## What does Business Interruption insurance usually cover? Normal claims would ordinarily encompass events such as flooding, storm damage or fire and cover may be provided for: - **Profits**: Based on a business's prior months' performance - **Fixed costs**: for example operating expenses and other incurred costs of doing business. - **Temporary relocation**: Some policies may insure the cost moving to and operating from a temporary business location. - **Extra expenses**: reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating. - **Employee wages**: Such coverage can aid a business owner make payroll when they cannot operate. - **HMRC Taxes**: Tax coverage can ensure a business can pay taxes on time and avoid penalties. - **Loan repayments**: Insurance could cover monthly loan repayments even when the business is not generating income. ## Has your insurer denied your business interruption insurance claim during COVID-19? There are policies where it is clear that the insurer has an obligation to pay out on a policy (i.e. policies that are not solely related to property damage). The main grounds of refusal may include the following: - unless a business was ordered to and did close completely there was no inability to use the premises within the meaning of the insurance wording, and unless it ceased to trade completely, its activities were not interrupted and so cover is not triggered. - guidance issued by the government advising a nationwide lockdown was according to some insurers not defined as a "restriction" "imposed by" a public authority (note: the [FCA](https://www.fca.org.uk/) disputes this contention). - Some insurers argue that their policy wordings do not provide cover in the case of pandemics (note: the [FCA](https://www.fca.org.uk/) disputes this contention). - Business loss did not "result from" the necessary local disease occurrence or danger but instead were caused by the wide-area pandemic and so cover is not triggered (note: the [FCA](https://www.fca.org.uk/) disputes this). - As to causation and quantum of any claim, insurers may state in their denial that most losses would have been suffered anyway, even but for the insured peril/business closure, for example because of the broader Covid-19 pandemic, self-isolation and social distancing. ## Which insurers claim denials are currently being assessed by the High Court? The [FCA named eight insurers](https://www.fca.org.uk/publication/corporate/bi-insurance-test-case-preliminary-list-affected-insurers-policies-9-june.pdf) in its [Particulars of Claim](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-particulars-of-claim.pdf) submitted to the High Court in the test case on the validity of insurers denying business interruption claims during the coronavirus pandemic. Other insurers will most likely be denying claims, but at present the following eight's policy wording is subject to the FCA's test case: - [Arch Insurance (UK) Limited](https://www.archcapgroup.com/Insurance/Regions/UK-Europe); - [Argenta Syndicate Management Limited](http://www.argentagroup.com/); - [Ecclesiastical Insurance Office Plc](https://www.ecclesiastical.com/); - [Hiscox Insurance Company Limited](https://www.hiscox.co.uk/); - [MS Amlin Underwriting Limited](https://www.msamlin.com/en/index.html); - [QBE UK Limited](https://www.qbe.com/); - [Royal & Sun Alliance Insurance Plc](https://www.rsagroup.com/); and - [Zurich Insurance Plc](https://www.zurich.com/en/zip). ## Is my business entitled to Business Interruption insurance? Specific advice can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why use a Specialist Business Interruption Insurance Claim Solicitor? We work to achieve our client’s interests by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim; - Assisting you in preparation of evidence to support your Business Interruption insurance claim case; - Appointing the right insurance experts to ensure the best chance of success in litigation; - Appointing forensic accountants to assess and report on the refunds and consequential losses due; - Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/); - Providing first class Court representation and advocacy; and - Developing (and aiding implementation of) strategies that allow the business to continue. [Submit your Business Interruption Claim for Legal Review](https://lexlaw.co.uk/legal-case-assessment/) Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Business rescue and Insolvency advice We specialise in [Litigation](https://lexlaw.co.uk/practice-areas/), [Winding-up](https://windinguppetitionsolicitors.co.uk/) and [Insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) work and as a consequence we are able to add value by our legal services by guiding clients in these areas which are often ancillary to Business Interruption insurance litigation. We can and have helped clients successfully defend [winding up petitions](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) brought by their banks and we can challenge the appointments of LPA Receivers, Auctioneers and also advise as to how best businesses can be rescued and turned around and how debts can be written off or restructured. If your business has already suffered terminal loss due to (either in full or part) a denial of a legitimate coverage claim by your insurer please still contact us. We can provide advice on obtaining an assignment of the right to bring legal proceedings against the insurer from the Administrator or the Trustee in Bankruptcy as appropriate and have experience in doing so. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. ### Check Your Litigation Case ✔ We analyse your case prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. *Want a first or second opinion on your case? *Click below or call our lawyers in London on ☎ [02071830529](tel:+442071830529) [Check your case ](https://lexlaw.co.uk/legal-case-assessment/)[✔](https://lexlaw.co.uk/legal-case-assessment/) --- # VAT De-Registration Appeals Source: https://lexlaw.co.uk/hmrc-vat-de-registration-tax-appeal-kittel-decision-input-tax-decision-letter-judicial-review-legal-advice/ *It is essential that any company deal with tax issues as soon as they occur to prevent their appeal from being time-barred (and such decisions are usually subject to a strict 30 day time limit).* *Our [HMRC Tax Disputes Solicitors and Barristers](https://taxdisputes.co.uk/contact-us/) have years of experience of UK and Community tax law and first hand commercial, litigation and advocacy experience . We have a proven track record of successfully contesting disputed tax assessments and penalties with HMRC. The tax authorities have lost many cases that are appealed through negotiation, internal review or through the Tax Tribunal.* ## Why should a company appeal a HMRC decision to deregister its VAT number? VAT number de-registration can lead to serious consequences for a company, especially one where taxable supplies are being made and are contemplated. For example, a company without a VAT number would be: - unlikely to secure future lucrative contracts; - would not be able to issue tax invoices charging VAT or showing a VAT registration number; and - would not be able to claim back input tax from taxable supplies and as such would be consequently subject to a hefty assessment. It is crucial to take [specialist advice](https://taxdisputes.co.uk/) early and appeal the decision to de-register in good time. There are a number of avenues a company can take in appealing such a decision from the Commissioners. ## In what circumstances do HMRC de-register VAT numbers? HMRC justifies its decision to de-register by exercising its powers under [paragraph 13 of Schedule 1 of the VAT Act 1994](http://www.legislation.gov.uk/ukpga/1994/23/schedule/1) to cancel a VAT registration. The two main reasons are: - when HMRC conclude after an investigation that a company is either no longer making taxable supplies; or - a Commissioner believes that the company has been registered with the principal aim of the registration is to facilitate a fraud on the VAT system. ## If there is fraud in a supply chain can this lead to de-registration of a VAT number? The [UK VAT Act 1994](http://www.legislation.gov.uk/ukpga/1994/23/schedule/1) is governed by the EU Principal VAT Directive (Dir. 2006/112), the directive requires UK VAT legislation to be interpreted in conformity with it. Case law such as [Kittel (C-439/04)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62004CJ0439) and Mecsek (C-273/11) establishes the principle that Community law cannot be relied on for fraudulent ends and the right to input tax recovery can be denied in circumstances where a transaction chain is connected with VAT fraud and the trader is found to have the requisite level of knowledge. Our tax solicitors have seen cases where HMRC cancel a VAT registration where the Commissioners conclude that a trader is using its VAT registration for fraudulent purposes (or will do so in the future). ## How can a company get its VAT number re-instated? It depends on the facts of each individual case. For example, in cases where fraud is alleged, the onus is on HMRC to establish that fraudulent activity has occurred or that the company is part of a chain of fraudulent transactions and that the trader knew- or ought to have known- about the fraud. Fraud is a serious accusation to level and HMRC should be put to the proof on this at the outset. Normally, such decision letters from HMRC do not go into detail. De-registration would ordinarily be a step taken after months of investigation by HMRC into a company’s affairs. In other cases, HMRC seek to import a wider interpretation to Community law than what the judges intended at the time. For example, [Kittel](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62004CJ0439) refers to taxable goods, however, we have seen cases where HMRC attempt to expand the meaning of [Kittel](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62004CJ0439) to include taxable supplies. It is not known at this stage how a Tribunal would interpret such a wide importation given by HMRC. ## Can a company seek judicial review of a decision to cancel a VAT registration? Again, the answer depends on the facts of the case. Generally it can be argued that cancelling the VAT number of a business that makes taxable supplies can be disproportionate. Arguments could be made that such a disproportionate action is incompatible with rights under the European Convention on Human Rights, contrary to[ section 6(1) of the Human Rights Act 1998](https://www.equalityhumanrights.com/en/human-rights/human-rights-act). ## Is there a time limit to bring a judicial review claim? Yes. A judicial review claim must be made promptly and in any event no later than 3 months after the grounds to make the claim arose (*[CPR 54.5(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54#54.5)*). Note that this date **cannot **be extended by agreement between parties. Therefore, if you believe that you may have a claim against HMRC for judicial review, then you should [seek legal advice promptly](https://taxdisputes.co.uk/contact-us/). ## The HMRC Appeal Process If a taxpayer disagrees with HMRC regarding a VAT de-registration decision, there is a 2-stage process for a taxpayer to dispute a HMRC decision: **Stage 1**: give notice of appeal to HMRC. A taxpayer can appeal in writing within 30 days of HMRC’s notice of their decision. HMRC will confirm their first decision, amend their decision or agree with the taxpayer’s assessment. **Stage 2**: if the taxpayer’s position cannot be agreed with HMRC in stage 1 then a taxpayer can avail themselves of two further options: **i.** HMRC can offer an internal review of the disputed decision (or the taxpayer can request this procedure at any time). The review is an entirely internal procedure completed not by the original HMRC decision maker but by a different HMRC officer. **ii.** A taxpayer can appeal to the First Tier Tax Tribunal if the taxpayer cannot agree their position following the review. The independent tribunal will make a determination on the case. A further appeal is permitted if a taxpayer does not agree with the decision. ## Notice of Appeal to HMRC If you disagree with HMRC’s deicison to de-register a VAT number, then you should first send notice to [appeal the decision to HMRC](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/). If HMRC makes a tax decision against you, you can [contact HM Revenue and Customs (HMRC)](https://www.gov.uk/government/organisations/hm-revenue-customs/contact) or professional advice should be sought. The first recourse of a taxpayer wishing to dispute a decision of HMRC is to examine the decision letter sent by HMRC which will contain instructions on how to appeal the decision made. Notice to appeal the tax decision must be made in writing by the taxpayer (or their legal representative) to HMRC by completing the appeal form attached to HMRC’s penalty letter or by following the instructions on the letter. It is essential to appeal promptly within 30 days and seek early specialist advice because a late response can be fatal to any appeal. Members of our legal team have first-hand experience and working knowledge of the internal workings of HMRC. As specialist London Tax Disputes Solicitors, we have the competency and experience to unblock negotiations with HMRC. More detailed guidance on HMRC Penalty Appeals can be found: [here](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/). ## HMRC Internal Review The HMRC internal review process can be used by a taxpayer when appealing a HMRC decision. If the stage 1 [appeal to HMRC](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/) after the penalty notice is issued is unsuccessful then either the taxpayer or HMRC can request an internal review of the decision. The review is a statutory process conducted by a different tax officer from the first reviewer and is seen as a useful tool in providing a fresh set of eyes on the interpretation of facts. Not on whether the decision was *“fair”* or for a technical dispute- but on determining whether the decision was made in line with HMRC guidelines. There are a number of advantages in utilising the internal review procedure. The internal review process is conducted within strict time periods, allowing the taxpayer to gain control of the timing of the case and resolution may be achieved faster than using the Tax Tribunal option. Moreover, previously published [official statistics](https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/322801/140610_Reviews_and_Appeals_MI_2013-14_final.pdf) shows that 49% of internal reviews have resulted in HMRC penalties being annulled or amended. This demonstrates that HMRC is prone to making errors when issuing a penalty notice. HMRC’s internal review process is subject to a number of formalities and strict time limits, it is important to seek legal representation as soon as possible. If the taxpayer neither accepts the review process nor notifies the appeal to the Tax Tribunal, the tax dispute is considered settled under [section 54](https://www.legislation.gov.uk/ukpga/1970/9/section/54/enacted) TMA 1970 in line with HMRC’s view of the matter. Therefore, it is important to seek legal representation early to help navigate the internal review process because after missing this response deadline, it is impossible to resile from the settlement according to [section 54(2)](https://www.legislation.gov.uk/ukpga/1970/9/section/54/enacted) TMA 1970 (unless the Tax Tribunal allows late notification of the appeal). If after the completion of internal review process the tax issue is still in dispute then recourse is also available by appealing to the [First Tier Tax Tribunal](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax) ([section 49D](https://www.legislation.gov.uk/ukpga/1970/9/section/49/enacted), TMA 1970) or by considering [alternative dispute resolution (ADR)](https://www.gov.uk/guidance/tax-disputes-alternative-dispute-resolution-adr). More detailed guidance on HMRC Internal Review Advice can be found: [here.](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/) ## Appeals to the Tax Tribunal The Tax Tribunals can be used by a taxpayer when appealing a HMRC decision. If the [appeal to HMRC](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/) after the penalty notice is issued is unsuccessful and the HMRC  [internal review](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/) procedure has not yielded a satisfactory conclusions then recourse is available by appealing to the [First Tier Tax Tribunal](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax) ([section 49D](https://www.legislation.gov.uk/ukpga/1970/9/section/49/enacted), TMA 1970). It is not permissible to appeal to the Tax Tribunal during the course of the internal review. The procedural rules governing the First Tier Tribunal are found in the *[Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273)](https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/357075/tax-chamber-tribunal-procedure-rules.pdf)*. The Tax Tribunal is completely independent of HMRC and is governed by an overriding objective to deal with cases fairly and justly ([rule 2, First Tier Tribunal Rules (FTR 2009)](https://www.legislation.gov.uk/uksi/2009/273/article/2/made)). The Tribunal will consider the evidence of both parties, equally whilst the judge heavily relies on previous case law. Commencing proceedings at the First Tier Tax Tribunal is subject to statutory time limits. It is recommended that legal advice is sought as soon as you become involved in a HMRC dispute to prevent a situation where a potential claim becomes time-barred. ## Case study: company has its VAT number retrospectively deregistered Our tax lawyers are representing a company that received: (i) a decision to deny the right to deduct input tax and a VAT assessment in excess of £200,000; and (ii) a decision to retrospectively deregister the company's VAT number. We were instructed on an urgent basis and within one day, arranged a telephone conference with the head of our tax team and a highly experienced specialist tax barrister. Within 2 days of instruction, we appealed the decision to deregister its VAT number and 24 hours later appealed the VAT assessment and submitted a hardship application. All of this was done within the 30 day time limit to appeal HMRC decisions. HMRC justified its decisions by alleging suspected fraudulent activity within the company's supply chain after an investigation. Full details of the case will not be expounded, save that cases such as our client's are commonplace and should your VAT number be registered, rest assured that our tax disputes team have the specialist and niche experience to effectively deal with your matter and advise you at the outset, when it matters most. ## Expert VAT De-registration Solicitors If you need HMRC Tax disputes advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC (having worked there). We can provide you with expert legal representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation. Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability. --- # What is a letter before claim? Source: https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/ We practise high value[ litigation in England & Wales](https://lexlaw.co.uk/practice-areas/). We are regularly instructed in high profile cases often with an international or regulatory perspective. [Our lawyers](https://lexlaw.co.uk/our-people/) never shy away from challenging litigation – the more complex the case, the better. We regularly take on magic circle law firms. When you instruct us you get decades of strategic legal practice from the outset - our first fixed fee meeting costs just £1750 plus VAT and includes a full review of your PDF bundle of papers advice from *both *a leading solicitor and a leading barrister. ## What is a letter before claim? A [letter before claim](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/) (sometimes known as a '[letter before action](https://lexlaw.co.uk/guide-to-starting-professional-negligence-claim-pre-action-protocol-no-win-no-fee-advice/)') is a formal letter putting a person on notice that court proceedings may be brought against them. It is a formal legal notice sent by one party to another before initiating court proceedings. ## What are the Rules on Letters Before Action? In the context of the Civil Procedure Rules 1998 (CPR), which govern civil litigation in England and Wales, the letter before claim is an essential step in the pre-action protocol process. The CPR encourages parties to try to resolve their disputes without resorting to formal court proceedings. The CPR contains practice directions on pre-action conduct and protocols. In summary these demand that before commencing proceedings, the court will expect the parties to have exchanged sufficient information to: - understand each other’s position; - consider Alternative Dispute Resolution to assist with settlement; - try to settle the issues without proceedings; - make decisions about how to proceed; - support efficient management of the proceedings; - reduce the costs of resolving the dispute. ## What's the Purpose of a Pre-action Letter? The CPR sets out the expectations for parties before they commence legal action. The purpose of the letter before claim is to promote openness, transparency, and early communication between the parties involved in the dispute. The key elements included in the letter before claim, as per CPR, are as follows: - **Exchanging Sufficient Information:** The parties should provide each other with enough information about their respective positions, evidence, and legal arguments so that they can fully understand the case presented by the other side. - **Making Informed Decisions:** Armed with the information exchanged, both parties should be able to make informed decisions about how to proceed further in the dispute resolution process. - **Settlement Attempts:** The parties should actively attempt to settle the issues in dispute without the need for formal court proceedings. This may involve negotiation, mediation, or other methods of resolution. - **Alternative Dispute Resolution (ADR):** Parties are encouraged to consider using ADR methods, such as mediation or arbitration, as an alternative way to resolve the dispute, which may lead to a quicker and more cost-effective resolution. - **Efficient Management:** The CPR emphasizes the need to support efficient case management and avoid unnecessary delays. - **Cost Reduction:** By engaging in open communication, exploring settlement options, and using ADR, the parties can work towards reducing the overall costs associated with resolving the dispute. Sending a letter before claim is seen as a reasonable and constructive approach before initiating costly and time-consuming court proceedings. The CPR expects parties to act in good faith during this pre-action phase and to comply with the pre-action protocols relevant to their specific type of dispute. Failure to adhere to the pre-action protocol may have consequences, including potential cost sanctions or other orders from the court. It's important to note that the specific requirements and procedures for a letter before claim may vary depending on the nature of the dispute and the applicable jurisdiction. If you are considering initiating legal action, it is crucial to seek advice from a qualified legal professional to ensure compliance with the relevant rules and protocols. [Get in touch with us](https://lexlaw.co.uk/legal-case-assessment/). ## Why do I need to write a letter before claim? If a dispute proceeds to litigation, the court will expect the parties to have complied with a relevant [pre-action protocol ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct)or this Practice Direction. The court will take into account non-compliance when giving directions for the management of proceedings (see [CPR 3.1(4) to (6)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.1)) and when making orders for costs (see [CPR 44.3(5)(a)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3)). The court will consider whether all parties have complied in substance with the terms of the relevant pre-action protocol or this Practice Direction and is not likely to be concerned with minor or technical infringements, especially when the matter is urgent (for example an application for an injunction). ## What are the pre-action protocols? Pre-action rules govern the conduct of the parties and what steps should be taken before issuing a claim. Non-compliance with UK litigation [pre-action protocols](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) may mean a party is later punished by the court in terms of costs. Before proceedings are commenced, the parties are required to act reasonably in exchanging information and documents relevant to the dispute. The aim is to avoid the need for legal proceedings by encouraging resolution of the dispute by other means. ## What if there is no relevant pre-action protocol to follow? Where there is a relevant pre-action protocol, the parties should comply with that protocol before commencing proceedings. Where there is no relevant pre-action protocol, the parties should exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. The steps will usually include— (a) the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated; (b) the defendant responding within a reasonable time – 14 days in a straight forward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and (c) the parties disclosing key documents relevant to the issues in dispute. ## What do I write in a letter before claim? Before court proceedings are commenced, a claimant should send a Letter of Claim to the defendant. Whilst each claim will require different information in the Letter of Claim as a general guide, a well-drafted Letter Before Claim typically includes the following elements: - Clear identification of the parties involved in the dispute. - A concise explanation of the facts and detail of the claim. - Reference to any relevant legal or contractual documents. - A detailed account of the claimant's position and the relief sought. - If the claimant is seeking to [recover debt](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) then they should list all of these debts. - A request for the defendant to respond within a specific timeframe. - Encouragement for the parties to consider Alternative Dispute Resolution (ADR) methods, such as mediation, to resolve the matter outside of court. - A reasonable time limit for the defendant to reply. - A clear statement that you will initiate court proceedings if you do not receive a reply. - A warning of the costs consequences that will follow once legal proceedings are commenced because the other side will ultimately have to pay towards your court costs and solicitors fees. ## Template: Letter Before Action (Debt Claim) **Note:** This is a basic template that must be adapted based on the specific details of your case. **Your Name** **Your Address** **Your Contact Information** **Date** **Recipient's Name** **Recipient's Address** **Dear [Recipient's Name],** **Reference:** [Reference number, if applicable] I am writing to you regarding an outstanding debt of [amount] owed to [your name] arising from [briefly describe the nature of the debt, e.g., contract, loan, goods or services supplied]. The debt is due and payable on [date]. A copy of the relevant [invoice, contract, etc.] is attached for your reference. Despite previous attempts to resolve this matter amicably, the debt remains unpaid. I am therefore formally requesting that you pay the outstanding amount in full within [number] days of the date of this letter. If you are unable to pay the full amount within this timeframe, please contact me to discuss alternative arrangements, such as a payment plan. Please note that if this matter is not resolved satisfactorily, I may be forced to commence legal proceedings against you to recover the outstanding debt. Yours faithfully, [Your Signature] [Your Name] **Enclosures:** - [List of enclosed documents, e.g., invoice, contract] ## Template: Letter Before Claim (Breach of Contract) **Note:** This is a basic template that must be adapted based on the specific details of your case. **Your Name** **Your Address** **Your Contact Information** **Date** **Recipient's Name** **Recipient's Address** **Dear [Recipient's Name],** **Reference:** [Reference number, if applicable] I am writing to formally notify you of a breach of contract regarding [Name of Contract]. The contract was entered into on [Date] between [Your Name] and [Recipient's Company]. The specific breach of contract occurred when [Describe the breach in detail, providing specific dates, actions, or omissions]. As a result of this breach, I have suffered [Describe the damages or losses incurred]. I am seeking [Specify the remedy you are seeking, such as damages, specific performance, or injunction]. I request that you [Specify what you want the recipient to do, such as acknowledge the breach, rectify the situation, or negotiate a settlement]. If this matter cannot be resolved amicably within [Number] days of this letter, I will have no choice but to commence legal proceedings. Yours faithfully, [Your Signature] [Your Name] **Enclosures:** [List of enclosed documents, e.g., invoice, contract, correspondence, evidence, reports] ## Litigation and Debt Cases we accept: We do not work on small value claims under £10,000 unless you are pursuing an undisputed debt against a company such as enforcing a court judgment which is worth more than [£750](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/). In which case please review our practice area [website about winding-up petitions](https://windinguppetitionsolicitors.co.uk/). You are welcome to instruct us on your case including to write a letter before claim and the first step is to book a fixed fee conference with the relevant team. You will need to provide us your papers in a PDF bundle and at least 3 members of the firm will review the papers. You will then be given advice in a video conference meeting with a qualified solicitor and barrister both of whom have expertise in the areas of law connected to your dispute. They will advise you on your claim's merits and demerits and the prospects of success and best way forward. We have a minimum fee of £1750 plus VAT to be instructed for the above review and advice meeting work. For regulatory reasons, we do not give any free advice. ## Recovery of Pre-action Legal Costs The Recovery of Pre-action Legal Costs pertains to the costs incurred by parties before the commencement of court proceedings. The Civil Procedure Rules (CPR) and Jackson reforms encourage parties to resolve disputes through Pre-Action Protocols (PAPs) before litigation. The recoverability of pre-action costs hinges on whether proceedings have been issued. If proceedings are issued, costs, including pre-action costs, can be recovered at the court's discretion. But, if no claim is issued, then generally no costs related to proceedings can be recovered, even if pre-action costs were incurred following the PAPs. However there are ways to secure costs. - *Webb Resolutions Ltd v Countrywide Surveyors Ltd* highlighted the importance of considering recoverability before issuing proceedings. The court allowed the defendant to recover both pre-action and post-issue costs, emphasising the discretionary nature of cost awards. - If a Part 36 settlement offer is made without issuing proceedings, Part 36 costs consequences may apply. If proceedings are issued and then settled, the court can decide on costs, considering factors like conduct and proportionality. - Parties can also negotiate settlements to agree on cost distribution. To safeguard their positions, parties should seek specialist legal advice at an early stage, particularly concerning pre-action costs. It's essential to understand the implications of initiating proceedings or pursuing settlement options to avoid unnecessary cost burdens. ## We provide nationwide legal representation We will represent you no matter where you are based in England or Wales. Contact us through our contact form, by email or by phone, then one of our team will liaise with you to discuss your matter and assess whether we can help you. We can arrange a fixed fee conference with senior members of our legal team. This meeting will take place via a video link accessible via your phone, tablet or laptop. Therefore, no matter where you are based in England or Wales we can represent you. ## Instruct Specialist Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Overdrawn Director’s Loan Accounts Source: https://lexlaw.co.uk/overdrawn-directors-loan-accounts-companies-act-insolvency/ *We are leading experts specialising in relation to Overdrawn Director's Loan matters. Our experienced[ City of London solicitors and barristers](https://windinguppetitionsolicitors.co.uk/contact-us/) regularly assist directors who are being pursued by Liquidators on behalf of Companies. Just [click here](https://windinguppetitionsolicitors.co.uk/legal-case-assessment) to complete our online contact form or for a free initial telephone consultation with a qualified lawyer call 02071830529.* ## What is a Director's Loan Account? In simple terms, a [director's loan account](https://www.gov.uk/directors-loans) is a record of transactions between a company and its directors aside from: - a salary, dividend or expense repayment; or - money previously paid into or loaned the company If you are a company director, you may have a director’s loan. A director’s loan account can be considered as being at a zero level in the circumstances where no monies have been removed from the company. Directors may also choose to put their own money into a company in order t cover the companies' expenses or costs in respect of purchasing specific assets which would lead to the director's account being in credit. In this situation, the director is a creditor of the company. The complexities arise once a director’s loan account becomes overdrawn. ## What is an Overdrawn Director’s Loan Account? An [overdrawn director’s loan account](https://www.gov.uk/directors-loans/you-owe-your-company-money) is a situation whereby a director has taken money out of the company that is not classed as a dividend, salary or an expense repayment and the said figure exceeds any money that the director has put into the company. These overdrawn amounts are considered 'assets' on the balance sheet of the company until they are repaid. A director may borrow from his own company provided that the company is not suffering financial difficulties and more importantly, the specific rules set out in the [Companies Act 2006 ](http://www.legislation.gov.uk/ukpga/2006/46/contents)and the company's articles of association have been followed. ## What does the legislation say? The[ Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/contents) liberalised the law on a company lending money to its directors and, most importantly, dropped the criminal penalties if these rules were broken. Directors are now able to borrow money from their companies and other similar transactions are now permitted if shareholders have given their approval. [Section 197 of the Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/4/crossheading/loans-quasiloans-and-credit-transactions) states that: > 197. Loans to directors: requirement of members' approval > > > > > > (1) A company may not- > > > > > > (a) make a loan to a director of the company or of its holding company, or > > > > > > (b) give a guarantee or provide security in connection with a loan made by any person to such a director, > > > > > > unless the transaction has been approved by a resolution of the members of the company. > > > [Section 197 of the Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/4/crossheading/loans-quasiloans-and-credit-transactions) ## Do all Director's Loans require shareholders' approval? The shareholders must approve loans over £10,000 (but less than £50,000) and the directors will need to agree to the loan terms such as the term and any interest charged. Unless the loan account is in credit (or has shareholder approval), then a company director who has withdrawn money from the company acts unlawfully ([section 213, Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/section/213/2014-10-01)). Like any other debt owed to the company, the overdrawn loan account is recoverable by the company. ## What happens if the company goes into Liquidation? In the circumstances where the company enters into insolvency, liquidators are appointed to settle whatever debts they can on behalf of the company. The liquidators view an overdrawn director’s loan account as an asset to be pursued and may take legal action in order to seek repayment of the overdrawn director's loan account for the benefit of the creditors. It is important to note that a director may be attacked with misfeasance in the circumstances where they have not acted in the company’s interests (e.g. if they cause the company to lend them money at a time when the company is struggling financially). Any subsequently appointed liquidator may, therefore, bring an action against the director under [section 212 of the Insolvency Act 1986 IA 1986](http://www.legislation.gov.uk/ukpga/1986/45/section/212).  A company’s loan to the director may also have increased because of company assets being transferred to the director’s name. The liquidator should check there was an independent valuation which established the true value of the asset and investigate whether there was a reason for transferring the asset to the director for no consideration.  In most cases, it will be difficult to justify the sale of a company asset for no immediate cash. If the liquidator's section 212 claim is successful, any sum awarded against the director by the court cannot be set off against a debt due to him from the company *(Re Anglo-French Co-operative Society Ex p Pelly (1882) 21 Ch D*;* Manson v Smith (liquidator of Thomas Christy) [1997] 2 BCLC 161*). ## Instruct Specialist Lawyers We provide a no-cost initial case review to establish whether or not we can help you. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding insolvency in particular issues. Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both [issuing](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/) and [defending](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Notice to Admit facts Source: https://lexlaw.co.uk/notice-to-admit-facts-form-n266-cpr-costs-sanction-legal-advice/ A notice to admit facts is a convenient procedural device and has the potential to save cost because a party need not go to the expense of proving uncontroversial detail. The rule, however, contains no sanction for a refusal to agree facts. It would not be common for the court to seek to apply any sanction to the refusal to admit facts other than a costs sanction after the event under [CPR 44](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs). [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is a "Notice to admit facts"? A notice to admit facts is a request served by a litigant in order to pressure the opponent to admit particular facts. Such notice may be served before a legal claim is commenced but is more usual once litigation has commenced. A party cannot be forced to reply save by an order of the Court however if a refusal is viewed by the judge as unreasonable, the court can show it's disapproval by imposing costs penalties. ## What is the "notice to admit facts" procedure? The CPR sets out the procedural guidance for serving and responding to a notice to admit facts in [CPR 32.18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.18): > (1) A party may serve notice on another party requiring him to admit the facts, or the part of the case of the serving party, specified in the notice. > > (2) A notice to admit facts must be served no later than 21 days before the trial. > > (3) Where the other party makes any admission in response to the notice, the admission may be used against him only – > > (a) in the proceedings in which the notice to admit is served; and > > (b) by the party who served the notice. > > (4) The court may allow a party to amend or withdraw any admission made by him on such terms as it thinks just. > > [CPR 32.18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.18) ## Which form is used to serve a "notice to admit facts"? A notice to admit may be served pursuant to *[CPR 32.18](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#IDARXSBB)* using [Form N266.](https://www.gov.uk/government/publications/form-n266-notice-to-admit-facts-admission-of-facts) ## What are the contents of a "notice to admit facts"? The serving party must specify which facts the other party is invited to admit. As with the case for formal admissions in general, a notice to admit should be used for facts or parts of a case which are not really in dispute between the parties. The questions asked or the facts to be admitted should ideally be kept as simple as possible so they can be admitted or denied without ambiguity. ## Can a "notice to admit" be served before a claim is issued? The Civil Procedure Rules envisage the serving of a notice to admit when proceedings have already started and there is a claim number. It is unlikely that a party could use a Form N266 in the pre-action stage. However, the [pre-action protocols](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) of course encourage the narrowing of issues between the parties. Costs penalties may later be ordered by a court if avoidable expense is incurred in later proving such facts. Therefore, admissions of non-disputed facts may be invited in pre-action correspondence instead of using Form N266. ## What is the time limit for serving a "notice to admit facts"? Pursuant to [CPR 32.18(2)](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.18) a notice to admit must be served at least 21 days before the trial date. ## Are there costs sanctions for not responding to a notice to admit? If a litigant refuses to admit facts which are subsequently proven at trial, there are no automatic costs sanction within the rules. However, such refusal will likely be a factor that the court takes into account when assessing costs under [CPR 44.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) and [44.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs). ## Does a litigant have to respond to a "notice to admit facts"? The leading case is [Glaxo Wellcome UK Ltd (t/a Allen & Hanburys) & Anor v Sandoz Ltd & Ors [2018] EWHC 1626 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Glaxo-case.pdf), where the judge opined that it was indeed within the court’s case management powers to order a party to respond to a notice to admit facts. Although in this case, the judge did not order the receiving party to respond to the notice to admit, Chief Master March stated obiter: > The defendants' position is that the court does not have power to require them to provide any further response than they have already given. Plainly it is right that a defendant cannot be, and should not be, forced to admit facts. Generally speaking, a party is entitled to lead the evidence it wishes for the purposes of either pursuing a positive case or defending the claim at a trial. **I have no doubt, however, that the court has power to make the sort of order that the claimants seek applying the overriding objective and the broad case management powers in CPR 3.1(2)(m) and indeed under CPR 3.3(b) to impose a condition.** > >  [Glaxo Wellcome UK Ltd (t/a Allen & Hanburys) & Anor v Sandoz Ltd & Ors [2018] EWHC 1626 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Glaxo-case.pdf) ## What is the time limit to respond to a "notice to admit"? The CPR does not actually specify a time period for a litigant to respond to a notice to admit facts. A court may order that a reply to a notice to admit should be served by a certain date (for example before a [CMC](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/)). ## How should a litigant respond to a "notice to admit"? The recipient of the notice can use the bottom section of [Form N266](https://www.gov.uk/government/publications/form-n266-notice-to-admit-facts-admission-of-facts) to admit the facts or it may serve its own Form N266. If a litigant does not wish to admit the facts, it can choose to do nothing or it may reply in correspondence to say that it does not admit the facts set out in the relevant Form N266. There may be costs sanctions for failing to respond to facts which are later proven at trial. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Unexplained Wealth Orders Source: https://lexlaw.co.uk/unexplained-wealth-orders-specialist-lawyers/ ## What is an Unexplained Wealth Order? The power was introduced by section 1 of the [Criminal Finances Act 2017 ("CFA") ](http://www.legislation.gov.uk/ukpga/2017/22/section/1/enacted)which created a new section [362A of the Proceeds of Crime Act 2002 ("POCA"). ](http://www.legislation.gov.uk/ukpga/2002/29/section/362A) A UWO requires that the respondent explains how they acquired property. If the respondent does not provide adequate evidence the property is deemed by the relevant authority to be "recoverable property" for the purposes of a civil recovery ([s.362C](http://www.legislation.gov.uk/ukpga/2002/29/part/8)). ## Who can issue an unexplained wealth order? Whilst the primary UK law enforcement agency to use UWO's is the National Crime Agency ("NCA"), others have the authority to apply for them also such as: - the Director of the Serious Fraud Office; - HM Revenue and Customs; - the Director of Public Prosecutions; and - Financial Conduct Authority. Any of the listed authorities above can make an application to the High Court for a UWO, which can be made [without notice](http://www.legislation.gov.uk/ukpga/2002/29/part/8) (s.362I). ## What are the requirements for making an UWO? Contrary to the standard used in a criminal trial where the relevant authority must decide whether the evidence is strong enough that a jury would find **beyond reasonable doubt **that there had been a criminal act**, **in order to successfully apply for a UWO one of the above authorities must only meet the civil standard of proof. Civil recovery proceedings under POCA only require the relevant authority to prove to the High Court that **on the balance of probabilities** there has been a criminal act. The High Court must also be satisfied that there is reasonable cause to believe that: - the respondent hold the property; - the value of the property is greater than **£50,000**; - there are **reasonable grounds** for suspecting that the known sources of the respondent's lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property; - the respondent is a **politically exposed** person or there are reasonable grounds to suspect they have been or are **involved with serious crime** or a person connected to serious crime Additionally, the respondent can hold the property in part or in its entirety alone or with any other persons. It is irrelevant whether the property was obtained before or after the legislation permitting the UWOs came into force, namely the [CFA. ](http://www.legislation.gov.uk/ukpga/2017/22/section/1/enacted) ## What to do if you have been served with an unexplained wealth order Firstly, as aforementioned the the issuing authority only needs prove that on the balance of probabilities there has been a criminal act in order to issue the UWO. Therefore, any response to a UWO must be carefully considered and it is advised that you instruct a specialist team who can assist you with this. As per [POCA s.362A](http://www.legislation.gov.uk/ukpga/2002/29/section/362A), in order to comply with the UWO the respondent must provide a statement: - setting out the nature and extent of the respondent's interest in the property in respect of which the order is made, - explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met), - where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order, and - setting out such other information in connection with the property as may be so specified. ## What happens after an UWO is made? If a UWO is granted by the High Court they may make an [interim freezing order](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) in respect of the property if they consider it necessary to do so for the purpose of avoiding the risk of the frustration of any recovery order they may make in the future. In order for the Court to grant the freezing order they must establish the following conditions: - The applicant must have a strong case. The applicant must establish that its case is capable of a serious argument. - There must be a substantive cause of action against the defendant - The applicant must demonstrate the risk of the asset being disposed of if the order is not put into place. - It must be ‘just and convenient’ to grant the order – it would cause unnecessary and disproportionate hardship to the defendant to grant the order.  ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our debt recovery team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our debt recovery team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Unexplained Wealth Order Defence Lawyers The legislation in respect of the above have become a field of great importance in recent years. The consequences of falling foul of a UWO can be very serious and devastating for individuals and corporations. Therefore considered, timely and accurate expert advice is essential. Our Defence and Private Prosecution team advises both corporate clients and individuals on all legal issues concerning offences created by way of the [Proceeds of Crime Act 2002](http://www.legislation.gov.uk/ukpga/2002/29/contents). We regularly deal with complex, large and difficult confiscation proceedings in the criminal courts under the Proceeds of Crime Act and the previous statutory regimes. We are experienced in asset tracing, restraint orders, the appointment of Receivers under the Proceeds of Crime Act, third party rights and directors’ disqualification proceedings. We are also happy to appear for interested parties in receivership proceedings and have particular expertise in forfeiture/cash/property seizure hearings. We are frequently instructed in defendant High Court restraint work and have in depth experience of lifting restraint or receivership orders from assets of defendants or third parties to criminal proceedings. --- # 债务追讨和法律咨询： 英国企业欠中国公司的逾期发票 Source: https://lexlaw.co.uk/%e5%80%ba%e5%8a%a1-%e8%bf%bd%e8%ae%a8-%e9%80%be%e6%9c%9f-%e5%8f%91%e7%a5%a8-%e6%ac%a0-%e8%8b%b1%e5%9b%bd-%e4%bc%81%e4%b8%9a-%e4%b8%ad%e5%9b%bd-%e5%85%ac%e5%8f%b8-%e6%b3%95%e5%be%8b-%e5%92%a8%e8%af%a2/ 英国的公司是否不付款？对于在英国被欠钱的中国公司会有哪些选择？中国企业应否在英国提起法律诉讼？[我们是伦敦的专业债务追讨律师](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/)，我们专门从英国所有公司和企业中收集高价值的商业债务。 我们已经代理服务过中国的多家公司，企业和供应商，并提供英语到普通话和普通话到英语的双语翻译服务。这意味着我们具备有清晰听取您完整指示的能力（即使您不会说英语）。 迄今为止，我们已经取得了100％的成功率，并有利解决了我们全体客户在英国法院发布的所有法律诉讼。这也意味着上诉的英国债务人公司也已支付了我们的律师费。对于指示我们的客户而言，他们在持续追究其坏账讼诉中最终也同样的可以收回所欠的款项以及利息，并退还法律费用。我们如此成功的效果，使我们现在能够只以少量固定的费用（亦很可能退还的情况下）为客户提供有积极的债务回收方案​​。 ## 我们的中国债务追讨法律服务 [我们的律师为中国大陆](https://lexlaw.co.uk/our-people/)，香港和台湾的国际客户提供法律服务。 我们的英国律师曾代表许多中国公司向英国公司追讨未付发票的付款。对于我们在中国的客户而言，要了解英国外国法律制度的细微差别将是一项挑战，因此，让我们的专业律师来处理您的案件并追讨您的债务是为上选。 如果您的公司在英国有大量债务人，我们可以接受您整体的指示， 由我们出面为您把所欠您的钱都取回来。 ## 英国为中国企业提供的偿债服务 我们代表寻求支付逾期发票的中国公司，帮助收回英国公司所欠的债务。如果您一直追逐付款并被忽略，那么我们可以为您提供帮助。我们会收取有折扣的固定费用，以便在包括翻译在内的视频或电话会议中提供初步的法律建议。我们的口译人员经验丰富，经常为英国政府，司法系统和法院提供帮助。 我们将为您提供英国所有的债务追索选择，并让您选择最适合您的需求。然后，我们通常能够以固定费用或不赢不收费的方式追讨其余债务。 ## 中国公司如何在英国收回坏账？ 凡因有某个在英格兰或威尔士的单位欠款于中国企业的商业公司可以通过以下方式让其客户支付未付或逾期的发票： - 发送诉讼前债务追回警告电子邮件或信件；- 在索赔书中威胁采取法律行动；- 与债务人协商付款计划/和解；- 指示英国专业债务追讨律师与债务人公司作书面通讯；- 送交正式的法定要求；- 开始民事法院或高级法院的诉讼；或- 送交清盘呈请 ## 如果英国的客户不付款，该怎么办：致未付款项警告信 如果英国债务人公司，客户或委托人不理会您的发票，而忽略了您的付款要求，那么作为您的专业债务追回律师，您可以指示我们发出正式的付款要求。 在某些情况下，英国律师会提出正式行动前的警告信，警告债务人如果未偿还债务，则将采取执法行动，这足以促使违约公司偿还欠您的款项。一般而言，凡首先采取行动者是最有可能获得报酬的。如果存在持续的客户关系，我们将发送礼貌而坚定的信函. ## 向尚欠您款项的英国公司索取滞纳金 如果您因商业发票而被延迟付款，则您的企业可以根据英伦[1998年《商业债务逾期支付（利息）法》](https://www.legislation.gov.uk/ukpga/1998/20/contents)要求债务人赔偿。如果未按时支付发票，则债权人有权要求债务人赔偿 - - 即使发票中没有利息或逾期付款的规定。 根据[《 1998年商业债务逾期支付（利息）法》](https://www.legislation.gov.uk/ukpga/1998/20/contents)的逾期付款赔偿如下： | 未偿债务额 | 滞纳金 | | --------------- | --------- | | £999.99 以下 | £40 | | £1,000 to £9,999.99 | £70 | | £10,000 or more | £100 | ## 向英国公司追偿债务:履行法定要求，正式要求付款 如果您在追逐付款，调解，尝试协商付款计划之后仍未收到未付发票的付款，则您有权对债务人采取法律行动以追讨欠您的款项。 在英格兰、威尔士、苏格兰或北爱尔兰，如果债务超过750英镑，法定要求是清算债务公司的第一步。在英国，法定要求是能够在债务到期时立即送达的，最好由律师来完成。 中国债权人通常会将法定要求视为一种更划算、更快速的方法，以确保债务人偿还债务，而不是启动法庭程序(至少一开始是这样)。准备和服务法定需求(取决于债务的数量和个别案例的事实)可能会相对较快地完成(包括法庭文件送达服务的成本)。鉴于这一程序不涉及法院，因此不存在额外的法庭费用或申请清单的延误(除非债务人对法定要求提出异议，例如债务存在争议)。 法定要求书规定了债务人履行其债务的期限，一经送达，债务人有**21天**的时间来偿还债务。 此外，法定要求会给债务公司带来清算的危险，并可能引起董事的注意，以确保加快偿还款项或参与和解谈判。 ## 对未付发票的英国有限公司进行清盘 在中国境内的债权人有权指示律师对债务人公司进行清盘以追回超过750英镑的债务，或制止债务人公司的债务恶化。 已向伦敦破产法院提出申请(这是诉状)，要求下令清盘该公司。 法院将规定一个听证会日期来“听取”请愿书。如果该公司没有回应，或者没有进行辩护，那么通常就是法官下令进行清盘。 清盘后，公司的所有资产被收回并分配给债权人，然后您有权对债务人采取强制行动。 ## 我们代表中国企业出席英国法庭听证会 我们的总部设在伦敦的法律中心，是历史悠久的[Middle Temple Chambers](https://www.middletemple.org.uk/)中唯一的律师事务所。我们在英格兰和威尔士提供覆盖全国的综合服务，以代表您的债权人利益，可以出席任何法院的清盘请愿和听证会。 我们不单是在法庭聆讯中代表您，还在全国范围内的任何一个法院聆讯中为您提供我们自己的大律师或外聘的当地律师。 ## 您在中国本土吗？我们提供国际性的债务追回服务 这没有关系，无论您在世界的哪个地方，我们都将代表您。 [如果您通过我们的联系表，电子邮件或电话与我们取得联系后，我们的追债法律团队的成员将通过电话与您联系，讨论您的问题并评估我们是否可以为您提供帮助。](https://windinguppetitionsolicitors.co.uk/contact-us/) 如果可以的话，我们将与清算请愿团队的资深成员安排一次会议。会议可以通过与会者亲自到场，也可以通过使用我们的电话会议设施，如果需要，可以通过Skype，Zoom或微信进行。因此，无论您身在何处，我们都可以代表您。 ## 为中国债权人指派专业的英国追债律师 我们是专业的破产律师，已经帮助中国企业追回了所有欠债。我们可以代表您要求债务人支付利息和赔偿；发送逾期付款要求；处理索偿前的信件，并向法院提起诉讼（索偿债务，利息，补偿金和追回债务的合理费用）；同时执行法院的判决。 我们是伦敦金融城一家专业的律师事务所，由律师和大律师组成，位于与皇家法院相邻的Middle Temple Inns of Court。我们是处理破产问题的专家。在皇家法院（劳斯大厦）或根据破产规则有管辖权的有关高等法院区域登记处或民事法院，我们的团队在法定要求，与债务人/债权人进行谈判，撤销法定要求， 发行和辩护清算请愿书等方面有无与伦比的经验。 --- # Overdue Invoices owed by UK Businesses to Chinese Companies Source: https://lexlaw.co.uk/uk-britain-debt-recovery-solicitors-lawyers-chinese-china-creditor-company-business-legal-action-advice-unpaid-invoices/ Is a company in the UK not paying your invoice? What options are there for Chinese companies that are owed money in the UK? Should a Chinese business commence legal action in the UK? We are [expert debt recovery lawyers](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/) in London, and we specialise in collecting high value commercial debts from all companies and businesses in the UK. We have acted for a number of companies, businesses and suppliers in China and are able to offer translation services for English to Mandarin and Mandarin to English. This means we are able to take full, clear instructions from you (even if you do not speak English). To date, we have a 100% success rate and all legal actions issued in the UK Courts has been resolved in our client’s favour. This has also meant that the petitioned UK debtor company has paid our legal fees as well. Luckily for our clients this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs. As a result of our success we are now able to offer clients a proactive debt recovery package for a small fixed fee (which is likely to be refunded). ## Our Chinese Debt Recovery Legal Services [Our lawyers](https://lexlaw.co.uk/our-people/) act for international clients based in mainland China, Hong Kong and Taiwan. Our UK solicitors have acted for many Chinese companies chasing payments of unpaid invoices from UK companies. Understanding the nuances of a foreign UK legal system will be challenging for our clients based in China, so let our expert lawyers take your case and recover your debt. If your company has a large number of debtors in the UK, we can accept bulk instructions. Instruct us to get the money that is owed to you. ## UK debt recovery service for Chinese companies We represent Chinese companies seeking to be paid overdue invoices and can help recover the debt that is owed from UK companies. If you have chased for payment and been ignored, then we can help you. We charge a discounted fixed fee to give preliminary legal advice in a video or telephone conference which includes our interpreter. Our interpreter is highly experienced and regularly assists the UK government, justice system and the courts. We will advise you of all the debt recovery options in the UK and allow you to choose the one that best suits your needs. Often we are able to then pursue the rest of the debt on a fixed fee or no win no fee basis. ## How can a Chinese company recover bad debts in the UK? Chinese businesses owed debt from someone in England & Wales can get their customer to pay an unpaid or overdue invoice in the following ways: - Send a pre-action debt recovery warning email or letter;- Threaten legal action in a letter of claim;- Negotiate a payment plan / settlement with the debtor;- Instruct specialist UK debt recovery solicitors to correspond with the debtor company;- Serve a formal statutory demand; - Commence County Court or High proceedings; or- Serve a winding-up petition. ## What if a customer in the UK will not pay: Warning letter for outstanding payments If a UK debtor company, client or customer is ignoring your invoices and have ignored your demands for payment, then you can instruct us as specialist debt recovery solicitors to send a formal demand for payment. In certain cases, a formal letter before action from UK solicitors warning the debtor of court enforcement action should the debt not be paid is enough to prompt the defaulting company to pay sums owed to you. Those who take action first are the ones most likely to be paid. We will send polite but firm correspondence where there is an ongoing customer relationship. ## Claim late payment compensation from UK companies that owes you money If you have been paid late on an invoice rendered commercially, then your business could be entitled to compensation from the debtor under the [Late Payment of Commercial Debts (Interest) Act 1998](https://www.legislation.gov.uk/ukpga/1998/20/contents). If an invoice is not paid on time, then a creditor is entitled to claim compensation from a debtor- even if there was no provision for interest or late payment in the invoice. Late payment compensation under the Late Payment of Commercial Debts (Interest) Act 1998 is as follows: | **Amount of the unpaid debt** | **Late payment compensation** | | ----------------------------- | ----------------------------- | | Up to £999.99 | £40 | | £1,000 to £9,999.99 | £70 | | £10,000 or more | £100 | ## Recover debt from UK companies: Serve a statutory demand to formally demand payment If you have still not received payment of an unpaid invoice after, for example, chasing for payment, mediation, attempting to negotiate a payment plan then you have the right to take legal action against the debtor to recover money that is owed to you. A [statutory demand](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/) is the first legal step to winding up a debtor company in England, Wales, Scotland or Northern Ireland, if the debt is for more than £750. A statutory demand is capable of being served as soon as the debt is due and is best done by a solicitor in the UK. Chinese creditors often serve a statutory demand as a more cost-effective and speedier method to ensuring the debtor pays the debt rather than instigating court proceedings (initially anyway). Preparing and serving the statutory demand (depending on the quantum of the debt and the facts of an individual case) could potentially be done relatively quickly (with the cost of a process server included). Given that this process does not involve the Court, there are no added court fees or delays seeking listings of applications (unless the debtor challenges the statutory demand e.g. if the debt is disputed). A statutory demand starts the time running for a debtor to honour its debts, as once served, the debtor has **21 days** within which to pay the debt. Moreover, a statutory demand carries a threat of winding up the debtor company, and could focus the mind of a director to ensure re-payment of the sums is expedited or engage in settlement negotiations. ## Wind-up a UK Limited Company that has unpaid invoices A creditor based in China has the right to instruct a solicitor to wind-up the debtor company to recover debts which exceed £750, or to stop the company making its debts worse. An application is made to the insolvency court in London (this is the petition) to seek an order to wind the company up. The Court will grant a hearing date to *“hear”* the petition. If the company does not respond, or if no defence is mounted, then it is usually a matter of the judge issuing the order to wind up. Upon winding up all the assets of the company are collected and distributed amongst creditors and then you are entitled to take enforcement action against the debtor. ## We represent businesses in China at UK Court hearings We are based in the legal heart of London, operating as the only law firm in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/), and we provide comprehensive nationwide coverage throughout England & Wales to represent your interests as a creditor at any court hearing and winding up petition hearing. We will represent you at any court hearing and will provide our own barristers or external local counsel to any hearing across the country. ## Are you based in China? We provide international debt recovery services That does not matter, we will represent you no matter where you are based internationally. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our debt recovery legal team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our winding up petition team. This meeting will take place either in person or using our telephone conference facilities, via Skype, Zoom or WeChat if you prefer. Therefore, no matter where you are based in the world we can represent you. ## Instruct Specialist UK Debt Recovery Solicitors for Chinese Creditors We are specialist Insolvency Lawyers and have helped Chinese businesses recover all the debt that is due to it. We can claim interest and compensation from debtors on your behalf; send late payment demands; letters before claim and issue Court proceedings (claiming the debt, interest, compensation and reasonable costs of debt recovery); and enforce Court judgments. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Damages-Based Agreements (DBAs) Source: https://lexlaw.co.uk/litigation-solicitor-funding-second-opinion-damages-based-agreements-dba-legal-representation-costs-advice/ In the United Kingdom, Damages-Based Agreements (DBAs) are primarily used for funding litigation in money claims, but they can also be used in other types of claims, such as those involving non-monetary relief. Under a DBA, a lawyer agrees to provide legal services to their client in exchange for a percentage of any damages or financial settlement that the client receives if their claim is successful. The lawyer's fee is contingent on the outcome of the case and is usually a percentage of the damages or settlement amount. If the client does not receive any compensation, the lawyer is not paid for their services. We offer you [partner and counsel-led advice](https://lexlaw.co.uk/legal-case-assessment/) in our first meeting, for a heavily discounted fixed fee. That way our best solicitors and barristers can review your litigation case and give you the correct advice and provide you with funding options at the outset, when it matters the most. We assess your case and work out if it is worth pursuing. If it has low merit or value or high risk we warn you quickly. If your case has started and you’re worried about prospects, we can provide a second legal opinion from a barrister and a solicitor in conference for just £1750 plus VAT. We can't provide any free legal advice. We factor in your risk-appetite, costs sensitivity and determination and depending on the merits of your case, we are open to considering contingency fee agreements with you (such as DBAs) if your case is of high value. ## What is a Damages Based Agreement (DBA)? Damages-based agreements (DBAs) are a form of funding for civil cases. DBAs are agreed between a solicitor and a client. A DBA is a form of "no win, no fee" arrangement between a solicitor and a client. ## How does a Damages Based Agreement work? A damages-based agreement is a contingency fee agreement agreed by a solicitor and a client which provides that a client will make a payment to the representative if the client obtains "a specified financial benefit" (usually damages paid by the losing side or via a settlement sum extracted). The amount of the payment will be determined as a percentage of the compensation received by the client (which will be set out in the DBA and agreed with the client in advance). If the client is unsuccessful in their litigation case, the solicitor will not be paid for the work done under the DBA. ## Our tailored assessment of your case Are you looking for [advice on your litigation case](https://lexlaw.co.uk/legal-case-assessment/) or a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/)? Do you want to know whether a law firm will offer you a damages based agreement? We do things differently from other law firms in England & Wales. We offer you partner and counsel-led advice in our first meeting, for a heavily discounted fixed fee, during which we analyse the prospects of the case and talk you through whether a damages based agreement is an option for you: - We assess your case and work out if it is worth pursuing. If it has low merit or value or high risk we warn you quickly.- We analyse and work out the legal merits of running your case to trial or to settlement via ADR or another cost-effective method of resolution.- We calculate and advise on the legal risk factors in litigation.- We explain the funding options available to you.- We factor in your risk-appetite, costs sensitivity and determination.- Together, we tailor the best possible result for you.- Our lawyers deliver strategic legal advice at your first meeting with us.- We may offer you a DBA if your case is high value and worth pursuing. ## Instruct the UK's leading law firm on Damages Based Agreements We understand the importance of promoting and furthering individual access to justice particularly during these unprecedented and uncertain economic times. [Our work](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-dba-high-court-judgment-lexlaw-vs-shaista-zuberi-comments-analysis-legal-advice/) on ensuring DBAs are accessible to all has made the national headlines and is the subject of a [leading UK High Court case](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf). ### Check Your Litigation Case ✔ We analyse your case prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. *Want a first or second opinion on your case? *Click below or call our lawyers in London on ☎ [02071830529](tel:+442071830529) [Check your case ✔](https://lexlaw.co.uk/legal-case-assessment/) ## Looking for a solicitor that can offer a DBA? When you instruct us to resolve your legal problem, your case will be dealt with by [highly qualified and experienced lawyers](https://lexlaw.co.uk/our-people/). The firm is made up of exceptional lawyers who are practising solicitors and barristers supported by high quality paralegals, legal apprentices and other legal support staff. We regularly work in conjunction with leading Queen’s Counsel and junior barristers from chambers predominantly in London near to our own chambers in [Middle Temple](https://www.middletemple.org.uk/). The strength of the legal teams available to our clients helps ensure matters are progressed efficiently and the very best results are obtained for our clients. To find out more about the people likely to assist you please view our individual profiles. If you have a legal matter and need to discuss the best way forward (including discussing the funding options available to you in your litigation) do not hesitate to contact us. --- # Enforcement of Foreign Judgments Source: https://lexlaw.co.uk/enforcement-of-foreign-judgments-recognition-in-uk-courts-foreign-debt-debtor-claims-advice/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. You can view our latest 2025 Guide to UK judgment enforcement here: [https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) but remember the information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## Recognition and Enforcement of foreign judgments in the UK The rules with respect to the enforcement of judgments from courts in EU member states and EFTA states given in proceedings instituted after 31 December 2020 were profoundly changed by Brexit, the UK's withdrawal from the EU. Prior to Brexit, the European enforcement regime facilitated a relatively straightforward process based on regulations such as the Recast Brussels Regulation and the 2001 Brussels Regulation. However, the UK’s exit necessitates relying on alternative mechanisms, as the European regime no longer applies to judgments from EU and EFTA states in proceedings instituted after this date. There are now five primary regimes for enforcing foreign judgments in England and Wales, depending on the origin of the judgment and the date proceedings began. The enforcement of judgments from EU member states in proceedings instituted after December 31, 2020 is determined by: - The Hague Convention (where applicable) - The Statutory Regime - The Common Law Regime in default of the two above It's important to note that the Statutory Regime and the Common Law Regime are less generous than the European regime and offer fewer grounds for enforcement. For example, a much narrower class of judgments is enforceable under the Statutory Regime compared to the European Regime. Also, enforcement under Common Law requires the judgment creditor to commence fresh proceedings to enforce the foreign judgment as a debt, which involves more steps and expense. Finally, the grounds on which enforcement can be resisted under the Statutory Regime and Common Law are wider than under the European Regime. ## The 5 UK Regimes for Enforcement of Foreign Judgments There are five general regimes for the enforcement of foreign judgments in England and Wales, depending on where the judgment originates from and the date the proceedings were instituted: - **The UK regime**: judgments from Scotland or Northern Ireland. - **The European regime**: judgments from EU and certain EFTA countries given in proceedings instituted before 31 December 2020. *However, this regime does not apply to judgments given in proceedings instituted after that date.* *Judgments from EU member states in proceedings instituted after 31 December 2020 are now subject to one of the following regimes:* - **The Statutory regime**: Judgments from most commonwealth countries, and possibly from some EU or EFTA states given in proceedings instituted after 31 December 2020. - **The Common Law regime**: judgments from other countries such as the USA, and judgments from EU and EFTA countries given in proceedings instituted after 31 December 2020 (unless they are subject to the statutory regime). - **The Hague Convention on Choice of Court Agreements**: until 31 December 2020, the Hague Convention generally applied to the enforcement of judgments from Mexico, Singapore and Montenegro in the UK where Mexico, Singapore or Montenegro (as the case may be) was designated in an exclusive choice of court agreement. After that date, the Hague Convention generally applies to the enforcement in England of such judgments from EU member states as well. ## What does recognition of a foreign judgment mean? Recognition of a foreign judgment in England and Wales means accepting it as having legal effect within the jurisdiction. **This doesn't mean the judgment is automatically enforceable, but it's a prerequisite for enforcement**. The same legal principles generally determine whether a judgment will be enforced or recognised. However, **no special procedure is normally required to get a judgment recognised**, as opposed to enforced. Think of it like this: - **Recognition** is like acknowledging the existence and validity of the judgment. For example, if a party wants to rely on a foreign judgment as *res judicata* to prevent a party from re-litigating a claim or defense already decided in a foreign court, the foreign judgment only needs to be recognised. - **Enforcement** goes a step further and allows the judgment creditor to take practical steps to collect on the debt. This could include seizing assets or garnishing wages. To enforce a foreign judgment in England and Wales, the judgment creditor may need to register the judgment or initiate fresh legal proceedings, depending on the applicable regime. *Essentially, recognition is the first step towards giving a foreign judgment legal effect in England and Wales. Without recognition, enforcement is impossible.* ## What does enforcement of a foreign judgment mean? Enforcement of a foreign judgment in England and Wales means taking concrete action to compel a debtor to satisfy the terms of the judgment. While recognition acknowledges a judgment's legal validity, **enforcement empowers the judgment creditor to translate that legal victory into tangible financial recovery**. This requires going beyond merely recognising the judgment and taking positive steps to recover the awarded sum. Enforcing a foreign judgment involves utilizing the legal system to ensure that the debtor complies with the court order, typically involving the payment of a sum of money. This may involve various methods, including: - Seizing and selling the debtor's assets. - Freezing funds in bank accounts. - Deducting a portion of the debtor's earnings. The specific enforcement methods available depend on factors like: - The type of judgment (for example, a County Court Judgment or a High Court Judgment). - The debtor's financial situation and assets. - The applicable legal regime for foreign judgments. The English legal system provides a variety of tools to compel debtors to fulfill their obligations**.** It's essential to understand that obtaining a judgment does not guarantee the debtor's compliance. Therefore, understanding enforcement is crucial for creditors seeking to recover what they are rightfully owed. It's also important to understand that** enforcing foreign judgments can be complex**, and it's highly recommended to seek legal advice from specialists in this area. Enforcement procedures vary depending on the applicable regime for the foreign judgment. ## What is the limitation period for enforcement of a foreign judgment? It's important to distinguish between a limitation period for taking a particular step, such as applying to register a judgment, and a limitation period that prevents taking any steps at all to enforce a judgment. **There is no limitation period which prevents a judgment creditor from taking *any* steps to enforce a foreign judgment.** However, **delaying enforcement may have certain consequences**, such as limiting the amount of interest that can be recovered. Here's a breakdown of how limitation periods work in the context of enforcing foreign judgments: - **No Statutory Bar on Enforcement:** There's no statutory limitation period within which a party must enforce a judgment debt. Enforcement proceedings fall within existing proceedings and are not subject to a limitation period. This means a judgment can potentially remain enforceable indefinitely. - **Six-Year Limitation on Bringing a Fresh Action:** The Limitation Act 1980 states that a fresh action to enforce a judgment cannot be brought after six years from the date the judgment became enforceable. This applies when the judgment creditor is initiating a new legal action to enforce the debt, rather than continuing enforcement proceedings within the original case. - **Permission Needed for Writs/Warrants after Six Years:** While there's no overall time limit for enforcement, CPR 83.2 requires court permission to issue writs and warrants of control, writs of execution, and warrants of delivery and possession if more than six years have passed since the judgment. Although no equivalent provision exists for other enforcement methods like charging orders or third-party debt orders, the court might consider the delay when deciding whether to grant such orders. - **Impact on Interest:** Delay can impact the amount of interest recoverable. In *Lowsley v Forbes*, the court held that interest recovery was limited to six years when enforcement occurred after six years had passed since the judgment. However, interest continues accruing on the sum secured by a charge until the principal is repaid. For instance, in *Ezekiel v Orakpo*, this principle was upheld, allowing for the recovery of interest accrued since the charging order, even if the initial judgment debt's interest was limited. - **Administration of Justice Act 1920 (AJA):** This Act stipulates a 12-month time frame for applying to register a judgment from a superior court in a reciprocating country. The court, however, may grant an extension if there are valid reasons for the delay. For example, if the applicant delayed enforcement due to the respondent’s assurances of payment, the court might allow registration outside the 12-month period. - **Foreign Judgments (Reciprocal Enforcement) Act 1933:** Under this Act, the time limit for applying to register the judgment is six years from the date of the foreign judgment. - **Common Law Treatment:** At common law, a foreign judgment is considered to create a contract debt, subject to the six-year limitation period for contractual claims. However, this doesn't mean the judgment is unenforceable after six years. It simply means the judgment creditor might need to initiate a new action to enforce the debt, potentially impacting the recoverable interest. **While no absolute deadline prevents enforcement actions, promptly enforcing foreign judgments is generally advisable.** Delay can result in limitations on interest recovery, asset dissipation, and procedural hurdles. ## Does a foreign judgment have to be for specified sum to be enforceable? To be enforceable in England and Wales, a foreign judgment **must be for a definite sum**, meaning the damages or costs awarded must have been assessed and quantified. This means that the judgment must specify a fixed amount of money that the judgment debtor is obligated to pay. Vague or undefined financial obligations are generally not enforceable until a definite sum is determined. In addition to being for a definite sum, a foreign judgment must also be: - **Final and Conclusive:** The judgment must be a final decision on the merits by the foreign court, even though it might be subject to appeal. A judgment that is still pending appeal or subject to further legal proceedings in the foreign jurisdiction is generally not considered final and conclusive. The rationale behind these requirements is to ensure that the English courts are enforcing a clear and unambiguous financial obligation that has been definitively determined by a competent foreign court. This promotes legal certainty and avoids potential conflicts with ongoing legal proceedings in other jurisdictions. ## How to enforce judgments from Scotland or Northern Ireland Enforcement of judgments from Scotland or Northern Ireland in England and Wales falls under the "UK regime" for enforcing judgments within the United Kingdom. The procedure for enforcing judgments from Scotland or Northern Ireland is set out in sections 18, 19 and Schedules 6 and 7 to the [Civil Jurisdiction and Judgments Act 1982](https://www.legislation.gov.uk/ukpga/1982/27/contents), [CPR 74.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part74#74.14) to [CPR 74.18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part74#74.14), and [PD 74A](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part74#74.14).  The relevant procedural rules are found in CPR 74.14 to CPR 74.18, and PD 74A. Here's a breakdown of the steps involved in enforcing a judgment from Scotland or Northern Ireland: **1. Obtaining the Necessary Certificate:** - The judgment creditor must first obtain a **certificate** from the originating court in Scotland or Northern Ireland. This certificate contains specific details of the judgment and confirms its enforceability. - For non-money judgments, a **certified copy** of the judgment is required instead of a certificate. - The certificate will only be issued if: The **time for appealing the judgment has expired**, or any appeals have been resolved. - **Enforcement of the judgment is not stayed or suspended**, and the time allowed for enforcement hasn't expired. **2. Applying for Registration in the High Court:** - The judgment creditor must apply to the **High Court in England and Wales** to register the judgment. - This application must be made **within six months** of the certificate's issuance date. - The application process differs slightly depending on the type of judgment: For **money judgments**, the application is made to the "proper officer" of the High Court. - For **non-money judgments**, the application is made directly to the court, without prior notice to the debtor. - However, both types of applications can be heard by a Master. - **Once registered, the judgment will have the same force and effect as a judgment obtained in England and Wales**. **3. Serving the Registration Order (for Non-Money Judgments):** - Specifically for **non-money judgments**, after the court grants permission to register, the judgment creditor must draw up a formal **order** reflecting this permission. - This registration order must then be **served on the judgment debtor**. **4. Potential Challenge by the Debtor:** - The judgment debtor can apply to **set aside the registration** of the judgment. - However, this can only be done if the **requirements of Schedules 6 or 7 of the CJJA 1982 were not met** during the registration process, such as the requirement for the prescribed certificate. - Another ground for setting aside registration is that the matter was previously adjudicated by a court with proper jurisdiction. This ground is discretionary, meaning the court can decide whether or not to set aside the registration. - Importantly, the **judgment cannot be refused recognition based on arguments that the original court lacked jurisdiction** according to private international law rules in England and Wales. Enforcing judgments from Scotland and Northern Ireland within the UK follows a relatively straightforward process. However, it's crucial to carefully follow the prescribed steps and timelines to ensure successful enforcement. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Lloyds HBOS compensation review scheme: What did HBOS do wrong? HBOS litigation claim? Source: https://lexlaw.co.uk/lloyds-hbos-compensation-review-scheme-what-did-hbos-do-wrong-hbos-litigation-claim-herbert-smith-fraud/ *The [Lloyds Banking Group](https://www.lloydsbankinggroup.com/)* HBOS compensation review scheme is due to reopen following Sir Ross Cranston's report that Lloyds' original customer review had ‘serious shortcomings’ while the [All-Party Parliamentary Group ("APPG")](https://www.parliament.uk/about/mps-and-lords/members/apg/) have submitted a complaint to the SRA against [Herbert Smith Freehills](https://www.herbertsmithfreehills.com/), Lloyds' legal advisers during the review. ## What is the HBOS fraud review compensation scheme? Stated in the submissions as "*one of the biggest frauds in English banking history*", the complaint concerns large-scale fraud which took place at Lloyds HBOS Reading branch estimated to have caused losses of around £1 billion. Six people, including directors of HBOS’ Impaired Assets Division in Reading, were sentenced to jail in January 2017 for defrauding and forcing vulnerable businesses customers into distress between 2003 and 2007 by referring the companies into a restructuring and turnaround unit. This led to excessive fees, charges and debts which the companies could not handle. The solicitors firm, Herbert Smith Freehills (HSF) was instructed by Lloyds to assist with the review of compensation for fraud victims. This was intended to be an independent review carried out by Professor Russel Griggs. Lloyds denied any liability for fraud and it appeared from the review scheme findings that Lloyds was the only victim of the fraud to have suffered financial loss and that all the business failures and all of the suffering were of Lloyds customers were due to their own making. ## Shortcomings in inadequate HBOS review scheme Following widespread public and Parliamentary concern about the review, a former High Court judge, Sir Ross Cranston investigated and published a [report](https://lexlaw.co.uk/wp-content/uploads/Sir-Ross-Cranstons-report-HBOS.pdf) stating that there were "serious shortcomings" in the review process. > Professor Griggs was placed in an impossible position and his appearance of independence was undermined by the way the process was structured. ## Were you a victim of the HBOS Reading fraud scheme? Sir Cranston found that the review process, which involved 1919 victims of the fraud, had been unsatisfactory and this has led to Lloyds being forced to set up another review (to be carried out under former High Court Judges Sir David Foskett or Dame Linda Dobbs) to examine the extent to which it may itself be said to have covered up the Reading scandal since the time it acquired HBOS. Sir Cranston has recommended that an independent body (‘the Panel’) be set up to reassess the direct and consequential losses suffered by victims of the HBOS fraud. ## HBOS complaint or litigation claim? If your business was a victim of the HBOS fraud scheme you may be entitled to have your complaint reassessed. Our specialist litigation team (who successfully assisted clients in the [FCA IRHP review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) and [RBS GRG complaints process](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/)) can be instructed to assist you in the review once the Panel has published its methodology and procedure. The legal basis for claims is as follows: - Breach of contractual terms specific to each case;- Breach of an implied duty of good faith whereby contracting parties have a duty of good faith under which they are obliged to treat each other honestly and responsibly;- Breach of fiduciary duties by directors including where the bank forces appointment of a director or otherwise acts as shadow director;- Unlawful means conspiracy where two or more parties agree to use unlawful means to injure the business customer causing the business damage;- Misrepresentation where HBOS make a false statement of fact to a customer, which induces the customer to enter into a contract;- Negligence in the form of a failure to treat HBOS customers with proper care and attention. Victims of HBOS should consider legal action promptly on their specific cases.  If businesses fail to do so then their legal rights will become time-barred by the [Limitation Act 1980](http://www.legislation.gov.uk/ukpga/1980/58), resulting in the complete loss of any legal right to compensation. Legal rights can be preserved by urgently instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings. ## Protecting Legal Rights against Lloyds HBOS It is an absolute must that victims of Lloyds HBOS or other bank's support units protect their legal rights.  This is a sensible course of action when a business is facing a high value dispute with a major bank.  If the bank refuses to offer reasonable redress following a complaints process, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist HBOS solicitors to issue a protective claim form or by instructing HBOS litigation solicitors to prepare and agree a carefully written standstill agreement. --- # Committal Proceedings Source: https://lexlaw.co.uk/new-rules-contempt-of-court-committal-proceedings-litigation-specialist-solicitors/ The [third amendment to the Civil Procedure Rules 2020](https://lexlaw.co.uk/wp-content/uploads/New-Committal-proceedings-Rules.pdf) will come into effect from 1 October 2020.  Following a public consultation, extensive revisions were undertaken to condense the previous rules and to set out a uniform procedure.  The new Part 81 reduces the number of rules from 38 to 10. ## What are committal proceedings? A committal application or proceedings are made in response to a contempt of court or a writ of sequestration. The Court must give permission to a party who seeks to make a committal application as per PD 81.11 which usually will be commenced via a Part 8 claim form or an application under CPR 23. ## What is contempt of court? The law regarding contempt of court has developed as a means for the courts to act to prevent conduct that tends to: obstruct, prejudice or abuse the administration of justice, either in relation to a particular case or generally. There are predominately two types of contempt of court: - **Contempt by disobedience** - for example, disobeying or breaching a court order or judgment.- **Contempt by interference **-for example, disrupting any court proceedings or the court process itself. You can read below how to make a committal application for contempt of court. ## What are the new rules? 81.1. - This Part sets out the procedure to be followed in proceedings for contempt of court (“contempt proceedings”).- This Part does not alter the scope and extent of the jurisdiction of courts determining contempt proceedings, whether inherent, statutory or at common law.- This Part has effect subject to and to the extent that it is consistent with the substantive law of contempt of court. ##### Interpretation 81.2.  In this Part - “claimant” means a person making a contempt application;- “contempt application” means an application to the court for an order determining contempt proceedings; - “defendant” means the person against whom the application is made;- “order of committal” means the imposition of a sentence of imprisonment (whether immediate or suspended) for contempt of court;- “penal notice” means a prominent notice on the front of an order warning that if the person against whom the order is made (and, in the case of a corporate body, a director or officer of that body) disobeys the court’s order, the person (or director or officer) may be held in contempt of court and punished by a fine, imprisonment, confiscation of assets or other punishment under the law. ## How do you make a contempt application? 81.3. - A contempt application made in existing High Court or county court proceedings is made by an application under Part 23 in those proceedings, whether or not the application is made against a party to those proceedings.- If the application is made in the High Court, it shall be determined by a High Court judge of the Division in which the case is proceeding. If it is made in the county court, it shall be determined by a Circuit Judge sitting in the county court.- A contempt application in relation to alleged interference with the due administration of justice, otherwise than in existing High Court or county court proceedings, is made by an application to the High Court under Part 8.- Where an application under Part 8 is made under paragraph (3), the rules in Part 8 apply except as modified by this Part and the defendant is not required to acknowledge service of the application.- Permission to make a contempt application is required where the application is made in relation to— (a)interference with the due administration of justice, except in relation to existing High Court or county court proceedings; (b)an allegation of knowingly making a false statement in any affidavit, affirmation or other document verified by a statement of truth or in a disclosure statement. - If permission to make the application is needed, the application for permission shall be included in the contempt application, which will proceed to a full hearing only if permission is granted. - If permission is needed and the application relates to High Court proceedings, the question of permission shall be determined by a single judge of the Division in which the case is proceeding. If permission is granted the contempt application shall be determined by a single judge or Divisional Court of that Division.- If permission is needed and the application does not relate to existing court proceedings or relates to criminal or county court proceedings or to proceedings in the Civil Division of the Court of Appeal, the question of permission shall be determined by a single judge of the Administrative Court. If permission is granted, the contempt application shall be determined by a Divisional Court. ## What are the requirements of a contempt application? 81.4. - Unless and to the extent that the court directs otherwise, every contempt application must be supported by written evidence given by affidavit or affirmation.- A contempt application must include statements of all the following, unless (in the case of (b) to (g)) wholly inapplicable— (a)the nature of the alleged contempt (for example, breach of an order or undertaking or contempt in the face of the court); (b)the date and terms of any order allegedly breached or disobeyed; (c)confirmation that any such order was personally served, and the date it was served, unless the court or the parties dispensed with personal service; (d)if the court dispensed with personal service, the terms and date of the court’s order dispensing with personal service; (e)confirmation that any order allegedly breached or disobeyed included a penal notice; (f)the date and terms of any undertaking allegedly breached; (g)confirmation of the claimant’s belief that the person who gave any undertaking understood its terms and the consequences of failure to comply with it; (h)a brief summary of the facts alleged to constitute the contempt, set out numerically in chronological order; (i)that the defendant has the right to be legally represented in the contempt proceedings; (j)that the defendant is entitled to a reasonable opportunity to obtain legal representation and to apply for legal aid which may be available without any means test; (k)that the defendant may be entitled to the services of an interpreter; (l)that the defendant is entitled to a reasonable time to prepare for the hearing; (m)that the defendant is entitled but not obliged to give written and oral evidence in their defence; (n)that the defendant has the right to remain silent and to decline to answer any question the answer to which may incriminate the defendant; (o)that the court may proceed in the defendant’s absence if they do not attend but (whether or not they attend) will only find the defendant in contempt if satisfied beyond reasonable doubt of the facts constituting contempt and that they do constitute contempt; (p)that if the court is satisfied that the defendant has committed a contempt, the court may punish the defendant by a fine, imprisonment, confiscation of assets or other punishment under the law; (q)that if the defendant admits the contempt and wishes to apologise to the court, that is likely to reduce the seriousness of any punishment by the court; (r)that the court’s findings will be provided in writing as soon as practicable after the hearing; and (s)that the court will sit in public, unless and to the extent that the court orders otherwise, and that its findings will be made public. ## How do you serve a contempt application? 81.5. - Unless the court directs otherwise in accordance with Part 6 and except as provided in paragraph (2), a contempt application and evidence in support must be served on the defendant personally.- Where a legal representative for the defendant is on the record in the proceedings in which, or in connection with which, an alleged contempt is committed— (a)the contempt application and evidence in support may be served on the representative for the defendant unless the representative objects in writing within seven days of receipt of the application and evidence in support; (b)if the representative does not object in writing, they must at once provide to the defendant a copy of the contempt application and the evidence supporting it and take all reasonable steps to ensure the defendant understands them; (c)if the representative objects in writing, the issue of service shall be referred to a judge of the court dealing with the contempt application; and the judge shall consider written representations from the parties and determine the issue on the papers, without (unless the judge directs otherwise) an oral hearing. ## What happens where no application is made? 81.6. - If the court considers that a contempt of court (including a contempt in the face of the court) may have been committed, the court on its own initiative shall consider whether to proceed against the defendant in contempt proceedings.- Where the court does so, any other party in the proceedings may be required by the court to give such assistance to the court as is proportionate and reasonable, having regard to the resources available to that party.- If the court proceeds of its own initiative, it shall issue a summons to the defendant which includes the matters set out in rule 81.4(2)(a)-(s) (in so far as applicable) and requires the defendant to attend court for directions to be given.- A summons issued under this rule shall be served on the defendant personally and on any other party, unless the court directs otherwise. If rule 81.5(2) applies, the procedure there set out shall be followed unless the court directs otherwise. ## Directions for hearing of contempt proceedings 81.7. - The court shall give such directions as it thinks fit for the hearing and determination of contempt proceedings, including directions for the attendance of witnesses and oral evidence, as it considers appropriate.- The court may issue a bench warrant to secure the attendance of the defendant at a directions hearing or at the substantive hearing.- The court may not give any direction compelling the defendant to give evidence either orally or in writing. ## Hearings and judgments in contempt proceedings 81.8 - In accordance with rule 39.2, all hearings of contempt proceedings shall, irrespective of the parties’ consent, be listed and heard in public unless the court otherwise directs.- Advocates and the judge shall appear robed in all hearings of contempt proceedings, whether or not the court sits in public.- Before deciding to sit in private for all or part of the hearing, the court shall notify the national print and broadcast media, via the Press Association.- The court shall consider any submissions from the parties or media organisations before deciding whether and if so to what extent the hearing should be in private.- If the court decides to sit in private it shall, before doing so, sit in public to give a reasoned public judgment setting out why it is doing so.- At the conclusion of the hearing, whether or not held in private, the court shall sit in public to give a reasoned public judgment stating its findings and any punishment.- The court shall inform the defendant of the right to appeal without permission, the time limit for appealing and the court before which any appeal must be brought.- The court shall be responsible for ensuring that judgments in contempt proceedings are transcribed and published on the website of the judiciary of England and Wales. ## What are the powers of the court in contempt proceedings? 81.9. - If the court finds the defendant in contempt of court, the court may impose a period of imprisonment (an order of committal), a fine, confiscation of assets or other punishment permitted under the law.- Execution of an order of committal requires issue of a warrant of committal. An order of committal and a warrant of committal have immediate effect unless and to the extent that the court decides to suspend execution of the order or warrant.- An order or warrant of committal must be personally served on the defendant unless the court directs otherwise.- To the extent that the substantive law permits, a court may attach a power of arrest to a committal order.- An order or warrant of committal may not be enforced more than two years after the date it was made unless the court directs otherwise. ## How do you apply to discharge committal orders? 81.10. - A defendant against whom a committal order has been made may apply to discharge it.- Any such application shall be made by an application notice under Part 23 in the contempt proceedings.- The court hearing such an application shall consider all the circumstances and make such order under the law as it thinks fit. --- # Enforcement: LPA Receivership: Appointing LPA Receiver to recover debts Source: https://lexlaw.co.uk/appointment-lpa-receiver-debt-recovery-lender-borrower-default-property-sale-security-insolvency/ *Often in loan agreements, a property is listed as collateral or security and if the loan is breached, the Law of Property Act 1925 sets out the rights and responsibilities of lenders and borrowers in enforcing the terms of the loan agreement. One of these options is to appoint an LPC Receiver to administer the sale and management of the property to recover any debts owed. * ## What is an LPA Receiver? When a company or individual is in default of the terms of a loan agreement e.g. by failing to make mortgage repayments, the fixed charge holder or mortgagee can enforce their security and recover funds by appointing a receiver under [section 109 of the Law of Property Act ("LPA")](https://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/109) to take control of the property. The process of LPA Receivership gives an LPA Receiver powers to either manage or sell the property to repay the lender. Anyone can be appointed as an LPA Receivers however they are are often licensed insolvency practitioners and surveyors. ## What does an LPA receiver do? An LPA Receiver will take control of the secured asset on behalf of the lender and essentially become the medium between the parties Steps taken by a receiver to recover debts may include: - Securing and insuring the property - Taking possession of the property - Managing the property i.e. rent payments- Diverting rental income and minimising any losses - Arranging the sale of the property - Distribution of proceeds of sale to the relevant parties ## When can i appoint an LPA Receiver? An appointment of a Receiver under [section 101 of the Law of Property Act (LPA)](https://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/101) may only take place if the mortgage money has become due and the power of sale is exercisable. This will be for the lender to show in the loan documents. ## How do I appoint an LPA Receiver? An LPA receiver can however be appointed fairly quickly and [notice](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/288876/RM01_notice_of_appointment_of_an_administrative_receiver_receiver_or_manager.pdf) must be given to [Companies House](https://www.gov.uk/government/organisations/companies-house) of the the appointment of an administrative receiver. The knowledge and experience of and the relationship with the Receiver is important to ensure a smooth and efficient process of enforcement. It is therefore sensible to consider the appointment of a receiver carefully and seek legal advice in doing so. We repeatedly work with a range of LPA Receivers and we can assist you in selecting a suitable LPA Receiver for your case. ## What is a validity review? The registrar needs to be satisfied that the power of sale, and hence power to appoint an LPA receiver has arisen (even if the power has not become exercisable). Any challenge to the validity of the mortgage or debenture (which will affect the power to appoint) that is within the actual knowledge of the Law of Property Act receiver or the applicant must be disclosed to the registrar. When appointing an LPA Receiver, a review of the various loan documents must be carried out to ensure the appointment of the receiver is valid. This validity review should be carried out by solicitors with the necessary experience, particularly given their knowledge and experience in analysing the relevant complex legal documents. ## Instruct specialist insolvency solicitors Our specialist insolvency team can advise you on your case and the appointment of a receiver if suitable including preparing deeds of appointment and validity reviews. --- # How do I Start Court Proceedings? Source: https://lexlaw.co.uk/how-do-i-start-court-proceedings-litigation-step-by-step-guide-second-opinion/ [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## How do I start court proceedings? You start court proceedings by issuing a [claim form](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/). At the same time, you can set out more details of your claim in [Particulars of Claim](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/) which can be filed and served at the same time or later (this is subject to strict deadlines). Once this has happened, the case has started and the Defendant will be under strict deadlines to file a Defence. ## Are the pre-action protocols important? Yes. Before proceedings are commenced the court expects the parties to engage in pre-action correspondence and follow the relevant pre-action protocol for the particular type of claim. Usually, this involves setting out your case in a [letter before claim](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/). ## What does pre-action mean? Pre-action rules govern the conduct of the parties and what steps should be taken before a claim is issued. Non-compliance with litigation [pre-action protocols](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) may mean a party is later punished by the court in terms of costs. Before proceedings are commenced, the parties are required to act reasonably in exchanging information and documents relevant to the dispute. The aim is to avoid the need for legal proceedings by encouraging resolution of the dispute by other means. ## What are the aims of the pre-action protocols? The objectives of pre-action protocols are to: - Encourage the exchange of early and full information about a prospective claim.- Enable parties to avoid litigation by agreeing a settlement of a claim before the commencement of proceedings.- Support the efficient management of proceedings where litigation cannot be avoided. ## What is the purpose of the pre-action protocol? The parties are expected to make appropriate attempts to resolve the dispute, whether by alternative dispute resolution (ADR), negotiations, offers of settlement or a combination of these methods. Settlement is usually a sensible option for all parties to consider at the pre-action stage, in order to save the costs of litigation and to eliminate risk. If proceedings are commenced, then the CPR and the courts encourage the parties to consider settlement options during the course of the litigation. ## What if there isn't a relevant pre-action protocol to follow? Where there is no relevant pre-action protocol, the parties should exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. The steps will usually include— (a) the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated; (b) the defendant responding within a reasonable time – 14 days in a straight forward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and (c) the parties disclosing key documents relevant to the issues in dispute. ## Should I write a letter before claim? A letter before claim puts a potential defendant on notice that proceedings will be issued against them. If a dispute proceeds to litigation, the court will expect the parties to have complied with a relevant [pre-action protocol ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct)or this Practice Direction. The court will take into account non-compliance when giving directions for the management of proceedings (see [CPR 3.1(4) to (6)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.1)) and when making orders for costs (see [CPR 44.3(5)(a)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3)). ## What do I write in a letter before claim? Before court proceedings are commenced, a claimant should consider sending a Letter of Claim to the defendant. Whilst each claim will require different information in the Letter of Claim as a general guide it should contain the following information: - your name and address;- concise detail of the claim;- summary of the facts;- if the claimant is seeking to [recover debt](https://windinguppetitionsolicitors.co.uk/debt-recovery-claims-pre-action-protocol/) then they should list all of these debts;- a reasonable time limit for the defendant to reply, usually 14 days;- a clear statement that you will initiate court proceedings if you do not receive a reply. ## What is a Claim Form? The claimant starts proceedings by issuing a claim form and paying the required fee. If the claim is for a sum of money, the fee is between £35 and £10,000, depending on the value of the claim. If the claim is for any remedy other than the recovery of a sum of money, then a fee of £465 or £175 is payable in the High Court or a county court, respectively. ## What do I put in a Claim Form? The claim form contains a concise statement of the nature of the claim and the remedy sought (for example, damages). Where the claimant is making a claim for money, the claim form must also include a statement of value of the amount claimed. ## When should a Claim Form be served? The claim form must be served on the defendant. The general rule is that service must be within four months after the date of issue, where the claim form is served within the jurisdiction, and within six months of the date of issue, where it is served out of the jurisdiction. ## What is the Particulars of Claim? The particulars of claim must set out full details of the claim, including the alleged facts on which the claim is based. The particulars may be included on the claim form. However, in a complex claim they are usually contained in a separate document. ## When are Particulars of Claim served? The particulars of claim must be served on the defendant within 14 days of service of the claim form in most courts (or within 28 days of service of the acknowledgment of service in the Commercial Court). Where a claim form is served at the end of its four or six months expiry period the particulars must be served at the same time.  ## Do I need to instruct a barrister to draft particulars of claim? In some cases, it may be appropriate to instruct an independent barrister or counsel before, or shortly after, proceedings have commenced. Working in conjunction with our [litigation solicitors](https://lexlaw.co.uk/our-people/), specialist independent counsel can give advice on the merits and assist with the preparation of the statement of case. ## Need a second opinion in your litigation? ## What is a limitation period? The law sets out deadlines for bringing legal claims, which are referred to as limitation periods. The purpose of limitation periods is to prevent legal claims from being brought too long after the cause of action accrued. The length of the limitation period varies with different types of legal claim. ## Why is limitation in litigation important? Limitation is not something that should be ignored. Where a party has a strong case, but the limitation period has expired, the claim will be likely to fail. Even in unusual circumstances, where a party is prevented from issuing its claim in time for reasons beyond its control, the court has no discretion to extend the limitation period in this type of claim. It is, therefore, crucial that limitation issues are considered at the outset of any potential claims. ## When does time start running on a claim? Once the cause of action has accrued, the time for bringing a legal claim will start to run and the limitation period will begin. In order to stop time running before the expiration of the limitation period in relation to a particular cause of action, you would need to either issue a claim form at Court or enter into a standstill agreement with your opponent. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Tenancy deposit protection litigation Source: https://lexlaw.co.uk/tenancy-deposit-protection-litigation-property-landlord-tenant-disputes-unpaid-rent-deposit-recovery/ Landlords must where necessary and required to do so, protect their tenants' deposit by putting them into a certified deposit scheme and there can be significant financial consequences for failing to do so. It is important for tenants to understand the benefits of a protected deposit and the implications of the same when occupying and leaving a property. *Our specialist property litigation team can advise in landlord tenant disputes including tenancy deposits, unpaid rent* *and property damage. We don't work on small value cases and have a minimum fee of £1750 plus VAT to review your case papers and advise in a video conference (this covers the cost of a solicitor and a barrister for this work).* ## What is tenant deposit protection (TDP)? Tenants usually have to pay a 'tenancy deposit' to their landlord when occupying a property which will usually be equivalent to four weeks' rent but no more than five weeks' rent or six weeks' rent if the deposit is more than £50,000. If there is an assured shorthold tenancy, the tenant's deposit should be in a protected deposit scheme. There are deadlines by which a landlord must protect a deposit depending on whether you paid before or after 6 April 2007. ## What is a certified deposit protection scheme? A certified deposit protection scheme is a government-approved program designed to safeguard tenants' deposits. If your assured shorthold tenancy (AST) started after 6 April 2007 Landlords are required to place their tenants' deposits into one of these 3 schemes to protect the tenants' interests. - [MyDeposits](https://www.mydeposits.co.uk/) - [Deposit Protection Service](https://www.depositprotection.com/)  - [Tenancy Deposit Scheme](https://www.tenancydepositscheme.com/) If your tenancy is not an assured shorthold tenancy, the landlord may accept valuable items (like a car or watch) as a deposit instead of money. However, these items will not be protected by a deposit protection scheme. To ensure you receive your deposit back, you must adhere to the terms of your tenancy agreement, avoid damaging the property, and pay your rent and bills on time. Your landlord or letting agent is obligated to place your deposit in a certified scheme within 30 days of receiving it. The UK government has issued guidance on tenancy deposit protection [here](https://www.gov.uk/tenancy-deposit-protection). ## My tenancy deposit is unprotected It is not compulsory for landlords to put all tenancy deposits into protection schemes however if a landlord has failed to protect a deposit the tenant may be entitled to compensation of up to 3 times the value of the deposit. A landlord will have to repay the deposit back to a tenant before they can serve a section 21 notice for eviction, if the deposit wasn't protected or was not protected by the deadlines above. ## Does a tenancy deposit need to be protected? It is not compulsory for all deposits to be protected. A landlord may have strong grounds for not returning a deposit and any disputes may have to be resolved through litigation if the deposit was not protected nor was it necessary to do so. If you are currently engaged in a landlord, tenant dispute, get in touch with our property litigation team to assess your options. ## My landlord failed to return my deposit If a tenant is leaving the property and has paid all of the rent due to the landlord, and left the property in good condition, in compliance with the lease agreement, the landlord should return the tenant's deposit. Any deductions made by a landlord must be reasonably and evidenced by any financial loss they have suffered i.e. if the tenant has damaged the property or for any cleaning or service fees. We can consider the lease agreement and relevant legislation and advise tenants and landlords on property disputes. ## Successful case study: Litigation concerning an unprotected deposit Our client was a tenant engaged in a property dispute with her former landlord as a litigant in person. Upon vacating a property she expected and requested the return of her deposit from her landlord but to no avail. She instructed us to assess her case and in advising her throughout the litigation, we subsequently obtained the return of her deposit in full from the landlord, together with her costs. *Our specialist property litigation team can advise in landlord tenant disputes including tenancy deposits, unpaid rent* *and property damage. We don't work on small value cases and have a minimum fee of £1750 plus VAT to review your case papers and advise in a video conference (this covers the cost of a solicitor and a barrister for this work).* --- # Bankrupt disputes against bridge lenders and annulment advisers Source: https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/ *Were you made bankrupt and sought assistance from or approached by a claims management company? Have you obtained bridging finance in order to repay your debts in bankruptcy to apply for an annulment? Are you now unable to repay the bridging loan which has high interest rates? We are specialist bridging loan lawyers who can assist you in your dispute with the lender, broker or adviser. * ## Bankruptcy annulment assistance from non-legal representatives, advisers and bridging brokers Once you are declared bankrupt, there are restrictions you need to comply with and you may not become a director. Bankruptcy can also affect your credit score and your ability to obtain future financing. Cancelling your bankruptcy puts you back in the same position legally as if the bankruptcy order had never been made. any property or belongings that haven't yet been disposed of will be given back to you You can apply to annul your bankruptcy on the basis that all of your debts and expenses have been repaid in full or to the satisfaction of the Court. This is where third parties such as claims management companies will assist you in obtaining funds to repay your debts. This is commonly done by obtaining a bridging loan or other short term finance. ## What is a bridging loan? A bridging loan is a temporary short term financing option normally with a maturity of less than 18 months and which is usually secured against a property. Bridging finance provides quick access to, what can be, large sums of money ordinarily used by a borrower purchasing a property or repay debts e.g. debts in a bankruptcy. Bridging loans are ordinarily a financing means of last resort given that they come with much higher interest rates than traditional mortgages and are typically offered by advisers, specialist bridging finance companies and mortgage brokers and are not normally offered by high street banks. ## What if I cannot afford to repay my bridging loan after the annulment? Bridging loans often have very high interest rates and even higher default rates. Failure to repay a bridge loan will likely lead to repossession and very significant adverse costs consequences. Bridging agreements can be complex financial agreements and it is important to seek legal advice before entering into such an arrangement. ## Is the bridging loan secured on your residential property? Quite often, a bridging loan will be secured on residential property as a bankrupt's only asset. This means failure to repay the loan can lead to possession proceedings. There are certain rules with which regulated companies need to comply and advice that needs to be given when proposing a finance arrangement to be secured on a residential property. You should seek legal advice before entering into any agreement which necessitates a charge to be put on your property, especially a residential property in which you personally live. ## Examples of Bridging Loan Mis-selling claims ### Bridging loans provided to inexperienced bankrupt borrowers An inexperienced borrower can include for example a borrower who is inexperienced with financial services, has poor management of money or a history of bad debts or a borrower with limited grasp of English. In that case, undue influence or unconscionable bargain provides an equitable remedy to protect those from abuse from stronger parties under contract law. ### Undisclosed links between brokers and bridging loan lenders There are situations where an unscrupulous broker will recommend a borrower get the bridging loan from a sister company which will provide the loan financing. Often bankruptcy annulment advisers will refer the bankrupt to a connected bridging finance company to obtain funds and will benefit from a hefty commission. In this case, borrowers may have a claim against the broker for a breach of the common law duty to advise. Moreover, particulars of claim would also include a claim for misrepresentation as the lender is really acting as the borrower’s agent when the true agency was between the lender and the broker. ### Bridging loans to individuals by lenders without a consumer credit licence Loans made by lenders without a [consumer credit licence](https://www.fca.org.uk/firms/consumer-credit-register) to individuals such as bankrupts are illegal under the [Consumer Credit Act 1974](http://www.legislation.gov.uk/ukpga/1974/39/contents) provisions, which are now found in the [Code of Conduct (COCON) section of the FCA Handbook](https://www.handbook.fca.org.uk/handbook/COCON.pdf). If a bridging loan is provided to a bankrupt individual without a consumer credit licence then this may be unlawful (regardless of the purpose for which the loan was made). ### Bridging loans which make it difficult for the bankrupt borrower to redeem Borrowers in loan agreements which have onerous redemption clauses potentially have the equitable right to argue that a court should not enforce the terms of a contract that make it difficult to repay. This equitable doctrine is known as *“clogs on the equity of redemption”*, Lindley M.R. in *[Santley v Wilde](https://swarb.co.uk/santley-v-wilde-ca-1899/)*[ (1899) 2 Ch 474](https://swarb.co.uk/santley-v-wilde-ca-1899/) provided the first expounding of this equitable principle: > “Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that ‘once a mortgage always a mortgage” What may be considered to amount to a clog includes onerous penalty clauses or unconscionable repayment provisions (such as redemption only permitted if one lump sum payment is made), may be considered to be caught by the equitable doctrine. If you have been recommended or encouraged to enter into into a bridging loan which makes it difficult to redeem, then [seek legal advice as soon as possible](https://lexlaw.co.uk/) as you may have a claim once the loan agreement has been analysed, the circumstances surrounding the parties entering into the loan have been ascertained, the amount advanced quantified and the nature of the transaction understood. ### Unsigned documents, documents signed in blank and altered documentation There have been cases where borrowers of bridging finance have alleged that a lender has inappropriately used a document signed in blank. Signing any blank form is not recommended at all, which can be fraudulently used against a borrower. When signing in blank, the lender acts as an agent to to fill in the details agreed to by the borrower. However, the key question is the extent of such agency and it is a factual question for the court to ascertain the scope of the agency. The key takeaway is that a broker or lender cannot receive a document signed in blank from a borrower and do whatever they want with it. ## Why should you use specialist lawyers instead of a claims management company? Claims Management Companies (CMCs) are only regulated by the Ministry of Justice and are not law firms made up legally qualified solicitors and barristers. CMCs can only complain to the Financial Ombudsman Service (FOS). They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and they do not have the required specialist knowledge and understanding of the insolvency rules when making applications relating to bankruptcy. ## Why you should use specialist bankruptcy lawyers We are leading experts specialising in Bankruptcy Petitions. We regularly assist with issuing petitions or setting aside statutory demands or defending petitions. We also specialise in making bankruptcy annulment applications. We can guide you through the minefield of complex [bankruptcy rules and procedure](http://www.legislation.gov.uk/uksi/2016/1024/part/10/made) and help your company to manage the entire process. We have years of experience in negotiating with creditors and their solicitors (in particular HMRC). We regularly represent our clients in the High Court/Bankruptcy Court and successfully obtain adjournments (e.g. to allow time to negotiate and settle or to defend a bankruptcy petition) or apply for annulment. ## Can my bankruptcy be cancelled? If you are made bankrupt, your assets, including your home (if you are the sole owner), will be transferred to your trustee in bankruptcy. This will not be reversed when you are discharged. You can however apply to have your bankruptcy annulled and it will be treated as if it had never happened and your assets will be restored to you. You can apply to have your bankruptcy annulled on the following grounds: - The bankruptcy order should not have been made;- The bankruptcy debts and expense of the bankruptcy have all been paid or secured to the satisfaction of the court; or- You have entered into an Individual Voluntary Arrangement since the bankruptcy order was made. ## How do I annul my bankruptcy? To annul your bankruptcy you must submit an application to the court, which will include a witness statement and evidence. You will also be required to pay a [court fee](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/728133/ex50-eng.pdf). The court will then list your application for a hearing. It is important you get legal advice throughout the process and a legal representative to represent you at any hearing in order to get the best possible outcome and your bankruptcy successfully annulled. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in high value bridging finance mis-selling disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers. --- # Aviva mis-selling: Hidden swaps and break costs in fixed rate loans Source: https://lexlaw.co.uk/aviva-gp-loan-mis-selling-hidden-swaps-and-break-costs-in-fixed-rate-loans/ *Fixed Rate Loans mis-selling, to SMEs including GPs, has come to light due to massive break costs (also called early redemption charges (ERCs) early redemption fees, exit fees or penalties). These arise because insurers such as Aviva have hidden complex derivatives (with significant contingent liabilities) in a ‘loan wrapper’ but have not explained this to the customer. [Norwich Union](https://www.aviva.com/newsroom/news-releases/2009/05/norwich-union-becomes-aviva-2/) and [Aviva](https://www.aviva.co.uk/) ([GPCF](https://www.avivainvestors.com/en-gb/capabilities/gp-finance/)) have all sold Fixed Rate Loans.* ## Mis-sold Aviva loans to SMEs and General Practitioners [The FCA](https://www.fca.org.uk/) launched an [investigation](https://lexlaw.co.uk/wp-content/uploads/FCA-scrutinising-interest-rate-swap-sales-to-doctors-_-Financial-Times-12-sept-2018.pdf) into the mis-selling of complex financial derivatives to SMEs including GP practices and individual doctors. ERCs or break costs were the primary problem. Many GP practices were approached by big lenders such as [Aviva](https://www.avivainvestors.com/en-gb/contact/gp-finance/) to finance surgery premises. The FCA's investigation relates to [](https://lexlaw.co.uk/solicitors-london/clydesdale-yorkshire-bank-nab-complaint-review-tbl-fixed-rate-tailored-business-loan-missold-hidden-swap-irhp/)[fixed rate loans or mortgages](https://lexlaw.co.uk/solicitors-london/clydesdale-yorkshire-bank-nab-complaint-review-tbl-fixed-rate-tailored-business-loan-missold-hidden-swap-irhp/) packaged with [hidden interest rate swaps](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#Aviva-Early-Repayment-Fee) within the loans. The FCA has concluded that some lenders such as RBS had "heavily targeted' GPG practices and had potentially prevented “hundreds of millions of pounds” from going back to the healthcare system. Many general practitioners will lack sufficient knowledge and understanding of these complex financial products and furthermore, were unaware of the hidden interest rate swaps at the time of entering into the loan. Often the swaps together with break costs were not brought to the attention of the GP customer at the time and the GP would have relied upon the advice of the [Aviva representative or an independent adviser.](https://www.avivainvestors.com/en-gb/capabilities/gp-finance/faqs/) ## Early Repayment Charges/Fees (ERC) & Break Costs As a result, under these swaps, customers were forced to make substantial payments to lenders such as Aviva, to the detriment of their businesses. Doctors were and often are still unable to terminate these swaps without paying large (and previously undisclosed) breakage costs (or Early Repayment Fees) to the lenders.The break costs, described as "repayment fees" or "exit fees" are prohibitively expensive and in turn lead to difficulties for future practice planning such as bringing in new partners. Insurers like Aviva (Norwich Union, previously GP Corporate Finance) the Fixed Rate Loan documentation will have a generic clause referring to Early Repayment Fees but which does not explain the method of calculation – perhaps because that method involves reference to Gilts-linked or Interest Rate Derivatives? ## Aviva's unexplained "early repayment fee" The clause below is meant to explain to borrowers (often doctors who are financially and legally unsophisticated) what the ‘Early Repayment Fee’ is but it does not explain it at all nor warn that the costs could be substantial as they are linked to derivatives. > The **Early Repayment Fee** is an amount sufficient fully to indemnify us against any reduction in the rate of return that we expect to receive on our investment in the Loan as a direct or indirect result of the Early Repayment. The amount of indemnity will be ascertained in accordance with our usual method of calculation from time to time. > > > GPFC / Norwich Union / Aviva Standard Condition 10.2.2 ‘explaining’ an “Early Repayment Fee” Those break costs could be several hundred thousand pounds if not millions – all dependant on the cost of breaking a hidden derivative. Most doctors thought this was clause was simply an ‘early redemption penalty’ which might cost a few to several thousand pounds like in a domestic mortgage because of the above vague wording with no warning the costs could be substantial. Some break costs amount to nearly 60% of the loan amount. > **Can I repay my mortgage early?** > > > > > > Yes, you can repay your mortgage early, although there may be costs incurred in doing so. If your mortgage is on a variable rate of interest you can repay at any time without incurring an early repayment fee. If your mortgage is on a fixed rate of interest, it is likely an early repayment fee will be payable. Please contact us to request an illustrative repayment quotation. > > > [GP Finance FAQs, Aviva](https://www.avivainvestors.com/en-gb/capabilities/gp-finance/faqs/) We have successfully obtained redress via [High Court swaps mis-selling litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) and via the [FCA agreed IRHP Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) on behalf of SMEs ranging from [family run businesses](https://web.archive.org/web/20140916060007/http://invezz.com/news/equities/6046-lloyds-share-price-details-of-swap-mis-selling-settlement-made-public) or [local retail companies](https://youtu.be/v_JHfC82N-I) to [listed PLCs](https://web.archive.org/web/20140731123938/http://www.bloomberg.com/article/2014-05-29/aTG0DdTNe1E4.html) and offshore companies.  We specialise in hidden derivatives litigation and have issued more court claims than any other law firm. Many hidden swaps cases settle via out of court settlements with banks and insurers doing this in order to prevent the setting of a case precedent which would cost much more. ## What are ‘Hidden Swaps’ or embedded derivatives? Embedded swaps – also known as hidden swaps – are fixed rate or tailored business loans that contain embedded complex financial derivative products.  With embedded swaps, unlike with standalone swaps, the derivative product (i.e. the swap) and the loan are marketed and sold as part of the same product. Major lenders, insureres, banks and building societies promoted these embedded swaps to their customers as ordinary business loans without explaining that these “loans” also contained complex financial derivative products, which bore significant risks to customers.  As a result, customers are now finding that they are unable to exit these “loans” without paying prohibitive (and previously undisclosed) breakage costs to their banks. > In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. > > > [Warren Buffet, Berkshire Hathaway annual report, 2002](https://www.berkshirehathaway.com/letters/2002pdf.pdf) ## I wasn't aware of the hidden interest rate swap and excessive early repayment fee If you are a GP, you may have been mis-sold the loan if: - your fixed rate loan was packaged with an interest rate swap of which you were unaware: - you were aware of the interest rate swap but you were given inadequate information, unsuitable advice and the risks of the same were not explained to you; - the options and penalties associated with refinancing were not explained to you; and/or - you were not provided simple numerical illustrations of early breakage/repayment costs. ## Why use a Specialist Hidden Rate Swap Solicitor? Derivatives are a complex subject matter which most generalist lawyers simply won’t be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks.  This experience has been gained not only at other leading city law firms but at the legal and compliance departments of the banks themselves. Our team will ensure your interest rate swap mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the hidden swap. This usually means a refund of all balancing payments and escaping or recovering the contingent liability (ie the break fee). We work to achieve our client’s interests by attempting to negotiate with the banks wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. ## Call us about your Fixed Rate Loan case  If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, are able to assist. Get in touch so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading financial services mis-selling litigation solicitors and barristers. Just call or email us now for a free initial telephone consultation; our legal team are waiting to help. --- # Injunctive Relief Source: https://lexlaw.co.uk/injunctive-relief-interim-remedies-urgent-injunction-freezing-order-second-opinion-litigation-advice/ *Our [London lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are based minutes from the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) and can be deployed with speed as the client’s needs and case demands. We ensure that we provide the best possible outcome for our clients by conducting in-depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense.* *During this current time of uncertainty, can an applicant still apply for an urgent injunction at the court? The answer is yes. You can still get an urgent injunction and the courts are still open for business.* *We ensure that we provide the best possible outcome for our clients by conducting in-depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense.* Information in this article:- What is an injunction? - What are the different types of injunction? - Can I apply for injunctive relief?- Do I need to give an undertaking in order to get an injunction?- What is a freezing order?- What are the consequences of a freezing injunction?- How do I get a freezing order?- Are the courts open to hear an urgent injunction?- How much does an injunction cost? - Specialist Injunction Solicitors in London ## What is an injunction?  An injunction is a Court order that will prohibit a party from taking a particular action which is called a prohibitory action; or may require them to take a particular action which is called a mandatory injunction. Usually the first step is to obtain an interim injunction which will usually be granted pending a further hearing or until a further hearing or until a full trial of the dispute.  If a party breaches an injunction the party can be held in contempt of Court which in some circumstances may lead to imprisonment.  ## What are the different types of injunction?  The Civil Procedure Rules (CPR) have codified the court’s power to grant types of interim order in [CPR 25.1(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part25). Such interim injunctive relief includes:  - Freezing injunctions – restricting someone from dealing with their assets; - Orders requiring a party to provide information about the location of property or assets, which may be sought to support a freezing injunction or as a standalone order; - Search orders – to permit the search of a respondent's property to preserve evidence and property; and/or - Orders requiring delivery up of property. ## Can I apply for injunctive relief? You can apply for an interim injunction that requires a party to do, or to refrain from doing, a specific act or acts. In urgent cases, interim injunctions may be obtained without prior notice to the defendant (for example, freezing injunctions that are sought to preserve the defendant’s assets pending judgment or final order). However, injunctions are only suitable in claims where damages are not an adequate remedy. An application for injunctive relief is not a step that should be taken lightly. ## Do I need to give an undertaking in order to get an injunction? Yes, a claimant is usually required to give an undertaking in damages (also known as a cross-undertaking) when an injunction is granted. The claimant undertakes to compensate the defendant for any loss incurred, should it later transpire that the injunction was wrongly granted. Depending on the circumstances, the damages awarded under the undertaking can be substantial. ## What is a freezing order? A freezing order or freezing injunction (formerly known as a Mareva injunction) is an order that is used by a creditor who is concerned that a company may sell their assets and fail to pay the amount due to the creditor. The order can freeze almost any asset including: a company bank account, property, land or investment and shares. ## What are the consequences of a freezing injunction? The granted freezing order will also be endorsed with a penal notice in case the respondent does not comply. If the respondent does not comply they will be in contepmt of court and therefore face a fine and/or imprisonment. ## How do I get a freezing order? The court will exercise its discretion to grant a freezing order and must only grant the order if it convenient. The court must establish the following conditions to grant a freezing order: - The applicant must have a strong case. The applicant must establish that its case is capable of a serious argument. - There must be a substantive cause of action against the defendant - The applicant must demonstrate the risk of the asset being disposed of if the order is not put into place. - It must be ‘just and convenient’ to grant the order – it would cause unnecessary and disproportionate hardship to the defendant to grant the order.    ## Are the courts open to hear an urgent injunction? Yes. The Queen’s Bench Division, the Commercial Court, and the Interim Applications List (Chancery) all continue to hear applications for urgent injunctive relief throughout the COVID-19 pandemic.  The way in which the hearing will be conducted will depend upon the individual Judge. Hearings for urgent injunctive relief are currently being heard by telephone or via Skype for Business.  We have taken part in many hearings via Skype for Business. The judge’s clerk sends a skype link in advance of the hearing and you click on it to access the hearing. There is no need to purchase Skype for Business, a free Skype account can be used. Further information updated information can be found on the websites for the daily cause lists of the [Queen’s Bench Division](https://www.justice.gov.uk/courts/court-lists/list-queens-bench) and the [Business and Property Courts (Ch)](https://www.justice.gov.uk/courts/court-lists/list-cause-rolls2/interim-applications-list-chd)  ## How much does an injunction cost?  The cost for an injunction is dependent on the circumstances and facts in the particular case.  The level of costs will be affected by:  - The urgency of the application; - The number of witnesses involved in the matter; and - Whether the matter is with or without notice.  ## Specialist Injunction Solicitors in London Our [London Injunction Lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firm's location adjacent to the Royal Courts of Justice in Central London. We have for example obtained an out-of-hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the [High Court.](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) We ensure that we provide the [best possible outcome](https://privateprosecutionservice.co.uk/private-prosecution-cases/) for our clients by conducting in-depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. --- # West Bromwich Building Society loan mis-selling: Hidden swaps and break costs Source: https://lexlaw.co.uk/west-bromwich-building-society-fixed-rate-loan-mis-selling-break-costs-hidden-derivative-swap/ *If you are an individual or a bank with a loan agreement with West Bromwich Commercial Limited, it is important to review your loan agreement when you are in a position to repay the loan. There are many individuals today who are struggling to exit these loans and have only just become aware of the mis-selling, hidden swaps or break costs, which may be the case in your situation. Due to limitation issues, it is important to seek legal advice on a potential claim against West Bromwich Building Society. * ## West Bromwich mortgage loan mis-selling If you are an individual or business, you may have been mis-sold the loan if: - your fixed rate loan was packaged with an interest rate swap of which you were unaware:- you were aware of the interest rate swap but you were given inadequate information, unsuitable advice and the risks of the same were not explained to you; - the options and penalties associated with refinancing were not explained to you; and/or- you were not provided simple numerical illustrations of early breakage/repayment costs. ## Early Repayment Fees and Break Costs As a result, under these swaps, customers were forced to make substantial payments to lenders such as West Bromwich, to the detriment of their businesses. Individuals and SMEs were and often are still unable to terminate these swaps without paying large (and previously undisclosed) breakage costs (or Early Repayment Fees) to the lenders. The break costs, described as "repayment fees" or "exit fees" are prohibitively expensive and in turn lead to difficulties for future practice planning such as bringing in new partners. The Fixed Rate Loan documentation will have a generic clause referring to Early Repayment Fees but which does not explain the method of calculation – perhaps because that method involves reference to Gilts-linked or Interest Rate Derivatives? ## West Bromwich's excessive "prepayment fee" There is often a clause in loan agreements which refers to an "early repayment fee" or "exit fee", in West Bromwich's case a "prepayment fee" and the clause is sometimes brought to the attention of unsophisticated borrowers but it does not explain it at all nor warn that the costs could be substantial as they are linked to derivatives. Often borrowers will assume the exit fee represents a few thousand pounds. > *If the Borrower prepays the loan, the borrower shall indemnify and pay to the Lender an additional sum determined by the Lender as representing all costs, loss and liability to the Lender arising as a result of such prepayment including without limitation, mid-interest period break costs and breakage funding costs, arising in relation to any fixed rate funding (including the cost of having to liquidate or re-deploy funds acquired or committed to make, fund or maintain the Loan or any part of it, or liquidating, cancelling or varying transactions entered into to match, hedge or fund the Loan or any part of it) together with an administrative charge representing 5%  of all such costs*. > > Clause referring to "prepayment fee" in a loan agreement with West Bromwich Commercial Limited Those break costs could be several hundred thousand pounds if not millions – all dependant on the cost of breaking a hidden derivative. Many individuals thought this was clause was simply an ‘early redemption penalty’ which might cost a few to several thousand pounds like in a domestic mortgage because of the above vague wording, with no warning the costs could be substantial. Some break costs can amount to nearly 60% of the loan amount. We have successfully obtained redress via [High Court swaps mis-selling litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) and via the [FCA agreed IRHP Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) on behalf of SMEs ranging from [family run businesses](https://web.archive.org/web/20140916060007/http://invezz.com/news/equities/6046-lloyds-share-price-details-of-swap-mis-selling-settlement-made-public) or [local retail companies](https://youtu.be/v_JHfC82N-I) to [listed PLCs](https://web.archive.org/web/20140731123938/http://www.bloomberg.com/article/2014-05-29/aTG0DdTNe1E4.html) and offshore companies.  We specialise in hidden derivatives litigation and have issued more court claims than any other law firm. Many hidden swaps cases settle via out of court settlements with banks and insurers doing this in order to prevent the setting of a case precedent which would cost much more. ## What are ‘Hidden Swaps’ or embedded derivatives? Embedded swaps – also known as hidden swaps – are fixed rate or tailored business loans that contain embedded complex financial derivative products.  With embedded swaps, unlike with standalone swaps, the derivative product (i.e. the swap) and the loan are marketed and sold as part of the same product. Major lenders, insureres, banks and building societies promoted these embedded swaps to their customers as ordinary business loans without explaining that these “loans” also contained complex financial derivative products, which bore significant risks to customers.  As a result, customers are now finding that they are unable to exit these “loans” without paying prohibitive (and previously undisclosed) breakage costs to their banks. > In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. > > > > [Warren Buffet, Berkshire Hathaway annual report, 2002](https://www.berkshirehathaway.com/letters/2002pdf.pdf) ## Why use a Specialist Hidden Rate Swap Solicitor? Derivatives are a complex subject matter which most generalist lawyers simply won’t be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks.  This experience has been gained not only at other leading city law firms but at the legal and compliance departments of the banks and building societies themselves. Our team will ensure your interest rate swap mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the hidden swap. This usually means a refund of all balancing payments and escaping or recovering the contingent liability (ie the break fee). We work to achieve our client’s interests by attempting to negotiate with the banks wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. ## Call us about your Fixed Rate Loan case  If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, are able to assist. Get in touch so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading financial services mis-selling litigation solicitors and barristers. Just call or email us now for a free initial telephone consultation; our legal team are waiting to help. --- # Nationwide TBL mis-selling: Hidden swaps and break costs in fixed rate loans Source: https://lexlaw.co.uk/nationwide-mis-selling-hidden-swaps-and-break-costs-in-fixed-rate-tbl-loans/ *In 2012, when a scandal of loan mis-selling came to light, Britain's biggest building society, Nationwide, set aside £103 million to compensate victims of loan mis-selling. There are many individuals today who are still struggling to exit these loans and have only just become aware of the mis-selling, hidden swaps, derivatives or considerable break costs. Due to limitation issues, it is important to seek legal advice on your potential claim.* ## Early Repayment Fees and Break Costs Under these hideden swaps, customers were forced to make substantial payments to lenders such as Nationwide, to the detriment of their businesses. Individuals and SMEs were and often are still unable to terminate these swaps without paying large (and previously undisclosed) breakage costs (or Early Repayment Fees) to the lenders. The break costs, described as "repayment fees" or "exit fees" are prohibitively expensive and in turn lead to difficulties for future business planning e.g. acquisition of further properties, which can be referred to as consequential losses. The Fixed Rate Loan documentation will have a generic clause referring to Early Repayment Fees but which does not explain the method of calculation – perhaps because that method involves reference to Gilts-linked or Interest Rate Derivatives? There is often a clause in loan agreements which refers to an "early repayment fee" and the clause is sometimes brought to the attention of unsophisticated borrowers but it does not explain it at all nor warn that the costs could be substantial as they are linked to derivatives. Often borrowers will assume the exit fee represents a few thousand pounds however the costs often amount to hundreds of thousands of pounds or sometimes millions. > For any prepayment the Borrower will indemnify Nationwide on demand against all costs, expense, losses, (including loss of margin) and other amounts which Nationwide may have incurred or sustained (including, without limitation, their termination, variation , liquidation or redeployment of any interest rate or other funding arrangements entered into by Nationwide and used in whole or part the Loan and/or limit its exposure to interest rate movements) > > Clause on breakage costs , Nationwide loan facility ## Nationwide's unexplained break costs and prepayment fee Those break costs could be several hundred thousand pounds if not millions – all dependant on the cost of breaking a hidden derivative. Many individuals thought this was clause was simply an ‘early redemption penalty’ which might cost a few to several thousand pounds like in a domestic mortgage because of the above vague wording, with no warning the costs could be substantial. Some break costs can amount to nearly 60% of the loan amount. We have successfully obtained redress via [High Court swaps mis-selling litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) and via the [FCA agreed IRHP Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) on behalf of SMEs ranging from [family run businesses](https://web.archive.org/web/20140916060007/http://invezz.com/news/equities/6046-lloyds-share-price-details-of-swap-mis-selling-settlement-made-public) or [local retail companies](https://youtu.be/v_JHfC82N-I) to [listed PLCs](https://web.archive.org/web/20140731123938/http://www.bloomberg.com/article/2014-05-29/aTG0DdTNe1E4.html) and offshore companies.  We specialise in hidden derivatives litigation and have issued more court claims than any other law firm. Many hidden swaps cases settle via out of court settlements with banks and insurers doing this in order to prevent the setting of a case precedent which would cost much more. ## What are ‘Hidden Swaps’ or embedded derivatives? Embedded swaps – also known as hidden swaps – are fixed rate or tailored business loans that contain embedded complex financial derivative products.  With embedded swaps, unlike with standalone swaps, the derivative product (i.e. the swap) and the loan are marketed and sold as part of the same product. Major lenders, insureres, banks and building societies promoted these embedded swaps to their customers as ordinary business loans without explaining that these “loans” also contained complex financial derivative products, which bore significant risks to customers.  As a result, customers are now finding that they are unable to exit these “loans” without paying prohibitive (and previously undisclosed) breakage costs to their banks. > In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. > > [Warren Buffet, Berkshire Hathaway annual report, 2002](https://www.berkshirehathaway.com/letters/2002pdf.pdf) ## I wasn't aware of the hidden interest rate swap and excessive early repayment fee If you are a business, you may have been mis-sold the loan if: - your fixed rate loan was packaged with an interest rate swap of which you were unaware:- you were aware of the interest rate swap but you were given inadequate information, unsuitable advice and the risks of the same were not explained to you; - the options and penalties associated with refinancing were not explained to you; and/or- you were not provided simple numerical illustrations of early breakage/repayment costs. ## Why use a Specialist Hidden Rate Swap Solicitor? Derivatives are a complex subject matter which most generalist lawyers simply won’t be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks.  This experience has been gained not only at other leading city law firms but at the legal and compliance departments of the banks themselves. Our team will ensure your interest rate swap mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the hidden swap. This usually means a refund of all balancing payments and escaping or recovering the contingent liability (ie the break fee). We work to achieve our client’s interests by attempting to negotiate with the banks wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. ## Nationwide mortgage loan and endowment mis-selling Nationwide have come under fire for mis-selling of endowment policies and payment protection insurance policies sold in conjunction with mortgages and loans. Often individuals were told they had to take out the relevant policies in order to obtain the loans and often these policies were unsuitable for unsophisticated, retail customers If you are a business or individual, you may have been mis-sold a loan or policy if: - Nationwide didn't advise you of the fees involved with setting up the endowment.- Nationwide didn't make me aware of the risks involved with investments; - Nationwide advised you that the endowment would repay the mortgage and there would be no shortfall- You were not advised about the risks and implications of any shortfall ## Call us about your Fixed Rate Loan mis-selling case  If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, are able to assist. Get in touch so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading financial services mis-selling litigation solicitors and barristers. Just call or email us now for a free initial telephone consultation; our legal team are waiting to help. --- # UK Spouse Visa Application Lawyers Source: https://lexlaw.co.uk/successful-uk-spouse-marriage-visa-application-immigration-solicitors-advice/ *[The UK Spouse Visa](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) is a popular visa option for non-EEA family members to join their British or settled partners in the UK. Family unification is important but there are many strict rules and requirements which need to be met in order for an application to be successful. Our Immigration Solicitors in London regularly prepare successful Spouse Visa applications, especially where there are complexities. It is important to submit a successful application to the Home Office the first time; otherwise previous visa refusals can make it more difficult for any future visas to be granted.* *[Our immigration solicitors](https://immigrationandvisasolicitors.co.uk/) are [regularly instructed](https://immigrationandvisasolicitors.co.uk/success/) to assist in the preparation and submission of the [Family of a Settled Person](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) or a [Spouse Visa application](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) for Applicants either in the UK or abroad. Our specialist immigration team are ready to [meet with you](https://immigrationandvisasolicitors.co.uk/legal-case-assessment/) in person or via Skype to consider with you whether you meet the eligibility requirements. As soon as you instruct us we liaise with you in preparing your Family of a Settled Person or a [Spouse visa application](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) with the requisite supporting documentation.* *We’re based in the legal heart of London in Middle Temple (a Barristers’ Inn of Court). We provide the strongest possible [UK Immigration Law advice](https://immigrationandvisasolicitors.co.uk/) and a comprehensive [UK Visa and Immigration advice service](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/uk-immigration-visa-solicitors-barristers-lawyers-london-uk/). To [contact our immigration team about your UK Visa Application](https://immigrationandvisasolicitors.co.uk/legal-case-assessment/), call ☎ 02071830570.* ## What is a UK Spouse Visa? [A UK Spouse Visa](https://www.gov.uk/uk-family-visa) (also known as a UK marriage visa) allows overseas non-EEA (European Economic Area) spouses to join their British or settled partners in the UK to live work and/or study. ## How long does a UK Spouse visa last? [A Spouse Visa for the UK](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) is valid for 30 months and can be renewed for a further 30 months. Following this period of 2 years and 6 months, applicants can apply for [indefinite leave to remain (settlement)](https://immigrationandvisasolicitors.co.uk/ilr-indefinite-leave-to-remain-uk/#:~:text=After%20you%20have%20lived%20legally,on%20your%20current%20visa%20category.) in the UK. ## Can I extend a UK Spouse Visa? Yes. Within 28 days of the expiry of that visa, Applicants can then submit an application to extend their leave in the UK for a further 30 months. Depending on the settlement route the Applicant is on (usually 5 years for straightforward cases or 10 years for discretionary applications). Applicants can then apply for Indefinite Leave to Remain (settlement) in the UK. Applications to then [naturalise](https://immigrationandvisasolicitors.co.uk/best-naturalisation-visa-lawyers-london-immigration/) as a British citizen and get a British passport can be made as soon as an Applicant is granted Indefinite Leave to Remain. ## How long does it take to get a UK Spouse Visa? The standard processing time for a [Spouse Visa application](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) made outside the UK is 12 weeks. For applications made within the UK, this is 8 weeks. There are also priority visa services available for additional costs which will place the [UK Spouse Visa application](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) ahead of the queue and receive a faster decision. Only straightforward applications should use the priority visa service as for more complex cases it may take caseworkers longer to consider the evidence outside the priority service time frame and the fee is non-refundable. ## How much does a UK Spouse visa cost in 2025? If you submit your [UK Spouse visa](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) from outside the UK the [Home Office](https://www.gov.uk/government/organisations/home-office) fee is £1,846 plus the [Immigration Health Surcharge](https://www.gov.uk/healthcare-immigration-application) (IHS). However, if you submit the application from within the UK the Home Office fee is £1,258 plus the IHS and any applicable Biometrics fees. ## How do I apply for a UK Spouse Visa? All [UK Spouse Visa applications](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) are now submitted and paid for online. Applicants then have the option of uploading clear scanned copies of their documents directly to the Home Office commercial partners’ website or for an additional fee to take their documents with them to their biometric appointment at a visa application support centre for them to be scanned in. ## What are the application requirements for a UK Spouse Visa? - You and your partner must be 18 or over; - Your partner must be a British citizen or has settled in the UK (e.g. indefinite leave to remain, settled status or proof of permanent residence); and - You and your partner must intend to live together permanently in the UK; ## What are the Eligibility Requirements for a UK Spouse Visa? [The UK Immigration Rules](https://immigrationandvisasolicitors.co.uk/immigration-glossary/) set out strict criteria that must be met by those applying for a Family of a Settled Person or a Spouse visa: - You must be in a genuine and subsisting marriage with a British citizen, a person present and settled in the UK or someone who is in the UK with refugee leave or with humanitarian protection; - You must intend to reside with your spouse/partner permanently; - You must have suitable accommodation for yourself, your spouse and any dependants; - You must meet the financial requirements (i.e. have enough money to support yourself, your spouse and any dependants without recourse to public funds); and - You must satisfy the [English language](https://www.gov.uk/uk-family-visa/knowledge-of-english) requirements by sitting an English language test with a Home Office approved test provider. ## What documents do you need to apply for a Spouse Visa for the UK? [Applications for a UK Spouse Visa](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) are made in accordance with the Immigration Rules [Appendix FM: Family Members](https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-fm-family-members) and [Appendix FM-SE: Family Members Specified Evidence](https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-fm-se-family-members-specified-evidence). There are several requirements that must be satisfied and ample documentary evidence must, therefore, be provided for the following categories: - [Genuine and subsisting marriage](https://immigrationandvisasolicitors.co.uk/genuine-relationship/); - [Financial requirement](https://immigrationandvisasolicitors.co.uk/all-you-need-to-know-on-spouse-visa-financial-requirements-in-2025/#:~:text=How%20Much%20Income%20Do%20You,without%20relying%20on%20public%20funds.); - [Accommodation requirement](https://immigrationandvisasolicitors.co.uk/adequate-accommodation-requirement/); and - [English language requirement](https://immigrationandvisasolicitors.co.uk/english-language-requirement/). ## What is the financial requirement for a UK Spouse Visa? An applicant must show that their Sponsor has an income of at least £29,000. For in-country applications, an applicant can rely on their own income or combine their income with their Sponsors to meet the £29,000 threshold. There are a number of different ways you can meet the financial requirement such as salaried employment or self-employment; however, there are other ways such as rental income, cash savings, and pensions. The different ways to demonstrate compliance with the financial requirement can be found [here](https://immigrationandvisasolicitors.co.uk/all-you-need-to-know-on-spouse-visa-financial-requirements-in-2025/#:~:text=How%20Much%20Income%20Do%20You,without%20relying%20on%20public%20funds.). ## What is the English test for a UK Spouse visa? Applicants are required to pass an English language test with the[ International English Language Testing System](https://www.ielts.org/) (IELTS) with at least a CEFR level A1 or above in speaking and listening and must submit the pass certificate. You can also meet the English language requirement if you are from a majority English speaking country or you have studied a degree taught in English. ## Can you work in the UK on a Spouse Visa? Yes. Migrants who have been endorsed under the UK Spouse visa route are able to work without any restrictions. Migrants can work for an employer or work as a self-employed person. ## How early can I apply for Spouse visa extension? Applicants can apply for their spouse visa extension 28 days before the expiry of their current spouse visa. However, Applicants are advised to commence the application process 3 months before the expiry as this will give them sufficient time to collate the mandatory documents under Appendix FM SE. ## Can you switch into a UK Spouse visa? Applicants who are already in the UK can apply to transfer their existing leave to the UK spouse visa route i.e. switching from [Skilled Worker](https://immigrationandvisasolicitors.co.uk/how-to-apply-for-a-skilled-worker-visa-guide-for-employers-and-applicants/) or [Student visas](https://immigrationandvisasolicitors.co.uk/uk-student-visa-a-comprehensive-guide-for-international-students/) to the spouse visa. Applicants must have a visa that is valid for more than 6 months to exercise the switch provision in the Immigration Rules. ## Does COVID-19 affect my UK Spouse Visa application? Potentially. The main concern for British Sponsors who are applying for [UK Spouse visas](https://immigrationandvisasolicitors.co.uk/spouse-visa-uk-visa-application-family-members-appendix-fm/) for their partners is the loss of income during the pandemic. On 9 June 2020, the Home Office published further guidance for British Sponsors clarifying that there will be a concession in place for those who have impacted financially. For those affected, the Home Office will consider employment income for the period immediately before the loss of income due to Coronavirus, provided the requirement was met for at least 6 months up to March 2020. ## Home Office Policy Guidance on meeting UK Spouse Visa eligibility requirements The new Home Office Policy Guidance essentially introduces a new Unjustifiably Harsh Consequences Test by considering any interests of children and alternative sources of income in meeting the [Minimum Income Requirement](https://immigrationandvisasolicitors.co.uk/minimum-income-requirement/). The new Unjustifiably Harsh Consequences Test applies in Family of a Settled Person or a Spouse visa applications, where applicants do not meet the Minimum Income Requirement under [Appendix FM Immigration Rules](https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-fm-family-members). However, if the Home Office accepts that the refusal could lead to Unjustifiably Harsh Consequences; applicants will be permitted to rely on other alternative sources of income, financial support or other funds to make up the deficit in meeting the Minimum Income Requirement. The full Home Office Policy Guidance can be accessed here in two parts: [Appendix FM Section 1.0a Family Life as a Partner or Parent – 5 year route LEXVISA Solicitors and Barristers](https://immigrationandvisasolicitors.co.uk/wp-content/uploads/2017/08/Appendix-FM-Section-1.0a-Family-Life-as-a-Partner-or-Parent-5-year-route.pdf) & [Family Life as a Partner or Parent and Private Life – 10 year routes guidance August 2015 LEXVISA Solicitors and Barristers](https://immigrationandvisasolicitors.co.uk/wp-content/uploads/2017/08/Family-Life-as-a-Partner-or-Parent-and-Private-Life-10-year-routes-guidance-August-2015.pdf) ## What is the Immigration Health Surcharge (IHS)? The [Immigration Health Surcharge](https://www.gov.uk/healthcare-immigration-application) (IHS) was introduced by the Home Office on 6 April 2015 and applies to temporary, non-EEA migrants who are coming to the UK for more than 6 months. Payment for IHS is collected by the Home Office and goes directly to the National Health Service (NHS). Our team of [Spouse Application Lawyers](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) can consider whether you will need to pay the IHS. If you wish to consider your options, please contact our team today and arrange a meeting with a qualified immigration solicitor who can advise you of your options. ## Our UK Spouse Visa Successful Applications #### Switch from Fiancé visa to Spouse visa granted The Applicant was a national of the UAE who arrived in the UK on a fiancé visa so that she could solemnise her marriage with her partner. Our immigration team assisted the Applicant to [obtain her fiancé visa.](https://immigrationandvisasolicitors.co.uk/switch-fiance-visa-to-spouse-visa-immigration-lawyers-london/) Once the Applicant formally registered her marriage in the UK, we conducted a further consultation where we discussed the requirements for a spouse visa under [Appendix FM SE](https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-fm-se-family-members-specified-evidence) to the Immigration Rules. The application was submitted during the COVID-19 lockdown and this naturally caused a delay in a decision. As a result, the Applicant had asked us to submit a formal request asking the Home Office to make an expedited decision on her application so that she could start working. The Applicant received a decision within 2 weeks from the date of our formal request asking for an expedited decision. Our [Spouse Visa Lawyers](https://immigrationandvisasolicitors.co.uk/) prepared the entire application from the start to the end. In particular, we prepared a bespoke documents list, conducted numerous document reviews, completed the online visa application form, and prepared persuasive legal representations in support of the application. #### Entry Clearance Spouse visa granted [The Applicant was a national of China residing and working in her home country.](https://immigrationandvisasolicitors.co.uk/success-story-entry-clearance-uk-spouse-london-immigration/) The Applicant was employed as a flight attendant and had an extensive travel history. The Applicant had previously encountered problems with the UK Border Agency when visiting her partner. The Applicant arrived in the UK with the intention to formally register her marriage. However, she was informed that she did not have the correct immigration status to do this and she was given temporary admission so that she could marry her spouse. The Applicant was advised that she would need to make the correct application if she wishes to visit again. After consulting with our [UK Spouse Application Solicitors](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/), the Applicant informed us that she wished to instruct us to prepare her application. The Applicant also explained that she wanted to use the “keep my passport” service as she needed her passport for work purposes. Our immigration team prepared a well-executed application and the application was granted without any issues well before the standard processing time. #### Further leave to remain as a Spouse granted (FLR M) [The Applicant was a Filipino national who was initially granted entry clearance as a spouse of a British citizen.](https://immigrationandvisasolicitors.co.uk/success-story-further-leave-to-remain-as-a-spouse-granted-flr-m/) The Applicant arrived in the UK to join her husband but shortly after her arrival, her husband had to leave the UK for a period of 12 months due to an urgent work assignment. The Applicant and her husband maintained daily communication through a variety of messenger apps and visited each other as often as they could. Whilst the Applicant’s husband was abroad he was employed by a British company and his employment remained the same. The Applicant’s husband continued to get paid into his UK account which was important in meeting the financial requirement of £18,600. If the Applicant’s husband was working for an overseas company then there would have further complexities in the Applicant’s case.   Our [Spouse Immigration Lawyers](https://immigrationandvisasolicitors.co.uk/uk-fiance-marriage-visa/) explained to the Applicant that it was possible to submit a successful application but she would need to provide strong supporting documents in evidence that she is still in a genuine and subsisting relationship with her husband. Our immigration team prepared a [successful application](https://immigrationandvisasolicitors.co.uk/success/) by preparing comprehensive legal representations and by working with the Applicant in gathering the necessary documentary evidence in support of her application. #### Successful Tier 4 Student Visa to Spouse Visa Switch [The Applicant was a national of Brazil who entered the UK in September 2018 on a Tier 4 (General) Student visa, in order to complete her Master’s degree](https://immigrationandvisasolicitors.co.uk/transfer-conditions-of-stay/). A couple of years earlier, the Applicant had been in the UK visiting her sister which is when she met her now-husband (“the Sponsor”), a non-EEA national who has indefinite leave to remain in the UK. The two initially stayed in contact with each other as friends, but once they got to know each other better they both realised their mutual feelings and began a long-distance relationship, visiting each other in the UK and Brazil as often as they could. Once the Applicant arrived in the UK on her student visa she moved in with the Sponsor and their relationship continued to develop, so much so that the Sponsor decided to propose to the Applicant on New Year’s Eve. After reviewing all of the Applicant’s supporting documents and completing our legal representations, we also completed the online form and uploaded the necessary supporting documents onto the Home Office commercial partner’s [website](https://www.ukvcas.co.uk/home-internal). We booked an appointment for the Applicant to attend a visa application support centre in order to give her biometrics, and she paid an additional fee of £800 and used the 24-hour super priority service so received her positive decision the following day after giving her biometric information. ## Why is it important to instruct expert UK Spouse Visa Lawyers? Caseworkers at the Home Office are trained to reject spouse visa applications which are improperly prepared, for example by failing to provide the correct supporting evidence. In order to ensure your Immigration & Visa application succeeds, our solicitors and barristers will ensure all specified documents must be provided. [Legal representatives](https://immigrationandvisasolicitors.co.uk/our-uk-immigration-lawyers-london/), such as our [specialist immigration](https://immigrationandvisasolicitors.co.uk/our-uk-immigration-lawyers-london/) and visa law firm, are qualified to advise you on the law and your immigration matter. You can instruct one of our immigration and visa legal representatives to successfully assist you with a spouse visa application. Our [Solicitors and Barristers](https://immigrationandvisasolicitors.co.uk/) will help you comply with the Home Office’s requirements and meet the Immigration Rules. The [UK Immigration Rules](https://immigrationandvisasolicitors.co.uk/immigration-glossary/) are complex and a legal representative can help ensure that your application meets the Immigration Rules. ## Our UK Visa Applications Service ## Expert UK Spouse Visa Lawyers [Our expert immigration team are regularly instructed](https://immigrationandvisasolicitors.co.uk/success/) to assist in the preparation of Family of a Settled Person or a Spouse visa applications and in some cases are instructed to attend same day visa appointments at one of the Premium Centre’s in the UK. Our team offer some of the following services: If you wish to have your documents checked by an expert immigration solicitor, please contact us so we can explore your options. We are an [Immigration law firm based in Middle Temple, London](https://immigrationandvisasolicitors.co.uk/pages/contact/) and our solicitors are fully authorised by the [Solicitors Regulation Authority (SRA)](https://www.sra.org.uk/home/home.page). Contact our specialist immigration team today and we can offer you a consultation in person or via telephone or Skype so we can explore your options. You can leave us a message on our [Contact Form](https://immigrationandvisasolicitors.co.uk/pages/contact/), [email ](mailto:immigration@djfsolicitors.co.uk)us or give us a call on 02071830570. --- # Tier 1 Entrepreneur Settlement & Extension Lawyers Source: https://lexlaw.co.uk/tier-1-entrepreneur-visa-settlement-extension-application-lawyers/ *If you already hold a T[ier 1 Entrepreneur Visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) you can still apply for a[ Tier 1 Entrepreneur visa extension](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension/) until 5 April 2023. You can also apply for [Tier 1 Entrepreneur settlement ](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/)until 6 April 2025 if the requirements for indefinite leave to remain can be met.* *You can no longer apply for a new [Tier 1 Entrepreneur Visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/). However, individuals who are looking to come to the UK to set up or take over a business in the UK should consider the [Tier 1 Start-up Visa](https://immigrationandvisasolicitors.co.uk/tier-1-start-up-new/) or a [Tier 1 Innovator Visas](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/). * *[Our immigration solicitors](https://immigrationandvisasolicitors.co.uk/our-uk-immigration-lawyers-london/) are [regularly instructed](https://immigrationandvisasolicitors.co.uk/success/) to provide guidance on Tier 1 Entrepreneur settlement and extension application before your application even reaches the Home Office UK Visa & Immigration department. [We can assist you](https://immigrationandvisasolicitors.co.uk/) with the preparation and submission of a visa application and ensure that you meet all the requirements under the Immigration Rules.* *We’re based in the legal heart of London in Middle Temple (a Barristers’ Inn of Court). We provide the strongest possible [UK Immigration Law advice](https://immigrationandvisasolicitors.co.uk/) and a comprehensive [UK Visa and Immigration advice service](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/uk-immigration-visa-solicitors-barristers-lawyers-london-uk/). To [contact our immigration team about your UK Visa Application](https://immigrationandvisasolicitors.co.uk/legal-case-assessment/), call ☎ 02071830570.* ## What is the Tier 1 Entrepreneur Visa? The [Tier 1 Entrepreneur](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/834084/Tier_1__Entrepreneur__Policy_Guidance_-_V_1019.pdf) visa was designed for individuals who wished to establish or take over an existing business in the UK. The key requirement was investing at least £200,000 into the business. The Tier 1 Entrepreneur visa has been closed for new applications and replaced with the [Tier 1 Start-up](https://immigrationandvisasolicitors.co.uk/tier-1-start-up-new/) and [Tier 1 Innovator](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/) visas. ## I have a Tier 1 Entrepreneur Visa, what are my options? If you currently hold a Tier 1 Entrepreneur Visa the route remains open for Tier 1 Entrepreneur extension and [settlement (indefinite leave to remain) applications.](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/) The route will remain open for settlement applications until 6 April 2025. ## What is Tier 1 Entrepreneur settlement? [Tier 1 Entrepreneur settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) is the same as an application for ["indefinite leave to remain."](https://www.gov.uk/settle-in-the-uk/y/you-have-a-work-visa/tier-1-entrepreneur-visa) You can only apply if you currently have a Tier 1 (Entrepreneur) Visa and have been living in the UK for 5 years (or 3 years if you have created enough jobs or income). ## What are the advantages of getting indefinite leave to remain? Applicants who obtain settled status would be free of immigration control and would no longer need to worry about submitting visa applications every 30 months. There are a number of requirements that must be met (see below). The Home Office also offers the option of [accelerated settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) for those who have created 10 or more full-time jobs or a business income of £5 million. ## What are the requirements for Tier 1 Entrepreneur settlement? The[ Tier 1 Entrepreneur route](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/) is governed by the Immigration Rules and is a Points Based System application. Applicants will be awarded points for meeting certain requirements. ## What is the Point Based System for Tier 1 Entrepreneur Settlement? In order to submit a successful application, you must score 75 points under Appendix A to the Immigration Rules. Further, Tier 1 Entrepreneur applications must be submitted in accordance with the requirements under Paragraph 245DF of the Immigration Rules. Applicants must [meet the following requirements](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-job-creation-requirement-points-based-system-innovator-appendix-w-business-immigration-solicitors-london/): - Must not fall under the general grounds of refusal (must be of good character); - Must have 5 or 3 years (depending on route) of continuous residence in the UK and must not have excessive absences; - Must score 75 points under Appendix A (see below); and - Must meet the English language requirement and knowledge about life in the UK in accordance with Appendix KoLL. In order to be awarded 75 points you must [meet the following requirements:](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-job-creation-requirement-points-based-system-innovator-appendix-w-business-immigration-solicitors-london/) - You must have invested at least £200,000 in cash directly into one or more UK business; - You must be registered with HM Revenue and Customs as self-employed or be registered with Companies House as a director of a UK company or member of a UK partnership; - You must have created at least 2 full-time jobs for British or Settled workers; and - You must have acquired 5 years of lawful residence in the UK. ## How do I apply for Tier 1 Entrepreneur Settlement? Our immigration and visa lawyers are regularly instructed to assist with [Tier 1 Entrepreneur settlement applications](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) to submit a visa application. Applicants must submit the application online using the SET O form. Following this, you must submit your supporting documents and provide biometric information (i.e. a digital photo). ## How long does it take to get Tier 1 Entrepreneur Settlement? You will be told whether your application has been successful by the Home Office within 6 months of applying online. If your application is complex and may take longer for example if you need to attend an interview or your supporting documents need to be verified. ## When can a Tier 1 Entrepreneur Settlement application be refused? The application can be refused by the Home Office if you have a criminal record in the UK or another country; if incomplete or false information is provided or if you broken UK immigration law. ## Download the UK Visas & Immigration Tier 1 (Entrepreneur) Points Based System Policy Guidance [![](https://lexlaw.co.uk/wp-content/uploads/image-20.png)](https://lexlaw.co.uk/wp-content/uploads/Tier_1__Entrepreneur__Policy_Guidance_-_V_1019.pdf) ## What is the absences requirement in Tier 1 Entrepreneur settlement applications? You cannot have more than 180 days outside the UK during any consecutive 12-months of the qualifying period. As a part of [the application](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/), you will be required to list all absences from the UK. If you cannot remember each trip we can assist by requesting your travel information from the Home Office. If you go above the required threshold and have a good reason we can submit detailed submissions explaining why you had exceeded the 180 days. There are a number of [accepted reasons](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-job-creation-requirement-points-based-system-innovator-appendix-w-business-immigration-solicitors-london/) for having excessive absences from the UK such as work-related absences, serious or compelling circumstances, and natural/humanitarian disasters. ## Does COVID-19 count as an accepted reason for excessive absence from the UK? It is yet to be seen whether[ Coronavirus COVID-19](https://immigrationandvisasolicitors.co.uk/home-office-coronavirus-advice-for-tier-1-entrepreneur-extension/) falls under these categories. However, it is our professional opinion that the Home Office will not punish Applicants who were forced to remain outside the UK [due to COVID-19 unfairly](https://immigrationandvisasolicitors.co.uk/home-office-coronavirus-advice-for-tier-1-entrepreneur-extension/). ## What is Tier 1 Accelerated Settlement? The Home Office introduced [accelerated settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-accelerated-settlement/) for applicants who wish to settle in the UK before the traditional 5-year period. Applicants can apply for [accelerated settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/) after 3 years of holding leave under the [Tier 1 Entrepreneur](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) category. ## How do I get Tier 1 Accelerated Settlement? In addition to the normal requirements above, you must be able to show that they have created 10 full-time jobs for UK or settled workers or the business has an income of at least £5 million. You will be required to provide documentary evidence demonstrating how each requirement has been met. ## How quickly can I submit a Tier 1 Entrepreneur settlement application? The earliest an applicant can apply for [Tier 1 Entrepreneur settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/) is 28 days before the end of the qualifying period. [Applications](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/) submitted earlier than this will be refused. If you need assistance in [calculating when to apply](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-job-creation-requirement-points-based-system-innovator-appendix-w-business-immigration-solicitors-london/) please contact our business immigration team.  ## Can family members also apply for Tier 1 Entrepreneur settlement? Yes. If your family members are dependents on your visa they can also [apply](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-job-creation-requirement-points-based-system-innovator-appendix-w-business-immigration-solicitors-london/) for settlement if they have the 5 years of consecutive leave under the [entrepreneur](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement-lawyers-london/) category. ## Can I apply to extend an Entrepreneur visa (Tier 1)? Yes. You can apply to[ extend the Tier 1 Entrepreneur visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-lawyers-london/) until 5 April 2023. You should apply before your current visa expires. ## What is the application fee to extend a Tier 1 Entrepreneur visa? It costs £1,277 to [extend the Tier 1 Entrepreneur Visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-lawyers-london/). There is also a fee of £19.20 to have your biometric information taken. ## How long will an extension to a Tier 1 Entrepreneur visa last? Initial Tier 1 Entrepreneur visas are valid for 3 years and 4 months. It is then possible to [extend the visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-lawyers-london/) for another 2 years thereafter. ## Eligibility for Tier 1 Entrepreneur Extension Applications To be eligible for an [extension to a Tier 1 Entrepreneur Visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-lawyers-london/), the following criteria must be satisfied: - you must have invested, or had invested on your behalf, a minimum of £200,000 / £50,000 in a UK business; - you must, within 6 months, have registered with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) as a self-employed person, registered a new UK business with the applicant as a director or registered as a director of an existing UK enterprise; and - at the time of the [extension application](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-lawyers-london/), the candidate must be engaged in activity within this business. ## Our Tier 1 Entrepreneur Visa Settlement and Extension Applications Success Double Tier 1 Entrepreneur Extension Application Granted [The Applicants were nationals of Australia and they had set up a number of businesses in the United Kingdom](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-success/). The Applicants had extensive qualifications and practical experience in their chosen field of business. In our initial consultation with the Applicants, our solicitors identified two potential issues with their application. The first was the investment of £200,000. The Applicants had invested the £200,000 in their primary business (related to their initial Tier 1 Entrepreneur application) but then loaned the money to their other businesses in the UK. The second issue was meeting the job creation requirement. The Applicants primary business had not created two full-time jobs or 4 part-time jobs in the UK. However, after a detailed assessment of all the businesses where the Applicants had invested their money, our solicitors were able to provide a solution to this issue. The Applicants were informed that their case was not straightforward and comprehensive legal representations were required explaining how their application met the requirements. The Applicants instructed us to prepare and assist with the submission of their Tier 1 Entrepreneur extension application. Our solicitors were able to prepare an exceptional application and eliminated any concerns, [resulting in a successful application](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension-success/). Entry Clearance Tier 1 Entrepreneur Visa Granted [The Applicant was an Egyptian national who had extensive qualifications and practical experience in the construction industry and had set up a construction company in the United Kingdom.](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur/) The Applicant had previously applied for a Tier 1 Entrepreneur visa on two occasions but his applications were refused by the UK Visas and Immigration department of the Home Office. The Applicant’s first application was refused on the grounds that he had failed to provide the requisite documents in support of his Tier 1 Entrepreneur visa application. With respect to his second Tier 1 Entrepreneur visa application it was accepted that he had acquired 95 points but the Home Office did not accept that he was a genuine entrepreneur as he had failed the [Genuine Entrepreneur Test](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-interview/). We were informed that he was invited for an interview and shortly after this Tier 1 Entrepreneur visa application was refused. Our solicitors had reviewed both previous refusals and formed the opinion that both applications were underprepared. After speaking to our expert solicitors, the Applicant was reassured that it was possible for him to overcome the difficulties he had encountered in his previous applications.   The Applicant instructed us to prepare and assist with the submission of his Tier 1 Entrepreneur visa application. Our solicitors were able to prepare an exceptional application and eliminate any concerns, resulting in a [successful application](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur/). ## Why instruct expert Tier 1 Entrepreneur Settlement and Extension Lawyers? Caseworkers at the [Home Office](https://www.gov.uk/government/organisations/home-office) are trained to reject applications which are improperly prepared, for example by failing to provide the correct supporting evidence. In order to ensure your UK Tier 1 Entrepreneur visa [extension](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension/) or [settlement](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-settlement/) application succeeds, all necessary documents must be provided. This can be a significant administrative task and you will need to submit the correct documentary evidence. The UK Immigration Rules are complex and a [legal representative](https://immigrationandvisasolicitors.co.uk/) can help ensure that your Tier 1 Entrepreneur visa application meets the Immigration Rules. ## Our Tier 1 Entrepreneur Visa Settlement/Extension Service ## Expert Tier 1 Entrepreneur Settlement and Extension Lawyers applications [Our UK solicitors and barristers](https://immigrationandvisasolicitors.co.uk/our-uk-immigration-lawyers-london/) are [specialist immigration lawyers](https://immigrationandvisasolicitors.co.uk/). We offer a client-tailored approach from the outset. From the very first meeting, we will advise you on your prospects of submitting a Tier 1 Entrepreneur settlement application before your application even reaches the Home Office UK Visa & Immigration department. We can assist you with the preparation and submission of a Visa application or extension and ensure that you meet all the requirements under the Immigration Rules. We are an [Immigration law firm based in Middle Temple, London](https://immigrationandvisasolicitors.co.uk/pages/contact/) and [our solicitors](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/) are fully authorised by the [Solicitors Regulation Authority (SRA)](https://www.sra.org.uk/home/home.page). [Contact our specialist immigration team](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/) today and we can offer you a consultation in person or via telephone or Skype so we can explore your options. You can leave us a message on our [Contact Form](https://immigrationandvisasolicitors.co.uk/pages/contact/) or give us a call on 02071830570. --- # Tier 1 UK Innovator Visa Lawyers Source: https://lexlaw.co.uk/tier-1-uk-innovator-visa-immigration-lawyers-home-office-applications-advice/ *The [UK Tier 1 Innovator visa](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/) is available to individuals who wish to establish a tangible product-based business or a service-based business. Applicants must show that their business is credible and viable and it must be endorsed by a Home Office approved endorsing body*.* It is also possible for Applicants to apply as a team of innovators as long as each Applicant personally meets the Immigration Rules.   * *Our [immigration team](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/) of solicitors and barristers with experience at the very highest levels of immigration law. Members of the team are regularly instructed to deal with all types of points based applications along with [family visas](https://lexlaw.co.uk/successful-uk-spouse-marriage-visa-application-immigration-solicitors-advice/), visit visas and general appeals and are involved in judicial review and immigration appeal tribunal hearings at all levels. [Our team](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/) has the expertise to deal with all immigration issues and the desire to ensure our clients achieve only the best possible results.* *We’re based in the legal heart of London in Middle Temple (a Barristers’ Inn of Court). We provide the strongest possible [UK Immigration Law advice](https://immigrationandvisasolicitors.co.uk/) and a comprehensive [UK Visa and Immigration advice service](https://lexlaw.co.uk/practice-areas/uk-immigration-solicitors-london/uk-immigration-visa-solicitors-barristers-lawyers-london-uk/). To [contact our immigration team about your UK Visa Application](https://immigrationandvisasolicitors.co.uk/legal-case-assessment/), call ☎ 02071830570.* ## What is a Tier 1 Innovator Visa? [The Tier 1 Innovator visa](https://www.gov.uk/innovator-visa) is a unique business visa available for entrepreneurs who wish to establish a new and innovative business in the UK. The business proposal must be innovative, viable, and scalable. This route also offers Applicants the opportunity to apply for settlement (indefinite leave to remain) in the UK. ## Has the Entrepreneur Visa been replaced? Yes, by the innovator visa. As of 29 March 2019, the [Innovator visa](https://www.gov.uk/innovator-visa) replaced the popular Tier 1 Entrepreneur visa. [The Innovator visa](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-team-immigration-london-lawyers/) is for [entrepreneurs](https://lexlaw.co.uk/tier-1-entrepreneur-visa-settlement-extension-application-lawyers/) looking to set up and establish a business in the United Kingdom.  ## Can I apply for an Innovator Visa? You can if the following [requirements](https://www.gov.uk/innovator-visa) are met: - you want to run or set up a business in the UK- you’re from outside the [European Economic Area (EEA)](https://www.gov.uk/eu-eea) and Switzerland- you meet the other [eligibility requirements](https://www.gov.uk/innovator-visa/eligibility)- your business or business idea has been endorsed by a Home Office [approved body](https://www.gov.uk/government/publications/endorsing-bodies-innovator) ## How long does it take to get a Tier 1 Innovator Visa? The [Home Office advise](https://www.gov.uk/innovator-visa) that the earliest you can apply is 3 months before you travel. Normally an applicant will get a decision on the visa within 3 weeks of the application. ## How do I get a Tier 1 Innovator Visa for the UK? The [Tier 1 Innovator visa](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/) is specifically for [entrepreneurs](https://lexlaw.co.uk/tier-1-entrepreneur-visa-settlement-extension-application-lawyers/) or business people who want to establish a business presence in the United Kingdom. The following requirements must be met: - you must have a credible business idea;- you must have at least £50,000 in cash to invest in their proposed business idea;- you must meet the [English language requirement](https://www.gov.uk/tier-1-entrepreneur/knowledge-of-english) (Level B2) in accordance with Appendix O of the Immigration Rules;- you must meet the maintenance requirement of £945 and hold the funds for 90 consecutive days; and- you must receive a suitable endorsement from an appropriate body. ## How do I get an endorsement for a Tier 1 Innovator Visa? The [endorsement](https://immigrationandvisasolicitors.co.uk/endorsement-requirement-start-up-innovator-visa/) must be from an appropriate (Home Office approved) body which is expected to include some higher education institutions which meet the requirements. The [endorsement](https://immigrationandvisasolicitors.co.uk/endorsement-requirement-start-up-innovator-visa/) body must have a proven track record of supporting entrepreneurs that are approved by the Home Office. A business plan will be required when applying for the endorsement. Applicants must meet the innovation, viability and scalability requirement to receive an endorsement. ## What is the innovation requirement for a Tier 1 Innovator Visa? Applicants must demonstrate that their business idea is genuine and original. The business idea can be for a tangible product-based business or a service-related business. ## What is the viability requirement for a Tier 1 Innovator Visa? Applicants [must demonstrate](https://immigrationandvisasolicitors.co.uk/endorsement-requirement-start-up-innovator-visa/) that their business is practical and credible. Applicants would be required to show that they have the expertise or specialist knowledge of their chosen business field to enable the business to success. Applicants must prepare and submit a well-drafted business plan to show that the business has a clear vision and all the relevant considerations such as start-up costs, target market, market segmentation and competition have been taken into consideration. The business plan should also show the projected cash flow forecast for the first 3 years for the business. Information on other relevant factors such as strengths and weakness of the business and the impact of future growth/decline of the business sector they wish to operate in. ## What is the scalability requirement for a Tier 1 Innovator Visa? Applicants must show that their business idea will benefit the economy in the United Kingdom and the business will contribute to job creation and growth into relevant markets. ## What is the fee for a UK Innovator Visa? The [Home Office application fee](https://www.gov.uk/innovator-visa) remains the same as the old Tier 1 Entrepreneur visa £1021 (entry clearance) and £1277 (switch in-country). The Immigration Health Surcharge (IHS) is currently £400 per year. ## What is the Immigration Health Surcharge (IHS)? The [Immigration Health Surcharge](https://www.gov.uk/healthcare-immigration-application) (IHS) was introduced by the Home Office on 6 April 2015 and applies to temporary, non-EEA migrants who are coming to the UK for more than 6 months. Payment for IHS is collected by the Home Office and goes directly to the National Health Service (NHS). Our team of [Spouse Application Lawyers](https://immigrationandvisasolicitors.co.uk/uk-marriage-visa-uk-spouse-visa/) can consider whether you will need to pay the IHS. If you wish to consider your options, please contact our team today and arrange a meeting with a qualified immigration solicitor who can advise you of your options. ## How long can you stay in the UK on an Innovator Visa? The Home Office state that you can stay for 3 years if you: - come to the UK on an [Innovator visa](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/)- switch to this visa from another visa ## Can I apply to extend a Tier 1 Innovator Visa? Yes, you can [apply to extend](https://www.gov.uk/innovator-visa/extend-your-visa) for another 3 years when your visa is due to expire. There’s no limit on the number of times you can extend. You may be able to apply for settlement (known as ‘indefinite leave to remain’) once you’ve been in the UK for 3 years or more. ## Can a team apply for an Innovator Visa? Yes. It is possible for a team of 2 or more individuals to apply together for a [Tier 1 Innovator visa](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-team-immigration-london-lawyers/) for the same business. Applicants do not need to be the sole founders of the business in question as long as the founder is also applying for the visa at the same time. Applications submitted on the basis of an [innovator](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-team-immigration-london-lawyers/) team require extra legal submissions, as it is important to clarify what each Applicant will bring to the business. Each Applicant must obtain an endorsement in their own right, as endorsements cannot be shared. In addition to this, each Applicant must show that they have at least £50,000 available to invest in the business i.e. if there is a team of three innovators each must have £50,000 totaling to £150,000. ## Can you switch to the Innovator visa? Yes. But you can only switch into an [Innovator visa](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/) if you were last granted valid leave on any of the following: - [Start-up](https://immigrationandvisasolicitors.co.uk/tier-1-start-up-new/) migrant;- Tier 1 ([Graduate Entrepreneur](https://immigrationandvisasolicitors.co.uk/graduate-entrepreneur/)) migrant;- Tier 1 ([Entrepreneur](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-visa/)) migrant;- Tier 2 [work permit](https://immigrationandvisasolicitors.co.uk/tier-2-work-visas/) migrant; or- A visitor who has been undertaking permitted activities as a prospective entrepreneur. If you were not last granted leave in any of the above you will need to apply for entry clearance from your home country or any other country where you have valid immigration status. ## Case Study: Successful innovator visa granted to our Indian national client Our [specialist business immigration team](https://immigrationandvisasolicitors.co.uk/) recently received some [wonderful news](https://immigrationandvisasolicitors.co.uk/innovator-visa-granted-immigration-lawyers-london/) that our client’s (“the Applicant”) [Innovator visa](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/791037/innovator-internal-guidance-v1.0.pdf) application was successful. We had previously assisted the Applicant in obtaining a [Tier 1 Entrepreneur visa](https://immigrationandvisasolicitors.co.uk/tier-1-entrepreneur-extension/). In our initial consultation, the Applicant had informed us that he had a new innovative business idea and wanted to explore whether he could apply for the [new Innovator visa.](https://immigrationandvisasolicitors.co.uk/innovator-visa-granted-immigration-lawyers-london/) Our [business immigration team](https://immigrationandvisasolicitors.co.uk/) conducted a detailed assessment and confirmed that the Applicant met the requirements for an Innovator visa under [Appendix W to the Immigration Rules](https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-w-immigration-rules-for-workers). We assisted the Applicant through the entire process and also helped him obtain an endorsement from an approved provider. Our business immigration team prepared detailed legal representations and submitted a well-prepared application allowing the Applicant to receive his Innovator visa within 2 weeks from the date of his biometric enrolment.   ## Why is it important to instruct expert Tier 1 Innovator Visa Lawyers? [Legal representatives](https://immigrationandvisasolicitors.co.uk/our-uk-immigration-lawyers-london/), such as our [specialist immigration](https://immigrationandvisasolicitors.co.uk/our-uk-immigration-lawyers-london/) and visa law firm, are qualified to advise you on the law and your [immigration](https://immigrationandvisasolicitors.co.uk/) matter. You can instruct one of our immigration and visa legal representatives to successfully assist you with a spouse visa application. Our [Solicitors and Barristers](https://immigrationandvisasolicitors.co.uk/) will help you comply with the Home Office’s requirements and meet the Immigration Rules. The [UK Immigration Rules](https://immigrationandvisasolicitors.co.uk/immigration-glossary/) are complex and a legal representative can help ensure that your application meets the Immigration Rules. ## Our UK Innovator Visa Service ## Expert UK Tier 1 Innovator Visa Lawyers [Our expert immigration team are regularly instructed](https://immigrationandvisasolicitors.co.uk/success/) to advise on the prospects of submitting a [UK Innovator Visa application](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-for-entrepreneurs/) before the application even reaches the Home Office UK Visa & Immigration department. We can assist you with the preparation and submission of an [Innovator Visa application](https://immigrationandvisasolicitors.co.uk/tier-1-innovator-visa-team-immigration-london-lawyers/) and ensure that you get all the necessary points under the Points Based System. If you wish to have your documents checked by an expert immigration solicitor, please contact us so we can explore your options. We are an [Immigration law firm based in Middle Temple, London](https://immigrationandvisasolicitors.co.uk/pages/contact/) and our solicitors are fully authorised by the [Solicitors Regulation Authority (SRA)](https://www.sra.org.uk/home/home.page). Contact our specialist immigration team today and we can offer you a consultation in person or via telephone or Skype so we can explore your options. You can leave us a message on our [Contact Form](https://immigrationandvisasolicitors.co.uk/pages/contact/) or give us a call on 02071830570. --- # Damages Based Agreements (DBAs) for Business Interruption Insurance Claims Source: https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/ *Have you suffered financial loss in your business due to the pandemic yet your insurer is refusing to payout? If you think you have a case, get in touch with our team of business interruption lawyers. We can assist you to understand the merits of your insurance claim and advise you on the best way to obtain fair compensation. Following our review, we may offer to take on your case on a **no win no fee** basis such as a [Damages Based Agreement (DBA)](https://lexlaw.co.uk/litigation-solicitor-funding-second-opinion-damages-based-agreements-dba-legal-representation-costs-advice/).* *We factor in your risk-appetite, costs sensitivity and determination and depending on the merits of your case, we are open to considering contingency fee agreements with you (such as DBAs) if your case is of high value.* *It is is essential that you [seek expert legal advice](https://lexlaw.co.uk/contact-us/) early in order to prepare your Business Interruption Insurance claim and stand the best chance of success.* ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Why use a solicitor instead of a broker to submit your BII Claim? Our [Business Interruption Insurance Claim Solicitors](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse. If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. [Our litigation lawyers](https://lexlaw.co.uk/our-people/) are experienced in settlement negotiations to get an optimum award for our clients. ## What is a Damages Based Agreement (DBA)? Damages-based agreements (DBAs) are a form of funding for civil cases. DBAs are agreed between a solicitor and a client. A DBA is a form of “no win, no fee” arrangement between a solicitor and a client. ## How does a Damages Based Agreement work? A damages-based agreement is a contingency fee agreement agreed by a solicitor and a client which provides that a client will make a payment to the representative if the client obtains “a specified financial benefit” (usually damages paid by the losing side or via a settlement sum extracted). The amount of the payment will be determined as a percentage of the compensation received by the client (which will be set out in the DBA and agreed with the client in advance). If the client is unsuccessful in their litigation case, the solicitor will not be paid for the work done under the DBA. ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Instruct the UK’s leading law firm on Damages Based Agreements We understand the importance of promoting and furthering individual access to justice particularly during these unprecedented and uncertain economic times. [Our work](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-dba-high-court-judgment-lexlaw-vs-shaista-zuberi-comments-analysis-legal-advice/) on ensuring DBAs are accessible to all has made the national headlines and is the subject of a [leading UK Court of Appeal case](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-court-of-appeal-upholds-enforceability-of-dba-lexlaw-vs-shaista-zuberi-comments-analysis/). ## Looking for a solicitor that can offer a DBA? When you instruct us to resolve your legal problem, your case will be dealt with by [highly qualified and experienced lawyers](https://lexlaw.co.uk/our-people/). The firm is made up of exceptional lawyers who are practising solicitors and barristers supported by high quality paralegals, legal apprentices and other legal support staff. We regularly work in conjunction with leading Queen’s Counsel and junior barristers from chambers predominantly in London near to our own chambers in [Middle Temple](https://www.middletemple.org.uk/). The strength of the legal teams available to our clients helps ensure matters are progressed efficiently and the very best results are obtained for our clients. To find out more about the people likely to assist you please view our individual profiles. If you have a legal matter and need to discuss the best way forward (including discussing the funding options available to you in your litigation) do not hesitate to contact us. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Property Disputes: Cladding Compensation Claims Source: https://lexlaw.co.uk/property-disputes-cladding-compensation-claims-landlord-tenant-building-owner-developer-surveyor-architect-conveyancer-professional-negligence/ *Following the tragic events of the Grenfell fire and amendments made to Building Regulations, government recommendations have been made to re-assess external cladding on tower blocks to ascertain whether the cladding complies with the regulations. Who will be responsible for effecting these changes and covering the costs of the same? Whether you are a tenant, landlord or building owner or property manager, our property litigation team can advise you.* ## What is cladding and what are the changes? Cladding is a material in the outer layer of a building to improve insulation and energy efficiency and often improve appearance. Following the events of the fire at [Grenfell Tower](https://www.grenfelltowerinquiry.org.uk/), there was a surge in investigations and claims involving cladding, which were said to have been a significant factor as to why the fire spread so quickly. The [Building Amendment Regulations 2018 SI 2018/1230 ](https://www.legislation.gov.uk/uksi/2018/1230/contents/made)came into force on 21 December 2018 which banned the use of combustible materials in the construction of external walls. Recommendations have been made to re-assess external cladding on tower blocks to ascertain whether the cladding complies with the Government's regulations. ## Who is responsible for assessing and replacing flammable cladding? Lease agreements will normally provide for responsibility of the "Common Parts" of a property and responsibility for fire safety in apartment buildings can be imposed on the landlord/freehold proprietor for the building, the Management Company or the leaseholder. Tenants are required to pay a service charge to their landlords as part of or in addition to the rent to cover the landlord's costs in complying with obligations under the lease e.g. service, repairs and improvements. The amount a landlord can recover must be for works that were reasonable for the landlord to undertake and completed to a reasonable standard. Landlords should cary out thorough risk assessments and consider carefully any obligations to repaid and subsequent recovery of these costs from their tenants. Whether you are a tenant, building owner or property manager, you should seek legal advice as soon as possible. ## I am a tenant. How do I make a claim? A physical inspection of a property will determine if there is cladding and the necessary enquiries can then be made. When purchasing a leasehold property, the Seller and Management Company should provide information in respect of any works that have been undertaken in the last three years in addition to proposed works. This information should also include details of any risk assessments which have been carried out. You should ensure the necessary enquiries are made when purchasing a property and that any concerns are raised. You should consider your lease agreement for responsibility for paying for replacement cladding and seek legal advice as soon as possible. If you feel as you were misinformed or misadvised, you may have a claim against the professional who advised you whether architect, surveyor or solicitor. ## I am a building owner, can I claim? Building owners should investigate and seek advice on any claim against architects and professionals responsible for designing and undertaking the cladding work in their property. If you feel as you were misinformed or misadvised, you may have a claim against the professional who advised you whether architect, surveyor or solicitor. Where a lot of buildings will have been built many years ago, you should seek advice as soon as possible to avoid any limitation issues. ## Will my insurers cover any costs of repairs? In  *Zagora Management Ltd and others v Zurich Insurance plc and others [2019] EWHC 140 (TCC)*, leaseholders of two blocks of flats in Manchester became aware of defects in the development. The leaseholders and freeholder commenced a claim against Zurich Insurance plc, the insurer who provided a new home warranty in relation to the flats and Zurich Building Control Services Ltd, providing approved inspector services certifying compliance wit the Building Regulations. The claim succeeded as the property was found to be seriously defective and required major and expensive repairs falling within the cover afforded by the building warranties issued by Zurich. The claims were limited to the purchase price of the flats pursuant to the maximum liability caps in the warranties. ## Complaint about an architect? Architects are highly trained and regulated by the [Royal Institute of British Architects (RIBA)](https://www.architecture.com/). All members at RIBA are mandated to follow the [Code of Professional Conduct](https://www.architecture.com/-/media/gathercontent/work-with-us/additional-documents/riba-code-of-professional-conduct--may-2019pdf.pdf) (with a new code effective from 1 May 2019). Core principles include acting with integrity; keeping the client informed; record keeping; inspection services; building performance and certification. RIBA have an alternative dispute resolution process including arbitration, adjudication and mediation. However, in order to protect legal rights from expiring, it is vital to[ seek legal advice](https://professionalnegligenceclaimsolicitors.co.uk/) at the outset of any dispute first to consider your options before considering making a formal complaint to RIBA. ## Who regulates property solicitors and licenced conveyancers? Licenced conveyancers are specialist legal professionals that have been specifically trained to practice property law. Solicitors can also deal with property transactions. Legal professionals such as solicitors and barristers are highly trained and rigorously regulated by the [Solicitors Regulation Authority](https://www.sra.org.uk/home/home.page) (SRA). A high level of trust is placed upon such lawyers by their clients. If a lawyer fails to deliver the service to the standard expected of a reasonable professional in the speciality field of conveyancing, then a client has every right to bring a complaint (and court proceedings) if financial or personal loss is suffered as a result. Licenced conveyancers are also regulated by the Council for Licenced Conveyancers (CLC), which is the specialist property law regulator. The CLC provides regulation for those conveyancers who do not practice as solicitors, but instead are specialists, who have been trained only in conveyancing. The CLC investigates misconduct, takes disciplinary action and sets training standards for licensed conveyancers. ## Complaint about a RICS surveyor or valuer? Incorrect survey report? Failure to identify defects at the property? Failure to identify subsidence issue? Over-valuation of property by valuation expert? Property experts such as surveyors are highly trained and regulated by the [Royal Institution of Chartered Surveyors (RICS)](https://www.rics.org/uk/). The RICS holds itself out as promoting and enforcing the highest international standards across the built and natural environment. Conveyancers, if they are legally trained, will be regulated by the[ Solicitor’s Regulation Authority (SRA)](https://www.sra.org.uk/home/home.page).   In order to bring a complaint against a property expert, then you must prove that the professional fell below the standard of care. ## Do I have a professional negligence claim in relation to cladding issues? If you relied on a professional such as an architect, surveyor or conveyancer to advise you on any potential issues and you feel you have not been given adequate advice or any at all, then you may have a claim for professional negligence. The following three elements need to be proved to the civil standard of proof on a balance of probabilities i.e. it must be proven that the lawyer’s breach in the duty owed to its’ client, more likely than not caused the client to suffer loss. 1.Demonstrate that the professional owed you a **duty of care**: the boundary lines between when a tortious duty of care is owed or not owed is subject to tests that are being continuously adapted by the courts. It is safe to say that a duty of care exists where the professional can be shown to have objectively assumed responsibility (and the courts have demonstrated increasing willingness to find that a professional is liable to whomever reasonably relies on their advice). Once a professional accepts instructions and you have signed the client care letter, a contractual duty of care will likely be found within that document. 2. Establish that the professional has **breached** the duty of care owed to you: proving breach will obviously vary depending on the individual circumstances of the case. A claimant needs to demonstrate that the breach shows that the professional fell below the standards of a reasonably competent property professional. The particular level of experience of the professional (from newly qualified to highly experienced partner) is not relevant- inexperience is no good argument to persuade the court to lower the standard of care. However, if a professional or firm hold themselves out as specialists in an area (for example solicitors specialising in conveyancing), then the court will hold them to standard of reasonably competent specialists of conveyancing law. 3. Prove that the professional's breach **caused loss** to you: you must prove both factual and legal causation. The test for factual causation is that “but for” the breach you would not have suffered loss, for example if a limitation date and as a result your claim becomes statute barred and you lose the chance to substantial damages in the substantive claim, factual causation is demonstrable because “but for” the solicitor’s negligence you would still have a claim that was not time-barred and still have a chance to achieving damages. Legal causation must also be proved i.e. the loss must be reasonably foreseeable at the time when the relevant duty was breached. ## Instruct Property Litigation Lawyers Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. If you are a commercial tenant and wish to obtain advice on your current position, please call our property litigation team on ☎ 02071830529 --- # Khurshid Ali Source: https://lexlaw.co.uk/our-people/khurshid-ali/ Head of Immigration; June 2021 - April 2022 --- # Lucy Tissiman Source: https://lexlaw.co.uk/lucy-tissiman/ --- # Andrew Young Source: https://lexlaw.co.uk/andrew-young/ Andrew Young is a leading UK tax barrister with over 30 years of experience specialising in tax litigation and dispute resolution. Recognised as one of the foremost advocates in his field, Andrew has appeared in many of the most significant tax cases before the UK Tax Tribunals, the High Court, the Court of Appeal and the European Courts of Justice and has acted for many high profile taxpayers including well known brands and individuals. His background includes senior roles within both government and the private sector. He began his career as Counsel for HM Customs & Excise (now HMRC), later becoming Head of Indirect Tax Litigation at Deloitte and subsequently the National Tax Litigation Director at PricewaterhouseCoopers (PwC). This rare combination of public and private sector expertise equips him with unique insight into complex disputes with HMRC. Andrew’s casework includes several landmark decisions shaping modern tax law, such as: - **Han v Yau** – establishing that tax penalties are criminal in nature, requiring HMRC to respect human rights during investigations. - **Teleos** – confirming that an intra-community trader acting in good faith may claim zero-rate VAT, even where goods were not ultimately exported. - **Marks & Spencer** – a high-profile challenge to the three-year cap on reclaiming back-dated VAT overpayments. We have instructed Andrew for decades and continue to regard him as a first-class counsel of choice. Our strong working relationship enables us to secure urgent and pragmatic advice, as well as robust representation, for our privately funded clients at the most critical stages of a dispute — when it matters most. --- # Mohammed Jehanzeb Ghumman Source: https://lexlaw.co.uk/our-people/m-jehanzeb-ghumman/ Mohammed Ghumman: Head of immigration until 7 July 2023; we are recruiting a replacement. --- # FCA IRHP Swap Review: How to appeal an unfair ‘Sophisticated’ Customer classification. Source: https://lexlaw.co.uk/fca-irhp-swap-review-how-to-appeal-an-unfair-sophisticated-customer-classification/ In June 2019, the [FCA](https://www.fca.org.uk/) appointed [Mr John Swift QC](https://www.monckton.com/barrister/john-swift-qc/) as an i[ndependent reviewer for the lessons learned review commissioned by the FCA’s board](https://www.monckton.com/fca-appoints-john-swift-qc-to-review-the-redress-scheme-for-interest-rate-hedging-products/). His 493 page report is available [here](https://www.fca.org.uk/publication/corporate/independent-review-of-interest-rate-hedging-products-final-report.pdf). LEXLAW is the leading law firm representing SME victims of the mis-selling by major banks of complex interest rate hedging products (IRHPs). ## Bank Exclusion of 34% of IRHP victims by labelling them as "Sophisticated" Whilst the FCA Review scheme paid out over £2.2 billion in redress, over a third of customers were excluded by bank contrived changes to the redress scheme to exclude compensation on the biggest cases. The Swift Report determined that following Bank persuasion, the FSA (as it then was) allowed the scope of the entire FCA IRHP Review Scheme to be limited to 'non-sophisticated' customers. The **Initial Sophisticated Customer Criteria** meant that customers would be classed as sophisticated if they had at least two of: (i) a turnover of more than £6,500,000, (ii) a balance sheet total of more than £3,260,000, or (iii) more than 50 employees. In addition, customers (even if they fell below the quantitative criteria) would also have been classed as sophisticated if the relevant bank was able to demonstrate that, at the time of the sale, they had the necessary experience and knowledge to understand the service provided and the type of the product, including their complexity and the risks involved. ## LEXLAW's Campaign against Sophistication Exclusion We have [previously written to the FCA in 2013](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf), on behalf of our SME clients who have been mis-sold IRHPs by a wide range of banks (including [Barclays Bank](https://www.barclays.co.uk/), [HSBC](https://www.hsbc.co.uk/), [Lloyds Bank](https://www.lloydsbank.com/), the [Royal Bank of Scotland](https://personal.rbs.co.uk/personal.html) and [Clydesdale ](https://secure.cbonline.co.uk/)and Yorkshire Banks ) to share their grave concerns about the review, which views we share. [LEXLAW](https://lexlaw.co.uk/wp-content/uploads/2019/10/260919-Letter-to-John-Swift-QC.pdf) also wrote to [Mr John Swift QC,](https://lexlaw.co.uk/wp-content/uploads/2019/10/260919-Letter-to-John-Swift-QC.pdf) putting the FCA on (repeated) notice of its failings in relation to the Financial Conduct Authority’s (FCA) implementation and oversight of the Interest Rate Hedging Products (IRHP) review and redress scheme. A copy of our letter to John Swift QC appears at this [link](https://lexlaw.co.uk/solicitors-london/lexlaw-raises-concerns-with-the-fca-on-its-implementation-and-oversight-of-the-irhp-review-redress-scheme/) headed "[REPEATED NOTICE OF FAILINGS IN THE FCA’S IMPLEMENTATION AND OVERSIGHT OF THE INTEREST RATE HEDGING PRODUCTS (IRHP) REVIEW AND REDRESS SCHEME"](https://lexlaw.co.uk/solicitors-london/lexlaw-raises-concerns-with-the-fca-on-its-implementation-and-oversight-of-the-irhp-review-redress-scheme/). You will note in particular that we attacked the exclusionary sophistication criteria which was clearly designed to arbitrarily exclude proper redress and thereby to save major banks billions of pounds in redress that was truly due. ## How to Appeal a "Sophisticated" Customer Classification to the FCA (14 December 2022 Deadline) It has been announced (via [The Times' James Hurley](https://www.thetimes.co.uk/article/hidden-clocks-ticking-over-swaps-fiasco-xq2ztr27s)) that the FCA will accept sophistication assessment appeals until 14 December 2022. Such appeals can now be lodged for customers that were classified as sophisticated yet in spite of its failings the FCA has not written to alert the 5000 customers or directed the banks to do so. The regulator’s approach is that complaints should be made within a year of the date on which the complainant first became aware of the circumstances giving rise to the complaint. As the [Swift Report was published by the FCA on 14 December 2021](https://www.fca.org.uk/news/press-releases/fca-publishes-swift-review-supervisory-intervention-interest-rate-hedging-products), this means companies only have a short time left to register their complaint. This deadline and complaints policy have not been publicised, only appearing in FCA board minutes. An FCA spokeswoman said to the Times: “We will always investigate complaints made within 12 months of the issue being known to the complainant, and we also have the flexibility to investigate complaints raised after that time so long as reasonable grounds for delay are shown.” Since 2011, we have developed a leading track record in obtaining many millions of pounds of redress compensation and damages. We issued more claims against major banks for the mis-selling of IRHPs and hidden swaps than all other UK law firms combined. We are still conducting cases in particular for [individuals sold fixed rate loans](https://lexlaw.co.uk/nationwide-mis-selling-hidden-swaps-and-break-costs-in-fixed-rate-tbl-loans/) with hidden swaps embedded in them causing huge break costs. We are well equipped and able to assist those that wish to lodge a detailed appeal to the FCA by making written submissions on behalf of customers that previously received a sophisticated customer classification. Given our track record, experience and specialist knowledge and understanding, we are readily able to identify and appeal aspects of cases that highlight major banks unreasonably excluding customers from the FCA IRHP Review scheme by improper application of the Sophistication Assessment process. **FCA SOPHISTICATION APPEAL DEADLINE: 14 DEC 2022** If you wish to lodge a detailed submission to seek to overturn your sophisticated customer assessment you must act as a matter of urgency. We understand what arguments work and can be instructed to lodge a detailed statement on your behalf. Please get in touch with our Financial Services Litigation team on 02071830529 or by [email/contact form](https://lexlaw.co.uk/contact-us/). Customers were only able to have their cases considered under the Review if they were assessed by the banks as being “non-sophisticated” customers. It is therefore concerning that allowing the banks to decide which customers were included in the Review allowed the banks to unfairly exclude some of their customers from the Review. We note from the FCA that over 34% of IRHP sales were excluded from the Review on the basis that those customers were allegedly “sophisticated”. However, we know from our own experience that this included customers who were not sophisticated in any normal sense of the word. It was and remains a major source of concern that any customer who disagreed with their bank’s decision to classify them as “sophisticated” had to appeal to their bank rather than to an independent body capable of making a fair and independent decision. ## Case Study 1: Lloyds Bank's efforts to deny Company C Redress via the FCA Review By way of a first example, we wrote to Lloyds regarding their erroneous assessment of our client, Company C, as “sophisticated”. However, despite the arguments advanced on behalf of Company C, Lloyds were able to continue improperly excluding our client from the Review, and our client had no effective recourse to obtain regulatory redress and had to turn to litigation. Company C, which was sold two Category A interest rate hedging products by Lloyds on 24 July 2007, and was sold another Category A product on 1 December 2008 (with Category A being the category designated by the FCA for the most complex interest rate hedging products). On 27 September 2012, Lloyds wrote to Company C to confirm that they had been assessed as a “non-sophisticated” customer and were included in the pilot Review for the sales of all three products. Company C was asked to provide additional information to Lloyds in order to *“assist us with the Review of your cases”*, and provided this information in October 2012. Company C then met with Lloyds under the Review on 25 October 2012, and then heard nothing further from Lloyds about the Review, even though customers who had been sold Category A products should have proceeded straight into the redress phase. Following the FCA’s revision of the sophistication assessment criteria on 31 January 2013, Lloyds decided to erroneously re-assess Company C as instead being a “sophisticated” customer. However, for reasons that Lloyds failed to explain, Lloyds failed to communicate this decision to Company C until 23 August 2013, even though the applicable limitation date was on 24 July 2013 (being six years after the first sale). Fortunately, Company C sought legal advice in time and protected its limitation period by issuing a protective claim form in July 2013, and subsequently obtained [redress](https://lexlaw.co.uk/solicitors-london/statement-by-coin-group-re-litigation-settlement-with-lloyds-bank-plc-swaps-irhp/) through litigation. Under this settlement, which was reported in the [Sunday Times](https://www.thetimes.co.uk/article/we-will-battle-on-warn-victims-of-bank-mis-selling-wq73g9ghcns), Lloyds agreed (i) to pay £890,523.98 GBP in respect of all derivatives payments previously paid by the customer, (ii) to bear the break cost of the one extant hedging product estimated in the sum of around £3.5 million GBP, and (iii) to pay £200,000 GBP towards the care home’s legal costs. The litigation settlement cost Lloyds Bank Plc in the region of £4.6 million GBP, which amounts to almost the entire claim value, although the bank continues to deny any liability and evaded paying any compensation in the FCA Review via self-assessing Company C as "sophisticated". ## Case Study 2: Family K - Denied over £1m Redress in the FCA Review by being wrongly classified by the Bank as Sophisticated By way of a further example, we also refer to the experience under the Review of another of our SME clients, Family K, who agreed a suspension of payments under their interest rate hedging product with Lloyds in February 2013. However, Lloyds stated that it could terminate that suspension in the event that Family K was notified that *“you are not within scope of the Review because you are a “sophisticated customer”*. Lloyds subsequently stated in May 2013 that it had classified Family K as an intermediate/professional customer, as a result of which our client was required to resume making payments that it could not afford. Despite repeated requests by us, Lloyds declined to provide any explanation of this incorrect classification, which only served to wrongly exclude Family K from the Review. As the case fell just inside the limitation period, Family K instructed us to investigate and commence legal proceedings, following which [Lloyds were forced to pay Family K full compensation (in excess of £1 million) for the mis-sold product](https://lexlaw.co.uk/solicitors-london/swap-misselling-case-settlement-revealed-irhp-the-times-lloyds-missold-derivatives/). It is of grave concern that, had circumstances been slightly different, Family K might have been unjustly excluded from any effective redress by their apparently arbitrary exclusion from the scope of the Review. There does not appear to have been any objective basis for determining whether a particular customer is “sophisticated”, and this unfair application of the sophistication assessment was symptomatic of a review process that allowed the wrongdoer banks to determine their own regulatory misconduct. ## Case Study 3: Company G - Retail Client Excluded by Improper Sophistication Assessment Criteria In addition to the significant issues concerning the application of the sophistication assessment by the banks (as explained above), there were also fundamental flaws in the criteria contained within the sophistication assessment itself. We refer with great concern to the experience of our client, Company G, who was classified by Yorkshire Bank as a retail client before being sold an interest rate swap on that basis in May 2008. Company G was classified as a retail client rather than a professional client because Yorkshire Bank correctly recognised that our client did not have any experience or knowledge of interest rate hedging products and was therefore non-sophisticated. However, Yorkshire Bank subsequently attempted to exclude Company G from the Review by including the turnover and net assets of Company G’s parent company and thereby mis-classifying Company G as a “sophisticated” customer (under the revised sophistication assessment criteria). Retail clients such as Company G are entitled to the “most regulatory protection” and it is therefore unacceptable that the FCA allowed wrongdoer banks to deny their SME customers any regulatory protection even when those customers were previously considered (at the time of sale) to be non-sophisticated. ## Excluding Customers by Bank Assessment of Customer Experience and Understanding as to Risks In addition, according to [the FCA’s own flowchart about the Review](https://www.fca.org.uk/your-fca/documents/fsa-irs-flowchart), there was a stage in the sophistication assessment where a bank could decide that a customer had, at the time of sale, *“the necessary experience and knowledge to understand the service to be provided and the type of product or transaction envisaged, including its complexity and the risks involved”*, thereby defining that customer as “sophisticated” and so excluding that customer from the Review. However, there were no stated parameters as to how a bank should decide whether a customer actually had that level of experience and knowledge in relation to interest rate hedging products at the time of sale. Therefore, given the astonishing level of discretion allowed to the banks in making this decision, it was possible for a bank to arbitrarily exclude a customer from the Review by claiming that the customer had the requisite level of knowledge and experience. ## Unreasoned Exclusion of £10 million+ IRHP Customers as automatically Sophisticated Furthermore, we also note that customers were defined as sophisticated (and therefore excluded from the Review) if they had existing IRHPs with a total value of more than £10 million. However, this criterion was flawed and unjust: what would happen if a customer who had a loan of £3 million with a bank was sold £11 million in IRHPs (which that customer could not afford to break) by that bank? Under the criterion in the Review, that customer would have been assessed as “sophisticated” and excluded from the Review, even though that customer would have been the victim of substantial over-hedging by its bank. Given that the FCA noted back in June 2012 that over-hedging had been a recurrent problem with the banks’ mis-selling of IRHPs, this was a disturbing and illogical omission by the FCA and only served to deny redress to many customers who suffered most from the banks’ mis-selling of IRHPs precisely because of the high and excessive value of the IRHPs in question. ## Instruct us to handle your appeal promptly - Deadline of 14 December 2022 It is now possible to appeal to the FCA even if you have litigated, depending on the facts and circumstances of your case and the method of your exclusion. The FCA are not publicising or instructing the banks to write to "sophisticated" customers about the availability of this appeal. This is undoubtedly in order to minimise the number of complainants and to save the major UK banks billions of pounds in compensation. If you wish to appeal you must act promptly. We’re the only City of London law firm that operates from professional legal chambers in the [Middle Temple](http://www.middletemple.org.uk/) [(a Barristers’ Inn of Court)](https://en.wikipedia.org/wiki/Inns_of_Court) opposite the English High Court. Our dual-qualified solicitors & barristers will advise on the merits of your specific appeal case and deliver the best legal strategy to give you the optimal chance of reversing the bank sophistication assessment decision. Get in touch with our team: ✉ [FCAappeals@lexlaw.co.uk](mailto:contact@lexlaw.co.uk?subject=Lexlaw.co.uk%20Enquiry) | ☎ [02071830529](tel:+442071830529) --- # Individuals Mis-sold Fixed Rate Loans with Swap Break Costs Source: https://lexlaw.co.uk/individuals-mis-sold-fixed-rate-loans-with-swap-break-costs/ *Our firm are experts in dealing with [Fixed Rate Loan (Hidden Swap) mis-selling cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/) and have achieved significant settlements for clients in terms of recovery of embedded derivative break costs and interest and legal costs. * Claims brought by individuals who were mis-sold a fixed rate loan (FRL) are not necessarily time-barred as we have developed inventive litigation strategies to successfully bring such claims. ## What is a Fixed Rate Loan (FRL or TBL)? FRLs are 'Loan agreements with embedded swap/hedging terms'. They carry massive break cost risk and contingent liability that customers are unlikely to have actually understood. A number of major UK banks and building societies sold over 60,000 FRL products to customers in the decade or so from 2001. Well-known banks and building societies engaged in such practice, for example: Lloyds Bank, Nationwide, Yorkshire Bank/Clydesdale Bank (known as TBLs - Tailored Business Loans), RBS/NatWest, HSBC, HBOS and Barclays. Several of these financial services institutions have settled and continue to settle mis-sold FRL claims once experienced FS Litigation solicitors are instructed. ## The Embedded Swap/Hedging Terms Fixed Rate Loans have properties which behave in a manner similar to complex financial derivatives, which provide customers with the certainty of knowing what their interest rate will be for a fixed period of time in return for a large financial risk. > *In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.* > > [Warren Buffet, Berkshire Hathaway, Annual Report, 2002](https://www.berkshirehathaway.com/letters/2002pdf.pdf) Warren Buffet has described derivatives as weapons of mass financial destruction; derivatives sales in the UK and EU are heavily regulated meaning they cannot be sold to unsophisticated customers. However, once embedded into Fixed Rate Loans, banks avoided the UK FSMA regulatory framework and mis-sold the products widely. ## What is the problem with Fixed Rate Loans? As well as massive break costs risks on exit, other problems we have seen are that the lifetime of the interest rate fix may not, however, be the same as the lifetime of the loan. In many cases, the fixed term of the interest rate fix may be shorter; exposing customers to fluctuating interest rates after the end of the fixed rate period. Most concerningly, many of the fixed rate loans sold by high street banks in recent years expose a customer who wishes to refinance their loan before the end of the term of the fixed interest rate, to significant break costs. ## Litigation Recovery of Break Costs Lexlaw Solicitors & Barristers are the leading law firm in this area and have helped more clients bring swaps mis-selling litigation than all other law firms in the UK combined. Our successful litigation work has been reported on BBC News, Panorama, Sky News, ITV News, 4 News, The Times, The Sunday Times, The Financial Times, The Daily Mail as well as many other publications. The firm's work was also mentioned in 'Shredded: RBS - The Bank that Broke Britain' - an investigative book by journalist Ian Fraser and in many other publications as well as cited in the UK Parliament by MPs. ## We can assist you to bring a compensation claim if: - you have been sold a Fixed Rate Loan- are an individual customer (not a Limited entity appearing on Companies House)- or are a partnership (not an LLP appearing on Companies House) Most swaps mis-selling claims are now time-barred by virtue of the Limitation Act 1980 (save for where s 32 LA 1980 can be pleaded for cases where fraud, deliberate concealment or mistake was a central plank of the claim. However Lexlaw have devised new strategies to force banks to settle FRL cases or face strong litigation claims that would open the floodgates. Please get in touch on ☎ [02071830529](tel:+442071830529) or [contact us](https://lexlaw.co.uk/contact-us/). ## Case Study: Settlement obtained for Individual Mis-sold Fixed Rate Loan One of our clients entered into a fixed rate loan for a high value over a lengthy term which was secured against a property. The interest rate applicable to the loan was fixed at a rate equal to the interest margin plus a rate quoted by another division of the bank at the time of fixing. Our client was paying a much higher rate than the market rate and therefore wished to re-finance his loan several years later, before the end of its term: and before the end of the fixed rate interest period. As a result of his desire to refinance the loan (which made financial sense save for the break cost), he was compelled to pay a significant sum of money which the bank attributed to its “break costs”. This, to us, was a sign that the bank had hedged is own interest rate exposure in the interbank market and passed on all the liability and risk of that hedge to their customer. This was far from the hallmark of a fair banking relationship. Our client had been complaining to the bank for years both himself and and via two other UK solicitor law firms and their counsel. None of these complaints had lead to any offer of resolution. Lexlaw have a [market leading reputation](https://lexlaw.co.uk/media-interest/) for acting for claimants in these categories of claims and the banks are well aware that we pursue litigation surefootedly and aggressively when needed including obtaining media interest on behalf of our clients. Unlike the previous two law firms, Lexlaw was able to settle the claim and recover the break costs that its client paid, together with interest on those break costs. Furthermore we were also able to obtain a significant majority contribution towards our client's legal costs. Many people think that claims such as this are out of time by reason of the Limitation Act 1980. That is not, however, not necessarily the case where the fixed rate loan was sold to an individual. If you are individual who has been sold a fixed rate loan by a Bank in the past, please contact us as soon as possible so we can give you specific advice on your case. --- # Client Portal Source: https://lexlaw.co.uk/clients/ [jetpackcrm_clientportal] --- # Client Portal Source: https://lexlaw.co.uk/clients-2/ [jetpackcrm_clientportal] --- # Appeal for Arbitral Awards Source: https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/appeal-for-arbitral-awards/ Arbitration is a form of dispute resolution that involves the parties to a dispute agreeing to submit their case to an impartial third party, known as an arbitrator. The arbitrator is empowered to make a binding decision, known as an arbitral award, which the parties agree to abide by. However, in some cases, a party may wish to challenge the arbitral award, for example, if they believe that the arbitrator made a mistake or acted improperly. In the UK, parties may appeal an arbitral award under Section 69 of the Arbitration Act 1996. The Arbitration Act of 1996 provides parties with the option of resolving disputes outside of the court system through arbitration. While arbitration is intended to be a faster and more efficient means of dispute resolution, parties may still be dissatisfied with the outcome of the arbitration process. ## What is an Arbitral Award? An arbitral award is the final decision made by the arbitrator after hearing the evidence and arguments presented by both parties. The award is binding on both parties and is enforceable in the same way as a court judgment. The arbitrator's decision is usually based on the evidence presented, the applicable law, and the terms of the arbitration agreement ## Overview of Section 69 of the Arbitration Act of 1996 Section 69 of the Arbitration Act of 1996 provides parties with the ability to appeal an arbitral award on a point of law. Specifically, this section permits a party to appeal to the court on a question of law arising out of an award made in an arbitration. The section applies to both domestic and international arbitration, and allows appeals to be made to both the High Court and the Court of Session in Scotland. In order to bring an appeal under Section 69, the party seeking the appeal must first seek permission from the court. The application for permission must be made within 28 days of the date of the award, or such longer period as the parties may agree. The court will only grant permission to appeal if it is satisfied that the question of law is one which affects the outcome of the award. ## Setting aside an Arbitral Award In the UK, the process for setting aside an arbitral award is governed by the Arbitration Act 1996. The Act outlines specific grounds on which an award can be challenged, including irregularity in the conduct of the arbitration proceedings, lack of jurisdiction on the part of the arbitrator, or the award being obtained by fraud or corruption. To challenge an award, an application must be made to the court within 28 days of the award being issued. The applicant must also provide evidence to support their claim, which may include witness statements and documentation from the arbitration proceedings. If the court agrees that there are grounds to challenge the award, it may set aside the award in whole or in part. Alternatively, the court may remit the award back to the arbitrator for reconsideration. It is worth noting that the grounds for challenging an arbitral award are limited, and the court will not review the merits of the dispute or the reasoning behind the arbitrator's decision. Therefore, parties should carefully consider whether arbitration is the best option for resolving their dispute before entering into an agreement to arbitrate. ## Grounds for Appeal In order to successfully appeal an arbitral award, a number of requirements must be met. First, the party seeking the appeal must demonstrate that the appeal is based on a question of law. The term "question of law" is broadly interpreted, and includes questions of interpretation and application of the law, as well as questions of procedural or evidential fairness. Second, the question of law must be one that affects the outcome of the award. This means that the court must be satisfied that the outcome of the arbitration would have been different if the question of law had been correctly determined. However, an appeal against an arbitral award is not the same as a rehearing of the dispute. An appeal can only be made on limited grounds, which also include: - The arbitrator lacked jurisdiction to make the award. - The award was made in breach of natural justice. - The arbitrator acted improperly or exceeded his or her powers. - The award is in conflict with public policy. It is important to note that an appeal cannot be made simply because one party is unhappy with the decision made by the arbitrator. There must be a valid legal reason for the appeal. ## Procedure for Appeal - **Initiating an appeal:** The procedure for initiating an appeal against an arbitral award in the UK depends on whether the parties have agreed to an appellate process. If the parties have agreed to an appellate process, the appeal will be made in accordance with that process. If the parties have not agreed to an appellate process, the appeal will be made to the High Court. To initiate an appeal, the party must file an appeal notice in the court within 28 days of the award being made. The appeal notice must include the grounds for appeal and the relief sought. The party must also serve a copy of the appeal notice on the other party. The responding party must file a response to the appeal notice within 28 days of being served with the notice. The response must include the grounds for defending the award and any cross-appeal. - **Hearing of the appeal:** Once the appeal notice and response have been filed, the court will set a date for the hearing of the appeal. The hearing will be conducted in accordance with the Civil Procedure Rules, which govern civil litigation in the UK. The hearing will typically involve the parties making oral submissions to the court. The court may also hear evidence from witnesses and may require the production of documents. The court may also ask the parties to make written submissions before or after the hearing. ## Arbitral Awards – Key Cases A number of key cases have considered appeals against arbitral awards under Section 69 of the Arbitration Act. The key case law regarding appeals against arbitral awards under Section 69 includes the following: - Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43: This case established that the standard of review for appeals under Section 69 is whether the arbitrator made an error of law that was significant to the outcome of the case. - Dallah Real Estate and Tourism Holding Co v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46: In this case, the UK Supreme Court clarified that the court should not embark on a review of the arbitrator's factual findings, as Section 69 only allows for appeals on points of law. - Atlasnavios-Navegacao Lda v Navigators Insurance Co Ltd [2018] EWCA Civ 241: This case confirmed that an appeal under Section 69 requires the appellant to identify a specific point of law that arises out of the award. - Halliburton Company v Chubb Bermuda Insurance Ltd [2018] EWCA Civ 817: In this case, the Court of Appeal considered the issue of arbitrator bias and held that the test for apparent bias in the context of an arbitrator was the same as the test for apparent bias in the context of a judge. These cases provide guidance on the circumstances in which an appeal against an arbitral award may be brought under Section 69, as well as the standard of review and the specific points of law that can be raised. ## City Of London Expert Commercial Arbitration Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. **To [contact us](https://lexlaw.co.uk/contact-us/) about your case please call us on: 02071830529** --- # Complaints Handling Procedure Source: https://lexlaw.co.uk/complaints/ ## Our Complaints Policy We are committed to high quality legal advice and client care to all our clients. When something goes wrong, we need you to tell us about it. This will help us to improve our standards. ## Our Complaints Procedure If you have a concern about any aspect of our service that has not been dealt with to your satisfaction by the person handling your case, please contact our client care partner, Mr Christopher Snell. ## What Will Happen Next? - We will acknowledge receipt of your complaint promptly. - Our client care partner will then investigate your complaint and review your matter file and speak to the member(s) of staff who acted for you. - We will usually invite you within around 14 days to a meeting to discuss and hopefully resolve your complaint. - Within three days of the meeting, we will write to you to confirm what took place and any solutions that can be agreed. - If you do not want a meeting or it is not necessary, we will send you a detailed written reply, including suggestions for resolution, within 21 days of sending you the acknowledgement letter. - If we have to change any of the timescales above, we will let you know and explain why. ## Legal Ombudsman If you are not satisfied, you can contact: Legal Ombudsman, PO Box 6806, Wolverhampton, WV1 9WJ about your complaint. Since 1 April 2023, the time limits for referring a complaint to the Legal Ombudsman are: one year from the date of the act or omission being complained about; or one year from the date when you should have realised that there was cause for complaint. You can contact the [Legal Ombudsman](https://www.legalombudsman.org.uk/) on 03005550333 or enquiries@legalombudsman.org.uk. ## Bar Standards Board The Bar Standards Board can deal with concerns about professional misconduct or breaches of the BSB Handbook, but it does not award compensation. --- # Solicitor Review of Yourcashier.co.uk Legal Cashiers Source: https://lexlaw.co.uk/review-of-yourcashier-mycashier-lawware/ https://yourcashier.co.uk/ Yourcashier.co.uk screenshot ## Low introductory price increased by 31% We used yourcashier.co.uk for our outsourced legal cashiering service and found the service was ultimately lacking - in particular whilst a fair price was agreed to take us away from a competitor they then unilaterally increased it by 30.74%. This aggressive price increase was accompanied by an unreasonable refusal to negotiate or even recognise the percentage increase was significant. In fact, this refusal was a clear breach of the agreed contract which said: > “A fixed fee per calendar month, to be reviewed on an annual basis, and on which review can be varied by agreement, in line with the UK Retail Price Index (RPI), or based on analysis of the volume of transactions in the client and office accounts.” > > > Contractual clause [Yourcashier](https://yourcashier.co.uk/) is/was also known as mycashier or lawprolegal and is now owned by Lawware, a software platform that we considered using but decided not to. We chose the cloud-based [Clio](https://www.clio.com/uk/web/legal-practice-management/) and [Xero](https://www.xero.com/uk/) which are now a market-leading combination in our experience which we recommend highly. We do not recommend [Leap](https://leap.co.uk/), which is originally from Australia, as they bought out older generation software systems like Perfectbooks and then gradually degraded those platforms and increased pricing to push solicitors onto Leap. Clio, originally from Canada, in comparison just grew organically in the UK without any such tactics. ## Review of the Yourcashier Service Provided In summary, our view of the service provided is that there are many different cashiers used that change so time is lost, relationships dont form as promised and mistakes are more easily made compared to having just one Legal Cashier. Also as the organisation is so small that there seem to be corporate governance issues so that a director can direct as they individually wish at their whim rather than professionally and reasonably as is the case in bigger organisations. We had Legal Cashier services provided by: - Lynne Outersson - Heather McCabe - Herlinde Tennant-Davies - Matthew Clark - Erin Sneddon We had rare occasions where it seemed our daily cashiering was not properly done but that did not cause us any problems. Generally the team were competent but it seemed throughout that they were just not as good as our previous providers (thecashroom.co.uk) who it has to be said were very professional throughout including on handover to yourcashier. This is probably the fault of the yourcashier organisation as opposed to the individual cashiers. ## Unfair Charging Method & Price Increase We switched from [cashroom](https://www.thecashroom.co.uk/) to yourcashier due to what we consider is double charging where automated bank entries into xero and clio are counted as two transactions because there are two separate systems (xero for accounts and clio for case management and invoicing). When we joined yourcashier they knew why - because we disagreed with double-counting and felt looking at bank transaction numbers was fairer. Hence the contractual clause quoted above was agreed (but completely ignored by them when it didnt suit them). We consider this method of double-count transaction based charging is contrived and artificial because Clio and Xero sync with each other fully and the bank feeds input all the data into Xero automatically. At the outset we explained this to Lynne and her team and asked them to charge us on the basis of the bank transactions per statements and agree a fixed fee which they initially did. As mentioned, when we first approached yourcashier in 2020 they agreed to a fixed fee and our bank transaction levels did not change significantly (may have gone down) however in 2022 yourcashier (now owned by Warren Wander / owner of Lawware) sought to increase the price by nearly a third and double counted Xero and Clio as their justification while refusing to discuss the percentage change in this massive price increase which is clearly above RPI. Whilst we were prepared to agree an increase that reflected the cost of living crisis and inflation they refused to even discuss the percentage increase and instead of speaking with us (the hallmark of a professional friendly relationship) their director simply terminated our service with just a few days notice in spite of the fact we said we had already agreed to paying the increased price but under protest and wanted a meeting with them to discuss the large price rise and why we felt it was not fair. They simply didn't want to listen. ## Unprofessional Handover We had to ask our chartered accountants to step in on an emergency basis as Yourcashier gave us no reasonable time at all (a few days) and did not even complete their month end correctly using the usual agreed protocols in their haste. Hence we have written this review as to their conduct. Compare this to Cashroom who did a full professional handover to Yourcashier in which they sent them emails and reports had a full conference call with them and us and our accountants to hand over between bookkeepers. Perhaps Cashroom are more expensive than Yourcashier but they seem far more professional in our experience. In the circumstances, we do not recommend Yourcashier to UK solicitors. If you are a UK Solicitor and have any query, do get in touch. --- # Property Litigation Source: https://lexlaw.co.uk/construction-disputes/ Our team of experienced property litigation lawyers specialises in resolving complex legal issues across the property sector. From construction disputes to commercial property transactions and residential property disputes, we provide expert advice and representation to protect your interests. We understand the intricacies of property law and are committed to achieving the best possible outcome for our clients. With decades of experience and extensive knowledge of the UK property market and the applicable laws and regulations, we are well-equipped to handle a wide range of property centric disputes. Some of our lawyers are themselves directors of UK Property development companies. We advise owners, employers, developers, contractors, sub-contractors and construction professionals (including architects and surveyors) in relation to litigation in both residential and commercial construction projects. Our team advise on: - the terms of construction contracts (eg Joint Contracts Tribunal, Institution of Civil Engineers or Federation of Master Builders) - payment disputes under construction contracts - disputes relating to defective works or remedial works - disputes relating to final accounts, including delay and extension of time claims - adjudication, arbitration and alternative dispute resolution - professional negligence on construction projects - contractor or employer insolvency - retention of title claims ## Our Approach to Solving Your Dispute Our objective is to assist clients in proactively preventing disputes or swiftly resolving them. Our services are customised to suit your unique case circumstances. We offer business-oriented guidance to secure the optimal result for our clients. We represent various employer and contractor clients under a broad retainer arrangement, enabling us to provide counsel on construction law matters as they emerge. We are open to exploring alternative funding options when appropriate. ## Our Construction Dispute Services: - **Construction Contract Disputes**: We assist clients in resolving disputes arising from construction contracts, including issues related to contract interpretation, scope of work, delays, payment disputes, variations, and termination. - **Construction Defect Claims**: [Our team](https://lexlaw.co.uk/our-people/) helps clients navigate construction defect claims, such as structural deficiencies, design errors, faulty workmanship, and defective materials, seeking fair compensation and remedial measures. - **Professional Negligence**: If you have suffered losses due to the negligence of architects, engineers, surveyors, or other construction professionals, we can help you pursue professional negligence claims and secure appropriate remedies. - **Adjudication and Arbitration**: We have extensive experience in construction dispute resolution methods, including adjudication and arbitration. Our lawyers are skilled in presenting your case effectively and maximising your chances of a favourable outcome. - **Mediation and Alternative Dispute Resolution**: We understand that litigation can be time-consuming and costly. Therefore, we explore [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) methods, such as mediation, to help our clients reach mutually acceptable resolutions efficiently. ## Key Issues in Property Disputes: > Property litigation involves legal disputes related to real estate. Whether you're a homeowner, landlord, developer, or business owner, our team can assist with a wide range of property-related legal issues. Our experienced lawyers have a deep understanding of property law and are committed to providing effective solutions to protect your interests. - **Delays and Extensions of Time**: Delays in construction projects can have significant financial implications. Our team can advise you on matters related to project delays, extensions of time, liquidated damages, and disruption claims. - **Payment Disputes**: We assist clients in resolving payment disputes, including issues related to progress payments, final accounts, variations, and retention sums. - **Design and Building Defects**: Construction projects can face challenges related to design defects, substandard workmanship, and non-compliance with building regulations. Our lawyers have the expertise to tackle these issues effectively. - **Insurance Claims**: We can guide you through insurance claims involving construction projects, including professional indemnity insurance, public liability insurance, and latent defects insurance. ## Instructing our Property Litigators Facing a property dispute? Don't hesitate to contact our experienced team of property litigation lawyers. We offer a comprehensive range of legal services and will work diligently to protect your rights and interests. Contact us today to schedule a consultation and discuss your specific needs. [Our team](https://lexlaw.co.uk/our-people/) of lawyers has a deep understanding of construction law and extensive experience in handling construction disputes in the UK. We provide personalised legal advice and strategies tailored to the unique circumstances of your construction dispute, ensuring the best possible outcome for your case. We are committed to clear and transparent client communication, with the goal of assisting clients in understanding their choices and preventing or resolving disputes at the earliest opportunity. In addition to examining legal rights and potential remedies, our guidance centers on practical actions aimed at securing the most favorable outcome for the client. ## Instruct our London Property Solicitors & Barristers With decades of experience in our team, if you are facing a construction dispute in the UK, don't hesitate to reach out to our experienced team of construction lawyers. We offer a comprehensive range of legal services and will work diligently to protect your rights and interests. [Contact us today](https://lexlaw.co.uk/contact-us/) to schedule a consultation and discuss your construction dispute needs. We advise owners, employers, developers, contractors, sub-contractors and construction professionals (including architects and surveyors) in relation to disputes arising from both residential and commercial construction projects. --- # Costs Information Source: https://lexlaw.co.uk/costs-information/ ## Price Transparency We want you to have the information you need to make an informed choice of legal services provider, including understanding what the costs may be. We provide transparent and realistic cost estimates. We provide an estimate at the outset of any matter and on request. While the cost of court action can be difficult to estimate our experience enables us to provide you with a reasonable estimate. We are authorised and regulated by the Bar Standards Board. We charge fixed fees which will be agreed in writing in advance. Our minimum fixed fee is £1750 plus VAT which covers a review of papers (around 200 pages) followed by an initial meeting advice from a solicitor and/or barrister. We specialise in litigation and tax disputes, in these areas: - Commercial litigation - Civil litigation - Financial Services Litigation - Bank Litigation - Contractual disputes - Shareholder and partnership disputes - Professional negligence - Injunctions and interim relief - Enforcement proceedings - Winding-up Petitions - Bankruptcy Petitions - Insolvency Litigation - HMRC tax dispute resolution - First-tier and Upper-tier Tax Tribunal representation - Judicial Review - Alternative dispute resolution, including mediation support Our most commonly provided services include: Legal opinions and advice; Drafting pleadings, applications and witness statements; Representation and advocacy at interim hearings, trials and mediations; Strategic litigation advice; Case management and procedural advice; Settlement negotiation advocacy. Timescales vary significantly depending on the complexity and stage of proceedings. Factors affecting timescales may include: Court timetabling and listing availability; The urgency of applications; The complexity of the dispute; The volume of evidence; The responsiveness of parties and third parties; Whether settlement discussions are ongoing. Where possible, estimated timescales will be discussed at the outset of the instruction and updated as the matter progresses. We do not provide any free legal advice. Costs information cannot be provided for every type of matter where we will act, as each case is different. Please [contact us](https://lexlaw.co.uk/contact-us/) to obtain a quotation for legal services. --- # Email Addresses and Telephone Numbers for Courts in England & Wales Source: https://lexlaw.co.uk/email-addresses-and-telephone-numbers-for-courts-in-england-and-wales/ Below, you will find important email addresses and contact information for the main [Courts in England & Wales](https://www.judiciary.uk/about-the-judiciary/our-justice-system/court-structure/). Our lawyers provide trusted case management and our legal representatives maintain seamless communication with the courts to ensure successful litigation outcomes. Should you require expert legal advice or are contemplating a case transfer, we invite you to [book an initial consultation](02071830529) with us. [Our experienced team](https://lexlaw.co.uk/our-people/) of solicitors and barristers is on hand to provide the strategic support you need. ## Reconsidering Your Legal Representation? If you are uncertain about the direction of your case or the advice you are receiving, our [expert litigation solicitors and barristers can offer a comprehensive second opinion for a discounted fixed fee](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/#:~:text=If%20your%20case%20has%20started,running%20your%20case%20to%20trial.). We meticulously evaluate the strengths and weaknesses of your case, consider the relevant legal risks, and tailor our advice to your specific situation. From our very first meeting, you'll receive actionable insights aimed at achieving the best possible outcome. ## Contact Details for UK Courts & Tribunals | **Category** | **Enquiry**** ****Type** | **Enquiry**** ****Detail** | **Email**** ****Address** | **Phone**** ****Number** | | ------------ | ------------------------ | -------------------------- | ------------------------- | ------------------------ | | **Civil National Business Centre** | General Queries | Acknowledgement of Service, AOS | [AOS.CNBC@justice.gov.uk](mailto:AOS.CNBC@justice.gov.uk) | 0300 123 1056 | | Claim Responses | Claim Response, N9A, N9B, Defence, etc. | [ClaimResponses.CNBC@justice.gov.uk](mailto:ClaimResponses.CNBC@justice.gov.uk) | 0300 123 1056 | | Directions Questionnaires | Directions Questionnaire, N180, DQ | [DQ.CNBC@justice.gov.uk](mailto:DQ.CNBC@justice.gov.uk) | 0300 123 1056 | | Judgment Requests | Request for Judgment, N225, N225a | [Judgments.CNBC@justice.gov.uk](mailto:Judgments.CNBC@justice.gov.uk) | 0300 123 1056 | | Case Progression | Notice of Acting, Address Changes, etc. | [CaseProgression.CNBC@justice.gov.uk](mailto:CaseProgression.CNBC@justice.gov.uk) | 0300 123 1056 | | Help with Fees | Help with Fees queries, EX160 forms | [HWF.CNBC@justice.gov.uk](mailto:HWF.CNBC@justice.gov.uk) | 0300 123 1056 | | Attachment of Earnings | Ongoing Attachment of Earnings queries | [CAPs@justice.gov.uk](mailto:CAPs@justice.gov.uk) | 0300 123 1056 | | Charging Orders | Charging Order applications or queries | [Chargingorders.CNBC@justice.gov.uk](mailto:Chargingorders.CNBC@justice.gov.uk) | 0300 123 1056 | | Attachment of Earnings Applications | Attachment of Earnings applications or queries | [AE.CNBC@justice.gov.uk](mailto:AE.CNBC@justice.gov.uk) | 0300 123 1056 | | Warrants or Writs of Control | Warrants or Writs of Control applications | [Writs.CNBC@justice.gov.uk](mailto:Writs.CNBC@justice.gov.uk) | 0300 123 1056 | | Issuing New Claims | Issuing a new claim, N244, N245 applications | [Applications.CNBC@justice.gov.uk](mailto:Applications.CNBC@justice.gov.uk) | 0300 123 1056 | | MCOL IT Assistance | Money Claim Online (MCOL) assistance | [MCOLITassistance@justice.gov.uk](mailto:MCOLITassistance@justice.gov.uk) | 0300 123 1056 | | PCOL IT Assistance | Possession Claim Online (PCOL) assistance | [PCOLITassistance@justice.gov.uk](mailto:PCOLITassistance@justice.gov.uk) | 0300 123 1056 | |   |   |   |   | | **Category** | **Court**** ****Type** | **Court**** ****Name** | **Email**** ****Address** | **Phone**** ****Number** | | **County**** ****Courts**** ****of**** ****England**** ****& Wales** | County Court | London County Court | [enquiries@londoncountycourt.gov.uk](mailto:enquiries@londoncountycourt.gov.uk) | 0300 123 5577 | | County Court | Barnet Civil and Family Courts Centre | [barnet.countycourt@justice.gov.uk](mailto:barnet.countycourt@justice.gov.uk) | 020 8447 7680 | | County Court | Birmingham Civil and Family Justice Centre | [birmingham.countycourt@justice.gov.uk](mailto:birmingham.countycourt@justice.gov.uk) | 0121 250 6767 | | County Court | Bristol Civil and Family Justice Centre | [bristol.countycourt@justice.gov.uk](mailto:bristol.countycourt@justice.gov.uk) | 0117 930 2400 | | County Court | Cardiff Civil and Family Justice Centre | [cardiff.countycourt@justice.gov.uk](mailto:cardiff.countycourt@justice.gov.uk) | 029 2037 6000 | | County Court | Central London County Court | [centrallondon.countycourt@justice.gov.uk](mailto:centrallondon.countycourt@justice.gov.uk) | 0300 123 5577 | | County Court | Clerkenwell and Shoreditch County Court | [clerkenwell.countycourt@justice.gov.uk](mailto:clerkenwell.countycourt@justice.gov.uk) | 020 7947 7900 | | County Court | Croydon County Court | [croydon.countycourt@justice.gov.uk](mailto:croydon.countycourt@justice.gov.uk) | 0300 123 5577 | | County Court | Derby Combined Court Centre | [derby.countycourt@justice.gov.uk](mailto:derby.countycourt@justice.gov.uk) | 01332 622 600 | | County Court | Exeter Combined Court Centre | [exeter.countycourt@justice.gov.uk](mailto:exeter.countycourt@justice.gov.uk) | 01392 415 300 | |   County Court | Leeds Combined Court Centre | [leeds.countycourt@justice.gov.uk](mailto:leeds.countycourt@justice.gov.uk) | 0113 306 2800 | |   County Court | Liverpool Civil and Family Court | [liverpool.countycourt@justice.gov.uk](mailto:liverpool.countycourt@justice.gov.uk) | 0151 296 2200 | |   County Court | Manchester Civil Justice Centre | [manchester.countycourt@justice.gov.uk](mailto:manchester.countycourt@justice.gov.uk) | 0161 240 5000 | | County Court | Newcastle Civil and Family Courts and Tribunals Centre | [newcastle.countycourt@justice.gov.uk](mailto:newcastle.countycourt@justice.gov.uk) | 0191 201 2000 | | County Court | Nottingham County Court | [nottingham.countycourt@justice.gov.uk](mailto:nottingham.countycourt@justice.gov.uk) | 0115 910 3504 | | County Court | Oxford Combined Court Centre | [oxford.countycourt@justice.gov.uk](mailto:oxford.countycourt@justice.gov.uk) | 01865 264 200 | | County Court | Preston Combined Court Centre | [preston.countycourt@justice.gov.uk](mailto:preston.countycourt@justice.gov.uk) | 01772 272 715 | | County Court | Reading County Court and Family Court | [reading.countycourt@justice.gov.uk](mailto:reading.countycourt@justice.gov.uk) | 0118 967 4400 | | County Court | Sheffield Combined Court Centre | [sheffield.countycourt@justice.gov.uk](mailto:sheffield.countycourt@justice.gov.uk) | 0114 281 2400 | | County Court | Southampton Combined Court Centre |     [southampton.countycourt@justice.gov.uk](mailto:southampton.countycourt@justice.gov.uk) | 023 8023 4500 | | County Court | Stoke-on-Trent Combined Court | [stoke.countycourt@justice.gov.uk](mailto:stoke.countycourt@justice.gov.uk) | 01782 854 000 | | County Court | Teesside Combined Court Centre | [teesside.countycourt@justice.gov.uk](mailto:teesside.countycourt@justice.gov.uk) | 01642 340 000 | |   |   |   |   | | **Category** | **Court**** ****Type** | **Court**** ****Name** | **Email**** ****Address** | **Phone**** ****Number** | | **High**** ****Court** | High Court | Royal Courts of Justice | [rcj.qbd@justice.gov.uk](mailto:rcj.qbd@justice.gov.uk) | 020 7947 6000 | | High Court | Manchester District Registry | [manchester.district.registry@justice.gov.uk](mailto:manchester.district.registry@justice.gov.uk) | 0161 240 5000 | | High Court | Birmingham District Registry | [birmingham.district.registry@justice.gov.uk](mailto:birmingham.district.registry@justice.gov.uk) | 0121 681 3000 | | High Court | Bristol District Registry | [bristol.district.registry@justice.gov.uk](mailto:bristol.district.registry@justice.gov.uk) | 0117 976 3000 | | High Court | Cardiff District Registry | [cardiff.district.registry@justice.gov.uk](mailto:cardiff.district.registry@justice.gov.uk) | 029 2037 6000 | |   |   |   |   | | **Category** | **Court**** ****Type** | **Court**** ****Name** | **Email**** ****Address** | **Phone**** ****Number** | | **Tribunals**** ****of**** ****the**** ****UK** | Tribunal | Employment Tribunal | [londoncentralet@justice.gov.uk](mailto:londoncentralet@justice.gov.uk) | 020 7278 4567 | | Tribunal | First-tier Tribunal (Immigration and Asylum) | [iaft@justice.gov.uk](mailto:iaft@justice.gov.uk) | 0300 123 1711 | | Tribunal |   Upper Tribunal (Administrative Appeals) | [uppertribunal@justice.gov.uk](mailto:uppertribunal@justice.gov.uk) | 020 7538 6171 | | Tribunal | First-tier Tribunal (Social Security and Child Support) | [sscst@justice.gov.uk](mailto:sscst@justice.gov.uk) | 0300 123 1142 | | Tribunal | First-tier Tribunal (Tax) | [taxtribunals@justice.gov.uk](mailto:taxtribunals@justice.gov.uk) | 0300 123 1024 | |   |   |   |   | | **Category** | **Court**** ****Type** | **Court**** ****Name** | **Email**** ****Address** | **Phone**** ****Number** | | **Supreme**** ****Court** | Supreme Court | The Supreme Court of the United Kingdom | [registry@supremecourt.uk](mailto:registry@supremecourt.uk) | 020 7960 1500 | ## Why Choose our Superb Solicitors & Barristers? Are you dissatisfied with your current solicitor? Concerned about progress, quality of service or fees? At LEXLAW, we provide an expert case transfer service, ensuring a smooth transition and a fresh perspective on your case. [Our team](https://lexlaw.co.uk/our-people/) has successfully taken over numerous cases, delivering superior legal strategy and support. We recently took on a debt recovery case that another firm didn't have the confidence or experience to handle to conclusion having worked on it for over a year - our team got a 100% recovery within weeks. ## Our Case Transfer Service Includes: - Seamless transfer of your case from your current solicitor to our firm. - Guidance on obtaining and transferring your legal documents. - A thorough second opinion from one of our expert barristers or solicitors. - Review and challenge of your current legal costs, supported by our in-house Legal Costs Disputes team. - Strategies for securing settlements from your former solicitor or their insurer. - Evaluation of potential professional negligence claims against your previous solicitor, with options for no win no fee arrangements. - Strategic advice to maximise your chances of success in litigation. At LEXLAW Solicitors & Barristers, we are committed to delivering exceptional legal services and achieving the best results for our clients. [Contact us](https://lexlaw.co.uk/legal-case-assessment/) today to book your initial consultation and learn how we can assist you in navigating your legal challenges. For tailored legal advice call ☎ [02071830529](02071830529) or email ✉ [litigation@lexlaw.co.uk](litigation@lexlaw.co.uk) --- # What is a Calderbank offer? Source: https://lexlaw.co.uk/what-is-a-calderbank-offer/ *In legal negotiations and settlements, various tools can be employed to facilitate fair resolution via settlement while avoiding lengthy court proceedings. One such tool is the [Calderbank offer](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/), a mechanism that can be a significant litigation tool in the right hands and thereby impact the outcome of legal disputes. * The Calderbank offer principle originates from the landmark case of *Calderbank v Calderbank* [1975] 3 All ER 333 (EWCA), where it was established that a party may make an offer in a legal dispute that is without prejudice save as to costs. This means that while the offer cannot be disclosed in court proceedings related to liability, it can be considered when determining the costs of the case. A Calderbank offer is a "without prejudice, save as to costs" settlement proposal made between litigants in England & Wales. The "without prejudice" element allows both parties to engage in confidential yet candid negotiations, protecting their discussions from being used against them in court. Whilst the "save as to costs" aspect means that the offer can be disclosed to the court when determining who should pay the legal costs. If the party receiving the offer refuses a reasonable settlement and later receives a less favourable judgment, they may be penalised on costs. Calderbank offers are a strategic tool which can encourage settlement and discourage unnecessary litigation. ## What happened in the Calderbank v Calderbank case? The Calderbank offer principle originates from the landmark case of *Calderbank v Calderbank* [1975] 3 All ER 333 (EWCA), where it was established that a party may make an offer in a legal dispute that is without prejudice save as to costs. This means that while the offer cannot be disclosed in court proceedings related to liability, it can be out to the Judge to be considered when determining the case costs. In the Calderbank case itself, which is an ideal way to illustrate the principle, the Court ruled that when a winning party in a legal dispute declines a prior settlement proposal presented by the losing side, the losing party can present this settlement offer as a significant factor when determining the suitable amount of costs to be paid. In practical terms, if the damages awarded to the winning party are lower than the initial settlement offer, the losing party might be liable to pay reduced costs to the winning party compared to the standard scenario. The case of *Calderbank v Calderbank*, the English Court of Appeal established the concept of a "Calderbank Offer." This offer is often marked by the disclaimer "without prejudice, save as to costs." The case involved Mr. and Mrs. Calderbank's divorce; they had been married for 17 years. The key issues were the division of matrimonial assets, primarily an £80,000 inheritance received by Mrs. Calderbank from her parents during the marriage. The matrimonial home was registered under Mr. Calderbank's name, and he continued to live there after the divorce. The Family Court awarded Mr. Calderbank only £10,000 out of the total assets, and the case was complicated by Mrs. Calderbank's earlier offer to give Mr. Calderbank another property. She appealed, arguing that Mr. Calderbank should not be entitled to legal costs because he had declined her reasonable pre-trial settlement offer. The Court ruled that if the winning party in litigation refuses a reasonable settlement offer made by the losing party, the losing party can use that offer as evidence to determine the appropriate level of costs payable. In this case, Mr. Calderbank had declined Mrs. Calderbank's settlement offer of around £12,000, and since his award was less than that amount, the burden of paying legal costs shifted from Mrs. Calderbank to Mr. Calderbank. However, Mrs. Calderbank remained liable for costs incurred up to 14 days after her offer. This decision highlights the significance of considering settlement offers in legal proceedings to determine cost liability. ## Difference Between a Part 36 Offer and a Calderbank Offer? A Calderbank offer differs from [a Part 36](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) offer primarily in its scope and consequences. A [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) offer is a formal offer to settle a claim, often carrying significant cost consequences if not accepted. On the other hand, a [Calderbank offer](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/) is more flexible, as it only affects costs and can be used to demonstrate that the offeror has acted reasonably in attempting settlement. ## What are the key aspects of a Calderbank offer? A Calderbank offer, distinct from a standard offer, possesses the following distinctive attributes: - Marked as “without prejudice save as to costs." - Explicitly references adherence to the principles outlined in *Calderbank v Calderbank*. - Demonstrates clarity and precision in its stipulated terms. - Must be capable of being accepted by the receiving party. - Clearly specifies the acceptable timeframe for responding, typically within a reasonable duration. - Furnishes rationales justifying acceptance of the offer. - Declares that, in case of rejection, the offer will be utilised in an application to the court for indemnity costs. ## When can a Calderbank Offer be made? A Calderbank offer is typically employed in situations where a party wishes to put forward a settlement proposal while safeguarding its position on costs. It can be particularly useful when there is a desire to avoid the potential adverse costs consequences associated with a Part 36 offer. ## How can I Reject a Calderbank Offer? To reject a Calderbank offer, a formal response should be sent to the offeror stating the rejection. Although a Calderbank offer cannot be referred to in liability-related proceedings, parties must still be cautious in their communications to avoid inadvertently waiving legal privilege. ## What happens if I reject a Calderbank offer? Before declining the Calderbank offer, the party receiving it should carefully assess the potential expenses involved in pursuing a court judgment, consider the probability of achieving their desired outcome, and realise that they bear the responsibility of demonstrating why they consider the Calderbank offer to be unreasonable if they decide to reject it. Once the offer is declined and the parties proceed to court, the receiving party must provide substantial justifications for their belief that the Calderbank offer was not reasonable. Furthermore, if the court's final decision yields less favourable terms than those outlined in the Calderbank offer, the receiving party may be obligated to cover the legal costs of the offering party from the point of offer rejection. ## Can a Calderbank Offer be Withdrawn? Unlike a Part 36 offer, a Calderbank offer can generally be withdrawn at any time prior to a court decision on costs. However, the timing and manner of withdrawal can have implications for costs assessment, so legal advice is advisable. ## How Long is a Calderbank Offer Valid For? There is [no fixed timeframe for the validity](https://lexlaw.co.uk/solicitors-london/legal-costs-without-prejudice-calderbank-offer-part-36-time-limit-no-win-no-fee-detailed-assessment-hearing-representation-advice/) of a Calderbank offer. It remains open until a court decision on costs is made or until it is withdrawn by the offeror. ## How Do I Respond to a Calderbank Offer? Upon receiving a Calderbank offer, careful consideration is essential. Legal advice should be sought to evaluate the potential costs implications of acceptance or rejection. Parties may engage in negotiations while being mindful of the without prejudice save as to costs principle. ## What Does Without Prejudice Save as to Costs Mean? The phrase without prejudice save as to costs indicates that communications, negotiations, or offers made under this label cannot be referred to during the main liability-related proceedings. However, they can be disclosed and considered when determining the costs of the case. ## Can you counter a Calderbank offer? The recipient of the Calderbank offer has the option to respond with a counteroffer, which, in effect, nullifies the original proposal put forth by the offering party. Engaging in a counteroffer to a Calderbank offer is advisable, provided it remains reasonable, particularly when deciding to decline the initial proposition. ## Importance of Calderbank offers In the intricate world of legal negotiations, Calderbank offers provide a strategic means to promote settlements while managing the potential costs consequences. Understanding the nuances of this principle, along with its distinctions from [Part 36](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) offers, can empower parties to make informed decisions, navigate negotiations effectively, and potentially achieve more favourable outcomes in their legal disputes. As with any legal matter, seeking professional advice is crucial to ensure proper implementation and maximise the benefits of utilising Calderbank offers. ## Need legal advice regarding Calderbank Offer and its Cost Consequences? Your search ends here. Our [costs team](https://lexlaw.co.uk/practice-areas/) made up of specialist cost lawyers can assist by providing you with a bespoke cost solution to your cost dispute. We can guide you through the minefield of ever-increasingly complex legislation, littered with compliance and due diligence traps. We have [a team of established cost specialist lawyers](https://lexlaw.co.uk/our-people/) with a proven track record of delivering authoritative solutions. ## Not based in London? We provide Cost Related Services Nationwide. That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our [litigation team members ](https://lexlaw.co.uk/our-people/)will contact you by phone to discuss your matter and assess whether we can help you regarding Part 36**, **Calderbank or any other Cost related questions you may have. If we can, we will arrange a conference with a senior member of our litigation team. This meeting will take place either [in person or using our telephone conference facilities](https://lexlaw.co.uk/contact-us/) or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. --- # Types of Construction Disputes Source: https://lexlaw.co.uk/types-of-construction-disputes/ Navigating the intricacies of construction and engineering projects in the UK can often lead to various disputes which have far-reaching consequences on project advancement, financial implications and overall success. It is imperative to have a comprehensive understanding of the types of disputes which commonly arise in the construction and engineering sector. The types of disputes mentioned below aim to provide an overview of the different types of disputes commonly seen in the construction sector, along with insights on how our law firm can provide valuable assistance and expertise. ## Latent and Patent Defects: Remedial Options Latent and patent defects are common in construction projects. Latent defects are hidden issues, not immediately visible, while patent defects are readily apparent problems. Remedial options differ for each: latent defects may be addressed through warranty claims, adherence to statutes of limitations, or builder liability insurance, whereas patent defects are often documented and corrected using snagging lists, retention of payment, or builder-provided warranties. Understanding these distinctions is vital for resolving construction issues effectively and ensuring the quality of work and materials meets the desired standards. [Our law firm](https://lexlaw.co.uk/construction-disputes/) specialises in construction law, enabling us to thoroughly examine contracts, specifications and relevant documentation to identify and assess the nature of defects. We can help determine liability, negotiate with parties involved and pursue appropriate remedial options, ensuring that your interests are protected. ## Managing Project Delays and Disagreements Project delays can lead to significant disagreements between parties. This category encompasses various aspects, such as requests for extensions of time, the identification of "relevant events" causing delays, critical path analysis to identify the sequence of activities affecting the project timeline, claims for liquidated and assessed damages (LADs) and the evaluation of whether LAD clauses may be deemed penalties and therefore voidable. [Our experienced team](https://lexlaw.co.uk/construction-disputes/) can analyse contract terms, extensions of time provisions and "relevant events" to accurately assess delay claims. We can utilise critical path analysis techniques to determine responsibility for delays and provide effective strategies for pursuing claims, or defending against them. Our expertise extends to assessing claims for liquidated and assessed damages (LADs) and evaluating the enforceability of LAD clauses. ## Handling Loss and Expense Claims Disputes regarding loss and expense arise when unforeseen circumstances, or changes to the project, cause additional costs, or disruption, to the contractor. Prolongation claims relate to delays extending the project's duration, while disruption claims pertain to disturbances impacting upon the project's progress, productivity and efficiency. [Our construction law specialists](https://lexlaw.co.uk/construction-disputes/) have extensive knowledge in evaluating claims for loss and expense, prolongation and disruption. We can assess the impact of unforeseen circumstances, changes, or disruptions on project costs and timelines and skilfully negotiate on your behalf to ensure fair and reasonable compensation for additional expenses incurred. ## Resolving Overhead and Profit Disputes Parties may engage in disputes over claims for overhead and profit, which involve allocating costs associated with project management, supervision and general administration; calculating a fair and reasonable amount for these costs often leads to negotiation and potential disagreement. [Our law firm](https://lexlaw.co.uk/construction-disputes/) possesses a deep understanding of the allocation of overhead and profit costs; we can help you navigate the complexities of such claims, providing expert guidance to ensure that your entitlement to overhead and profit is accurately assessed and fairly compensated. ## Evaluating Variations and Associated Delays Variations refer to changes made to the original scope of work, which can impact project costs and timelines; disputes may arise concerning the valuation of variations and the extent to which they have caused delays, or disruption. [Our team](https://lexlaw.co.uk/construction-disputes/) excels in assessing and valuing variations, allowing us to accurately determine their impact upon project costs and schedules; we can provide comprehensive advice and representation, ensuring that your rights are protected in disputes related to variations and associated delays. ## Final Accounts and Retention Disputes Final accounts represent the culmination of a project, detailing the agreed-upon costs, payments, and adjustments. Retentions (the withholding of a percentage of the contract sum) can lead to disputes regarding the release of funds and their resolution during the final account settlement. [Our construction law experts](https://lexlaw.co.uk/construction-disputes/) can meticulously analyse and negotiate final accounts, ensuring that they accurately reflect the agreed-upon costs and adjustments; we can guide you through the process of resolving disputes over retentions, advocating for the timely release of funds owed to you. ## Payment Disputes Disputes often arise due to delays, or non-payment of invoices and applications for payment; parties may contest the adequacy and timeliness of interim and final payments, leading to cash flow problems and potential project disruptions. [Our law firm](https://lexlaw.co.uk/construction-disputes/) understands the critical importance of cash flow to construction projects; we can assist you in disputes arising from delays or non-payment of invoices and applications for payment. Our team will work diligently to enforce your rights, pursuing prompt and fair interim and final payments. ## Interpretation of Standard Terms Standard forms of contract, such as the *JCT, ICE, NEC*, and *FIDIC *forms, are frequently employed in the construction industry; interpretation and application of these contracts can result in disagreements and disputes, particularly regarding clauses, obligations and responsibilities. Interpreting standard forms of contract, such as these forms, requires in-depth knowledge and expertise; [our experienced construction lawyers](https://lexlaw.co.uk/construction-disputes/) can analyse and interpret these standard terms, ensuring that your rights and obligations are properly understood and enforced. ## Contract Novations and Assignments Issues may arise when contracts are transferred, or assigned, to new parties; disputes can emerge concerning the rights, liabilities and obligations of the original parties and those assuming the contract. [Our law firm](https://lexlaw.co.uk/construction-disputes/) can guide you through the complexities of contract novations and assignments, ensuring a smooth transition and the protection of your interests; we will review contractual terms, negotiate necessary amendments and assist with the transfer of rights and responsibilities between parties. ## Exclusion and Limitation Clauses Exclusion and limitation clauses define the extent of liability and responsibility for each party. Disputes often arise when one party seeks to rely upon such clauses to limit, or exclude liability, leading to disagreements over the fairness and enforceability of these provisions. Exclusion and limitation clauses can significantly impact upon the allocation of liability and risk. [Our construction law specialists](https://lexlaw.co.uk/construction-disputes/) are well-versed in scrutinising these clauses, assessing their enforceability and advocating for your best interests. We will strive to ensure that exclusion and limitation clauses are fair and reasonable in their application. ## Terms Implied Under the Construction Act 1996 The *[Construction Act 1996](https://lexlaw.co.uk/wp-content/uploads/Construction-Act-1996.pdf)* introduced important provisions relating to payment, including payment notices and pay less notices; disputes can occur when parties fail to comply with these statutory requirements, leading to challenges regarding payment obligations and entitlements. Navigating the requirements of the *[Construction Act 1996](https://lexlaw.co.uk/wp-content/uploads/Construction-Act-1996.pdf)* can be complex; [our team](https://lexlaw.co.uk/construction-disputes/) can assist you in complying with payment and pay less notice obligations, helping to avoid disputes related to these statutory requirements and protecting your rights in the payment process. ## Dealing with Contractor Work Suspension In certain circumstances, a contractor may suspend, or halt, work due to non-payment, breaches of contract, or other factors; disputes can arise regarding the validity, consequences and remedies associated with such suspensions or cessations. In disputes involving the suspension or cessation of works, [our law firm](https://lexlaw.co.uk/construction-disputes/) can provide expert advice upon your rights and responsibilities; we will guide you through the legal implications, helping to resolve the dispute effectively and minimise any potential damages, or delays. ## Addressing Nuisance Claims in Construction Claims for nuisance involve disturbances caused by construction activities, such as noise, vibration and damage to adjacent properties; disputes often emerge concerning the level of nuisance, liability and appropriate remedies. [Our construction law specialists](https://lexlaw.co.uk/construction-disputes/) have experience in handling nuisance claims arising from construction activities; we can assist in assessing the validity of the claims, advising on mitigation measures and negotiating settlements to minimise disruption and liability. ## Navigating Party Wall Disputes Construction projects involving shared walls, or structures, may give rise to party wall disputes; parties may disagree upon matters such as rights, obligations, access and compensation relating to party wall agreements. [Our law firm](https://lexlaw.co.uk/construction-disputes/) can provide comprehensive guidance on party wall issues, ensuring compliance with relevant legislation and agreements; we will assist in resolving disputes, protecting your rights and facilitating constructive communication and cooperation between the parties involved. ## Pre-Action Protocol for Construction Disputes The *[Pre-Action Protocol for Construction and Engineering Disputes](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_ced)* provides a framework for resolving disputes without formal litigation; disputes can arise when parties fail to adhere to the protocol, or differ on its application. [Our legal team](https://lexlaw.co.uk/construction-disputes/) is well-versed in the *[Pre-Action Protocol for Construction and Engineering Disputes](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_ced)*. We can guide you through the process, ensuring compliance with the Protocol's requirements, facilitating early settlement discussions and ultimately minimising the need for formal litigation. ## Bonds, Warranties and Guarantees Disputes may arise concerning bonds, warranties and guarantees issued during construction projects: Parties may disagree upon the validity, enforceability and scope of these instruments, leading to potential legal action. [Our law firm](https://lexlaw.co.uk/construction-disputes/) can assist in the interpretation and enforcement of bonds, warranties and guarantees associated with construction projects; we will provide expert advice on your rights and obligations under these instruments, helping to resolve disputes and secure the necessary protections. ## Managing Construction Insurance Disputes Insurance plays a crucial role in managing construction risks; disputes can arise regarding insurance coverage, including contractor's all risks, public and employer's liability, and NHBC type warranties, among others. Our [construction law experts](https://lexlaw.co.uk/construction-disputes/) can effectively handle insurance disputes, including contractor's all risks, public and employer's liability, and NHBC type warranties; we will analyse policy coverage, negotiate with insurers and advocate for your best interests, ensuring that you receive the appropriate insurance benefits and coverage. ## Professional Negligence in Construction [Professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-claims/) involve allegations of inadequate performance, or errors committed by professionals, such as architects, building and quantity surveyors, structural engineers, and property valuers; disputes can arise over the extent of negligence, liability and resulting damages. In cases involving professional negligence claims, [our law firm](https://professionalnegligenceclaimsolicitors.co.uk/) can provide the necessary expertise to assess liability and damages; we will pursue professional negligence claims against architects, building and quantity surveyors, structural engineers and property valuers, ensuring that you receive proper compensation for any losses incurred. ## Instructing Our Construction Lawyers When it comes to construction disputes in the UK, our [team of highly skilled construction lawyers](https://lexlaw.co.uk/construction-disputes/) is here to assist you; with their extensive knowledge of construction law and years of experience in handling complex disputes, they are well-equipped to provide you with the best legal advice and strategies tailored to your specific situation. At our firm, we prioritise clear and transparent communication with our clients; we understand that construction disputes can be overwhelming, which is why we keep you informed at every stage of your case. Our dedicated lawyers will explain complex legal concepts in a straightforward manner, ensuring that you have a thorough understanding of the process and the options available to you. Resolving construction disputes efficiently and cost-effectively is our top priority. We recognise the importance of minimizing time and expenses associated with protracted litigation. That's why we explore alternative dispute resolution methods, such as mediation, or negotiation, whenever appropriate. By taking this approach, we aim to reach a satisfactory resolution which saves you time, money, and unnecessary stress. When you engage our construction lawyers, you can trust that you are receiving top-notch legal representation. We are dedicated to protecting your interests and achieving the best possible outcome for your case. With our deep understanding of construction law, attention to detail and strategic approach, we are well-prepared to handle even the most complex construction disputes. Don't let construction disputes derail your project, or business. Contact our firm today and let our experienced construction lawyers guide you towards a favourable resolution. --- # FAQs on HMRC Security Notices Source: https://lexlaw.co.uk/faqs-on-hmrc-security-notices/ This is our Frequently Asked Questions on [security notices issued by HMRC](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100). HMRC is now more committed than ever to leverage VAT security provisions as well as those relating to PAYE and NICs in order to aid in enforcement actions and the prosecution of directors who fail to comply. Despite the fact that these provisions have long been in existence, they are presently undergoing a notable resurgence in their application and significance and we are conducting a significant number of such cases. Our tax team made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) including ex-HMRC counsel can assist by providing you with bespoke advice to carefully manage your tax dispute. We can guide you through the complex the HMRC Notice of Requirement to give security (NOR) process. We have experience in negotiating with HMRC to drop Security Notices and of managing appeals against their decisions at all levels (including the leading appeal before the Upper-Tier Tax Tribunal). Members of the team include qualified [Tax Solicitors](https://taxdisputes.co.uk/tax-solicitors/) and [Tax Barristers](https://taxdisputes.co.uk/tax-barristers/) whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience. ## What is a Security Deposit Letter of Notice? A [notice of requirement to give security](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/), is a HMRC notice sent to a taxpayer, typically a business, informing them that they are required to provide security for future VAT, PAYE or NIC debts to HMRC by a specific deadline. Also known as a HMRC security deposit notice. The [Notice of Requirement to give security (NOR)](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/) is a formal written notice issued by HMRC to a taxpayer demanding security by a specified date. If not paid or [challenged](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/) it can result in criminal charges and prosecution in the Magistrates Court. HMRC typically issues a warning before sending a NOR, unless they perceive a high risk of non-compliance. A Notice of Requirement (NOR) to give security states: - The required security amount - The deadline for payment (at least 30 days from receipt) - Acceptable payment methods - Justification for the security demand - Relevant tax types - Appeal rights and process Security can be provided through cash deposits, bank letters of credit, third-party guarantees, or charges over assets. Non-compliance may lead to aggressive collection measures, including asset seizure and insolvency procedures. ![](https://lexlaw.co.uk/wp-content/uploads/tax-liability-hmrc-security-notice-LEXLAW-LONDON-UK-SOLICITORS-LAWYER-TAX-CHALLEMGE-HMRC-1-1024x559.png) ## Why does HMRC issue Security Notices? As a result of UK [tax law](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/795523/HMRC_Policy_and_Legal_Framework_11-03-19.pdf), in particular as set out in [HMRC's internal manual on Securities Guidance](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100), HMRC can require a taxable person to give an amount of monies to be deposited as security against certain taxes (unpaid PAYE, NIC or VAT) which has or will become due in the future. HMRC does this by sending a [Notice of Requirement to give Security (NORS)](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100). HMRC must have reasonable grounds to believe that a company or person may not pay their future tax liabilities before issuing a Security Notice. This belief can be based on past behaviour or current financial circumstances. In essence, Security Notices serve as a protective measure for HMRC to secure potential future tax revenue from taxpayers deemed to be at high risk of non-compliance or default. ## When does HMRC issue a Notice of Security? These notices are usually issued to businesses with a history of non-compliance, whether unintentional or for more deliberate reasons. Importantly HMRC must explain the reasons and the taxpayer has 2 stage rights of appeal; either directly to the Tax Tribunal for VAT or via an internal HMRC review (by HMRC) which invariably upholds the HMRC decision. HMRC issues a Security Notice under specific circumstances: - *History of non-compliance:* When a business has a track record of late payments or non-payment of taxes, particularly VAT, PAYE, or National Insurance Contributions. - *Risk assessment:* HMRC must have reasonable grounds to believe that a company or individual may not pay their future tax liabilities. - *Protection of future revenue:* The primary purpose is to safeguard potential future tax revenue from high-risk taxpayers. - *Previous tax fraud:* If the taxpayer has committed tax fraud in the past. - *Failed businesses:* Directors or individuals associated with previously failed businesses that left unpaid tax liabilities may receive a NOR for their new ventures. - *Ongoing non-compliance:* When there's a pattern of repeated failure to file returns, register for taxes, or establish proper due diligence processes. Before issuing a NOR, HMRC typically sends a warning letter, unless they believe doing so would increase the risk of non-compliance. The decision to issue a NOR must be authorised by an HMRC officer of at least Higher Officer grade. ## Why might a business receive a security deposit letter of notice? Businesses may receive a security deposit notice from HMRC for several reasons, primarily related to their compliance history with tax obligations. A consistent pattern of late payments, such as failing to pay VAT or neglecting PAYE and National Insurance Contributions, can trigger such a notice. Additionally, financial instability plays a significant role; businesses with a history of insolvency or those currently facing financial difficulties may be viewed as high-risk for future tax liabilities. Moreover, any involvement in tax fraud or evasion, whether through deliberate actions or suspicious accounting practices, can lead to the issuance of a security deposit notice. HMRC is particularly vigilant regarding directors associated with multiple failed businesses that left unpaid tax debts, as well as individuals who have been disqualified from directorships but are now involved in new ventures. Certain industry risk factors also contribute to the decision to issue a notice. Businesses operating in high-risk sectors or those that are cash-intensive may attract closer scrutiny due to the increased potential for unreported income. Sudden changes in tax behavior, such as unexpected drops in tax payments or rapid business expansion without adequate tax management, can further raise red flags. Also, businesses that have previously ignored warnings from HMRC are more likely to receive a security deposit notice. Failing to act on prior advice or continuing non-compliance despite interventions signals to HMRC that stronger measures are necessary. Ultimately, these notices serve as a preventive measure to secure future tax revenue and encourage businesses to enhance their tax compliance practices. ## Are there different types of security deposit notices for different tax liabilities? Yes, there are distinct types of notices. For instance, there are notices related to VAT liabilities and separate notices for PAYE and national insurance debts. Each type of notice has its own set of consequences. For Value Added Tax (VAT) liabilities, HMRC issues specific notices under Section 161 of the Finance Act 2008. These notices are designed to address concerns related to businesses that have a history of VAT non-compliance or are deemed high-risk for future VAT debts. The requirements and consequences of these notices are tailored to the VAT system, including potential restrictions on VAT registration or deregistration. In the case of Pay As You Earn (PAYE) and National Insurance Contributions (NICs), HMRC utilises notices under Section 162 of the Finance Act 2008. These notices focus on employers' obligations regarding income tax and NICs deducted from employees' wages. The consequences of non-compliance with these notices can include penalties and potential criminal proceedings. There are also specific notices for other taxes, such as Corporation Tax or Customs Duties, each with its own legal basis and set of procedures. The amount of security required, the timeframe for compliance, and the potential penalties can vary depending on the type of tax liability involved. ## What is a Security Notice for VAT? HMRC issues Notice to give Security in respect of [VAT](https://www.gov.uk/browse/tax/vat) when a business has a history of non-compliance with its VAT payments and continues to trade while owing unpaid taxes. This notice is sent when HMRC believes there is a significant risk of future VAT non-payment based on past behaviour. The notice requires the business to provide a security deposit, usually in the form of cash or a bank guarantee, to cover potential future VAT liabilities. This security acts as a safeguard for HMRC against the risk of tax loss. The amount required is generally calculated based on the business's estimated VAT liability for a period of 4-6 months, plus any existing arrears. HMRC issues these notices under Section 161 of the Finance Act 2008, which grants them the authority to demand security for VAT. The primary aim is to protect future tax revenue while encouraging businesses to improve their tax compliance. Situations that may trigger a VAT Security Notice include: - A consistent pattern of late VAT payments - Accumulation of significant VAT arrears - Previous VAT-registered businesses with unpaid liabilities - Sudden de-registration followed by immediate re-registration under a new entity Failure to comply with a VAT Security Notice can have serious consequences. These may include restrictions on claiming VAT refunds, inability to bid for contracts requiring VAT compliance, and potential criminal prosecution. In extreme cases, HMRC has the right to prevent the supply of taxable goods until the security payment is made. It's crucial for businesses receiving such a notice to take immediate action. They have the right to appeal within 30 days if they believe the notice is unjustified. Grounds for appeal may include demonstrating that previously non-compliant individuals no longer have control over the business or that the nature of the business has significantly changed, making previous VAT estimates inaccurate. ## What is a Security Notice for PAYE and NICs? HMRC issues security notices in respect of [PAYE](https://www.gov.uk/paye-for-employers#:~:text=PAYE%20is%20HM%20Revenue%20and,you%20must%20keep%20payroll%20records.) and NICs on the act of non-payment, regardless of business activity. A Security Notice for PAYE (Pay As You Earn) and NICs (National Insurance Contributions) is a formal document issued by HMRC to employers with a history of non-compliance with their tax obligations. These notices are authorised under [Section 162 of the Finance Act 2008](https://www.legislation.gov.uk/ukpga/2008/9/section/162) and are designed [to protect future tax revenue](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42250). HMRC issues these notices when there is a significant risk of non-payment of PAYE and NICs based on past behaviour, regardless of ongoing business activity. The notice requires the employer to provide security, typically in the form of cash or a bank guarantee, to cover potential future liabilities. Key aspects of PAYE and NICs Security Notices include: - *Calculation*: The amount of security required is usually based on the employer's [estimated PAYE and NICs](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100) liability for a period of 4-6 months, plus any existing arrears. - Multiple parties: HMRC can require security from [more than one person](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42250) associated with the employer, such as company directors. In such cases, those required to give security are jointly and severally liable. - *Notice details*: The Notice of Requirement (NOR) [must specify](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100) the amount of security required, the deadline for payment (at least 30 days from receipt), and acceptable payment methods. - *Appeals*: Employers have the right to[ appeal to the Tax Tribunal](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/) against the notice or the amount required. They can also request an internal review by HMRC before proceeding to a Tribunal hearing. - *Consequences*: Failure to comply with a Security Notice is a criminal offence and can result in prosecution. The [maximum fine](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/) for non-compliance is £5,000 per person required to give security. - *Duration*: HMRC typically specifies[ how long the security will be required](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/), often up to 24 months. These notices are part of HMRC's strategy to ensure tax compliance and protect public funds, when dealing with employers who have a record of late payments or non-payment of PAYE and NICs. ## What are the consequences of receiving a security deposit notice? The consequences of receiving a security deposit notice can vary based on the specific circumstances and the type of notice issued. The NOR generally explains to the person: - HMRC's power to require security - the amount of security HMRC require - the date on or before which security is to be given - this date must not be earlier than 30 days after the day on which the person receives the NOR - how long HMRC will hold security - the names of all the other persons who have been given an NOR requiring them to give security jointly and severally - the means by which security can be given - what happens if the recipient fails to provide security - each and every person’s *separate *right of appeal. Generally, the notice implies that the taxpayer is required to provide security to ensure the protection of revenue. Non-compliance with a VAT Security Notice may result in consequences specific to VAT, such as restrictions on the ability to claim VAT refunds, bid for contracts that require VAT compliance, or maintain good standing with HMRC for VAT-related matters. Ignoring or failing to comply with a VAT Security Notice may lead to penalties, criminal prosecution, fines, and restrictions directly related to VAT. In extreme cases, criminal charges may be filed against the business and its directors. *Our [Taxation practice](http://taxdisputes.co.uk/) is at the core of the firm.* *Got a dispute with HMRC?* *Our tax team is made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) who can assist you to resolve your tax dispute. Our ex-HMRC lawyers will guide you on complex tax legislation to get you the best possible result.* ## What happens If I ignore the Security Notice? Ignoring Notice of Security Requirement may lead to HMRC imposing significant penalties, difficulties in maintaining payroll for employees, and potential financial difficulties. The case may be referred to the [Crown Prosecution Service (CPS)](https://www.cps.gov.uk/) for a charging decision. If the CPS proceeds, which is usually the case, then the business and its directors may face charges in a [magistrate's court](https://www.gov.uk/courts), potentially resulting in fines. Ignoring a Security Notice from HMRC can have severe consequences for both the business and its directors. The repercussions escalate over time if the notice continues to be disregarded. - *Penalties and Fines: *HMRC can impose significant financial [penalties](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/). For VAT-related notices, fines can reach up to £5,000 for each taxable supply made without providing the required security. In some cases, fines may escalate to £20,000 per taxable supply. - *Criminal Prosecutio*n: If the notice continues to be ignored, HMRC can refer the case to the Crown Prosecution Service (CPS) for a charging decision. This can result in criminal charges against the business and its directors. - *Court Proceedings:* If the CPS proceeds with prosecution, the case will be heard in a magistrate's court. This can lead to criminal convictions for directors and substantial fines. - *Personal Liability:* Directors may be held personally liable for the unpaid security, potentially facing individual fines of up to £5,000. - *Operational Difficulties:* Non-compliance can create challenges in maintaining payroll for employees and cause broader financial difficulties for the business. - *Reputational Damage:* Criminal proceedings and public records of non-compliance can severely damage the business's and directors' reputations. It's crucial to address a Security Notice promptly and [seek professional legal advice](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/) to navigate the situation effectively and avoid these severe consequences. ## How can a business avoid receiving a security deposit notice? To avoid receiving a security deposit notice, a business must ensure that it is consistently meeting its tax obligations and keeping them up-to-date. This includes paying taxes on time and complying with tax regulations. If you consider you are at risk of getting a security notice book a discounted fixed fee conference with our experienced ex-HMRC tax barrister and solicitor team so we can advise you on your options and the best next steps. ## What legal basis allows tax authorities to issue a notice of requirement to give security? The legal basis for tax authorities to issue a notice of requirement to give security is rooted in specific legislation designed to protect public revenue and ensure tax compliance. In the United Kingdom, this power is primarily derived from the Finance Act 2008, specifically Sections 161 and 162, which grant HMRC the authority to demand security for VAT, PAYE, and National Insurance Contributions respectively. These provisions were introduced to address the growing concern over tax losses due to non-compliant businesses and individuals. The legislation provides HMRC officers with a broad discretionary power to assess and act upon perceived risks to tax revenue. This discretion is crucial as it allows for a flexible approach to diverse situations that may arise in the complex landscape of business taxation. When considering whether to issue a notice of requirement to give security, HMRC officers must carefully evaluate the specific circumstances of each case. This evaluation involves analysing the taxpayer's compliance history, current financial situation, and the potential risk to future tax revenue. The assessment is not merely based on past behaviour but also considers the likelihood of future non-compliance or inability to pay taxes. The value of the security required is another critical aspect that falls under the discretionary power of HMRC. Officers must determine an amount that is both sufficient to protect the revenue at risk and proportionate to the perceived threat. This calculation typically considers factors such as the business's turnover, tax liability history, and the duration for which the security is deemed necessary. It's important to note that while this power is broad, it is not unlimited. HMRC must exercise this authority *reasonably *and in accordance with general principles of administrative law. Taxpayers have the right to appeal against both the issuance of the notice and the amount of security demanded, providing a check on potential overreach by the tax authorities. If you feel your Security notice is not reasonable then our team of professionals can advise you. Our team includes an ex-HMRC counsel who headed up two big 4 accountancy firms national tax litigation practices and our senior partner, a dual-qualified solicitor and barrister both of whom have featured on BBC Panorama. ## Is there any recourse for businesses that receive a security deposit notice? Businesses that receive a security deposit notice may have options to [challenge the notice](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/) or negotiate the terms of the required security. It's advisable to seek legal counsel to explore potential courses of action. For VAT-related security notices, the appeal process is direct and streamlined. Taxpayers have the right to appeal directly to the First-tier Tribunal (Tax Chamber) usually within 30 days of the date of the notice. This immediate access to an independent judicial body allows for a swift resolution and provides an opportunity for the taxpayer to present their case before an impartial adjudicator. The Tribunal has the power to confirm, vary, or set aside HMRC's decision, offering a comprehensive review of the notice's validity and proportionality. In contrast, for PAYE and National Insurance Contributions, the appeal process typically involves an additional step. Initially, taxpayers can request an internal review by HMRC. This review is conducted by a different team within HMRC, separate from those who issued the original notice. While this internal review often upholds HMRC's original decision, it provides an opportunity for HMRC to reconsider its position and potentially resolve the issue without the need for formal tribunal proceedings. If the taxpayer remains unsatisfied with the outcome of the internal review, they can then proceed to appeal to the First-tier Tribunal. ## How can I challenge a security deposit notice? To [challenge a security deposit notice](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/), you initially [appeal to the tax authority](https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2010). If the decision isn't overturned, you can request an independent review within HMRC within 30 days. If the decision remains unchanged, you can appeal to the First Tier Tribunal Tax Chamber, an independent judicial body. ## How can I get more information or legal assistance regarding security deposit notices? If you need more information or legal assistance related to security deposit notices and taxation matters, it's recommended to consult with a tax attorney or a qualified legal professional specializing in taxation law. They can provide guidance and support tailored to your specific situation. ## Why is it essential to address security deposit notices promptly and with legal assistance? Seeking advice immediately upon receiving a notice is crucial, as it significantly impacts the chances of success in challenging the notice and avoiding severe consequences. Delaying action may limit the avenues for resolution and could result in a criminal conviction. ## Security Notice Solicitors Advice We have years of experience [negotiating with HMRC](http://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/) and handling tax appeals at the [Tax Tribunals](http://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) and in the High Court dealing with contentious tax disputes. We also work extensively with Accountants, Tax Investigation practices and former HMRC Officers to ensure your matter is handled correctly. We have a dedicated team of [barristers and solicitors defending HMRC Security Notices](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/) including representation at the Magistrates Courts and at the First-tier and Upper-tier Tax Tribunals. The depth of our combined capabilities allows us to represent clients in a variety of situations, whether advising private or corporate clients during tax audits, pursuing administrative appeals, or litigating tax matters at the Tax Tribunal, Court or in tax appeals. Clients hire us because of our [extensive experience in all areas](http://taxdisputes.co.uk/success/), and especially because of our litigation experience – when necessary, we know when to go to the [Tax Tribunal ](https://www.gov.uk/tax-tribunal)and we know how to litigate against HMRC. **HMRC SECURITY NOTICES - ACT PROMPTLY ** There is a limited time to respond to a HMRC Security Notice once it has been served which may be as short as 30 days from the date on the Notice letter. The options for defending against the criminal sanctions for non-compliance become more limited thereafter. You should take therefore obtain specific legal advice on your circumstances quickly. --- # Construction Adjudication Source: https://lexlaw.co.uk/construction-adjudication/ When disputes arise in the construction industry, the need for a swift and cost-effective resolution is crucial. Construction adjudication offers a valuable mechanism for resolving disputes without the need for lengthy court proceedings. At [LEXLAW](https://lexlaw.co.uk/), our team of [experienced construction lawyers](https://lexlaw.co.uk/construction-disputes/) specialises in construction adjudication and can provide you with the expert guidance and representation you need to navigate this process effectively. ## What is Construction Adjudication? Construction adjudication is a statutory process in the UK which provides parties involved in construction disputes with a quick and binding resolution, having been introduced by the *[Housing Grants, Construction and Regeneration Act 1996](https://lexlaw.co.uk/wp-content/uploads/Construction-Act-1996.pdf)* to promote timely dispute resolution in the construction industry. ## Key Features of Statutory Adjudication for Construction Disputes These features make statutory adjudication an efficient and accessible method for resolving construction disputes in the UK. - **Non-negotiable Right to Adjudicate**: Parties involved in a construction contract cannot opt-out of the right to adjudicate. This provision allows either party to refer a dispute to adjudication "at any time," ensuring fairness and access to resolution. - **Interim Dispute Resolution**: Statutory adjudication offers a mechanism for promptly resolving disputes in construction contracts on an interim basis; adjudicators' decisions hold binding authority, until the dispute is conclusively determined through legal proceedings, arbitration, or mutual agreement. - **"Pay First, Argue Later" Policy**: The concept of statutory adjudication revolves around the principle of "pay first, argue later"; this means that parties are expected to fulfill their financial obligations promptly, ensuring cash flow within the construction industry. Disputes can then be resolved separately, avoiding delays in payment and project progress: *Tally Wiejl (UK) Ltd v Pegram Shopfitters Ltd (2003) 1 WLR 2990*. - **Speed and Cost-Effectiveness:** Statutory adjudication provides a fast and cost-effective approach to dispute resolution. Under the *[Construction Act 1996](https://lexlaw.co.uk/wp-content/uploads/Construction-Act-1996.pdf)*, the timeframe between referral to the adjudicator and the adjudicator's decision is set at 28 days; however, this period can be extended, if mutually agreed, allowing for flexibility in resolving complex issues. Construction adjudication is known for its speed, informality, and enforceability. Adjudication allows parties to present their case to an impartial adjudicator, who will make a decision within a fixed timeframe, typically 28 days. The decision, known as the adjudicator's decision, is binding unless and until it is overturned in subsequent legal proceedings. ## Types of Construction Disputes Suitable for Adjudication Construction adjudication covers a broad range of disputes, including payment disputes, variations, delays, defective workmanship, and professional negligence claims; it is a versatile process that can be applied to both simple and complex construction disputes. Residential disputes must be expressly made subject to adjudication We can provide advice upon a wide range of building and engineering disputes, including: - Latent and patent defects in quality of work and materials and remedial options - Project delays, including:Requests for extensions of time and "relevant events".- Critical path analysis and concurrent delays.- Claims for liquidated and assessed damages (LADs). - Evaluation of whether LAD clauses amount to a penalty and are voidable. - Claims for loss and expense, prolongation and disruption. - Claims for overhead and profit. - Valuation of, and delays caused by variations. - Final accounts and retentions. - Delays or failure to make interim and final payments. - Interpretation of standard terms, including JCT, ICE, NEC, and FIDIC forms of contract. - Contract novations and assignments. - Exclusion and limitation clauses. - Terms implied under the *[Construction Act 1996](https://lexlaw.co.uk/wp-content/uploads/Construction-Act-1996.pdf)*, including payment and pay less notices. - Suspension, or cessation of works, by the contractor. - Nuisance claims, including noise, vibration and damage to adjacent properties. - Party wall issues. - Compliance with the *[Pre-Action Protocol for Construction and Engineering Disputes](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_ced)*. - Bonds, warranties and guarantees. - Related insurance disputes, including:Contractor's All Risks- Public and employer's liability - NHBC type warranties - Professional negligence disputes involving architects, building and quantity surveyors, structural engineers and property valuers. ## The Step-by-Step Guide to the Construction Adjudication Process Here's a step by step guide on how to initiate the Construction Adjudication Process: - **Notice of Adjudication:** The party initiating the adjudication process must serve a Notice of Adjudication on the other party or parties involved in the dispute, the notice should specify the nature of the dispute, the relief sought and the appointment of an adjudicator.  - **Appointment of the Adjudicator:** The parties have the option to agree upon the appointment of an adjudicator; if they cannot agree, the adjudicator will be appointed through a nominating body, or an adjudicator-nominating body (ANB).  - **Response and Referral:** The responding party must submit a written Response within a specified timeframe, usually within seven days of receiving the Notice of Adjudication; the Response should address the claims made by the initiating party. Prior to the Response, the referring party will submit a Referral, which sets out the details of the dispute and appends supporting documents.  - **Adjudication Timetable:** The adjudicator will typically set a timetable for the exchange of documents, including the Referral, Response and any supporting evidence; the timetable will also include deadlines for any subsequent submissions, meetings, or site visits.  - **Adjudication Hearing:** Whilst adjudication is primarily a document-based process, there may be an opportunity for a face-to-face, or virtual hearing, if deemed necessary by the adjudicator; during the hearing, both parties will present their arguments and evidence before the adjudicator.  - **Adjudicator's Decision:** The adjudicator must issue a written decision, known as the adjudicator's decision, within a fixed timeframe, usually within 28 days from the date of the Referral; the decision will outline the reasons for the decision and specify any payment, or actions, required by either party. - **Compliance with the Adjudicator's Decision:** The parties are legally bound to comply with the adjudicator's decision, unless and until it is overturned in subsequent legal proceedings; the decision may require one party to make a payment, provide specific performance, rectify defects, or take other necessary actions. - **Enforcement, or Challenge:** If a party fails to comply with the adjudicator's award, the successful party may seek enforcement through the courts; conversely, the unsuccessful party may challenge the award by commencing court proceedings inorder to have it overturned. ## Addressing Adjudicator Bias in Construction Adjudication Adjudicator bias is a concern which parties involved in construction adjudication may have when seeking a fair and impartial resolution to their disputes. Whilst the construction adjudication process is designed to provide an impartial decision by a neutral adjudicator, there are instances where concerns about bias may arise. We understand the importance of addressing such concerns and ensuring that the adjudication process is conducted fairly and transparently. Identifying and Addressing Adjudicator Bias - **Selection of an Impartial Adjudicator**: It is crucial to select an adjudicator who is neutral and free from any potential conflicts of interest. Parties can consider the adjudicator's background, experience and reputation when appointing, or agreeing on, an adjudicator. Nominating bodies and adjudicator nominating bodies (ANBs) play a significant role in the appointment process to ensure impartiality. - **Disclosure of Potential Conflicts**: Adjudicators have a duty to disclose any potential conflicts of interest, or circumstances which may give rise to a reasonable apprehension of bias; this includes any prior involvement with the parties, the subject matter, or any personal, or financial, connections which could impact their impartiality. Parties are also encouraged to disclose any concerns they have about potential bias. - **Impartiality and Fairness**: Adjudicators must act impartially and ensure that both parties have an equal opportunity to present their case. They should base their decisions solely upon the evidence and arguments presented during the adjudication process, without favouring one party over the other. - **Challenging Adjudicator Bias**: If a party believes that an adjudicator is biased, or has a reasonable apprehension of bias, they can seek redress through the courts; this may involve challenging the adjudicator's appointment, or seeking a declaration of bias. It is essential to act promptly and provide clear evidence to support the claim of bias. [Our experienced construction lawyers](https://lexlaw.co.uk/construction-disputes/) can provide you with expert advice if you have concerns about adjudicator bias. We have the knowledge and expertise to assess the circumstances, review the evidence and guide you on the appropriate course of action to address any potential bias.  If you decide to challenge an adjudicator's appointment or seek a declaration of bias, [our skilled lawyers](https://lexlaw.co.uk/construction-disputes/) are ready to represent you in court proceedings; we will effectively present your case, ensuring that your concerns are properly addressed and taken into consideration. [Contact LEXLAW](https://lexlaw.co.uk/contact-us/) today to discuss your concerns about adjudicator bias and receive comprehensive legal support; our construction lawyers are here to assist you and guide you towards a fair resolution. ## Instructing our Construction Lawyers [Our experienced construction lawyers](https://lexlaw.co.uk/construction-disputes/) have a deep understanding of construction law and the adjudication process; we can guide you through every step of the adjudication process, from preparing your case to presenting arguments before the adjudicator, ensuring that you have the best chance of a successful outcome. We will assess the merits of your case and advise you on the most effective strategy for your construction adjudication; our lawyers will analyse the relevant contracts, documents and legal arguments to develop a strong case on your behalf. [Our team](https://lexlaw.co.uk/construction-disputes/) will assist you in preparing all the necessary documents for your adjudication, including the Notice of Adjudication, Response, witness statements, expert reports, and legal submissions; we ensure that your case is presented clearly and persuasively to maximise your chances of success. [Our skilled lawyers](https://lexlaw.co.uk/construction-disputes/) have extensive experience in presenting cases before adjudicator; we will advocate on your behalf, presenting your arguments robustly and effectively to the adjudicator to support your position. If the other party fails to comply with the adjudicator's award, we can assist you in enforcing the decision through the courts, ensuring that you receive the compensation, or remedies, to which you are entitled to. ## Contact Us for Effective Construction Adjudication Support If you are considering construction adjudication, or require assistance with an ongoing adjudication process, our experienced construction lawyers are here to help; [contact us](https://lexlaw.co.uk/contact-us/) today to schedule a consultation and discuss your construction adjudication needs. --- # EIG Property Auctions – Undervalue Sale? Source: https://lexlaw.co.uk/eig-property-auction-undervalue-sale-lpa-receivers-duty/ ## Was Your Property Sold at an Undervalue? A look at Receiver Duties The sale of a repossessed property by a receiver can be a complex and distressing process for the former owner. A central concern is often whether the property was sold at its true market value, or whether it was undervalued. This article delves into the legal framework surrounding the receiver's duty to obtain the "best price reasonably obtainable" for the property including in particular the choice of auctioneer. Is it ever appropriate for an [LPA Receiver](https://www.insolvencydirect.bis.gov.uk/freedomofinformationtechnical/technicalmanual/ch49-60/chapter%2056-2/Part%204/Part%204.htm#:~:text=An%20LPA%20receiver%20is%20a,contained%20in%20a%20mortgage%20deed.) to use a one-stop-shop for distressed property where the same very small company secures, values and then auctions the property? This might make things easy for the less energetic LPA Receiver but does it get the best value on sale? The LPA Receiver has a legal duty to ensure he/she obtains the *true market value* and surely using well-established auctions houses like [Allsop](https://www.allsop.co.uk/auctions/residential-auctions/) (est. 1906), [Savills](https://auctions.savills.co.uk/) plc, [Lambert Smith Hampton](https://propertyauctions.lsh.co.uk/) Auctions, [SDL](https://www.sdlauctions.co.uk/) Property Auctions, [McHugh & Co](https://www.mchughandco.com/) (est. 1983), [Strettons](https://www.strettons.co.uk/auctions/) (est. 1931) and [Auction House](https://www.auctionhouse.co.uk/) is a better choice than using new insubstantial online auction market entrants that do not operate real life auctions and have no history or repute and simply open an account with [EIG the property auction data company](https://www.eigpropertyauctions.co.uk/)? ## What are EIG Property Auctions? [EIG Property Auctions](https://www.eigpropertyauctions.co.uk/) has made it significantly easier for *anyone *to become a property auctioneer, thanks to its comprehensive online platform and support services. Here’s how this shift has happened and what it means: **Access to Auction Technology**: EIG provides a white-label, one-stop solution for online property auctions, allowing individuals or businesses to host their own auctions without needing deep technical expertise or a traditional auction house infrastructure. Their platform includes customisable online payment methods, legal document storage, and integrated money laundering checks, making it accessible for newcomers to enter the auctioneer space. **Comprehensive Data and Tools**: EIG aggregates details on virtually every property going to auction in the UK, offering a vast database for research, market analysis, and comparison. This enables aspiring auctioneers to make informed decisions, track market trends, and understand pricing strategies without years of industry experience. **Step-by-Step Guidance**: EIG and related resources offer clear steps for becoming a property auction expert, including understanding auction basics, researching the market, building a network, mastering due diligence, and practicing bidding strategies. **Support for Online Auctions**: The move to online auctions, accelerated by EIG’s technology, means auctions are no longer tied to physical venues or established auction houses. Anyone can set up and run auctions from anywhere, broadening participation and allowing new entrants to act as auctioneers with EIG’s ongoing support and advice. **No Industry Barriers**: With EIG’s platform, the traditional barriers—such as needing a physical auction room, a large team, or years of experience—are lowered. The platform handles the technical and legal complexities, so individuals can focus on sourcing properties and marketing their auctions. In summary, EIG Property Auctions has effectively opened up the property auction industry, enabling *anyone *with access to EIG’s tools to become a property auctioneer. This marks a significant shift from the past, where auctioneering was a closed profession dominated by established firms and the case law is based on this now false premise. ## The Receiver's Fiduciary Duty A receiver occupies a position of trust and confidence, owing fiduciary duties to those whose interests they affect. This fiduciary duty is paramount in the context of property sales. Thus, at the heart of the matter is the fiduciary duty owed by a receiver to the mortgagor. This duty, as clarified in cases such as *Cuckmere Brick Co v Mutual Finance* [1971] Ch 94, mandates that the receiver exercises reasonable care to achieve the true market value of the property at the time of sale. This principle has been consistently reaffirmed, with terms like "best price reasonably obtainable" and "proper price" being used interchangeably (see *Michael v Miller* [2004] EWCA Civ 282). Crucially, the receiver's duty is analogous to that of a mortgagee (see *Silven Properties Limited v Royal Bank of Scotland* [2003] EWCA Civ 1409). This means that the legal principles established in mortgagee cases are equally applicable to receivers. The scope of the receiver's duty extends beyond simply achieving a good price. It encompasses a broader obligation to act in the best interests of those entitled to the proceeds of sale. This includes: - **Diligent enquiry:** The receiver must make reasonable inquiries to ascertain the true market value of the property. This may involve obtaining valuations from multiple sources and considering factors such as location, condition, and potential development opportunities. - **Effective marketing:** The property must be adequately marketed to reach a wide range of potential purchasers. This includes considering different sale methods (auction, private treaty), advertising channels, and the duration of the marketing campaign. - **Avoiding conflicts of interest:** The receiver must avoid any situations that could create a conflict of interest, such as purchasing the property themselves or selling to a connected party. - **Transparency and accountability:** The receiver must maintain clear records of their actions and be prepared to justify their decisions. ## To Whom is the Duty Owed? The receiver's fiduciary duty to obtain the best price reasonably obtainable extends beyond the mortgagor to encompass all those with an interest in the property. This principle is rooted in the concept of equity of redemption, which represents the mortgagor's right to redeem the property by repaying the mortgage debt. **Guarantors of the secured debt** are prime examples of parties with an interest in the equity of redemption. As individuals who have pledged their personal assets to secure the mortgage, guarantors have a vested interest in maximizing the proceeds of the property sale to minimize their potential liability. The case of *Standard Chartered Bank v Walker* [1982] 1 WLR 1410 supports this view, recognizing the guarantor's interest in the property's value. However, the position of **guarantors of unsecured indebtedness** is less clear-cut. While they may have an economic interest in the property's value, their relationship to the property is less direct. The case of *Burgess v Vanstock* [1998] 2 BCLC 478 highlights the complexities of determining the extent of the receiver's duty to unsecured creditors. It is important to note that the scope of the receiver's duty to parties beyond the mortgagor may vary depending on the specific circumstances of the case, including the terms of the mortgage, the nature of the guarantees, and the interests of other stakeholders. **In summary**, while the receiver's primary duty is to the mortgagor, the obligation to obtain the best price reasonably obtainable extends to those with a direct financial interest in the property, such as guarantors of the secured debt. The precise extent of the duty to other interested parties requires careful consideration of the specific facts of each case. ## Burden of Proof and Standard of Care The onus is generally on the claimant (often the mortgagor) to prove that the receiver failed to meet the standard of care required to obtain the best price (see *Aodhcon LLP v Bridgeco Limited* [2014] EWHC 535 (Ch)). The court applies a stringent test, requiring the claimant to demonstrate that the receiver was "plainly on the wrong side of the line" (see *Cuckmere Brick Co v Mutual Finance*). This is often equated to the margin of error allowed to a valuer in a negligence claim (see *Michael v Miller*). Particular scrutiny is applied when the sale price barely covers the outstanding debt (see *Aodhcon LLP v Bridgeco Limited*). The court recognizes that repossession can depress property values, but this does not absolve the receiver from their duty. The sale to a connected or associated party inverts the burden of proof, placing a heavy onus on the receiver to justify the sale price (see *Tse Kwong Lam v Wong Chit Sen* [1983] 1 WLR 1349). Sales to the receiver or mortgagee themselves are prohibited as they constitute a conflict of interest (see *Farrar v Farrars Ltd* (1888) 40 Ch D 395 and *Hodson v Dears* [1903] 2 Ch 647). ## The Role of Expert Evidence Expert valuation evidence is indispensable in undervaluation disputes. It provides the court with the specialized knowledge necessary to assess the reasonableness of the sale price. However, the role of the expert is not to usurp the court's decision-making function; rather, it is to assist the court in reaching its own conclusion. A key principle is that the court is concerned with the actual market value at the time of sale, rather than theoretical valuations based on hypothetical conditions. The case of *Aodhcon LLP v Bridgeco Limited* emphasizes this point, highlighting that a RICS valuation, while informative, may not accurately reflect the price that could have been achieved in the prevailing market conditions. Furthermore, expert evidence must be grounded in reality. The case of *Meah v G E Money Home Finance Limited* [2013] EWHC 20 (Ch) underscores the importance of aligning expert opinions with actual market interest in the property. An expert's valuation must be supported by evidence of market demand and comparable sales. It is essential to select a qualified and independent valuation expert who can provide clear, unbiased, and defensible opinions. The expert's methodology, assumptions, and conclusions must be robust and withstand scrutiny. ## Receiver's Conduct and Marketing Strategy Receivers must exercise informed judgment in determining the sale process. While they are not obligated to improve the property before sale (see cases such as *Meftah v Lloyds TSB Bank* [2001] 2 All ER (Comm) 741), they must take reasonable steps to market the property effectively. This includes providing accurate and comprehensive sales particulars and employing appropriate advertising strategies (see *Aodhcon LLP v Bridgeco Limited* and *Michael v Miller*). The decision to sell by auction or private treaty rests with the receiver, but the chosen method must be suitable for the property and market conditions (see *Michael v Miller*). Regardless of the method, adequate marketing is essential. ## Challenges for Claimants Proving that a property was sold at an undervalue can be a formidable task. Key challenges include: **Limitation periods:** Time limits apply to bringing claims. Missing the deadline can be fatal to a case. **Establishing the true market value:** Determining the accurate market value at the time of sale can be difficult, especially in rapidly changing market conditions. Expert valuation evidence is often crucial but can be contested. **Causation:** The claimant must demonstrate a direct causal link between the receiver's actions (or omissions) and the loss incurred due to the undervaluation. This can involve complex economic analysis. **Burden of proof:** The claimant generally bears the burden of proving the receiver's breach of duty and the resulting loss. This can be a high threshold to overcome. ## Conclusion Determining whether a property has been sold at an undervalue by a receiver is a complex legal matter requiring careful scrutiny. While the law imposes a clear duty on receivers to obtain the best price reasonably obtainable, proving a breach of this duty can be challenging. This is particularly the case when market conditions are volatile or when the receiver has acted with apparent diligence. Successful undervaluation claims often hinge on expert evidence, meticulous documentation, and a deep understanding of the legal framework governing receiver duties. Given the complexities involved, seeking expert legal advice at an early stage is crucial for individuals who believe their property may have been undervalued. If you suspect that your property was sold at an undervalue by an EIG auction advertiser, our Property & Insolvency Litigation Team can provide the expert guidance and representation you need. We have a proven track record in handling complex property disputes and are committed to helping you recover potential losses. **Contact us today for a confidential consultation.** --- # 2025 Guide: Enforcing Judgment Orders in England & Wales Source: https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/ *If a debtor refuses to pay a Court Order or Judgment, the judgment creditor has many UK enforcement options. Our [london enforcement lawyers](https://lexlaw.co.uk/?page_id=356) can help choose the best option. These include charging orders to secure a charge against property or shares; or [winding-up petitions](https://windinguppetitionsolicitors.co.uk/) or third-party debt orders to freeze funds in banks; or attachment of earnings orders to deduct a portion of the debtor's earnings; or [bankruptcy](https://windinguppetitionsolicitors.co.uk/bankruptcy-advice/). Acting quickly with an [expert enforcement legal team](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) and choosing the best option is crucial, as delays give debtors the opportunity to hide assets.* *The costs of [instructing our enforcement solicitors and barristers](https://lexlaw.co.uk/legal-case-assessment/) can usually be [recovered](https://lexlaw.co.uk/solicitors-london/recovering-the-costs-of-civil-litigation/) from the debtor if you choose the right enforcement option.* ## Securing Your Rights: UK Judgment Enforcement Obtaining a favourable judgment in court is a significant legal victory. However, the journey to recovering the awarded sum doesn't end with the court's decision. Many creditors find that debtors, despite a court order to pay, fail to fulfil their financial obligations. This is where [judgment enforcement by UK legal professionals](https://lexlaw.co.uk/legal-case-assessment/) becomes absolutely critical. Judgment enforcement is the legal process of compelling a debtor to satisfy the terms of a judgment. It empowers creditors to translate their legal success into tangible financial recovery. A real understanding and experience of this process is vital, as navigating the complexities of enforcement requires careful strategy and adherence to legal procedures. This 2025 Guide to UK judgment enforcement provides a detailed overview of available enforcement mechanisms and essential steps to ensure the effective recovery of your rightful dues. At the end of the page, you can download a PDF version of this 2025 Guide; however, please note the information is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## Types of Judgments: What Can Be Enforced? Before delving into the mechanisms of enforcement, it's essential to understand what types of judgments can be enforced in England & Wales. A judgment is a court order that sets out the legal obligations of parties involved in a dispute. The most common type of judgment that creditors seek to enforce is a money judgment. This type of order compels a debtor to pay a specific sum to the creditor. Here are some key examples: **County Court Judgments (CCJs)**: These are judgments issued by the [County Court](https://www.judiciary.uk/courts-and-tribunals/county-court/) and are the most frequent type encountered in debt recovery cases. CCJs can be issued for various reasons, including unpaid debts, breaches of contract, and personal injury claims. **High Court Judgments:** The [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) handles more complex and higher-value cases. Its judgments carry the same legal weight as those of the County Court, but enforcement procedures may differ. **Foreign Judgments:** A judgment obtained outside of England & Wales is considered a foreign judgment. Enforcing these judgments requires a separate legal process, which involves establishing the foreign court's jurisdiction and registering the judgment in the [English courts](https://www.judiciary.uk/about-the-judiciary/our-justice-system/court-structure/). Understanding the nature of your judgment is crucial, as the appropriate enforcement method and the court with jurisdiction to handle the matter will vary depending on the type of judgment you hold. Instructing a specialist [enforcement litigation firm like LEXLAW](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/) can help you not only enforce quickly but obtain enforcement costs form the other side. ## Methods of Enforcement: Taking Recovery Action Once you have a judgment, the next step is to choose the most effective method to enforce it. The English legal system provides a variety of tools to compel debtors to fulfil their obligations. Here's a detailed look at some of the most commonly used methods: ### 1. Charging Orders A [charging order](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/#:~:text=Obtaining%20a%20charging%20order%20allows,debtor) is a court order that secures a judgment debt against a debtor's asset, such as land or securities. This is very effective where the debtor owns a property in the UK. It acts like a mortgage, preventing the debtor from selling the asset without first settling the debt. If the debtor fails to pay, the creditor can apply for an order for sale to force the sale of the asset and recover the debt from the proceeds. *Key Points on UK Charging Orders:* - Effective for debtors with substantial equity in property. - Less effective for jointly owned property or family homes. - Can be used alongside other enforcement methods. ### 2. Writs and Warrants of Control This method, commonly known as taking control of goods, empowers enforcement agents, typically High Court Enforcement Officers (HCEOs) or County Court bailiffs, to seize and sell a debtor's goods to recover the debt. The court issues a [writ or warrant of control](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/#:~:text=If%20the%20judgment%20debtor%20has,control%20from%20the%20County%20Court.), which authorizes the enforcement agent to take possession of the debtor's goods, sell them at auction, and use the proceeds to satisfy the judgment debt. *Key Points on UK Writs or Warrants of Control:* - Effective when the debtor has valuable assets that can be seized and sold. - A relatively quick and straightforward method. - Strict regulations govern the process, including notice requirements and exemptions for certain goods. ### 3. Attachment of Earnings Orders An [attachment of earnings order](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/#:~:text=order%20over%20it.-,What%20is%20an%20Attachment%20of%20earnings%20order%3F,of%20the%20debt%20is%20paid.) directs a debtor's employer to deduct a portion of their earnings directly from their salary and pay it to the creditor. This method is suitable for situations where the debtor has a regular income source. *Key Points on UK Attachment of Earnings Orders:* - Requires knowledge of the debtor's employer. - Effective for debtors with a stable employment history. - The amount deducted is determined by the court and takes into account the debtor's living expenses. ### 4. Third-Party Debt Orders A [third-party debt order](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/#:~:text=the%20judgment%20debt.-,What%20is%20a%20Third%20party%20debt%20order%3F,for%20example%20a%20bank%20account.), previously known as a garnishee order, enables a creditor to freeze funds owed to the debtor by a third party, such as a bank, and redirect those funds to settle the debt. This method is often used to target funds held in the debtor's bank account. *Key Points on UK Third-Party Debt Orders:* - Requires evidence that the third party owes money to the debtor. - Can be an effective way to access funds that would otherwise be difficult to reach. ### 5. Order for Sale This order is typically sought after obtaining a [charging order](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/#:~:text=Obtaining%20a%20charging%20order%20allows,debtor). It compels the sale of the charged asset, usually property, to satisfy the judgment debt. The proceeds of the sale are used to pay the creditor, and any remaining funds are returned to the debtor. *Key Points on UK Orders for Sale:* - Used to realize the value of the asset secured by the charging order. - The court considers various factors, including the debtor's circumstances and the interests of other creditors, before granting an order for sale. It's important to remember that choosing the right enforcement method depends on the specific circumstances of your case. Factors to consider include the type of judgment, the debtor's financial situation, and the nature of their assets. Consulting with experienced legal professionals is crucial to determine the most appropriate and effective strategy for enforcing your judgment and recovering your debt. LEXLAW are [UK litigation experts](https://lexlaw.co.uk/#:~:text=We) and will help you select the most effective debt recovery method to maximise costs recovery and speed of execution of your judgment order. ## A Step-by-Step Guide to Enforcing a Judgment in England & Wales This section outlines the key steps involved in the judgment enforcement process, guiding you from the initial judgment to successful debt recovery. ### Step 1: Obtain a Valid Judgment The foundation of any enforcement action is a legally sound and enforceable judgment. This could be a County Court Judgment ([CCJ](https://lexlaw.co.uk/solicitors-london/tag/ccj/)), a [High Court](https://lexlaw.co.uk/solicitors-london/tag/high-court/) Judgment, or a [recognised foreign judgment](https://lexlaw.co.uk/enforcement-of-foreign-judgments-recognition-in-uk-courts-foreign-debt-debtor-claims-advice/). ### Step 2: Allow Reasonable Time for Payment Before initiating enforcement proceedings, allow the debtor a reasonable period to comply with the judgment. The court typically specifies a payment deadline. If none is stipulated, the standard timeframe is 14 days from the judgment date1. ### Step 3: Investigate Debtor's Financial Situation & Assets Understanding the debtor's financial standing is critical for selecting the [most effective debt recovery enforcement method](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/). Together with our private investigator, we can help you consider the following: - **Does the debtor have a regular income?** This may make an attachment of earnings order suitable. - **Does the debtor own property or valuable assets?** This could make a charging order followed by an order for sale an appropriate strategy. - **Does the debtor have funds held by a third party, such as a bank?** A third-party debt order could be effective. Various investigative tools are available, including: - **Examination of the debtor under oath**: This compels the debtor to answer questions about their assets and income under court supervision. - **Company officer examination**: For judgments against companies, this order compels a company officer to disclose the company's financial affairs. **Step 4: Choose the Most Appropriate Enforcement Method** Based on the debtor's financial situation and the type of judgment, select the most effective enforcement method: - **Charging Order:** Suitable for debtors with substantial equity in property. - **Writ or Warrant of Control:** Effective for seizing and selling valuable assets. - **Attachment of Earnings Order:** Suitable for debtors with regular employment income. - **Third-Party Debt Order:** Targets funds held by a third party, such as a bank. - **Order for Sale:** Used to force the sale of an asset secured by a charging order. ### Step 5: Apply for and Obtain Necessary Court Order Each enforcement method requires a separate application to the court. You'll need to provide the court with the relevant details, such as the judgment, the debtor's information, and the chosen enforcement method. The court will review your application and, if satisfied, issue the necessary order. ### Step 6: Instruct Enforcement Agents (If Required) Some enforcement methods, like writs of control, require the involvement of enforcement agents. These professionals, acting under the authority of the court, carry out the practical steps of enforcement, such as seizing assets or contacting employers for earnings deductions. ### Step 7: Monitor the Enforcement Process and Take Further Action (If Needed) Stay informed about the progress of enforcement and be prepared to take further action if the initial attempt fails to recover the full debt. You might need to consider alternative enforcement methods or explore insolvency proceedings against the debtor. Our team of insolvency barristers and solicitors can also advise on [bankruptcy](https://lexlaw.co.uk/solicitors-london/tag/bankruptcy/) and [winding-up petitions](https://windinguppetitionsolicitors.co.uk/) - these are not strictly debt recovery tools but if handled expertly can result in swift payment. We have decades of experience in this area and understand [aggressive debt recovery tactics](https://windinguppetitionsolicitors.co.uk/aggressive-debt-recovery/) and how to stay on the right side of the [court's proper process](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/injunction-win-abusive-hmrc-winding-up-petition-dismissed/). Navigating the complexities of judgment enforcement requires a thorough understanding of the legal procedures and potential challenges. Consulting with experienced legal professionals is strongly recommended. A solicitor can guide you through each step, ensuring that your actions are legally sound and tailored to the specific circumstances of your case. ## Time Limits: Acting Within the Legal Timeframe The ability to enforce a judgment in England & Wales is subject to certain time constraints. Understanding these limits is crucial to avoid losing your right to recover the debt. ### General Limitation Period The general [limitation period](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/#:~:text=A%20limitation%20period%20is%20the,type%20of%20claim%20being%20made.) for enforcing a judgment is **six years** from the date on which the judgment became enforceable. This means you have six years to initiate enforcement proceedings to recover the debt. However, it is strongly advised not to wait until the last minute. Delay can have significant consequences. ### Exceptions to the Six-Year Limit While the six-year rule generally applies, there are some important exceptions. These include: **Enforcement Proceedings Within Existing Proceedings:** If you are already taking steps to enforce a judgment, further actions within those existing proceedings are not subject to the six-year limitation. For instance, if you've obtained a charging order and are seeking an order for sale, this action wouldn't be time-barred even if initiated after six years. **Bankruptcy or Winding-Up Proceedings:** The six-year limitation does not apply to insolvency proceedings based on judgment debts. **Enforcement of a Charging Order:** A charging order has "a life of its own." Even if more than 12 years have passed since the order was made, an application to enforce it is not considered an application to enforce the original judgment and is not subject to the six-year limit. ### Consequences of Delay Though a limitation period may not always apply, delaying enforcement can have adverse consequences: **Loss of Interest:** Recoverable interest on a judgment might be limited to six years if enforcement is delayed beyond that period. **Dissipation of Assets:** The debtor may have more opportunity to move or sell assets, making enforcement more difficult. **Permission Requirement for Older Judgments:** For judgments older than six years, you'll need the court's permission to issue certain enforcement instruments, such as writs and warrants of control. ### Enforcement of Tomlin Orders Tomlin orders, which stay proceedings on agreed terms, may be subject to different time limits. Enforcing the agreed terms, typically found in a schedule attached to the order, is considered an application to enforce contractual rights and may be subject to the **six-year limitation period for simple contracts**. ### Costs Orders The limitation period for a costs order begins to run when the order becomes enforceable by action. This typically occurs after the costs have been assessed and certified. ### Importance of Acting Promptly In essence, while a hard time limit for enforcement may not always exist, **it's crucial to initiate the process as soon as possible.** Prompt action increases your chances of successfully recovering the debt and minimises the potential for complications or limitations on your ability to enforce. Consulting with a legal professional can provide clarity on the specific time constraints relevant to your case and ensure you act within the appropriate legal timeframe. ## Costs and Fees: Factoring in the Expenses of Enforcement Enforcing a judgment involves various [costs](https://lexlaw.co.uk/solicitors-london/category/costs/) and fees, which can vary significantly depending on the chosen method and the complexity of the case. It's crucial to consider these expenses and understand how they can be recovered from the debtor. ### Court Fees Most enforcement methods involve [court fees](https://lexlaw.co.uk/costs-information/). These fees are payable to the court when applying for the enforcement order. The specific fees vary depending on the chosen method and the court in which the application is made (High Court or County Court). Information on current court fees can be found in the Civil Proceedings Fees Order and any amendment orders. ### Enforcement Agent Fees Writs and warrants of control, which involve seizing and selling a debtor's goods, incur fees for the enforcement agent, typically a High Court Enforcement Officer (HCEO) or County Court bailiff. These agents charge fees for their services, which can be added to the debt and recovered from the debtor if the enforcement is successful. The [Taking Control of Goods (Fees) Regulations 2014](https://www.legislation.gov.uk/uksi/2014/1/contents) governs the fees that enforcement agents can recover for taking control of goods under [Schedule 12 of the Tribunals Courts and Enforcement Act 2007](https://www.legislation.gov.uk/ukpga/2007/15/schedule/12). These regulations specify fixed fees for different stages of the enforcement procedure and allow additional fees based on a percentage of the value of the goods seized. ### Fixed Costs Certain enforcement procedures have fixed costs associated with them, meaning the amount recoverable is predetermined. These fixed costs are outlined in [CPR 45.23](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part45-fixed-costs#25) and [Table 7 of PD 45](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part45-fixed-costs/practice-direction-45-fixed-costs#7). #### TABLE 7: rule 45.23 – fixed costs of enforcement | For an application under rule 70.5(4) that an award may be enforced as if payable under a court order, where the amount outstanding under the award— |   | | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ------ | | exceeds £25 but does not exceed £250 | £30.75 | | exceeds £250 but does not exceed £600 | £41.00 | | exceeds £600 but does not exceed £2,000 | £69.50 | | exceeds £2,000 | £75.50 | | On attendance to question a judgment debtor (or officer of a company or other corporation) who has been ordered to attend court under rule 71.2 where the questioning takes place before a court officer | for each half hour or part, £15.00 | | On the making of a final third party debt order under rule 72.8(6)(a) or an order for the payment to the judgment creditor of money in court under rule 72.10(1)(b): |   | | if the amount recovered is less than £150 | one-half of the amount recovered | | otherwise | £98.50 | | On the making of a final charging order under rule 73.10(6A)(a), 73.10(7)(a) or 73.10A(3)(a) | £110.00 | |   | The court may also allow reasonable disbursements in respect of search fees and the registration of the order. | | Where a certificate is issued and registered under Schedule 6 to the Civil Jurisdiction and Judgments Act 1982, the costs of registration | £39.00 | | Where permission is given under rule 83.13 to enforce a judgment or order giving possession of land and costs are allowed on the judgment or order, the amount to be added to the judgment or order for costs— |   | | (a) basic costs | £42.50 | | (b) where notice of the proceedings is to be to more than one person, for each additional person | £2.75 | | Where a writ of control as defined in rule 83.1(2)(k) is issued against any party | £51.75 | | Where a writ of execution as defined in rule 83.1(2)(l) is issued against any party | £51.75 | | Where a request is filed for the issue of a warrant of control under rule 83.15 for a sum exceeding £25 | £2.25 | | Where a request is filed for the issue of a warrant of delivery under rule 83.15 for a sum exceeding £25 | £2.25 | | Where an application for an attachment of earnings order is made and costs are allowed under rule 89.10 or CCR Order 28, rule 10, for each attendance on the hearing of the application | £8.50 | ### Costs Assessment If fixed costs do not apply to a particular enforcement method, the court will need to assess the costs. This involves a detailed review of the expenses incurred and can be a time-consuming process. It's often more efficient to reach an agreement with the debtor regarding costs to avoid the need for assessment. ### Recovering Enforcement Costs The judgment creditor is generally entitled to recover the costs of successful enforcement proceedings from the judgment debtor. This includes: - **Court fees**: The fees paid to the court for issuing the enforcement order. - **Enforcement agent fees**: The charges incurred for the services of enforcement agents. - **Fixed costs**: The predetermined costs associated with specific enforcement procedures. - **Assessed costs**: The costs determined by the court if fixed costs do not apply. It's important to note that recovery of costs is contingent upon the debtor having sufficient funds. If the debtor is insolvent or has limited assets, recovering the full amount of enforcement costs may be challenging. ### Previous Enforcement Attempts The [Courts and Legal Services Act 1990 (section 15)](https://www.legislation.gov.uk/ukpga/1990/41/section/15) allows for the recovery of costs from previous unsuccessful attempts to enforce the same judgment. However, the court will only allow recovery of these costs if it deems them to have been reasonably incurred. ### Insolvency Costs When using insolvency proceedings such as [winding-up petitions](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) as a method of enforcement, the fees and costs associated with these proceedings should be included in the claim submitted in the insolvency process. Understanding the costs associated with judgment enforcement is essential for making informed decisions about the best course of action. Careful consideration should be given to the likelihood of recovering these costs from the debtor before proceeding with enforcement. Consulting with an [insolvency legal professional](https://windinguppetitionsolicitors.co.uk/our-success-case-studies-successful-insolvency-law-firm-london/) can provide clarity on the potential costs involved in your specific case and help you develop a cost-effective strategy. ## Legal Considerations: Protecting the Debtor's Rights While enforcing a judgment, it's essential to operate within the legal framework and respect the debtor's rights and protections. Failure to do so can result in setbacks, delays, and potential legal challenges such as adverse costs orders in the process of enforcement. Our team of [UK enforcement solicitors and barristers](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/) have the ability to navigate enforcement carefully in line with our advice and your informed instructions. ### Debtor's Right to Notice and Opportunity to Pay Before initiating most enforcement methods, the debtor must have been given: - **Adequate notice of the judgment** and the intended enforcement action. - **A reasonable opportunity to pay the judgment debt**. This typically involves serving the debtor with a copy of the judgment order and allowing them a stipulated time to pay, usually 14 days. Premature enforcement without proper notice can invalidate the process. ### Restrictions on Enforcement Against Insolvent Debtors Special rules apply if the debtor is insolvent or facing insolvency proceedings. There are statutory restrictions on pursuing claims against insolvent debtors, including: - **Bankruptcy:** If a debtor is declared bankrupt, a restriction on commencing legal proceedings or pursuing remedies against the debtor or their property comes into effect. This is to ensure equitable distribution of assets among all creditors under the supervision of a bankruptcy trustee. - **Individual Voluntary Arrangement (IVA):** An IVA is a legally binding agreement between a debtor and their creditors to repay debts over time. Once approved, the IVA's terms bind all creditors, potentially impacting your ability to enforce the judgment. ### Challenging the Judgment The debtor has the right to challenge the original judgment through various legal avenues, including: - **Setting Aside Default Judgment:** If a default judgment was obtained, the debtor can apply to have it set aside if they have a valid defense or were not properly served with the claim. - **Appealing the Judgment:** The debtor can appeal the judgment to a higher court if they believe the original decision was incorrect. Any pending challenges to the judgment may impact your ability to enforce it. ### Protection of Exempt Goods When seizing goods under a writ or warrant of control, certain items are exempt from seizure. These typically include: - **Essential household goods**, such as basic furniture, appliances, and bedding. - **Tools of the trade** necessary for the debtor's employment or business. - **Goods belonging to a third party**. Enforcement agents must be aware of these exemptions and cannot seize protected items. ### Human Rights Considerations Enforcement actions must comply with the Human Rights Act 1998. This means considering the proportionality of the enforcement method and avoiding actions that would disproportionately infringe on the debtor's rights. - For example, when considering an order for sale of a property, the court will consider the impact on the occupants, particularly if it's their primary residence, and balance this against the creditor's right to recover the debt. ### Data Protection Any personal data obtained or used during enforcement must comply with data protection laws, such as the [UK GDPR](https://ico.org.uk/for-organisations/data-protection-and-the-eu/data-protection-and-the-eu-in-detail/the-uk-gdpr/) and the [Data Protection Act 2018](https://www.legislation.gov.uk/ukpga/2018/12/contents). ### Vulnerability Considerations Under the [Taking Control of Goods (Fees) Regulations 2014](https://www.legislation.gov.uk/uksi/2014/1/contents), if the debtor is a "vulnerable person," enforcement agents must provide an adequate opportunity for the debtor to seek assistance and advice before removing seized goods. The term "vulnerable" is broadly construed and could encompass various circumstances, including illness, disability, or financial hardship. ### Debtor's Right to Seek Relief Debtors facing enforcement action have the right to seek relief from the court, such as: - **Stay of Execution:** The court can temporarily suspend enforcement if there are special circumstances, such as a pending appeal or a change in the debtor's financial situation. - **Instalment Order:** The court can order the debt to be paid in instalments, making it more manageable for the debtor. ### Restrictions and Challenges - **The court can place restrictions** on using certain enforcement methods while other orders are in effect. For example, a judgment creditor needs the court's permission to levy execution while an attachment of earnings order is in force. - **A judgment debtor should formally object to a final charging order**, rather than simply attending the hearing to oppose it. ### Best Practices for Ethical and Effective Enforcement - **Transparency:** Communicate clearly with the debtor throughout the enforcement process, explaining the steps being taken and their rights. - **Proportionality:** Choose enforcement methods that are proportionate to the debt and the debtor's circumstances. - **Compliance:** Ensure all actions comply with relevant laws and regulations. - **Professionalism:** Maintain professional conduct and avoid any actions that could be perceived as harassment or intimidation. Observing and upholding these considerations helps ensure a fair and lawful process, minimising potential complications and protecting the rights of all parties involved thereby reducing the adverse enforcement costs risks. Please consult a legal professional. ## Enforcing Foreign Judgments in England & Wales: Navigating the Legal Landscape Enforcing a judgment obtained in a foreign country within England and Wales involves a distinct set of rules and procedures. The applicable regime hinges on the origin of the judgment and the date the proceedings were initiated. The UK has various mechanisms for recognizing and enforcing foreign judgments, including bilateral treaties, multilateral conventions, and common law principles. ### Determining the Applicable Regime There are five primary regimes for enforcing foreign judgments in England and Wales: - **The UK Regime:** Applies to judgments from Scotland or Northern Ireland. - **The European Regime:** Governs judgments from EU and certain EFTA countries given in proceedings instituted **before December 31, 2020**. This regime doesn't apply to judgments issued in proceedings started after that date. - **The Statutory Regime:** Covers judgments from most Commonwealth countries and potentially some EU or EFTA states issued in proceedings instituted **after December 31, 2020**. - **The Common Law Regime:** Applies to judgments from countries not covered by the other regimes, like the USA or Japan. This regime also covers judgments from EU and EFTA countries given in proceedings initiated **after December 31, 2020**, unless they fall under the statutory regime. - **The Hague Convention on Choice of Court Agreements:** Applies to judgments from countries designated in an exclusive choice of court agreement. Before December 31, 2020, this generally applied to judgments from Mexico, Singapore, and Montenegro. After that date, it also applies to such judgments from EU member states. ### Key Treaties and Conventions **The UK's exit from the EU (Brexit) significantly impacted the enforcement of judgments from EU and EFTA states.** Before Brexit, the European regime, based on regulations like the Recast Brussels Regulation and the 2001 Brussels Regulation, facilitated a relatively straightforward process. However, the UK's withdrawal necessitates relying on other mechanisms. **Key international instruments include:** - **Hague Convention on Choice of Court Agreements 2005:** Simplifies the recognition and enforcement of judgments from designated countries where an exclusive choice of court agreement exists. The UK acceded to this Convention in its own right after Brexit. - **Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters 2019 (Hague Judgments Convention):** Once in force for the UK (expected on July 1, 2025), this Convention will establish a comprehensive framework for recognizing and enforcing judgments among contracting states, including several EU member states. ### Enforcement Procedures **Enforcement procedures vary depending on the applicable regime.** - **European Regime:** Involves obtaining a certificate of enforceability from the court of origin and serving it on the debtor, allowing enforcement as if it were an English judgment. - **Statutory Regime:** Requires registration of the foreign judgment in the High Court to obtain a declaration of enforceability before proceeding with enforcement. - **Common Law Regime:** Entails commencing a fresh action in the English courts to enforce the foreign judgment as a debt. In some cases, summary judgment may be possible, expediting the process. ### Important Considerations - **Jurisdiction of the Original Court:** For a foreign judgment to be enforceable under the statutory or common law regimes, the original court must have had jurisdiction based on territorial or consensual grounds recognized under English law. - **Finality and Conclusiveness:** The judgment must be final and conclusive in the originating court. - **Defenses to Enforcement:** Various defenses can be raised against the enforcement of a foreign judgment, including procedural irregularities, fraud, public policy concerns, and inconsistency with previous judgments. - **State Immunity:** Judgments against foreign states are subject to the rules of state immunity, as outlined in the State Immunity Act 1978. Enforcement against state assets is generally restricted unless specific exceptions apply. Enforcing foreign judgments can be a complex undertaking. Seeking legal advice from specialists in international judgment enforcement is highly recommended to ensure you understand the applicable regime, procedures, and potential challenges. We offer a discounted fixed fee conference with an experienced solicitor and barrister; get in touch to discuss your specific judgment enforcement case with us. ## The Register of Judgments, Orders, and Fines: UK Public Record of Financial Obligations The Register of Judgments, Orders, and Fines (Register) is a publicly accessible database in England and Wales that records unsatisfied money judgments issued by the County Court and High Court. The Register serves as a valuable tool for creditors and a potential obstacle for debtors. ### What the Register Contains The Register holds detailed information about unsatisfied money judgments, including: - The debtor's full name and address (including postcode) - The debtor's date of birth, if known, when the debtor is an individual - Date and amount of the judgment debt - Court name and claim number ### How the Register Operates The courts automatically send information about money judgments to the Register, which is maintained by Registry Trust Limited under the authority of the Courts Act 2003 and the Register of Judgments, Orders, and Fines Regulations 2005. Judgments remain on the Register for six years from the date of the judgment, unless they are: - Set aside or reversed - Paid in full within one calendar month of the judgment date If a judgment is paid in full after one month, it remains on the Register for the full six years but is marked as "satisfied." ### Implications for Debtors A registered judgment can have significant adverse implications for debtors: - **Creditworthiness:** A judgment on the Register can severely damage a debtor's credit rating, making it difficult to obtain credit, loans, mortgages, or even rent a property. - **Public Record:** The Register is publicly searchable, meaning anyone can access information about a debtor's financial obligations. This can lead to embarrassment, reputational damage, and potential difficulties in personal and professional life. - **Debt Recovery:** The presence of a judgment on the Register makes it easier for creditors to locate debtors and pursue further enforcement actions. ### Implications for Creditors Creditors benefit from the Register in several ways: - **Locating Debtors:** The Register helps creditors locate debtors and obtain their current address, facilitating enforcement efforts. - **Assessing Creditworthiness:** Creditors often check the Register to assess the creditworthiness of potential borrowers or business partners. A registered judgment can serve as a warning sign, indicating a history of financial difficulty. - **Debt Collection:** The Register can act as a deterrent, encouraging debtors to prioritize repayment to avoid the negative consequences of a registered judgment. ### Exemptions from Registration Not all judgments are registered. Some are exempt, including: - Judgments related to family proceedings - Judgments issued by the Administrative Court - Judgments from the Technology and Construction Court (TCC) - Contested judgments (unless certain conditions apply, such as enforcement actions or installment payment orders) ### Amendment and Cancellation The Register can be amended to reflect changes in the judgment, such as the addition of costs after assessment. Cancellation of a registered judgment is limited to specific situations: - **Payment in full within one month:** The judgment is removed from the Register. - **Judgment set aside or reversed:** The judgment is removed. Even if a judgment is settled for a reduced amount, it is marked as "satisfied" but remains on the Register. ### Future Developments The Ministry of Justice is considering changes to the Register, including: - **Adding claimants' names**: This is intended to help debtors find judgment information and provide insights into claimant behavior. - **Addressing concerns for vulnerable claimants**: Mechanisms are being explored to protect vulnerable claimants, potentially allowing them to opt out of the Register. ### The Register's Significance The Register of Judgments, Orders, and Fines plays a crucial role in the debt recovery and credit assessment landscape in the UK. It provides transparency and accountability while highlighting the importance of addressing financial obligations promptly to avoid lasting consequences. ## Setting Aside Judgments: Challenging a Court's Decision [Setting aside a judgment](https://lexlaw.co.uk/solicitors-london/default-judgment-set-aside-application-cpr-12-litigation-costs-service-of-claim-form-covid-19/) allows a defendant to challenge a court's decision and potentially avoid its consequences. This process is governed by specific rules and is subject to the court's discretion. ### Setting Aside Default Judgments [Default judgments](https://lexlaw.co.uk/solicitors-london/category/litigation/default-judgment/), issued when a defendant fails to respond to a claim, are addressed under [CPR 13.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.2) and [13.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.3). There are two primary grounds for setting aside a default judgment: - **Judgment "Wrongly Entered":** If the judgment was issued in error, the court **must** set it aside, even without a defense on the merits. This includes situations like: The defendant filed an acknowledgment of service or defense within the allowed time frame, but judgment was entered regardless. - Service of the claim was defective, making the judgment irregular. - **Court's Discretion:** In cases not covered by [CPR 13.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.2), the court may set aside a judgment at its discretion. Factors influencing this decision include: **Real Prospect of Defence:** The defendant must demonstrate a viable defence to the claim. - **"Some Other Good Reason":** This broad ground encompasses various justifications, such as non-receipt of claim documents despite deemed service. - **Promptness:** Applications should be made promptly to avoid prejudicing the claimant. Delay can be a significant factor in the court's decision. ### Additional Considerations for Setting Aside Default Judgments - **Prejudice to the Claimant:** The court will consider any potential harm to the claimant if the judgment is set aside. - **Conditions:** The court may impose conditions on setting aside the judgment, like payment into court or security for costs. - **Procedure:** Applications involve submitting a notice with supporting evidence, outlining grounds for setting aside and any relevant factors like delay. ### Setting Aside Other Types of Judgments Judgments other than default judgments are generally more difficult to set aside. The principle of finality in litigation favours upholding judgments unless strong grounds for challenge exist. Here are some options: - **Setting Aside for Fraud:** If a judgment was obtained through fraudulent means, it can be set aside through fresh proceedings. - **The Slip Rule:** This rule allows correction of minor errors or omissions in judgments, like typos or incorrect party names. - **CPR 3.1(7):** The court has inherent power to vary or revoke its orders, including judgments, under limited circumstances. Grounds include: A material change in circumstances. - To correct a serious procedural irregularity. - Where it is necessary to do justice. - **Setting Aside Judgments in Absence:** Specific rules apply to setting aside judgments when a party was not present at the hearing. ### Important Points to Remember - **Seek Legal Advice:** Setting aside a judgment is a complex process. Consulting with a professional UK firm of solicitors and barristers is crucial for understanding your options and navigating the procedure. - **Appeals vs. Setting Aside:** Setting aside is distinct from appealing a judgment. Appeals challenge the legal basis of the decision, while setting aside focuses on procedural errors or exceptional circumstances. - **Time Limits:** Strict time limits apply to setting aside applications. Act promptly to avoid losing your right to challenge the judgment. Navigating the intricacies of setting aside judgments requires a keen understanding of the relevant rules and procedures. Seeking legal guidance is essential for ensuring you approach the process effectively. ## Frequently Asked Questions: Judgment Enforcement in England and Wales ### General Enforcement - **Q: What is judgment enforcement?** A: Judgment enforcement is the process of taking legal action to compel a debtor to comply with a court order, typically requiring the payment of a sum of money. If a debtor fails to pay a judgment debt, the judgment creditor can use various methods to enforce the judgment. - **Q: When can I start enforcing a judgment?** A: Generally, enforcement proceedings can begin after the time for payment specified in the judgment or order has expired. However, there are some exceptions, like when the debtor is actively challenging the judgment or has obtained a stay of execution. - **Q: How long do I have to enforce a judgment?** A: There is no strict limitation period for enforcing most money judgments. However, delay in enforcement can have consequences, such as potentially limiting the amount of interest recoverable. - **Q: Can I use more than one enforcement method?** A: Yes, a judgment creditor can often use multiple enforcement methods simultaneously or consecutively, unless specific laws or rules prohibit it. However, be mindful of double recovery and ensure proper notification of payments received. - **Q: What if the debtor has no assets in England and Wales?** A: If the debtor has assets in another jurisdiction, you might need to consider enforcing the judgment abroad. This involves separate procedures and legal considerations specific to the foreign country. ### Specific Enforcement Methods - **Q: What is a charging order?** A: A charging order secures a judgment debt against a debtor's property, typically land or a share in a property. It doesn't automatically force a sale but allows the creditor to claim proceeds from any future sale. - **Q: What is a third-party debt order?** A: A third-party debt order compels a third party who owes money to the debtor, like a bank, to pay the debt directly to the judgment creditor. This is useful when the debtor has funds held by someone else. - **Q: What is an attachment of earnings order?** A: This order directs a debtor's employer to deduct a portion of their earnings and pay it to the judgment creditor until the debt is settled. It applies only to employed individuals and has specific limitations on deduction amounts. - **Q: What is taking control of goods?** A: Taking control of goods involves authorizing an enforcement officer to seize and sell the debtor's goods to satisfy the judgment debt. It replaces the previous execution against goods procedure and has specific rules regarding exempt goods and protections for third-party property. ### The Register of Judgments, Orders, and Fines - **Q: What is the Register of Judgments, Orders, and Fines?** A: It's a public database recording unsatisfied County Court and High Court money judgments in England and Wales. It allows anyone to search for information about a debtor's outstanding financial obligations. - **Q: How long does a judgment stay on the Register?** A: Judgments remain for six years from the judgment date, even if marked as "satisfied" after one month. Cancellation is possible only for judgments paid within one month or set aside by the court. - **Q: What are the implications of a judgment on the Register?** A: A registered judgment can severely impact a debtor's creditworthiness, making it harder to get loans, rent property, or secure credit. It's also publicly accessible, potentially causing reputational harm. ### Costs and Interest - **Q: Can I recover interest on a judgment debt?** A: Yes, judgment debts typically accrue interest at a statutory rate set by the Judgments Act 1838. The applicable rate may vary depending on when the judgment was issued. - **Q: Can I recover the costs of enforcement?** A: Yes, the court can allow recovery of reasonable enforcement costs. This may include fees for applications, court hearings, and enforcement agents' charges. ### Dealing with Difficult Situations - **Q: What if the debtor closes their business to avoid payment?** A: There are legal avenues to address this. Depending on the circumstances, you might consider investigating potential fraudulent conveyance or pursuing enforcement against personal assets of the business owners if personal guarantees exist. Seek legal advice to determine the best course of action. - **Q: What if the debtor claims they are insolvent?** A: Insolvency impacts judgment enforcement. Certain enforcement methods might be restricted, and you may need to participate in insolvency proceedings to recover your debt. Seek legal advice to understand the implications and your options. ### Important Reminders - **Seek Legal Advice:** Judgment enforcement involves complex procedures and legal considerations. Consulting a solicitor is crucial to understand your rights, options, and the best approach for your specific situation. - **Act Promptly:** Timely action is key in enforcement. Delay can weaken your position and make recovery more difficult. - **Keep Records:** Maintain detailed records of all correspondence, payments received, and steps taken in the enforcement process. This documentation will be essential if disputes arise or further legal action is required. ## Case Studies: Illustrating Key Points in Judgment Enforcement ### Setting Aside Default Judgments: Promptness and the Denton Test - **Case:** *[Regione Piemonte v Dexia Crediop SpA](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2014/1298.html)* 2014 EWCA 1298 - **Key Point:** The importance of acting promptly in setting aside a default judgment and the relevance of the *[Denton v White](https://caselaw.nationalarchives.gov.uk/ewca/civ/2014/906)* principles for relief from sanctions. - **Summary:** The applicant sought to set aside a default judgment but faced a 12-month delay. The Court of Appeal, applying *Denton*, upheld the dismissal of the application, emphasizing that CPR 13.3 requires prompt action and considers compliance with rules a significant factor. This highlights the need to act swiftly when seeking to set aside a default judgment and the potential consequences of delay. - **Case:** *[Gentry v Miller](https://caselaw.nationalarchives.gov.uk/ewca/civ/2016/141)* 2016 EWCA Civ 141 - **Key Point:** The application of the *Denton* principles to "good reason" cases under CPR 13.3. - **Summary:** This case involved an insurer and a delay in responding to a claim. The Court of Appeal, referencing *Denton*, reiterated that even when asserting a "good reason" for setting aside a default judgment, the court will scrutinize the seriousness of the delay and its underlying cause. This underlines that the *Denton* test's focus on compliance and proportionality extends to setting aside default judgments. ### Importance of Clear Drafting and Communication in Judgments and Orders - **Case:** *[AIC Ltd v Federal Airports Authority of Nigeria](https://www.supremecourt.uk/cases/uksc-2020-0206)* 2020 UKSC 16 - **Key Point:** The significance of finality in litigation and the careful approach required when reconsidering judgments or orders. - **Summary:** The Supreme Court overturned a lower court's decision to set aside an enforcement order after a guarantee was provided post-judgment but pre-order sealing. The Court stressed the weight of the finality principle, emphasizing that while a judge has discretion to reconsider, it should be exercised judiciously and not lightly displace a finalized decision. - **Case:** *[John Forster Emmott v Michael Wilson & Partners Ltd](https://caselaw.nationalarchives.gov.uk/ewhc/comm/2022/731)* 2022 EWHC 2682 (Ch) - **Key Point:** The need for clear communication and adherence to deadlines when seeking to make submissions on draft judgments. - **Summary:** The defendant, acting in person, submitted documents after the draft judgment without following proper procedure. The court, emphasizing fairness and adherence to deadlines, provided the defendant a clear opportunity to make submissions but ultimately proceeded with the judgment due to the defendant's non-compliance. ### Enforcement Against a State: Specific Procedural Requirements - **Case:** *[General Dynamics United Kingdom Ltd v Libya](https://www.supremecourt.uk/cases/uksc-2019-0166)* 2019 UKSC 22 - **Key Point:** The mandatory nature of complying with the State Immunity Act 1978 when enforcing an arbitration award against a state. - **Summary:** The Supreme Court held that strict compliance with the SIA 1978 is essential when serving enforcement proceedings on a state party. This highlights the unique procedural rules and considerations involved in enforcing judgments against sovereign states, emphasizing the need for meticulous attention to specific legal requirements. ### Challenging Judgments Obtained Through Fraud - **Case:** *[Royal Bank of Scotland plc v Highland Financial Partners LP](https://lexlaw.co.uk/solicitors-london/high-court-slams-dentons-and-rbs-for-cavalier-attitude-to-disclosure/)* 2010 EWCA Civ 1106 - **Key Point:** The high threshold for setting aside judgments based on fraud. - **Summary:** The Court of Appeal established a three-limb test for setting aside judgments for fraud, requiring proof of conscious dishonesty, materiality of the fraud to the judgment, and the existence of new evidence. This case underscores the principle of finality in litigation and the need for strong evidence to overturn a judgment based on allegations of fraud. These case studies demonstrate the practical application of key principles in judgment enforcement. They highlight the importance of prompt action, clear communication, adhering to specific procedures, and understanding the legal tests for challenging judgments. Consulting with a solicitor is crucial for navigating these complexities and ensuring effective judgment enforcement or defence. ## Expert Tips for Successful UK Judgment Enforcement Enforcement of a judgment can be just as challenging as obtaining it. These expert tips, drawing on insights from [our legal practitioners with decades of experience](https://lexlaw.co.uk/our-people/) and case law, can help maximise chances of recovery: ### Before Enforcement: Due Diligence is Key - **Investigate the debtor's assets:** Thoroughly research the debtor's assets *before* commencing enforcement. This may involve searches of the Land Registry, Companies House, and credit reference agencies. Consider using a tracing expert if assets are complex or hidden. - **Assess the debtor's financial situation:** Determine if the debtor is genuinely unable or simply unwilling to pay. Consider a pre-enforcement interview or order for questioning under oath to understand their means and identify any potential avenues for recovery. - **Choose the most effective enforcement method:** Don't rush into a familiar method like using bailiffs. Consider a range of options based on the debtor's assets and financial situation. Consult a solicitor specializing in enforcement for tailored advice. ### During Enforcement: Strategic and Informed Action - **Act promptly:** Delays can prejudice your position, allowing the debtor to dissipate assets or making recovery more challenging. Time is of the essence, particularly with methods like taking control of goods. - **Understand the specifics of each method:** Familiarise yourself with the procedural rules and nuances of your chosen enforcement method. This includes understanding fees, timelines, and potential challenges. - **Communicate effectively:** Keep accurate records of all communications with the debtor, the court, and any enforcement agents. Clear and consistent communication can help avoid misunderstandings and ensure the process runs smoothly. - **Consider alternative dispute resolution:** In some cases, mediation or negotiation can be more cost-effective than court proceedings. Explore these options if appropriate. ### Dealing with Common Challenges - **Evasive debtors:** If the debtor actively tries to avoid payment, consider robust methods like third-party debt orders to freeze accounts or obtaining a passport order to restrict their travel. Seek legal advice on options like freezing injunctions if dissipation of assets is suspected. - **Insolvency:** If the debtor becomes insolvent, enforcement becomes more complex. You might need to participate in insolvency proceedings and understand the impact on your claim's priority. Consult an insolvency specialist for guidance. - **Cross-border enforcement:** Enforcing a judgment in another jurisdiction involves specific procedures and legal frameworks. Seek advice from lawyers with expertise in cross-border enforcement. ### Additional Tips - **Use the Register of Judgments:** Registering your judgment can incentivise payment and deter further credit. It can also help identify other creditors and facilitate potential joint action. - **Stay informed about interest and costs:** Ensure you're claiming all applicable interest on the judgment debt, which can significantly increase the amount recovered. Also, seek recovery of reasonable enforcement costs. - **Leverage legal expertise:** Enforcement is a specialized area of law. Consult with a solicitor throughout the process for expert advice and to navigate the complexities effectively. **Remember:** Successful judgment enforcement relies on a combination of thorough preparation, strategic action, and a clear understanding of the legal framework. Prioritising these expert tips, and [seeking professional legal advice](https://lexlaw.co.uk/legal-case-assessment/), can significantly increase your chances of recovering the debt owed to you. ## Recent Changes and Future Outlook for UK Judgment Enforcement The landscape of judgment enforcement in England and Wales is constantly evolving. Recent changes, coupled with ongoing reform initiatives, signal potential shifts in the enforcement process. Here's an overview of recent developments and what to expect in the near future, with a particular focus on changes relevant to 2025: ### 2024: A Year of Significant Shifts 2024 saw the implementation of a major international treaty impacting judgment enforcement: - **The [Hague Judgments Convention](https://www.hcch.net/en/instruments/conventions/full-text/?cid=137):** The UK's ratification of this convention, entering into force on **1 July 2025**, will streamline the recognition and enforcement of judgments from participating countries.. This will replace the more complex common law and statutory regimes for these countries. **Judgments given in proceedings commenced after 1 July 2025 will be directly enforceable under this convention**, potentially making cross-border enforcement more efficient.. ### Looking Ahead to 2025 and Beyond - **Impact of the [Hague Judgments Convention](https://www.hcch.net/en/instruments/conventions/full-text/?cid=137):** As the convention takes effect, **expect to see more clarity and uniformity in enforcing judgments from participating countries**. New procedural rules under [CPR Part 74](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part74) and supporting [Practice Direction 74A](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part74/pd_part74a) have been introduced to facilitate this.. This development could have significant implications for businesses and individuals engaged in cross-border transactions. - **Digitalisation of Warrants of Control:** HMCTS has confirmed its commitment to digitising warrants of control through the new Online Civil Money Claims service. While the exact timeline remains unclear, this could potentially lead to a more efficient and user-friendly process for enforcement using this method. ### Other Potential Reform Areas While the focus for 2025 seems to be on the implementation of the [Hague Judgments Convention](https://www.hcch.net/en/instruments/conventions/full-text/?cid=137) and the digitalisation of warrants of control, other areas ripe for reform, with potential developments in the future, include: - **Enforcement Against Debtors with Complex Assets:** Existing methods can be inadequate in cases where debtors hold assets like [cryptocurrency](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/) or [complex financial instruments](https://www.youtube.com/watch?v=7NXkPIkyLw4). Expect potential legal and procedural developments to address this evolving challenge. - **Protecting Vulnerable Debtors:** There's growing emphasis on safeguarding vulnerable debtors from unfair or aggressive enforcement practices. This might involve clearer guidance on identifying vulnerability, stricter regulation of enforcement agents, and enhanced safeguards for essential assets. - **Streamlining Enforcement Processes:** The current system, with its various methods and procedural complexities, can be cumbersome. Further streamlining and simplification, potentially through greater use of technology, could improve efficiency and accessibility for both creditors and debtors. ## Conclusion: Judgment Enforcement in England and Wales Enforcing a judgment to recover a debt can be a complex process in England and Wales. While a court order may grant you the right to payment, it doesn't guarantee the debtor will comply. Taking the right steps, often with the help of a legal professional, can significantly increase your chances of success. Here are key points to remember: - **Due Diligence is Essential:** Thorough research into the debtor's assets and financial situation is crucial *before* starting enforcement action. This helps determine the most appropriate and effective enforcement method. - **Various Enforcement Methods Exist:** Options range from instructing bailiffs to seize goods, to obtaining orders to freeze bank accounts or charge land. Understanding the specifics of each method, including costs and procedures, is vital for making informed decisions. - **Acting Promptly is Crucial:** Delays can allow debtors to dissipate assets, hindering your efforts to recover the debt. Time limits apply to many enforcement methods, so swift action is often key. - **Professional Legal Advice is Invaluable:** Enforcement law is complex and constantly evolving. A solicitor specializing in enforcement can provide expert guidance tailored to your situation. They can help you navigate the intricacies of the process, deal with challenges like evasive debtors, and ensure you're claiming all applicable interest and costs. **The importance of seeking professional legal advice cannot be overstated.** A solicitor can provide crucial support throughout the enforcement process, from choosing the right method to dealing with unexpected complications. Their expertise can maximise your chances of recovering what you're owed and avoid costly mistakes. **Looking ahead, the enforcement landscape will continue to change.** The Hague Judgments Convention, coming into force in July 2025, will impact cross-border enforcement, potentially simplifying the process for judgments from participating countries. Further reforms and digitalisation efforts are expected, which may lead to greater efficiency and accessibility in judgment enforcement. Staying informed about these changes, with the help of legal professionals, will be key for successful debt recovery in the future. ## Is Your Judgment Just a Piece of Paper? Start Enforcement Action... You've won your case, and the court has ruled in your favour. **But what happens when the debtor simply refuses to pay?** Don't let a hard-won judgment turn into an empty victory. **You have options, and we can help you enforce your rights and often using methods where the debtor ends up paying your costs of instructing us.** We are a team of experienced dispute resolution specialist solicitors and barristers dedicated to helping businesses like yours recover what they're rightfully owed. We understand the complexities of judgment enforcement and can guide you through every step of the process, [helping you choose the right strategy](https://lexlaw.co.uk/practice-areas/) for successful recovery. **LEXLAW's litigation work has been [featured in the media](https://lexlaw.co.uk/media-interest/) over its past two decades of success**: **Here's why choosing LEXLAW can make the difference in your enforcement efforts:** - **Expert Advice and Strategy:** Our solicitors and barristers have in-depth knowledge of the various enforcement methods, from traditional approaches like bailiff action to more specialised techniques such as third-party debt orders or charging orders. We'll assess your situation and recommend the most effective strategy to maximize your chances of recovery. - **Efficient and Prompt Action:** We understand that time is often of the essence in enforcement. Delays can give debtors opportunities to hide assets, making recovery more difficult. We'll act swiftly and decisively to protect your interests. - **Navigating Complexities:** Enforcement law can be intricate, and challenges can arise, particularly when dealing with evasive debtors or cross-border situations. Our expertise ensures you have the right legal support to overcome these obstacles. - **Maximising Your Recovery:** We'll meticulously calculate all applicable interest on your judgment debt, ensuring you recover the full amount you're entitled to. We'll also pursue the recovery of reasonable enforcement costs to minimize your financial burden. **Don't let a judgment gather dust while you're left out of pocket.** [Contact us](https://lexlaw.co.uk/contact-us/) today for a discounted fixed fee consultation. Our team will listen to your concerns, answer your questions, and provide clear guidance on how we can help you enforce your judgment and finally receive the payment you deserve. **[Contact us](https://lexlaw.co.uk/contact-us/) today on 02071830529 to schedule your discounted fixed fee consultation. Let us turn your judgment into tangible results.** The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). [LEXLAW UK 2025 Guide to Enforcing Judgment Orders in England lexlaw.co.uk Solicitors Barristers +442071830529](https://lexlaw.co.uk/wp-content/uploads/LEXLAW-UK-2025-Guide-to-Enforcing-Judgment-Orders-in-England-lexlaw.co_.uk-Solicitors-Barristers-442071830529.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/LEXLAW-UK-2025-Guide-to-Enforcing-Judgment-Orders-in-England-lexlaw.co_.uk-Solicitors-Barristers-442071830529.pdf) --- # Expert Legal Defence Against Manolete: Transactions at an Undervalue Claims Source: https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/ Facing a legal claim for a [transaction at an undervalue](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf), particularly from prominent litigation funders like [Manolete Partners PLC](https://find-and-update.company-information.service.gov.uk/company/07660874), can be a significant challenge for individuals and companies involved in insolvency proceedings. Understanding the intricacies of these claims and the relevant law is crucial for building a robust defence. We specialise in providing expert legal representation to clients facing such actions. This article explains what a transaction at an undervalue is, outlines the key legal principles, and details how our experienced team can help you defend against claims, especially those brought by [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874). ## What is a Transaction at an Undervalue Under UK Law? A [transaction at an undervalue](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf) occurs when a company or an individual enters into a transaction where the value of what they provide is significantly more than what they receive in return, or where they receive no consideration at all. This is particularly relevant in the context of insolvency, as liquidators, administrators, or trustees in bankruptcy may seek to recover assets that were transferred away to the detriment of creditors before the insolvency proceedings began. Under UK law, as outlined in the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents), a transaction at an undervalue typically falls into one of two categories: - **Gifts or Transactions with No Consideration:** This includes situations where a company or individual gives away assets or enters into an agreement without receiving any payment or benefit in return. - **Transactions with Significantly Less Value Received:** This covers instances where the value of the consideration received by the company or individual is significantly less than the value of what they provided. The assessment of "significant" undervalue is a matter for the court to determine based on the specific circumstances. ## The Legal Framework: Section 238 of the Insolvency Act 1986 and Beyond The primary legal basis for challenging transactions at an undervalue in [corporate insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) is [Section 238 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf). This section empowers an administrator or liquidator (referred to as the "office-holder") to apply to the court to seek an order in respect of such transactions entered into by a company that subsequently goes into administration or liquidation. If the court finds that a [transaction at an undervalue](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf) has occurred within a specified "relevant time" and other conditions are met, it has the power to make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into the transaction. This could include requiring the transfer of property back to the insolvent estate or ordering the recipient to pay a sum of money to the office-holder. Similar provisions exist for individuals facing [bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) under [Section 339 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-339-of-the-Insolvency-Act-1986.pdf). A trustee in [bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) can apply to the court to challenge transactions at an undervalue entered into by the bankrupt within a longer "relevant time" frame. ## Key Elements of a Transaction at an Undervalue Claim To successfully pursue a claim for a [transaction at an undervalue](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf), several key elements must be established: - **The "Relevant Time":** For companies, a transaction at an undervalue can typically be challenged if it occurred within two years ending with the "onset of insolvency". This period is presumed if the transaction was with a person "connected" with the company (other than solely as an employee). For individuals facing bankruptcy, the "relevant time" can extend up to five years before the presentation of the bankruptcy petition. Again, there are presumptions of insolvency for transactions with "associates". - **Insolvency:** In corporate cases, for a transaction within the two-year period to be considered a transaction at an undervalue (unless with a connected person), the company must have been unable to pay its debts at the time of the transaction or become so as a result of it. This is presumed in transactions with connected persons. Similar insolvency requirements exist for bankruptcy cases, particularly for transactions more than two years before bankruptcy. - **Significant Undervalue:** As mentioned earlier, there must be a demonstrable significant disparity between the value provided and the value received by the company or individual. The courts will assess the value at the time of the transaction, although subsequent events may be taken into account in certain circumstances. The case of [Phillips v Brewin Dolphin Bell Lawrie Ltd](https://www.bailii.org/uk/cases/UKHL/2001/2.html) provides important guidance on how the court assesses the value of consideration in such transactions. ## Defending Claims for Transactions at an Undervalue: How We Can Help Against Manolete Partners [Manolete Partners PLC](https://markets.ft.com/data/equities/tearsheet/summary?s=MANO:LSE) is a leading insolvency litigation funding company that specialises in pursuing [insolvency-related claims, including transactions at an undervalue](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). Their business model often involves purchasing these claims from liquidators or administrators and aggressively pursuing litigation against directors or other parties to maximise returns. If you are [facing a claim](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) for a [transaction at an undervalue](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf) backed by [Manolete Partners](https://markets.ft.com/data/equities/tearsheet/summary?s=MANO:LSE), [expert legal representation](https://lexlaw.co.uk/) is essential. We have extensive experience in defending clients against such claims and possess a deep understanding of the tactics employed by litigation funders like [Manolete](https://find-and-update.company-information.service.gov.uk/company/07660874). [Our expert team](https://lexlaw.co.uk/our-people/) can provide strategic legal support to counter aggressive tactics and ensure the most optimal outcome in your case. Here’s how we can assist you in defending against a transaction at an undervalue claim from Manolete Partners: - **Challenging the Claim’s Validity:** We will thoroughly examine the basis of Manolete’s claim, scrutinising the evidence and identifying any potential weaknesses or defences specific to the type of claim being pursued. This includes assessing whether the transaction meets the legal definition of an undervalue transaction and whether the "relevant time" and insolvency criteria are satisfied. - **Scrutinising Financial Evidence:** We will meticulously review financial records and challenge any assumptions made about the company’s or individual’s insolvency or financial state at the time of the alleged wrongdoing. This is particularly crucial as Manolete often relies on retrospective analysis of financial positions. - **Utilising Limitation Arguments:** We are acutely aware of the applicable limitation periods for bringing such claims and will raise these arguments where appropriate. [Manolete](https://markets.ft.com/data/equities/tearsheet/summary?s=MANO:LSE) has faced challenges on this front in the past, and the [Limitation Act 1980](https://lexlaw.co.uk/wp-content/uploads/Limitation-Act-1980.pdf) provides potential avenues for defence. - **Demonstrating Good Faith (Corporate Claims):** For claims against directors of companies, we will explore whether the [Section 238(5)](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf) defence applies, arguing that the company entered into the transaction in good faith and for the purpose of carrying on its business, with reasonable grounds to believe it would benefit the company at the time. - **Challenging the Assignment:** While recent court decisions have made this more difficult, we will, where appropriate, examine the validity of the claim assignment from the liquidator or administrator to Manolete. - **Focusing on the Merits of the Case:** Our primary focus will be on building a robust defence against the substance of the **t**ransaction at an undervalue claim itself, rather than being diverted by challenges to Manolete’s involvement. - **Considering Security for Costs:** While Manolete often asserts that security for costs orders are rarely obtained against them, we will explore this option in suitable cases. We a [track record](https://lexlaw.co.uk/solicitors-london/category/case-study/) of successfully challenging complex insolvency claims and has extensive experience in dealing with litigation funders. [Our team](https://lexlaw.co.uk/our-people/) of expert solicitors and barristers possesses in-depth knowledge of [insolvency law](https://windinguppetitionsolicitors.co.uk/), commercial contracts, fraud, and directors' duties, making us well-equipped to handle even the most sophisticated claims brought by Manolete Partners. We adopt a strategic, partner-led approach, providing robust representation tailored to your specific circumstances. ## Facing a Transaction at an Undervalue Claim from Manolete? Contact Our Expert Legal Team Today If you or your company is facing a legal claim for a [transaction at an undervalue](https://lexlaw.co.uk/wp-content/uploads/Section-238-of-The-Insolvency-Act.pdf) from [Manolete Partners PLC](https://find-and-update.company-information.service.gov.uk/company/07660874) or any other litigation funder, it is imperative to seek expert legal advice without delay. Our dedicated team is here to provide you with the strategic guidance and robust defence you need to protect your interests and achieve the best possible outcome. We invite you to contact us for an [initial consultation](https://lexlaw.co.uk/legal-case-assessment/) with our experienced solicitors and barristers. We will carefully analyse the details of your case, assess the merits of the claim, and develop a tailored defence strategy designed to counter the allegations and protect your position. Don't face Manolete's aggressive litigation tactics alone. Let our expertise in defending transactions at an undervalue claims work for you. [Contact us today](https://lexlaw.co.uk/legal-case-assessment/) to discuss your case. --- # £115m UK Palace Insufficient for Service of NBD Bankruptcy Petition on Qatari Source: https://lexlaw.co.uk/solicitors-london/115m-uk-palace-insufficient-for-service-of-nbd-bankruptcy-petition-on-qatari/ In *Emirates NBD Bank PJSC v Ghanim Bin Saad Majid Al Saad Al Kuwari* [2026], the High Court set aside a £16.3 million bankruptcy petition (BR-2025-000542) and alternative service order against a [Qatari billionaire](https://en.wikipedia.org/wiki/Ghanim_Bin_Saad_Al_Saad). The judge ruled that serving the debtor via alternative means in England was invalid because he was in [Qatar](https://en.wikipedia.org/wiki/Qatar), and the bank had never sought permission to serve him abroad. The judgment, delivered by [ICC Judge Greenwood](https://www.judiciary.uk/appointments-and-retirements/insolvency-and-companies-court-judge-greenwood/) in the [Insolvency and Companies List (ChD)](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/), sets aside a previous alternative service order and derails a bankruptcy petition targeting a multi-million-pound debt. The decision underscores that prime London real estate holdings cannot serve as a procedural proxy for valid cross-border service when a debtor in fact resides outside the jurisdiction. ## The Underlying Litigation The cross-border enforcement campaign stems from a sustained effort by Dubai-based [Emirates NBD Bank PJSC](https://www.emiratesnbd.com/en) to recover substantial funds from one of Qatar’s most prominent business figures, Mr. Ghanim Bin Saad Majid Al Saad Al Kuwari. The underlying procedural history developed across multiple jurisdictions: **The Dubai Judgments:** In October 2023, Emirates NBD secured a judgment for £16.3 million in the [DIFC](https://www.difc.com/) [Dubai Court of First Instance](https://www.difccourts.ae/difc-courts/services/court-of-first-instance). This judgment successfully withstood two subsequent levels of appeal within the [United Arab Emirates](https://en.wikipedia.org/wiki/United_Arab_Emirates). **The English Recognition:** Moving to enforce the judgment debt within England and Wales, the bank commenced a Part 7 claim in the Commercial Court (*[Emirates NBD Bank PJSC v Al Saad Al Kuwari](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2026/1468.html&query=(kuwari))* Case No: CL-2025-000001), resulting in a successful default judgment in February 2025. **The Insolvency Route:** Seeking maximum leverage, the bank initiated creditor bankruptcy proceedings in June 2025 (*I[n re Ghanim Bin Saad Majid Al Saad Al Kuwari](https://www.iclr.co.uk/ic/2026005026)* Case No: BR-2025-000542). ## Procedural Trap: Shortcutting Alternative Service To progress a bankruptcy petition, a creditor must validly serve the petition on the debtor. The bank attempted personal service at three adjoining, high-value properties in Westminster, London – commonly referred to as the debtor's £115 million palace. While a process server observed the debtor entering the premises in July 2025, personal service was not completed before he left the UK to return to his permanent residence in Doha, Qatar. Rather than pursuing the proper channels for international service, the bank sought an order for alternative service under the provisions of the Civil Procedure Rules, which was granted in August 2025. This permitted the bank to deem service executed via publication in the *London Gazette* and digital transmission. The debtor’s legal team subsequently applied to set aside both the service order and the underlying petition. ## Core Legal Threshold: Substantive vs Adjudicatory Jurisdiction In his judgment, ICC Judge Greenwood identified a fundamental flaw in the bank’s tactical approach, clarifying that the bank had conflated two distinct statutory tests: ### Substantive Jurisdiction under Section 265 The bank correctly identified that the English court possessed the substantive capacity to hear an insolvency petition against the debtor. Under [Section 265 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/265), the court has jurisdiction if the debtor has a place of residence or has carried on business in England and Wales within the preceding three years. The ownership of the Westminster estate comfortably satisfied this statutory floor. ### Adjudicatory Jurisdiction via Valid Service However, satisfying Section 265 does not grant a creditor automatic territorial jurisdiction over an individual who is physically located abroad. > **Key Legal Principle:** Substantive jurisdiction determines whether the English court *can* hear an insolvency case; valid service determines whether the court’s power has been *legitimately activated* over a specific individual. Valid service remains the literal foundation of the court’s adjudicatory power. Because the bank could not establish that the debtor was physically present within the jurisdiction at the precise time the alternative service was executed, and because the bank had never applied for permission to serve the insolvency proceedings out of the jurisdiction in Qatar, the alternative service order was defective and entirely invalid. [Emirates NBD Bank PJSC v Ghanim Bin Saad Majid Al Saad Al Kuwari [2026] EWHC 1468 (Ch) (16 June 2026) LEXLAW LITIGATION LONDON UK UAE](https://lexlaw.co.uk/wp-content/uploads/Emirates-NBD-Bank-PJSC-v-Ghanim-Bin-Saad-Majid-Al-Saad-Al-Kuwari-2026-EWHC-1468-Ch-16-June-2026-LEXLAW-LITIGATION-LONDON-UK-UAE.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Emirates-NBD-Bank-PJSC-v-Ghanim-Bin-Saad-Majid-Al-Saad-Al-Kuwari-2026-EWHC-1468-Ch-16-June-2026-LEXLAW-LITIGATION-LONDON-UK-UAE.pdf) ## Key Takeaways for Litigation Creditors This ruling serves as an expensive cautionary tale for insolvency practitioners dealing with internationally mobile, high-net-worth debtors. **No Property Shortcuts:** Possessing high-value residential assets in London is sufficient to establish a connection under Section 265, but it cannot be weaponised as a mechanism to bypass international service treaties or formal letters of request. **Service Must Lead, Not Follow:** If a debtor is known to reside in a non-Hague Convention state or a jurisdiction requiring complex service mechanisms (such as Qatar), creditors must budget time and resources for serving abroad from the outset. **Strict Construction of Insolvency Rules:** The courts will not allow alternative service orders to function as convenient workarounds when a creditor has failed to make any substantive attempt at serving the debtor in their actual country of residence. By failing to respect the strict territorial limits of the English court's service powers, the bank’s enforcement strategy has been reset to the beginning of the bankruptcy process. ## Frequently Asked Questions ### 1. What was the core legal issue in this case? The High Court of Justice (Chancery Division) was asked to determine whether a creditor can use an alternative service order to serve a bankruptcy petition on a non-UK resident debtor in England, simply because the debtor owns substantial residential property in London. The court specifically evaluated the boundaries between substantive jurisdiction under the Insolvency Act 1986 and the strict territorial requirements for executing valid service. ### 2. Why did the High Court set aside the alternative service order? ICC Judge Greenwood ruled that the alternative service order (historically referred to as an Agnello order in this context) was legally ineffective because the bank failed to establish that the debtor, Mr Al Kuwari, was physically present in England at the time the service was executed. Crucially, the bank had never attempted to serve the debtor in Qatar, where he actually resides, meaning they could not prove that personal service was "impracticable". ### 3. Does owning a £115 million London property establish jurisdiction for a bankruptcy petition? It establishes *substantive* jurisdiction, but not *adjudicatory* jurisdiction. Under Section 265 of the Insolvency Act 1986, owning a residence in England satisfies the threshold for the court to potentially hear a bankruptcy case. However, ownership of property does not give a creditor a free pass to bypass the strict rules of territorial service if the debtor is currently abroad. ### 4. What must a creditor demonstrate before seeking an alternative service order against an international debtor? To successfully obtain and rely on an alternative service order, a creditor must show a "good arguable case" that the debtor was physically present within England and Wales during the relevant service period. Furthermore, they must demonstrate that they have exhausted reasonable standard channels, such as attempting formal cross-border service in the debtor’s home country, before declaring personal service to be impracticable. ### 5. What are the broader implications of this ruling for cross-border debt enforcement? The judgment serves as a strict warning to international banks and litigation solicitors that technical procedural shortcuts will not be tolerated in high-value bankruptcy proceedings. Wealth and prime UK assets do not strip foreign citizens of their rights to proper international service. Creditors dealing with internationally mobile debtors must formulate a valid, treaty-compliant service strategy from the outset rather than attempting to rely on localised alternative service workarounds. --- # Defeating HMRC’s £1m VAT Assessment Source: https://lexlaw.co.uk/solicitors-london/lexlaw-defeats-hmrcs-900000-vat-assessment-after-establishing-hmrc-assessed-the-wrong-taxpayer/ A VAT assessment is only as strong as its foundations. In this matter, [LEXLAW's tax litigation team](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) secured the complete withdrawal of a substantial VAT assessment not by disputing the arithmetic, but by demonstrating that HMRC had assessed the wrong legal person altogether. What began as a conventional appeal over quantum became, through forensic preparation, a decisive challenge to the validity of the assessment itself. The result was that HMRC withdrew the assessment in full, accepted that its records had been wrong for years, and the Tribunal proceedings came to an end with no liability falling on our client. ## Origins of the Dispute Our client was an individual who had been served with a substantial [VAT assessment](https://taxdisputes.co.uk/2026/01/how-to-challenge-a-vat-assessment-2026-guide/). HMRC had raised the assessment to [best judgment](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/), on the basis of supplies it considered had been made and on which it said VAT was due. There was, however, a critical problem with HMRC's analysis that was not apparent on the face of the assessment. The trading activity in question had not been carried on by the individual at all. It had been carried on through a limited company. The economic activity, the contractual relationships, the invoicing and the commercial substance all belonged to the company, not to the person HMRC had chosen to assess. The root of the difficulty lay much earlier, in the VAT registration process. Years before, a [VAT1 registration application](https://www.gov.uk/register-for-vat) had been submitted that identified the limited company as the applicant. Our client, like most taxpayers, had relied on professional advisers to complete and submit the registration in the ordinary way. HMRC, however, processed that application incorrectly and registered the individual rather than the company. That single administrative error then sat embedded within HMRC's records for several years, unnoticed and uncorrected, until it surfaced in the most damaging way possible, as the basis for a best judgment assessment raised against the wrong taxable person. ## The Problem When LEXLAW was instructed, the appeal was proceeding on conventional VAT grounds. The focus, as is so often the case, was on the substance of the supplies and the quantum of the assessment: how much VAT was said to be due, on what supplies, and whether HMRC's best judgment could be displaced. During the preparation of [witness evidence](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/), however, our specialist team identified a far more fundamental issue. The assessment appeared to have been issued against the wrong legal person. The distinction between a limited company and the individual standing behind it is one of the most basic principles in law, and it is no less important in VAT. A company is a separate legal person. Where it is the company that makes taxable supplies in the course of its business, it is the company, and not its director, shareholder or proprietor, that is the taxable person liable to account for VAT. That distinction is not a technicality to be glossed over. An assessment raised against the wrong taxable person is potentially fatal to HMRC's case. It does not matter how compelling HMRC's figures might be if the assessment is directed at a person who is not, in law, liable to be assessed at all. Recognising this transformed the nature of the appeal. The right question was no longer simply *how much*, but *who*. ## The Investigation Establishing the point required disciplined, evidence-led investigation rather than assertion. LEXLAW carried out a detailed review of the historic [VAT registration records](https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat) to reconstruct what had actually happened at the point of registration and in the years that followed. That work included obtaining and analysing the original VAT registration application, which showed on its face that it was the company that had been put forward as the applicant. We reviewed the correspondence that had passed between HMRC and the professional advisers, building a documentary timeline that demonstrated the company had always been intended to be the registered and taxable person. We gathered the wider commercial record, supplier invoices, trading documents and other registration material, to show where the economic activity genuinely sat. Crucially, we did not stop at the documents. We obtained [witness evidence](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) from both the taxpayer and from the professional adviser who had been responsible for the VAT registration process. That combination of contemporaneous documentation and first-hand testimony is what gives a case like this its strength. It is one thing to argue that an error occurred; it is another to be able to prove, from the original paperwork and from the people who completed it, that the company was always the intended registrant and that HMRC's records were simply wrong. ## Litigation Strategy Once the issue had been identified and the supporting evidence assembled, LEXLAW instructed specialist tax counsel and developed a strategy designed to put the point at the centre of the case. A deliberate decision was taken to seek the [First-tier Tax Tribunal's](https://taxdisputes.co.uk/2025/10/first-tier-tax-tribunal-appeals-guide/) permission to amend the grounds of appeal so that the case squarely raised the question of whether HMRC had assessed the wrong legal entity. Fresh directions were sought to accommodate the reshaped case and the additional evidence. Rather than allowing the dispute to drift towards a lengthy hearing about the quantum of supplies, the strategy was to focus the Tribunal's attention on a single, potentially decisive point of legal identity. That issue was well suited to being determined as a preliminary matter. If our client succeeded in showing that the assessment had been raised against the wrong person, that finding would dispose of the entire appeal, regardless of the underlying figures. Framing the case in this way placed real and immediate pressure on HMRC to confront the validity of its own assessment rather than simply defending its calculations. ## The Evidence Filed The evidence was prepared with care and directed precisely at the issue. Detailed [witness statements](https://lexlaw.co.uk/first-tier-tax-tribunal-hmrc-representation-solicitor-london/) were filed which demonstrated that it was the company, and not the individual, that carried on the economic activity giving rise to the supplies HMRC had assessed. Equally important, the evidence showed that this was not a problem HMRC was learning about for the first time. The material established that advisers had, over a period of years, repeatedly tried to persuade HMRC to correct the VAT registration so that it properly reflected the company. HMRC had therefore been placed on notice of the registration issue long before the assessment was ever raised. That point mattered considerably: it removed any suggestion that the error was a recent or convenient invention and instead showed a long-standing, documented attempt to put HMRC's records right. ## HMRC's Response The response to the amended grounds and the supporting witness evidence was telling. Once served, HMRC did not press on regardless. Instead, it sought additional time to consider its position. HMRC took specialist internal advice and obtained the advice of its own counsel. That is the natural step for a responsible litigant faced with a properly evidenced challenge to the foundation of its assessment. Having reviewed the position, HMRC reached the conclusion that the assessment could not stand. ## The Outcome HMRC formally withdrew the assessment in full. It accepted that the [VAT registration](https://lexlaw.co.uk/solicitors-london/vat-de-registration-appeals-how-to-challenge-hmrcs-decision-to-cancel-your-vat-number/) had been processed incorrectly at the outset. It accepted that the individual registration should be cancelled, and that the company should instead be treated as the relevant VAT registrant going forward. With the assessment withdrawn, the Tribunal proceedings came to an end. Our client avoided liability under the disputed assessment entirely. A substantial exposure, one that had been hanging over our client and that, on HMRC's original case, ran to a significant sum, was removed not after a contested hearing, but because the legal foundation of the assessment had been shown to be defective. ## Why This Case Matters The most important lesson from this matter is also the simplest: HMRC must assess the right person. The identity of the taxable person is not a preliminary formality to be assumed; it is a precondition of a valid assessment. As section 73 of the [Value Added Tax Act 1994](https://lexlaw.co.uk/wp-content/uploads/Value-Added-Tax-Act-1994.pdf) makes clear, an assessment must be raised against the person who is liable, and that question of legal identity is fundamental, not peripheral. The case is a clear illustration of why the distinction between an individual and a limited company cannot be treated casually. Where a business is carried on through a company, it is the company that is the taxable person. An assessment that ignores that separation, however large, and however carefully the figures have been calculated, is exposed to challenge at its root. It also demonstrates that procedural and [VAT registration](https://taxdisputes.co.uk/appeal-hmrc-vat-de-registration-cancel-number-taxable-goods-supplies-kittel-decision-letter-judicial-review-legal-advice/) issues can be every bit as decisive as substantive tax arguments. A great deal of litigation effort is devoted to disputing the amount of an assessment. This case is a reminder that the more powerful question is sometimes whether the assessment is valid at all. Reviewing the legal foundations of an HMRC assessment, who has been assessed, on what basis, and whether the registration position supports it, can be far more effective than arguing only about quantum. Finally, the outcome shows what careful [witness evidence](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) and forensic analysis can achieve. The decisive point here was not visible on the face of the assessment and did not emerge from the original grounds of appeal. It surfaced because the historic records were examined closely, the original registration application was obtained and analysed, and witnesses were able to speak to what had actually happened. Preparation of that quality can change the entire course of litigation. It is also worth noting that where professional advisers have made errors in the VAT registration process that contributed to the client's exposure, there may be a separate [professional negligence claim](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) worth exploring against the adviser responsible. LEXLAW's litigation team regularly advises on [claims against accountants and tax advisers](https://lexlaw.co.uk/negligence-claims-against-financial-advisers/) whose failings have caused or compounded a client's tax difficulties. ## Key Takeaways - **The taxable person is fundamental.** An assessment raised against the wrong legal person is vulnerable to challenge no matter how the figures are calculated. [HMRC's assessment powers](https://taxdisputes.co.uk/2024/02/hmrcs-assessment-powers/) under section 73 VATA 1994 depend on the correct person being identified. - **A company and its owner are not the same.** Where trade is carried on through a limited company, it is the company that is the taxable person for VAT, not the director or shareholder behind it. - **Registration errors have long tails.** A mistake made at the point of [VAT registration](https://www.gov.uk/register-for-vat) can lie dormant in HMRC's records for years before resurfacing as a significant liability. - **Look at validity, not just quantum.** Before disputing how much is owed, test whether the [assessment is properly founded](https://taxdisputes.co.uk/2026/01/how-to-challenge-a-vat-assessment-2026-guide/) at all. The identity of the taxpayer is a threshold question. - **Evidence wins these cases.** Original registration documents, contemporaneous correspondence and credible witness evidence are what turn a good argument into a decisive one. - **Notice matters.** Showing that HMRC was alerted to a registration problem well before raising an assessment removes scope for HMRC to claim ignorance and strengthens the case for withdrawal. - **Reshaping a case can be the right call.** Seeking permission to amend grounds of appeal to put a decisive point front and centre, including requesting a preliminary issue hearing, may resolve an entire dispute before any final hearing. ## Facing an HMRC Dispute? Contact LEXLAW's Tax Litigation Team If you or your business has received a [VAT assessment](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/), is the subject of an [HMRC investigation](https://lexlaw.co.uk/hmrc-tax-investigation-penalty-advice-solicitors/), or has been served with a best judgment assessment, the earliest possible specialist review can be critical. The same applies to disputes over [VAT registration and de-registration](https://lexlaw.co.uk/hmrc-vat-de-registration-tax-appeal-kittel-decision-input-tax-decision-letter-judicial-review-legal-advice/), and to allegations concerning historic VAT liabilities. This case shows that the right outcome is not always found by arguing about figures. Sometimes it is found by questioning the foundations of the assessment itself, and that requires experienced tax litigators who know where to look. Where the underlying difficulties stem from negligent professional advice, [a claim in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) may run alongside or in addition to the tax appeal. LEXLAW's [tax litigation team](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) advises individuals, companies, accountants and tax advisers on the full range of HMRC disputes, from enquiries and assessments through to appeals before the [First-tier Tax Tribunal](https://taxdisputes.co.uk/2025/10/first-tier-tax-tribunal-appeals-guide/) and beyond. We are based at Middle Temple, City of London, and our team includes solicitors, barristers and lawyers with first-hand experience of the internal workings of HMRC. If you are facing a VAT assessment, an HMRC enquiry, a best judgment assessment, a VAT registration dispute or any allegation concerning historic VAT liabilities, contact [LEXLAW's specialist tax litigation team](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) for a confidential discussion of your position. --- # Winning on Appeal: Reversing Judicial Errors in Coghlan v Lexlaw [2026] Source: https://lexlaw.co.uk/solicitors-london/winning-on-appeal-reversing-judicial-errors-in-coghlan-v-lexlaw-2026/ Receiving an adverse judgment in the lower courts can be an incredibly discouraging experience for any litigant. Whether you are an individual navigating a complex personal dispute or a corporate entity defending your commercial interests, a decision that feels fundamentally unjust can leave you questioning the efficacy of the English legal system. However, it is vital to recognise a foundational reality of civil litigation: judges are human, and lower courts make errors**.** The English appellate framework exists precisely to serve as a corrective safety valve. Under [Part 52 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part52) (CPR), the High Court and Court of Appeal possess the power to set aside, vary, or remit decisions that are "wrong" or "unjust because of a serious procedural or other irregularity." Winning an appeal, however, requires far more than simply re-arguing the merits of your original case. It demands a meticulous, highly technical evaluation of where the lower court departed from established legal principles or procedural boundaries. An example of this is today's High Court decision handed down in the Chancery Division: *Arran Coghlan & Anor v Lexlaw Limited* [2026] EWHC 1512 (Ch). This case serves as a case study in appellate advocacy, demonstrating how holding a lower court judge strictly to the rules of procedure can dismantle an irregular judgment and revive litigation. ## The Core Legal Threshold: When Can an Order Be Reversed? It is critical to understand the legal standard an appellant must clear. An appellate court will not intervene merely because it might have weighed the evidence differently or arrived at a alternative conclusion within a permissible band of judicial discretion.To succeed, an appellant must typically show that the lower court judge committed: **An Error of Law: **Misinterpreting a statute, misapplying a binding precedent, or introducing an incorrect legal test. **A Serious Procedural Irregularity:** Violating the rules of natural justice, failing to give adequate reasons, or crucially deciding the application based on arguments or legal theories that were never properly raised or pleaded by the parties. As the *Coghlan v Lexlaw* case illustrates, when a lower court judge wrongly attempts to rescue a poorly formulated case by straying outside the formal boundaries set by the parties' statements of case, they commit a reversible error. ## What is the Equitable Lien over the Fruits of Litigation? An equitable lien provides a critical safety net for solicitors, acting as a security interest that guarantees they can recover their contractually agreed fees from the proceeds of successful litigation. This legal protection is deeply entrenched in English common law, dating back over 200 years to foundational 18th-century cases like *Welsh v Hole* (1779) and *Read v Dupper* (1795), where Lord Mansfield and the courts first established that a solicitor holds an equitable charge over the "fruits of litigation". As recently reaffirmed by the Supreme Court in *Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd* [2018] UKSC 21 and *Bott & Co Solicitors v Ryanair DAC* [2022] UKSC 8, this modern security interest takes absolute priority over the interests of the client or any third-party claimants. Crucially, by ensuring that solicitors are justly compensated from the very funds their industry helped recover, this centuries-old mechanism continues to fulfill a vital public purpose: safeguarding access to justice by allowing individuals to secure high-quality legal representation even when payment can only be made after a successful outcome. ## Case Study: Arran Coghlan & Anor v Lexlaw Limited ### 1. The Genesis of the Dispute The background of the matter involves a highly contentious multi-layered legal dispute. The Appellant is a specialist firm of solicitors that had previously been instructed by the Respondents (Arran Coghlan and Claire Burgoyne) to act on their behalf in a substantial professional negligence action. Lexlaw had been retained under a hybrid Conditional Fee Agreement (CFA) dated 16 May 2018 having taking over conduct from a previous solicitors firm. In February 2020, the Respondents terminated the CFA and instructed yet another new firm of solicitors, to take over the professional negligence claim. At the point of termination, Lexlaw asserted that substantial unpaid basic fees were due, alongside contingent success fees that would crystallise upon a "win". To protect their commercial entitlement, Lexlaw exercised a solicitor’s lien over the client file and an equitable lien over the fruits of the litigation. Crucially, Lexlaw issued a formal "Lien Letter" to BLM Law, who were the opposing solicitors in the underlying professional negligence case, putting them on clear notice of their equitable lien over any future settlement or judgment proceeds. The former clients retaliated by launching a wide-ranging lawsuit against Lexlaw (the "Lien Claim"). They asserted that merely protecting these legal costs through the Lien Letter amounted to a series of actionable wrongs, specifically alleging: **Alleged Defamation**: This aspect has already been dismissed on a trial of this preliminary issue by High Court order of His Honour Judge Lewis who rejected such argument wholesale (see a summary of that decision on [Legal Futures](https://www.legalfutures.co.uk/latest-news/high-court-letter-asserting-solicitors-lien-was-not-defamatory)). > *“It said nothing about the claimants’ character and would not have lowered or tended to lower the claimants in the estimation of right-thinking people generally,” * - His Honour Judge Lewis **Alleged Breach of** **Confidence**: Disclosing confidential details (simply that monies would be payable on success). The judge noted that the claim was left entirely "unparticularised" and on the pleaded facts, it was impossible to understand how sending a standard Lien Letter could legally constitute a breach of the continuing duty of confidence. **Alleged Breach of Fiduciary Duty**: Allegedly trying to compromise the clients' position (of which there is no evidence). Similar to the confidentiality claim, the judge pointed out that the claimants provided no explanation or particulars showing how asserting a lien constituted a breach of fiduciary duty. Since the solicitor-client retainer had already been terminated when the letter was sent, the firm was no longer bound by an active fiduciary duty to advance the clients' position. The judge found it impossible to see how trying to protect legally entitled fees amounted to an actionable breach of fiduciary duty on the face of the pleadings. **Alleged Breach of GDPR / Data Protection Act 2018**: Unlawfully processing personal data through the publication of the letter (when it has been lawful to send such a Lien Letter for 200 years in England & Wales). The judge rejected the notion that the letter was an unlawful processing of personal data simply because the exact sum owed might be disputed. The lower court judge had allowed themselves to be swayed by unpleaded arguments regarding the financial accuracy of the lien amount. Mr Justice Edwin Johnson reaffirmed that a solicitor is legally entitled to write to a third party to assert an equitable lien, and flaws or disputes over the exact bill amount do not suddenly render the processing of data unlawful under the GDPR. ### 2. The Lower Court’s Overstep Confronted with these improper allegations, and having emphatically won the preliminary issue that there was no defamation and given the Claimants wanted to continue to fight the remaining claims, Lexlaw took robust procedural action. Recognising that the claimants' statements of case were legally deficient and structurally flawed, Lexlaw issued an application for summary judgment and/or to strike out the claims under CPR 3.4(2). They argued that the claims lacked any real prospect of success and were unparticularised. The application came before [His Honour Judge Monty KC](https://www.middletemple.org.uk/bencher-persons-view/33897) in the [County Court at Central London](https://www.find-court-tribunal.service.gov.uk/courts/central-london-county-court) on May 29, 2025. In a surprising turn, HHJ Monty KC dismissed Lexlaw’s application. The judge found that the confidentiality, fiduciary duty, and GDPR elements of the claim were "reasonably arguable" for the purposes of avoiding summary judgment. The judge reached this conclusion by relying on a nuanced interpretation of the CFA's specific clauses regarding payment timelines and the validity of the underlying invoices - arguments that the claimants *had not actually articulated or properly pleaded* within their formal Particulars of Claim. The Judge also appeared to be drawn to misleading arguments by Coghlan's counsel that if the amount in the Lien Letter was wrong then this would amount to wrongdoing. This superficial analysis fails to recgnise the very existence of the [Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/contents), in particular with reference to assessment of solicitors' bills, which means that no solicitor's bill can ever be a liquidated debt and is never certain in sum and by a procedure of assessment can be reduced, even down to nil. Hence a solicitor's bill can never form the basis of a statutory demand, bankruptcy or winding-up petiiton. Furthermore, the readership of the Lien Letter were solicitors who would always be cognisant of the 1974 Act and its potential implication on the potential amount of the lien. ### 3. The Turning Point in the High Court Lexlaw refused to accept this flawed decision. They successfully obtained permission to appeal, bringing the matter before [Mr Justice Edwin Johnson](https://en.wikipedia.org/wiki/Edwin_Johnson_(judge)) in the High Court (Chancery Division). In a rigorous judgment handed down on June 18, 2026, Mr Justice Edwin Johnson overturned the lower court's refusal to grant summary judgment. The High Court identified a profound procedural error in how the County Court judge had treated the statements of case: **Judges Cannot Decide Cases on Unpleaded Grounds:** The High Court observed that the confidentiality and fiduciary duty claims, as originally written in the formal Particulars of Claim, were left entirely unparticularised. It was accepted as standard practice that a solicitor exercising a lien is legally entitled to write to a third party to assert it. The lower court judge had essentially constructed a hypothetical case based on an unpleaded interpretation of the CFA to find the claim arguable. Mr Justice Edwin Johnson stated: > *"The Judge made his decision to refuse the grant of summary judgment... on the basis of a case which was not pleaded... In my view, the Judge was not entitled to take this course."* **Witness Statements are Not Statements of Case:** The Respondents attempted to argue that any gaps in their pleadings were filled by the narrative evidence contained in the client’s witness statements. The High Court emphatically rejected this. Witness statements exist solely to identify relevant matters of fact; they cannot act as a substitute for formal, legally binding pleadings. ### 4. The Result Because the County Court judge had detached his ruling from the actual statements of case, the High Court ruled the order unsustainable. Rather than allowing a procedurally compromised decision to stand, the High Court set aside the lower court order and remitted the entire summary judgment application back to the Central London County Court. This mandatory remittal forces the lower court to hear the application properly alongside the claimants' lagging draft amendment applications. ## Judgment in Arran Coghlan & Anor v Lexlaw Limited [2026] EWHC 1512 (Ch) [Litigation Appeal Win - Arran Coghlan & Anor v Lexlaw Limited-[2026] EWHC 1512 (Ch) - London Lawyers UK](https://lexlaw.co.uk/wp-content/uploads/Litigation-Appeal-Win-Arran-Coghlan-Anor-v-Lexlaw-Limited-2026-EWHC-1512-Ch-London-Lawyers-UK.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Litigation-Appeal-Win-Arran-Coghlan-Anor-v-Lexlaw-Limited-2026-EWHC-1512-Ch-London-Lawyers-UK.pdf) ## Media and Legal Press Commentary The implications of this High Court judgment have reverberated across the legal sector, drawing extensive analysis from leading industry publications. The commentary reinforces the supreme importance of maintaining strict procedural discipline under the Civil Procedure Rules. **[The Solicitors Journal](https://www.solicitorsjournal.com/sjarticle/coghlan-v-lexlaw-the-high-court-sends-a-warning-about-deciding-cases-on-unpleaded-arguments)** evaluated the decision as a critical warning on judicial overreach, highlighting that the High Court firmly corrected the lower court's attempt to rule on an unpleaded case. The journal noted that a judge must never step into the arena to construct a hypothetical case for a party. **[Law360](https://www.law360.com/articles/2491225/law-firm-revives-bid-to-ax-negligence-suit-over-soca-case)** approached the ruling from a perspective of litigation strategy, detailing how our firm successfully weaponised procedural non-compliance to completely overturn an adverse lower court order. This widespread legal commentary validates our forensic approach to appellate litigation. When our firm is instructed, we bring this identical level of analytical rigor to bear, ensuring that our clients' opponents are held strictly to the letter of their pleadings. ## Protecting Interests via Liens A key commercial victory in this judgment is the definitive protection of the solicitor's equitable lien. When a client relationship concludes before the final resolution of a dispute, ensuring that accrued legal costs are secured is a standard business practice. The High Court confirmed that issuing a professionally worded lien notice to an opponent's legal team is a protected action. The judgment confirms that such notices cannot be weaponised by former clients as a breach of fiduciary duty or a breach of confidentiality. For corporate entities and professional firms, this ruling provides absolute clarity that standard, robust legal mechanisms to secure financial entitlements will be upheld by the senior judiciary. ## Key Takeaways for Litigants Facing an Unfair Judgment This second published decision in the *Coghlan v Lexlaw* litigation battle highlights critical rules that apply to any litigant evaluating whether to launch an appeal: ### A. Pleadings Form the Boundaries of a Lawsuit In English civil procedure, a court is strictly bound by the statements of case (the Particulars of Claim and Defence). A judge cannot act as a rogue advocate. If an opponent has a weak case, and the judge "saves" them by dreaming up a legal theory that was never formally pleaded, that judgment is highly vulnerable to being struck down on appeal. ### B. Gaps Cannot Simply Be "Patched Over" Later You cannot initiate a vague claim via a Part 7 Claim Form and hope to retroactively inject substance into it via witness statements or oral arguments during a interim hearing. Appellate courts demand precision. If the lower court overlooks a fatal lack of detail in your opponent's case, an appeal is your mechanism to enforce adherance to civil procedure rules. ### C. Acting Swiftly is Paramount The window to appeal an interim order or a final judgment is unforgivingly brief (often just 21 days under [CPR 52.12](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part52) unless the lower court specifies otherwise). Meticulous analysis must begin the moment the judgment is handed down. ## Strategy and Reality: Is an Appeal Right for You? Appealing a judicial error is a highly strategic endeavor. It requires evaluating the commercial reality of your position: **The Cost-Benefit Analysis:** Grounding an appeal requires specialized appellate counsel who can isolate exact errors of law or procedure. You must balance the costs of the appeal against the financial or reputational impact of letting a flawed lower court order stand. **Correcting the Record:** Beyond the immediate financial stakes, allowing an erroneous judgment to remain unchallenged can create damaging judicial precedents for your business operations or personal standing. ## Instruct Expert High Court Appeals Solicitors in London Appellate litigation is not won by re-arguing facts; it is won by mastering procedure, identifying judicial errors, and maintaining an unyielding tactical position. If you are facing a complex commercial dispute, or if a lower court has committed a serious procedural irregularity in your ongoing proceedings, you require legal counsel capable of navigating the technical landscape of the High Court and the Court of Appeal. We apply the same fearless litigation strategies to our clients' cases that we used to dismantle our opponents' positioning in this landmark appeal. ## We Can Help Protect Your Legal Rights Navigating an appeal requires a completely different tactical mindset than managing a trial. It is an intellectual, hyper-technical arena where cases are won or lost on the exact scope of statement boundaries and an uncompromising mastery of civil procedure. Operating from Middle Temple, directly adjacent to the Royal Courts of Justice and the Rolls Building, we regularly handle high-stakes appeals within the Chancery Division, Commercial Court, and the Court of Appeal. **Take Direct Action:** Do not allow a procedural error or a flawed lower court ruling to compromise your commercial position. Contact our London litigation barristers and solicitors today to arrange an initial consultation and ensure your appellate rights are protected with absolute precision. --- # Defending Claims Brought by Liquidators: A UK Director’s Guide Source: https://lexlaw.co.uk/solicitors-london/practice-areas-defending-claims-brought-by-liquidators/ When a company is placed into [compulsory or creditors’ voluntary liquidation](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/), the liquidator’s statutory function is to gather in and realise the company’s assets for the benefit of creditors. A significant part of that exercise is investigating the conduct of the company’s directors and former directors, and, where appropriate, bringing proceedings against them personally. These claims can be substantial, are frequently funded by litigation funders or assigned to third parties, and expose directors to personal liability that company limited liability does not shield. If you have received a letter of claim, an application notice, or a request for information under [sections 235 and 236 of the Insolvency Act 1986](https://lexlaw.co.uk/solicitors-london/sections-235-and-236-insolvency-act-1986-directors-duties-to-co-operate-with-liquidators/), you should obtain [specialist legal advice](https://lexlaw.co.uk/legal-case-assessment/) without delay. The good news is that these claims are defensible. Each cause of action has specific statutory ingredients that the liquidator must prove, each carries recognised defences, and the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents) provides a discretionary power for the court to relieve an honest and reasonable director from liability. This succinct guide, prepared by our insolvency litigation team, sets out the claims a liquidator can bring, the defences available to each, and the practical strategy for protecting your position.**   ** ## Why Liquidators Bring Claims Against Directors? A liquidator owes duties to the general body of creditors and must act to maximise recoveries into the insolvent estate. Claims against directors serve two purposes: they swell the pot available for distribution, and they hold directors to account for conduct in the period before insolvency. The liquidator’s investigation typically focuses on the so-called [twilight period](https://lexlaw.co.uk/solicitors-london/directors-exposed-to-personal-liability-in-the-twilight-period-insolvency-act-1986/): the months or years in which the company was insolvent, or heading towards insolvency, and in which directors’ duties shift to take account of creditors’ interests. Administrators and liquidators are also obliged to report on directors’ conduct to [the Insolvency Service](https://www.gov.uk/government/organisations/insolvency-service), which may lead to separate [director disqualification](https://windinguppetitionsolicitors.co.uk/risks-for-directors/) proceedings under the [Company Directors Disqualification Act 1986](https://www.legislation.gov.uk/ukpga/1986/46/contents). Importantly, it is no defence to say that a director was unaware of the company’s financial position: a director is expected to inform themselves. Non-executive directors are generally held to the same standard, and resigning once difficulties emerge will rarely assist and may be treated as aggravating. Understanding this backdrop is the first step in mounting an effective [defence to post-insolvency claims](https://windinguppetitionsolicitors.co.uk/post-insolvency-claims-against-directors/). ## The Claims a Liquidator Can Bring: A liquidator (and in some cases an administrator) has a suite of statutory and common law claims. The principal ones are summarised below, with the relevant provisions of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents). **1. Misfeasance (section 212)** [Section 212](https://www.legislation.gov.uk/ukpga/1986/45/section/212) is a procedural “summary remedy” rather than a freestanding cause of action. It allows the liquidator to seek a court order requiring a director, officer or other person involved in the management of the company to restore property, account for it, or contribute compensation, where they have misapplied or retained company property or been guilty of misfeasance or breach of any fiduciary or other duty. In practice it is the vehicle used to enforce breaches of directors’ duties, including the recovery of [overdrawn director’s loan accounts](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/) and unlawful dividends. **2. Wrongful Trading (section 214)** [Section 214](https://www.legislation.gov.uk/ukpga/1986/45/section/214) allows the court to order a director to contribute to the company’s assets where, at some point before the start of the winding up, the director knew or ought to have concluded that there was no reasonable prospect that the company would avoid insolvent liquidation, and they continued to trade. The standard combines an objective test (the general knowledge, skill and experience reasonably expected of a person carrying out that director’s functions) with a subjective uplift where the director in fact possesses greater knowledge or skill. **3. Fraudulent Trading (section 213)** [Section 213](https://www.legislation.gov.uk/ukpga/1986/45/section/213) applies where the business has been carried on with intent to defraud creditors or for any fraudulent purpose. Because it requires actual dishonesty, the evidential threshold is high and the consequences serious; fraudulent trading is also a criminal offence. Claims under section 213 are far rarer than wrongful trading precisely because dishonesty must be proved. **4. Transactions at an Undervalue (section 238)** [Section 238](https://www.legislation.gov.uk/ukpga/1986/45/section/238) enables the liquidator to challenge a gift, or a transaction for significantly less than the value the company provided, entered into within the relevant time (generally two years before the onset of insolvency under [section 240](https://www.legislation.gov.uk/ukpga/1986/45/section/240)). The company must also have been insolvent at the time or have become insolvent as a result, which is presumed where the other party is a connected person. The court may make such order as it thinks fit to restore the position. Valuation of consideration is often the battleground. **5. Preferences (section 239)** [Section 239](https://www.legislation.gov.uk/ukpga/1986/45/section/239) targets the situation where a company, influenced by a desire to put a particular creditor (or surety) in a better position on insolvency than they would otherwise have occupied, does something that has that effect. The relevant time is six months before the onset of insolvency, extended to two years where the preference benefits a connected person. The requirement that the company was “influenced by a desire” to prefer is central. **6. Transactions Defrauding Creditors (section 423)** [Section 423](https://www.legislation.gov.uk/ukpga/1986/45/section/423) is a powerful provision that allows a transaction at an undervalue to be unwound where it was entered into for the purpose of putting assets beyond the reach of creditors, or otherwise prejudicing their interests. Unlike sections 238 and 239 it has no fixed look-back period and can be brought by a victim of the transaction as well as by an office-holder. Limitation is fact-sensitive and depends on the relief sought. **7. Breach of Directors’ Duties (Companies Act 2006)** The general duties owed by directors are codified in sections 171 to 177 of the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/2), including the duty to promote the success of the company, to exercise reasonable care, skill and diligence, and to avoid conflicts of interest. Where a company is insolvent or bordering on insolvency, the duty to promote success is modified so that directors must have regard to the interests of creditors. Breaches are usually enforced through section 212 misfeasance proceedings. **8. Unlawful Dividends and Overdrawn Loan Accounts** Dividends paid otherwise than out of distributable profits are unlawful and recoverable; sums drawn by directors and recorded as loans frequently crystallise into personal liabilities once the company fails. These are among the most common and most readily provable claims a liquidator pursues, and they are often combined with misfeasance allegations. ## The Creditor Duty and the “Twilight Zone” Many liquidator claims turn on when directors should have recognised the company’s predicament and adjusted their conduct. In *BTI 2014 LLC v Sequana SA* [2022] UKSC 25, the Supreme Court confirmed the existence of a creditor duty: as a company nears insolvency, directors must consider, and at later stages give priority to, the interests of creditors as a whole. Subsequent High Court decisions, including *Hunt v Singh*, have applied Sequana and emphasised that directors should focus on the reality of the company’s liabilities rather than optimistic assumptions. For directors, the practical lesson is that taking prompt specialist advice and keeping a contemporaneous record of decisions is one of the strongest protections against later allegations of breach. Where financial records are deficient, courts may draw adverse inferences against the director. ## Defending the Claim: The Substantive Defences A robust defence usually combines two strands: first, putting the liquidator to proof of each statutory ingredient and challenging causation and quantum; and second, advancing the positive defences and discretionary relief available for the particular claim. The principal defences are set out below. **Put the Liquidator to Proof: Elements, Causation and Quantum** Each cause of action has defined ingredients, and the burden lies on the liquidator to establish them. A defence drafted in accordance with CPR 16.5 must respond to every allegation, admit what is properly admitted, deny what is denied with reasons, and plead the director’s own version of events. Even where some breach is established, the liquidator must still prove that the breach caused loss to the company and must justify the amount claimed. Robustly testing causation and quantum, often with expert accountancy evidence on the company’s true financial position and the counterfactual, frequently reduces or defeats the claim.**        ** **Wrongful Trading: the “Every Step” Defence** Section 214(3) provides a complete defence where the director took every step to minimise the potential loss to the company’s creditors that they ought to have taken, once they knew or ought to have concluded that insolvent liquidation was unavoidable. Continuing to trade is not automatically wrongful: in *Re Continental Assurance Co of London plc* the directors successfully resisted liability because they had taken proper advice and acted responsibly. A well-evidenced narrative of board meetings, professional advice, monitoring of cash flow and steps to protect creditors is the heart of this defence. The liquidator must also prove that continued trading worsened the creditors’ position (the “net deficiency” analysis). **Preferences: No Desire to Prefer** A preference claim under section 239 fails unless the company was influenced by a positive desire to improve the creditor’s position. Where a payment was made for ordinary commercial reasons, for example to keep a critical supplier on board or under genuine pressure, the requisite desire is absent and the claim should fail. Where the preferred party is not a connected person, the desire is not presumed and must be proved by the liquidator. **Transactions at an Undervalue: Value and the Good-Faith Defence** Defences to a section 238 claim include showing that the company received consideration of equivalent value (so there was no undervalue at all), and the statutory defence in section 238(5): the court must not make an order if satisfied that the company entered the transaction in good faith and for the purpose of carrying on its business, and that at the time there were reasonable grounds for believing it would benefit the company. Valuation evidence is usually decisive. **Transactions Defrauding Creditors: the Question of Purpose** A section 423 claim requires proof that a purpose of the transaction was to put assets beyond the reach of creditors or to prejudice their interests. If the transaction had a legitimate commercial purpose and the prohibited purpose was not a real, substantial purpose of those entering into it, the claim should not succeed. Careful analysis of contemporaneous documents and the commercial rationale is essential. **Relief under section 1157 of the Companies Act 2006** Even where a breach of duty or negligence is established, [section 1157 of the Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/section/1157) gives the court a discretion to relieve a director wholly or partly from liability where they acted honestly and reasonably and ought fairly to be excused. This is a key plank of a director’s defence and is usually pleaded by way of counterclaim alongside the substantive denial of liability, supported by evidence that the director acted bona fide in the company’s interests. **Limitation** Limitation can be a complete defence and should always be checked at the outset. The applicable period under the [Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58) depends on the nature of the claim and the relief sought. Wrongful trading claims have been held subject to a six-year period. Antecedent transaction claims may be six or, where proprietary relief is sought, potentially twelve years, and misfeasance claims take their limitation from the underlying cause of action, with no period applying in certain cases of fraud or recovery of trust property. Because the analysis is fact-sensitive, early specialist advice is essential to identify whether the claim is, in whole or part, time-barred. **Ratification, Insurance, Indemnities and Funding the Defence** Other protections may be available depending on the facts: a breach may, in limited circumstances, have been ratified by the company; the director may benefit from directors’ and officers’ (D&O) insurance or a qualifying indemnity; and a company may, on the terms permitted by sections 205 and 206 of the Companies Act 2006, fund the cost of defending proceedings or applying for relief. Note that the Companies Act 2006 generally prohibits a company from exempting or indemnifying directors against liabilities, subject to specific exceptions, so the precise terms matter. Where a director’s loss flows from negligent advice, a [claim against the negligent adviser or insolvency practitioner](https://professionalnegligenceclaimsolicitors.co.uk/claims-against-negligent-administrators-insolvency-practitioners-liquidators-legal-advice-second-opinion/) may also be available. ## Procedure and Strategy Most liquidator claims proceed by application notice in the existing insolvency proceedings in the [Insolvency and Companies List](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) of the Business and Property Courts, supported by points of claim and a witness statement. The respondent director files a defence (and, where relief under section 1157 is sought, a counterclaim) verified by a statement of truth, complying with the Insolvency (England and Wales) Rules 2016 and the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules). Key strategic considerations include: - Engaging early at the pre-action stage. A well-evidenced response to the letter of claim can narrow issues, defeat weak allegations, and prompt a commercial resolution before costs escalate. - Scrutinising the funding behind the claim. Many claims are pursued by litigation funders or have been assigned; an adverse costs strategy, including an application for security for costs, may be available. - Marshalling contemporaneous evidence: board minutes, management accounts, advice received, and correspondence. Documentary evidence created at the time carries far more weight than later reconstruction. - Assessing settlement realistically. Liquidators must act in creditors’ interests and are often open to commercial settlement, particularly where causation, quantum, or limitation are genuinely in issue. - Considering set-off and counterclaims, including any sums the company owed the director and relief under section 1157. ## Practical Steps if You Are Served with a Liquidator’s Claim - Do not ignore it and do not respond off the cuff. Deadlines run quickly, and statements made informally to the liquidator or Official Receiver can be used against you. - Preserve all documents. Retain board minutes, accounts, emails and advice. Do not delete anything; document destruction is itself a serious matter. - Locate your insurance. Check for D&O cover and notify insurers promptly in accordance with the policy, as late notification can prejudice cover. - [Take specialist advice](https://lexlaw.co.uk/contact-us/) before any meeting or interview. You remain under a duty to co-operate, but the manner of co-operation should be handled with legal guidance. - [Instruct experienced insolvency litigation lawyers](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) to review the merits, limitation, causation and quantum, and to formulate your defence and any counterclaim. ## Where the Real Fault Lies Elsewhere: Claims Against Advisers Directors are frequently pursued for outcomes that flowed from negligent professional advice, for example from accountants, tax advisers or insolvency practitioners. Where that is so, a director or the company may have a parallel [professional negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/can-directors-sue-professional-advisers-for-business-losses/). Equally, where the company’s difficulties were driven by an [HMRC enforcement or VAT dispute](https://taxdisputes.co.uk/2026/04/hmrc-escalates-vat-enforcement-against-large-companies-insolvency-directors-duties/), or where a director faces a [Personal Liability Notice](https://taxdisputes.co.uk/2026/05/personal-liability-notices-appeals-and-enforcement/), specialist tax litigation advice should run alongside the defence. Considering these counter-claims early can materially improve a director’s overall position and, in some cases, fund the defence itself. Limitation in negligence is itself fact-sensitive (see guidance on the [professional negligence limitation period](https://professionalnegligenceclaimsolicitors.co.uk/limitation-period-in-professional-negligence-claims/)). ## Why Instruct Experts at LEXLAW? [LEXLAW](https://lexlaw.co.uk/) is a City of London litigation practice operating from chambers in [Middle Temple](https://www.middletemple.org.uk/), with dual-qualified [solicitors](https://lexlaw.co.uk/our-people/jaron-dosanjh/) and [barristers](https://lexlaw.co.uk/our-people/christopher-snell/) who act both for office-holders bringing claims and, importantly, for directors defending them. That breadth gives us an unusual insight into how liquidators build and value their claims, which we use to your advantage in defence. We handle the full range of [insolvency litigation](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and contentious director claims, from pre-action correspondence to trial advocacy, and we coordinate with our [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) and [tax dispute](https://taxdisputes.co.uk/) teams where a claim has those dimensions. Time is the critical variable: the options available today narrow with every day that passes. [Contact LEXLAW](https://lexlaw.co.uk/contact-us/) now for a confidential case assessment. ### Frequently Asked Questions Can a director be made personally liable for company debts in a liquidation? Limited liability protects directors from the company’s ordinary debts, but it does not protect against personal claims for misfeasance, wrongful or fraudulent trading, preferences, transactions at an undervalue, transactions defrauding creditors, unlawful dividends or overdrawn loan accounts. Where one of these claims is established and the relevant ingredients proved, a director can be ordered to contribute to the company’s assets or to restore property. Each claim, however, is defensible, and the court can grant relief under section 1157 of the Companies Act 2006 where the director acted honestly and reasonably. What is the difference between wrongful trading and fraudulent trading? Wrongful trading under section 214 of the Insolvency Act 1986 does not require dishonesty: it is concerned with whether a director continued to trade after the point at which they knew or ought to have concluded there was no reasonable prospect of avoiding insolvent liquidation, and whether they then took every step to minimise loss to creditors. Fraudulent trading under section 213 requires actual intent to defraud and is correspondingly rare and serious, being also a criminal offence. Most claims in practice are for wrongful trading. **What defences are available to a wrongful trading claim?** The principal defence is in section 214(3): that the director took every step to minimise the potential loss to creditors that they ought to have taken. Directors may also challenge the date from which they ought to have known liquidation was unavoidable, dispute that continued trading worsened the creditors’ position, rely on professional advice taken at the time, and seek relief under section 1157. Contemporaneous documentary evidence of responsible decision-making is central, as illustrated by Re Continental Assurance Co of London plc. **How far back can a liquidator challenge transactions?** For transactions at an undervalue under section 238, the relevant time is generally two years before the onset of insolvency. For preferences under section 239, it is six months, extended to two years where the beneficiary is a connected person. Transactions defrauding creditors under section 423 have no fixed look-back period. The onset of insolvency and the company’s solvency at the time are defined by section 240, and connected-person transactions attract presumptions that shift the evidential burden. **What is section 1157 relief and when does the court grant it?** Section 1157 of the Companies Act 2006 allows the court to relieve a director, wholly or in part, from liability for negligence, default, breach of duty or breach of trust where the director acted honestly and reasonably and ought fairly to be excused in all the circumstances. It is discretionary and fact-specific. It is usually advanced as a counterclaim within the defence. I have received a request for information from the liquidator. Do I have to comply? Directors and former officers are under a statutory duty to co-operate with the liquidator and to provide information and documents under sections 235 and 236 of the Insolvency Act 1986. Failure to co-operate carries its own sanctions. However, the way in which you co-operate, and what you say in any interview or statement, should be handled with specialist advice, because your responses may be relevant to any later claim. Seek advice before responding. Is there a time limit on the liquidator’s claim against me? Yes, although it varies. Limitation under the Limitation Act 1980 depends on the type of claim and the relief sought; wrongful trading has been treated as subject to a six-year period, antecedent transaction claims may be six or potentially twelve years, and misfeasance takes its limitation from the underlying duty, with no period applying in some cases of fraud or recovery of trust property. Limitation can be a complete defence, so it should be assessed at the outset by a specialist. --- # The Need to Be Clear: Percy v Merriman White and Professional Negligence Source: https://lexlaw.co.uk/solicitors-london/clarity-in-professional-negligence-cases-percy-v-merriman-white/ In the recent case of *Percy v Merriman White,* the Court of Appeal considered the application of Section 1(4) of the Civil Liability (Contribution) Act 1978. It ruled that the focal point for the provision's purpose was the liability of the party claiming contribution. ## The Facts The Claimant ("Mr Percy") had been given negligently advised by his solicitors and barrister ("Merriman White & Mayall"), thereby leading to a reduction of £435,000 to his settlement for his original claim. The Claimant brought a professional negligence claim against them. The Claimant subsequently settled the claim with his solicitors and discontinued his claim against the barrister. In light of the discontinuance, the solicitors sought a contribution in the settlement fee from the barrister under Section 1(4) of the 1978 Act. ## The Claim Under Section 1(4) of the Civil Liability (Contribution) Act 1978, a party who has settled may recover a contribution “without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established”. Relying on this provision, the solicitors sought to obtain a contribution from the barrister by attempting to establish his liability as well. ## The Judgement At first instance, the High Court held that the solicitors should be able to recover contribution in light of the fact that they had a cause of action against the barrister. On appeal, however, the Court of Appeal found otherwise. It held that the liability of the party seeking a contribution (the solicitors) is the only relevant matter under Section 1(4). Since neither the Defendant (the solicitors) nor the Claimant (Mr Percy) had mentioned any instance of the barrister's negligence in their pleadings, it would have been unreasonable and impossible to comment on any role the barrister's negligence may have played in the loss caused to the Claimant. The claim was **dismissed.** ## The Need to Be Clear *Percy *clarifies the law's standing on contribution claims and the extent to which it may apply with regard to Section 1(4) of the 1978 Act. Most importantly, however, it shows the courts' reluctance to allow a party to rely on another interpretation to recover contribution; a claim premised on incorrect interpretations cannot subsequently be amended. The case does not affect the rights of parties originally affected by such negligence, however, it does highlight an important theme: **the need to be absolutely clear when bringing a claim of professional negligence.** Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) guide you through the applicable complexities relating to your professional negligence case, ensuring that you are able to successfully claim bring your claim in seeking recompense. ## Download the Judgement **[![](https://lh5.googleusercontent.com/pBmGI5Z51Ged8oT8TjE6MNRfVZUJ72_2eabEqL8H4sOFn2TG1aT63FCyTWq5olxf5V2CSmClIGM8deic5ju46wuBDHbxcTlUx7EakaZt7ZSiwigafBtxszoTVruYbW_Y5av_iNZdesjd8hgDcA)](https://www.judiciary.uk/wp-content/uploads/2022/04/Percy-v-White-judgment.pdf)** ## Successful Professional Negligence Claims We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience in providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We provide the best possible outcome for our clients by conducting in-depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution through first-class negotiation. If required, we are extremely experienced and capable of navigating our clients through the litigation process. ## Meet our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our [Professional Negligence Lawyers](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) on ☎ 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # “Banks, Frauds and Accomplices”: Police and Crime Commissioner rebukes Lloyds & large-scale UK banking fraud beyond HBOS scandal Source: https://lexlaw.co.uk/solicitors-london/banks-frauds-and-accomplices-lloyds-uk-fraud-hbos-scandal/ A well-attended [New City Agenda event ](https://newcityagenda.co.uk/stansfeld/)heard from Anthony Stansfeld, the [Thames Valley Police and Crime Commissioner](https://www.thamesvalley-pcc.gov.uk/about-us/police-and-crime-commissioner/), on the [HBOS banking fraud](https://www.bbc.co.uk/news/business-38796087) and the lessons from this scandal. Stansfeld strongly rebuked the actions of senior board members of the Banks, their ongoing complicity in attempting to cover-up large- scale frauds, their mis-treatment of SMEs and proposed reforms to the current financial regulatory system, which clearly is not and will not work whilst the Banks can continue to exert control without transparent checks and balances. The Thames Valley Police and Crime Commissioner also revealed that [Lloyds Bristol may be guilty of a much larger fraud than HBOS](https://www.standard.co.uk/business/top-police-commissioner-urges-deeper-probe-into-lloyds-office-after-hbos-case-a3883846.html), which has yet to be properly investigated. Victims of banking misconduct from [HBOS](https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/publication/hbos-complete-report), [Lloyds](https://www.lloydsbank.com/) and [RBS](https://personal.rbs.co.uk/) were present along with MPs representing many constituents who have suffered due to large-scale fraud, members of the House of Lords, members from the APPG on Fair Business Banking, the [SME Alliance](https://www.smealliance.org/) and members of the [financial services litigation team](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) at [LEXLAW](https://lexlaw.co.uk/) were all present to hear Anthony Stansfeld's rebuke of endemic large-scale financial fraud, which spreads much further than the conviction of middle-management in one regional office in Reading. ![](https://lexlaw.co.uk/wp-content/uploads/2018/07/Anthony-Stansfeld-New-City-Agenda-HBOS-Fraud-Event.jpg)Thames Valley Police and Crime Commissioner Anthony Stansfeld speaking in Committee Room 14, House of Commons, on large-scale banking fraud. Credit: Steve Baker MP ## Anthony Stansfeld rebukes endemic financial fraud The powerful message coming from the most senior figure in British policing and an integral figure in tackling large scale financial fraud is that Lloyds and other UK banks have been guilty of corrupt practices and: - Bank-commissioned "independent" review schemes- such as[ Professor Russel Griggs' review of HBOS Reading](https://www.lloydsbankinggroup.com/Media/Press-Releases/press-releases-2017/lloyds-banking-group/professor-russel-griggs-appointed-independent-reviewer-of-hbos-reading-customer-cases/)- are "derisory" especially given the lack of either consequential loss or cumulative loss coupled with a "frightening" gagging order; - Dame Linda Dobbs' independent review is a "review done properly", and Stansfeld suggested that an interim report should be available by October 2018; - reports such as Project Lord Turnbull,[ leaked onto the APPG website](http://www.appgbanking.org.uk/wp-content/uploads/2018/06/draft-Project-Lord-Turnbull-Report-part-1.pdf), highlight in "devastating detail" the dishonest and "disgraceful" actions of senior banking figures and the continuing cover-up by Lloyds of major fraud and the hole in HBOS' accounts; - many frauds across Banks have not been properly investigated, especially Lloyds Bristol, which maybe larger than the HBOS scandal; - victims of financial fraud are common-place, as was highlighted in the [Parliamentary debate](https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/), Stansfeld noted that victims of ["business support"](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) "profit-churning centres" of Lloyds' BSU, RBS's GRG and NAB Clydesdale, have still yet to be fully compensated (if at all); - over £200 billion is the quantum of fraud in the UK, less than 1% of serious organised crime is investigated and only the one office of HBOS Reading has been successfully prosecuted. ## The next steps in tackling large scale banking fraud Anthony Stansfeld rebuked the Treasury's ignoring of the "destitution" of SMEs from the offices of  Gordon Brown to Phillip Hammond. SMEs contribute more to the UK economy than large multinationals and he criticised the Treasury for taken the interests of the Banks' more into account (especially when many civil servants end up in Bank employ further into their careers). Large scale fraud in HBOS Reading was only uncovered after a 10 year and £7 million investigation by the Thames Valley Police instigated by [Paul and Nikki Turner.](https://www.theguardian.com/business/2017/nov/30/tireless-couple-who-investigated-hbos-settle-claim-with-lloyds)  Clearly, as Stansfeld suggested, a better system is needed to uncover fraud: - A US-style Chapter 11 system may go some way to prevent predatory business support units stripping SMEs of their assets, by allowing debtor businesses time to restructure and pay its creditors over time. - Chairmen of Banks and its senior Board members must not be placeholders, but must be qualified bankers that understand the rules and not salesmen. - Fraudulent bankers must be arrested and prosecuted like in the US, who have a much cleaner system. - The SFO and the FCA must be properly independent to the Treasury. - Civil servants should not be able to move effortlessly into Bank jobs. - The [SRA](https://www.sra.org.uk/home/home.page), the [Royal Institute of Chartered Surveyors (RICS)](https://www.rics.org/uk/) and [Insolvency Practitioners Association (IPA)](https://www.insolvency-practitioners.org.uk/) must be held to account for some of their members complicity in aiding and abetting financial fraud by Banks. - More funding is required for financial fraud investigations for the [Serious Fraud Office (SFO)](https://www.sfo.gov.uk/) and specialist regional fraud police units are required. - A system of recompense for victims of banking fraud is required: Stansfeld advocated for a removal of the 6 year statutory limit; restrict the use of personal guarantees; stop Banks using large amounts of shareholder money on expensive London lawyers to protect themselves. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of Lloyds BSU, RBS GRG or other bank BSUs protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the Royal Bank of Scotland or National Westminster Bank. Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors to issue a protective claim form or by instructing us to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of [Solicitors](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) and Barristers in London are highly experienced in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on ☎ 02071830529 or complete our online contact form. *[Jaron Dosanjh](https://lexlaw.co.uk/our-people/jaron-dosanjh/)*, *Financial Services Litigation Team, LEXLAW* --- # Bringing Professional Negligence Claims: McClean and Others v Thornhill Source: https://lexlaw.co.uk/solicitors-london/protecting-yourself-from-professional-negligence-claims-mcclean-and-others-v-thornhill/ *The case of McClean and Others v Thornhill sheds light on how those providing advice may now protect themselves based on the technicalities of a disclaimer*.* Multiple investors found themselves with no recourse after having incurred heavy losses owing to reliance on a professional's incorrect advice. * *Have you suffered financial loss at the hands of a professional who has failed to act within professional standards? If you think you have a case, get in touch with our team of [professional negligence lawyers.](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) We can assist you to understand the merits of your claim and advise you on the best way to obtain fair compensation.* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## Background A scheme was developed with the aim of providing investors with tax advantages. The tax specialist contributing to this conclusion was the renowned tax barrister Andrew Thornhill QC. A memorandum was circulated to potential investors which highlighted Mr Thornhill’s advice and noted that copies of this advice would be available on request. The memorandum did contain a **caveat**, advising would-be investors **to seek independent advice **from their own tax advisors before buying into the scheme. Ultimately, HMRC did not allow these tax advantages to go ahead and ten investors agreed to a settlement in which they paid back the majority of the tax benefit with interest. ## The Claim All ten investors brought professional negligence claims against Mr Thornhill on the basis that they had all relied on his advice when investing in the scheme, and had suffered a loss on that basis. ## The Judgement Ultimately, the court ruled in Mr Thornhill’s favour, finding that there was no duty of care owed by Mr Thornhill to the claimants, and even if there was, no breach had occurred. ## The Analysis This is not to say that there was no potential for a duty of care to exist. Mr Thornhill had specific expertise and provided it to investors whom he knew would rely on it. His status as a tax expert would make investors more comfortable investing in the scheme, especially given his conclusion on the potential tax benefits. Finally, Mr Thornhill knew that his analysis related to what was arguably the focal point of the scheme: the tax advantages. In spite of these points**, the disclaimer in the memorandum was Mr Thornhill’s saving grace.** Whilst the claimants were relying on the expert advice in the memorandum, it was never intended to be the only advice they relied upon. In addition, as the scheme was only marketed to high-net-worth individuals, by independent professional investors, all of the claimants had access to independent financial advisors to assist them. It was, therefore, reasonable to assume that the would-be investors would seek this independent advice, in addition to that of Mr Thornhill. It is for these reasons that the judge did not find a duty of care was owed to the claimants. ## The Importance of Disclaimers It is of the utmost importance to realise that the **disclaimer in the memorandum is what pre-emptively defeated any successful claims of professional negligence arising** against Mr Thornhill. Keeping this in mind, it is essential that you are fully aware of what any professional advice you receive entails and the extent to which it may seek to absolve itself. Our team of professional negligence lawyers look at the merits of your case and accurately advises the extent to which such advice may be binding on a professional. It is equally important to note that the precedent set by *McClean *with regard to disclaimers will not always be deemed sufficient. One of the grounds for the decision was the fact that the investors were business-savvy investors who had recourse to multiple independent financial advisors. An uncommon occurrence, it is likely that you still have a case in light of *McClean*. Our highly-qualified team of professional negligence solicitors and barristers walk you through the complex rules and regulations applicable to your case, ensuring that you are able to successfully bring claims of professional negligence against professional advice that has caused you a loss. ## Download the Judgement [![](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/McClean.png)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/457.pdf) ## Successful Professional Negligence Claims We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We provide the best possible outcome for our clients by conducting in-depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution through first-class negotiation. If required, we are extremely experienced and capable at navigating our clients through the litigation process. ## Meet our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our [Professional Negligence Lawyers](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) on [☎ 02071830529](tel://+442071830529) or [email us now](https://lexlaw.co.uk/legal-case-assessment/).*  * --- # Professional Negligence: Supreme Court guidance on valuing the loss of litigation chance Source: https://lexlaw.co.uk/solicitors-london/professional-negligence-supreme-court-perry-raleys-loss-of-chance-claims/ *The Supreme Court case of [Perry v Raleys Solicitors [2019] UKSC 5](https://lexlaw.co.uk/wp-content/uploads/2020/02/Perry-v-Raleys-2019.pdf) was an opportunity for the Court to consider the correct approach to determining loss of chance claims arising out of lost litigation. * *In short, the landmark judgment means that if a claimant would probably have lost their underlying claim, nevertheless they may be able to succeed in a professional negligence claim against a solicitor if they can prove that their underlying claim had at least a real and not fanciful chance of succeeding. * ## Facts This case concerned a scheme for the compensation of miners with [Vibration White Finger's Syndrome](https://www.hse.gov.uk/vibration/hav/yourhands.htm) between 1999 and 2011, which scheme settled approximately [175,000 claims, paying out £1.7 billion](https://www.gov.uk/government/publications/vibration-white-finger-compensation-scheme-claims-handling-agreement) in compensation. ## Lost chance in bringing a litigation claim Mr Perry had instructed solicitors, Raleys, in this personal injury claim which they settled and Mr Perry received £11,660 for general damages. In 2009 Mr Perry sought to bring a professional negligence claim against Raleys because they had negligently failed to advise him that he could claim for a "services award", which was an additional amount of compensation for being unable to carry out various manual tasks around the home following the injury. By not being aware of and being advised on this part of his claim, he suffered from a "loss of chance" to recover any damages in this regard. ## The test for loss of chance following Perry v Raleys Where the Claimant has lost the chance to pursue or potentially win a previous claim due to their solicitors' negligence, the Court is not required to conduct a "trial within a trial" and make a decision on whether the original claim would have succeeded or failed. Instead the following formula is applied: > x % chance of original claim = value of professional negligence against solicitors Not every loss of chance claim however is decided on this basis. Since the decision in[ Allied Maples](https://www.bailii.org/ew/cases/EWCA/Civ/1995/17.html), consideration has been given to the causation principle: - The Court makes a finding ‘on balance of probabilities’ in deciding what the Claimant would have done, had the Defendant not been negligent; and - To the extent that the Claimant's loss depends on the hypothetical actions of third parties, the lost chance is calculated on a percentage basis by reference to the prospects that the better result would have been secured. In [Perry v Raleys](https://lexlaw.co.uk/wp-content/uploads/2020/02/Perry-v-Raleys-2019.pdf), the Supreme Court decided on the above basis that the County Court would have come to a decision about whether, on the balance of probabilities, Mr Perry would have pursued an honest claim for loss of ability to perform domestic tasks, had he been properly advised of the opportunity to do so. The Court found that on the balance of probabilities, Mr Perry would not have pursued such a claim as he had not lost the ability to carry out most of those manual tasks. The Court found that Mr Perry lacked credibility as a witness and one of the reasons for this was that his evidence as to his disability was contradicted by evidence on his social media e.g. photographs of his activities. Furthermore, any impairment which he had suffered was not a result of the actions of the Defendant in the personal injury claim, but as a result of a previous injury. In conclusion, Mr Perry could not show that if he had been properly advised, he would have advanced a claim for a services award. ## Comment: Loss of chance claims against negligent solicitors This Supreme Court judgment highlights the following issues: - There is no change to the requirement that a claim in negligence for loss of chance requires proof that the loss has been caused by the breach of duty and that the claimant has lost something of value. - There is also no change to the causation requirements established in Allied Maples that a claimant must prove his/her actions on the balance of probabilities before then determining how a third party would have acted on a lost chance basis. - It remains generally inappropriate to conduct a "trial within a trial". - In addition to claims for nuisance value, dishonest claims will not be recoverable against negligent professionals. - There is no distinction for these purposes between "lost litigation" claims and claims for loss of a chance under other commercial transactions. The Supreme Court held that it had been proper for the trial judge to have conducted a 'trial within a trial' on the question of whether the Claimant would or could have brought an honest claim for compensation had his solicitors given him adequate and competent advice. Furthermore, this case was an example of where the Court required an assessment of what the Claimant would have done if properly advised, Defendants may seek to challenge a Claimant's credibility through evidence or cross examination, and the Court will make findings accordingly. Professionals and in particular, insurers, will take comfort from the approach taken in this case which reinforces that Claimants, rather than third parties, are still required to provide their actions on the balance of probabilities and that dishonest claims can expect to be dismissed. ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our[ expert legal team](https://www.pnla.org.uk/members/jaron-dosanjh-21698/) of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our [Professional Negligence Lawyers](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # “Bridging Loan borrowers sucked into the MFS Vortex” (The Times) Source: https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/ Our [Bridging Finance Litigation](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) client, Dr Elizabeth Donald, a client in our bridging finance litigation practice represented by solicitor advocate [Jaron Dosanjh](https://lexlaw.co.uk/our-people/jaron-dosanjh/), told *[The Times](https://www.thetimes.com/business/companies-markets/article/mfs-collapse-borrowers-loans-cq3fg3lc8?gaa_at=eafs&gaa_n=AWEtsqcUhz2piT5ymJWeeOg_ms8nJjZFDxZaoj_4pFkrC20aN7gBs5pjUdbZLtF4WJc%3D&gaa_ts=69bedc77&gaa_sig=0ZV7V03L5xuPKfgHmOADJmqcrXdh17p8eQy29YDez4eeFsFI8KVVUHZHlQlFaa6m_xpXMg1azvhZE9SaVjRDAA%3D%3D)* that the collapse of MFS has been a “nightmare” for her personal property portfolio. While major institutions such as Barclays, Santander and Wells Fargo are reported to be exposed to the Mayfair-based lender’s failure, less attention has been given to the significant impact on individual borrowers - an issue now coming under increasing scrutiny as reported by *James Hurley, Assistant Business Editor*, *The Times* *Newspaper*. With at least £1.3 billion estimated to be missing from a £2.3 billion loan book, the scandal at Market Financial Solutions may become one of the UK’s largest alleged Ponzi-style frauds. Institutions, including Barclays, Elliott Management, Wells Fargo, Castlelake and Santander, are thought to be the primary victims of the failure of the Mayfair-based mortgage lender. Yet individuals are finding they are caught up in the fallout, too. [Elizabeth Donald, a GP](https://weightlossbydoctors.co.uk/About) based near Stratford-upon-Avon, has recently discovered she is exposed to MFS’s collapse and says the experience has been “an absolute nightmare for me and my family”. She is currently pleading with liquidators of a collapsed part of the MFS group to intervene to prevent foreclosure on her family home and her small property portfolio after being told receivers have been appointed. “My family home is now under threat of being sold by receivers appointed on behalf of lenders who are themselves the subject of a fraud investigation,” she said. Donald, 52, is a customer of [Black & White Bridging](https://www.blackandwhitebridging.co.uk/), based in Wick, near Bristol. It is a provider of bridging finance products for property developers. Black & White is one of several bridging finance providers that have found themselves caught up in the failure of MFS because they originated loans for Twinwin, which is linked to MFS. There is no suggestion of wrongdoing by Black & White and it is not under investigation. Twinwin is one of more than 200 companies linked to MFS that is now in insolvency proceedings. Its provisional liquidators, from FRP, say Twinwin played an important role in the alleged lending scam at MFS and that it was used to “siphon off” money lent by institutions. MFS, a provider of mortgage and [bridging finance](https://lexlaw.co.uk/solicitors-london/category/bridging-loan/), fell into administration in February after a High Court judge said insolvency practitioners needed to investigate claims of fraud. Practitioners from Alix Partners, appointed over the MFS entity at the heart of the group, have claimed there is “compelling evidence of serious financial mismanagement” at the group. It is feared certain loans may be entirely unsecured and therefore irrecoverable because of problems created by security having allegedly been granted over the same property in favour of two or more lenders, a practice dubbed [“double pledging”](https://archive.ph/o/gPiH5/https://www.thetimes.com/business/companies-markets/article/more-than-25bn-at-risk-after-collapse-of-mortgage-lender-mfs-09bz5sk37). The loan provider was alleged to have been under the “close and personal control” of Paresh Raja, its founder and chief executive, according to Alix. Raja, who is in Dubai, is the subject of a [£1.3 billion global asset freezing order](https://archive.ph/o/gPiH5/https://www.thetimes.com/business/companies-markets/article/mfs-ceo-paresh-raja-freezing-order-b86sm5wk7) and travel ban. On Friday the City regulator, which oversaw MFS under money laundering and terrorist financing rules, [launched an investigation into its collapse](https://archive.ph/o/gPiH5/https://www.thetimes.com/business/companies-markets/article/fca-investigation-mfs-private-credit-3rzwr7gsw). ![Paresh Raja, Founder and CEO of MFS Bridging, smiling at the camera.](https://lexlaw.co.uk/wp-content/uploads/579c0b06df7558ecb03a3d437737d1079419e888.webp)Paresh Raja, the founder of Market Financial Solutions An analysis of filings by The Times shows that along with Donald, Twinwin borrowers include a company that supports children with special needs, a dementia-specialist care home and a provider of retirement housing. At first glance Twinwin does not appear to be part of the MFS group. Its controlling shareholder is listed as Khemanand Hurhangee, 53. However, FRP have alleged in court filings that Hurhangee was a shadow director on behalf of Raja, who purportedly used him to “perpetrate fraudulent wrongdoing”. The advisory firm said it was unclear what “legitimate business” Twinwin had other than to “siphon off” money from MFS entities that housed money from institutions. It believes the actions of Twinwin are “dishonest rather than incompetent”. Twinwin is alleged to have acted without authorisation or disclosure when it sat between borrowers and MFS lending entities funded by institutions including Barclays. It appears to have taken unauthorised fees and interest charges, according to FRP. Raja declined to comment. Hurhangee could not be reached for comment. Sriharans Solicitors, which is named on certain Twinwin loan documentation, purportedly told administrators that loan agreements apparently certified by them were “forged”. Sriharans declined to comment. Gunnercooke, another law firm, purportedly certified many of Twinwin’s loan documents including the loan to Donald. Its solicitor Stavros Theophilou is believed to have called into question the veracity of certain Twinwin filings Gunnercooke is named on. Theophilou has been involved in communications over foreclosing on Donald, emails appear to show. Gunnercooke declined to comment. Many of the certified Twinwin charge documents examined by this newspaper include irregularities, including not having been signed by purported lenders, nor witnessed by a third party. Hurhangee, an accountant, has 145 current directorships and he is the controlling shareholder of 124 businesses, filings show. Many are alleged to be connected to Raja and own properties worth more than £200 million. Insolvency practitioners have claimed he lives in a modest family home in the London suburbs that has a mortgage on it. Filings reviewed by this newspaper appear to support this. Hurhangee is also listed as the beneficial owner of London residences of Raja, his ex-wife and adult children. As well as being named as the controlling shareholder of Twinwin, which was financed by MFS entities, he is also a director of companies in the Magus Accounting group, which provided accounting services to MFS. In a further apparent conflict of interest, he was also a director of property companies which took loans from MFS.  What this all means for legitimate borrowers with loans financed by Twinwin remains to be seen. FRP is understood to be in contact with bridging lenders and their borrowers who are caught up in the scandal. Donald says the situation is both horrifying and absurd. With more than one lending entity registered against her properties on charging documents, she says it is not immediately clear who she should be paying back to get out of the tangle. “There needs to be a freeze while all this is investigated,” she said. [Jaron Dosanjh](https://lexlaw.co.uk/our-people/jaron-dosanjh/), solicitor at Lexlaw, which is representing Dr Donald, said other Twinwin borrowers should “*first, check the Land Registry and obtain official copies of your title - look carefully at the Charges Register for any entries you did not consent to. Second, confirm whether your lender is authorised by the FCA. Third, review the default interest provisions; if the rate far exceeds the contractual rate, it may constitute an unenforceable penalty. Finally, if your lender is connected with any company currently under investigation, take immediate legal advice. Do not wait until receivers are appointed or your property is sold - the law does offer protection, but timing and expert advice are critical.*" Martyn Smith, chief executive of Bath and West Finance, the owner of Black & White, said his company had a loan arrangement with Twinwin, which was “facilitated and operated by MFS”. Twinwin advanced loans originated by Black & White, he said, and his firm was not privy to the arrangement which saw the loans managed by MFS. He said the Twinwin loan book represented about 8 per cent of the firm’s loan book and that Black & White was in the process of establishing the effect, if any, of the collapse of MFS on Twinwin and on its commercial relationship with Twinwin. Bath and West declined to answer several questions about its dealings with Twinwin and did not comment on the case of Donald. Read more on this topic: [UK Bridging Loans: Fast Cash for Significant Risk?](https://lexlaw.co.uk/solicitors-london/uk-bridging-loans-fast-cash-for-significant-risk/) --- # Limitation in Litigation: Know your Limits Source: https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/ ## What is a limitation date? A limitation period is the period of time within which a party to a contract or a party who has suffered damages as a result of another party's conduct, must bring a claim.  The [Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/32) sets out the applicable time limits depending on the type of claim being made. It is important to be aware of these time limits if you are bringing or defending a claim. ## What happens if I miss my limitation date? One of the first questions which must be asked when considering the route of litigation which can be time consuming and costly, is whether the claim is time-barred. If the limitation period has expired then the claim will be irreversibly time-barred unless an exception under section 14 Limitation Act or section 32 Limitation Act applies. The time bar may apply even where your case has strong merits based on the facts. Where the limitation has expired, the Defendant has a complete defence to the claim. It is for the Defendant to plead limitation as a defence and the burden will then be on the Claimant to prove that time has not expired. ## Time limits for different types of claims ### Contract Limitation Date 6 years from the date the cause of action accrued *([section 5 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/5))*. In English law, the limitation period for contract claims is governed by section 5 of the Limitation Act 1980. This section sets the time limit for bringing an action on a contract. According to the statute, a contract claim must be initiated within 6 years from the date the cause of action accrued. The "cause of action" in contract cases typically arises from a breach of contract, i.e., when one party fails to fulfill their contractual obligations. For example, if Party A enters into a contract with Party B to provide goods by a specific date and Party B fails to deliver the goods as agreed, the cause of action for Party A to claim breach of contract starts on the date Party B should have fulfilled their obligations. It is crucial for claimants to be aware of the contract limitation date and take prompt action to protect their rights. Failing to bring a contract claim within the prescribed time frame may result in the claim being time-barred, meaning the court will not hear the case due to the statute of limitations. In such instances, the claimant loses the right to seek legal remedies for the breach of contract. To avoid potential issues with limitation periods, claimants should seek legal advice and initiate their contract claims within the 6-year time limit from the date the cause of action accrued. Conversely, defendants in contract cases can use the limitation period as a defense if the claimant has exceeded the allowed time frame for bringing the claim. As such, understanding the contract limitation date is essential for both claimants and defendants in contract disputes. ### Tort Limitation Date 6 years from the date the cause of action accrued and/or the loss was suffered *([section 2 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/2))* In English law, the limitation period for tort claims is regulated by section 2 of the Limitation Act 1980. This section establishes the time limit within which a claimant must bring an action in tort. The key feature of the tort limitation date is that it is based on two possible starting points: the date the cause of action accrued and/or the date the loss was suffered. This means that the claimant has a total of 6 years from either of these events to initiate the tort claim. The "cause of action" in tort refers to the specific event or circumstances that give rise to the claim. For example, in a personal injury case, the cause of action may be the date of the accident or the date when the claimant became aware of the injury. On the other hand, the "loss suffered" refers to the date when the claimant incurred damage or loss as a result of the tortious act. For instance, in a negligence claim, the loss suffered may be the date when the claimant discovered property damage caused by the defendant's negligence. The dual nature of the tort limitation date provides flexibility for claimants, allowing them to choose the starting point that is more favorable to their case. However, it is essential for claimants to be diligent in pursuing their tort claims and ensuring they fall within the 6-year time frame. Delaying the initiation of a claim can result in the claim becoming time-barred, and the court may refuse to hear the case due to the expiration of the limitation period. Defendants in tort cases can also rely on the limitation period as a defense if the claimant fails to bring the claim within the specified time limit. Therefore, understanding the tort limitation date and taking timely legal action is vital for both claimants and defendants involved in tort-related disputes. Seeking legal advice at the earliest opportunity can help ensure that the claim is initiated within the appropriate time frame and increase the chances of a successful resolution. ### Professional Negligence Limitation Date If based on contract, 6 years from the date of the breach of contract *(section [5 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/5))* If based on the common law tort of negligence, 6 years from the date the Claimant suffered a financial loss as a result of a negligent professional *([section 2 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/2))* Professional negligence claims in English law can arise from either a breach of contract or the common law tort of negligence. The limitation period for professional negligence claims varies depending on the nature of the claim. - ***Professional Negligence Claim based on Contract:*** If the professional negligence claim is based on a breach of contract, the limitation period is set by section 5 of the Limitation Act 1980. According to this section, the claimant has 6 years from the date of the breach of contract to initiate the claim. For example, if a client enters into a contract with a solicitor to provide legal services and the solicitor fails to meet the agreed-upon and reasonable standard of care, resulting in financial loss for the client, the cause of action for professional negligence in this case starts from the date of the breach of the contract. - ***Professional Negligence Claim based on Common Law Tort of Negligence:*** Alternatively, if the professional negligence claim is based on the common law tort of negligence, the limitation period is governed by section 2 of the Limitation Act 1980. In this scenario, the claimant has 6 years from the date they suffered a financial loss as a result of the negligent professional's actions to bring the claim. For instance, if a surveyor negligently evaluates a property's condition, causing the client financial loss due to undisclosed defects, the claimant's cause of action for professional negligence starts from the date they incurred the financial loss resulting from the surveyor's negligence. It is crucial for claimants in professional negligence cases to be aware of these distinct limitation periods and take timely legal action. Failing to bring a professional negligence claim within the prescribed time frame may lead to the claim being time-barred, and the court may refuse to hear the case. As with other types of claims, defendants can also rely on the limitation period as a complete defence. Seeking legal advice promptly is essential for claimants considering a professional negligence claim. Legal professionals can assess the claim's basis, identify the appropriate limitation period, and ensure that the claim is initiated within the allowed time frame, increasing the chances of a successful resolution. ### Assessment of a Solicitor's Bill Limitation Date #### Detailed assessment 3 months after: - the date of a judgment awarding costs; - service of notice of discontinuance under rule CPR 38.3; - the date when the right to costs arose *([CPR 47.7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-47-procedure-for-detailed-assessment#47.7))* #### Assessment of solicitor’s bill An absolute right to an [assessment](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) arises within 1 month of receipt of the bill *([Section 70 Solicitors Act](https://www.legislation.gov.uk/ukpga/1974/47/section/70))* This time limit is extended to 12 months if special circumstances exist as to why you didn’t challenge the bill within a month *([Section 70 Solicitors Act](https://www.legislation.gov.uk/ukpga/1974/47/section/70))* ### HMRC Tax Penalties, Assessments or Notices Limitation Date If you have received a penalty, unless otherwise stated you must appeal, usually within [30 days](https://www.gov.uk/tax-appeals) of the date of the penalty notice. Please check the notice itself which should set out your appeal or review rights. When dealing with tax penalties issued by Her Majesty's Revenue and Customs (HMRC) in the UK, it is essential to be aware of the specific limitation period for appealing such penalties, assessments or notices. Generally, unless stated otherwise, if you receive a tax penalty notice from HMRC, you must file an appeal within 30 days from the date of the penalty notice. Unlike the previous sections that discussed limitation periods based on the Limitation Act 1980, the HMRC tax penalties limitation date operates under specific rules set forth by HMRC. Therefore, the time frame for appealing tax penalties is governed by the provisions outlined in the penalty notice. If a taxpayer receives a penalty notice for various tax-related offences, such as late filing or underreporting income, the clock starts ticking from the date the taxpayer receives the penalty notice. To ensure that the appeal is lodged in a timely manner, it is crucial for the taxpayer to promptly review the penalty notice, understand the grounds for the penalty, and prepare the appeal accordingly. Failing to appeal within the 30-day limitation period may result in losing the opportunity to challenge the penalty, and HMRC's decision may become final. This highlights the importance of acting swiftly and seeking professional advice if necessary when faced with HMRC tax penalties. Tax matters can be complex, and the appeal process may involve presenting evidence, legal arguments, and navigating specific tax laws and regulations. Therefore, [taxpayers may benefit from engaging an experienced team of HMRC tax litigators to handle the appeal and ensure that all necessary documentation and arguments are properly presented](https://taxdisputes.co.uk/expert-advice/) within the limited timeframe. In summary, for HMRC tax penalties, claimants must adhere to the 30-day limitation period for appealing the penalty, as indicated in the penalty notice. Taking timely action and seeking professional assistance can greatly impact the success of the appeal and potentially lead to a favorable outcome for the taxpayer. HMRC operate very strict time limits and you may lose your right to challenge a penalty with HMRC or in the Tribunal if you submit an appeal out of time. [Our tax team can advise on challenges to HMRC and appeals in the Tax Tribunal](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/). ### Judicial Review Limitation Date The claim form must be filed promptly (the primary deadline) and in any event not later than 3 months after the ground to make the claim first arose *([CPR 54.4(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54))* It is important to check time limits carefully as there are shorter time limits for claims such as certain planning judicial review decisions need to be commenced within 6 weeks and procurement decisions within 30 days *([CPR 54.5](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54))* Judicial review is a legal process in which a court reviews the lawfulness of decisions made by public bodies or officials. In the UK, the limitation period for filing a judicial review claim is governed by the Civil Procedure Rules (CPR). - **Standard Limitation Period for Judicial Review:** Under CPR 54.4(1), the claimant must file the judicial review claim promptly and, in any event, not later than 3 months after the ground for making the claim first arose. This means that from the moment the claimant becomes aware of the decision or action they wish to challenge, they should do so promptly (ie within 30 days) and at most *may *have 3 months to initiate the judicial review proceedings. For example, if a public authority makes a decision that adversely affects an individual's rights or interests, the 3-month limitation period starts from the date on which the decision is made or communicated to the claimant. It is crucial for claimants to act *promptly *(30 days) and ensure that their claim form is submitted with urgency to avoid the risk of the claim being time-barred. - **Shorter Time Limits for Certain Judicial Review Claims:** It is essential to exercise caution when dealing with specific types of judicial review claims, as there are shorter time limits for certain decisions. As stated in CPR 54.5, claims challenging certain planning decisions must be commenced within 6 weeks, and procurement decisions must be commenced within 30 days. These shorter time limits apply to specific categories of cases to ensure swift resolution and avoid undue delays in projects or public decisions that may have significant implications. Given the strict and varied time limits for judicial review claims, claimants must be vigilant in understanding the relevant deadlines applicable to their case. Seeking legal advice at the earliest opportunity can help clarify the specific limitation period for their claim and guide them through the intricate judicial review process. In conclusion, the limitation period for filing a judicial review claim is 30 days to 3 months from the date the ground for making the claim first arose. However, for certain types of decisions, shorter time limits apply. As judicial review involves complex legal proceedings, claimants should act promptly well before 30 days and seek professional guidance to ensure compliance with the relevant time limits and optimise their chances of success in the judicial review process. ### Limitation Periods under s26/s28 Financial Services and Markets Act 2000 ("FSMA") - Money Claims In cases involving actions for damages under sections 26 and 28 of the Financial Services and Markets Act 2000 ("FSMA"), the limitation period for a money claim is arguably six years from the date the principal sum is repaid, rather than from the date of earlier payments made in respect of fees or interest. This conclusion was drawn in Bhattacharya v Oaksix Holdings Limited [2021] EWHC 1326 (Ch) by comparing claims under the Consumer Credit Act 1974 ("CCA"). The court acknowledged the applicability of various cases, such as Rahman v Sterling Credit Ltd, Nolan v Wright, Patel v Patel, and Collin v Duke of Westminster, which provided guidance on limitation decisions concerning the Consumer Credit Act 1974. The court found that the reasoning behind applying the six-year limitation period was not erroneous and determined that it clearly applied to the claim for repayment of monies under FSMA section 28(2). The case in question involved a bridging loan taken by the claimants, the Bhattacharyas, from Oaksix Holdings Limited ("Oaksix"). The loan agreement went through several extensions and repayments, leading to the claimants seeking a declaration that the agreements were unenforceable under FSMA and claiming repayment of interest and fees paid to Oaksix. The judgment addressed two main issues: - **Limitation Period:** The Bhattacharyas argued that their money claims fell under the 12-year limitation period for actions on a specialty (section 8(1) of the Limitation Act 1980), rather than the six-year limitation period under section 9 of the Limitation Act. However, the court upheld the shorter limitation period, agreeing with the Deputy Master that FSMA claims are analogous to CCA provisions and are subject to the six-year limitation period. The court clarified that the claim for payment of money arises solely from the statute, and without it, the claimants would have no basis for their claim. - **Accrual of Limitation:** The judgment examined when the limitation period starts running. According to section 9 of the Limitation Act, a cause of action accrues when all the necessary facts exist to support the plaintiff's right to a judgment. In this case, the court determined that the critical fact triggering the money claim was the repayment of the capital, which occurred on 27 August 2013. Until that date, the claimants did not need to bring a money claim because they owed more money to Oaksix under the loan agreement than the interest and fees they wrongly paid. Thus, the cause of action for the money claim only arose on 27 August 2013, less than six years before the claim was brought. The court clarified that sections 26 and 28 of the FSMA do not require a borrower to bring proceedings to obtain relief. The borrower is entitled not to perform the agreement and can recover sums transferred under the agreement while also repaying sums received. As a result, until the first loan was repaid, there was no need for the appellants to bring proceedings for the repayment of money, and they could not have done so earlier, as the balance of sums due and owed would have led to an order for payment to the lender. The critical fact giving rise to the claim for the recovery of money was the repayment of capital, which occurred on 27 August 2013, less than six years before the proceedings were commenced. It's essential to note that this judgment was given in the context of an appeal against a strike-out and summary judgment. Nonetheless, the court's analysis and analogies drawn with established case law related to the CCA make the determination regarding limitation in money claims under FSMA highly persuasive. This judgment provides valuable arguments for claimants facing limitation issues in FSMA cases. ### Limitation Periods under s26/s28 Financial Services and Markets Act 2000 ("FSMA") - Declaration Claims Bhattacharya v Oaksix Holdings Limited [2021] EWHC 1326 (Ch) also considered the application of s8 and s9 of the Limitation Act 1980 to s26 and s28 of FSMA 2000 Act. The claim for a declaration fell within s.8(1) of the Limitation Act and was subject to a 12-year limitation period. Section 8(1) of the Limitation Act 1980 deals with specialty debts. A specialty debt is a debt arising from a written instrument, such as a deed. This section stipulates that actions to recover a specialty debt must be brought within 12 years from the date the debt became due. So, if a claim falls within the scope of a specialty debt, the claimant has 12 years from the date the debt arose to bring the action. On the other hand, section 9 of the Limitation Act 1980 relates to other types of actions, not classified as specialty debts. This section establishes a general six-year limitation period for actions that are not specifically covered by other provisions in the Act. It applies to claims seeking the recovery of money, where the cause of action does not fall under the definition of a specialty debt. In the case discussed, the lender acknowledged that the claim for a declaration of unenforceability under section 26(1) of the Financial Services and Markets Act 2000 ("FSMA") fell within the scope of a specialty debt. As a result, the lender accepted that this claim was subject to the 12-year limitation period set out in section 8(1) of the Limitation Act 1980. This means that the claimants had 12 years from the time the debt became due to bring the action seeking a declaration of unenforceability. The discussion on the application of sections 8 and 9 of the 1980 Act is crucial because it determines the appropriate limitation period for the specific claims under FSMA sections 26(1) and 28(2). By clarifying which section applies to each claim, the court establishes the time frame within which the claimants are allowed to bring their actions for declarations of unenforceability and repayment of monies under FSMA. ### Enforcing Judgments Limitation Date 6 years from the date on which the judgment became enforceable *([Section 24 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/24))* In English law, the process of enforcing a judgment obtained through a court proceeding is subject to a specific limitation period as outlined in Section 24 of the Limitation Act 1980. According to Section 24, the claimant has 6 years from the date on which the judgment became enforceable to take action in enforcing the judgment. This limitation period comes into effect once a judgment has been rendered by the court and becomes enforceable. The "*enforceable*" date of a judgment refers to the point at which the court's decision becomes legally enforceable, allowing the successful party (judgment creditor) to take steps to recover the awarded sum or enforce other remedies as determined by the court. It is essential for the judgment creditor to be proactive in enforcing the judgment within the 6-year timeframe. Delaying the enforcement process can risk the claim becoming time-barred, and the judgment creditor may lose the ability to recover the awarded sum through legal means. When enforcing a judgment, the judgment creditor has various options available, such as issuing a writ of execution, obtaining a charging order against the judgment debtor's property, or seeking a third-party debt order against someone who owes money to the judgment debtor. The choice of enforcement method may depend on the specific circumstances of the case and the assets available for recovery. Conversely, judgment debtors should be aware of the 6-year limitation period for enforcing judgments against them. If the judgment creditor fails to take action within this timeframe, the judgment debtor may have grounds to argue that the claim is time-barred and cannot be enforced. Understanding and adhering to the limitation period for enforcing judgments is crucial for both judgment creditors and debtors. [Seeking legal advice from experienced professionals can help parties navigate the enforcement process](https://windinguppetitionsolicitors.co.uk/debt-recovery/) effectively and ensure compliance with the relevant time limits. ### Property Litigation Limitation Dates **Action to recover land: ** 12 years from the date the cause of action accrued* ([Section 15 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/15))* **Action to recover rent: ** 6 years from the date the rent arrears became due* ([Section 19 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/19))* **Action to recover proceeds of sale of land:** 12 years from the date the right to receive the money accrued *([Section 20 Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/20))* If you have a landlord-tenant dispute or a complaint against an individual or firm who advised you in a property transaction, our [property litigation team](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/) can assist. #### Employment Law Limitation Dates **Employee’s contract claim**: 3 months from the effective date of termination *([Employment Tribunals Extension of Jurisdiction Order 1994](https://www.legislation.gov.uk/uksi/1994/1623/article/7/made))* **Unfair Dismissal**: 3 months from the effective date of termination or if there is no termination, the last day on which the employee worked * ([Section 111 Employment Rights Act 1996](https://www.legislation.gov.uk/ukpga/1996/18/part/X/chapter/II))* **Discrimination and victimisation:** 3 months starting with the date of the act to which the complaint relates or such other period as the Employment Tribunal thinks is "just and equitable" ([*section 123 Equality Act 2010*](https://www.legislation.gov.uk/ukpga/2010/15/section/123)) If you have been unfairly dismissed, discriminated against in the workplace or have any other dispute against your employer and would like advice on bringing a claim in the Employment Tribunal, our [employment team](https://lexlaw.co.uk/ukemploymentlawyers/) can assist. ### Defamation Limitation Date 1 year from the date of the defamatory publication or when the claimant became aware of the publication of the defamatory statement ([Section 4A Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/4A)) Where material is online, and continues to be published online, the time will start to run from the date the material was first published. In the realm of defamation law in the UK, the limitation period for bringing a claim is outlined in Section 4A of the Limitation Act 1980. This provision governs the time within which a claimant must initiate legal action against a defamatory publication. Under Section 4A, the claimant has 1 year from either of the following events to bring a defamation claim: - *The Date of the Defamatory Publication: *The 1-year limitation period starts from the date the defamatory statement was first published or communicated to a third party. This means that if a defamatory statement was made public on a certain date, the claimant has 1 year from that specific date to file a claim for defamation. - *The Date the Claimant Became Aware of the Defamatory Publication:* In some cases, the claimant may not immediately become aware of the defamatory statement's publication. Therefore, the limitation period also allows the claimant 1 year from the date they became aware of the defamatory publication to initiate the defamation claim. This provision ensures that claimants have sufficient time to discover the defamation and seek legal remedies, even if the defamatory statement was published without their immediate knowledge. It is crucial for potential claimants in defamation cases to act swiftly and seek legal advice promptly upon becoming aware of a defamatory statement or its publication. Failing to bring a claim within the 1-year limitation period may result in the claim being time-barred, and the court may refuse to hear the case. Defamation claims can be complex, requiring careful assessment of the alleged defamatory statement, its publication, and its potential impact on the claimant's reputation. Seeking legal counsel from experienced defamation lawyers is essential to determine the best course of action and navigate the legal process effectively within the specified time frame. In summary, the limitation period for defamation claims is 1 year from either the date of the defamatory publication or the date the claimant became aware of the defamatory statement's publication. Claimants must act promptly and seek legal assistance to safeguard their reputations and pursue appropriate remedies within the given timeframe. ## Extensions to the Limitation Date ### Date of knowledge [Section 14 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/14) provides for two alternative start dates for negligence claims: (1) 6 years from the date the cause of action accrues i.e. when the damage occurs; or (2) 3 years from the "earliest date on which the Claimant had both the knowledge required for bringing an claim for damages in respect of the relevant damage and a right to bring such a claim. For the reasons above, it is vital to seek legal advice as soon as you become aware of a potential claim you have against a Defendant. ### Deliberate concealment [Section 32 of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/32) states that "*any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the Defendant*" the 6 year period for bringing a claim does not start until the Claimant has discovered the concealment, or could have done so with reasonable diligence. The term "deliberate" means that the fact has been concealed by a positive act of concealment or omission or withholding of relevant information. This means the Defendant must have known that he acted in breach of duty before he can be accused of deliberate concealment. This is a difficult hurdle to overcome and it is important you seek specialist legal advice on the same. Our team of carefully selected solicitors and barristers, specialising in financial services litigation and professional negligence have advised many clients in deliberate concealment cases against well known financial institutions in relation to [mis-selling of complex financial products](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/). ### Fraud Section 32(1)(c) provides for the limitation period to be extended where the action being brought *"is based upon the fraud of the defendant"*. In certain cases where a claim is based on the fraud of the defendant, the standard limitation period may be extended to allow the claimant additional time to bring the action. Section 32(1)(c) of the Limitation Act 1980 deals with this scenario and provides a specific provision for fraud-based claims. Under Section 32(1)(c), the limitation period for fraud-based claims does not begin to run until the claimant has discovered the fraud or could have reasonably discovered it with due diligence. This means that the clock for the limitation period starts ticking from the date the claimant becomes aware of the fraudulent conduct or when they could have reasonably discovered it by exercising reasonable diligence. The rationale behind this provision is to prevent defendants from benefiting from their fraudulent actions by running out the standard limitation period before the claimant even becomes aware of the fraud. It ensures that claimants have a fair opportunity to pursue their claims for redress in cases where fraud is involved. To illustrate this, consider a situation where a claimant enters into a contract with a defendant who knowingly misrepresents critical information to induce the claimant into the agreement. If the claimant discovers the fraudulent misrepresentation five years after the contract was formed, the limitation period under Section 32(1)(c) would not begin until the claimant became aware of the fraud. As a result, the claimant would have additional time beyond the standard limitation period to bring the action for fraud. However, it is crucial to note that even under Section 32(1)(c), there is still a maximum time limit for fraud-based claims. The claimant must bring the action within a reasonable time after discovering the fraud, even if it extends beyond the standard limitation period. Delaying the claim excessively after discovering the fraud could still lead to potential difficulties in pursuing the case. In conclusion, Section 32(1)(c) of the Limitation Act 1980 grants claimants an extended limitation period for fraud-based claims, starting from the date the claimant becomes aware of the fraud or could have reasonably discovered it with due diligence. Seeking legal advice promptly upon discovering fraud is essential to ensure the claim is pursued within a reasonable time and to maximize the chances of a successful outcome. ### Mistake Section 32(1)(c) provides for the limitation period to be extended where the action being brought "i*s for relief from the consequences of a mistake*". Section 32(1)(c) of the Limitation Act 1980 offers an extended limitation period for claims seeking relief from the consequences of a mistake. This provision applies to cases where a claimant is seeking to rectify a mistake that has resulted in adverse consequences for them. Under Section 32(1)(c), the limitation period for mistake-based claims does not commence until the claimant has discovered the mistake or could have reasonably discovered it with due diligence. This means that the clock for the limitation period starts ticking from the date the claimant becomes aware of the mistake or when they could have reasonably discovered it by exercising reasonable diligence. The purpose of this provision is to ensure that claimants have a fair opportunity to seek relief from the repercussions of a mistake without being unfairly barred by the standard limitation period. It recognises that mistakes can often remain hidden or undiscovered for a considerable period, and claimants should not be penalised for discovering the mistake after the standard limitation period has expired. To illustrate this, consider a scenario where a claimant enters into a business contract based on erroneous financial information provided by the defendant. Several years later, the claimant discovers the mistake in the financial calculations that significantly impacted the terms of the contract. Under Section 32(1)(c), the limitation period for the claimant to seek relief from the consequences of the mistake would not begin until they became aware of the mistake. This provides the claimant with additional time beyond the standard limitation period to bring the action for rectification. However, similar to claims based on fraud, Section 32(1)(c) imposes a "reasonable time" limitation for mistake-based claims. After discovering the mistake, the claimant must bring the action within a reasonable time. The purpose of this limitation is to prevent undue delay in pursuing the claim after discovering the mistake. In conclusion, Section 32(1)(c) of the Limitation Act 1980 extends the limitation period for claims seeking relief from the consequences of a mistake. The limitation period starts from the date the claimant discovers the mistake or could have reasonably discovered it with reasonable diligence. Seeking legal advice promptly upon discovering the mistake is essential to ensure the claim is pursued within a reasonable time and to maximise the chances of obtaining the desired relief. ## My limitation date is approaching: What can I do to protect my position? Your legal rights may be subject to limitation and thereby irreversibly time-barred if you fail to take legal action or defend a legal claim in time. Therefore you should not delay in seeking legal advice. ### Entering into a standstill agreement A standstill agreement is a contract and subject to the same rules as other contacts. The purpose of such agreements is to extend or suspend a limitation period. Before a claim is issued, the parties should use reasonable endeavours to engage in pre-action correspondence to see if they can resolve the dispute, in compliance with pre-action protocols. A standstill agreement, if one can be agreed, can buy time for both parties. The parties will agree in written terms to stop the clock in order to engage in pre-action correspondence or settlement. ### Issuing a protective claim form In the event the parties cannot agree a standstill agreement, or negotiations are ongoing between the parties, you may need to issue a protective claim form if there is a risk that your claim will be time-barred pursuant to any of the time limits above. The period of limitation stops when the claimant issues proceedings and the critical date is issue, not service. The Claimant will then have four months to serve the Claim Form. The Court will seal the claim form with the date the claim form was received, reflecting your compliance with the relevant time limits. It is important to note the Court closing times for issuing a claim as most Courts will close at 4pm, therefore your claim form must make it to a court clerk or be received by the Court before then. Where possible, issuing a claim form at least one business day before the date of limitation may avoid any administrative or human error which may lead to your claim becoming time barred. ## My solicitor or adviser failed to advise me about time limits It is crucial for practitioners to consider limitation issues as soon as instructed in order to prevent the possibility of a claim being time-barred. [If you have been inadequately or negligently advised by a solicitor, barrister or any other professional adviser in relation to a potential claim, then you may be able to recover any losses in a claim for professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) against the firm or individual providing the advice. Our [professional negligence team](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) can assist by assessing your case and advising you on the next steps. ## Initial Fixed Fee consultation with Solicitor & Barrister We don’t offer free advice. Instead, for a heavily discounted fixed fee we offer you high quality partner and counsel-led advice in our first meeting. Two minds are better than one. This way our best solicitors and barristers can review your litigation case and give you the correct advice at the outset, when it matters the most. [We invite you to contact us so our legal team can assess your dispute.](https://lexlaw.co.uk/legal-case-assessment/) Call our team of leading London Litigation Lawyers on 02071830529 or email us on: [litigation-solicitors-london@lexlaw.co.uk](http://admin@lexlaw.co.uk/). Please note that we are unable to provide free or legal aid advice and do not work on low value claims. For legal and regulatory reasons, we can also strictly only give legal advice once we have been formally retained via a fee and you have become a client. We charge a minimum fee of £1750 plus VAT to provide advice in conference with a solicitor and barrister. We don’t provide any free legal advice. --- # Beware of Limitation Periods: Supreme Court clarifies time periods for litigation claims Source: https://lexlaw.co.uk/solicitors-london/beware-of-limitation-periods-supreme-court-clarifies-time-periods-for-litigation-claims/ *The [Supreme Court](https://www.supremecourt.uk/) has reconfirmed the importance of not leaving issuance of a claim to the last minute in the recent case of [Matthew v Sedman [2021] UKSC 19](https://www.supremecourt.uk/cases/docs/uksc-2019-0080-judgment.pdf) heard before The Supreme Court, it was ruled that where a cause of action accrues from the stroke of midnight, the following day directly is to be included in the calculation time of the limitation period. Practitioners should be aware that failure to do so gives rise to a claim in negligence or breach of contract.* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## The Facts The [Supreme Court](https://www.supremecourt.uk/cases/docs/uksc-2019-0080-judgment.pdf) found in favour of the defendants who were accountants and former Trustees of the Evelyn Hammond Will Trust until their retirement in August 2014 against the claimants who are the current trustees.  The trust had a shareholding in Cattles Plc and managed to acquire the Welcome Finance Services Limited, also known as “Welcome” in 1994. Cattles published an annual report in 2007 which had included a right issue prospectus which had released to potential investors in April 2008. The FSA subsequently held that the information contained in the both the 2007 annual report and 2008 prospectus contained misleading information. As a result, trading in Cattles plc’s shares was later suspended in April 2009 and in December 2010 both Cattles and “Welcome” commenced proceedings for court-sanctioned schemes of arrangement. The court approved the Welcome Scheme in February 2011 which included the provision of claims to be made by shareholders. As such, the scheme of arrangement required any claims to be submitted on behalf of shareholders to the administrators accordingly in time by Thursday 2 June 2011 and before midnight. A claim was made too late by a shareholder on 3 June 2011 and since the claimants failed to submit claims before the Bar Date, thereby prevented them from claiming under the Welcome Scheme. ## The Claim For this matter concerning the claim in the Cattles Scheme, the claimants accordingly issued proceedings against the former trustees alleging both negligence and a breach of trust on Monday 5 June 2017. [Under the Limitation Act 1980](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/), actions brought in contract, tort and breach of trust is time-barred after the expiration of six years from the date on which the cause of action accrued. ## The Judgment The Court ruled that it was common ground before the judge that the cause of action had in fact accrued during the day namely a nanosecond after the stroke of midnight on Saturday 3 June 2017, thus the claim ought to have been discounted for limitation purposes. Following the decision of [Pritam Kaur v S Russell and Sons [1973] QB 336](https://swarb.co.uk/pritam-kaur-v-s-russell-and-sons-ltd-ca-2-jun-1972/), it was established that where a cause of action accrues part way through a day, that day should be excluded when calculating the relevant time period for the purposes of limitation as the law simply does not recognise segments of individual days. Simply put, it is intended to prevent segments of the day to be counted as a whole day, where it could prejudice the claimant by interfering with the time periods stipulated in the Limitation Act 1980. In reaching this conclusion, the judge upheld the decision by noting this as a straightforward matter of calculating six years from the date the cause of action arose. Given here in this case, the six year period ended on Friday 2 June 2017. Since the cause of action arose on the stroke of midnight on 3 June 2011, it would be considered prejudicial to lengthen the statutory limitation period by a whole day. Therefore, the Welcome Claim was brought out of time. ## Download the judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-26.png)](https://www.supremecourt.uk/cases/docs/uksc-2019-0080-judgment.pdf) ## What is a limitation period? The law sets out deadlines for bringing legal claims, which are referred to as limitation periods. The purpose of limitation periods is to prevent legal claims from being brought too long after the cause of action accrued. The length of the limitation period varies with different types of legal claim. ## Why is limitation in litigation important? Limitation is not something that should be ignored. Where a party has a strong case, but the limitation period has expired, the claim will be likely to fail. Even in unusual circumstances, where a party is prevented from issuing its claim in time for reasons beyond its control, the court has no discretion to extend the limitation period in this type of claim. It is, therefore, crucial that limitation issues are considered at the outset of any potential claims. ## When does time start running on a claim? Once the cause of action has accrued, the time for bringing a legal claim will start to run and the limitation period will begin. In order to stop time running before the expiration of the limitation period in relation to a particular cause of action, you would need to either issue a claim form at Court or enter into a standstill agreement with your opponent. ## What happens after the limitation period expires in litigation? If the limitation period expires before you have issued a claim form or entered into a standstill agreement, then your claim will be time-barred. This means that if you begin your legal claim after the limitation period has expired, the defendant will be able to raise limitation as a complete defence to your claim (regardless of how strong a claim it may otherwise be). ## The implications of leaving service of a claim form until the last minute Justice Nicklin reiterated that it is very *“unwise”* for any Claimant to adopt a non-engagement approach, which as in this case, can cause your claim to be dismissed. Justice Nicklin also noted that, as long as defendants do nothing to mislead or obstruct, they can hardly be criticised if they decided to follow Napoleon’s advice ‘not to interrupt an enemy when they were making a mistake’, thereby restating the argument from [***Woodward -v- Phoenix healthcare Distribution Ltd*** **[2019] EWCA Civ 985**](https://lexlaw.co.uk/wp-content/uploads/Woodward-v-Phoenix-Healthcare-Distribution-Ltd.pdf)[44-47] that there is no duty on a defendant to warn a claimant about failure to validly serve a Claim Form. This judgment serves as a stark reminder, to both litigants in person and solicitors alike, that strict adherence to the CPR is vital and the consequences of failing to do so can be fatal to any litigation, which is why you should instruct [specialist litigation solicitors.](https://lexlaw.co.uk/contact-us/) Had the Claimant done so in this matter and the solicitor then failed to serve the Claim Form, there would be strong grounds for a [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) case which would enable him to seek [damages from them](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). You can read the [full judgment here.](https://lexlaw.co.uk/wp-content/uploads/Dr-Theodore-Piepenbrock-v-Associated-Newspapers-Limited-DMG-Media-of-Daily-Mail-General-Trust-plc-The-London-School-of-Economics-and-Political-Science-Joanne-Hay.pdf) ## My solicitor failed to advise me about time limits It is crucial for practitioners to consider limitation issues as soon as instructed in order to prevent the possibility of a claim being time-barred. If you have been inadequately or negligently advised by a solicitor, barrister or any other professional adviser in relation to a potential claim, then you may be able to recover any losses in a claim for professional negligence against the firm or individual providing the advice. Our [professional negligence team](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) can assist by assessing your case and advising you on the next steps. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # The Manipulation of LIBOR by the Banks and the Impact on Interest Rate Swap Mis-selling Claims Source: https://lexlaw.co.uk/solicitors-london/the-manipulation-of-libor-by-the-banks/ The Financial Services Authority (FSA) have issued a [press release](http://www.fsa.gov.uk/library/communication/pr/2012/070.shtml) indicating that Barclays Bank has been fined for the manipulation of global benchmark interest rates LIBOR and EURIBOR. Barclays Bank, who had self-disclosed their own conduct earlier this year, will pay penalties of £290m ($450m) for misconduct in trying to fix the key interest rates at which banks lend money to each other. The penalty from UK and US authorities followed "serious and widespread" misconduct, the Financial Services Authority said "This is the largest ever penalty imposed by the FSA". The FSA communication states that Barclays’ breaches of the FSA’s requirements encompassed a number of issues, involved a significant number of employees and occurred over a number of years. The US Commodity Futures Trading Commission reported in some detail the allegations and emails against Barclays Bank in an [enforcement order](https://lexlaw.co.uk/wp-content/uploads/2012/01/CFTC-Barclays-Order-LEXLAW-Interest-Rate-Swaps-Lawyers-270612.pdf). Of particular interest to customers sold interest rate protection derivatives such as interest rate swaps is that Barclays’ misconduct included:1. Making submissions which formed part of the LIBOR and EURIBOR setting process that took into account requests from Barclays’ interest rate derivatives traders. These traders were motivated by profit and sought to benefit Barclays’ trading positions;2. Seeking to influence the EURIBOR submissions of other banks contributing to the rate setting process;and3. Reducing its LIBOR submissions during the financial crisis as a result of senior management’s concerns over negative media comment. ## Legal Impact of LIBOR Fixing on Swap Mis-selling Claims LIBOR manipulation seems to have occurred on a regular and often daily basis in the period from 2005-2009 and is likely to have an impact on many interest rate swaps mis-selling claims which stem from that period. The impact of the manipulation of LIBOR can be explained as follows: LIBOR, described as the world’s most important number, is used in the pricing process for a number of financial products and instruments in particular OTC derivatives. Interest Rate Swaps, Collars and Caps with varying levels of complexity have been sold to a multitude of small businesses in the UK. These complex instruments have regularly been proffered by banks as “Interest Rate Protection Products” accompanied with inadequate explanation of the true nature of the complexities involved in the derivatives nor the contingent liabilities. The most common interest rate swap is one where Counterparty A pays a fixed rate (the swap rate) to Counterparty B, while receiving a floating rate indexed to a reference rate (such as LIBOR or EURIBOR). Often these derivatives are linked specifically to LIBOR as a reference rate. Even where the derivative is linked to base rate we understand that because there is no Base Rate hedging market in the UK the derivatives traders make an internal adjustment / calculation of the value of the hedge by making a comparison to the prevailing LIBOR rates. When interest rate swaps were sold to SMEs this would have been on an implied representation by the bank to the customer that the reference rate(s) would be set fairly. The banks would impliedly or by conduct represent that they were neither aware of any conduct that would undermine the integrity of LIBOR nor party to any such conduct. Such representations would seem to be untrue and in breach of (1) a bank’s duty to take care as to the truth of the representations; (2) an implied warranty as to the truthfulness of the representations; and (3) an implied term as to conduct. The remedies which ought to be considered include rescission (termination of the contract) and/or a claim for damages. ## Are any other Banks involved? RBS, Lloyds, HSBC? There is a growing scandal over such manipulation. Whilst Barclays have settled with the FSA and various US regulatory and enforcement authorities, there are allegations in the public domain against not only Barclays (now seemingly admitted), but also Lloyds Banking Group, Bank of America, Royal Bank of Scotland Group, Citigroup, Deutsche Bank, HSBC Holdings, J.P. Morgan Chase & Co and UBS. Of these, Barclays and Barclays Capital, HSBC and HSBC Global Markets, RBS/Natwest and RBS Global Banking & Markets and Lloyds HBOS and Lloyds Corporate Markets have all had litigation surrounding the alleged mis-sale of ‘interest rate protection’ OTC derivatives to UK SMEs. ***If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, can assist. Get in touch with us so we can assess your claim. Visit our practice area page for further information: [Interest Rate Swap Claims](https://lexlaw.co.uk/interest-rate-swap-mis-selling-solicitors-hedging-lawyers.php).*** --- # Court of Appeal Decision: Mobilx, Blue Sphere, Calltel Source: https://lexlaw.co.uk/solicitors-london/ca-decision-mobilx-blue-sphere-calltel/ Court of Appeal in conjoined appeal cases of Mobilx, Blue Sphere Global and Calltel upholds previous lower court decisions and provides new guidance on the 'Kittel' test.** **The approved judgement is available here [[download]](https://lexlaw.co.uk/[2010]%20EWCA%20Civ%20517%20Mobilx%20Approved%20[Provided%20by%20LEXLAW].pdf) The Court of Appeal heard together the appeals of three cases, two of which HMRC had already won (Mobilx and Calltel) together with one in which the Chancellor of the High Court found against HMRC (Blue Sphere Global). The pre-existing decisions in each of those cases were not overturned resulting in HMRC losing its appeal on Blue Sphere Global but maintaining the findings it had sought in Mobilx and Calltel. The principle in the ECJ decision of Kittel was examined by the Court of Appeal and it has been determined that Kittel does no more than to remove the right to deduct input tax from a person who, by reason of his degree of knowledge, can be regarded as someone who has aided fraudulent evasion of VAT. The Kittel doctrine has therefore been clarified and narrowed in the following way: The question to be asked now is not whether an appellant should have known that its transactions were more likely than not to be connected with fraud but whether it should have known that its transactions were connected with fraud. The correct question as things stand then is whether a trader should have known that its transactions were connected with fraud. With respect to the burden of proof, the CA have indicated that it is for HMRC to prove that a trader's state of knowledge was such that his input tax ought to be denied. The Tribunal have been guided to look at all the surrounding circumstances to establish whether there is sufficient knowledge to treat the trader as a participant in the fraud. Tribunals have been directed away from a simple focus on the question whether a trader has acted with due diligence. Instead they ought ask the essential question taken from Kittel: whether the trader should have known that by his purchase he was taking part in a transaction connected with fraudulent evasion of VAT. The Court indicated that the trader's state of knowledge ought to be determined by reference to not only the merit of individual transactions but also with regard to the wider context of the trader's activities from which inferences can be drawn. In effect the Tribunal is directed to look at all the circumstances of an appellant and all of it's trades to determine whether an individual transaction forms or patterns part of a fraudulent scheme. HMRC have also been directed to query why, if not for fraud, traders believe they have enjoyed the opportunity to reap large rewards over a short period of time. In HMRC's Public Notice 726 traders were warned that the imposition of joint and several liability was aimed at businesses who "know who is carrying out the frauds, or choose to turn a blind eye" (3.3). They were warned to take heed of any indications that VAT may go unpaid (4.9). Traders must therefore prepare to advance a reasonable explanation based on their individual case for why their trading was able to lead to such reward and wherever possible assert deals and other business in which there is no taint of fraud. In addition appellant traders must respond substantively to each and every bit of evidence that HMRC outline as an indicator of fraud, even if circumstantial. Tribunals are directed that they should not unduly focus on the question whether a trader has acted with due diligence as was the case in BSG before the Tribunal. Even if a trader has asked appropriate questions, the circumstances in which transactions take place cannot be ignored if the only reasonable explanation for them is that they have been or will be connected to fraud. We reiterate that Tribunals are now likely to refrain from focusing simply on the question of due diligence and will instead ask the essential question: "whether the trader should have known that by his purchase he was taking part in a transaction connected with fraudulent evasion of VAT". It is undoubted that from now on the overall circumstances as well as the due diligence will be determinative. There are in excess of 800 live appeals at the Tax Chamber of First-Tier Tribunal (involving more than GBP2 billion of denied input tax credits) and no doubt hundreds of extended verification decisions awaited from HMRC (which may involve up to GBP3.5 billion of VAT). Whilst every appeal case is different and turns on its own merits, the Court of Appeal judgment will come as good news for those traders caught up in a chain in which fraud was perpetrated some distance away from its own transactions and whose due diligence may not have been the best but have wider circumstances to show their business model was/is genuine and not directly connected to fraud. Traders with pending tribunal cases should note that it is now even more important that they respond fully and vigorously to HMRC's lengthy list of 'indicators of fraud'. If these are not aggressively challenged they will likely be accepted by the Tribunal. It should be borne in mind that is almost inevitable that the Court of Appeal decision will now be appealed to the Supreme Court. The appeal will likely centre on the fact that Kittel is an European legal test being applied domestically without being brought into force by UK legislation. The national domestic legal tests to prove liability as an accessory to fraud are a higher hurdle in comparison with the test in Kittel and this discrepancy is yet to be fully examined judicially. It is inherently unfair for HMRC to proceed against exporters and not the fraudsters directly and in such circumstances it is all the more important that the full weight of judicial attention is brought to bear on the actions of HMRC. **For further information about our VAT practice area please click [here](https://lexlaw.co.uk/solicitors-london/ca-decision-mobilx-blue-sphere-calltel/). To contact one of our specialist VAT Solicitors please use the email link below or call 0207 1830 529.** *Please note: If you have had a VAT assessment raised against you by HMRC or otherwise face MTIC allegations feel free to contact us for a free initial telephone consultation or meeting.* --- # Brayfal Decision Highlights the Importance of the Three Person VAT Tribunal Source: https://lexlaw.co.uk/solicitors-london/brayfal-decision/ The case report [[download]](https://lexlaw.co.uk/TC00410%20-%20Brayfal%20Decision%20%5bProvided%20by%20LEXLAW%5d.pdf) from the Manchester former VAT and Duties Tribunal contains useful information relevant to the means of knowledge appeal cases we regularly conduct. The tribunal judge fundamentally disagreed with the two members of the tribunal. Since each had equal voting powers save for the event of a tie then the judge's opinion was overruled. We have encountered cases where the members were prejudiced by the activities of mobile phone, CPU and carbon credit trading per se and in such instances a three person tribunal may not be helpful. However we consider that generally it is better to have three persons determining complex high value fraud trials as opposed to leaving all matters in the hand of a lone judge and a member (whom the judge can and effectively always will if necessary simply overrule). We have made a policy decision subject to instructions that we will be applying for a panel of two chairmen and one judge in all future First-Tier Tax Tribunal hearings managed by this firm. Please do not hesitate to call our Mr Akram whom can discuss this case with you at length and the reasoning behind having a panel of two as opposed to three arbitrators. **For further information about our VAT practice area please click [here](https://lexlaw.co.uk/solicitors-london/brayfal-decision/). To contact one of our specialist VAT Solicitors please use the email link below or call 0207 1830 529.** **Email: ** *Please note: If you have had a VAT assessment raised against you by HMRC or otherwise face MTIC allegations feel free to contact us for a free initial telephone consultation or meeting.* --- # LEXLAW featured on BBC Radio 4’s The Report: Interest Rate Swaps Mis-selling Source: https://lexlaw.co.uk/solicitors-london/lexlaw-featured-on-bbc-radio-4s-the-report-interest-rate-swaps/ LEXLAW Principal, M Ali Akram, was interviewed by BBC Radio 4′s “The Report” alongside our client, a firm of family butchers, who are bank mis-selling victims. The programme discusses the mis-selling of interest rate swaps (derivatives) by retail banks to UK businesses. These derivatives were sold to small businesses from 2005 to 2008 when they were often encouraged to take out derivatives to ‘protect’ them from fluctuating interest rates. This is an issue that has negatively impacted a wide range of businesses such as property developers/investors, franchise chains, hotels and as highlighted in The Report, even a butchers shop in East London. The radio programme is currently available on [BBC iPlayer](https://web.archive.org/web/20120520164233/http://www.bbc.co.uk:80/iplayer/console/b01gvtjg) and below. [Interest-Rate-Swap-Misselling-r4report03052012-LEXLAW-Solicitors.mp3](https://lexlaw.co.uk/Interest-Rate-Swap-Misselling-r4report03052012-LEXLAW-Solicitors.mp3) ## LEXLAW featured on BBC Radio 4's The Report, Interest Rate Swaps: **For further information about our Interest Rate Swaps practice area please click [here](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/). To contact one of our specialist Financial Services Litigators please use email or call 0207 1830 529.** --- # Graiseley Properties Ltd (Guardian Care Homes) v Barclays Bank PLC – LIBOR Manipulation Test Case Source: https://lexlaw.co.uk/solicitors-london/graiseley-properties-ltd-guardian-care-homes-v-barclays-bank-plc-libor-test-case/ *Application to amend particulars of claim - amendment to plead implied representations (alternatively implied terms) which induced claimants to enter into swap agreements - implied representations allegedly false and fraudulent - amendments also to claim deceit against Barclays Bank given UK and US regulatory findings of manipulation of LIBOR by Barclays - Defendant Bank argued that proposed amendments had no real prospect of success - Claimants' application to amend succeeded - Costs awarded against the Defendant Bank.  Mabanga v Phir Energy, Belize v Belize Telecom and Crema v Cenkos Securities plc considered.* Neutral Citation Number: [2012] EWHC 3093 (Comm) Case No: 2012 FOLIO 1259 [![Royal Courts of Justice RCJ Seal - England & Wales](https://lexlaw.co.uk/wp-content/uploads/2012/11/Royal-Courts-of-Justice-RCJ-Logo.jpg)](https://lexlaw.co.uk/wp-content/uploads/2012/11/Royal-Courts-of-Justice-RCJ-Logo.jpg) IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice Strand, London, WC2A 2LL Date: 29/10/2012 Before : THE HON MR JUSTICE FLAUX - - - - - - - - - - - - - - - - - - - - - Between : Graiseley Properties Limited and others Claimant - and - Barclays Bank PLC Defendant - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Hearing date: 29th October 2012 - - - - - - - - - - - - - - - - - - - - - APPROVED JUDGMENT THE HONOURABLE MR JUSTICE FLAUX Judgment Approved by the court for handing down (subject to editorial corrections) **The Hon Mr Justice Flaux:** 1. This is an application by the claimants in this case (which has been transferred from the Birmingham Mercantile Court to the Commercial Court as a potential test case concerning LIBOR) for permission to amend their particulars of claim to plead implied representations by the defendant and, in the alternative, implied terms. The implied representations are said to have induced the claimants to enter into the series of loan agreements and related hedging transactions. In the alternative, the claimants allege that similar terms are to be implied into those contracts. 2. So far as the implied representations are concerned, the claimants now allege that those implied representations were false and fraudulent and they seek to bring a claim against the defendant bank (“Barclays”) in deceit, There was a claim for rescission for innocent misrepresentation in the original pleading, but the reason for the present proposed amendment is that, since the pleading was originally drafted and served, the various conclusions and findings of the regulatory authorities, both in this jurisdiction and in the United States of America against Barclays, have been published. 3. This matter concerns the setting of LIBOR and the effect of manipulation of LIBOR by Barclays. LIBOR is defined by the British Bankers' Association as: "The rate at which an individual contributor panel bank could borrow funds were it to do so by asking for and then accepting interbank offers in reasonable market size just prior to 11.00 am London time." 4. The recent report of the Treasury Select Committee quotes the finding of the Financial Services Authority (“FSA”) as to the significance of LIBOR and the related Euro rate of EURIBOR: "Benchmark reference rates to indicate the interest rates that banks charge when lending to each other. They are fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts." 5. This case concerns, in effect, two such derivatives contracts which the claimants were obliged to enter into as a condition of Barclays granting the relevant loan facilities. It is not necessary for present purposes to set out in any great detail the findings of the various regulatory authorities. What has essentially been found, both in the United States and in the United Kingdom, is misconduct and wrongdoing on the part of Barclays in relation to its manipulation of LIBOR at various times between 2005 and 2009. 6. In its Final Notice dated 27 June 2012, the FSA identified two distinct phases of wrongdoing. The first concerned submissions from Barclays to the BBA from 2005 to 2008, which took into account requests by interest rate derivatives traders to the submitters (who were responsible for submitting the LIBOR rates to the BBA) which the FSA found were motivated by profit. Secondly, the FSA found that during the financial crisis from about September 2007 until about May 2009, on instructions from senior management of Barclays, the submitters lowered their LIBOR submissions to the BBA, in response to negative media comments about the bank, what is described throughout the evidence before the Treasury Select Committee as “low-balling”. 7. Similar findings were made in relation to these matters by both the Department of Justice in the United States and also by the US Commodities Futures Trading Commission, both of which issued reports on 27 June 2012 and both of which levied substantial fines against Barclays, as indeed, did the FSA. I should add that it is apparent from the material I have considered, including the recent preliminary findings of the House of Commons Treasury Select Committee, that what has been set out in the various regulators' findings and reports to date is by no means the complete picture and it appears likely that other matters will emerge in due course. 8. The specific implied representations relied upon by the claimants are set out in the draft amended pleading at paragraph 9 and they are as follows: "(1) On any given date up to and including the date of the Swap and the date of the Collar, LIBOR represented the interest rate as defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11.00 am on that date. (2) Barclays had no reason to believe that on any given date, LIBOR had represented, or might in the future represent, anything other than the interest rate defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11.00 am on that date. (3) Barclays had not on any given date, up to and including the date of the Swap and the Collar, (a), made false or misleading LIBOR submissions to the BBA and/or (b), engaged in the practice of attempting to manipulate LIBOR, such that it represented a different rate from that defined by the BBA, viz a rate measured at least in part by reference to choices made by panel banks as to the rate that would best suit them in their dealings with third parties; and (4) Barclays did not intend in the future to (a),make false or misleading LIBOR submissions to the BBA and/or (b), engage in the practice of attempting to manipulate LIBOR, such that it represented a different rate from that defined by the BBA". 9. The pleading goes on again to refer to a rate that was being measured in part by the bank's own personal interest, if I can summarise it in that way. The pleading then sets out how the representations were made by the agents of the bank, that is to say for present purposes, those managers and staff in the local branches in the Black Country with whom the claimants dealt, both in documents, including drafts of the various agreements which referred on a number of occasions to LIBOR and to the setting of the so-called screen rate, a series of emails passing between the bank and the claimants, and meetings. 10. Then the pleading sets out in detail at paragraph 12 the respects in which the representations are said to be false and those track in large measure the detailed findings made by the regulatory authorities. There is then a plea in paragraph 12A of why those representations are alleged to be fraudulent and what is pleaded is that the relevant knowledge and/or recklessness is that Barclays was proposing to potential customers that they enter into financial transactions containing obligations measured by reference to LIBOR such that the LIBOR representations were being made, or might be made to the said customers, and that those representations were or might be false. 11. Then the claimants say that, prior to disclosure, the best particulars they can give of whose knowledge it was, or which individuals had the relevant knowledge, is a number of categories of managers and others within the bank, which again obviously tracks the conclusions reached by the regulatory authorities, specifically the findings made by the regulatory authorities about the involvement of senior management of the bank together with the involvement of the derivatives traders who made request to the submitters and also the involvement of the compliance department. There is then a specific plea that the claimants relied on the representations through their chief executive officer, Mr Hartland, and also that the bank intended the claimants to rely upon the representations and was well aware that the claimants or a class of persons which included the claimants would rely upon the representations. 12. The objections raised by the bank to the granting of permission to amend fall essentially into three categories. First, whether there is any basis for implication at all; secondly, whether or not it can be said that it must have been obvious to the people who are alleged to have had the relevant knowledge that the representations were being made and were false, and thirdly, there is an objection related to the issue of authority or authorisation to make the representations. 13. It is important to have in mind and, indeed, it is accepted by Mr Beltrami QC on behalf of the bank, that at this stage all the court is concerned with is whether these proposed amendments are sufficiently arguable to go forward to trial, in the sense that they have a real prospect of success: see Civil Procedure para 17.3.6. Accordingly, the court is concerned not with establishing the facts as they may or may not be established at trial, nor with whether or not, if certain evidence emerges or does not emerge, the claim will succeed, but just with whether, looking forward, this pleading is sufficiently arguable that it has a real prospect of success. 14. I should say at the outset that, having considered the various submissions on both sides, I have no doubt whatsoever that this pleading does satisfy that test and that the points that the claimants raise are clearly and properly arguable and should be allowed to go forward to trial. 15. The principles according to which the Court decides whether any given representation has been made have been recently usefully summarised by Popplewell J in Mabanga v Ophir Energy [2012] 1589 (Comm) at [25] to [28]. It is by reference to those principles that Mr Beltrami QC on behalf of Barclays seeks to argue that the proposed amendments have no real prospect of success. 16. So far as the first objection is concerned, which is whether it is appropriate to imply the alleged representations at all, the United States Department of Justice found at paragraph 32 of its Statement of Facts (expressly accepted by Barclays, as is recorded by the Department of Justice), albeit in the context of the activities of derivatives traders, that certain of those traders and rate submitters who had engaged in efforts to manipulate LIBOR and EURIBOR submissions were well aware of the basic features of the derivative products tied to these benchmark interest rates. Accordingly, they understood that to the extent they increased their profits or decreased their losses in certain transactions from their efforts to manipulate rates, their counterparties would suffer corresponding adverse financial consequences with respect to those particular transactions. 17. In my judgment what holds for derivative traders as to their knowledge or understanding must at least arguably also hold for those senior management of Barclays who were also responsible for manipulation of LIBOR. In those circumstances, the attempt by the defendants to argue that these implied representations do not even reach the level of “real prospect of success” for the purpose of allowing the amendments is doomed to failure. Whether the implied representations were in fact made will depend upon a number of factual issues which can only be decided at trial. It seems to me that it cannot be said that Barclays has an unanswerable case that the implied representations were not made, so the matter is quintessentially a factual one for determination at trial. 18. Various points were taken by Mr Beltrami QC about the implied representations pleaded being too wide and for too long a period, but as I said during the course of argument, this is all essentially shadow boxing, because Barclays is well aware of the case that it has to meet. As Mr Lord QC pointed out in reply, so far as the temporal aspect of the representations is concerned, the fixing of LIBOR appears to have commenced some time in 2005, so that one is really focusing on a period of between two and three years between the time when fixing first began and the time when these two contracts were entered into in September 2007 and April 2008, not as Mr Beltrami suggested a wide open-ended period of time. 19. Mr Beltrami also took a point that because the series of contracts with which the claim is concerned are ones where the LIBOR rate was by reference simply to sterling LIBOR and not to dollar LIBOR or LIBOR in any other currency, any representation alleged, insofar as it refers to LIBOR generally, is far too wide and should be limited to sterling LIBOR. It seems to me that it is a wholly artificial exercise to seek effectively to divide up the various LIBOR fixings or manipulations into separate currencies. It is quite clear that there was fixing not only of sterling LIBOR but also of dollar LIBOR and of EURIBOR, and that, as I said during the course of argument, there is inevitably scope for cross-infection here. It may be that in due course, when full disclosure has been provided, it will become apparent that one or other aspect of the LIBOR fixing assumes more significance, but it seems to me to be impossible to say that the representations that were impliedly being made should be limited in the way in which Mr Beltrami suggests. Clearly, in terms of whether there is a real prospect of success, it is fully arguable that these representations were implicitly made to the claimants before they entered the various agreements. 20. The second objection is the one of obviousness. The context in which this point arises is the well-established requirement that, in a deceit case, the representor should understand that he is making the implied representation and that it had the misleading sense alleged: see the summary of the relevant principles by Hamblen J in Cassa di Risparmio della Republica di San Marino v Barclays Bank [2011] EWHC 484 (Comm) at [215-233] particularly [221]. 21. It seems to me that this objection is one which is wholly without merit. If it is the case, as set out in paragraph 32 of the Statement of Facts of the United States Department of Justice, that the derivative traders were well aware of the potential impact of what they were doing to manipulate the rates upon profits and losses under their derivative contracts and the extent to which counter-parties would suffer corresponding adverse financial consequences, as I have already said, it is surely seriously arguable that senior management within Barclays had the same degree and extent of knowledge. 22. What it really would require before the Court could refuse permission to amend on the basis of this objection is that the Court was satisfied that it was simply not arguable that senior management were aware that products were being sold by the bank to customers of the bank which contained references to LIBOR. However, any senior manager who had given the matter a moment's thought would surely have appreciated that customers who were dealing with the bank would assume and would be entitled to assume that LIBOR was being set in accordance with the BBA definition as an independent benchmark and was not being manipulated by Barclays or any other bank for its own personal interest or gain. Accordingly, it seems to me the suggestion that the claimants do not have an arguable case that these representations were obvious to the people within Barclays who are alleged to have been at fault here, is not a suggestion which has any force whatsoever. 23. So far as the third objection is concerned about authority or authorisation, again it seems to me that Mr Beltrami is seeking to divide up this issue artificially to a far greater extent than is appropriate in the circumstances. Mr Lord on behalf of the claimants relied in this context on the formulation of the relevant legal test in Bowstead & Reynolds on Agency at paragraph 185 in these terms: "The principal is liable if while not expressly authorising the agent to make the false representation he knew it to be untrue and was guilty of some positive wrongful conduct as by consciously permitting the agent to remain ignorant to the true facts so as to prevent the disclosure of the truth to the third party if the third party should ask the agent for information or in the hope that the agent would make some false representation. The agent's representation when made would of course require to be within the scope of his actual or apparent authority." 24. Mr Lord also submitted that in circumstances where it is quite apparent from the findings of the regulators that senior management within the organisation were responsible for or aware of manipulation of LIBOR rates, and were aware that particular products were being sold by the bank to customers which were referable to LIBOR rates, that the idea that the bank was not authorising those managers and employees who were responsible for negotiating such contracts with those terms in them with third parties such as the claimants, to enter into contracts on those terms, was really a point which was lacking merit, to put it at its lowest. 25. It seems to me again that it is fully arguable in the present case that the implied representations alleged were authorised by Barclays. Such authority or authorisation is arguable on two grounds. The first ground is that the bank as an entity has to take responsibility as a matter of law for those people who have any guilty knowledge and whose knowledge is to be imputed to the bank. The second ground is that there was arguably sufficient implied or ostensible authority given to those people within the bank who were responsible for issuing the relevant contracts and negotiating them with the claimants, to make the implied representations alleged. 26. Accordingly, it is fully arguable that in those circumstances there was, if not express authority or authorisation, clearly implied or ostensible authority to make the implied representations alleged. So it seems to me again that this third objection is not well founded. 27. Mr Beltrami then sought to raise points about the various aspects of the claimants’ pleading insofar as they concerned the remedies sought, specifically remedies of rescission, repudiation and damages. As Mr Lord rightly points out those particular matters are not in truth, on proper analysis, part of the amendments for which he seeks permission but were part of the original pleading and have not been the subject of some separate application to strike out. In any event the issue as to what, if any, remedy is appropriate is one which will quintessentially turn upon the facts as found by the court at the end of the day at trial and are not appropriate to be the subject of some form of strike out or mini trial at this stage. 28. Finally, in relation to the amendments to plead implied terms, I consider that the proposed implied terms as set out in Mr Lord's draft pleadings do fall fairly and squarely within the test adumbrated by Lord Hoffmann in the Privy Council in AG for Belize v Belize Telecom Ltd [2009] 1 WLR 1988. It also seems to me they fall within the test set out by Aikens LJ in Crema v Cenkos Securities plc [2011] 1 WLR 2066 at paragraph 38(5), where his Lordship says this: "If the reasonable addressee would understand the instrument against the other terms and the relevant background to mean something more ie that something is to happen in that particular event which is not expressly dealt with in the instruments terms then it is said that the court implies a term as to what will happen if the event in question occurs.” 29. However one formulates the test for the implication of a term, whether one adopts the more modern approach favoured by Lord Hoffmann or whether one goes back to the old approach of asking the question whether it went without saying that the term should be implied, the issue is always one of what is the correct construction of the contract, taking account of what the reasonable person would consider were the terms which should be spelt out in the contract if they are not expressly set out in it. However the test is formulated, it is clearly arguable that these terms are to be implied into the relevant contracts. 30. It follows that in all the circumstances the claimants are entitled to the permission to amend which they seek. PDF: [Graiseley Properties Ltd v Barclays Bank PLC - 29 October 2012 - [2012] EWHC 3093 (Comm)](https://lexlaw.co.uk/wp-content/uploads/2012/11/Graiseley-Properties-Limited-Ors-v-Barclays-Bank-plc_www.LEXLAW.co_.uk_swaps_misselling_solicitors.pdf) --- # KPMG Expert Evidence fielded by HMRC: The Need to Respond Source: https://lexlaw.co.uk/solicitors-london/kpmg-expert-evidence/ As all appellant traders will be aware, Her Majesty's Revenue & Customs ("HMRC") have since early 2008 deployed KPMG LLP as consultants to provide evidence of 'indicators' of fraud. The types of evidence deployed has shifted remarkably since the first use of such experts when they would rather simply attempt to show that there was no legitimate grey market in the goods in question. Needless to say this was an argument which was easy to counter and in respect of which expert evidence in response was barely necessary. Matters have advanced remarkably since then having learnt from their earlier mistakes in the Tribunal, HMRC and KPMG (the latter using a new consultant of the day), have moved on to provide complex and seemingly sophisticated expert evidence. This does not simply state that there is no grey market, but instead admits the obvious and then studies the grey market in some detail providing information about how and why the grey market operates together with classifications of grey market trading and apparently matter of fact detailed regional sales figures. Some VAT advisers appear to have, at least initially, considered this evidence to be innocuous believing that it simply proved the existence of the grey market and did not specifically attack their appellant trader. We have long considered that the current folder of expert evidence produced by KPMG must be responded to. Members of this firm represented the first major appellant trader who attacked this evidence before the Tribunal. What this new evidence seeks to do is provide an expert opinion with a backdrop of information, figures and other data which counsel in cross examination and/or closing argument will use to argue that whilst there is a grey market the appellant could not have been a legitimate participant. If your legal team have not sought to attack the veracity of such evidence by the advancement of your own expert opinion then you will have considerable difficulty in responding to HMRC's arguments which may simply end up being accepted by the Tribunal. We advise all appellants to consider very carefully the need to instruct an expert to respond to the KPMG expert evidence. **For further information about our VAT practice area please click [here](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/vat-appeals-mtic-solicitors-london/). To contact one of our specialist VAT Solicitors please use the email link below or call 0207 1830 529.** *Please note: If you have had a VAT assessment raised against you by HMRC or otherwise face MTIC allegations feel free to contact us for a free initial telephone consultation or meeting.* --- # Clydesdale and Yorkshire Banks’ Tailored Business Loans – Terms of ‘Swaps Mis-selling’ Review Source: https://lexlaw.co.uk/solicitors-london/clydesdale-and-yorkshire-banks-tailored-business-loans-terms-of-swaps-mis-selling-review/ ## Information relating to Clydesdale and Yorkshire Banks Review of Interest Rate Hedging Products (12 October 2012) [PDF DOWNLOAD](https://lexlaw.co.uk/wp-content/uploads/2012/12/121012-clydesdale-interest-rate-hedging-products-customer-communication.pdf) Introduction A. The Review B. The products that we have agreed to review C. Tailored Business Loans (TBLs) D. Next Steps E. Overview of our Decisions F. Further Information G. Claims Management Companies H. Complaints Appendix 1: Full list of products falling within scope of the review ## Introduction Customers may have read in the Press that the Financial Services Authority (FSA) has been in discussion with a number of banks, including Clydesdale and Yorkshire Banks (the Bank), about a review of the sale of certain Interest Rate Hedging Products, often referred to as “Interest Rate Swaps”. This letter sets out what the Bank has agreed with the FSA, the steps that we propose to take and details of where you can obtain further information. ## A. The Review. Although the FSA has not made any finding that the Bank sold any such products inappropriately, we have agreed to undertake a review of the sale of certain Interest Rate Hedging Products sold to Private and Retail customers on or after 1 December 2001, where the customer does not meet the definition of a “sophisticated customer”. Accordingly, if: - You were not a Private or Retail customer at the time of the sale, or - You meet the definition of a “sophisticated customer”, then you will not be covered by this review. If you are within the scope of the review then the steps that we will take will depend on the type of product that you purchased. You have received this letter because we think that you may be in scope of the review, as you purchased an Interest Rate Hedging Product during the period since  1 December 2001. Only those customers who would have been categorised by us as a Private or Retail customers will be in the scope of the review. If we determine that you  were not a Private or Retail customer or you come within the definition of a “sophisticated customer” as the review progresses, then we will write to you to confirm this and as a consequence, you would not fall within the scope of the review. The FSA has defined a “sophisticated customer”, as one who met at least two of the following criteria during the financial year in which the product was taken out: - a turnover of more than £6.5 million; or - a balance sheet total of more than £3.26 million; or - more than 50 employees. There is an alternative test for a “sophisticated customer” that may apply where a customer clearly had the necessary experience and knowledge to understand the type of product envisaged at the time it was taken out. ## B. The products that we have agreed to review. The nature of the review depends upon the type of product that you purchased. When we have established your position we will write further to you to explain how you will be affected by the review. A full list of the products that are included within the scope of review can be found in appendix one of this letter. We have agreed to undertake the review in the following way: - In the case of a sale of a Structured Collar, the Bank will undertake a  proactive exercise to redress those customers who did not meet the definition of a sophisticated customer at the time when the product was sold. The redress will be assessed on the basis of what is fair and reasonable in the circumstances. - In the case of other Interest Rate Hedging Products, apart from Caps, the Bank will write to all customers who did not meet the definition of a sophisticated customer asking if they wish to have their file reviewed. For those customers who do ask for their files to be reviewed, we will then undertake a past business review of the sale of those products. Redress is not automatic but if we assess that the sale was not appropriate, then redress will be assessed on the basis of what is fair and reasonable in the circumstances. - In the case of a Cap a review will only be undertaken if we receive a complaint from you. If you make a complaint and are a non-sophisticated customer we will review the sale and, where it is appropriate to do so, provide redress on the basis of what is fair and reasonable in the circumstances. ## C. Tailored Business Loans (TBLs). In addition to the products above that the Bank has formally agreed to review with the FSA, the review will also consider the sales of certain TBL products. A full list of the TBL products that are included within the scope of review can be found in appendix one of this letter. The Bank will undertake a past business review of the sale of those products to customers who do not meet the definition of a sophisticated customer at the time that the product was sold. Redress is not automatic but where it is considered to be appropriate, it will be assessed on the basis of what is fair and reasonable in the circumstances. We have agreed to undertake the review in the following way: - In the case of those TBLs exhibiting comparable features to a Structured Collar, the Bank will undertake a proactive exercise to consider redress to those customers who did not meet the definition of a sophisticated customer at the time when the product was sold. Any redress will be assessed on the basis of what is fair and reasonable in the circumstances. - In the case of those TBLs exhibiting comparable features to other Interest Rate Hedging Products (e.g. simple collars), but not including Caps or fixed rate products, the Bank will write to all customers who do not meet the definition of sophisticated customers asking if they wish to have their file reviewed. For those customers who do wish to have their files reviewed, the Bank will then undertake a past business review of the sale of those products. Redress is not automatic but if we assess that the sale was not appropriate, then redress will be assessed on the basis of what is fair and reasonable in the circumstances. - In the case of those TBLs exhibiting comparable features to Caps (defined as a Capped Rate Loan), a review will only be undertaken if we receive a complaint from you. If you make a complaint and you fall outside the definition of “sophisticated customer” we will review the sale and, where it is appropriate to do so, provide redress on the basis of what is fair and reasonable in the circumstances. TBLs where the interest rate was fixed for the period of the loan or any part of it will not be reviewed. If you hold such a product and are unhappy about the way in which it was sold, your right to complain is unaffected (see section H for more details). ## D. Next Steps. The Bank is currently undertaking a review of the products that it has sold since December 2001 and will identify whether you purchased any of the products referred to in paragraphs 1 or 2 of Sections B and C above. If you did, we will then determine whether or not you fall within the definition of “sophisticated customer” in order to ascertain whether you are within the scope of the review. We will try to do this from information already in our possession. However, we may need to write to you for additional information to help clarify whether, for example, you employed fewer than 50 people in the financial year in which you took the product out. In the case of customers who do not meet the definition of a “sophisticated customer”, and who took out a Structured Collar we will undertake a proactive redress exercise and will write to you further confirming that we are doing this and explaining how the exercise is being undertaken. In the case of customers who have taken out one of the products referred to in paragraph 2 of Section B and C above, and who are not classified as a sophisticated customer, we will write to you and set out in general terms any potential failings and invite you to respond if you would like us to review our sale of the relevant product. For those TBLs which have comparable features to a Structured Collar, we will consider redress as referred to in Section C numbered paragraph 1 of this letter. If your product is a Cap or a relevant TBL exhibiting comparable features to a Cap, we will only review your case on receipt of a complaint from you about the sale of the product. Details of the address to which complaints should be addressed are set out in section H of this letter. We will be reviewing all of the affected products in the manner described above, as sold since 1 December 2001, including all cases that have previously been referred to the Financial Ombudsman Service or have been considered by us following a complaint from you. Those customers who are experiencing financial difficulties will be reviewed first. We will not be foreclosing on any affected customers until the review is completed unless, by exception, we need to foreclose to preserve the value in your business or you consent to us doing so. ## E. Overview of our Decisions. We have agreed with the FSA that all of our decisions under sections B1, B2 and B3 (including whether we regard you as meeting the sophisticated customer criteria) will be reviewed individually by an independent person/firm who has the necessary skill and expertise to ensure that we are acting fairly and in accordance with our agreement with the FSA. This person/firm is known as a “Skilled Person” and their appointment has been approved by the FSA. The firm appointed for this purpose is the law firm Berwin Leighton Paisner LLP. The FSA has issued guidance on the role of the independent reviewer and published it on the FSA web site. We have also appointed Berwin Leighton Paisner LLP to act as independent reviewer of sales of Tailored Business Loans (TBLs) covered under sections C1, C2 and C3 above. Although the review of Tailored Business Loans falls outside the scope of the agreement with the FSA referred to above, we are committed to ensuring that sales of Tailored Business Loans are reviewed applying the same approach and principles (so far as they apply to these products) to ensure fair and reasonable outcomes for our customers. This will ensure that all aspects of the Bank review, including the level of any appropriate redress to be provided to customers, are independently assessed and are consistent across the whole process. ## F. Further Information. The FSA has issued a statement dealing with the issue (as it affects Clydesdale Bank in respect of sections B1, B2, B3). This can be found on the FSA web site. It has also issued a helpful Questions and Answers publication, including a glossary of terms that is regularly updated which refers to the element of the review explained in Section C. This is also available from its web site. If you are unable to access the documents via these web sites please let us know and we will provide you with paper copies. ## G. Claims Management Companies. There are claims management companies who may offer to submit your complaint to the bank or the Financial Ombudsman Service (FOS). However, they will charge for using their services and this could involve the payment of a  significant fee to a claims management company (relative to the amount of any redress received). You do not need to use a claims management company because the process is straightforward. ## H. Complaints. Our agreement to review these products does not affect your right to complain. If you fall within the definition of a sophisticated customer or are a customer with a product not included in the review your right to complain about the sale of a product remains. Such complaints should be addressed to: Customer Engagement, 4th Floor, 40 St Vincent Place, Glasgow, G1 2HL. ## Appendix 1: Full list of products falling within scope of the review as categorised A, B and C for both Interest Rate Hedging Products (Standalone) and Tailored Business Loans (TBLs) *Hedging Product FSA Category Product Category - Product Name* Standalone A Structured Collar Ladder Swap A Structured Collar Pivot Swap A Structured Collar Window Swap B Collar Collar B Swap Callable Swap B Swap Extendable swap B Swap Swap B Swap Swaption C Cap Cap Tailored Business Loan A Structured Collar Discounted Fixed Range Rate Loan A Structured Collar Fixed Trigger Rate Loan A Structured Collar Flexible Drawdown Participating Fixed Rate Loan A Structured Collar Modified Participating Fixed Rate Loan A Structured Collar Participating Fixed Rate Loan B Collar Range Rate Loan B Swap Convertible Floating Rate Loan B Swap Discounted Fixed Rate Loan B Swap Fixed Rate Flexible Maturity Loan B Swap Flexible Drawdown Fixed Rate Loan B Swap Ratchet Rate Loan C Cap Capped Rate Loan [PDF DOWNLOAD](https://lexlaw.co.uk/wp-content/uploads/2012/12/121012-clydesdale-interest-rate-hedging-products-customer-communication.pdf) --- # Inheritance Tax: past, present and future Source: https://lexlaw.co.uk/solicitors-london/inheritance-tax-past-present-and-future/ This article is for general information only. Nothing in this article will be deemed to be or constitute legal advice. LEXLAW cannot accept responsibility for any loss or damage suffered as a result of acts or omissions based on this article. # 1 Introduction This article considers Inheritance tax (henceforth IHT). There are three main sections: firstly considering the objectives of the tax within the UK taxation system, secondly explaining the operation of the Inhertiance Tax Act 1984 (henceforth IHTA) and thirdly discussing whether IHTA represents a fair method of achieving the objectives identified. # 2 Objectives of IHT ## 2.1 Theoretical basis of taxation[i] That there must be taxes is widely accepted. The principle is clear:  that monies must be collected by the state for the financing of things beneficial to society generally.[[ii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn2)  Views differ as to the overall *level* of taxation which is appropriate (which does not concern us here) and also as to the fairest and most efficient *basis* for taxation:  how should the tax burden be distributed across society? ### 2.1.1 Ability to pay It is frequently agreed that taxes should fall most heavily upon those best able to pay them. This is true partly for pragmatic reasons, but also from a sense that it is only fair that those who are able to shoulder a greater share of the burden should do so.[[iii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn3) ### 2.1.2 Social engineering Taxation is not only used as a means of collecting necessary revenue, but also as a tool of social engineering. This is exemplified by high taxes on goods which are seen as having socially or environmentally negative consequences, such as alcohol, tobacco and petrol.  It can also take the more radical form of suggesting that taxation should aim for a redistribution of wealth from the rich to the poor, in the interests of creating a more equal society.[[iv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn4)  Similarly, there is also an argument that taxation ought *not* to distort the operation of the market since this may encourage economic inefficiency.[[v]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn5) ### 2.1.3 Collectibility Finally, but importantly, there may be pragmatic reasons for preferring one tax to another. A tax which is impossible to collect is useless, no matter how justified in principle, and, more generally, it is important to keep collection costs as low as possible.[[vi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn6) ## 2.2 Taxes on inheritance We may now ask, “Why tax on death?” Reasons can be identified in all three of the above categories (2.1.1-2.1.3). Firstly, a person who dies has no further use for their wealth and is therefore well able to afford the tax. The legatees also, having received a gain at no expense, can afford a portion being paid for the general good. Secondly, the case for redistribution may be at its strongest with respect to inherited wealth, because, while allowing individuals to *accumulate* wealth can encourage industry, creativity and investment, allowing individuals to *inherit* wealth may have the opposite effect;[[vii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn7) there is also a visceral sense of unfairness that some should be immensely wealthy by the accident of their birth. Thirdly, IHT is fairly easy to collect.  The estate must be valued in any case for administration.  The collection cost per pound collected in 2008/9 was 0.99p, slightly cheaper than income tax, which cost 1.24p per pound to collect, although more expensive than most other direct taxes.[[viii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn8) Nevertheless, tax on inheritance is not inevitable. For instance, Australia and Canada replace it with a capital gains tax on death.[[ix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn9)  Some of the many suggested alternatives will be discussed at 4.2 below. ## 2.3 Historical development of IHT To understand IHT as it now is, it is essential to understand the historical background. ### 2.3.1 Estate Duty In 1894 Estate Duty was introduced as a tax on property passing either by will or on intestacy. It later expanded to catch certain gifts made in the period preceding death (as an anti-avoidance measure), and by 1974 it included gifts made up to seven years before death.  By the 1970s it was widely condemned as being “voluntary”.[[x]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn10) ### 2.3.2 Captial Transfer Tax The Labour government of 1974 was elected on a platform of wealth redistribution, and they proposed to introduce a wealth tax.  However, as Healey, the Labour Chancellor of the Exchequer, later admitted, “I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and the political hassle.”[[xi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn11)  A Capital Transfer Tax (henceforth CTT) was nevertheless introduced as a first stage in 1974, the intention being to prevent wealth transfers from operating to avoid the proposed wealth tax.[[xii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn12)  CTT replaced the old Estate Duty with a tax on all transfers of capital, calculated on a cumulative and progressive basis over all gifts made either during life or on death.[[xiii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn13) ### 2.3.3 Inheritance Tax In 1979, a Conservative government returned to power, and the principles unlying CTT were gradually eroded, so that the Finance Act 1986 (henceforth FA 1986), which introduced the name “Inheritance Tax”, merely completed the process. The thresholds were raised, exemptions were introduced and the cumulation period was reduced from life first to ten and then to seven years. Rules were introduced (as with Estate Duty) to prevent the avoidance of the tax by “preservation of benefit”. The result has been described as having, “The form of CTT, but more the substance of estate duty,”[[xiv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn14) and also, less charitably, as, “Simply a mess.”[[xv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn15) It is certainly true that CTT had been widely criticised[[xvi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn16) and, while in opposition, Thatcher had indicated an intention to repeal it altogether.[[xvii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn17) It is also true that, the proposed wealth tax having lapsed, there was no need for the associated anti-avoidance measure. It is less clear why CTT should be replaced by a replication of the discredited estate duty, which also preserves most of the faults identified in CTT. One contemporary suggested that the reason for this reform was to encourage generosity in making life-time gifts,[[xviii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn18) but it is possible to suspect that another contemporary may have been right to describe it as merely “a shabby hand-out to the very rich.”[[xix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn19) The process has been called, “A game of perceptions as much as reality,”[[xx]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn20) and it is possible that the government wished to emasculate CTT, without, for political reasons, being seen to allow unearned inheritances to escape taxation. # 3 Operation of IHT ## 3.1 Overview FA 1986 amended the Capital Transfer Tax Act 1984, including changing its name to the Inheritance Tax Act 1984.[[xxi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn21) This section of the essay consists of an explanation of the operation of IHTA, as amended. A full description of the Act fills a weighty tome[[xxii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn22), and this article focuses mainly on the core charging provisions, ss1-7. ## 3.2 Transfers of value s.1 IHTA provides that tax shall be charged on the value transferred by a “chargeable transfer”. Immediately the “form of CTT” is apparent:  the structure of the Act is to include *all* transfers, then later to potentially exempt those made *inter vivos*.[[xxiii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn23)  s2 defines a “chargeable transfer” as being any “transfer of value” which is not exempt.[[xxiv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn24) s.3 explains what is meant “transfer of value”: this occurs whenever a disposition takes place which reduces the value of the estate.[[xxv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn25) The value of the transfer is the amount by which it diminishes the value of the estate,[[xxvi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn26) rather than the amount by which it enriches the recipient. ### Examples - If A gives B £10,000, then A has made a transfer of value of £10,000.- If A sells B a piece of land worth £30,000 at a cost of £20,000 then A has *prima facie *made a transfer of value of £10,000, although see below for commercial transactions.- If A gratuitously grants B an easement over A’s land which reduces the value of that land by £10,000, then A has made a transfer of value of £10,000.- If A has a set of four paintings, such that the paintings separately are worth £5,000 each but taken as a set are worth £25,000, and A gives one painting to B, then since A’s three remaining paintings are worth only £15,000, A has made a transfer of value of £10,000. ## 3.3 Commercial transactions s10 IHTA effectively excludes commercial transactions from being transfers of value, so the fact that the tax-payer has struck a bad bargain does not create an IHT liability.  If the transaction was made, “At arm’s length between persons not connected with each other,”[[xxvii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn27) then it is sufficient to show that it was not intended to confer a gratuitous benefit. Between connected persons, it is also necessary to show that the transaction is such as might be expected to arise at arm’s length;[[xxviii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn28) that is to say that it is a reasonable commercial transaction which might have taken place between strangers.[[xxix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn29) Connected persons are defined in s270 IHTA and s286 of the Taxation of Chargeable Gains Act 1992 and comprise relatives, trustees, partners and certain close companies. ## 3.4 Potentially exempt transfers s3A was inserted by FA 1986 (sch 19 para 1), and it is this section which achieves the “substance of estate duty” by exempting *inter vivos *gifts, provided that the donor survives the gift by at least seven years.  Hence these transfers are “potentially exempt”, and are known as “potentially exempt transfers” or PETs.  s3A(4) provides that a PET made more than seven years before the death of the transferor is an exempt transfer and any other PET is a chargeable transfer.  s3A(5) provides that a PET shall be treated as an exempt transfer until the death of the transferor should prove it to be chargeable.  Therefore, in particular, no IHT will be payable on the PET unless and until the transferor dies within the seven year period following the transfer.  The effect of this is that only in very limited circumstances is IHT payable *inter vivos*; IHT liability nearly always arises on the tax-payer’s death, as if it were an estate duty. For a transfer to be a PET it must satisfy the three conditions in paragraphs (a)-(c) of s3A(1).  Firstly, the transfer must be made on or after 18th March 1986, when the new provisions took effect, so that transfers which had already attracted a tax liability could not become retrospectively exempt.  Secondly, the transfer must be one which would otherwise be chargeable.  Thirdly, the transfer must either be a gift to an individual or a gift to a bereaved minor’s trust or a disabled trust. Clearly the third of these conditions (in s3A(1)(c)) is the one which will most concern the tax-payer.  Under s3A(2), for a transfer to count as a gift to an individual, it must increase the value of that individual’s estate, either directly or indirectly.  Further, under s49, a person with an interest in possession under a trust is treated as beneficially entitled to the property, so that the creation of a trust will count as a gift to an individual, provided that somebody has an interest in possession under the trust.  Therefore the only category of transfers likely to be immediately chargeable are those which create a trust without interest in possession.  However, s3A(1)(c) goes on to include two particular trusts without interest in possession: bereaved minors’ trusts (see s71A) and disabled trusts (see s89).  Both of these are intended to cover cases where the effect of a gift to an individual is intended, but, because that individual lacks legal capacity, a direct gift would be inappropriate.  Prior to 22nd March 2006, gifts to accumulation and maintenance trusts were PETs, and it was often possible to draft trusts so that they would fall within this provision.  However, most trusts without an interest in possession will now give rise to an immediate charge to IHT (subject to the availability of the nil rate band). ### Examples (ignoring the effect of Part II exemptions) - A gives B £10,000.  This will be a PET of £10,000.- A pays B’s hospital bill of £10,000.  This is a PET of £10,000.  Although the property does not become part of B’s estate, the value of B’s estate is increased because the debt is paid.- A buys B a holiday for £10,000.  This is a chargeable transfer of £10,000.  The value of A’s estate has been diministed, so it falls within s3, but the value of B’s estate is not increased, so the transfer is not a PET.  If it were desired to make the transaction potentially exempt, a gift of £10,000 should be made to B, who can then use it to buy a holiday.- A gives B one of a set of four paintings with an individual value of £5,000, but worth £25,000 as a set.  This is a PET of £10,000.  Even though the value of B’s estate has only been increased by £5,000, the whole transfer is potentially exempt.- A settles £10,000 on trust to B for life, remainder to C.  This is a PET of £10,000.  The trust property is treated under s49 as being part of B’s estate.  If B surrenders his life interest, he would make a futher PET of £10,000 to C. ## 3.5 Death s4 IHTA provides that on a person’s death, IHT shall be charged *as if* he had made a transfer of the entire value of his estate immediately before death.  Here the contrast between form and substance is at its most acute, because an Act, the effect of which is to tax estates, achieves this effect by treating the property passing on death as if it were an *inter vivos* transfer, while simultaneously excluding most actual *inter vivos* transfers by the operation of s3A. ### 3.5.1 Meaning of estate Under s5(1), a person’s estate includes all property to which he was beneficially entitled immediately before death.  This also includes property in which he had a life interest.[[xxx]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn30)  Because the estate is calculated immediately *before* death it includes property which passes automatically at the moment of death under the *jus accrescendi*, such as an interest under a joint tenancy.  Certain property is excluded from the estate under s6, notably property outside the UK held by an individual domiciled outside the UK. ### 3.5.2 Gifts with reservation s102 FA 1986 was introduced to stop the taxpayer from continuing to benefit from an asset after giving it away.  It applies whenever property is disposed of by gift but the donor continues to enjoy some benefit of that property; this is called a “gift with reservation”.  Under s102(3) FA 1986, such property shall be treated as if the taxpayer was beneficially entitled to it immediately before death.  It is therefore included in the taxpayer’s estate and liable to IHT on death. Despite this section, some schemes (such as ‘double trusts’) remain effective in causing an asset (often the family home) to be substantially transferred for IHT purposes while the donor continues to benefit from the asset (by living in it).  For this reason, the ‘pre-owned assets’ regime was introduced, under which a charge to Income Tax arises when a person benefits from an asset that they previously owned but the asset is *not* caught by the gifts with reservation rule.  Tax payers and their advisors should be alert to this potential liability, which in most cases makes such schemes unattractive. ### 3.5.3 Effect of death on PETs At death, all the PETs in the previous seven years become chargeable transfers under s3A(4). ### 3.5.4 Valuation of estate The estate is valued according to part VI of the Act, ss160-198.  The basic rule[[xxxi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn31) is that the estate will be given the value that it would fetch on the open market, without any reduction being made for the whole property’s being placed on the market at the same time.  It should also be noted that s171 provides that any changes in value which occur by reason of death shall be treated as if they had occurred before death.  For instance, a life assurance policy shall be valued at its maturity value rather than its surrender value. ## 3.6 Exemptions and reliefs It will be recalled that a chargeable transfer is defined by s2 IHTA to be any transfer of value which is not an exempt transfer.  Exempt transfers are defined in Part II IHTA, ss18-42.  There are also some transfers which are chargeable but which qualify for a full or partial relief reducing the value deemed to have been transferred.  These reliefs are described in Part V IHTA, ss103-159.  In an article of this length, it is only possible to outline the main categories of exemptions and reliefs. ### 3.6.1 Exemptions Under s18, transfers between spouses or civil partners are exempt.  Under s19, transfers of value up to £3,000 in any one year are exempt.  Moreover, this allowance can be rolled-over for one year only.  Therefore, if *no* transfers of value have been made in one year, then up to £6,000 is exempt the following year.  Small gifts of up to £250 to any one person in any one year are exempt under s20.  Under s21, a gift is exempt if it is part of the transferor’s normal expenditure paid out of his income, leaving him with sufficient income to maintain his customary standard of living.  Thus, a regular payment of £1,000 a year, out of income, to each of one’s grandchildren, would be exempt (provided that sufficient income was left to maintain one’s standard of living).  Under s22, wedding presents are exempt up to £5,000 for parents, £2,500 for remoter ancestors and £1,000 for others.  Under s23 gifts to charities are exempt.  Of these exemptions, only the spouse exemption and the charity exemption are applicable on death. Note that these exemptions can be cumulated, so that if a couple’s child was getting married, and neither parent had used any of their annual exemption allowance in the previous year, each parent could give a total of £11,250 to the child outside the IHT regime, giving a reasonably substantial combined total of £23,000. ### 3.6.2 Dispositions for maintencance of family It should also be mentioned here that under s11, dispositions for the maintenance of one’s spouse or civil partner or children (up to the age of 18 or in full time education) are not transfers of value at all.  Therefore they are not strictly speaking exempt transfers, but the effect is much the same.  Again, this only applies *inter vivos*. ### 3.6.3 Reliefs The most important reliefs are those on business (ss 103-114) and agricultural (ss115-124) property.  These reliefs apply to reduce the value deemed to be transferred by either 50% or 100%. ## 3.7 Tax payable Tax is payable on chargeable transfers at the rates indicated in sch 1 IHTA:  0% for the first £325,000 (in 2012/13) and 40% thereafter.  The threshold is generally increased from year to year, although it has remained at the current level since April 2009.  Under s7(1)(b), the total value transferred in the seven years up to and including the transfer must be cumulated to find the applicable rate. ### 3.7.1 Tax payable on death This means that, on death, it is necessary to consider all transfers of value made in the previous seven years.  These will usually have been PETs at the time they were made, but will now have become chargeable and tax will be due.  For each of these transfers it is first necessary to apply any applicable exemptions or reliefs to determine the value which falls to be taxed.  If there have been no chargeable life-time transfers (as will frequently be the case), the whole of the nil-rate band will be available at the start of the seven year period.  The nil-rate band will be applied first to the earliest transfers, and once it is used up, the subsequent transfers will fall to be taxed at the 40% rate. ### Example A transfers £100,000 to B in each of 2000 and 2008 and dies in 2010 leaving the whole of his free estate (worth £300,000) to B.  A was joint tenant with his wife (who suvives him) of the family home, in which A’s interest was worth £500,000. s3A applies to the transfers made in 2000 and 2008, as they were gifts to an individual:  they were both PETs.  Since A died in 2010, the 2000 PET is an exempt transfer and the 2008 PET is a chargeable transfer.  The s19 annual exemption is applicable and can be rolled over from 2007, so £6,000 of the transfer is exempt.  Therefore the 2008 transfer is a chargeable transfer of £94,000. Under s4, A is deemed to have made a transfer of value of £800,000 immediately before his death.  The annual exemption is not available here, as it only applies to *inter vivos* transfers.[[xxxii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn32)  However, the s18 spouse exemption is available, so the £500,000 interest in the house, passing by survivorship to A’s wife, is exempt.  Therefore A makes a chargeable transfer of £300,000 in 2010. For 2008 the whole of the nil-rate band is available.  The whole £94,000 will be taxed at 0% so no tax is payable on this transfer.  For 2010, £231,000 of the nil-rate band remains.  The first £231,000 of the transfer is taxed at 0% and the other £69,000 at 40%.  Therefore IHT of £27,600 is payable.  This will be paid by A’s executors before handing over the remaining £272,400 to B. ### 3.7.2 Taper relief s7(4) IHTA provides for “taper relief” on transfers made more than three but less than seven years before death.  The longer the transferor survives the transfer, the greater the relief available: between three and four years, tax is charged at 80% of the normal rate; between four and five years, 60%; between five and six years, 40%; and between six and seven years, 20%.  The effect is that the potential tax liability of a transfer gradually reduces as the transferor gets older, presumably on the basis that a small difference in time should not result in an enormous difference in the tax due. ### 3.7.3 Chargeable life-time transfers s7(2) IHTA applies to *inter vivos* transfers which are chargeable at the time.  As explained at 3.4, the only significant life-time transfers which are not potentially exempt are transfers to trusts with no interest in possession.  Such transfers are taxed at half the rates in sch 1, subject to the usual exemptions and reliefs and the seven year cumulation period.  If the settlor dies within seven years of the transfer, then tax must be recalculated on the basis outlined above, and extra tax may be payable.  However, s7(5) ensures that tax will never be repaid.  Discretionary trusts also attract 10-year and exit charges, but space does not permit any discussion of these.  However, it may be noted that the 10-year and exit charges are not large, and the benefits of a trust structure in some cases will outweigh these costs. ### Example A gives £100,000 to B in 2005 and settles £500,000 as a discretionary trust in April 2007 (the trustees to pay the IHT), before dying in June 2010. In 2007, A is still alive and so the 2005 transfer is treated as being exempt (s3A(5)).  Therefore the whole of the nil-rate band is available.  Also, the annual exemptions for 1996 and 1997 can be used, so A has made a chargeable transfer of £494,000.  The first £325,000 is taxed at 0% and the remaining £169,000 is taxed at 20% (half of 40%), so the tax payable by the trustees in 2007 is £33,800. When A dies in 2010, the tax must be recalculated.  The 2005 PET now becomes chargeable; taking into account the annual exemption, the value is £94,000.  This falls within the nil-rate band and no tax is payable on this transfer.  Now only £231,000 of the nil-rate band remains for 2007.  Taper relief applies: since the transfer was between three and four years before death, tax is charged at 80% of the sch 1 rates.  The first £231,000 of the £494,000 transfer is taxed at 0% and the remaining £263,000 is taxed at 80% of 40%, which is 32%, giving a tax liability of £84,160.  This is greater than the £33,800 originally paid, so the surplus of £50,360 must now be paid by the trustees. ### 3.7.4 Transfer of nil-rate band between spouses and civil partners Since 9th October 2007, it has been possible for the surviving spouse or civil partner to benefit from any unused part of the nil-rate band of the first to die.  This generally obviates the need for schemes intended to ensure the maximum use of both nil-rate bands (such as nil-rate band trusts).  The value of the carried over nil-rate band will be the relevant proportion of the nil-rate band at the time of the second death.  It is possible that the nil-rate band may increase significantly within the next few years, as it was proposed in the last Conservative manifesto to raise the threshold to £1 million, although it must be said that little has been heard of this policy since.  If such a rise were to take place, it would be advantageous to reserve as much as possible of the first nil-rate band for the second death. ## 3.8 Who pays? Liability to pay IHT is allocated by Part VII of the Act (ss199-214).  The basic rule on death[[xxxiii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn33) is that the personal representatives pay the IHT associated with the tax-payer’s free estate and also on property passing by survivorship, the trustees pay the IHT associated with trust property, and donees of PETs which have become chargeable pay their associated IHT.  The transferor is liabile for the IHT due on chargeable life-time transfers[[xxxiv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn34), although often the burden will be shifted to the recipient trustees. # 4 Does IHTA represent a fair way of achieving the objective of IHT? ## 4.1 Problems with IHT This article began by identifying the fundamental purpose of taxation as being to collect revenue.  One of the problems with the old estate duty was that the tax was too easy to avoid.  In this respect IHT is no improvement.  In the last year of estate duty, that tax contributed 2.38% to inland revenue receipts (down from 29% in 1908/1909).[[xxxv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn35)  In 2011-2012, IHT contributed only 0.7% of the government’s total tax income.[[xxxvi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn36)  This continued poor rate of return is unsurprising, given the marked practical similarities between estate duty and IHT.  It remains “a voluntary tax imposed only on those who [are] unlucky and [die] young or [are] too greedy to part with capital before old age.”[[xxxvii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn37) Sandford has also pointed out that IHT favours the very rich, who are best able to make gifts relatively early in life, and that the tax imposed on those unlucky enough to die young is a tax which affects those beneficiaries who are less able to afford it, since they may have lost the family’s main earner.[[xxxviii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn38)  The tax therefore fails to satisfy the equity principle mentioned at 2.1.1. Looking at the more detailed provisions, it is unclear why the nil-rate band should be so vast.  In effect, this excludes the vast majority of estates from taxation.  Income tax is payable on annual income above £4,895; why should a person inheriting a £325,000 estate escape taxation entirely?  The merits of the agricultural and business reliefs may also be questioned.  The intention is to prevent the family business or farm from having to be sold to meet the IHT liability, but it is unclear why such continuity is in the national interest.[[xxxix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn39) It has also been pointed out[[xl]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn40) that IHT, as a tax on transferors, is not in logical alignment with income tax and capital gains tax, which are taxes on receipts. ## 4.2 Proposals for reform Various suggestions for reform have been made.[[xli]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn41)  The simplest reform (favoured by Kerridge) would be to abolish IHT altogether.  Given the low level of receipts, this is perfectly practical.  Such a tax cut might be unpopular (although the reaction to the Conservatives’ 2007 proposals suggests the opposite), as benefitting only the rich, but it could also be combined with a reimposition of capital gains tax on death, since it is hardly logical that *inter vivos* gifts are treated less favourably for captial gains tax purposes.  A contrasting possibility suggested by Goodhart is to tax gifts as income.  As he says, “Receipts from inheritances are just as much an addition to resources—and hence to taxable capacity—as receipts from employment.”[[xlii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn42)  This proposal has a certain logic in its favour and it cannot be doubted that it would very considerably increase tax receipts.  Unfortunately, this very fact is likely to render it politically unacceptable.  A less radical proposal would be to have a true inheritance tax, charged on the cumulative amount received by beneficiaries over their lifetimes.  Unfortunately, while this has been proposed in the past, it has always proved too difficult to implement.[[xliii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_edn43)  Finally, a wealth tax might be introduced, although this proved too difficult a task in the 1970s. # 5 Conclusion It is hard to see anything like logic in the IHTA.  This could be justified if the tax were a success on pragmatic grounds, but it is not.  It is neither fair nor efficient.  While there would be considerable practical difficulties in administering either a wealth or an acquisitions tax, the proposals to tax inherited wealth either as income or as a realised capital gain pose no greater practical problems than the present system, with much greater logic.  Of these, the latter is far more likely to prove acceptable to the public. [[i]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref1) *Cf.* *Revenue Law: Principles and Practice*, chap 1. [[ii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref2) Tiley (2000), 1.2.1. [[iii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref3) Dobris (1984), 366. [[iv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref4) *Ibid.*, 364. [[v]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref5) Tiley (2000), 1.3.3. [[vi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref6) *Ibid.*, 1.3.5. [[vii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref7) Dobris (1984), ??. l[viii] *Revenue Law: Principles and Practice*, 7. [[ix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref9) Tiley (2000), 1134. [[x]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref10) *Revenue Law:  Principles and Practice*, 459. [[xi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref11) Quoted in Tiley (2000), 1136, n8. [[xii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref12) Williams (1986), 429. [[xiii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref13) *Revenue Law:  Principles and Practice*, 459. [[xiv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref14) Kerridge (1999), 351. [[xv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref15) *Revenue Law:  Principles and Practice, *460. [[xvi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref16) The arguments are summarised in Dobris (1984). [[xvii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref17) Sandford (1986), 140. [[xviii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref18) Williams (1986), 429. [[xix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref19) Sandford, quoted in *Revenue Law:  Principles and Practice*, 460. [[xx]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref20) Dobris (1984), 377. [[xxi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref21) s100 FA 1986. [[xxii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref22) McCutcheon (2004). [[xxiii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref23) See 3.4. [[xxiv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref24) See 3.6 for exemptions. [[xxv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref25) See 3.5.4 for the valuation of the estate. [[xxvi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref26) s3(1) IHTA. [[xxvii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref27) s10(1)(a) IHTA. [[xxviii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref28) s10(1)(b) IHTA. [[xxix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref29) *Revenue Law:  Principle and Practice*, 463. [[xxx]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref30) s49 IHTA. [[xxxi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref31) s160 IHTA. [[xxxii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref32) s19(5) IHTA. [[xxxiii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref33) s200 IHTA. [[xxxiv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref34) s199 IHTA. [[xxxv]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref35) Goodhart (1988), 473. [[xxxvi]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref36) *HM Revenue and Customs receipts, ONS* [[xxxvii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref37) Goodhart (1988), 473. [[xxxviii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref38) Sandford (1986), 142. [[xxxix]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref39) Goodhart (1988), 477. [[xl]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref40) Kerridge (1999), 355. [[xli]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref41) Dobris (1984), Goodhart (1988), Kerridge (1999). [[xlii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref42) Goodhart (1988), 479. [[xliii]](file://diskstation/home/CloudStation/LEXWORK/!ADMIN/LEXTEAM/RDJ/Estate%20planning.docx#_ednref43) *Revenue Law:  Principles and Practice*, 459. --- # Consequences of the abuse of process of early advertisement of Winding-up Petitions Source: https://lexlaw.co.uk/solicitors-london/abuse-of-process-by-early-advertisement-of-winding-up-petitions/ Insolvency Rules 4.11 provides that once a Winding-up Petition has been presented, it must be advertised in the London Gazette.  Advertisement must take place within a certain window: it must be no sooner than 7 business days after service on the company and no later than 7 business days before the date appointed for the hearing.  The reason behind this rule is to allow the company a certain grace period after presentation, while ensuring that all creditors are made aware of the hearing, giving them the opportunity to file Notices of Appearance, stating whether they support or oppose the winding up.  Banks keep a careful eye on the Gazette, and bank accounts will invariably be frozen following advertisement, which can have a dire effect even on an otherwise solvent company. Under Rule 4.11(5), the Court has a discretionary power to dismiss a petition which has not been advertised in accordance with the Rule, and this includes the case where the petition has been advertised too early.  In *Re Signland Ltd* [1982] 2 All ER 609, Slade J held that the purpose of the grace period was to allow the company time either to pay the debt (if it was admitted) or apply for the petition to be struck out (if it was disputed), to which may be added that the company may also wish to apply for a validation order under s127 of the Insolvency Act 1986 or for an injunction restraining advertisement.  Slade J held that aggravating factors included where the breach was blatant, as when advertisement was before service on the company, or where the breach was deliberate.  It should be noted, however, that in the *Signland* case itself, although Slade J found that the breach was such as to justify striking out the petition, he did not do so, as another creditor successfully applied to be substituted. A notification otherwise than by advertisement in the Gazette is outside the scope of Rule 4.11(5) (*Secretary of State for Trade and Industry v North West Holdings plc* [1999] 1 BCLC 425).  However, it has been held that publicising the petition before advertisement according to the Rule is a breach of the spirit of the rules (*Re FSA Business Software Ltd *[1990] BCC 465) and it can be struck out as an abuse of process.  In particular, in *Re Bill Hennessey Associates Ltd *[1992] BCC 386, a petition was struck out after it was faxed to the company’s bank on the same day as it was served on the company. In a recent case in which LEXLAW was instructed (*Re A Company (2012**) *unreported), the petitioner faxed a copy of the petition to the company’s bank before service on the company.  However, *Bill Hennessey *was not followed, despite the similar facts.  Arnold J held that the company had no reasonable prospect of opposing the petition, and thus had suffered no prejudice from the early advertisement.  Since the early notification was deliberate (albeit well-intentioned) and was before service, both of the aggravating factors mentioned in *Signland* applied, and with great respect for the learned judge, it may be doubted whether this decision gives effect to the policy of the rules.  If early notification will be winked at simply because the petition itself is good, the procedural requirement would seem to be of little effect. It was at least some consolation to the company that the petitioning creditor was penalised in costs for it's abuse of the process of advertisement. --- # Probate disputes where there is a contest over wills Source: https://lexlaw.co.uk/solicitors-london/probate-disputes-where-there-is-a-contest-over-wills/ It is not uncommon for a person to make more than one will in their lifetime. Unsurprisingly, disputes often arise where a person has made more than one will. In these circumstances the court has the unenviable task of deciding the contest over which will is valid. We examine the circumstances in which the problem may arise, a recent case example and what ought to be done to avoid probate disputes. ## Why would a testator leave more than one will? The main reason why the person who has died (the testator) may have left more than one will is due to the fact that their financial circumstances had changed during their lifetime. Another reason may be that the person had changed the beneficiaries of their will for example due to them having a falling out with a particular beneficiary. It is the latter circumstance which generally creates more contention about which will is valid. There are those who may have assets in various countries and may have a will in each country to deal with the assets in that particular country. In these circumstances the will should state clearly and in no uncertain terms that the will relates to the assets in a particular jurisdiction. However, what is the position, if someone has two wills, made at different times, in two different countries, with different beneficiaries? ## Disputed wills: Carmen Curati -v- Sylvana Perdoni The recent case of *Carmen Curati -v- Sylvana Perdoni [2012] EWCA Civ 1381* gave an indication of how the courts would deal with the situation where two wills competed over the disposition of an estate.* *The case concerned a will made by the deceased multi-millionaire, Piero Curati (Pierluigi Curati), in England in 1980 and a second subsequent will made in Italy in 1994. Here the 1980 will stated that the deceased's wife would be the sole beneficiary, however if the wife predeceased her husband (which in this case did happen) then the deceased's niece and nephew would benefit from the deceased's estate. The 1994 will was a short will which stated that the wife would be the sole heir. However as the wife died before her husband, and if the 1994 was held to be valid then, the rules of intestacy came into force, which meant (under both English law and Italian Law) that the husband's sister, who lived in Italy would be the beneficiary. It seems that the 1994 will was ambiguous to say the least, as it made no mention of the effect of previous wills, nor did not it point to which assets the will included and it failed to indicate which law should govern the will. The court was therefore faced with the following two main issues: - Whether the 1994 will revoked the 1980 will; and- Whether the 1994 will should be governed by Italian law or English Law In relation to revocation the court explored potential hypotheses about the deceased intention by the creation of the second will. The court concluded that there was nothing to suggest that the 1994 will revoked the 1980 will. Here the court applied a high threshold using the cases of *Dempsey -v- Lawson [1877] * and *Re Hawksley's Settlements, Black -v- Tidy [1934]. *The court came to the view that even theses cases where there was clear indication that earlier wills were to be revoked or 'cancelled', the earlier wills were still held to be valid to some degree, then it could not possibly conclude that the 1980 will had been revoked in its entirety. Dealing with the governing law, the court applied the law which that "the construction of a will is governed by the law intended by the testator". The law considers whether the will is of movables or immovables and will consider the domicile of the testator as the time of the execution of the will. Bringing us back to the case in question, the courts concluded that the fact that it was made in Italian by an Italian citizen and was made in Italy did not in itself give rise to the fact that that Italian law should be applied. ## Avoiding a probate dispute or contest This case highlights the obvious need for what can be referred to as the '3Cs'  of will writing (clarity, certainty and  careful consideration). The '3Cs' should be used when testators are preparing their wills, especially if they have more than one will in different countries. Lawyers often explain to their clients, (when drafting wills or other agreements for that matter) that not every eventuality can be foreseen and therefore not every eventuality can be accounted for. However, careful consideration should be given when new wills are being drafted for the same person; the effect of earlier will(s) must be carefully considered in further detail before the testator makes another will. This process inevitably leads to less disputes in relation to which will is valid. Furthermore, the '3Cs' will assist personal representatives when they are carrying out their duties and ensure that the deceased's intentions are complied with. --- # BBA Announcement on Major Banks’ Swaps Payment Suspension Policy Source: https://lexlaw.co.uk/solicitors-london/bba-announcement-on-major-banks-swaps-payment-suspension-policy/ The British Bankers' Association (the "BBA"), a trade association for the UK banking and financial services sector, has announced a policy for 'Major Banks' which suggests such banks will consider rolling over swap payments pending a swaps mis-selling complaint or review. This is certainly contrary to the past experience of this firm which has regularly seen (i) that clients who have requested a suspension of swaps payments have always been rejected by the banks without any evidence of reasoned careful thought or consideration and (ii) have only been able to stop swap payments by a declaration of rescission and change of banks (resulting in payments being added as an overdraft). We shall be writing to the 'Major Banks' in due course (on behalf of individual clients) asking them to confirm this BBA press release is a statement of their own bank policy and whether they will suspend payments where clients have suffered financial distress which would continue or be exacerbated if payments were not suspended. The full text of the BBA press release dated 11 December 2012 follows: ## Interest Rate Swaps: Businesses in Financial Distress (major banks review process) Businesses with interest rate swap arrangements which consider themselves to be in financial distress should contact their bank to discuss the situation. The banks will review and consider each case carefully, and on a case by case basis, where the bank determines financial distress to be present in relation to meeting ongoing swap payments, the bank, will, at the customers request, suspend the collection of swap payments pending the outcome of the formal review by the independent skilled person being conducted in conjunction with the Financial Services Authority (FSA). In these circumstances when the bank agrees with the business to suspend swap debit payments from the business account, the suspension of payment does not constitute any acknowledgement of wrong doing on the part of the bank and the bank will reserve all its rights including with respect to the suspended payments and/or any other defaults. The banks remain committed to addressing the Interest Rate Swap review as quickly and as fairly as possible with businesses and are working closely and cooperatively with the FSA and the skilled independent reviewers appointed by the FSA to do so‪. Source: http://www.bba.org.uk/media/article/interest-rate-swaps-businesses-in-financial-distress-major-banks-review-pro --- # Property Fraud: Breach of trust claims against solicitors Source: https://lexlaw.co.uk/solicitors-london/property-fraud-breach-of-trust-claims-against-solicitors/ There have been a spate of recent cases where conveyancing solicitors acting for lenders may have been honest but these solicitors' actions resulted in loss of monies through fraud. When a lender and/or borrower suffers losses on residential or commercial loan transactions, a claim often follows against the lender’s professional solicitor conveyancers. The Court of Appeal have just handed down judgment in [Davisons Solicitors (a Firm) v Nationwide Building Society [2012] EWCA Civ 1626](https://lexlaw.co.uk/wp-content/uploads/2012/12/LEXLAW_Davisons-Solicitors-a-Firm-v-Nationwide-Building-Society-2012-EWCA-Civ-16261.rtf), the latest in a line of claims for breach of trust against solicitors’ firms arising out of the recent property market crash. Leading members of Inner Temple's Hailsham Chambers, Michael Pooles QC and William Flenley QC, acted for the solicitors and the financial institution respectively. The claim arose out of an identity fraud in which a fraudster purported to be the branch office of a genuine firm of solicitors. As a result, the defendant sent the mortgage advance to someone who was not in fact a solicitor and who could not give an enforceable solicitors’ undertaking to discharge the pre-existing charge on the property; the Court of Appeal held, following Lloyds Bank v Markandan & Uddin [2012] EWCA Civ 65, that there was a breach of trust by reason of the defendant firm having parted with the loan money prior to completion. It was no defence to this allegation that the defendant had otherwise complied with the CML Lenders’ Handbook or had an undertaking to redeem the relevant prior charge from the person he reasonably believed to be the seller’s solicitor; however, the defendant was relieved from liability for that breach pursuant to s.61 of the Trustee Act 1925. Acting reasonably, the Court said, did not “predicate that [the defendant] has necessarily complied with best practice in all respects” and, it seems, any unreasonable conduct by a solicitor will need to be causatively linked to the loss in order to disentitle that solicitor to relief; and the contractual obligations imposed on the defendant by the CML Handbook were not strict. As usual in professional negligence, they were obligations of skill and care only. The decision is both good and bad news for lenders and defendant solicitors. Findings of breach of trust will, it seems, become more common, but so too will relief from any consequential liability and breach of contract is unlikely to provide an alternative route to (effectively) strict liability. --- # Comet Administration highlights ‘Inequity of Legal Arms’ Source: https://lexlaw.co.uk/solicitors-london/insolvency-analysis-of-administrators-proposals-for-comet/ LEXLAW Senior Partner, M Ali Akram, was interviewed by Joel Hills live on Sky News Business providing insolvency law commentary around the collapse of Comet Group Limited. Joint Administrators (Neville Barry Kahn, Nicholas Guy Edwards and Christopher James Farrington all of Deloitte) [published](http://www.deloitte-insolvencies.co.uk/comet-group) a Statement of Proposals 17 December 2012 on which we comment below. ![Insolvency Lawyers in London Litigation Solicitors Barristers](http://upload.wikimedia.org/wikipedia/en/e/e1/Comet_Group_logo.svg)*Comet Group (In Administration) - Is the likely liquidation outcome fair or an inequitable burden on the State?* The administrators' proposals suggest that the financial position is as follows: - Total assets are around £62.2 million - The cost of the administration will be around £10.4 million - There are preferred creditors of £1.5 million, representing holiday pay accrued by the employees prior to the date of the administration. - The 'prescribed part' is £0.6 million - this is money which is reserved by statute to the unsecured creditors in preference to the floating charge holders. - That leaves £49.7 million for the secured (fixed and floating charge) creditors, which is only about a third of their outstanding debt. Therefore only the prescribed part of £600,000 will be available to the unsecured creditors.  As the unsecured creditors' debts total around £233 million, the distribution will be less than a penny in the pound (approximately 0.4p per £).  The secured creditors as a class will get about 34p in the pound (85 times more than the class of unsecured creditors), although the actual payment will depend on the nature of the security. We understand that the unsecured creditors include:  HMRC, employees (by virtue of their redundancy claims), trade creditors and customers who have paid for but not received goods.  It seems unlikely that many customers will bother to claim in the administration.  The employees are entitled to payment out of the National Insurance Fund.  There is a pension deficit of some £30 million, which will be met by the Pension Protection Fund, which is funded by a levy on pension schemes generally.  In 2003, the commencement of the Enterprise Act 2002 meant that HMRC were no longer afforded ‘preferential creditor status’ and any unpaid taxes fell to be dealt with in the same was way as all other unsecured debts. This case illustrates the problems caused by the ubiquity of the use of 'all assets' floating charges (by legally and financially sophisticated financial institutions) which result in minimal funds being available to unsecured creditors and a large burden being placed on the taxpayer. M Ali Akram (Senior Partner, LEXLAW) --- # Media Appearance: M Ali Akram on Comet Plc Administration (Sky News) Source: https://lexlaw.co.uk/solicitors-london/media-appearance-lexlaws-m-ali-akram-on-comet-administration/ Our Senior Partner, who practises insolvency law at the firm, was interviewed by Joel Hills live on Sky News Business and also featured in a [report by Sky News’ Business & Economics Correspondent, Poppy Trowbridge,](https://web.archive.org/web/20130123200411/http://news.sky.com/story/1026872/investigation-launched-into-comet-collapse) discussing the potential inequitable outcome in the liquidation of Comet Group Limited: https://www.youtube.com/watch?v=BL_c1yFX10U&feature=emb_title Our lawyers, M Ali Akram (Principal) & Robert Jones (Barrister) consider the the joint administrators' report and the potential inequitable outcome on liquidation at: [http://wp.me/p2MQoC-jq](http://wp.me/p2MQoC-jq) --- # Green & Rowley v Royal Bank of Scotland plc [2012] EWHC 3661 (QB) Source: https://lexlaw.co.uk/solicitors-london/green-rowley-v-royal-bank-of-scotland-plc-2012-ewhc-3661-qb/ **UPDATE: [LEGAL COMMENT](http://wp.me/p2MQoC-kb) ** ![Royal Courts of Justice RCJ Seal - England & Wales](https://lexlaw.co.uk/wp-content/uploads/2012/11/Royal-Courts-of-Justice-RCJ-Logo.jpg) [ ](https://lexlaw.co.uk/wp-content/uploads/2012/11/Royal-Courts-of-Justice-RCJ-Logo.jpg) Case No: 2MA40004 Neutral Citation Number: [2012] EWHC 3661 (QB)** ** **IN THE HIGH COURT OF JUSTICE** **MANCHESTER**** DISTRICT REGISTRY** **MERCANTILE COURT** Date: 21 December 2012  B e f o r e : **HIS HONOUR JUDGE WAKSMAN QC** **(sitting as a Judge of the High Court)** **(1) JOHN GREEN** **(2) PAUL ROWLEY** Claimants and **THE ROYAL BANK OF SCOTLAND PLC** Defendant [PDF: Green & Rowley v Royal Bank of Scotland plc [2012] EWHC 3661](https://lexlaw.co.uk/wp-content/uploads/2012/12/GreenFinalJudgment.pdf) --- # Legal Comment on Green & Rowley v RBS [2012] EWHC 3661 (Swaps Mis-selling Judgment) Source: https://lexlaw.co.uk/solicitors-london/legal-comment-on-green-rowley-v-rbs-2012-ewhc-3661-swaps-mis-selling-judgment/ The judgment in Green & Rowley v RBS is certainly not helpful to claimants in swap mis-selling cases, but on careful analysis, it is less bad than it might seem given the following: - HHJ David Waksman QC himself observes that the case is "*highly fact-sensitive*" (at para 21).  The judge found that the claimants were "*both intelligent and experienced businessmen*" and that "*this particular swap was very straightforward*" (para 37).  In many of the cases we have seen and are progressing against the banks, the claimants were significantly less sophisticated and the products significantly more complicated. - In addition, the section 150 FSMA claim (which ought to have been the strongest element of the case) was time-barred in Green & Rowley.  This illustrates the importance of a careful analysis of a case in order to calculate the correct limitation dates applying to each element of the claim. - Waksman J found that no recommendation had in fact been made by the bank in relation to the swap.  He does state (at para 48) that if such a recommendation had been made, this would have constituted 'advice', therefore potentially opening up the bank to a Hedley Byrne type liability. - The judge declined to determine whether the exclusion clauses in the swap documents would be effective (at para 117, since he found no liability to exclude).  This therefore leaves open the possibility that on a different case, in which the bank did make a clear recommendation, the negligent mis-statement argument could be run. Another point which Green & Rowley illustrates is the evidential difficulties arising in relation to matters which often happened six or more years ago.  Where (as will often be the case) the memories of the witnesses differ, the court is likely to conclude, on the balance of probabilities, that the contemporaneous documents were an accurate record of what was said.  In many cases these will be the bank's documents.  Therefore we consider it imperative for claimants to obtain disclosure of these documents at an early stage, either under the Data Protection Act or CPR Rule 31.16. Clearly there is a need for using a [specialist swaps mis-selling legal team](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) from the outset especially firstly to assess the case on its merits (and demerits) and then secondly to manage it carefully in particular on the issue of obtaining all of the bank held documents and recordings and also on the issue of limitation (which is not as simple as many commentators think and is not necessarily as simple as six years from the date of the trade telephone call). The full judgment is available [here](https://lexlaw.co.uk/solicitors-london/green-rowley-v-royal-bank-of-scotland-plc-2012-ewhc-3661-qb/). M Ali Akram (Principal) --- # Financial Ombudsman Service Decision Not a Bar to Further Court Action Source: https://lexlaw.co.uk/solicitors-london/financial-ombudsman-service-ruling-no-bar-to-court-proceeding/ *High Court ruling in Clark v In Focus  of assistance to complainants who have accepted a decision via the Financial Ombudsman Service; ruling determines that this in itself is no bar to bringing separate civil proceedings for a greater amount than the statutory maximum award.* In the recent case of *Barry Clark and Julie Clark v In Focus Asset Management & Tax Solutions Ltd,* Cranston J ruled that, where the claimants had accepted an award from the Financial Ombudsman Service of £100,000 (the maximum the Ombudsman could then award - now raised to £150,000), this was no bar to bringing separate civil proceedings for the balance of the amount the claimants said was due to them. ## Doctrine of merger does not apply The doctrine of merger provides that a person who has received a final judgment in one competent tribunal, may not apply to a second tribunal for effectively the same relief arising from the same subject matter.  The two causes of action are said to have 'merged' so that the final ruling on the first also extinguishes the second. However Cranston J held that this did not apply to rulings of the Ombudsman, as it is not a tribunal in the relevant sense.  This is because: (a) the Ombudsman attempts to resolve cases by mediation, (b) the Ombudsman sometimes makes non-binding recommendations, (c) even when the Ombudsman makes a final determination, it does not bind either party unless the complainant assents and (d) the Ombudsman deals with complaints and not causes of action (see paragraph 27 of the judgment). The learned judge went on to find that, considering the statutory scheme as a whole, the policy of the Ombudsman procedure was not inconsistent with permitting further recourse to the courts, and that the Ombudsman's ruling was said to be 'final' only in the sense that it completed the Ombudsman process, and not in the sense that it would preclude other remedies. ## Relevance to financial services litigation such as bank swaps mis-selling This case may well be helpful to those with substantial claims whom chose the FOS route and obtained a positive determination.  In particular victims of [swaps mis-selling](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/), that have previously accepted a determination by the Ombudsman, may now wish to apply for further relief through the courts. Indeed, Cranston J, went as far to note that there was no objection to a complainant using the statutory award (previously £100,000) received from the Ombudsman's determination in order to fund further litigation. Read the full judgment: [Barry Clark and Julie Clark v In Focus Asset Management & Tax Solutions Ltd [2012] EWHC 3669 (QB) - LEXLAW Solicitors](https://lexlaw.co.uk/wp-content/uploads/2013/01/Barry-Clark-and-Julie-Clark-v-In-Focus-Asset-Management-Tax-Solutions-Ltd-2012-EWHC-3669-QB-LEXLAW-Solicitors.pdf) M Ali Akram (Principal) --- # Financial Ombudsman Service Consults on Unprecedented Workload Source: https://lexlaw.co.uk/solicitors-london/financial-ombudsman-service-consults-on-unprecedented-workload/ The Financial Ombudsman Service (FOS) is consulting on its proposed plan and budget for 2013/2014. The plans would make the FOS larger in terms of staff numbers than the third largest Building Society in the UK (Coventry Building Society). It anticipates an unprecedented workload, including 245,000 cases relating to mis-sold payment protection insurance (PPI) which will take up nearly two-thirds of its expected workload. It plans to take on 1,000 more (currently a staggering 2,500) case workers to tackle this and also to take on more ombudsmen to respond to the continuing shift towards complex and harder-fought cases. It also plans to increase the number of free cases to 25 and raise the individual case fee by £50 to £550, and charge the supplementary case fee for PPI mis-selling cases only after 25 cases. Finally, the levy will rise by nearly £6 million to £23 million. *(Source: [FOS Consults on Plans for Dealing With Unprecedented Complaint Numbers](http://www.financial-ombudsman.org.uk/news/updates/corporate_plan_and_13-14_budget.html))* --- # Warren Buffett On Derivatives Source: https://lexlaw.co.uk/solicitors-london/warren-buffett-on-derivatives/ *Excerpts from the Berkshire Hathaway 2002 Annual Report:* I view derivatives as time bombs, both for the parties that deal in them and the economic system. Basically these instruments call for money to change hands at some future date, with the amount to be determined by one or more reference items, such as interest rates, stock prices, or currency values. For example, if you are either long or short an S&P 500 futures contract, you are a party to a very simple derivatives transaction, with your gain or loss derived from movements in the index. Derivatives contracts are of varying duration, running sometimes to 20 or more years, and their value is often tied to several variables. Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counter-parties to them. But before a contract is settled, the counter-parties record profits and losses – often huge in amount – in their current earnings statements without so much as a penny changing hands. Reported earnings on derivatives are often wildly overstated. That’s because today’s earnings are in a significant way based on estimates whose inaccuracy may not be exposed for many years. The errors usually reflect the human tendency to take an optimistic view of one’s commitments. But the parties to derivatives also have enormous incentives to cheat in accounting for them. Those who trade derivatives are usually paid, in whole or part, on “earnings” calculated by mark-to-market accounting. But often there is no real market, and “mark-to-model” is utilized. This substitution can bring on large-scale mischief. As a general rule, contracts involving multiple reference items and distant settlement dates increase the opportunities for counter-parties to use fanciful assumptions. The two parties to the contract might well use differing models allowing both to show substantial profits for many years. In extreme cases, mark-to-model degenerates into what I would call mark-to-myth. I can assure you that the marking errors in the derivatives business have not been symmetrical. Almost invariably, they have favored either the trader who was eyeing a multi-million dollar bonus or the CEO who wanted to report impressive “earnings” (or both). The bonuses were paid, and the CEO profited from his options. Only much later did shareholders learn that the reported earnings were a sham. Another problem about derivatives is that they can exacerbate trouble that a corporation has run into for completely unrelated reasons. This pile-on effect occurs because many derivatives contracts require that a company suffering a credit downgrade immediately supply collateral to counter-parties. Imagine then that a company is downgraded because of general adversity and that its derivatives instantly kick in with their requirement, imposing an unexpected and enormous demand for cash collateral on the company. The need to meet this demand can then throw the company into a liquidity crisis that may, in some cases, trigger still more downgrades. It all becomes a spiral that can lead to a corporate meltdown. Derivatives also create a daisy-chain risk that is akin to the risk run by insurers or reinsurers that lay off much of their business with others. In both cases, huge receivables from many counter-parties tend to build up over time. A participant may see himself as prudent, believing his large credit exposures to be diversified and therefore not dangerous. However under certain circumstances, an exogenous event that causes the receivable from Company A to go bad will also affect those from Companies B through Z. In banking, the recognition of a “linkage” problem was one of the reasons for the formation of the Federal Reserve System. Before the Fed was established, the failure of weak banks would sometimes put sudden and unanticipated liquidity demands on previously-strong banks, causing them to fail in turn. The Fed now insulates the strong from the troubles of the weak. But there is no central bank assigned to the job of preventing the dominoes toppling in insurance or derivatives. In these industries, firms that are fundamentally solid can become troubled simply because of the travails of other firms further down the chain. Many people argue that derivatives reduce systemic problems, in that participants who can’t bear certain risks are able to transfer them to stronger hands. These people believe that derivatives act to stabilize the economy, facilitate trade, and eliminate bumps for individual participants. On a micro level, what they say is often true. I believe, however, that the macro picture is dangerous and getting more so. Large amounts of risk, particularly credit risk, have become concentrated in the hands of relatively few derivatives dealers, who in addition trade extensively with one other. The troubles of one could quickly infect the others. On top of that, these dealers are owed huge amounts by non-dealer counter-parties. Some of these counter-parties, are linked in ways that could cause them to run into a problem because of a single event, such as the implosion of the telecom industry. Linkage, when it suddenly surfaces, can trigger serious systemic problems. Indeed, in 1998, the leveraged and derivatives-heavy activities of a single hedge fund, Long-Term Capital Management, caused the Federal Reserve anxieties so severe that it hastily orchestrated a rescue effort. In later Congressional testimony, Fed officials acknowledged that, had they not intervened, the outstanding trades of LTCM – a firm unknown to the general public and employing only a few hundred people – could well have posed a serious threat to the stability of American markets. In other words, the Fed acted because its leaders were fearful of what might have happened to other financial institutions had the LTCM domino toppled. And this affair, though it paralyzed many parts of the fixed-income market for weeks, was far from a worst-case scenario. One of the derivatives instruments that LTCM used was total-return swaps, contracts that facilitate 100% leverage in various markets, including stocks. For example, Party A to a contract, usually a bank, puts up all of the money for the purchase of a stock while Party B, without putting up any capital, agrees that at a future date it will receive any gain or pay any loss that the bank realizes. Total-return swaps of this type make a joke of margin requirements. Beyond that, other types of derivatives severely curtail the ability of regulators to curb leverage and generally get their arms around the risk profiles of banks, insurers and other financial institutions. Similarly, even experienced investors and analysts encounter major problems in analyzing the financial condition of firms that are heavily involved with derivatives contracts. The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. **Warren Buffet** Berkshire Hathaway 2002 Annual Report ![berkshire hathaway lexlaw warren buffett litigation solicitors london](https://lexlaw.co.uk/wp-content/uploads/2013/01/berkshire-hathaway-1024x141.png) --- # FSA Findings on Banks’ Pilot Swaps Mis-selling Review Source: https://lexlaw.co.uk/solicitors-london/fsa-findings-on-banks-pilot-swaps-mis-selling-review/ *The FSA has today published a long-awaited press release setting out the findings of their 'pilot scheme' in relation to the mis-selling of complex interest rate derivatives to small businesses. We interpret the FSA findings and add legal comment based on our lengthy experience of reviewing cases and advising hundreds of SMEs on mis-selling.* ## Over 90% of Swaps Sales Non-Compliant This release is generally good news for the victims of mis-selling, as the FSA seem finally to have acknowledged the scale of this problem, after a long period of lobbying by small business groups, derivatives experts, MPs and this firm. The FSA have found that 90% of the sales examined in the pilot review did not comply with their regulatory requirements. To outsiders this will no doubt seem an astonishing proportion, although it is not surprising to us, as we know from the many cases that we have seen that banks' sales teams routinely ignored their regulatory duties. ## Areas of Regulatory Concern for Mis-sold Swaps The FSA identify five problems in particular, which we also have found in a very large number of cases, specifically: (i) break costs were not adequately explained, (ii) no attempt was made to assess the customer's attitude to risk, (iii) sales teams routinely made recommendations to customers despite the banks stating that they were providing a non-advisory service, (iv) the amount and/or term of the derivative products sold exceeded the amount and/or term of the underlying loan, resulting in the customer being 'over-hedged' and (v) the banks salespeople were motivated by a desire to maximise their own commissions or bonuses - in many cases this led directly to the over-hedging previously mentioned. We may also add, although the FSA seem to have overlooked it, that banks salespeople routinely downplayed the possibility that interest rates would fall. The conversations were exclusively focused on the benefits to the customer if rates rose, with little or nothing being said about the cost to the customer if rates fell. ## Our Concerns About the FSA's Proposals However, while we are pleased that the FSA has at last woken up to the problem, we continue to have serious concerns on behalf of our SME clients in respect of the FSA's proposed solution. In particular, the proposed review process will involve the derivative sales being reviewed by an 'independent reviewer' who will in fact be appointed by the bank. It may therefore be doubted whether the reviewers will be truly independent and we have already had reports of telling conduct at meetings with swaps victims. The FSA say that in the pilot study they found that the independent reviewers did robustly challenge the banks' views. However, the very fact that they knew that the pilot cases would be closely examined by the FSA means that the reviewers may well have been more conscientious in dealing with these. If the customer is unsatisfied with the outcome of the review, it is not clear how they will be able to challenge it. In our view, it could never be appropriate for a non-sophisticated customer to be over-hedged.  This is because over-hedging, where the hedge exceeds either or both of the amount and term of the underlying loan, is by its nature a speculative position and is not performing the proper commercial function of a hedge.  Hedging is intended to reduce a business's exposure to interest rate risks, whereas over-hedging and other speculative positions instead add new risks.  Therefore we are concerned that the FSA indicate only that the consequences of over-hedging ought to have been clearly explained.  We consider that any over-hedged position ought to be treated presumptively as a mis-sale, unless the bank can produce compelling evidence that the customer instigated the trade and was determined to proceed with it despite advice to the contrary. We also have concerns over the proposed remedies. Extraordinarily, the FSA state that *"redress will not be owed to the customer in all cases where the sale did not comply with the regulatory requirements."*  They also say that in some cases the appropriate redress will be the substituting of an alternative product, and this may result in customers receiving less than the full compensation to which they should be entitled. In particular, the FSA do not say anything about the common scenario where the bank made the hedge a condition of the loan.  In those cases it may be said that, even if the customer had been properly informed, they would still have entered into the hedge in order to obtain necessary finance.  This does not address the fundamental point of whether it was appropriate for the bank to insist on such a condition. The FSA indicate that where an alternative product should be substituted, this should have potential break costs of no more than 7.5% of the amount hedged, as the FSA consider that if customers had been properly advised, this would be the maximum liability they would have been prepared to accept.  If this is right in relation to alternative products, surely the FSA ought to apply the same standard to the original sales?  Indeed, we agree that few customers would have entered into hedging arrangements had they appreciated that (in a plausible but pessimistic scenario, as the FSA put it) they might be liable for break costs which we have often seen amount to 30-40% of the value of the loan.  Therefore all of these products should be treated presumptively as mis-sales. ## Tailored Business Loans The FSA press release entirely fails to address the issue of Tailored Business Loans.  This may be because it only covers the pilot in relation to the 'Big Four' banks, and the treatment of Tailored Business Loans may have to await the announcement of the results from the other pilots "in the coming weeks", as these products were mostly sold by the smaller banks.  Tailored Business Loans were products with 'built in' derivatives.  In our view these should clearly be treated in the same way as stand-alone derivative products, as the issues are identical, i.e. that customers were being sold complex products which were not properly explained with no real understanding of the risk involved.  However, we are still awaiting any indication from the FSA as to how these products will be treated in the review or indeed whether they will be included at all. ## Keeping Open the Option of Legal Action Because of the concerns detailed above, we consider that it is important for the victims of mis-selling to keep alive the option of seeking redress through the courts. Unfortunately, this gives rise to a further serious concern we have with the FSA's report, which is that it ignores a potentially crucial problem regarding limitation dates. The period for bringing a legal action for derivatives mis-selling will usually be six years from the date of the sale (or from the sales presentation). Given that this problem mostly occurred in the period 2003-2008, as time goes by, progressively more victims will be excluded from legal redress. They then risk finding themselves with no legal remedy if the banks' review proves unsatisfactory. We therefore consider it essential that the victims of derivatives mis-selling seek professional legal advice at the earliest opportunity, so that the necessary steps can be taken to safeguard their legal rights.  We are extremely concerned by the suggestion at the end of the FSA press release that the victims of mis-selling will not need external assistance "because the process is straightforward".  No doubt the banks would prefer that victims merely accept whatever partial compensation they choose to offer, but the whole problem of mis-selling interest rate derivatives arose because these are complex products on which customers will require professional advice in order to understand their position. M Ali Akram, Principal, LEXLAW --- # What is Sophistication in the FSA Swaps Mis-selling Scheme? Source: https://lexlaw.co.uk/solicitors-london/defining-sophistication-in-the-fsa-swaps-mis-selling-scheme-10m/ *The Financial Services Authority's announcement on the swaps mis-selling pilot reviews (31 January 2013) brought in a refinement of the 29 June 2012 announced test of sophistication. That test has been explained by the regulator by way of a Paper and a Flowchart which are inconsistent with each other.  * *Due to this lack of clear explanation there is confusion amongst swaps mis-selling victims, lobby groups, MPs and commentators about the correct definition and treatment of individual cases. Whilst we wait for the FSA to issue a correction we offer here what we consider the test of sophistication is intended to be.  * ## FSA communications on Pilot Reviews and start of full review of interest rate swap mis-selling The FSA yesterday (31 January 2013) issued: - a [Press Release](http://www.fsa.gov.uk/library/communication/pr/2013/010.shtml) to confirm the commencement of the banks' review process (although we understand that no pilot review findings have yet been communicated); - a Paper on the Pilot Findings findings in relation to the banks' own reviews of 'Interest Rate Hedging Products' [[FSA Pilot Findings Paper](https://lexlaw.co.uk/wp-content/uploads/2013/02/FSA_interest-rate-swaps-pilot-findings-paper-2013_LEXLAW.pdf)]; and - a Flowchart designed to simplify and explain the FSA - bank agreed review scheme in relation to the sophistication test [[FSA-Flowchart-PDF](https://lexlaw.co.uk/wp-content/uploads/2013/02/FSA_irs-flowchart-2013_LEXLAW.pdf)]. ## The FSA Flowchart Mis-Defining Sophistication The FSA Flowchart appears helpfully designed to help the victims of swap mis-selling understand whether or not they fall within the (admittedly complicated) definition of non-sophisticated so as to merit inclusion in the review. Less helpfully, the Flowchart does not accurately reflect the FSA’s policy as set out in their Paper published yesterday resulting in a lot of confusion as to what is the true position. This quote from the FSA taken from a [Telegraph article](http://www.telegraph.co.uk/finance/rate-swap-scandal/9843366/Swap-scheme-10m-threshold-could-block-billions-of-pounds-of-claims-says-experts.html) earlier today clearly implies that the policy remains as set out in the FSA Paper: > “We introduced the £10m notional hedge limit to bring businesses such as farms, B&Bs and small care homes into the review,” he said. “Without this change they might otherwise have been excluded due to the size of their fixed assets and numbers of seasonal part time workers.” However the article writer (and presumably the MP) seem to be under the impression (due to the FSA Flowchart) that the policy has now been changed per the misleading Flowchart. ## The FSA Paper setting out the intended Policy on Sophistication and introducing the £10 million test The Paper sets out the FSA’s policy on sophistication by first restating the original test, and then explaining how the original test is to be modified. The original test was that a customer would be sophisticated if (at the relevant time) they met any two out of the following three conditions: - Turnover exceeds £6.5 million; - Balance sheet exceeds £3.26 million; - Business has more than 50 employees. Other customers were correspondingly  non-sophisticated, so the effect was that a customer would be eligible for inclusion if they met none or one of the above conditions. The modifications set out in yesterday’s paper provide for a number of exceptions, both by way of excluding some businesses which would have been included under the original test and including some businesses which would have been excluded. These exceptions are as follows: - If a business meets both the balance sheet and employee criteria above (so it would have been sophisticated under the original test), but does not meet the turnover test, then it will nevertheless be treated as non-sophisticated (as so included in the review) *provided that* the total value of the live swaps is no more than £10 million. - If a business is part of a group, and the group as a whole meets the test for sophistication, then the business will be treated as sophisticated even though treated in isolation it would have been deemed non-sophisticated. - Where the business is a Special Purpose Vehicle, and it is connected to a group (even though it is not formally part of the group), it will be treated as sophisticated *provided that* the total value of live swaps exceeds £10 million. (We believe that the FSA must have intended this to apply only where the group to which the SPV is connected is itself a sophisticated customer, although this is not stated.) ## Understanding the New £10 million Test The key point here is that the £10 million test applies only in two specific situations, i.e. to businesses with turnover of less than £6.5 million, a balance sheet of more than £3.26 million and more than 50 employees and to business which are SPVs connected to but not part of a group structure [which is itself sophisticated]. The published flow-chart makes it appear that the £10 million test has to be met by all customers to meet the definition of non-sophisticated. It is unfortunate, to say the least, that this is likely to cause customers who are entitled to redress under the scheme to believe that they are not so entitled. We have already had one enquiry from a client who is non-sophisticated under the original test (because only one of the three conditions is met) but who believed that they might nevertheless be treated as sophisticated because the total value of their swaps exceeded £10 million. We hope that the FSA will rapidly take action to bring their flowchart into line with their own published policy. M Ali Akram, Principal, LEXLAW --- # RBS fined for LIBOR Manipulation; will lead to increased LIBOR Litigation Source: https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/ The Financial Services Authority (FSA) has today [announced](http://www.fsa.gov.uk/library/communication/pr/2013/011.shtml) a fine of £87.5 million on RBS in relation to manipulation of the London Interbank Offered Rate ("LIBOR").   This is a key interest rate which is set daily by a group of major London banks in relation to a variety of periods and currencies.  While this notionally represents the interest rate applying when banks lend and borrow money between themselves (hence "Interbank"), we now know that at least some of the banks were making fraudulent submissions so as improve their trading positions.   LIBOR is used to determine the payments to be made under a wide variety of derivatives contracts, and the size of the trades is such that the bank can make a substantial profit by manipulating LIBOR by even one basis point (i.e. 0.01%).  A profit for the bank necessarily implies a loss for whoever is on the other side of the deal. ![rbs grg ross mcewan swaps misselling claims litiggation solicitor in london lexlaw high court](https://lexlaw.co.uk/wp-content/uploads/2017/11/Royal-Bank-of-Scotland-Logo-Lexlaw-financial-litigation-solicitors-london-1024x640.jpg) RBS fined for LIBOR Manipulation; will lead to increased LIBOR Litigation The FSA have previously fined Barclays (£59.5 million) and UBS (£160 million) and we understand that their investigations are continuing into a number of other major banks.  In addition to the FSA fine, RBS has also been fined [$325 million by the US Commodity Futures Trading Commission](http://www.cftc.gov/PressRoom/PressReleases/pr6510-13) and [$150 million by the US Department of Justice](http://www.justice.gov/opa/pr/2013/February/13-crm-161.html).  The CFTC press release contains some particularly interesting details, including extracts from conversations between traders such as: Yen Trader 4: where’s young [Yen Trader 1] thinking of setting it? Yen Trader 1:** where would you like it[,] libor that is[,] same as yesterday is call** Yen Trader 4: haha, glad you clarified ! mixed feelings but **mostly I’d like it all lower** so the world starts to make a little more sense. Senior Yen Trader:** the whole HF [hedge fund] world will be kissing you instead of calling me if libor move lower** Yen Trader 1:** ok, i will move the curve down[,] 1bp[,] maybe more[,] if I can** The US Attorney General has described RBS's conduct as "a stunning abuse of trust".  The CFTC notes that the unlawful conduct went back to at least 2006 and continued even after RBS was aware of the Commission's investigation.  The FSA describe the abuse as "widespread" and notes that in response to a specific query in March 2011, RbS assured the FSA that it had proper systems in place to prevent LIBOR manipulation, when this was false.  All in all, the outcome of this international investigation into RBS's affairs is a damning indictment of its culture and management practices. It is therefore unimpressive that RBS say in their [press response](http://web.archive.org/web/20130822151022/http://www.rbs.com/news/2013/02/libor.html): "There are no findings that anyone beyond individual traders and, in some instances, their immediate supervisors, was aware of, or instructed, any deliberate manipulation of submissions, nor is there any finding that RBS suppressed LIBOR submissions at the direction of senior management."  It is clear that senior management entirely failed to put in place appropriate oversight systems and indeed presided over a remuneration structure which rewarded wrong-doing by the bank's employees. We understand that RBS continues to be investigated by a number of other bodies, including the European Commission and the Japan Financial Services Agency.  The FSA fine included a discount of 30% because RBS agreed to early settlement; without the discount the fine would have been £125 million. This announcement will further undermine confidence in LIBOR and this will give rise to potential litigation in relation to the many trillions of pounds worth of LIBOR denominated contracts outstanding.  It is doubtful, to say the least, that many small businesses would have taken out LIBOR based derivatives with RBS had they been aware that RBS was involved in manipulation of the key benchmark. --- # Barclays announce 2012 results – Provision for swaps mis-selling £850 million Source: https://lexlaw.co.uk/solicitors-london/barclays-announce-2012-results-provision-for-swaps-mis-selling-850-million/ *Barclays Bank *have* today announced their results for 2012 [[Barclays Bank Results 2012](http://group.barclays.com/about-barclays/investor-relations/results-announcements)].* ## Barclays' Announcement on Swaps Mis-selling (IRHPs or IRSAs) These deal with swaps mis-selling on page 91. Barclays indicate that they have around 4000 customers who were sold interest rate hedging products in the relevant timeframe, of which they say approximately 3000 are likely to be categorised as non-sophisticated.  Barclays have made an additional provision of £400m in respect of this liability, bringing their total provision to £850m.  If there are 3000 people entitled to redress under the FSA scheme, this would amount to an average of £280,000 provisioned per customer. [![Barclays Bank Litigation Lawyers London LEXLAW Solicitors Barristers Compensation Claim Review Legal Action FX GRG IRHP](https://lexlaw.co.uk/wp-content/uploads/2013/02/Barclays-Bank-Litigation-Lawyers-London-LEXLAW-Solicitors-Barristers-Compensation-Claim-Review-Legal-Action-FX-GRG-IRHP.jpg)](https://lexlaw.co.uk/solicitors-london/barclays-announce-2012-results-provision-for-swaps-mis-selling-850-million/barclays-bank-litigation-lawyers-london-lexlaw-solicitors-barristers-compensation-claim-review-legal-action-fx-grg-irhp/)Barclays announce 2012 results - Provision for swaps mis-selling £850 million ## Accuracy of the Derivatives Mis-selling Provisions The FSA have estimated that the total number of swaps sold to non-sophisticated customers was around 40,000, so if Barclays' estimate of their own sales is accurate and is not understated, it would appear likely that other big banks must have sold a higher number and will therefore have an even higher liability. In particular, the £50m provision so far made by the Royal Bank of Scotland in its Q2 2012 results is clearly, and always has been, woefully inadequate especially bearing in mind it came at the same time as Ulster Bank (part of the RBS Group) had settled a Euro 35 million claim in Ireland against David Agar, a property developer who had been mis-sold swaps.  RBS have already [admitted](https://web.archive.org/web/20130204053246/http://www.ftadviser.com/2013/02/01/ifa-industry/product-providers/rbs-admits-swaps-provision-too-low-banks-brace-for-bn-hit-eyUgpeBUKdglms7QOp4wIJ/article.html) that they will need to make further provision in due course, but so far we have seen no indication of what this might be.  We anticipate that RBS' total liability will be considerably in excess of £1 billion. ## LEXLAW's estimate of the financial impact on Major Banks As a leading City of London law firm representing claimants in derivatives mis-selling financial services litigation we have a large client base which reveals which banks were selling derivatives in greater numbers and reveals that, amongst our clients, the value of claims on average is far in excess of the average that Barclays have determined. In terms of customer numbers, we consider that Barclays and RBS are the biggest two sellers of swaps to SMEs followed at a distance by HSBC and Lloyds.  We anticipate that the quantum of overall liability for the banks involved in the mis-selling swaps to smaller SME businesses is likely to be in the range of a few to several billion pounds. M Ali Akram, Principal --- # The Impact of the Finance Bill 2013 on Trusts for Bereaved Minors Source: https://lexlaw.co.uk/solicitors-london/the-impact-of-the-finance-bill-2013-on-trusts-for-bereaved-minors/ The Finance Act 2006 introduced a new category of trusts called Bereaved Minors Trusts. This trust could be set up by way of a will or under intestacy. Broadly, the trust is for minors under the age of 18 who are living and are entitled to benefit from the capital or the income of property. ## Bereaved Minors Trusts and Inheritance Tax Bereaved Minors Trusts escape facing inheritance tax liability where: - the bereaved minor receives absolute ownership on or before their 18th birthday, or- property is applied for the maintenance of the bereaved minor, or- the bereaved minor dies before reaching 18. Section 32 of the Trustee Act 1925 enables trustees of a trust to distribute assets for the benefit of the bereaved minor and also manage the capital asset for and in the interests of the minor without the court having to intervene.  However, with the introduction of the new Finance Bill 2013, trustees powers will either be excluded or restricted. ## Impact of the Finance Bill 2013 The proposed changes mean that any property transferred after 8 April 2013 to the trust will be done without the benefit of provisions in section 32 of the Trustee Act 1925.  If the testator wishes for  section 32 powers to apply then the trust will not fall into the category of a Bereaved Minors Trust and therefore the bereaved minor would be disadvantaged as the inheritance tax liability would reduce their entitlement. In addition, if the trust is a Bereaved Minor Trust, then under the proposed changes, the restriction of the trustees powers may mean that the court has to intervene in relation to the management of the trust.  This would mean further costs that would be deducted from the trust fund (and therefore reduce the entitlement of the bereaved minor). The Law Society are concerned that parents with existing wills may have to have their wills redrafted as a result of the proposed changes.  The Law Society has expressed their concerns to HMRC  and Lucy Scott-Moncrieff, president of the Law Society said: > "I'm sure the government doesn't intend to penalise orphaned children, or to require a significant number of parents to redraft their wills to protect their children's futures. We all know that unintended consequences can arise from legislation and it is very fortunate that the watchfulness and diligence of our expert solicitor members gives the government the opportunity to put this right before it creates injustice, confusion and unforeseen expense." The Law Society are awaiting for HMRC to respond to their concerns. --- # RBS Announce Results: Provision for Swaps Mis-selling Increased by 1300% Source: https://lexlaw.co.uk/solicitors-london/rbs-announce-results-provision-for-swaps-mis-selling-increased-by-1300/ The Royal Bank of Scotland have today announced [their 2012 results](https://www.rbs.com/rbs/news/2013/02/annual-results-2012.html).  These show an operating loss of £5.2 billion with a total loss for 2012 of £5.8 billion. They also show a provision of £700 million in relation to the mis-selling of 'Interest Rate Hedging Products'. This is an increase of 1300% on their previous provision of £50 million, which as [we said previously](https://lexlaw.co.uk/solicitors-london/barclays-announce-2012-results-provision-for-swaps-mis-selling-850-million/), was plainly inadequate. ## RBS continue to downplay involvement in swaps mis-selling RBS have not said anything about this issue in the *Highlights* section at the start of the report, nor have either the Chairman or the Chief Executive mentioned the issue in their letters to shareholders, which accompany the results. Mis-selling of IRHPs is mentioned on pages 25, 93 and 131 of the full report. In these places RBS continues to downplay its involvement in this scandal, saying for example: > Prior to the FSA review, RBS’s sales processes had generally been found to be appropriate during the period, with 59 out of 62 adjudications by the Financial Ombudsman’s Service in the bank’s favour. This included 20 out of 20 adjudications relating to the disclosure of break costs. Two recent court cases also found in favour of RBS, including rulings on past sales processes and the adequacy of related disclosures. This conveniently fails to mention that, within the FSA review, [over 90% of such products were found to have been mis-sold](https://lexlaw.co.uk/solicitors-london/fsa-findings-on-banks-pilot-swaps-mis-selling-review/). If the FOS was previously giving rulings in the bank's favour in the large majority of cases (and our experience suggests that this was indeed the case), this merely shows how toothless and inept the FOS unfortunately has been in dealing with mis-selling cases. Not only that but last year's 35 million euro settlement to David Agar in Ireland (by RBS Group's Ulster Bank) is not mentioned at all. Of course that latter settlement and the many others are confidential. ## £700 million swaps mis-selling provision still inadequate Of the £700 million provision, £575 million is stated to be for providing redress, while the remaining £125 million is for 'administrative' expenses, of which the bulk is presumably legal costs. The report does finally note that, "As the actual amount that the Group will be required to pay will depend on the facts and circumstances of each case, there is no certainty as to the eventual costs of redress." RBS do not give any indication of how many customers have purchased IRHPs, nor do they give any indication of how many are likely to be 'non-sophisticated' for the purposes of the FSA review. It is therefore impossible to say what provision has been made in relation to each customer. However, the FSA have indicated that 40,000 products were sold to non-sophisticated, and we believe from the many cases this firm has seen that RBS was involved in a significant, possibly the largest, proportion of these cases.  We therefore consider that the £700 million provision is still plainly inadequate. It is apparent that RBS are doing everything they can to delay dealing with this problem, and are continuing to offer only minimal redress to the victims of derivatives mis-selling. It is therefore particularly important that RBS customers who consider that they may have been victims of swaps mis-selling obtain independent legal advice. M Ali Akram (Principal) --- # The Times: Banks’ secretly settling swaps mis-selling cases Source: https://lexlaw.co.uk/solicitors-london/the-times-banks-secretly-settling-swaps-mis-selling-cases/ *The Times Newspaper has been given inside information from a number of reputable sources that banks are striking secret settlement deals with small businesses over the mis-selling of interest rate swaps on the eve of court proceedings.  It is clear when bringing suit against the banks that professionally presented and argued 'good cases' will lead to settlements whilst 'bad cases' will lead to judgments in favour of the banks.* [![Banks in secret settlements over swaps mis-selling - settling good cases - LEXLAW Solicitors & Barristers, London.](https://lexlaw.co.uk/wp-content/uploads/2013/03/30032013-Times-Business-Banks-in-secret-settlements-over-swaps-mis-selling.jpg)](https://lexlaw.co.uk/wp-content/uploads/2013/03/30032013-Times-Business-Banks-in-secret-settlements-over-swaps-mis-selling.jpg)Banks are secretly settling good swaps mis-selling cases - LEXLAW Solicitors & Barristers, London. The Times newspaper today [reports](http://www.thetimes.co.uk/tto/business/industries/banking/article3726535.ece) that lenders are picking off claims that they believe are the strongest and settling while making public statements about their innocence in other cases, people close to the process said. The number of claims being filed at court is escalating as small companies come to realise that thousands of others are in a similar position. Banks have so far paid out about £1 billion for swaps mis-selling. [Abhishek Sachdev, of the consultancy Vedanta Hedging](http://www.vedantahedging.com/), an expert on swaps contracts, said: “The final bill for banks for swaps mis-selling may be about £20 billion after including out-of-court settlements — more than the total costs for payment protection insurance, which have been £13 billion so far.” Banks have reserved more than £2 billion to cover compensation for businesses that claim they were systematically mis-sold unsuitable interest rate hedging products for nearly a decade. But the need to put aside far more for swaps compensation and other problems was underlined this week by the Financial Policy Committee, which said an extra £25 billion in capital was required by the end of the year. Stuart Wall, the founder of Opal Property, a provider of student accommodation in Manchester that went into administration this week, is suing Royal Bank of Scotland over a swaps contract. The case could be one of the most significant to date, with Opal seeking £170 million. RBS denies the claim. Among the small number of cases that are in the public domain was a settlement between David and Marilyn MacGregor, owners of a fish and chip business in Scarborough, and HSBC. That case went as far as a court hearing before HSBC settled for an undisclosed sum. Sara Pearson, a small business owner, settled with Barclays in September last year after filing court documents against the bank. RBS is the only bank so far to have claimed a couple of court victories over swaps. One was against a small property developer, Grant Estates. In the other, a judge threw out a claim by Paul Rowley, a Lancashire hotelier, and his business partner, John Green. The two are appealing. While many businesses are pushing ahead with lawsuits, others are waiting to see how a claim bought by Guardian Care Homes against Barclays progresses, in what will be the first dispute over swaps to reach the High Court. The company is suing Barclays for allegedly mis-selling it interest rate swaps in 2006. Barclays rejects the allegations, saying the business was sophisticated enough to understand the risks of the products. If Guardian Care Homes wins, that is expected to lead to a flood of claims from larger companies against banks. The swaps sold to businesses were supposed to help when they took out loans by offering protection against interest rate increases. In return for a fee, banks agreed not to pass on the full cost of rising interest rates to their customers. But if rates fell, customers had to make regular payments to the banks. The products became controversial as rates have stayed close to zero in the past few years, resulting in businesses making huge payments to the banks. A further sting in the tail was provided by the break fees in the contracts. These fees were in some cases worth about 40 per cent of the value of the underlying loan, making it punitive for companies to release themselves from the contracts. Thousands of small businesses argue that the products were too complex and that the banks did not explain the risks involved. Small business that have suffered as victims of swaps mis-selling are encouraged to consider their legal options immediately – good cases lead to settlement and [experienced swaps mis-selling law firms](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) can put forward good cases in the right manner with the right legal team to encourage early settlement. --- # RBS v Highland Financial Partners: Culture of denial at RBS? Source: https://lexlaw.co.uk/solicitors-london/rbs-v-highland-financial-partners-culture-of-denial-at-rbs/ *In a recent unanimous judgment of the Court of Appeal in the case of *RBS v Highland Financial Partners [2013] EWCA Civ 328*, it was held that RBS had procured a previous judgment by fraud, having misled their client, their own lawyers and the court. RBS was held to have deliberately and dishonestly failed to disclose relevant documents in the previous proceedings. The RBS employee concerned, having been disbelieved by the court at an earlier hearing, was given a formal warning, a promotion and (we understand) a half million pound bonus. **This judgment must raise grave doubts about the culture of RBS and its approach to litigation.* ![](https://lexlaw.co.uk/wp-content/uploads/2020/01/Shredded-RBS-Banking-Law-Litigation-Lawyers-in-London-UK.jpg) ![Excerpt from "Shredded: Inside RBS: the Bank that Broke Britain" by Ian Fraser. The book quotes and cites this legal news article by one of our chancery barristers at LEXLAW.](https://lexlaw.co.uk/wp-content/uploads/2019/12/Shredded-RBS-Bank-Excerpt-Lexlaw-Litigation-Solicitors-Barristers-London-UK-1024x809.jpg) Excerpt from *"Shredded: Inside RBS: the Bank that Broke Britain"* by Ian Fraser. The book quotes and cites this legal news article by one of our chancery barristers at LEXLAW. ## Factual background - CDO Fund This case concerns what may appear to be a fairly dry commercial dispute between RBS and the Highland Capital Management Group of companies. Highland is a US investment management and advisory group. In 2006, Highland engaged RBS in connection with the launch of a collateralised debt obligation ("CDO") fund. In preparation for offering this fund to the market, various debts were acquired using money borrowed from RBS. As a result of the deteriorating financial climate and the increasingly negative market outlook on CDOs, this fund never got off the ground. On 15 September 2008, Lehman Brothers collapsed and on 30 October 2008 RBS pulled the plug on the CDO. ## Sham Auction conducted by RBS RBS then realised its security by selling the loan portfolio. The process by which this was done was opaque, but as it is eventually came out in court, what happened was that RBS conducted a "sham auction" (paragraph 61) in which they asked for bids for the loans when in fact, in relation to at least a large number of the loans, there was no possibility that they might be sold at auction, because RBS had already decided to buy them itself and had in fact already moved the loans from its trading book to its banking book. There was a technical accounting reason for this, which was that there was a change on 13 October 2008 to International Accounting Standard 39. The effect of this was that certain assets could be accounted for by banks on an accruals basis rather than a mark-to-market basis. (We may say in passing that we are not accountants, but we can see no justification for this, which seems to us to be a piece of fudge.) However, in order to take advantage of this, the loans needed to be transferred to RBS's banking book by 31 October 2008, and the loans in issue were in fact transferred on this date, i.e. the day immediately after RBS had terminated the contract and a week before RBS purported to auction the loans. RBS attempted to argue in court that despite the fact that the loans had been transferred to its banking book, they still might have sold them had they received a sufficiently attractive bid.  RBS's evidence on this point was disbelieved (paragraph 62). This operation generated a very substantial notional profit for RBS of some £1.44 billion (paragraph 32). The trader concerned, Sam Griffiths, believed that the transfer of the loans would result in a "windfall profit" and that this profit should be credited to his department or desk (paragraph 62). Mr Griffiths supervisor, Stewart Booth, the Global Head of Credit Trading, was also well aware of this transaction (paragraph 60). RBS appear to have been oblivious to the obvious conflict of interest with its client, and (the court held) RBS deliberately misled its own client by not disclosing any of this information at the time and by the charade of conducting a dummy auction. This also involved it in instructing its employees to make dishonest statements to potential buyers (paragraph 61). RBS then proceeded to sue its client for the supposed shortfall on its loan for the CDO. ## Conduct of the litigation We frequently tell our clients that they should always be entirely truthful and not attempt to tailor to their recollections to what they think will help their case. No doubt RBS's lawyers will have said much the same to them, but this message went unheeded.  Mr Griffiths (who by then had been promoted to Head of High Yield Trading) was motivated by "an anxiety not to disclose 'The Suppressed Fact' [that 36 of the loans had already been transferred to RBS's banking book on 31 October 2008 in order to book a profit and were therefore not available for sale]" (paragraph 110). Moreover, it was RBS's strategy to reveal as little information at possible during the early stages of the litigation (paragraph 63). This, the court held, was motivated by the hope and expectation that they would be able to settle the case before the Suppressed Fact came to light (paragraph 71). Mr Griffiths was closely involved in the litigation. He falsely instructed RBS's lawyers that there had been no transfer, with the result that the lawyers refused disclosure of the relevant documents on the basis that they were not material (paragraphs 65, 114, 118 and 127).  He repeatedly signed statements of truth on witness statements in the knowledge that they were not in fact true (paragraphs 61, 63, 65, 91, 115 and 119) and (the court held) he repeatedly lied under oath both in relation to Suppressed Fact and then later in giving a false explanation of his earlier statements (paragraphs 61, 71, 91, 128, 129, 164 and 165). In an RBS disciplinary hearing in December 2010, Mr Griffiths was found guilty of serious misconduct in directing employees of RBS to make misleading statements to clients (i.e. during the dummy auction) and of making a number of misleading statements in his witness statements and subsequently affirming those statements as fact (paragraph 45). As a result, he was given a written warning.  It strikes us as surprising that RBS do not consider lieing under oath to be a sackable offence. In fact by the 2012 trial, Mr Griffiths had been promoted again, to Managing Director (paragraph 156), and we understand that he also received a bonus of around £500,000. ## RBS's dismissive approach to client complaints Mr Griffiths wrote to his superior on 10 May 2010 that "IAS/39 is a major worry right now - Highland appear to be claiming that because we put some of the assets on the banking book at 30 June levels we should have given them some credit for that. It's a nonsense argument of course but one that we need to deal with" (paragraph 66). This dismissive attitude towards its client's grievances may seem familiar to many of those who have been mis-sold swaps by RBS. --- # Swaps Complaints in the Financial Ombudsman Service Annual Review for 2012/2013 Source: https://lexlaw.co.uk/solicitors-london/mis-sold-swaps-complaints-in-the-financial-ombudsman-service-annual-review-for-2012-2013-fos/ *The Financial Ombudsman Service (FOS)  was set up under the Financial Services and Markets Act 2000 to resolve individual disputes between consumers and financial businesses. It has just published its [2012/2013 annual review](http://www.financial-ombudsman.org.uk/publications/ar13/ar13.pdf) of consumer complaints. We focus on the comments on Interest Rate Swaps mis-selling, an area in which LEXLAW's Financial Services team proudly excel ([lexlaw.co.uk/swaps*](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/)). ## General overview of the FOS 2012/2013 Report The FOS reports a 92% increase in new cases that it has taken on in the last year, over 508,000. The sale of payment protection insurance (PPI) accounted for almost three-quarters of the complaints dealt with by the FOS, with 2,000 new cases being referred to it each day. ## FOS Comments on Swaps Mis-selling On interest rate hedging products (IHRPs - i.e. Derivatives such as Interest Rate Swaps), the FOS refers to it's action on 24 October 2012 when it published two provisional decisions relating to interest-rate  hedging products, setting out the issues involved in disputes over “swaps” and “collars” between banks and smaller businesses (SMEs). The aim was to  explain the ombudsman’s general approach to complaints (it is noteworthy however that no redress was actually set out and that the FOS previous complaints on this area were not made public and were not reasoned in the same way). The FOS notes that it received 258 complaints from businesses about interest rate hedging products sold by banks in 2012/13. However, the FOS stated it is generally unable to take on cases where a complaining business does not meet the definition of a microenterprise in the FCA rules (an enterprise that employs less than ten people and has a turnover or annual balance sheet that doesn’t exceed €2 million) such as to qualify as an eligible complainant for the purposes of invoking the FOS’ jurisdiction. Therefore the FOS could not deal with the vast majority of these complaints. Furthermore, the compensation claimed by businesses in these cases significantly exceeds the £150,000 maximum award that the FOS has the power to order by way of compensation to customers. ## FSA rejected an FOS IHRP Swaps Review In January 2013 the FSA (now the FCA) rejected the FOS’s suggestion that it should establish a special scheme allowing the ombudsman service to deal with complaints about interest-rate hedging products brought by businesses that would otherwise be outside the FOS' jurisdiction. It is interesting to note that the FSA rejected this following consultation with stakeholders, and said that it had decided it was not appropriate to have the FOS set up this scheme. Instead the banks agreed to review themselves their past business sales of IHRPs. ## The Appeal Body for FCA Review Appeals It is also noted that in spite of this rejection of the FOS special scheme, the FOS is the FCA's intended last resort for appeals from the banks own regulatory review process in respect of past sales of IHRPs, as stated here ([from the FCA website](http://www.fsa.gov.uk/library/other_publications/interest-rate-swaps/irhp-review)): > If, having had your case reviewed, you are not satisfied with the outcome or the level of redress you have been offered; you may be able to refer your complaint to the [Financial Ombudsman Service](http://www.financial-ombudsman.org.uk/). It will independently review all eligible cases. > > > > > > If you believe you have incorrectly been classified as a 'sophisticated' customer and have, therefore, not been eligible for redress, you can complain directly to your bank. If you are then not happy with your bank’s response you may be able to refer your complaint to the Ombudsman. Bank customers with IHRPs may wish to protect themselves from the possibility of their legal claims becoming time barred by virtue of limitation (generally six years from the date of the mis-selling such as the presentation of IRHPs by the bank) so that their legal claims can be pursued if necessary or advised. This would avoid the unfortunate position of a business having no final resort except with the Ombudsman. --- # The Banking Commission’s Proposals relevant to Swaps Mis-selling Source: https://lexlaw.co.uk/solicitors-london/banking-commission-final-report-proposals-swaps-mis-selling-derivatives-ihrps/ *The Parliamentary Commission on Banking Standards today publishes its Final Report – [‘Changing banking for good’](https://publications.parliament.uk/pa/jt201314/jtselect/jtpcbs/27/27iii02.htm).  It outlines the radical reform required to improve standards across the banking industry. We examine how the Final Report deals with issues of LIBOR manipulation and derivatives mis-selling and suggest further steps that could be taken to deter bank misconduct.* ## An Inquiry into Banking Standards The Commission was established in July 2012, in the wake of the Swaps mis-selling and LIBOR rate manipulation scandal, to conduct an inquiry into professional standards and culture in the UK banking sector and to make recommendations for legislative and other action.  The Chairman of the Parliamentary Commission on Banking Standards, Andrew Tyrie MP, said today: > Recent scandals, not least the fixing of the LIBOR rate that prompted Parliament to establish this Commission, have exposed shocking and widespread malpractice.  Prudential and conduct failings have many shared causes but there is no single solution that can restore trust in the industry.  The Final Report contains a package of recommendations that, together, change banking for good.  Given the misalignment of incentives, it should be no surprise that deep lapses in banking standards have been commonplace. ## The Commission's Proposals relevant to Swaps Mis-selling The Final Report contains a number of proposals of which the headline suggestion is criminal liability and deferred pay for bankers guilty of reckless misconduct extending to senior executives in supervisory positions and top traders who should operate by a new set of banking standards set by regulators.  These proposals have five themes: - making individual responsibility in banking a reality, especially at the most senior levels; - reforming governance within banks to reinforce each bank's responsibility for its own safety and soundness and for the maintenance of standards; - creating better functioning and more diverse banking markets in order to empower consumers and provide greater discipline on banks to raise standards; - reinforcing the responsibilities of regulators in the exercise of judgement in deploying their current and proposed new powers; and - specifying the responsibilities of the Government and of future Governments and Parliaments. The Report also makes recommendations relevant to swaps mis-selling which we highlight below: ## 1. Greater Access to the Financial Ombudsman Service (FOS) The Final Report makes plain that "the evidence the Commission has received suggests that too often the banks have not taken customer complaints seriously" and that "large banks have a poor track record when it comes to complaints handling." It is considered that the narrow definition of an "unsophisticated customer" used to determine eligibility for access to the Financial Ombudsman Service (FOS) for redress has been highlighted as problematic by the wave of cases relating to interest rate swap mis-selling to small businesses.  Many small businesses have fewer than 10 employees.  *Such businesses are particularly vulnerable to potential exploitation by the banks they rely upon for finance, particularly in the case of complex derivative products. (emphasis added)* The Commission recommends that the FCA consult on options for widening access to the FOS (Paragraph 523).  The suggestion is that the FOS might widen its criteria for eligible complainants which is currently restricted to private individuals or "micro-enterprises".  Micro-enterprises is an EU term covering smaller businesses with an annual turnover of less than two million euros and fewer than ten employees. It is noted that the FOS decisions on cases of swaps mis-selling (which are unpublished) have been historically predominantly in the favour of the banks and have wrongly excused the banks conduct in the sale of derivatives products to SMEs (save for two FOS published decisions of Ombudsman Boorman which came after the FSA report on the mis-selling of Interest Rate Hedging Products by the major banks). In order to be of service to bank customers the FOS will need to ensure that it improves its own standards when considering complex legal disputes such as these.  The FOS ought to have no hesitation in taking legal and regulatory advice from specialists where necessary to avoid reliance on the bank's viewpoint which has been carefully shaped by the bank's legal advisers. ## 2. A Licensing Regime to Uphold Individual Standards The Final Report proposes replacement of the current regulatory Approved Persons Regime (individuals approved by the FSA to perform one or more 'controlled functions' on behalf of an authorised firm).  The proposals are for the following: - A Senior Persons Regime to replace the Significant Influence Function element of the Approved Persons Regime. This should provide far greater precision about individual responsibilities than the system that it replaces, and would serve as the foundation for some of the changes to enforcement powers and approach that we recommend in Chapter 10; - A Licensing Regime to replace the Approved Persons Regime as the basis for upholding individuals' standards of behaviour, centred on the application of a revised set of Banking Standards Rules to a broader group than those currently covered by the Statement of Principles for Approved Persons; and - Reform of the register to support the first two pillars and ensure that relevant information on individuals can be captured and used effectively (Paragraph 612). The licensing regime proposal is intended to avoid the current situation where individual bankers involved in rate setting or the mis-selling or swaps can seek to claim a level of ignorance of the process they are a part of or claim they were only following orders.  The revised Banking Standards Rules ought to clearly set out what is and what is not acceptable individual conduct. ## 3. Financial Literacy, Transparency & Cross-selling The Final Report urges there to be greater financial literacy for customers and greater transparency by the banks particularly when cross-selling products. The Commission states that: - Waves of mis-selling and other forms of detriment suffered by consumers in the retail banking market reflect widespread financial illiteracy on the part of customers and a more financially literate population will be better capable of exerting meaningful choice, stimulating competition and exerting market discipline on banks, which, in turn, can drive up standards. - Industry, regulators and governments must avoid a situation where the banks design ever more complex products and then blame consumers for not being financially literate enough to understand them. - Alongside greater financial literacy, there is a need for a relentless drive towards the simplification of products and the introduction of clear, simple language. - Mis-selling and undesirable cross-selling are very unlikely to be eliminated through higher financial literacy, but improvements to such literacy will help bear down on those problems and be more effective, in many cases, than ever more detailed conduct regulation. - Cross-selling and a lack of price transparency are not restricted to retail banking.  Parts of investment banking are also characterised by opaque fee structures and some highly sophisticated companies [let alone small businesses] have entered into complex transactions that they have not fully understood.  This should not usually be an area for regulatory intervention: the principle of caveat emptor acts as an important force for market discipline. The regulator should not seek to shield sophisticated customers from the consequences of their poor decisions. However, it should be their duty, wherever possible, to ensure maximum price transparency at every level of banking (Paragraph 536). These issues are prime features of cases of derivatives mis-selling (largely to small unsophisticated business).  Banks have operated a purposive "Joint Meeting Programme" whereby the retail arm of the bank would, via the trusted Relationship Manager, introduce the derivatives sales person from the wholesale arm of the bank and each bank official would then jointly meet with the customer in order to sell complex financial instruments such as IRHPs. In a typical swaps mis-selling case, the bank customer, often a small business, would likely be completely unaware of the contingent liabilities in the proposed complex derivatives and would be unable to comprehend (or be properly informed of) the risks if rates fell. This is because the bank and its derivative sales person would routinely not be transparent about the risks associated with (nor the profits generated for the bank) by the customer's entry into such financial instruments. ## Will the Proposals Prevent Future Derivatives Mis-selling? The proposals by the Commission on Banking Standards are to be welcomed and are likely to have a deterrent and reductive effect on the likelihood of further mis-selling and manipulation scandals as is their design.  However with reference to swaps mis-selling specifically we consider the net impact whilst welcome will in practice be minimal. To explain, we have already seen the impact that the fall in base rate in Q4 2008 and Q1 2009 had on the banks sales processes of these products in that the sales presentations from the same sales teams at the major banks were vastly changed to provide more substantial risk warnings around breakage costs (as should always have been the case). Those clients with early swaps presentations in 2005 to 2008 and then restructuring presentations after the fall in base rate, particularly in 2010 and 2011, will have witnessed for themselves the stark changes in the sales process of derivatives by their bank. ## Additional Measures to Deter Swaps Mis-selling With reference to swaps mis-selling, the Commission could have gone further by correcting some of the legal issues which hamper swaps mis-selling claims brought in England & Wales.  We highlight two such issues below: - Firstly the Commission could have proposed regulation to prevent the banks claiming their role is non-advisory /execution only when in reality it is not particularly in cases of unsophisticated customers being cross-sold a complex financial instrument.  The practice of the banks is to insert small print into the contractual relationship and trade documents stating the relationship with the customer (even a small non-sophisticated business) and the trade of the financial instrument is on a non-advisory execution only basis.  Should a claim for breach of advisory duty subsequently be advanced the banks seek to rely on the legal principle of "contractual estoppel" effectively that the customer should be estopped from asserting the relationship is advisory as they have (in the small print) contracted otherwise.  This is especially unfair when dealing with complex financial instruments and a lack of available independent advice.  The Commission noted this when "referring to interest rate swaps, [Abhishek Sachdev [of Vedanta Hedging]](http://www.vedantahedging.com/abhishek-sachdev-quoted-in-final-banking-commission-report/) explained that there was nowhere for SMEs to go for advice on a complex product: they were sold to unsuspecting customers on "an execution only basis"." - Secondly,  the Commission could have proposed an amendment to [section 150 of the Financial Services and Markets Act 2000](http://www.legislation.gov.uk/ukpga/2000/8/section/150) (which gives a statutory right for private persons to bring a damages action for certain contravention in the sales process for regulated financial instruments).  The amendment could bring this statutory provision in line with the way in which other Member States, such as Germany and Ireland, have implemented the EU Markets in Financial Instruments Directive (MiFID) which is the source of s.150 FSMA 2000.  In England & Wales the legal status of the customer as a natural person (i.e an individual) determines access to s.150; an incorporated entity such as a company cannot claim under s. 150 due to the wording deployed by Parliament when transposing the EU directive into our national statutory laws.  This is in stark contrast to the position intended under MiFID and apparent in other Member States where status as an individual is not an issue in terms of making a statutory claim for breaches of rules. Banks must be forced to ensure their sales teams sell these products in a fair, honest, transparent manner with full disclosure of risks and importantly profit particularly where sales are to unsophisticated small business customers.  Further measures ought to be proposed to ensure (i) banks cease claiming sales to unsophisticated small businesses are non-advisory execution only trades and the default should be advisory responsibility for banks when selling derivatives to retail clients and (ii) that EU laws are properly transposed and implemented in this jurisdiction for the benefit of customers (not lobbying banks) and in accordance with the Government's stated [Guiding Principles for EU Legislation](https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/185624/bis-13-775-transposition-guidance-how-to-implement-european-directives-effectively.pdf) (post-MiFID; April 2013)*. * --- # ‘FCA Review’ of Interest Rate Hedging (IRHP) Sales: Written Statement or ‘Fact Find’ Interview? Source: https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/ *We outline the dangers to small business customers of recorded interviews in what is commonly known as the "FCA/FSA Review" of  sales of derivatives (eg interest rate swaps - IRHPs) but is actually a review conducted by the bank itself (the mis-selling wrongdoer) and not the regulator.* *The banks review teams often instruct lawyers to represent them and deliver the questions to customers (ordinary people) and the questions seem designed to avoid or limit compensation*. The interview process is one sided and customers have limited rights, for example to ask questions or obtain material from the bank's records *which may assist them**.* ## Bank Review of IRHP Sales: Fact Find Interview? Firstly you, as a bank customer, must confirm you would like to opt in to the review of past sales of interest rate hedging products (IRHP) (depending in some cases on the type of IRHP). This is the process which was privately agreed in June 2012 between the major banks (RBS, Barclays, HSBC and Lloyds) and the Financial Conduct Authority (FCA) (formerly the Financial Service Authority (FSA)). Once this 'opt-in' is done your bank will invite you to participate in an oral fact-find. The purpose of this discussion is said to be *"in order to give customers an opportunity to provide a complete and detailed account of the derivative sales experience"* however the derivative sale often took place several years ago and you may have little detailed recollection of events and conversations. It is paramount to note that your recollection will be a critical factor when it comes to the bank deciding what "fair and reasonable" redress to offer. Any lack of recollection is not helped by the usual refusal of the bank to provide you the full set of bank records which the bank and the reviewer has full access to.  It is disappointing to say the least that the bank have retained telephone recordings and can listen to them and produce transcripts but often will not release them to customers directly and promptly. The banks will routinely refuse Data Protection Act subject access requests and often legal pre-action disclosure applications are necessary to obtain as much information as possible and level the playing field. ## "FSA Review" Meetings / Telephone Calls The banks prefer to conduct face to face recorded meetings or several lengthy recorded telephone calls. One of the primary dangers is that in some cases the banks seem to operate these as interrogations with the client being repeatedly asked the same question in a multitude of different ways, which may be designed to elicit a response which would avoid or reduce the eventual redress. Those asking the questions are often senior City litigation lawyers instructed by the bank and acting for the bank (not the FSA/FCA) and who have been carefully trained to ask questions with a view to achieving their client's (the bank's) aims. While you can have a legal representative present, we would not necessarily be able to prevent you from making an unguarded comment, which might then subsequently be used against you in deciding the level (if any) of redress and also in any legal proceedings. It is crucial to note that all fact find interviews and the bank's documentation may be referred to in any complaint or litigation as these discussions are **not** without prejudice. Every case is unique and there is an argument that nothing paints the picture of mis-selling better than to hear it straight from the small business owner who was clearly unsophisticated yet has been sold the most complex derivatives product.  However we normally advise against a face to face meeting unless the customer is the type of person that is not easily led in discussion, is armed with a full set of information and records, and has a good understanding of the factors and arguments for redress. ## Using a Written Statement in the "FCA Review" In its Report, 'Interest Rate Hedging Products - Pilot Findings', the FSA stated that it would encourage all customers to take advantage of the opportunity to engage in the review. Crucially, a customer's account of the sale in correspondence by way of** a written statement is permitted by the review** but is generally discouraged by the bank's review teams and lawyers. A carefully prepared and considered written statement can provide a great level of detail and completeness in describing the sales experience in a structured form and without any of the dangers of a one sided interview process. You may wish therefore to submit a written statement, with the assistance of your legal advisers to ensure it contains no comments that can be used to avoid redress or limit legal action. We set out a basic summary of the areas that a written statement should seek to cover: - Relevant background about your business at the time of the purchase of the interest rate hedging product ("IRHP"), for example, the financial position of the business, your business plans and reasons for the loan; - Your relationship with the bank, for example, how long you have banked with them and the relationship with your banker(s); - Details of the loan including the amount, term and repayment profile; - Details of the sale of the IRHP describing the discussions that took place and the information that was provided to you about the IRHP that you purchased and any other products that you were offered; - Your understanding (at the time of the sale) of the features, benefits and risks of the IRHP and the cost of terminating the IRHP early; - Whether you were required to purchase the IRHP in order to receive the loan and your understanding of the reason(s) for this requirement; - Whether you felt you were being advised to take out the IRHP, together with any statements by the bank or its representatives which may have implied the bank was acting in an advisory capacity; - Your knowledge and understanding of IRHP at the time of the sale and the factors that influenced your decision to enter into the IRHP; and - Post sale issues and the impact of the IRHP on you and your business. ## Instructing Specialist Mis-sold Swap / "FCA Review" Lawyers It is important for small businesses not to assume they will get redress through some form of automatic process because of the breach of regulatory rules by their bank and action by the regulator. This is not what is happening; instead customers who were mis-sold must effectively put forward a claim to be considered under a framework of  rules known in detail only by the bank and the regulator. It is important to note the banks have employed and retained large defence teams made up of hundreds of (internal and external) solicitors, barristers, derivatives sales people and forensic accountants to represent them and therefore it is sensible to consider the review as a process in which you must also be represented. Solicitors can carefully manage the entire review process and specialist "FSA Review" lawyers can also, for example, assist you in preparing what effectively is a witness statement. This is not an easy or straightforward task. The information to be presented must be put forward in a clear structured and forceful manner. We have a legal team made up of leading financial services litigation solicitors and barristers; we pride ourselves on our ability to closely manage and concisely present our clients’ interests. Our swaps lawyers are well versed in not only writing detailed statements but have critical expert knowledge of the method of mis-selling, the relevant regulatory, statutory and common law and legal principles which you must assert to be considered in determining redress, the rules around the regulation of financial instruments and consequently the correct customer sales process which often did not occur. In addition we understand what pitfalls in your evidence the banks are seeking to capitalise on to avoid or reduce the financial compensation owed to the 40,000 victims of swaps mis-selling. ## Using Derivatives & Accounting Experts in the "FCA Review" We regularly instruct the leading derivatives and forensic accountant experts in litigation and the FCA Review process. We do this in order to ensure (i) we maximise the likelihood of a finding that the bank is liable to give real redress and (ii) that the compensation is as much as is legally appropriate in accordance with established law. Since this is an FCA mandated regulatory review, it may be that in your case we consider you need the assistance of an FCA authorised derivative expert. Such an expert is authorised to advise on the suitability and appropriateness of the IRHP provided to you, together with information about the extent to which the bank's sales process complied the conduct of business rules.  We can instruct the expert to calculate the profits generated by the Bank in selling you the IRHP which is often the fundamental motive for the whole IRHP sale in the first place. The expert can also suggest what OTC derivatives may have been more appropriate (if relevant) and can then also calculate the prices /rates of the alternative products that should have been provided to you, which will then help to assess your direct loss. Finally, in some cases we would advise the instruction of a qualified forensic accountant to substantiate / analyse your consequential losses. These are losses which result from the mis-sale of the IRHP, beyond the direct cost, such as additional finance costs, forced sale of properties and inability to pursue planned business opportunities.  A clear provision for this has been provided within the FCA Review scheme, on the same basis as such losses would be allowed in a legal case. While you may consider losses of this sort to clearly be a consequence of the IRHP, the assistance of a qualified expert may be very helpful in order for these claims to be taken seriously by the bank’s review team. --- # ‘FCA Swaps Review’ Update: Comment on Bank IRHP Review Delays with Statistics from the FCA Source: https://lexlaw.co.uk/solicitors-london/fca-swaps-review-bankirhp-review-scheme-delays-statistics-fca/ *We advise many businesses who have been [mis-sold over the counter derivatives](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) by banks such as RBS, Barclays, Lloyds, HSBC, Clydesdale and many others. We entirely understand the significant detrimental impact that this issue has had and continues to have on our clients' businesses. * [![FCA Financial Conduct Authority - Litigation Solicitors](https://lexlaw.co.uk/wp-content/uploads/2013/07/FCA-Financial-Conduct-Authority-Litigation-Solicitors-288x172.png)](https://lexlaw.co.uk/wp-content/uploads/2013/07/FCA-Financial-Conduct-Authority-Litigation-Solicitors-288x172.png) We not only litigate but often write and join in campaigns on behalf of our clients. We correspond not only with banks but also with MPs, print and broadcast journalists and regulatory authorities. We have very recently received a personal response (addressed to one of our clients) from Mr Martin Wheatley, the Chief Executive of the Financial Conduct Authority (the FCA) which contains insightful statistical information. Our client raised concerns in relation to the [banks’ reviews of the sales of Interest Rate Hedging Products (IRHPs)](https://lexlaw.co.uk/fcareview), particularly a view that the banks are systematically progressing review cases too slowly ([a view which we note is today widely reported as shared by the Business Secretary Vince Cable](https://www.google.co.uk/search?q=vince+cable+swaps+slow+&oq=vince+cable+swaps+slow+&aqs=chrome.0.69i57j69i62.4288j0&sourceid=chrome&ie=UTF-8#q=vince+cable+swaps+slow&safe=off&source=lnms&tbm=nws&sa=X&psj=1&ei=TiTxUc6zK4iU0AXTiICwDA&ved=0CAwQ_AUoBA&bav=on.2,or.r_cp.r_qf.&bvm=bv.49784469%2Cd.d2k%2Cpv.xjs.s.en_US.MpiVkF51mpA.O&fp=61705dcb6cb0f9bf&biw=1280&bih=899)). Whilst the banks' own reviews of past derivatives sales was announced in June 2012, the banks in fact only began their full reviews at the end of April 2013.  The FCA Chief Executive stated: "*We recognise that customers may have been frustrated by the perceived delay in getting started*." The delay is not merely perceived, it is very real and suits the banks in that tens of thousands of customers are at risk of losing the right to legal redress.  Many customers may be pinning their hopes on the so-called 'FCA Review' (the FCA do not review the mis-selling; the wrongdoer bank does) while their legal rights may be lost due to the six year time bar created by the Limitation Act. It is noteworthy and entirely revelatory that the FCA do not give any warning about legal rights becoming extinguished. We urge all businesses to protect their legal right of action even where they do not wish (or cannot afford) to pursue litigation at this time and would like to travail down the long path of the bank IRHP review process. The FCA's latest data was reported to our client by the Chief Executive of the FCA and this rather alarmingly reveals that of the approximately 38,000 cases identified only around: - Half (50%) of the [sophistication assessments](https://lexlaw.co.uk/solicitors-london/defining-sophistication-in-the-fsa-swaps-mis-selling-scheme-10m/) have been completed and that these customers have been invited to opt-in and provide testimony. - 1,500 (3.9%) cases  have moved to the [fact find / interview phase](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/). - 1,000 (2.6%) customers have had their payments suspended pending their reviews. It is worrying that only 3.9% of cases have reached the initial interview stage and of extreme concern is that only 2.6% of customers have had [swaps payments suspended in accordance with the BBA announced policy in December 2012](https://lexlaw.co.uk/solicitors-london/bba-announcement-on-major-banks-swaps-payment-suspension-policy/). It seems that some of the claims made in the past relating to the percentage of customers to whom suspension of swaps payments had been granted were not accurate compared with the above latest data provided in writing by the FCA Chief Executive. Aside from our general concerns about the one-sided unfairness in the so-called 'FCA Swaps Review' process, we are also very concerned to learn that at least one bank is attempting to bypass the sophistication stage entirely. We have evidence of an instance where one of our retail clients has been told that no decision has been reached on sophistication, but been told that the review can carry on as long as our client accepts the bypass of the sophistication assessment. This is clearly a tactic by the bank to avoid the damage of stating openly the client is unsophisticated. In spite of the assurances of the FCA such activities by the wrongdoer banks cannot be the hallmark of a transparent, fair and open review process. We consider it was, and remains, a fundamental error for a financial services regulator to ever allow a wrongdoer to review its own wrongdoing. This always suggested a lack of proper regulatory oversight which must also be the reason for the delays in the reviews (which are taking longer than cases settled after commencing High Court litigation) and the reason for the constant attempts of the banks to limit and bypass aspects of the swaps mis-selling review scheme itself. M Ali Akram, Principal, LEXLAW --- # Court of Appeal Judgment: Green & Rowley v The Royal Bank of Scotland Source: https://lexlaw.co.uk/solicitors-london/court-appeal-judgment-green-rowley-v-royal-bank-scotland/ [![Royal Courts of Justice Logo - LEXLAW Litigation Solicitors](https://lexlaw.co.uk/wp-content/uploads/2013/10/Royal-Courts-of-Justice-Logo-LEXLAW-Litigation-Solicitors-195x190.bk.optm.png)](https://lexlaw.co.uk/wp-content/uploads/2013/10/Royal-Courts-of-Justice-Logo-LEXLAW-Litigation-Solicitors-195x190.bk.optm.png)  Neutral Citation Number: [2013] EWCA Civ 1197 Case No: A3/2013/0138**** **IN THE COURT OF APPEAL (CIVIL DIVISION)** **ON APPEAL FROM THE HIGH COURT OF JUSTICE** **MANCHESTER DISTRICT REGISTRY** **His Honour Judge Waksman QC** **[2012] EWHC 3661 (QB)** Royal Courts of Justice Strand, London, WC2A 2LL Date: 09/10/2013 **Before :** LORD JUSTICE RICHARDS  LADY JUSTICE HALLETT and LORD JUSTICE TOMLINSON - - - - - - - - - - - - - - - - - - - - - **Between :** ** ****John Green and Paul Rowley** **Appellants** **- and -** ** ** ** ****The Royal Bank of Scotland plc** **(Registered in Scotland 90312)** **Respondent ** ** **Hearing date : 29 July 2013 - - - - - - - - - - - - - - - - - - - - - # Approved Judgment   **Lord Justice Tomlinson :** 1. On 25 May 2005 the Respondent bank, The Royal Bank of Scotland plc, hereinafter “the Bank”, sold to the Appellants, John Green and Paul Rowley, an interest rate swap, hereinafter “the Swap”, as a form of hedge against their existing loan liabilities to the Bank.  Messrs Green and Rowley allege that the swap was, to use the current expression, “mis-sold” to them by the Bank.  The judge below, His Honour Judge Waksman QC, sitting in the Mercantile Court at Manchester, disagreed.  Hence this appeal. 2. At the relevant time the conduct of the Bank in either arranging a swap transaction or advising upon it was governed by the then current Conduct of Business, hereinafter “COB”, Rules promulgated by the Financial Services Authority pursuant to its rule-making powers conferred by the Financial Services and Markets Act 2000. 3. Section 150 of the Financial Services and Markets Act 2000 provides, so far as material, as follows:- > “**150  Actions for damages.** > > (1) A contravention by an authorised person of a rule is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty. > > . . . > > (3) In prescribed cases, a contravention of a rule which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty. > > . . . > > (5) “Private person” has such meaning as may be prescribed.” 4. The Bank was for these purposes an “authorised person” and the Bank conceded for the purposes of this action that Messrs Green and Rowley were “private persons”. 5. The COB Rules said to be relevant are:- > “**COB 2.1 Clear, fair and not misleading communication** > > **Application** > > COB 2.1.1 R**  **(1) This section applies to a *firm* when it communicates information to a *customer* in the course of, or in connection with, its *designated investment business.* > > (2) This section does not apply to a *firm* when it communicates a *financial promotion* in circumstances in which COB 3 (Financial promotion) applies to the *firm.* > > **Purpose** > > COB 2.1.2G   The purpose of this section is to restate, in slightly amended form, and as a separate *rule,* the part of *Principle 7* (Communications with clients) that relates to communication of information.  This enables a *customer*, who is a *private* person, to bring an action for damages under section 150 of the *Act* to recover loss resulting from a *firm* communicating information, in the course of *designated investment business,* in a way that is not clear or fair, or is misleading. > > **Clear, fair and not misleading communication** > > COB 2.1.3 R  When a *firm* communicates information to a *customer*, the *firm* must take reasonable steps to communicate in a way which is clear, fair and not misleading. > > COB 2.1.4 G  When considering the requirements of *COB 2.1.3 R*, a *firm* should have regard to the *customer’s *knowledge of the *designated investment business* to which the information relates. > > COB 2.1.5 G  *COB 2.1* embraces all communications with *customers,* for example: *client agreements, periodic statements, *financial reports, telephone calls and any correspondence which is not a *financial promotion* to which COB 3 (Financial promotion) applies.  *Firms* should note the requirements of COB 3.8.4 R relating to *non-real timefinancial promotions* and COB 3.8.22 R relating to *real timefinancial promotions.* > > . . . > > **COB 5.4 Customers’ understanding of risk** > > **Application** > > COB 5.4.1 R  This section applies to a *firm* that conducts *designated investment business* with or for a *private customer* but does not apply to a* firm* when *providing basic advice on a stakeholder product.* > > **Purpose** > > COB 5.4.2 G  *Principle 7* (Communications with clients) requires a *firm* to pay due regard to the information needs of its *clients* and communicate information to them in a way that is clear, fair and not misleading.  *Principle 9* (Customers: relationships of trust) requires a *firm* to take reasonable care to ensure the suitability of its advice and discretionary decisions.  The purpose of this section is to ensure that a *firm* takes reasonable steps to ensure that a *private customer* understands the nature of the risks inherent in certain transactions. > > **Requirement for risk warnings** > > COB 5.4.3 R  A *firm* must not: > > (1) make a *personal recommendation* of a transaction; or > > (2) act as a discretionary *investment manager,* or > > (3) *arrange (bring about) *or *execute a deal* in a *warrant *or *derivative;* or > > (4) engage in *stock lending activity;* > > with, to or for a *private customer* unless it has taken reasonable steps to ensure that the *private customer* understands the nature of the risks involved.” > > The designation “R” indicates that the relevant provision is a rule – those provisions preceded by the designation “G” are guidance as to the purpose and application of the rule. 6. For the purposes of these provisions the Bank was a firm engaged in designated investment business and Messrs Green and Rowley were private customers. 7. Mr Green was at the material time an estate agent and residential lettings agent in Lytham St Annes.  Mr Rowley was at the material time a hotelier and property developer in the same town.  They carried on business together in partnership buying and developing commercial property.  The judge described them as intelligent and experienced businessmen.  He also observed that whilst they were not previously versed in swaps, this particular swap was very straightforward and they would have had no difficulty in understanding it or, if they did not, they would have asked, by which he meant I think that they would have asked the Bank in the circumstances hereinafter described.  They also had access to their own independent financial and legal advice from accountants and solicitors. 8. As at May 2005 Messrs Green and Rowley had two loans from the Bank secured on their properties.  The precise details of the loans do not matter.  Although it is an over-simplification, it can for present purposes be assumed that the loan was of £1.5 million for a term of fifteen years on an interest only basis at 1.5% above base rate.  Base rate as at 25 May 2005 was 4.75%. 9. Messrs Green and Rowley allege that both prior to and at a meeting on 19 May 2005 they were told by a Mrs Kay Gill and a Mrs Karen Holdsworth of the Bank that the Swap was a good idea and that they should enter into it.  Mrs Gill was a Senior Commercial Manager looking after a specific portfolio of business customers, including Messrs Green and Rowley.  Mrs Holdsworth was an Area Manager specialising in the arrangement of interest rate management products of which the Swap was one. 10. The Swap was executed on 25 May 2005.  It was preceded by the Bank sending to Messrs Green and Rowley what the judge described as the Terms Letter, which Mr Rowley countersigned as having been read and understood, together with its enclosures.  The enclosures included a copy of the Bank’s Terms of Business which stated at paragraph 3.2 that the Bank would provide the customer with dealing services on an execution only basis.  At paragraph 3.3 thereof the Bank stated that it would not provide the customer with advice on the merits of a particular transaction.  Schedule 1 to the Terms Letter, specifically acknowledged by Mr Rowley as having been read and understood, was a Risk Warning Notice in the form then prescribed by the Financial Services Authority.  It is unnecessary for the purposes of this judgment to discuss the question whether the provision of a notice in this form amounts to compliance with COB Rule 5.4.3.  It is equally unnecessary to discuss whether, on the assumption that provision of the Risk Warning Notice is not or not necessarily sufficient compliance therewith, the Bank did on the facts of this case take reasonable steps to ensure that Messrs Green and Rowley understood the nature of the risks involved in entering into the Swap.  The judge held that it did, although that conclusion was equally unnecessary to his decision, as I shall describe. 11. An interest rate swap is or can serve as an interest rate hedging product.  The Swap executed on 25 May 2005 was independent of the loan, although its purpose was to protect Messrs Green and Rowley against the risk of base rate increasing during the term of the loan.  An increase in base rate would result in the variable interest rate under the loan, base rate plus 1.5%, increasing accordingly.  Both parties would have assumed in 2005 that the margin above base rate would remain constant during the term of the loan.  Indeed, the margin was initially fixed, although later agreed variations to the terms of the loan opened up the prospect of an increase in margin being imposed on review or roll-over.  But on the assumption that the margin remained fixed at 1.5%, the Swap effectively converted the variable rate of interest under the loan to a fixed rate, at any rate for the term of the Swap.  It did so by means of a very straightforward transaction.  The Swap was based upon a notional sum, £1.5 million, which happened to be the principal amount of the loan in question.  A term was selected of ten years.  It could have been for the same period as the outstanding term of the loan, but it was Messrs Green and Rowley’s choice to make it shorter.  The property market was then buoyant. Their view was that within ten years they would sell or refinance their properties so that there was no need to lock themselves into a fifteen year swap.  They also expected their debt to increase rather than decrease over this period as they wished and expected to acquire more properties.  A fixed rate was set and applied to the notional amount.  It was 4.83%, only fractionally more than the then prevailing base rate.  The Swap provided for quarterly net payments between the Bank and the counterparty, here Messrs Green and Rowley.  Where base rate exceeds 4.83%, the Bank pays the counterparty the amount of the difference between the fixed rate and base rate as applied to the notional amount, £1.5 million, over the period in question.  Where base rate is lower than 4.83%, the counterparty pays the Bank the amount of the difference calculated in the same way.  Ignoring the fractional difference between 4.75%, base rate prevailing as at 25 May 2005, and 4.83%, the fixed rate, this mechanism provides an effective hedge against any increase in base rate during the ten year term.  If interest rates went up, whilst Messrs Green and Rowley would pay more under the variable rate loan, they would recoup the enhanced payment from the Bank under the Swap.  The obvious corollary of course is that if base rate went down, Messrs Green and Rowley would be worse off than had they not entered into the Swap.  That is because whilst they would pay less interest under the variable rate loan, they would have to disgorge that saving to the Bank under the Swap.  Hence their liability to pay interest to the Bank under the loan effectively became fixed for the term of ten years.  It is of the essence of a fixed rate loan that a borrower is protected against increases in base rate but does not get the benefit of a decrease in base rate.  Both the Bank and Messrs Green and Rowley thought at the time that it was a reasonable view that interest rates would come down in the short term and thereafter rise.  Neither foresaw the market convulsions of 2008. 12. In fact base rate remained fairly flat until about June 2006 when it started to rise significantly.  Between then and October 2008 Messrs Green and Rowley did well out of the Swap.  They were, as it is said, “in the money”.  But after October 2008, as interest rates fell to an all time low of 0.5% by 5 March 2009, they fared correspondingly badly.  But it is necessary to bear in mind that “doing well” and “doing badly” in this context merely reflects the answer to the question whether the market movements, from whose effect Messrs Green and Rowley were, so far as concerns the loan, now insulated, had been up or down.  Through thick and thin the Swap achieved its purpose of, in effect, fixing the interest rate payable under the loan. 13. In early 2009 Messrs Green and Rowley wished to restructure their partnership with Mr Green taking most of the properties and with them most of the debt.  This meant also revising the Swap, which still had six years to run with the Bank considerably “in the money”.  Clause 7 of the Swap deals with the calculation of the payment required for early termination.  At the meeting on 19 May 2005 Messrs Green and Rowley were given a copy of the Bank’s brochure or pamphlet entitled “Interest Rate Hedging Solutions: Reducing the uncertainty of future interest rate movements”.  As is explained in that document:- > “If interest rate derivative contracts are closed before their maturity, breakage costs or benefits may be payable.  The value of any break cost or benefit is the replacement costs of the contract and depends on factors on closeout that include the time left to maturity and current market conditions such as current and expected future interest rates.  This is illustrated below. > > There will be a breakage cost to you if the interest rates prevailing on closeout are lower than the fixed rate of the Swap (that you are paying) or below the floor rate of the collar.  There will be a benefit to you if prevailing interest rates are higher than the fixed rate of the Swap (that you are paying) or above the cap rate of the collar.” The reference to cap and collar is irrelevant in the context of this Swap which contained neither feature.  In early 2009 the cost to Messrs Green and Rowley of early termination of the Swap was calculated as £138,650.  This came as a shock to them as evidently it did to Mrs Gill. 14. On 25 May 2011 Messrs Green and Rowley issued a Claim Form against the Bank.  Many allegations were made in the Amended Particulars of Claim.  Most failed at trial in the light of the judge’s findings of fact which are largely unchallenged. The allegation which Messrs Green and Rowley wish to pursue on this appeal is that compliance with the COB Rules required the Bank not only to warn that break costs could be substantial but also to explain clearly and fairly the true potential magnitude of those costs so that they as the potential counterparty could understand it.  In that duty, so Messrs Green and Rowley allege, the Bank failed.  There was, it is said, inadequate disclosure of break costs.  As I have already indicated, the judge disagreed.  If it becomes relevant, the Appellants on this appeal challenge the judge’s finding as to the adequacy of the warning as to break costs. 15. As noted above, s.150 of the Financial Services and Markets Act 2000 renders contravention of the COB Rules by the Bank actionable at the suit of Messrs Green and Rowley.  So if in the opinion of the court the Bank failed to take reasonable steps to make sure that Messrs Green and Rowley understood the nature of the risks involved in committing themselves to the Swap, or failed to take reasonable steps to communicate with them in a way which was clear, fair and not misleading, Messrs Green and Rowley have without more a cause of action for breach of statutory duty, or a cause of action akin thereto, subject only to questions of causation, reliance and proof of loss.  This cause of action was not however pursued before the judge.  It was abandoned before trial on the footing that it was time-barred, the allegations being focused on what was said or not said at the meeting on 19 May 2005 and the Claim Form having been issued more than six years thereafter on 25 May 2011, the six year anniversary of the execution of the Swap.  Before us it was said by Mr David Berkley QC, for Messrs Green and Rowley, that the concession made below by his junior, Mr John Virgo, who then appeared alone, was “likely” to be wrong because any breach of duty associated with the arrangement and execution of the transaction would continue until the execution of the transaction itself.  This notwithstanding, no attempt was made by Messrs Green and Rowley to resile from the concession made below, and accordingly we are not called upon to express a view one way or another on the question when time began to run.  However this background history provides for the Appellants a distinctly unpromising start to their quest to persuade the court that there exist at common law duties of care co-extensive with those prescribed by the COB Rules, since one justification for the finding of such co-extensive, or as it is sometimes put by the Appellants, concurrent duties, the one rooted in statute and the other rooted in the common law, is said to be the more generous limitation period available in respect of the latter. 16. The judge found in terms that no “recommendation or advice for the Swap was given at the meeting” of 19 May 2005.  He also found that the Bank did not assume “an advisory duty of care before the meeting” and that no such duty arose as a result of anything said by Mrs Gill or Mrs Holdsworth at the meeting.  There is no formal appeal against those conclusions. 17. The judge also assumed, uncontroversially, that the Bank owed to Messrs Green and Rowley a duty to take care when making statements in relation to which it knew or ought to have known that Messrs Green and Rowley would rely upon its skill and judgment – the duty discussed in *Hedley Byrne and Co Ltd v Heller and Partners Ltd* [1964] AC 465.  This was in relation to what was called at trial the “Information Claim”.  So far as concerned the suggestion by the Appellants that the COB Rules informed the content of this duty the judge observed, rightly in my view, although I paraphrase his language, that the *Hedley Byrne* duty does not comprise a duty to give information unless without it a relevant statement made within the context of the assumption of responsibility is misleading.  Thus insofar as COB Rule 2.1.3 refers to a duty to take reasonable steps not to mislead, this is comprised within the common law duty, but insofar as it refers to a duty to take reasonable steps to communicate clearly or fairly, this introduces notions going beyond the accuracy of what is said which is the touchstone of the *Hedley Byrne* duty.  The duty imposed by COB Rule 5.4.3 to take reasonable steps to ensure that the counterparty to a transaction understands its nature the judge regarded, again rightly in my view, as well outside any notion of a duty not to mis-state, as he characterised the *Hedley Byrne* duty to be.  Accordingly, the judge did not regard the content of the Bank’s common law duty in relation to the accuracy of its statements as in any relevant manner informed by the content of the COB Rules. 18. By contrast, the judge was prepared to recognise that had the Bank undertaken an advisory duty, the content of that duty would have been in part informed by the content of COB Rules 2.1.3 and 5.4.3.  That approach has been endorsed on at least four occasions by first instance judges, the first of them His Honour Judge Raymond Jack QC putting it pithily in *Loosemore v Financial Concepts* [2001] Lloyds PNLR 235 at 241 where he pointed out that the skill and care to be expected of a financial advisor would ordinarily include compliance with the rules of the relevant regulator.  See also per His Honour Judge Havelock Allan QC in *Seymour v Ockwell* [2005] PNLR 758 and by the same judge in *Rubenstein v HSBC *[2011] EWHC 2304 (QB).  In *Shore v Sedgwick Financial Services Limited* [2007] EWHC 2059 (QB) Beatson J put it this way:- > “It is common ground that [the financial advisors] owed [the Claimant] a common law duty to act with the skill and care to be expected of a reasonably competent financial advisor.  In determining the extent of this duty, it is useful to start with the requirements of the relevant regulatory regime, in this case the SIB principles and the IMRO rules.  This is because the skill and care to be expected of a reasonably competent financial advisor ordinarily includes compliance with the relevant regulatory rules.” 19. The argument on this appeal is a narrow one, albeit the Appellants attempted to widen it beyond the confines of their Grounds of Appeal.  Mr Berkley submitted that “conventional jurisprudence holds that breach of a statutory duty is actionable as a breach of a concurrent common law duty of care where either the purpose of the statute is to confer protection on a defined class of individuals (sounding in an entitlement to damages) or (in like circumstances) where the statutory duty has been carelessly executed.”  For this proposition he relied upon the speech of Lord Browne-Wilkinson in *X (Minors) v Bedfordshire County Council* [1995] 2 AC 633 at 730. 20. Mr Berkley submitted that where a bank undertakes a regulated activity, here arranging or executing a relevant transaction, in circumstances where failure to comply with a statutorily imposed regulation, here COB Rule 5.4.3, is likely to give rise to damage to the counterparty, robbing it of its informed choice, a duty of care arises at common law which is co-extensive or concurrent with that imposed by statute. 21. Mr Virgo, following in circumstances where it was apparent that his leader did not have the ear of the court, suggested that the situation was one in which the court should by reliance on one or other of the conventional formulations of the incremental approach recognise the existence of a duty at common law, incremental to the *Hedley Byrne *duty, the content of which is informed by the statutorily imposed rules. 22. Mr Virgo’s argument is an attempt to re-open the argument which failed at trial in the light of factual findings against which there is no appeal.  The Bank did not undertake to advise upon the transaction and it gave no advice.  The circumstances were not such as could give rise to any duty at common law to advise. 23. Mr Berkley’s argument is in my view misconceived.  It amounts to saying that the mere existence of the COB Rules gives rise to a co-extensive duty of care at common law.  This proposition invites the question “why?”  Mr Berkley accepted that not every statutory duty will generate a co-extensive duty of care at common law.  It is no answer to the question what feature of the instant statutory duty, if there is a relevant statutory duty, gives rise to a co-extensive duty of care at common law to assert, as Mr Berkley did, that the Bank was undertaking a regulated activity in circumstances where a failure to comply with COB Rule 5.4.3 would be likely to cause loss.  Parliament has provided, by s.150 of the Financial Services and Markets Act 2000, a remedy for contravention of the rule in the shape of an action for breach of statutory duty, or at any rate an action akin thereto.  There is no feature of the situation which justifies the independent imposition of a duty of care at common law to advise as to the nature of the risks inherent in the regulated transaction.  As Mr Andrew Mitchell QC for the Bank succinctly put it, the Bank did not cross the line which separates, on the one hand, the activity of giving information about and selling a product and, on the other hand, the activity of giving advice.  Absent that feature, there is neither justification nor need for the imposition of a common law duty independent of but co-extensive with the remedy provided by statute. 24. Mr Mitchell also pointed out, correctly in my view, that neither COB Rule 2.1.3 nor COB Rule 5.4.3 in fact provides any pointer at all as to the assumption of a duty of care to advise or as to the appropriateness of imposing such a duty since both impose statutory duties which are owed by firms which are in a non-advisory or execution-only relationship with their counterparty as well as by firms which have undertaken an advisory role.  This is most clearly demonstrated by COB Rule 5.4.3, which imposes the duty to take reasonable steps to ensure that the private customer understands the nature of the risks involved upon both a firm which makes a personal recommendation of a transaction, sub-paragraph (1), and upon a firm which arranges (brings about) or executes a transaction, sub-paragraph (3). 25. Lord Browne-Wilkinson in *X * at page 730 said that:- > “Private law claims for damages can be classified into four different categories, viz: (A) actions for breach of statutory duty simpliciter (i.e. irrespective of carelessness); (B) actions based solely on the careless performance of a statutory duty in the absence of any other common law right of action; (C) actions based on a common law duty of care arising either from the imposition of the statutory duty or from the performance of it; (D) misfeasance in public office, i.e. the failure to exercise, or the exercise of, statutory powers either with the intention to injure the plaintiff or in the knowledge that the conduct is unlawful.” 26. Lord Browne-Wilkinson explained how a category (A) claim arises in this way at page 731:- > “The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult. The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action.  However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: *Cutler v. Wandsworth Stadium Ltd. *[1949] A.C. 398: *Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No.2) *[1982] A.C. 173. However, the mere existence of some other statutory remedy is not necessarily decisive.” 27. The absence of any general rule by reference to which it can be decided whether a statute creates a right of action for breach of statutory duty presents no difficulty in this case since s.150 of the Financial Services and Markets Act 2000 expressly provides a private law cause of action.  It can perhaps be described as an express cause of action for breach of statutory duty. 28. Category (B) does not assist the appellants.  As Lord Browne-Wilkinson explained, at page 732:- > “(B) *The careless performance of a statutory duty - no common law duty of care*. > > This category comprises those cases in which the plaintiff alleges (a) the statutory duty and (b) the "negligent" breach of that duty but does not allege that the defendant was under a common law duty of care to the plaintiff. It is the use of the word "negligent" in this context which gives rise to confusion: it is sometimes used to connote mere carelessness (there being no common law duty of care) and sometimes to import the concept of a common law duty of care.  In my judgment it is important in considering the authorities to distinguish between the two concepts: as will appear, in my view the careless performance of a statutory duty does not in itself give rise to any cause of action in the absence of either a statutory right of action (Category (A) above) or a common law duty of care (Category (C) below).” This case is not concerned with the careless performance of a statutory duty, since the Bank had no duty to sell derivative products.  But in any event Category (B) claims, as Lord Browne-Wilkinson demonstrated, involve the assertion of either a cause of action for breach of statutory duty or a cause of action at common law.  At pages 734 – 735 Lord Browne-Wilkinson said this:- > “In my judgment the correct view is that in order to found a cause of action flowing from the careless exercise of statutory powers or duties, the plaintiff has to show that the circumstances are such as to raise a duty of care at common law. The mere assertion of the careless exercise of a statutory power or duty is not sufficient.” 29. This leaves Category (C) claims.  Of these Lord Browne-Wilkinson said, at page 735:- > “(C) *The common law duty of care* > > In this category, the claim alleges either that a statutory duty gives rise to a common law duty of care owed to the plaintiff by the defendant to do or refrain from doing a particular act or (more often) that in the course of carrying out a statutory duty the defendant has brought about such a relationship between himself and the plaintiff as to give rise to a duty of care at common law. A further variant is a claim by the plaintiff that, whether or not the authority is itself under a duty of care to the plaintiff, its servant in the course of performing the statutory function was under a common law duty of care for breach of which the authority is vicariously liable.” This is of no relevance here for, as I have already pointed out, the Bank was not carrying out a statutory duty.  More importantly however this analysis does not support the notion that the mere existence of a statutory duty of itself brings about the creation of a co-extensive common law duty.  On the contrary, the analysis is inimical to any such notion.  The existence of a statutory duty may give rise to a common law duty of care in circumstances where breach of the statutory duty is not actionable in private law.  The more usual case is where in performance of a statutory duty a party, usually but not always a public authority, brings about a relationship between itself and another person such as is recognised to give rise to a duty of care owed to that person.  Again, the duties are not co-extensive and the duty at common law does not arise by reason of the imposition of the statutory duty but arises out of the relationship so created. 30. I therefore reject the suggestion that the Bank here owed to Messrs Green and Rowley a common law duty of care which involved taking reasonable care to ensure that they understood the nature of the risks involved in entering into the swap transaction.  The existence of the action for breach of statutory duty consequent upon contravention of a rule does not compel the finding of such a duty – indeed for the reasons I have already given it rather tells against it.  Mr Berkley’s further argument that such a cause of action would afford protection to those who, not being a “private person” cannot avail themselves of a cause of action for breach of statutory duty, is an invitation to the court to drive a coach and horses through the intention of Parliament to confer a private law cause of action upon a limited class.  Equally misconceived was his argument in reply that those who begin life as “Category A” claimants should be protected after expiry of the relevant period of limitation by a small incremental development of the circumstances recognised to give rise to a duty of care at common law. 31. Accordingly I would dismiss this appeal.  The Financial Conduct Authority was given leave to intervene in the appeal in order to make submissions upon the issue which does not in the event arise, whether the judge was right to conclude that the Bank did not in any event contravene COB Rule 2.1.3 or 5.4.3.  The parties, including the Financial Conduct Authority, were agreed that, the court having indicated after argument on the first ground that it intended to dismiss the appeal on that ground, it is inappropriate to express any view on a conclusion which was also, as I have already remarked, unnecessary to the judge’s decision.  Accordingly, we heard no argument on this further issue and I express no view about it. **Lady Justice Hallett :** ****32. I agree. **Lord Justice Richards :** ****33. I also agree. --- # The Times: Lloyds swap case settlement revealed Source: https://lexlaw.co.uk/solicitors-london/swap-misselling-case-settlement-revealed-irhp-the-times-lloyds-missold-derivatives/ *Katherine Griffiths, of The Times newspaper, [reports](http://www.thetimes.co.uk/tto/business/industries/banking/article3893732.ece) on our Financial Services Litigation team's recent success in a swaps mis-selling litigation case where a speculative financial instrument, namely a multi-cancelable swap, was sold to an SME by Lloyds bank. The bank refused to compensate their customers until the family instructed us earlier this year and we commenced legal proceedings. * [![The Times - Lloyds case settlement revealed - LEXLAW Litigation Solicitors & Barristers Bank Swaps Mis-selling](https://lexlaw.co.uk/wp-content/uploads/2013/10/141013-The-Times-Lloyds-case-settlement-revealed-LEXLAW-Litigation-Solicitors-Barristers.jpg)](https://lexlaw.co.uk/wp-content/uploads/2013/10/141013-The-Times-Lloyds-case-settlement-revealed-LEXLAW-Litigation-Solicitors-Barristers.jpg)*Lloyds Bank settles swaps mis-selling claim brought via LEXLAW Solicitors & Barristers, London.* Lloyds has paid about £1 million to a family business for mis-selling a complex hedging product that allowed the bank to cancel the contract against its client’s wishes. In a rare example of a settlement over swaps mis-selling becoming public, it has emerged that a Lloyds employee sold the so-called multi-cancellable swap to the businessman over the telephone while he was driving. The business, owned by a family named Khaishgi, runs small hotels in London and argued that it did not understand the £4.5 million product. Abhishek Sachdev, of the [Derivatives Expert consultancy Vedanta Hedging](http://www.vedantahedging.com/vedanta-hedging-client-awarded-non-secret-settlement-for-swap-mis-selling/), who acted as an expert witness for the Khaishgis, said that the swap was a “heads I win, tails you lose” derivative. Many small businesses have taken out interest rate swaps with their banks to ensure that if interest rates rise, their loan repayments will not become unaffordable. However, there has been a wave of complaints about the products because businesses have found that the terms were not what they thought, with many having onerous break clauses. In the Khaishgi case, after a given time, the contract allowed Lloyds to cancel it if interest rates rose — the very time that the client would have wanted the protection. If they stayed low and the client wanted to cancel, it would have been very expensive to do so. [M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), the family’s solicitor at [LEXLAW](https://lexlaw.co.uk/), said: > “If Lloyds did not settle the bank knew it would inevitably lose at trial which would result in the setting of a case precedent against itself and all major banks. They settled, on our terms, to avoid creating a precedent judgment.” Banks are settling dozens of swaps cases before they reach court every month but almost all of the terms are secret thanks to confidentiality clauses inserted by the banks. However, the Khaishgi case was brought [in fact settled] under civil procedure rules known as Part 36 which forced the bank to accept liability on terms of the party bringing the case. Small businesses are being encouraged to use the Financial Conduct Authority’s review scheme to lobby their banks for compensation, but the process has been criticised for being too favourable to the banks. One area of controversy is the FCA’s decision to divide businesses into “sophisticated” — those which should have been able to understand the hedging products and therefore are not allowed to be part of the review — and “non-sophisticated”, which banks are being obliged to look at. The Khaishgis were barred from using the scheme because a property they own in Mayfair broke through the FCA’s cap on assets [in fact they were *incorrectly* classified by their bank several years ago as intermediate customers and Lloyds used this, their own error, to their own advantage to avoid paying compensation in the redress scheme]. A Lloyds spokesman said: > “We fully accept that it was not appropriate to have conducted this call whilst the customer was driving. We have settled this case by mutual agreement with the customer.” Details of the settlement have emerged as Barclays is preparing this week for a fresh battle in its swaps mis-selling case with Guardian Care Homes. At a Court of Appeal hearing, Barclays will try to remove the link in the case between swaps mis-selling and Libor — the benchmark rate that many swaps were based on. Barclays has admitted it rigged Libor along with other banks, but is fighting attempts by Guardian and others to say that because Libor was flawed, so were the swaps. Barclays wants to fight the case — at a trial next year — on the details of the specific swap. Businesses that have suffered as victims of swaps mis-selling are encouraged to consider their legal options immediately – good cases lead to settlement and [expert swaps mis-selling lawyers](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) can put forward good cases in a way designed to encourage early settlement. --- # BBC Panorama exposes costly bank ‘swap’ scandal Source: https://lexlaw.co.uk/solicitors-london/bbc-panorama-exposes-costly-bank-swap-scandal-swaps-fca-review-irhp/ *LEXLAW have recently advised and given expert comment to BBC Panorama in order expose, on behalf of our SME clients, the banks who mis-sold. The programme will expose that customers were mis-sold complex loan insurance products and could be fined by the regulator, the FCA.* *Lexlaw's featured client obtained over £1m in compensation, due to the litigation and media pressure placed on them by us in our quest to obtain the optimal redress outcome for our client*. ## BBC Panorama: Britain’s New Banking Scandal The 'swap' deals were meant to give borrowers security against rising interest rates but with interest rates at an historic low many businesses have seen their payments soar. A redress scheme set up by the Financial Conduct Authority (FCA) to review nearly 30,000 cases involving various major banks has to date led to payouts for just 32 businesses. The FCA said the mis-selling of these products was a cultural problem and it would consider fining banks after the redress scheme had closed. Catherine and Michael Whelan from Newport are just two customers who have been affected by the scandal. After Panorama contacted Barclays about their case, the bank said it had suspended Kites Nursery's interest rate swap payments and if they made mistakes, they will put them right. Adam Shaw reports. [Panorama](http://www.bbc.co.uk/programmes/b006t14n)*: Britain's New Banking Scandal, BBC One, Monday 14 October at 20:30 GMT and then available in the UK on the *[BBC iPlayer](http://www.bbc.co.uk/iplayer/)*.* https://www.youtube.com/watch?v=7NXkPIkyLw4&feature=emb_title --- # Green & Rowley v RBS considered by Court of Appeal Source: https://lexlaw.co.uk/solicitors-london/green-rowley-v-rbs-considered-by-court-of-appeal/ Swaps Mis-selling case, Green and Rowley v RBS, is today being heard in the Court of Appeal.  The appeal from the Queen's Bench Division (Commercial) is being heard before Court of Appeal (Civil) Judges: Lord Justice RICHARDS, Lady Justice HALLETT and Lord Justice TOMLINSON. ## A3/2013/0138 Green & Anr -v- The Royal Bank of Scotland The Appeal is that of the Claimants and is an appeal from the [order of His Honour Judge Waksman QC](https://lexlaw.co.uk/solicitors-london/green-rowley-v-royal-bank-of-scotland-plc-2012-ewhc-3661-qb/), dated 21st December 2012, filed 18th January 2013 which dismissed the claim in favour of RBS. We provided [legal comment on Green & Rowley v RBS](https://lexlaw.co.uk/solicitors-london/legal-comment-on-green-rowley-v-rbs-2012-ewhc-3661-swaps-mis-selling-judgment/) back in December 2012. The decision, which was highly fact-sensitive, was decided in favour of the bank, who convinced the court that it had properly explained the risks of the product. ## Intervention by the Financial Conduct Authority (FCA) In January 2013, the Financial Conduct Authority (FCA) sought and gained permission to participate in the appeal. The FCA explained that in so doing it wanted to be considered impartial. The FCA wanted the opportunity to explain its regulatory framework of rules and its interpretation of them to the Court of Appeal. Eleven UK banks have agreed with the FCA to review their past sales of interest rate swaps and provide redress (not necessarily monetary compensation) to customers who were misled or not given adequate information in the sales process. We consider the FCA's comments will have been helpful to the Appellants but are most unlikely to be determinative in this appeal. ## Time Bar / Limitation of Swaps Mis-selling Claims It should be noted though the fact that Green and Rowley for some reason decided to accept the section 150 FSMA claim was time barred without making any legal challenge on this issue. The section 150 FSMA claim ought to have been the strongest element of the case and the acceptance that it was time-barred may prove unfortunate as this aspect cannot be easily challenged in the Court of Appeal given it was not determined by HHJ Waksman QC in the lower Court. This illustrates the importance of a careful analysis of a case in order to calculate the correct limitation dates applying to each element of the claim and demonstrates the importance of instructing a [specialist law firm dealing with swaps mis-selling claims](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) from the outset. Expert swaps litigation lawyers ought to assess the case on its merits (and demerits) and then manage it carefully. This entails adopting an appropriate litigation or [FCA Review strategy](https://lexlaw.co.uk/fcareview) for the particular case. It is important to obtain bank held documents and telephone recordings and to carefully consider the issue of limitation which is not as simple as six years from the date of the trade telephone call as many believe. --- # Green & Rowley -v- The Royal Bank of Scotland: Appeal Dismissed Source: https://lexlaw.co.uk/solicitors-london/green-rowley-v-the-royal-bank-of-scotland-court-of-appeal-dismiss-swaps-misselling-appeal/ *In a hearing that, after months of anticipation and an intervention by the FCA, proved in the end to something of a damp squib, the appeal in Green & Rowley was quickly determined by the Court of Appeal earlier today and dismissed. Importantly no harm seems to have been done to other businesses with swaps mis-selling claims.* ## A3/2013/0138 Green & Anr -v- The Royal Bank of Scotland The appeal was from the decision of HHJ Waksman QC sitting in the Mercantile Court in Manchester (Queen’s Bench Division (Commercial)). The appeal was heard by the following Lord Justices of the Court of Appeal: Lord Justice RICHARDS, Lady Justice HALLETT and Lord Justice TOMLINSON. Those following financial services litigation cases against banks in the area of interest rate hedging mis-selling will be well aware of this case and the intervention by the Financial Conduct Authority (FCA) into the appeal. The FCA we understand took the opportunity in a skeleton argument drafted by Nicholas Peacock QC to explain its regulatory framework of rules and its interpretation of them to the Court of Appeal. As we stated in an earlier post, we consider the FCA’s comments will have been helpful to the Appellants but were most unlikely to be determinative in this appeal. ## Understanding why the Appeal was Dismissed We consider the appeal was dismissed because of two principal factors. Firstly and historically (i.e. prior to the lower court determination), the claimants decided to abandon the section 150 FSMA claim as they (probably) believed it was time barred by operation of the Limitation Act. This was a mistaken concession because in fact certain of the conduct of business rules arguably create duties that run right up to the trade execution call. This highlights the need to instruct [expert swaps mis-selling lawyers](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) to prepare, present and argue your case. Secondly the Court of Appeal were effectively being asked to decide that there was a concurrent advisory duty under common law to comply with the regulatory rules in the face of a decision of fact by HHJ Waksman QC that there was no advice in this particular case. ## URGENT: Time Bar in Swaps Mis-selling Claims This case  illustrates the importance of calculating the correct limitation dates that apply to each element of the claim. Expert swaps lawyers would assess the case at the outset when it matters the most and then advise on an appropriate litigation or FCA Review strategy. The issue of limitation is not as simple as six years from the date of the trade telephone call as many believe. Clearly it is vital to instruct a specialist law firm dealing with swaps mis-selling claims from the outset. Those businesses with mis-sold swaps should see a solicitor promptly as given many swaps were sold in the period of 2005 to 2008 the issue of time bar is effecting and limiting the legal rights of hundreds of cases every week at present. It costs little to protect a legal claim compared to a small fortune if the opportunity to pursue legal rights are lost. Those businesses who believe they were mis-sold a swap but that do not protect their legal claims will be left utterly reliant on the bank's **own** review of whether they mis-sold the IRHP. --- # White Collar Crime Update: “Making and Accepting a Financial Advantage” under the Bribery Act 2010 Source: https://lexlaw.co.uk/solicitors-london/white-collar-crime-update-making-and-accepting-a-financial-advantage-under-the-bribery-act-2010/ *The[ Serious Fraud Office (SFO)](http://www.sfo.gov.uk/) has brought the first set of charges **under the Bribery Act 2010 against **a UK company allegedly involved in a £23 million bio-fuel investment fraud. We discuss the white collar crime of  'Making and Accepting a Financial Advantage' contrary to the Bribery Act. * ## White Collar Crime: The Bribery Act 2010 The company being investigated is suspected of the fraudulent promotion and selling of "bio fuel" investment products to UK investors. An SFO spokesperson said: > *“The Serious Fraud Office is investigating the activities of Sustainable Agroenergy Plc and Sustainable Wealth Investments UK Ltd and associated companies in connection with selling ‘bio-fuel’ investment products involving Jatropha tree plantations in South-East Asia.”* The value of the alleged fraud is approximately £23 million. A total of 1,500 investors could lose out as a result of the collapse of investment firms which invested heavily in bio-fuel. The alleged fraudsters have now been charged with the offences of *'making and accepting a financial advantage*' contrary to sections 1 and 2 of the Bribery Act 2010. The SFO confirmed that those connected with the fraud will appear before Westminster Magistrates Court on 23 September 2013. ## What is 'Bribery'? (Making and Accepting a Financial Advantage) The criminal act of bribery is set out in Section 1 of the Bribery Act 2010. The act of bribery is committed when a person either: - gives or promises to give a financial or other advantage to another individual in exchange for improperly performing a relevant function or activity (or reward a person for the improper performance of such a function or activity); or- offers, promises or gives a financial or other advantage to another person, and that person knows or believes that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity. Section 2 of the Bribery Act 2010 covers the offence of being bribed which is defined as: requesting, accepting or agreeing to accept such an advantage, in exchange for improperly performing such a function or activity; or agreeing to receive a financial or other advantage, with the agreement or acceptance constituting the improper performance of a relevant function or activity. An individual who is found guilty of an offence under section 1 or section 2 of the Bribery Act 2010 could face imprisonment for either a term not exceeding six months, or for a term not exceeding 10 years (depending on the seriousness of the offence).  Those found guilty under section 1 or section 2 may also face a substantial fine. ## Section 7 of the Bribery Act 2010: Corporate Liability? There have been calls for more charges to be brought under section 7(1) of the Bribery Act 2010 against commercial organisations for* ‘failures to prevent bribery*’. The suggestion is that commercial organisations should be fined for turning a blind eye to acts of bribery by those connected or associated with the company. However, under section 7(2) of the Bribery Act 2010, it is a statutory defence to demonstrate that the company *'implemented adequate procedures designed to prevent a person committing bribery*'. This means that provided the company demonstrates it has adequate procedures in place to combat bribery, there is a high possibility that the company will escape liability. Nevertheless, many commentators believe that the ball is now rolling and that we may not have to wait too much longer for the first Section 7 case. ## Will there now be more Bribery Act 2010 Prosecutions? The first SFO case under the Bribery Act 2010 will not be easy to prove as key terms under the Act such as “adequate procedures,” “associated persons,” or “foreign public official” have not yet been defined by the Court. Nevertheless, this case provides a reminder that the Act is not limited to acts of bribery overseas and that now UK company directors, members of company boards, and financial advisers can be held accountable for their actions under the Bribery Act 2010.  This case demonstrates that the SFO are cracking down on acts of bribery, with particular emphasis on senior officers and directors of companies. --- # Interest Rate Swaps Mis-selling: FCA Publishes IRHP Review Statistics Source: https://lexlaw.co.uk/solicitors-london/interest-rate-swap-mis-selling-fca-update-irhp-fsa-review/ *The FCA have today published an [update](http://www.fca.org.uk/news/update-on-the-banks-reviews-of-sales-of-interest-rate-hedging-products) on the banks' reviews of the sale of interest rate hedging products ("IRHPs"). Despite attempts by the FCA to say that good progress is being made, the figures expose that the Review process is marred by severe delay. Such delay serves to limit customers' legal rights and amounts to an abuse of the proper process of  the Review.* ## 14 Months on: Review population: 30,169 | Acceptable offers: 10 The review into the mis-selling of interest rate swaps was announced by the Financial Conduct Authority (then the FSA) on 29 June 2012. On [31st January 2013](http://www.fsa.gov.uk/library/communication/pr/2013/010.shtml), the Financial Conduct Authority (the FCA) published a [press release](http://www.fsa.gov.uk/pubs/other/interest-rate-swaps-2013.pdf) in which they stated: *"We expect the banks to aim to complete their review within six months, although the priority must be delivering fair and reasonable outcomes for customers. We accept that for banks with larger review populations this may take up to 12 months."* This led many people to understand that the review process would be completed within 6-12 months of 31st January 2013, i.e. in many cases by 31st July 2013 and in all cases by 31st January 2014. It is clear from the progress to date that these deadlines will not be met, and the FCA makes no reference to its previous statement in today's release.  In fact, by the end of August 2013, there were only 10 cases where a final offer of redress had been accepted by the customer. The FCA now say that *most *customers will be informed of the *basic redress offer* by the *end of the year*.  It therefore seems clear that the review will not in fact be complete by the end of January 2014. Indeed, given that only 0.03% of customers have completed the process to date, it seems unlikely that revised target (whatever it means) can be met. ## RBS lagging the field: Delay tactics designed to time bar legal rights? Further striking information can be gleaned from the breakdown of the [data by bank](http://web.archive.org/web/20150421010001/http://www.fca.org.uk:80/static/documents/bank-by-bank-progress.pdf) (which is easy to miss at the bottom of the press release). Firstly, it is notable that RBS has more than double the review population of any other bank.  In fact, RBS customers make up over a third of the total. No doubt because of this, RBS are progressing more slowly through the review process than the other banks. Whereas Barclays have now completed the customer classification process, RBS are still at this stage for nearly half their customers. Customer classification simply refers to the process of determining whether customers are "sophisticated" or not for the purposes of the review. Although there are [some complexities](https://lexlaw.co.uk/solicitors-london/defining-sophistication-in-the-fsa-swaps-mis-selling-scheme-10m/) to this determination, in the vast majority of cases it should be as straightforward as looking at the business and seeing that it has fewer than 50 employees, less than £6.5 million turnover and a balance sheet of less than £3.26 million. There can be no reasonable explanation for such lengthy delays in this process. We have previously [noted our concern](https://lexlaw.co.uk/solicitors-london/rbs-announce-results-provision-for-swaps-mis-selling-increased-by-1300/) that RBS's provision for IHRP mis-selling claims remains inadequate. With a population of over 10,000 sales, and given the high rate of non-compliant sales noted by the FCA and below, a provision of £700 million seems plainly inadequate. In particular, Barclays, with a much smaller population of sales have made a provision of £850 million. ## 93% of sales non-compliant with regulatory framework The complex part of the review process is what the FCA refer to as the "compliance assessment", which is the third stage, where the bank actually determines whether or not the sale complied with its regulatory obligations. Only 608 cases have completed this stage, out of an eligible population of 28,050, i.e. 2% of sales have been assessed for compliance. Of these, 93% have been found to be non-compliant. ## FCA deterring customers from seeking legal advice Today's FCA press release once again repeats previous claims by the FCA that the redress process means that customers need not obtain legal advice as the process is allegedly simple. We consider this is incorrect and that there are at least two serious dangers with this approach from the customers point of view. The first is that, as we have [previously outlined](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/), the review contains a number of traps for the unwary which could result in customers prejudicing their legal rights. For example, the banks' review teams often instruct lawyers to represent them and deliver interview questions to customers (ordinary people) and the questions seem designed to limit redress. The interview process is  demonstrably one sided and customers have limited rights, for example to ask questions or obtain material from the bank’s records which may assist them in providing their account of events that occurred several years previously. The second is that many of these cases will be coming up to their "limitation date", which will usually be six years after the date of the presentation or sale. After this date has passed, it will be too late to bring legal proceedings. ## Warning: waiting for a Review may result in loss of legal rights A customer was recently informed by their bank (shortly after the expiry of their limitation date) that they would be excluded from the review. It is a source of dismay that this was in spite of the customer being sold a Category A product and engaging with the bank in the pilot review process in 2012 (having undergone a full review in that process). Fortunately, that customer had obtained legal advice and protected their legal rights by issuing a claim in the High Court. With large sums of money in dispute, a relatively small expenditure on expert legal advice could prove very valuable. --- # Online Ticketing Company Directors Receive Lengthy Disqualification Order Source: https://lexlaw.co.uk/solicitors-london/company-directors-disqualified-cdda-1986/ *The directors of Virtuosi Limited, which is a hospitality provider centred in Leicester, have been disqualified for a total of 18 years under the Company Directors Disqualification Act 1986. This comes after an investigation was carried out by the Insolvency Service into how the company sold, but did not deliver, tickets for concerts and sporting events including the Qatar Grand Prix. * ## Company Directors Disqualification Act 1986 A disqualification order is made by the court under the Company Directors Disqualification Act 1986. The Act applies not only to a person who has been formally appointed as a director, but also to those who carry out the functions of a director, known as ‘shadow directors’. In this case, the two directors, were disqualified for a total of 18 years because their company sold tickets to customers worth at least £386,271 for the three Grand Prix events and unauthorised tickets to numerous London Olympic events worth £61,685, but they failed to deliver. The investigation uncovered that the directors allowed the company to continue trading despite being insolvent. As such, the company exploited and customers who paid thousands of pounds for goods and services which they did not receive. The company was wound up following the presentation of a [winding up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) by one of its suppliers. Ken Beasley, an Official Receiver at the [Insolvency Service](http://www.bis.gov.uk/insolvency) said: > “The Insolvency Service has strong enforcement powers and we will not hesitate to use them to remove directors from the business environment who have failed to demonstrate the level of care and responsibility that is required of them.” ## Legal Consequences for Disqualified Directors The consequences of being disqualified means that the director in question cannot act as a director (or carry out any function of a director) for the period of disqualification. The directors name will be placed on a register of persons who have either been disqualified through a court order, or by an undertaking given by the director. The register shows the length of time the director has been disqualified. The minimum period of a disqualification order is two years and the maximum is 15 years. Our specialist lawyers are able to assist with the [legal defence of directors disqualification proceedings brought by the Insolvency Service](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/). Please note it is open to a disqualified director to apply to the court for leave to act as a director or manager of a company. --- # Barclays’ appeal in ‘LIBOR test case’ dismissed by Court of Appeal Source: https://lexlaw.co.uk/solicitors-london/barclays-appeal-libor-test-case-dismissed-court-appeal/ *The Court of Appeal has today dismissed Barclays' appeal in the case of Barclays Bank v Graiseley, which has been referred to as the 'LIBOR test case’. The case of Deutsche Bank v Unitech was also decided in the favour of the customer. The Court of Appeal judgment will be of significant interest for any bank customer that has a LIBOR pegged derivatives contract (interest rate hedging product or IRHP) with a bank. The judgment makes it clear that banks that manipulated the benchmark are at significant risk in allowing cases where LIBOR fraud is well pleaded to go to trial.* The two appeals resulted from the manipulation of the London Inter-Bank Offered Rate (“LIBOR”) frequently used as a reference rate in the calculation of interest in loan agreements or swap agreements. LIBOR indicates the interest rate that banks charge when lending to each other and is fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts. In both the appeals the claimants sought permission to amend their pleadings to allege that the banks made implied representations as to the efficiency of or the non-manipulation of LIBOR.  In the Graiseley v Barclays case Flaux J on 29th October 2012 gave permission for such amendments to be made.  In the two Deutsche Bank cases Cooke J on 28th February 2013 declined to follow Flaux J and refused permission to make amendments in the two cases but gave permission to appeal. The Court of Appeal dismissed Barclays’ appeal from the decision of Flaux J [2012] EWHC 3093 (Comm) by which the claimants, Graiseley (members of the Guardian Care Homes group), were granted permission to amend their claim to plead fraudulent LIBOR misrepresentation and LIBOR implied terms against the bank. Lawyers acting for Barclays argued unsuccessfully that the LIBOR claims amounted to an *“obligation to disclose one’s own dishonesty”* which was a cause of action unknown to English law. Longmore LJ stated that such submission was inappropriate to an application for permission to amend. LJ Longmore said at paragraphs 27 and 28 of his judgment (emphasis added): > In the present case, however, the banks did propose the use of LIBOR and **it must be arguable that, at the very least, they were representing that their own participation in the setting of the rate was an honest one**.  It is, to my mind, surprising that the banks do not appear to be prepared to accept that even that limited proposition is arguable. > > > > > > It was also submitted that doing nothing cannot amount to an implied representation.  But it is (arguably) the case that the banks did not do nothing in that they proposed transactions which were to be governed by LIBOR.  **That is conduct just as much as a customer’s conduct in sitting down in a restaurant amounts to a representation that he is able to pay for his meal**. The learned judge went on to comment at paragraph 30 that (emphasis added): > The banks’ submissions boiled down to saying that they were prepared to accept that they would do nothing dishonest or manipulative during the term of the contract and that should be enough for any counterparty.  I can only say that, in my view, it is arguably not enough.  **If the day after the contracts had been made, the banks had told their counterparties that they had been manipulating LIBOR in the past and intended to do so in the future, but would be happy to pay any loss that their borrowers could prove, the borrower would (arguably) be sufficiently horrified so as to think he would be entitled to rescind the deal.** ** The law should strive to uphold the reasonable expectations of honest men and women.**  If in the end it cannot do so, that should only be after a proper trial. The Barclays appeal was heard together with the appeal by the claimants in two related cases from the decision of Cooke J in Deutsche Bank AG & Ors v Unitech Global Limited & Or [2013] EWHC 471 (Comm). Unitech’s appeal was also allowed including on LIBOR aspects. The Graiseley v Barclays case is now set to proceed to a trial before Flaux J in April 2014. Full Judgment: [Court of Appeal: GRAISELEY PROPERTIES LIMITED v BARCLAYS [2013] EWCA Civ 1372](https://lexlaw.co.uk/wp-content/uploads/2013/11/LEXLAW-Court-of-Appeal-GRAISELEY-PROPERTIES-LIMITED-v-BARCLAYS-2013-EWCA-Civ-1372.pdf) --- # RBS Commissioned Report Criticises Treatment of SME’s in Global Restructuring Group (GRG) Source: https://lexlaw.co.uk/solicitors-london/rbs-commissioned-report-criticises-treatment-of-smes-in-global-restructuring-group/ *Following the [publication of the Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) into the Royal Bank of Scotland’s treatment of SME’s, [another report by Sir Andrew Large](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) has called for an urgent review of the way businesses are treated by banks turnaround divisions such as RBS’s Global Restructuring Group (“GRG”).* *Sir Andrew Large was asked by RBS to conduct an independent review into RBS’s SME lending; he took into account various sources including the [damning Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) and concluded that **some of the banks’ customers had a strongly negative perception of RBS, in particular related to their treatment as a business in financial distress. The RBS commissioned report criticises GRG’s governance and its communications procedures, recommending that the bank look into the treatment of SME’s in  the turnaround division.* ## RBS Independent Lending Review: Sir Andrew Large’s Findings on RBS Global Restructuring Group (GRG) The RBS commissioned report highlighted the aim of RBS’s Global Restructuring Group as managing distressed SME customers and nursing them back to health. GRG had the responsibility of turning businesses in financial difficulty around and sending them back to the mainstream Business & Commercial business area. The following flow chart taken from the report shows the bank's internal transfer process for distressed business customers within RBS: [![RBS GRG Andrew Large](https://lexlaw.co.uk/wp-content/uploads/2015/12/RBS-GRG-Andrew-Large.png)](https://lexlaw.co.uk/wp-content/uploads/2015/12/RBS-GRG-Andrew-Large.png) However, Sir Andrew Large found that: - GRG is run as an “internal profit centre”, with its profit and loss account based on the incremental income that it generates for the bank, less its operating costs. Yet GRG retains the ultimate authority over which customer relationships are transferred to it. In practice, decisions to transfer customers to GRG are usually initiated by the (Specialised) Relationship Manager or Credit Officer within B&C (in consultation with GRG). However, GRG officially retains the ultimate decision making authority rather than an independent body, and there are no other procedural checks and balances in place (such as a negotiated transfer price between B&C and GRG) - GRG also has responsibility for the move from turnaround to resolution and recovery. Once responsibility for managing the relationship with a customer has been transferred to GRG, B&C has limited visibility over the actions taken and decisions made by GRG, regardless of whether the objective is turnaround or recovery and resolution. The governance process for the critical decision of whether a business has reached the point of non-viability is therefore opaque both to B&C and to the SME itself, which may be unaware or unprepared for the consequences of the change Sir Andrew Large commented that "the decisions and actions taken by the bank can be highly unsettling and emotional for the customer" and that "they will likely impact the livelihoods of the individuals and families who own and run the SMEs in question". He also found that the individual SME "may be unaware or unprepared for the consequences of the change", and highlighted the lack of recourse available to customers in such situations, stating that "SMEs typically lack the funds or expertise required to challenge the banks in protecting their interest". ## Sir Andrew Large Urges Review into Bank's Treatment of SME's in Turnaround Divisions such as RBS GRG [Sir Andrew Large echoed Dr Lawrence Tomlinson's findings and told the Financial Times](http://www.ft.com/cms/s/0/f7a23e1a-55b9-11e3-b6e7-00144feabdc0.html#axzz3vnvFWMeJ) the lack of governance and safeguards at Britain’s biggest lender to SMEs could be replicated elsewhere. > "RBS needs to address the concerns that have been raised by some customers and external stakeholders about its treatment of SMEs in financial distress and minimise the perceived conflict of interest within GRG. This would be best achieved through a forensic inquiry to substantiate or refute serious accusations that have been made." Following the publication of both reports, RBS announced that they would be carrying out an internal investigation and reporting their findings in due course. Lawrence Tomlinson's report can be read here: [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) (PDF) & [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx) (Text) Sir Andrew Large's report can be read here: [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) (PDF) & [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx) (Text) --- # Sky News report on UKBA Immigration backlog featuring LEXLAW Source: https://lexlaw.co.uk/solicitors-london/sky-news-report-ukba-immigration-backlog-featuring-lexlaw/ *The Home Affairs Committee's Eighth Report on the work of the UK Border Agency was published today. Rhiannon Mills of [SKY NEWS](https://web.archive.org/web/20131111191629/http://news.sky.com:80/story/1165519/poor-record-on-illegal-immigrant-removals) met with Aisha Choudhry of LEXLAW's Immigration Team to discuss the negative impact of the UKBA's immigration backlog on UK Visa and Immigration Applications (which better the UK's economic prosperity). * https://www.youtube.com/watch?v=F37c04I2vqM&feature=emb_title The SKY News interview is in light of the [Home Affairs Committee's Eighth Report on the work of the UK Border Agency](http://www.publications.parliament.uk/pa/cm201314/cmselect/cmhaff/616/61602.htm) which was published today. The report focuses on the work of the UK Border Agency and has found that the Home Office still has a backlog of 432,000 cases and that these cases must be 'cleared as a matter of priority'. The Home Secretary explained the rationale for disbanding the UKBA and replacing it with two new entities: > In [the Agency's] place will be an immigration and visa service, and an immigration law enforcement organisation. By creating two entities instead of one, we will be able to create distinct cultures. The first will be a high-volume service that makes high-quality decisions about who comes here, with a culture of customer satisfaction for business men and visitors who want to come here legally. The second will be an organisation that has law enforcement at its heart and gets tough on those who break our immigration laws. The Home Affairs Committee concluded it was too early to evaluate the operational impact of the abolition of the UK Border Agency but interestingly noted that the reporting to the committee itself by the Home Office was, in what is becoming it's inimitable style, routinely delayed. The Committee noted in conclusion that (emphasis added): > In real terms that the backlog of cases awaiting resolution has only been reduced by 19,421. **The Home Office still do not appear to be getting to grips with this issue. The backlog is still at an astonishing 432,029, which will mean at current levels it will still take over 5 years to clear**, notwithstanding the addition of new cases or the discovery of new backlogs. The Committee reiterate our previous recommendation made on numerous occasions that the backlogs must be cleared as a matter of priority. The Home Office's backlog and delay in processing UK visa applications is an issue affecting businesses and other migrants and visitors to the UK that ought to be welcomed and encouraged. Many visa applicants, who have submitted their applications to the Home Office, are forced to wait for many months and even years for the final outcome of their applications. This heavily impacts their ability to work, study, open bank accounts or register with GPs whilst their application is pending consideration. --- # Immigration: EU Citizenship and Passports for Sale to High Net Worth Migrants Source: https://lexlaw.co.uk/solicitors-london/eu-citizenship-and-passports-for-sale-to-high-net-worth-immigration-migrants/ *[LexisNexis' LexisPSL](https://www.lexisnexis.com/uk/lexispsl/pslhome) (a leading UK legal publisher*) recently interviewed LEXLAW's High Net Worth Immigration Team on 'whether Malta could set a trend for selling EU citizenship?'  *We commented on the Maltese Citizenship Act 2013 and the ‘Individual Investor Programme'**. Investors of €650,000 (£546,000) are set to receive Maltese and EU citizenship, passports, work and residency rights in the 28 EU member state bloc.* [![Immigration Lawyers in London](https://lexlaw.co.uk/wp-content/uploads/2013/12/LexisNexis-ASC-Immigration-Law-London-435x190.jpg)](https://lexlaw.co.uk/wp-content/uploads/2013/12/LexisNexis-ASC-Immigration-Law-London-435x190.jpg) The full LexisPSL report is available for download here: LexisPSL - 'Citizenship_for_sale' - LEXLAW [![LexisPSL-EU-Citizenship-for-Sale-LEXLAWuk](https://lexlaw.co.uk/wp-content/uploads/2013/12/LexisPSL-EU-Citizenship-for-Sale-LEXLAWuk-288x185.png)](https://lexlaw.co.uk/wp-content/uploads/2013/12/LexisPSL-EU-Citizenship-for-Sale-LEXLAWuk.png) ## Maltese Parliament's Proposal to Sell EU Citizenship Malta's parliament approved a plan to sell citizenship of the island for  EUR 650,000 for each non-European Union applicant on 12 November. Prime Minister Joseph Muscat said the programme was meant to bring in revenue to the country and would earn the government  EUR 30m in its first year. The passports would also give applicants work and residency rights in the rest of the 28-member EU bloc. However plans have now been put on hold indefinitely, following a massive international and national outcry, until terms can be agreed. ## Not the First Country to Sell EU Citizenship Malta's policy of selling citizenship to foreign investors is not unprecedented. The Maltese government is following the example of a number of other EU member states who have similar policies which effectively market and sell EU citizenship: - the UK offers the Tier 1 Investor and Entrepreneur visa to attract high net worth individuals to invest in the UK - Portugal recently introduced a scheme in which individuals can obtain Portuguese citizenship by investing either  EUR 1m in financial assets over five years or  EUR 500,000 in property or by creating ten jobs - the Republic of Ireland has a scheme in which Irish citizenship is granted to individuals investing at least  EUR 500,000 in the Irish economy - Cyprus offers citizenship to individuals investing  EUR 5m in Cypriot property or depositing  EUR 3m in a Cypriot bank - Spain is currently offering citizenship to investors in return for an investment of as little as  EUR 160,000 (approximately £133,500) in order to revive its flagging property sector. - Austria offers citizenship to individuals 'rendering exceptional services in the interest of the Republic' - several non-EU countries, such as Dominica and St. Kitts and Nevis have long enacted similar policies The Tier 1 investor visa offered by the UK is regarded as the leading option for non-EU high net worth investors seeking to obtain the benefits of UK and EU citizenship. We advise high net worth clients on the UK's Tier 1 investor scheme in which individuals who invest millions in the UK can obtain British citizenship as early as three years under a fast track route. Investors should consider very carefully the country in which they decide to invest because (as demonstrated by the recent Cypriot financial crisis) some economies are more stable and secure than others for foreign investors. ## Maltese Citizenship for Non-EEA Nationals (High Net Worth Individuals) The Maltese government has recently passed the Maltese Citizenship Act 2013, which allows individuals seeking Maltese citizenship to apply for a Certificate of Naturalisation by contributing to an 'individual investor programme'. ## Requirements for Obtaining Maltese Citizenship Under the terms of this programme, applicants need to invest  EUR 650,000 into the Maltese economy, of which  EUR 10,000 will be a non-refundable deposit. Furthermore, applicants will also need to provide deposits of  EUR 25,000 each for spouses and individual children below 18 years of age, and deposits of  EUR 50,000 each for dependent parents aged 55 or over and unmarried children aged between 18 and 25. ## Benefits of EU Citizenship for High Net Worth Migrants  Due to Malta's membership of the EU in 2004, Maltese citizens are EU citizens thereby enjoy the right to enter, study and work freely in other EU member states, as well as the right to vote or stand as a candidate both in elections to the European Parliament and in municipal elections in the EU member state in which they reside. Furthermore, Maltese citizens are able to benefit from the Schengen visa, which allows entry into twenty-five other European countries without requiring prior entry clearance or visa. Malta also has a visa waiver agreement with the USA, as a result of which Maltese citizens can enjoy the right to enter the USA as visitors. An individual purchasing Maltese citizenship would therefore be able to enjoy these benefits in the same way as any other Maltese citizen. ## Wealthy Foreign Nationals Can Keep Dual Citizenship Dual citizenship was heavily restricted under Maltese law from independence in 1964 until 2000, when all such restrictions were removed. Any individual who purchases Maltese citizenship would therefore not be required to terminate their previous citizenship. ## Concerns & Criticisms of Malta's Immigration Policy The policy has attracted a lot of controversy in Malta where many nationalists have viewed this as an insult to the country. The Nationalist Party (who are the main opposition party) have warned that such a policy leads to Malta being compared to offshore tax haven island countries such as those typically in the Caribbean. An anti-migration demonstration was planned outside the Maltese Houses of Parliament in Valletta but was declared illegal by the Maltese Police and subsequently cancelled. M Ali Akram Aisha Choudhry LEXLAW, 1 Middle Temple Lane, London First published 28 November 2013 by LexisPSL --- # Tomlinson Report Accuses RBS & Lloyds Bank of ‘Unscrupulous Practices’ Source: https://lexlaw.co.uk/solicitors-london/tomlinson-report-accuses-rbs-lloyds-bank-of-unscrupulous-practices/ *Entrepreneur in residence at the BIS, [Dr Lawrence Tomlinson, has today published an explosive report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) which accuses many of Britain’s banks of ‘heavy handed profiteering and abhorrent behaviour.’ * *The report which was commissioned by Business Secretary Vince Cable, compiled case studies and examples relating to the treatment of borrowers by the Royal Bank of Scotland’s turnaround division Global Restructuring Group ("GRG") and found that RBS forced viable businesses into financial trouble so it could profit from their distress by squeezing them for exorbitant fees and charges. Often, RBS’s property division, West Register purchased the **devalued assets. * [![LAWRENCE-TOMLINSON-REPORT-BANKS-LENDING-PRACTICES-RBS-GRG-FCA-REVIEW-LEXLAW.](https://lexlaw.co.uk/wp-content/uploads/2013/11/LAWRENCE-TOMLINSON-REPORT-BANKS-LENDING-PRACTICES-RBS-GRG-FCA-REVIEW-LEXLAW.jpg)](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) ## Tomlinson Report: RBS's Global Structuring Group (GRG) another 'Terrible Scandal'? Global Restructuring Group (“GRG”) was set up in the 1990’s to help ailing businesses turnaround; following the financial crisis, it was seen as a solution to the bank’s problems. Businesses who found themselves in financial distress were identified by their lender as needing assistance. They were then put in Business Support Units (BSU) such as GRG which were divisions which would work with the business to help them overcome their difficulties. However, in a report compiled by the government’s key advisor, it was revealed that RBS had forced businesses into the GRG division and withdrawn lines of credit by charging unreasonably high fees and charges so when it became insolvent, it could seize its assets at knockdown prices. [In his press release, Dr Lawrence Tomlinson commented](http://www.tomlinsonreport.com/): > *"The profit-making nature of GRG significantly undermines its position as a turnaround division, in which good businesses should be restructured and returned to normal banking.  The temptation to get hold of assets and take additional profit from these businesses to boost GRG’s balance sheet is clear.* > > > > > > *From the cases I have heard, it is clear that a perception has arisen that the intention is to purposefully distress businesses to put them in GRG and subsequently take their assets for the West Register at a discounted price.”* ## Tomlinson Report: RBS’s GRG Process After considering a number of cases and experiences of businesses, Dr Lawrence Tomlinson summarised RBS’s overall process as being as follows: - The bank artificially distresses an otherwise viable business and through their actions puts them on a journey towards administration, receivership and liquidation. - Once transferred into the business support division of the bank the business is not supported in a manner consistent with good turnaround practice and this has a catalytic effect on the business’ journey to insolvency. - The insolvency process lacks fairness and accountability leading to financial implications and biased outcomes to the detriment of the business owner. Lawrence Tomlinson considered the process to be “systematic and institutional” and found from conversations with whistle-blowers, experts and lawyers that more often than not, viable businesses were entering such a path as there was more to be gained by the bank from this than a less asset risk business. ## Lawrence Tomlinson: Solutions & Recommendations Dr Lawrence Tomlinson was contacted by 200 companies of which he included 23 companies in his report to illustrate bad bank behaviour. Ironically, 20 of the companies were RBS customers. Tomlinson concluded his report by highlighting three key areas where he thinks Government reform could help prevent bank behaviour. These included: - Business Protection: It is important to protecting businesses, especially SMEs, when issues and disputes with the banks arise so proper redress is given. - Removing conflicts of interest:  Conflict of interests between the banks, IBRs, valuers, administrators, insolvency practitioners and receivers should be given careful consideration because when these conflicts occur, they do so at the expense of the business. - Competition:  RBS and Lloyds should be made significantly smaller, removing conflicts of interest within the bank, and creating a number of smaller, purely retail/commercial banks. They will then have to compete for businesses’ custom in the same way as other banks and the incentive to maintain relationships with businesses and encourage them to growth will be reinstated. Following the publication of report, it remains to be seen how RBS and other banks respond to Tomlinson's critical analysis into Business Support Groups and also how the government now respond to claims that banks have profited from distressing businesses and forcing them into insolvency. Lawrence Tomlinson's report can be read here: [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) (PDF) & [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx) (Text) --- # FCA to Review RBS GRG Allegations Source: https://lexlaw.co.uk/solicitors-london/financial-conduct-authority-fca-announces-review-into-allegations-against-rbs-global-restructuring-group/ *Following the publication of the government commissioned Tomlinson Report by Lawrence Tomlinson, the [Financial Conduct Authority (“FCA”) have ordered a formal investigation into allegations that RBS systematically defrauded small business customers in distress](http://www.fca.org.uk/news/update-on-independent-review-of-rbs-treatment-of-business-customers-in-financial-difficulty). The FCA have instructed Consultancy Promontory Financial Group and accountancy firm Mazars to look into claims made in Lawrence Tomlinson's report in late November 2013. The report is due to be published in 2015 and if the findings reveal issues which come within the FCA’s remit, the FCA may consider furher regulatory measures.* ## FCA Order s.166 Review into RBS’s GRG division On 25 November 2013, Business Entrepreneur [Dr Lawrence Tomlinson published an explosive report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) which examined the treatment of borrowers by the Royal Bank of Scotland’s turnaround division Global Restructuring Group ("GRG") and concluded that RBS forced viable businesses into financial trouble so it could profit from their distress by squeezing them for exorbitant fees and charges. Tomlison found that once the business had collapsed, RBS’s property division, West Register purchased its devalued assets and the sold the assets off to make a profit. Following the publication of the report, the FCA announced that they would be investigating claims which arose from the Tomlinson Report. Today, the FCA have announced that they would be using their powers under s.166 FSMA to commission a Skilled Person Review; the report will examine RBS’s treatment of business customers in financial difficulty and consider allegations of poor practice set out in the report by Dr Lawrence Tomlinson and referenced in Sir Andrew Large’s report *[RBS Independent Lending Review](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf)*. Sir Andrew Large had previously commented in his report: > “RBS needs to address the concerns that have been raised by some customers and external stakeholders about its treatment of SMEs in financial distress and minimise the perceived conflict of interest within GRG. This would be best achieved through a forensic inquiry to substantiate or refute serious accusations that have been made.” ## FCA Report to Examine Treatment of RBS Customers in GRG The FCA announced on their website that: > “The first stage of the review will consider RBS’ treatment of a sample of customers referred to its Global Restructuring Group. This will include some cases where customers have already raised concerns with Dr Tomlinson, the Department of Business, Innovation and Skills or the FCA. > > > > > > The review will also consider whether any poor practices identified are widespread and systematic. If this is the case, the second stage of the review will identify the root cause of these issues and make recommendations to address any shortcomings identified.” In press interviews since the publication of the [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf), Dr Lawrence Tomlinson surmised that the FCA will be "shocked by the treatment of businesses and the lives that have been ruined." Lawrence Tomlinson's report can be read here: [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) (PDF) & [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx) (Text) Sir Andrew Large's report can be read here: [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) (PDF) & [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx) (Text) --- # RBS & Clifford Chance Report on GRG Branded ‘Whitewash’ Source: https://lexlaw.co.uk/solicitors-london/rbs-clifford-chance-report-branded-whitewash/ *The Royal Bank of Scotland has today published Clifford Chance's review of the central allegation made against the bank in the damning Tomlinson Report written by Dr Tomlinson, commissioned by Business Secretary Vince Cable. [Critics have slammed the bank’s report as a "whitewash](http://www.huffingtonpost.co.uk/2014/04/17/rbs-clifford-chance-tomlinson-report_n_5167333.html)" and believe that the report does not go as far as it should have to uncover what was happening in the 'business support unit' Global Restructuring Group (GRG).* [![CLIFFORD CHANCE REVIEW LAWRENCE TOMLINSON REPORT BANKS](https://lexlaw.co.uk/wp-content/uploads/2015/12/CLIFFORD-CHANCE-REVIEW-LAWRENCE-TOMLINSON-REPORT-BANKS-LENDING-PRACTICES-RBS-GRG.jpg)](https://lexlaw.co.uk/wp-content/uploads/2015/12/Clifford-Chance-Independent-FCA-Review-RBS-GRG-LEXLAW.pdf) *Back in November 2013, [Sir Andrew Large published his own report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) into the bank’s lending practices and ordered RBS to set up an enquiry into the way it handled businesses facing difficulties and distress. [Ross McEwan, Chief Executive of RBS, accepted that Sir Andrew Large’s RBS Independent Lending Review report was a “tough read”](http://www.rbs.com/news/2013/11/final-lending-review-report.html) for the bank and confirmed that it had instructed Clifford Chance to lead an internal investigation as to whether it was guilty of systematically defrauding its customers.* ## Findings of “Independent” Clifford Chance Report for RBS The report, which RBS paid £1.5m for, has been welcomed by RBS as it finds "no evidence of systematically defrauding its customers". However, these findings are in stark contrast to allegations made in Dr Lawrence Tomlinson’s report which was compiled using first-hand experience from businesses who felt that the bank had acted like a “hit squad” by deliberately causing their healthy businesses  go bust for the bank's personal gain. The review was overseen by a bank executive rather than a non-executive director and its independence is questionable. It seems that many questions have been left unanswered such as why RBS’s GRG has not explained the size of the fees it charged and the accuracy of its asset valuations. Some allegations against RBS by Dr Lawrence Tomlinson were only partially addressed by the Clifford Chance report. In respect of the inaccuracy of asset valuations, Clifford Chance concluded that there was: > "…no evidence that the bank deliberately manipulated valuations to procure a customer's transfer to [Business Restructuring Group]." Clifford Chance also said that it did not see "any instances of an LTV breach being the event that precipitated transfer to BRG." However, whilst Clifford Chance had access to copies of property valuations for each of the cases it examined, it "did not test the accuracy of the bank's valuation methodology" when coming to its conclusion. ## Clifford Chance Report finds Problems with Transparency of Pricing in RBS GRG With regard to whether GRG acted as a ‘profit centre’ for the bank, Clifford Chance also considered the fees charged to RBS customers in GRG. They found that a number of complainants commented that they felt pricing of restructured facilities lacked transparency. Their report acknowledged that GRG had been aware of complaints regarding pricing transparency from polls conducted at least as early as 2008 (this was an area identified as a priority to improve) but found: > “In reviewing the files, we found it difficult to understand how the bank calculated the fees which it proposed to customers in any particular case and therefore found it difficult to assess allegations of unfairness.” ## Tomlinson Report: Recap of Findings Critics are of the opinion that the report has not done enough to address the allegations made by Dr Lawrence Tomlinson in the [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf). In summary, the Tomlinson Report included the following allegations: - Inaccuracy and manipulation of property asset valuations. Specifically, Dr Tomlinson alleged that businesses' assets had been undervalued for the purpose of determining adherence to loan-to-value covenants'; - Technical or "insignificant" breaches of covenants being used to bring businesses into default and transfer them out of local management; - Transparency of decision making about the transfer of a business into GRG. The report alleged that "there is much confusion on the part of businesses" and that "the rationale and reason for their treatment is not clear to the business at the time it happens"; - "Excessive" fees and increased interest payments charged to businesses upon entering GRG; and - Allegations of conflicts of interest arising from the sale of assets. Specifically, the report alleged that conflicts of interest existed between West Register, a property management subsidiary of RBS which frequently bought distressed assets, and BRG, which sold distressed assets. It remains to be seen how the Financial Conduct Authority (FCA) will consider this report. [As we had previously reported, the FCA are due to publish their own findings in due course](https://lexlaw.co.uk/solicitors-london/financial-conduct-authority-fca-announces-review-into-allegations-against-rbs-global-restructuring-group/). The full report entitled *Independent Review of the Central Allegation made by Dr Lawrence ToMlinson in Bank's Lending Practices: Treatment of Businesses in Distress *can be read here: [Clifford Chance LLP Report](https://lexlaw.co.uk/wp-content/uploads/2015/12/Clifford-Chance-Independent-FCA-Review-RBS-GRG-LEXLAW.pdf) (PDF) & Clifford Chance LLP Report (Text) Lawrence Tomlinson's report can be read here: [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) (PDF) & [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx) (Text) Sir Andrew Large's report can be read here: [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) (PDF) & [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx) (Text) --- # Royal Bank of Scotland’s GRG Whistleblower Reveals All in Channel 4 Investigation Source: https://lexlaw.co.uk/solicitors-london/royal-bank-of-scotlands-grg-whistleblower-reveals-all-in-channel-4-investigation/ *In an [exclusive interview with Channel 4](http://www.channel4.com/news/rbs-whistleblower-grg-business-destroy-video), a former Relationship Manager at the Royal Bank of Scotland’s ‘business support’ unit Global Restructuring Group (GRG) has revealed how RBS deliberately destroyed perfectly viable businesses in an effort to save itself during the credit crisis. **The whistle-blower shockingly revealed that GRG deliberately charged exorbitant fees to push businesses to the brink, intercepted payments and put the money into RBS’s own accounts. It is then alleged that the bank stripped firms of their assets and held them in West Register, another unit of RBS, which then sold them off for a profit.* ## Healthy Businesses Transferred to RBS’s BSU GRG & Charged Unreasonably High Fees The former RBS insider explained that although the Business Support Unit GRG was set up to help nurse ailing businesses back to health, staff in GRG were encouraged to use “hostile” tactics which would help recover money the bank lost during the credit crisis. Typically, once a business was sent to GRG, it lost contact with its local relationship manager and once in GRG, it was made to feel as though it was in financial distress. > "We would tell them we were nervous. We would put them on a watch list. From that point on we would start saying we wanted to sign new terms and agreements with you where we take X stakes in your company or we take larger fees from your company." The whistle-blower went on to say: > "We gave them choices and they chose one bad thing or the other bad thing." ## Collapse of Hotel Business:  Charged “Unnecessary” Fees Totalling Half a Million over 2 years The Channel 4 investigation also featured the disheartening story of Mr and Mrs Smith, once the proud owners of a successful hotel and events business in Suffolk. In 2008, Mr and Mrs Smith, were transferred to RBS’s GRG and were told that they were “too highly geared” and had “too much lending”. Upon entry into GRG, they were charged monthly fees of between £15,000 - £25,000 which they maintain were not fully explained to them. The couple claim they were forced to pay over £510,000 over the next 2 years which “ruined” them and eventually pushed them into bankruptcy. Shockingly but now not surprisingly, one of their hotels ended up in West Register, another of RBS’s investment units. The whistle-blower alleges that as RBS could not legally hold on to the assets, they sent them to West Register; in most cases getting assets into West Register was the deliberate intention and part of RBS’s strategy. The Channel 4 documentary ends with Mr Smith concluding that he does not understand why GRG was labelled a “support unit” as he does not recall receiving any support from it all. ![Westregister RBS GRG Review Compensation Whisteblower C4](https://lexlaw.co.uk/wp-content/uploads/2014/02/C4-Story-RBS-GRG-Whistleblower_LEXLAW-RBS-GRG-Review-Solicitors.png)Whistleblower: how RBS 'deliberately destroyed' firms ## Financial Conduct Authority to Investigate Allegations Against RBS's BSU GRG [As reported in November 2013](https://lexlaw.co.uk/solicitors-london/tomlinson-report-accuses-rbs-lloyds-bank-of-unscrupulous-practices/), Dr Lawrence Tomlinson compiled a report using first hand experience from businesses ruined by RBS's GRG; [Sir Andrew Large's independent report](https://lexlaw.co.uk/solicitors-london/rbs-commissioned-report-criticises-treatment-of-smes-in-global-restructuring-group/) echoed similar findings and [in January 2014, the Financial Conduct Authority announced](https://lexlaw.co.uk/solicitors-london/financial-conduct-authority-fca-announces-review-into-allegations-against-rbs-global-restructuring-group/) there would be an investigation into how RBS treated SME's in GRG. Lawrence Tomlinson's report can be read here: [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.pdf) (PDF) & [Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx) (Text) Sir Andrew Large's report can be read here: [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.pdf) (PDF) & [RBS Independent Lending Review Report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx) (Text) --- # Probate Disputes: Rectification of Invalid Wills Source: https://lexlaw.co.uk/solicitors-london/probate-disputes-rectification-of-invalid-wills/ *In the recent case of [Marley v Rawlings (2014)](http://www.bailii.org/uk/cases/UKSC/2014/2.html) the Supreme Court held that disputed wills can be rectified under section 20 of the Administration of Justice Act 1982 provided that the will upon rectification takes into account the testator's intention from the outset. **The Supreme Court held that despite the invalid execution of the will, the will could still be capable of rectification because the testator had signed it with the intention of being his last will and testament and it was properly witnessed. * ## Section 9 of the Wills Act 1837: Formalities for a Valid Will Under section 9 of the Wills Act 1837 (as amended by section 17 of the Wills Act 1982) states that certain formalities must be satisfied to create a valid will. These formalities are as followed: a) a will must be in writing, signed by the testator or by some other person in his presence and by his direction; b) it appears that the testator intended by his signature to give effect to the will; and (c) the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time. Each witness either attests and signs the wills or acknowledge his signature, in the presence of the testator (but not necessarily in the presence of any other witness). ## Probate Disputes: Challenging Validity of Wills On 17 May 1999 Mr Alfred Rawlings and his wife, Ms Maureen Rawlings, were visited by their solicitors to enable them to execute the wills. Except for the difference to reflect the identity of the makers, the wills were identical and were based on the same financial terms. Each spouse left his or her entire estate to each other with a substitutional gift to Mr Terry Marley, the appellant in these proceedings. If the other partner survived the deceased spouse for less than one month (or the formation of the will is held to be invalid) the entire estate would fall to Mr & Mrs Rawlings’ two sons, Terry and Michael Rawlings (the Respondents) under the intestacy rules. Instead of signing their own wills, each by mistake executed the wrong one.  The mistake only came to light when Mr Rawlings, the surviving spouse, died.  The appellants challenged the validity of the will which Mr Rawlings had signed. They argued that if the will was valid, the appellant would inherit £70,000 under the terms of the will, whereas if the will was invalid, Mr Rawlings would have died intestate, and the respondents would inherit the £70,000. Mr Marley brought proceedings on the understanding that Mr Rawling's will should be rectified so as to record what was actually intended. The Judge dismissed Mr Marley's claim on the grounds that the will did not satisfy the requirements of section 9 of the Wills Act 1837, even if it had done so, the will was not open to rectification under section 20 of the Administration of Justice Act 1982. Mr Marley appealed to the Court of Appeal, who upheld the Court's decision at first instance. As a result, Mr Marley appealed to the Supreme Court. ## Supreme Court's Decision The Supreme Court held that this was a classic case of rectification under section 20 of the Administration of Justice Act 1982 because the testator's intentions were clear and that the changes required were not too extreme to permit rectification. The Supreme Court ruled that giving someone the wrong will to sign would only amount to a "clerical error" and therefore rectification is permissible under section 20 of the Administration of Justice Act 1982. At paragraph 20 of the Judgment, Lord Neuberger stated: "When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context." ## Commentary The Supreme Court's decision (in particular the approach adopted by Lord Neuberger) clearly demonstrates that the Supreme Court are adopting a sensible approach to the rectification of wills under section 20 of the Administration of Justice Act 1982. It appears that the Supreme Court is willing to look beyond the statutory formalities under section 9 of the Wills Act 1837 in order to understand and implement a testator’s true intentions. --- # Challenging a Will in Probate on Grounds of Mental Capacity (Dementia) Source: https://lexlaw.co.uk/solicitors-london/probate-disputes-will-of-woman-suffering-from-dementia-declared-invalid/ *In the recent case of Catling v. Catling, Mrs Catling's 2007 will was declared invalid because she did have the requisite mental capacity when she made it. The Court ruled that Mrs Catling's 2007 will was a 'radical departure' from her earlier wills and she did not have the necessary mental capacity to understand the radical changes. * ## Facts: Formation & Execution of the Will Mrs Catling was 82 when she died and had suffered from dementia for some years. On 23rd August 2004, Mrs Catling made a Will prepared by her solicitors. This Will gave an sum equal to the nil-rate band to her children and the residue to the surviving spouse. If the spouse did not survive, the residue estate was to divided equally among all 8 children.  In 2007, Mrs Catling made another Will leaving everything to her youngest son, Kevin. Much was made of the fact that the person who was drawing up the 2007 Will  (a paid professional but not a qualified solicitor) had not followed the so called "golden-rule" and asked a medical practitioner to act as a witness to the Will. Moreover, the validity of the Will was challenged on the basis that Mrs Catling did not have the relevant mental capacity to understand the changes made.  ## Mental Capacity For Making A Valid Will: Banks v. Goodfellow (1870) The question of whether a testator has the mental capacity to make a will is imperative when assessing the validity of the will. It involves the testator being able to make and understand the provisions in the will. The Court needs to be satisfied that the testator had a *“ sound and disposing mind and memory.”* The leading authority in this matter is *Banks v Goodfellow (1870) *which states that the testator must be able  (1) to understand the nature of his act (i.e. making a will, and its effects) (2) to understand the extent of the property of which the testator is disposing (3) to comprehend and appreciate the claims to which the testator ought to give effect and the testator must not be subject to any disorder of mind as shall poison his affections, pervert his sense of right, or prevent the exercise of his/her natural faculties. ## Court's Decision: The Court held that Mrs Catling's 2007 Will was invalid because she lacked the mental capacity to understand the changes. The court was heavy influenced by medical evidence which demonstrated that beyond reasonable doubt Mrs Catling developed dementia in the last years of her life and by late 2005 her cognitive impairment was fully established. As a result, Mrs Catling's 2007 Will was a radical departure from her earlier Wills. At paragraph 68 of the Judgment Mr David Halpern QC (sitting as a Judge in the Chancery Division) stated: > "I am satisfied on the basis of Professor Jacoby's second report that she did not have the limited capacity needed in May 2007, even if she had capacity in December 2005 or January 2006. I am strengthened in this conclusion by the radical departure of the 2007 Will from her earlier Wills." ## Commentary: The court's decision demonstrates the importance of having the relevant mental capacity when making a will. It is evident that the court was heavily influenced by the doctor's report which proved that the testator lacked the relevant mental capacity and therefore the 2007 Will was declared invalid.  [FULL JUDGMENT - CATLING AND OTHERS](https://lexlaw.co.uk/wp-content/uploads/2014/05/FULL-JUDGMENT-CATLING-AND-OTHERS.pdf) --- # HMRC Advice for the tax treatment of Interest Rate Hedging Products (IRHP Review) redress payments Source: https://lexlaw.co.uk/solicitors-london/hmrc-advice-tax-treatment-interest-rate-hedging-products-irhp-review-redress-payments/ *HMRC have recently provided banks that are party to the FCA IRHP Review scheme with generic tax advice leaflets to pass to customers who receive redress. HMRC says it wants to help you ensure that you correctly account for this redress payment, received from your bank, in your tax return.* [![](https://lexlaw.co.uk/wp-content/uploads/2014/07/HMRC-Tax-Advice-IRHP-redress-payments-LEXLAW-Solicitors-Swaps-Mis-selling-288x156.jpg)](https://lexlaw.co.uk/wp-content/uploads/2014/07/HMRC-Advice-for-the-tax-treatment-of-Interest-Rate-Hedging-Products-redress-payments-IRHP-LEXLAW-Swaps-Mis-selling.pdf)[Full PDF on HMRC Tax Advice on IRHP redress payments](https://lexlaw.co.uk/wp-content/uploads/2014/07/HMRC-Advice-for-the-tax-treatment-of-Interest-Rate-Hedging-Products-redress-payments-IRHP-LEXLAW-Swaps-Mis-selling.pdf) ## Why have you received an IRHP redress payment? The redress payments are due because the Financial Conduct Authority (FCA) identified failings in the way that some banks sold Interest Rate Hedging Products. The major banks involved are Barclays, HSBC, Lloyds and RBS together with Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire banks (part of the National Australia Group (Europe)), Co-operative Bank and Santander UK who have all agreed to review their sales of IRHPs to small businesses based on the principles set out in the FSA's report, and overseen by independent reviewers. The bank involved agreed to review their sales since 2001 and as a result certain customers became entitled to compensation (redress) under a process supervised by the FCA. ## What happens next? The redress will usually be paid out as a single payment that is taxable in the year it is received. This will mean that there is no need to amend your previous years' tax returns. The payment is taxable because you would have previously claimed tax relief for the payments under the Interest Rate Hedging Product as an allowable business deduction. When the redress payments are made to you they must be treated as business income and reflected in your business accounts. ## IRHP Redress can be composed of up to three elements: - **Basic redress** represents the difference between the actual payments made by you based on the mis-sold product and the payments that you would have made, without the product; - **Compensatory Interest** at 8% per year is applied to the basic redress, plus in certain circumstances to consequential losses; - **Consequential losses**, which are losses that you have suffered due to not having the use of the money that would otherwise have been available to you. The full amount of the redress payment will generally be taxable for individuals, companies and partnerships. However if you are an individual the bank will deduct income tax at the basic rate from payments of compensatory interest and tell you how much they have deducted. You will need to remember that any tax deducted from the interest element should be treated as a credit against any tax payable by you for the year the redress is received. ## Taking Accounting Advice There are certain circumstances in which your tax treatment may be different if this is the case, you may wish to take accounting advice.  These circumstances could include: - when your business ceased trading; - where the product was associated with a non-business loan; or - the product was a hedging product and its fair value was recognized in your accounts. Where this is the case and the payment you received is not taxable as income, it may still be subject to capital gains tax (or corporation tax on chargeable gains for companies). If so the normal capital gains tax rules will apply. --- # Fixed Rate Tailored Business Loan Mis-selling: Clydesdale & Yorkshire Bank’s Internal TBL Review Source: https://lexlaw.co.uk/solicitors-london/clydesdale-yorkshire-bank-nab-complaint-review-tbl-fixed-rate-tailored-business-loan-missold-hidden-swap-irhp/ *Following hundreds of complaints, lobbying and several adverse adjudications by the Financial Ombudsman Service and recent pressure from the Treasury Select Committee on SME Lending, National Australia Bank Group's Clydesdale and Yorkshire Banks have now begun an (unannounced) internal complaint-led review of past sales of fixed rate loans often sold as Tailored Business Loans (TBLs). * Our lawyers regularly litigate against the banks on the basis that these fixed rate products amount to FSMA-regulated designated investments; however, it is argued by bank legal teams that such products are merely contracts for loans and not contracts for difference (see our previous legal news article: [Hidden Swaps in Fixed Rate Loans & TBLs](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/)). Such fixed rate loans or TBLs usually contain (or are backed by) swaps or other over-the-counter derivatives and are often widely described as 'embedded derivatives' or 'hidden swaps'. [![yorkshire clydesdale nab tbl mis-sold interest rates swap break cost](https://lexlaw.co.uk/wp-content/uploads/2014/09/yorkshire-clydesdale-small1.png)](https://lexlaw.co.uk/wp-content/uploads/2014/09/yorkshire-clydesdale-small1.png)Mis-sold Fixed Rate Loans with costly Break Costs / Early Repayment Fees ## Other Lenders: Aviva / Norwich Union / Nationwide / West Bromwich Clydesdale and Yorkshire Banks are not the only banks to have mis-sold Fixed Rate Loans. Building Societies such as Nationwide and West Bromwich and major insurers such as [Norwich Union / Aviva](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#Aviva-Early-Repayment-Fee) have also sold Fixed Rate Loans, with connected complex derivatives - often to financially inexperienced SME customers even NHS GPs borrowing from the historic GPCF scheme. Experts say these contain [hidden embedded interest rate or gilts referenced derivatives](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#hidden-swaps) arguably contrary to the Financial Services and Markets Act and the FCA's Conduct of Business Sourcebook Rules given they were in fact selling a product containing all the risks of a complex derivative financial instrument (but not all the benefits). The major risk is the contingent liability of the [hidden derivative](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#hidden-swaps) which is inadequately explained to the customer. Sometimes the lender simply refers to this as an [Early Repayment Fee](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/#Aviva-Early-Repayment-Fee) with no reference to the fact it might be a very substantial sum thus making it sound like a residential mortgage Early Redemption Penalty which of course is usually a few to several thousand pounds only. In Fixed Rate Loans the break costs can be hundreds of thousands of pounds. ## Evidence from the Treasury Select Committee on SME Lending On 17 June 2014, David Thorburn (Chief Executive of Clydesdale and Yorkshire Banks) and Debbie Crosbie (Executive Director of Customer Trust and Confidence at National Australia Group Europe) gave evidence to the Treasury Select Committee on SME Lending about the Banks' mis-selling of fixed rate loans and tailored business loans to SMEs. A full and lengthy transcript of this Treasury Committee session is available online (see [the Parliament website](http://goo.gl/vrOXud) or watch on [Parliament TV](http://www.parliamentlive.tv/Main/Player.aspx?meetingId=15555)). The salient points arising from Mr Thorburn's and Ms Crosbie's evidence to the Treasury Select Committee are: - The Banks admitted that they had found that they had often mis-sold fixed rate loans and tailored business loans (for example by failing to clearly explain the potential implications of breakage costs) as the Bank had upheld around 60% of approximately 500 complaints that it has considered;- The Banks admitted that they felt that tailored business loans did not require the complex and extensive documentation that was required for standalone interest rate hedging products;- The Banks admitted that their parent company sold tailored business loans in order to expand its customer base and attract new profits;- The Banks admitted that, in some cases, they were selling complex tailored business loans to customers who did not understand the risks of those products in a falling interest rate environment; and- The Banks accepted that many of the SMEs to whom they sold fixed rate loans and tailored business loans were of limited financial sophistication. In August and September 2014, following the session before the Treasury Select Committee on SME Lending, the banks confirmed in writing to some of its SME customers that they will be conducting an internal investigation and review of its past sales of fixed rate loans and tailored business loans (where the banks determine that there has been a customer complaint). We note that it is likely that several decisions earlier this year by the [Financial Ombudsman Service](http://www.financial-ombudsman.org.uk/) (the “FOS”), which have often been findings *against* the two banks, have also prompted NAB to begin dealing with these complaints internally. ## What is the TBL ‘Internal Complaint-Led Review’? The internal TBL review has arguably been promulgated by a desire of the two banks to avoid more active regulatory intervention following comments made by the Treasury Select Committee on SME Lending.  As a consequence it seems there will be limited guidance on the process for this internal hidden swap review as compared to the IRHP review which was announced in some relative detail by the FSA (now FCA) on 29 June 2012 (see the FCA website on '[Interest rate hedging products](http://www.fca.org.uk/consumers/financial-services-products/banking/interest-rate-hedging-products)').  The two banks publish only general guidance on their general complaints process on their respective websites (see the relevant pages on [Clydesdale bank complaints](http://www.cbonline.co.uk/contact-us/complaints-procedure-contact-us/) and [Yorkshire Bank complaints](http://www.ybonline.co.uk/contact-us/complaints-procedure/) which offer general guidance only). As our lawyers are instructed and engaged in a number of 'hidden swap' litigation cases against banks on behalf of our SME clients, we have experience and knowledge of the complaint process.  In our experience, Clydesdale/Yorkshire Banks are likely to automatically consider as complaints any case in which litigation is anticipated (perhaps via a pre-action letter before claim) or has begun as these evidence customer discontent.  Whilst the banks are intent on re-assessing previous complaints, customers of the two banks who have complained previously may wish to re-register a fresh complaint to ensure their TBL product is in fact reviewed internally by the relevant bank. It is not clear whether the two banks will be conducting their 'internal complaint-led review' under similar (and unfortunately in fact secretive) rules as their [FCA-agreed review of the sales of interest rate hedging products (IRHPs)](https://lexlaw.co.uk/solicitors-london/clydesdale-and-yorkshire-banks-tailored-business-loans-terms-of-swaps-mis-selling-review/), although it does appear the banks will draw on guidance from the IRHP review. ## Procedure of the 'Internal Complaint-Led Review' We understand that under the internal complaint-led review: - A complaint would be led by a case handler who has not been involved in either the complaint to date or the management of customer banking facilities;- The complaint assessment is intended to take account of the recent analogous decisions of the FOS;- The case handler is tasked with making an objective assessment, considering the evidence as to whether the Bank met the appropriate standards for the lending process;- The case handler also considers the wider circumstances of the customer and the suitability of the fixed rate loan or tailored business loan;- The work of the case handler goes through a quality assurance process and the recommendation of a fair outcome is developed by the complaints team;- Compensation will not be capped at the FOS level of £150,000;- Interest will be paid at the rate of 8% simple which is intended also to reflect loss of opportunity; and- In exceptional circumstances the two banks will consider consequential loss claims drawing on guidance from FOS decisions. It is important for small businesses not to assume that they will automatically be awarded redress by either of the two banks. Instead, customers who feel they have been mis-sold fixed rate loans or tailored business loans should effectively put forward a written claim that the relevant bank will consider in accordance with assessment criteria that is only known to the bank. Customers should therefore seek to ensure that their case is prioritised for redress by ensuring they put forward strong written submissions (which we can assist with). ## Making Written Complaint Submissions In all the circumstances, we consider that it would be sensible for all affected SME customers to make written submissions in order to ensure that the key points of your claim are communicated to the case handler. Please see our [article in relation to the IRHP review scheme on making written submissions](http://goo.gl/dyF1vb). The submissions must be crafted to your case and ideally spell out not only the relevant facts but the relevant regulatory and other legal breaches. We strongly recommend that you seek legal advice from expert mis-sold TBL lawyers before you make any written submissions or agree to be interviewed by the relevant bank case handler or their legal team. Otherwise you may inadvertently damage the prospects of success in your case without intending to do so. ## Preserving Litigation Rights - Limitation Warning There are strict time limits for bringing legal claims against banks for the mis-selling of hidden swaps.  The time limit is generally six years from the date the bank first started mis-selling products or the date of the loan contract. After the limitation date, claims will face limitation challenges by the bank. However, steps can be taken to protect legal rights and prevent banks from asserting a limitation defence. Affected Clydesdale Bank and Yorkshire Bank customers should urgently seek legal advice. *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Swaps Mis-selling: Judgment in Crestsign Ltd v NatWest & RBS Source: https://lexlaw.co.uk/solicitors-london/high-court-judgment-crestsign-limited-claimant-and-1-national-westminster-bank-plc-2-the-royal-bank-of-scotland-plc/ [![Royal Courts of Justice Logo - LEXLAW Litigation Solicitors](https://lexlaw.co.uk/wp-content/uploads/2013/10/Royal-Courts-of-Justice-Logo-LEXLAW-Litigation-Solicitors-150x150.png)](https://lexlaw.co.uk/wp-content/uploads/2013/10/Royal-Courts-of-Justice-Logo-LEXLAW-Litigation-Solicitors-195x190.bk.optm.png) Neutral Citation Number: [2014] EWHC 3043 (Ch) Case No: HC13B02029 **IN THE HIGH COURT OF JUSTICE** **CHANCERY DIVISION** Rolls Building, Royal Courts of Justice 7 Rolls Buildings, Fetter Lane London, EC4A 1NL Date: 26/09/2014 Before : MR TIM KERR QC (sitting as a Deputy Judge of the High Court) - - - - - - - - - - - - - - - - - - - - - Between : **CRESTSIGN LIMITED** Claimant -and- (**1) NATIONAL WESTMINSTER BANK PLC** **(2) THE ROYAL BANK OF SCOTLAND PLC** Defendants RICHARD EDWARDS (Instructed by Slater & Gordon (UK) LLP, 50-52 Chancery Lane, London, WC2A 1HL) appeared on behalf of the Claimant ANDREW MITCHELL QC and LAURA JOHN (Instructed by DLA Piper, 3 Noble Street, London, EC2V 7EE) appeared on behalf of the Defendants Hearing dates: 21-24 July 2014, 28-29 July 2014 **Approved Judgment** I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. ............................. [Final Judgment - Crestsign Ltd v Natwest RBS](https://lexlaw.co.uk/wp-content/uploads/2014/09/Final-Judgment-Crestsign-Ltd-v-Natwest-RBS.pdf) *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Barclays’ attempt to strike-out swaps mis-selling claim (on limitation defence) dismissed by High Court Source: https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/ *The High Court (Queen's Bench Division) has recently dismissed an attempt by Barclays Bank to strike-out an interest rate hedging product (IRHP) mis-selling claim for being issued more than six years after the IRHP was sold to the customer. The judgment in Kays Hotels Ltd v Barclays Bank PLC is relevant to any bank customer who was sold an IRHP more than six years and did not understand that they might consequently have a legal claim against their bank for mis-selling.* [![Barclays Bank IRHP Swaps Mis-selling](https://lexlaw.co.uk/wp-content/uploads/2014/05/1280px-Barclays_logo.svg1_-288x49.png)](https://lexlaw.co.uk/wp-content/uploads/2014/05/1280px-Barclays_logo.svg1_.png) ## The Derivatives Contract sold by Barclays In August 2005, Barclays sold a 10-year amortising collar for a notional amount of £1 million to its customer, a private limited company operating a hotel in Suffolk. If the base rate fell below 4%, then the customer was obliged to make a payment to Barclays. If base rate rose above 5.5%, then Barclays was obliged to make a payment to the customer. If base rate remained between 4% and 5.5%, then neither party would make a payment to the other. ## ADR: The Interest Rate Hedging Product Review At the end of June 2012, the Financial Services Authority (as it was then; now the Financial Conduct Authority) announced its agreement with several major banks (including Barclays) for the Banks to review their own past sales of interest rate hedging products to non-sophisticated customers. The IRHP review scheme was (and still is) notoriously dogged by delay. The claimant subsequently issued a legal claim against Barclays in relation to mis-selling of the collar on 8 November 2012. ## The Bank's Limitation Defence According to section 5 of the Limitation Act 1980, the limitation period for issuing a legal claim in relation to a contract is six years after the parties entered into that contract, failing which the claim would be time-barred. Barclays applied to the High Court for (i) summary judgment on the claim in its favour under CPR 24.2 and/or (ii) to have the claim form struck out under CPR 3.4(2) on the grounds that it was issued more than six years after the collar was sold to the claimant, and therefore was (in its view) indisputably time-barred and so should be summarily dismissed. ## Section 14A of the Limitation Act 1980 In bringing its claim, the claimant sought to rely on section 14A of the Limitation Act, under which the limitation period is extended to three years after the date when the claimant knew (or ought to have known) the facts necessary to investigate the possibility of issuing a claim, i.e. the material facts about the damage suffered and that the damage was potentially attributable to an act or omission by Barclays. Barclays attempted to argue that the collection of payments under the collar from November 2008 meant that the claimant knew (or ought to have known) the necessary facts for investigating a claim from that time, and that the claim was also time-barred pursuant to section 14A of the Limitation Act. ## Application Judgment: Kays Hotels Ltd v Barclays Bank  However, Mr Justice Hamblen disagreed with Barclays' argument and stated at paragraph 26 of his judgment that: > "If the complaint had simply been that the claimant had been advised that he would incur no interest rate loss, then one could understand that as soon as it became apparent that the claimant was having to pay interest rate losses, he would or should have known the facts necessary to investigate into such a claim... > > > > > > In my judgment the mere fact that it was known that some interest payments were being made for a period of about a year does not give rise to an unanswerable case that the claimant knew or ought to have known sufficient facts to make the requisite investigation for the purpose of Section 14A" It was held that the claimant did have a real prospect of establishing that the claimant could rely on section 14A of the Limitation Act, and Barclays' application to strike out the claim was dismissed. A copy of the full judgment is available to download or view here: [Kays Hotels Ltd (Trading As Claydon Country House Hotel) v Barclays Bank Plc [2014] EWHC 1927 (Comm) (16 May 2014)](https://lexlaw.co.uk/wp-content/uploads/2014/05/Kays-Hotels-Ltd-Trading-As-Claydon-Country-House-Hotel-v-Barclays-Bank-Plc-2014-EWHC-1927-Comm-16-May-2014.pdf) ## Legal Comment on Swaps Limitation The court's decision makes it even more difficult for banks to summarily strike out 'swaps mis-selling claims' on the basis of time bar where the claimant relies on section 14A of the Limitation Act 1980 to seek to extend the limitation period. Ultimately the court will have to determine the validity of the section 14A argument (unless of course the parties settle before trial as is commonplace with strong claims brought by experienced specialist swaps solicitors). *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # A Royal Bad Bank: RBS Capital Resolution (RCR) Source: https://lexlaw.co.uk/solicitors-london/royal-bad-bank-rbs-capital-resolution-rcr-royal-bank-of-scotland-grg-irhp-westregister/ *RBS' bad bank (Royal Bank of Scotland Capital Resolution - RCR) has been set up to take over RBS' bad loans (those with significant non-performing assets).  When transferring the bad assets of RBS to the bad bank, RBS will clear its balance sheet of toxic assets. RBS will therefore take write downs in which RBS shareholders and bondholders may lose money from this solution (but not depositors).  The bad bank strategy is designed to allow RBS (sans bad loans) to start to trade profitably and then move into a taxpayer exit.  * *Those RBS customers affected (many of whom are in this vulnerable position due to interest rate swaps mis-selling by the bank itself) are being told their loans are now 'bad RCR loans' and will be dealt with in accordance with RCR objectives as enunciated below:* ## Background to creation of RBS Capital Resolution (RCR) and its objectives In June 2013 the Chancellor announced a review into the case for The Royal Bank of Scotland Group (RBS) creating a bad bank. In response to the review, RBS announced on 1 November 2013 the creation of RBS Capital Resolution (RCR). RCR is a separate business within RBS whose objective is to manage and wind down RBS’ higher risk and capital intensive assets by the end of 2016. Working in consultation with the Prudential Regulatory Authority (PRA), HM Treasury (HMT) and their advisers, RBS established RCR with effect from 1 January 2014 with a portfolio of assets totalling £29 billion. The RCR portfolio includes, but is not limited to, certain lending products and other financial instruments originated by subsidiaries of The Royal Bank of Scotland Group, including RBS PLC and Ulster Bank. RCR was established with the following principles: - removing risk from the RBS balance sheet in an efficient, expedient and economic manner; - reducing balance sheet volatility; and - accelerating the release of capital through the management and exit of the RCR portfolio. It is our intention to manage the RCR portfolio in accordance with these principles in order to strengthen RBS’ balance sheet whilst preserving value for the Bank’s shareholders. RCR has committed to reduce its portfolio of assets by 55-70% by the end of 2015 and 85% by the end of 2016. ## What this means for RBS customers > We are writing to inform you that the financing arrangement listed in the Appendix to this letter (the RCR facilities) has been included in the RCR portfolio and are now being managed in line with the principles and objectives outlined above. > > > > > > This means that the Bank’s strategy and the options we may be able to offer in restructuring the RCR facilities are subject to the overriding commitments given to the PRA and HMT as outlined above. In particular, we will be unable to extend the term of any RCR facilities beyond 2016. We may be unable to agree additional forbearance or temporary extensions of RCR facilities in the period up to December 2016. > > > > > > Our objective will be to work with you to seek a consensual repayment or refinancing of your facilities prior to December 2016, irrespective of the final maturity date and whether the facilities are currently compliant with their contractual terms. If we unable to agree a consensual exit, we will be obliged to consider alternative means of removing risk from the RBS balance sheet, which may include a sale of the loans to a third party or, in extremis, enforcement against our collateral in the case of facilities that are in default against their contractual terms and where no reasonable repayment or exit strategy can be agreed. > > > > > > Within these constraints we will continue to deliver excellent customer service. We will work with you to try to agree a consensual solution that meets the bank’s obligations and your business objectives. ## Impact on IRHP Review > As you may be aware the Bank has agreed with the Financial Conduct Authority (FCA) to conduct a review of the sale of interest rate hedging products. We have agreed with the FCA that for the period of the review, we will not foreclose on or adversely vary existing lending facilities without giving prior notice to the customer and obtaining their prior consent unless exceptional circumstances arise. The arrangements referred to in this letter do not in any way affect the review or our undertaking to the FCA. ## Appointment of new (RCR specialised) Relationship Manager > In view of this development, [a new bank employee specialised in RCR relationships] has been appointed as your new Relationship Manager to actively work with you to explore your options and to develop appropriate courses of action to enable RCR to achieve its objectives. ## Dealing with RBS / RCR - Borrower Protection Lawyers Every bank-customer relationship and lending situation is unique.  For many RCR customers (that are able to) exiting from RBS/RCR may prove to be the best strategy.  However, where customers cannot move to other lenders the lending bank knows that the borrower is under pressure to go along with whatever they dictate.  Customers are often unable to move due to the impact of, for example, (i) a shift in property prices leading to a loan to value (LTV) covenant breach, or (ii) due to the bank citing a 'market disruption clause', or (iii) changing the interest rate in some other way, or (iv) due to previous pressure to sell assets or shares (eg via RBS Global Restructuring Group - GRG) to a bank subsidiary such as RBS West Register or (v) the huge break costs of an interest rate swap or other derivative product (that may have been mis-sold in the first place). Many NatWest and RBS customers were mis-sold interest rate hedging products (IRHPs such as swaps, collars, cancellable swaps, structured collars) which cause significant credit limit utilisation (CLU).  When selling an IRHP derivative contract to a customer, the use of the customers credit limit (over charged assets) was regularly done without the (otherwise usual) customer knowledge of credit limit applications and utilisation.  We believe this practice of non-notification of CLU was designed to avoid the customer appreciating the real contingent liability risk that these complex financial instruments posed (this could be tens or hundreds of thousands or millions of pounds depending on product sold and size of notional amount and term). *The Borrower Protection team at LEXLAW has a wealth of experience and success in negotiating with banks and building societies and challenging unfair lender practices and mis-selling.  As the leading UK lawyers dealing with these disputes for borrowers, members of the team regularly appear in print, TV and radio broadcast media discussing misconduct by the major banks and building societies.* --- # FCA IRHP Review – KPMG whistleblower: RBS fought to reduce size of interest rate swap redress Source: https://lexlaw.co.uk/solicitors-london/fca-irhp-review-kpmg-whistleblower-rbs-interest-rate-swap-compensation/ *The Times' City Editor, [Harry Wilson](http://muckrack.com/harry-wilson), one of the journalists that three years ago broke the news of interest rate derivatives mis-selling by the major banks, reports today (based on the first hand account of a KPMG whistleblower) on flaws in the [FCA Interest Rate Hedging Product (IRHP) redress scheme](http://www.fca.org.uk/consumers/financial-services-products/banking/interest-rate-hedging-products) in that Royal Bank of Scotland (RBS) executives aggressively sought reductions in the redress offered to victims of their mis-selling. * ## RBS minimised mis-sold IRHP compensation A whistleblower has claimed [Royal Bank of Scotland](http://www.rbs.co.uk/) tried to minimise the amount of compensation paid out for mis-sold interest rate swaps. [The Times](http://www.thetimes.co.uk/tto/news/) reports that [KPMG](http://www.kpmg.com/UK), which oversaw the redress programme over mis-sold derivatives, was “browbeaten” into accepting smaller settlements to small businesses. A former KPMG subcontractor, who asked not to be named, told the newspaper swaps worth more than £750,000 were “almost always challenged” by the bank. The source said RBS pushed for firms to be given a new deal rather than their money back. They said: > “The bank did not want to pay out cash on these cases, nor meet high break costs if it was in any way avoidable. Considerable pressure was put on the review team by the bank to offer … an alternative product or, in some cases, to argue that it was a compliant sale with no redress. > > > > > > “The higher the cost to the bank, the more the bank would argue with the reviewers and in some cases also with the skilled person seeking to persuade them to change their minds.” A spokesman for RBS told The Times that it "refuted the allegations that have been made"; whilst a spokeswoman for KPMG denied "any suggestion that our work ... has been in any way influenced by RBS.”  The [FCA](http://www.fca.org.uk/) claims it had "maintained close oversight of the relationship between the bank and their independent reviewers" and claimed the "allegation is not supported by the facts". ## Failings in the FCA IRHP Review The Times' investigative report into the IRHP mis-selling review scheme (together with the [Rt. Hon. Guto Bebb MP](http://www.gutobebbmp.co.uk/) and other political comments in [today's APPG parliamentary debate](https://web.archive.org/web/20180614221308/https://www.parliament.uk/business/committees/committees-a-z/commons-select/backbench-business-committee/news/mps-debate-the-financial-conduct-authoritys-redress-scheme/)) highlight the inadequacies of the FCA's IRHP redress scheme which was fundamentally flawed from the outset as it allowed the wrongdoer banks to review and redress their own wrongdoing. Over a year ago, we provided critical research information to [BBC Panorama](http://www.bbc.co.uk/programmes/b03dz52t) and, on behalf of our SME clients, we wrote to Mr. Martin Wheatley, the Chief Executive of the FCA giving him personal detailed notice of the failings in and abuses of the IRHP review and to request him to take action. We warned in particular of the lack of independence of those appointed by the banks as so-called 'independent reviewers': > The fact that the banks are able to appoint their own “independent reviewers” at all casts obvious doubt on the independence of the reviewer and therefore also puts in doubt the proper scrutiny and oversight required for effective conduct of this Review. This is particularly the case where the appointed reviewer is a large financial services organisation who will inevitability have an ongoing relationship with the bank in question which they will be anxious to preserve. At the time of writing we pointed out and and explained the following concerns: > A. Unreasonable exclusion of customers from the Review > B. Fettering of customers’ appeal rights against the sophistication assessment > C. Lengthy and unreasonable delays in conduct of the Review (leading to limitation issues) > D. Unfair and one-sided conduct of the Review Subsequently, we now have direct knowledge that consequential loss claims (even those prepared by lawyers and forensic accountants) have been assessed in the IRHP review by former bank managers with no legal or accountancy qualifications and who are not therefore qualified to determine such claims based on 'established legal principles' (as promised by the FCA). Consequential loss claims are routinely rejected and the FCA appears to provide little statistical analysis in this regard. See our full letter to the FCA here: [![Appeal IRHP review; IRHP redress appeal; FSA; FCA; Swaps; Derivatives; IRHP; IRHP Review; Swaps Mis-selling; Derivatives Mis-selling; Review scheme; KPMG; Independent Reviewer; Skilled person; RBS; Royal Bank of Scotland; Barclays; Barcap; HSBC; Lloyds; NAB; Clydesdale Bank; Yorkshire Bank; LEXLAW; Swaps Solicitor; Swaps Lawyers; Financial Services Litigation; Swaps Litigation](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW-e1417730638365-1024x799.jpg)](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf)Notice of Failings and Abuse to FCA [10 October 2013 - Letter from LEXLAW to FCA (Failings in and abuses of the IRHP Review)](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf) Mr Wheatley failed to reply to this correspondence himself. Instead we received an anodyne response and consider it possible that no meaningful action was taken by the FCA in response to our and our clients' shared concerns. ## Short-changed SMEs: Alternative IRHP Product Redress It is the above flaws in the FCA's IRHP scheme which have lead to many SMEs being short-changed by alternative product redress. Such alternative products, the FCA indicated in their [announcement FAQs](http://web.archive.org/web/20150417130349/http://www.fca.org.uk:80/consumers/financial-services-products/banking/interest-rate-hedging-products/questions?category=review-and-redress-determination-process), were only meant to be offered in circumstances where banks can show this is what the customer would have purchased had the bank complied with its regulatory obligations at the point of sale, using reasoning, evidence and customer testimony to demonstrate this. However it appears evident that banks have routinely offered alternative product redress for example by way of offers that mis-sold cancellable swaps be replaced with so-called 'vanilla' swaps or structured collars be replaced with so-called 'vanilla' collars.  All interest rate hedging products are classified as complex within the [Markets in Financial Instruments Directive (MiFID)](http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02004L0039-20110104&from=EN) and in our view it is misleading to refer to any such products as 'vanilla'.  In many cases the alternative product offered costs the customer as much as the original product, so no cash payment is offered (indeed, sometimes the alternative product would have imposed *higher* costs on the customer, although in fairness to the banks, they do not actually seek to argue that their customers should compensate *them* for the difference). Redress including such alternative products, reducing or eliminating the amount of cash payable to the customers, saves the banks billion of pounds in redress payments. Have the banks spent millions of pounds on their past reviews of derivatives sales, employing and engaging internal reviewers and so-called independent reviewers in order to save billions of pounds due to SMEs? ## Appealing an IRHP Redress Determination Given our and our client's lack of faith in the IRHP scheme (which today was backed by [adverse comments towards the review made by many MPs](http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141204/debtext/141204-0002.htm#14120439000001)) we have been instructed to litigate many cases regardless of the FCA's flawed IRHP review scheme. We have achieved successful settlements in the vast majority of such cases and are continuing to litigate in many more cases. Whilst the FCA implies that review outcomes have been determined and redress outcomes notified to customers, save for a small number who joined the review late, we know of at least one case where no redress determination has been provided in spite of the customer having provided its evidence for the review over a year ago and in spite of repeated promises to provide a provisional basic redress determination, which has apparently been being "finalised" since at least 30 May 2014. It is likely that there are hundreds of poorly reasoned bank determinations of alternative redress where the real reason for an alternative product is to reduce the cost of the mis-selling payout for the bank. Examples we have successfully challenged using litigation and [derivative expert advice](http://www.vedantahedging.com/swap-mis-selling/) include: - A mis-sold bank callable swap being replaced with a swap which meant the redress sum was *negative *(around -£50,000) - until we recently issued litigation and made further written IRHP review submissions (resulting in the swap being cancelled altogether compensating our client around £600,000 plus consequential losses). - In other examples, even where a swap was being replaced with a seemingly suitable IRHP cap, we assessed the caps were for a longer notional value than could ever be justified by the lending condition (or by derivatives market practice with respect to its term length or strike price) and on challenge have secured significantly greater compensation for our clients. - We have experienced two Banks offering alternative products other than caps by claiming that a cap was offered but rejected - but upon investigation the only cap sales engagement the banks could point to was in relation to collars (which contain a cap as well as a floor) but no standalone cap was ever described to the customer. The FCA indicated that legal advice was not necessary but failed to inform SME victims that banks like RBS were allowed to have a team of specialist lawyers to work on their behalf in the review scheme itself (in addition to their usual in-house legal team). Those with questionable alternative redress offers would be prudent to seek urgent (immediate) [IRHP mis-selling legal advice](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) in particular where the mis-selling was to individuals. ## The Times: RBS 'challenged size of payouts for rate swap damages' [![FSA; FCA; Swaps; Derivatives; IRHP; IRHP Review; Swaps Mis-selling; Derivatives Mis-selling; Review scheme; KPMG; Independent Reviewer; Skilled person; RBS; Royal Bank of Scotland; Barclays; Barcap; HSBC; Lloyds; NAB; Clydesdale Bank; Yorkshire Bank; LEXLAW; Swaps Solicitor; Swaps Lawyers; Financial Services Litigation; Swaps Litigation](https://encrypted-tbn0.gstatic.com/images?q=tbn%3AANd9GcR6Rqo-LtTHjXEZVpTQAMSCluII8HJIGsFtb9RmVbCcA8BPXT4z)](https://lexlaw.co.uk/wp-content/uploads/2014/12/RBS-FCA-IRHP-Swaps-Review-KPMG-IR-Whistleblower-Swap4Swap-Collar4Collar-Harry-Wilson.pdf)FCA IRHP Review scheme whistleblower: RBS 'challenged size of interest rate swap redress' [PDF of Times article: RBS 'challenged size of payouts for rate swap damages'](https://lexlaw.co.uk/wp-content/uploads/2014/12/RBS-FCA-IRHP-Swaps-Review-KPMG-IR-Whistleblower-Swap4Swap-Collar4Collar-Harry-Wilson.pdf) *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Interest Rate Hedging Product (IRHP) Review: Confidential agreement between FCA and major banks published Source: https://lexlaw.co.uk/solicitors-london/irhp-review-agreement-fca-banks-misselling/ *The Financial Conduct Authority's confidential agreement with several major banks, which set up the [Interest Rate Hedging Product (IRHP) Review](http://www.fca.org.uk/consumers/financial-services-products/banking/interest-rate-hedging-products), was published today. The Treasury Select Committee has also expressed concerns that the terms of the IRHP Review has allowed major banks the opportunity to avoid providing meaningful redress to SME customers who have been mis-sold interest rate hedging products.* ## IRHP Review - agreement between the FCA and major banks Andrew Tyrie MP, chairman of the Treasury Committee, commented on the publication of the agreement between the FCA and several major banks, and said: > These documents need to be in the public domain. The FCA took far too long to cooperate and did so only after many requests and persistent pressure from the Committee. > > > > > > The agreement will allow those who are party to the redress scheme to examine the precise terms of it, in particular what redress should be provided to firms that were mis-sold these complex products. The Committee will want to reach a judgment on whether the process provides fair and reasonable redress. > > > > > > The Committee remains very concerned that terms of the FCA's redress scheme may, in some cases, have provided banks with an opportunity not to provide meaningful redress. Many firms feel that this process has unfairly favoured the banks. > > > > > > The Committee expects to comment further on the scheme in its forthcoming report on SME lending. The confidential agreement between the FCA and several major banks, establishing the IRHP Review, can be seen here: [Agreement relating to Past Sales of Interest Rate Hedging Products](https://lexlaw.co.uk/wp-content/uploads/2015/02/Agreement-relating-to-Past-Sales-of-Interest-Rate-Hedging-Products.pdf) [Supplemental Agreement relating to Past Sales of Interest Rate Hedging Products](https://lexlaw.co.uk/wp-content/uploads/2015/02/Supplemental-Agreement-relating-to-Past-Sales-of-Interest-Rate-Hedging-Products.pdf) The Treasury Select Committee also published a letter from Clive Adamson, former Director of Supervision at the FCA, to major banks in relation to the IRHP Review, which can be seen here: [Letter from Clive Adamson to Major Banks about the IRHP Review](https://lexlaw.co.uk/wp-content/uploads/2015/02/Letter-from-Clive-Adamson-to-Major-Banks-about-the-IRHP-Review.pdf) *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Barrier to justice raised as court fees rise by 600% Source: https://lexlaw.co.uk/solicitors-london/barrier-to-justice-raised-as-court-fees-rise-swaps-claim/ *In spite of Lord Pannick QC's laudable [motion of regret](http://www.bbc.co.uk/news/live/uk-politics-31728448), the draft Civil and Family Proceedings (Amendment) Fees Order has been approved in the House of Lords; this will require those suing for breach of contract or personal injuries to pay an upfront court fee of 5% of the value of the claim, up to a fee cap of £10,000, whereas the previous fee cap was £1,920 (raised some 11 months ago from £1,670). * ![Litigation Lawyers in London High Court](https://lexlaw.co.uk/wp-content/uploads/LEXLAW-HMCTS-Ministry-of-Justice-litigation-solicitors-london-uk.jpg) ## 600% court fee rise is a real barrier to justice. A civil justice system that is open to all is the hallmark of a civilised society because such a system forces everyone to operate within it or have their conduct exposed to the light of judicial scrutiny. Our courts force men and women of business, by both judgment and precedent example, to treat each other honestly and responsibly and within the rule of law. At the centre of our justice system is the court, to which individuals and businesses turn when seeking to persuade those who have operated outside of legal norms to correct their conduct. Very often the commencement of legal action on a well-founded claim will lead to a financial settlement whereas very rarely will a letter before claim on the same matter ever lead to settlement.  Now, those without significant financial means may not be able to commence legal action by which they could have otherwise pressed those that commit societal wrongs to conform to societal norms. The increase in court fees by circa 600% is a significant barrier to justice and without doubt there will be many individuals and small businesses who will, from Monday, never be able to secure legal redress or settlement from their wrongdoers. Regrettably, the court system is being turned from a justice centre into a profit centre. The Law Society have issued a [pre-action protocol letter for judicial review](https://web.archive.org/web/20170808012407/http://www.lawsociety.org.uk/policy-campaigns/articles/court-fee-increases/) to challenge the fee increases. This is supported by  a multitude of professional legal bodies such as [The Law Society](http://www.lawsociety.org.uk/), [The Bar Council](http://www.barcouncil.org.uk/), [Chartered Institute of Legal Executives (CILEx)](http://www.cilex.org.uk/), [Forum of Insurance Lawyers (FOIL)](http://www.foil.org.uk/), [Association of Personal Injury Lawyers (APIL)](http://www.apil.org.uk/), [Motor Accident Solicitors Society (MASS)](http://www.mass.org.uk/), [Chancery Bar Association](http://www.chba.org.uk/), [Action Against Medical Accidents (AvMA)](http://www.avma.org.uk/) and the [Commercial Bar Association (COMBAR)](http://www.combar.com/). ## Without justice; example impact on SMEs Small and medium enterprises (SMEs) are the backbone of the UK economy. Far too many of them have been mis-sold lending which includes, or is linked to, or is mark to market break costed by reference to, complex financial instruments, typically gilts, interest rate swaps or foreign exchange forwards. Such sales are commonly entered into with major financial institutions such as Norwich Union, Aviva, RBS, NatWest, Barclays, Lloyds, HSBC, Santander, Bank of Ireland, Nationwide, West Bromwich and forex brokers such as Western Union, Moneycorp, World First, HiFX, Monex, OptFX, Currencies Direct and AFEX. [Derivatives experts](http://www.vedantahedging.com/) and campaign groups for such SME victims include [The Federation of Small Businesses (](http://www.fsb.org.uk/)[FSB](http://www.fsb.org.uk/)), [Bully-Banks](https://web.archive.org/web/20160210035737/http://bully-banks.co.uk:80/site/), [SME Alliance](http://www.smealliance.org/); general case studies can be readily seen at [InsolvencyAssist](https://insolvencyassist.wordpress.com/case-examples/) (a community interest company). ### Failings in the FCA IRHP Review scheme An example of the power of and the need for the protective claim form can be demonstrated by a real life example. By way of background, the Financial Conduct Authority (previously the Financial Services Authority) found and reported in June 2012 that over 93% of cases of Interest Rate Hedging Product sales it had examined were non-compliant with the regulations that covered their sales process (the conduct of business rules). This resulted in many billions of pounds of cumulative losses to SMEs and, in the light of the regulator's findings, the announcement of a compensatory review scheme. That scheme has been widely [condemned](https://old.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news/treasury-committee-publishes-agreement-between-fca-and-banks-on-irhp-review/) as having [failed](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf) SMEs by a process of allowing the wrongdoer financial services institutions to determine and assess their own wrongdoing and deny redress or limit it by proposing commercially unrealistic alternative products as redress. > *“The Committee remains very concerned that terms of the FCA’s redress scheme may, in some cases, have provided banks with an opportunity not to provide meaningful redress. Many firms feel that this process has unfairly favoured the banks."* - Rt. Hon. Andrew Tyrie MP, Chair of the Treasury Committee In addition, following a pilot review scheme, many businesses were ejected from the so-called FCA review (however, it is the wrongdoer bank rather than the FCA that conducts the review) when the [banks persuaded the regulator to modify the scheme](https://web.archive.org/web/20151002041905/http://in.reuters.com/article/2015/02/12/banks-britain-misselling-idINL5N0VM3FW20150212). ### Case study in beating the FSA Review by Litigation One such small business (not the only SME in this situation) was told of its ejection from the so-called [FCA Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) only after its legal rights had become time barred. One has to question why it took the bank several months to communicate the ejection decision; perhaps it was a sharp legal and financial strategem designed to save millions of pounds or perhaps the bank were behaving *bona fide* but just slowly. Fortunately, that client had issued a protective court claim form against his bank at a cost he could afford of a reasonable £1,670. The court had to assign a number to the claim form handed to it for stamping and bank the issue fee and wait to see if the claim form was later served on the bank (which eventually it was) to commence proceedings. In that case, the claim form was served after the bank denied all wrongdoing which position they maintained for over 18 months. Eventually, as a result of the pressure of litigation disclosure and impending judicial scrutiny, the bank agreed to pay significant damages to our client, which amounted to a financial benefit of around four million pounds. At the time our client needed to issue the claim form, his business was devastated by the bank and he was left with very little funds due to the massive costs of the toxic financial instruments mis-sold to him by his bank. Fortunately, the court issue fee at the time was a reasonable and proportionate £1,670; soon, however, it will be £10,000. When these events unfold in the face of future victims of financial services institutions, who may not have £10,000 at their disposal to issue a protective claim form (due to the very conduct of their opponents), they may well be left without justice. *If you have a claim, you may wish to instruct your legal advisers to issue it tomorrow (as many of our clients are doing; even one small business that first spoke to us earlier today). You can also [write to your MP and/or the Ministry of Justice following these templates](https://www.lawsociety.org.uk/policy-campaigns/campaigns/access-to-justice/).* --- # Treasury Committee reports on Conduct in SME lending (FCA IRHP Mis-selling Review, TBLs, Hidden Swaps and GRG) Source: https://lexlaw.co.uk/solicitors-london/treasury-committee-reports-on-conduct-in-sme-lending-fca-irhp-mis-selling-review-tbls-hidden-swaps-and-grg/ *The [House of Commons Treasury Committee](https://old.parliament.uk/business/committees/committees-archive/treasury-committee/) has today (10 March) published its report on Conduct and competition in SME lending. This report covers bank [mis-sold interest rate derivatives](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/), regulation of [loans embedded with swaps](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/) (hidden swaps such as TBLs), criticisms of the [FCA Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) process, challenging banks through [litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) at the courts, or via the [Financial Ombudsman Service](http://www.financial-ombudsman.org.uk/) and issues regarding RBS Global Restructuring Group ([GRG](https://lexlaw.co.uk/solicitors-london/tag/grg/)). We set out below some of the key conclusions and recommendations.* [![fca review mis-sold swaps lawyers](https://lexlaw.co.uk/wp-content/uploads/2015/03/Treasury-Committee-Report-on-SME-Lending-FCA-IRHP-Swaps-Mis-selling-Solicitors.png)](https://lexlaw.co.uk/wp-content/uploads/2015/03/Treasury-Committee-Report-on-SME-Lending-FCA-IRHP-Swaps-Mis-selling-Solicitors.png)  *[Download a PDF copy of the report](https://lexlaw.co.uk/wp-content/uploads/2015/03/Treasury-Committee-Conduct-and-Competition-in-SME-lending-FCA-IRHP-Review-Swaps-Mis-selling-Solicitors-LEXLAW.pdf)* ## Mis-sale of Interest Rate Hedging Products and the FCA’s IRHP review *Much of what the Treasury Committee has today reported on, in 2015, was warned and notified to the FCA by LEXLAW in a letter dated 10 October 2013 which we wrote to Martin Wheatley of the FCA to warn him and give the regulator [NOTICE OF FAILINGS IN AND ABUSES OF THE IRHP REVIEW](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf).  He defended the review scheme in his response and the FCA denied the scheme was flawed.  However, the Treasury Committee has now indicated the process is flawed and the FCA should investigate to establish whether there are systematic failures in the review scheme. * The FCA’s IRHP redress process is guided by the principle that “redress must be fair and reasonable”, and that “redress should aim to put customers back in the position they would have been in had the breach of regulatory requirements not occurred.” This is a statement of principles, and is open to interpretation by banks conducting the review. The outcome in each customer’s review therefore relies primarily on the judgement of the bank, on a case by case basis, subject to approval from an independent reviewer. In addition different banks came to different conclusions with inconsistency between different independent reviewers. **(paragraph 91)** The arbitrary sophistication test may have been necessary to obtain agreement to a voluntary scheme from banks, but it is clear that not all non-sophisticated customers have been included in the review. **(paragraph 92)** The FCA has acknowledged that the introduction of a £10 million cap on the size of an IRHP has excluded approximately one third of the largest IRHP review participants. The FCA should write to the Committee to explain its decision-making on this cap. This explanation must state whether, in its view, it represented a concession to bank lobbying, and if not, why not. **(paragraph 99)** The FCA has consistently maintained that the redress process has worked as intended. But there have been complaints that the process of the IRHP review falls short of delivering fair and reasonable redress. It has been difficult for this Committee to determine, however, whether these complaints are examples of isolated exceptions to an adequate process, or are signs of a wider, systemic problem with the review. **(paragraph 114)** This in itself is indicative of a flaw in the process which the FCA should address. In particular, the FCA should collect the information necessary to establish whether there are systemic failures in the review. The FCA should publish its findings, a summary of the complaints it has examined, and take any action it decides is appropriate to ensure that all customers receive fair and reasonable redress. **(paragraph 115)** > Chairman of the Treasury Committee, Andrew Tyrie MP: > *“Many small businesses have been badly hit by the complex terms of the IRHPs offered by their bank. A significant number of those firms who were mis-sold these hedging products feel that, having been ripped off in the first place, they have now been treated unfairly again by the FCA’s IRHP redress scheme.* > > > > > > *“It is far from clear that the FCA’s scheme has delivered fair and reasonable redress to all the businesses affected. The FCA needs to do much more to demonstrate that this process is credible and has not unduly favoured the banks.* > > > > > > *“As part of this work, the FCA should collect the information necessary to establish whether there are systemic failures in the review. This would benefit from independent oversight. It should publish its findings. Greater transparency is crucial in order to ensure that those SMEs mis-sold these products receive – and are seen to receive – appropriate redress. The Financial Services Act provides for the Treasury to require for this type of work to be done. But hopefully this won’t be necessary.” * ## Tailored Business Loans and Clydesdale Bank *Over 60,000 fixed rate or tailored business loans containing embedded derivatives or ‘hidden swaps’ have been sold to SMEs by major banks and building societies including Clydesdale and Yorkshire Banks. These ‘loan contracts’ are in fact regulated ‘contracts for difference’ and are open to legal challenge as they were thereby often mis-sold, for example, due to inadequate warning of break costs. We have litigated more cases than any other law firm in the UK and are settling cases constantly including cases involving [‘hidden swaps’](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/).* We have received evidence suggesting that [Clydesdale Bank mis-sold Tailored Business Loans](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/). [Clydesdale](http://en.wikipedia.org/wiki/Clydesdale_Bank) has itself admitted that its terms and conditions letters would not pass a plain English test, and that its TBL customers could not reasonably have anticipated the high levels of potential break costs to which they had exposed themselves. Many small businesses indeed did not grasp their exposure to such high break costs, nor could they reasonably have been expected to do so.** (paragraph 147)** It appears that the bank did not explain the potential scale of break costs in a low interest rate environment because the bank itself had not taken into account this potential risk. Banks, however, should be the experts in assessing the potential risk of products they sell, and explain those risks to their customers. The sale of TBLs has led to considerable consumer detriment. The bank’s failure adequately to assess the potential risk of its product may explain the detriment that the bank has caused to its customers, but does not excuse it. **(paragraph 148)** From the point of view of the customer, the services provided by the hedging element of a loan with an embedded interest rate hedging facility—such as a Tailored Business Loan—and a stand-alone IRHP are extremely similar, if not identical. But stand-alone IRHPs are regulated, while loans with embedded interest rate hedging facilities are not. It is a logically inconsistent result of the perimeter of regulation that products whose effects may be identical fall on both sides of the perimeter. **(paragraph 149)** Clydesdale understood that TBLs were unregulated. It created TBLs to avoid requirements imposed by the regulator on the sale of a regulated product, IRHPs. It claims that this was to simplify the associated documentation, and to make the product easier for customers to understand. The use of TBLs has left regulators powerless to enforce compensation for customers to whom products were mis-sold, as they have done with IRHPs. Clydesdale created a product that retained the risks and complexities of the regulated product, but had none of the safeguards. **(paragraph 150)** The Treasury should publish an assessment of the feasibility, benefits and costs of adjusting the perimeter of regulation to cover loans with features of interest rate hedging products. This assessment will need to take into account the possibility that other products may inadvertently be included in the perimeter as a by-product, and the negative consequences that this could entail.** (paragraph 151)** The lack of public oversight, minimal transparency and limited coverage of the scheme mean that the Committee cannot be confident that [Clydesdale’s separate internal review](https://lexlaw.co.uk/solicitors-london/clydesdale-yorkshire-bank-nab-complaint-review-tbl-fixed-rate-tailored-business-loan-missold-hidden-swap-irhp/) will deliver outcomes equivalent to the FCA review upon which it is intended to be based. If Clydesdale’s aim is to build public trust in its actions, it should address all three of these problems.** (paragraph 161)** > Chairman of the Treasury Committee, Andrew Tyrie MP: > *“The hedging element of Tailored Business Loans fell outside the scope of regulation, despite sharing – for all practical purposes – the features of regulated products.* > > > > > > *“This gap in the regulatory perimeter meant that the product created by Clydesdale Bank was not covered by the usual safeguards. Many of its customers did not understand the product and could not reasonably have been expected to do so. Some were probably unaware that the product fell outside the scope of FSMA. Regulators have been powerless to provide redress to those affected by wrongdoing.* > > > > > > *“Furthermore, Clydesdale’s own internal review of potential mis-selling appears to have serious shortcomings. It lacks public oversight, transparency and is limited in scope. All three of these problems need to be addressed by Clydesdale.* > > > > > > *“The Treasury should, for the future, undertake a thorough analysis to consider the merits of bringing these products within the scope of regulation.”* ## The role of the regulators Regulation can be an impediment to effective competition in banking. Regulators appear to have an instinctive resistance to new entrants: in the recent past, prudential requirements had been applied in a way that unnecessarily hindered new entrants, the authorisation process had been difficult for new entrants, and small banks had to reach an agreement with a larger one to have access to the payments system. The FCA now has a statutory objective to promote competition in the interests of consumers. The FCA must continue to transform its regulatory approach in order to fulfil this new objective. It is essential that the FCA’s approach to meeting this objective is not siloed within an individual department of the regulator, but instead permeates through the entire culture and approach of the organisation. **(paragraph 250)** The FCA’s competition objective is new. The regulator is in the process of learning a new set of skills. The evidence suggests that this is a work in progress. The Committee recommends that the FCA, with oversight from the CMA, produce an annual report on the implementation of its pro-competition activities. In particular, the CMA should be invited to form a judgement on the effectiveness of the FCA’s competition regime. The FCA and CMA have concurrent competition objectives. They both remain active in the competition field. The danger is that the CMA retreats, and the FCA does not vigorously fill in the space left. The CMA should report publicly if it believes the FCA is not fulfilling its competition duties.**(paragraph 251)** > Chairman of the Treasury Committee, Andrew Tyrie MP: > * “Regulation alone is not the answer. After persistent pressure from the Treasury Committee, the FCA is now required by law to promote competition in the interests of consumers.* > > > > > > *“The FCA’s efforts to fulfil this objective and transform its culture are still work in progress. Much more needs to be done to put competition at the core of decision-making across the organisation. The CMA should assume responsibility for reaching an annual judgement as to whether the FCA is fulfilling its statutory duty to promote competition in the interests of consumers. It should ensure that its findings are published.”* ## RBS and GRG *In a blow for[ RBS, a bank which has in recent times obtained judgment by fraud in the High Court](https://lexlaw.co.uk/solicitors-london/rbs-v-highland-financial-partners-culture-of-denial-at-rbs/), the Treasury Committee has described testimony from senior RBS witnesses as "incorrect and therefore misleading" in respect of RBS attempts to deny that GRG generated profits for the bank.* In his report on RBS, Sir Andrew Large said that GRG was run as an “internal profit centre”. However, in written and oral evidence to the Committee, RBS disputed that description—even though it had had the opportunity to contest that point when it saw Sir Andrew’s report in draft. Mr Sullivan and Mr Sach told the Committee, on behalf of RBS, that GRG was not a profit centre. The Committee, having received further written evidence from Sir Andrew Large, the Chairman of RBS, Mr Sach and Mr Sullivan, has concluded that Mr Sullivan and Mr Sach’s original statements to the Committee on this point were wrong. It is now agreed by all that Sir Andrew was correct in his description of GRG as an internal profit centre. **(paragraph 80)** The evidence that Mr Sach and Mr Sullivan gave was incorrect and therefore misleading, whether intentionally or not. RBS has apologised to the Committee and corrected its evidence. However, given the seniority of the original RBS witnesses, it should not have required intervention by this Committee with the Chairman of RBS to obtain that apology and a full statement of RBS’s position. **(paragraph 81)** This misunderstanding of the bank’s position by two senior executives is indicative of a systemic weakness of standards and culture. It is understandable, indeed right, that banks should seek to support businesses in difficulty with special measures but how that is done and whether the institution or the customer is the main beneficiary needs much greater clarity. **(paragraph 82)** The Clifford Chance review of RBS’s treatment of distressed customers, principally by the Global Restructuring Group, was welcomed by RBS as finding “no evidence of systematic defrauding of business customers”. However, the review—overseen by a bank executive rather than an non-executive director—was not independent, was based on narrow terms of reference, and left a number of questions unanswered, such as why GRG could not explain the size of fees it had charged, and the accuracy of its asset valuations.**(paragraph 68)** The FCA is conducting its own review into GRG. It is important that this review comprehensively address the allegations against GRG, so that the public can be confident that any wrongdoing is identified and resolved.** (paragraph 69)** > Chairman of the Treasury Committee, Andrew Tyrie MP: > *“Two senior RBS managers gave evidence to the Committee that was materially incorrect on a key point. RBS has subsequently but belatedly apologised.* > > > > > > *“The Clifford Chance review of RBS’s treatment of distressed customers should not be considered a clean bill of health. A thorough investigation by the FCA already underway is crucial to the restoration of confidence in RBS as a bank. This investigation needs to demonstrate that RBS serves its customers’ interests rather than its own.”* *[Download a PDF copy of the report](https://lexlaw.co.uk/wp-content/uploads/2015/03/Treasury-Committee-Conduct-and-Competition-in-SME-lending-FCA-IRHP-Review-Swaps-Mis-selling-Solicitors-LEXLAW.pdf)* --- # Enterprise Finance Guarantee Mis-Selling & Royal Bank of Scotland EFG Review Source: https://lexlaw.co.uk/solicitors-london/enterprise-finance-guarantee-efg-loan-mis-selling-review/ *[The Royal Bank of Scotland (RBS) is reviewing its past sales of 1,800 Enterprise Finance Guarantee (EFG) loans](https://www.rbs.com/rbs/news/2015/01/rbs-announces-review-into-customers-affected-by-enterprise-finance-guarantee-efg.html) to small businesses, following concerns that RBS did not properly explain the risks of [EFG loans](https://www.gov.uk/understanding-the-enterprise-finance-guarantee) to SME customers already in financial distress. We comment on the issues relating to EFG mis-selling ([which the Serious Fraud Office are reportedly investigating](https://twitter.com/ian_fraser/status/501292746850992129)) and explain the options for wronged and dissatisfied customers based on our experience of ongoing EFG and other financial services mis-selling cases.* ## What are Enterprise Finance Guarantee (EFG) loans? The [Enterprise Finance Guarantee scheme](http://british-business-bank.co.uk/market-failures-and-how-we-address-them/enterprise-finance-guarantee/) is a loan guarantee scheme that was set up by the Government in November 2008 to encourage banks to lend to businesses who had insufficient security to obtain normal commercial lending. To be eligible for the Enterprise Finance Guarantee scheme, businesses had to meet the following criteria: - The business had to operate in the UK; - The business had to have a turnover of less than £41 million; - The business had to be seeking a lending facility between £1,000 and £1 million; - The business had to be willing to agree to repayment terms of between 3 months and 10 years; and - The business had to operate in a sector eligible for EFG (and most sectors were eligible). Under the Enterprise Finance Guarantee loan scheme, the Government agreed to guarantee 75% of the value of each individual loan, but had no involvement in lending decisions, which were entirely at the prerogative of the lender banks. The EFG loan scheme has been available through many lenders, including Barclays, Clydesdale, Yorkshire, HBOS, HSBC, Lloyds, RBS/NatWest, Bank of Scotland and the Cooperative Bank. Lender banks were entitled to take security, including [personal guarantees (PGs)](http://en.wikipedia.org/wiki/Personal_guarantee), from borrowers, even though the purpose of the Enterprise Finance Guarantee scheme was to assist businesses that lacked security by providing a Government guarantee for 75% of the value of each EFG loan. In addition to paying the lender's fees and costs, businesses receiving an EFG loan were required to pay an additional 2% premium (based on the outstanding capital amount of the loan) to the Government in order to partially cover the cost of the EFG scheme. ## How did banks mis-sell EFG loans? It has been [reported](https://twitter.com/lexlawuk/status/555998182996738048) that there are a number of serious issues in relation to how banks sold Enterprise Finance Guarantee loans to their customers. Many banks failed to explain to their customers that, for each individual EFG loan, the customer would remain responsible for repaying 100% of the EFG loan (and not just the 25% of the EFG loan that was outside of the Government's guarantee). Consequently, many customers did not realise that their liability to their bank was greater than anticipated and that the EFG loans served primarily to protect banks from the risk of loan default rather than borrowers. Furthermore, despite having the security of a 75% guarantee from the Government, many banks obtained charges over their customers' primary private homes or arranged personal guarantees for the sole or main purpose of guaranteeing the 25% of the EFG loan not guaranteed by the Government, even though the banks were expressly prohibited from seeking these forms of additional PG or charged security by the rules of the EFG scheme. ## Advancing an EFG mis-selling claim EFG claims can be progressed either via litigation or via the review or by both processes which can result in significant advantages for claimants resulting in an optimal financial outcome. Please contact us to discuss this further in an initial meeting. ## EFG Review RBS has indicated that it will be conducting its own review into EFG loan mis-selling, but it has failed to confirm when it will start contacting wronged customers or when its review will be concluded. However, RBS has also failed to assuage customers that the numerous problems that have plagued its handling of its IRHP mis-selling review (including extensive delays, a lack of independent scrutiny and unequal access to case files and other information) will not reoccur in relation to its review of EFG loan mis-selling. To best ensure an optimal financial outcome, we recommend that customers take legal advice and make detailed and authoritative [written submissions](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/) via their lawyers rather than submitting to face to face questioning by the bank. ## EFG Litigation We consider that it is important for customers who have fallen victim to EFG loan mis-selling to maintain their option of seeking redress through legal proceedings. The period of initiating legal proceedings for EFG loan mis-selling will usually be six years from the date of the sale (or from the date when the bank first proposed an EFG loan to the customer). Given that EFG loan mis-selling has occurred since November 2008, it is likely that more victims will progressively become time-barred from seeking legal redress although [s14A of the Limitation Act may provide a further three year period from the 'date of knowledge' of the mis-sold EFG](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/). Those customers will then risk finding themselves with no or limited legal recourse if RBS's review proves unsatisfactory (or if they were mis-sold and EFG loan by another bank). We therefore consider it essential that the victims of EFG loan mis-selling seek professional legal advice at the earliest opportunity in order to enable the necessary steps to be taken to safeguard their legal rights and obtain optimal financial compensation. --- # Judicial review of FCA IRHP swaps mis-selling review scheme permitted Source: https://lexlaw.co.uk/solicitors-london/judicial-review-of-fca-irhp-swaps-mis-selling-review-scheme-permitted/ *Holmcroft Properties Limited v KPMG ([Daily Telegraph, April 25, 2015, Business 33](http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11562078/Rate-swap-compensation-to-face-a-landmark-challenge-in-the-courts.html)). Holmcroft wins permission to bring a [judicial review](https://www.judiciary.gov.uk/you-and-the-judiciary/judicial-review/) against KPMG's conclusion that the redress offered in the redress scheme run by Barclays and reviewed by KPMG was "appropriate, fair and reasonable".* ## Application for Permission to Judicially Review KPMG's IRHP decision On April 24, 2015, Barclays Bank (as an interested party, having mis-sold the derivatives), KPMG LLP (in their capacity as the Independent Reviewer or Skilled Person under s166 FSMA 2000) and the Financial Conduct Authority (an interested party and the Regulator) appeared at a hearing to respond to claims from Holmcroft that the compensation given to victims of mis-sold interest rate hedging products (IRHPs) has been unfair. The claim for permission to judicially review Barclays' KPMG-approved final redress decision was brought by Holmcroft Properties Ltd, who had been awarded around GBP 500,000 under the IRHP mis-selling compensation scheme, but not compensated for some alleged consequential and other loss. The hearing could open the way for a full judicial review of the IRHP scheme and the role of the skilled person. ## JR of KPMG's Decision as FCA Review 'Skilled Person' allowed Mr Justice Parker heard the application for permission to have a judicial review and has allowed Holmcroft Properties Ltd, a nursing home operator, to bring a full judicial review after being mis-sold interest rate swaps. Mr Justice Parker stated that KPMG, the independent reviewer of Barclays' redress programme, could potentially be considered to be exercising the role of a public body (the FCA) by facilitating and enforcing its regulatory function and therefore KPMG could be the subject of a judicial review. It was also indicated that the JR claim was of general public interest. ## Next Steps for SMEs Mis-sold IRHPs Directions will now be set and the claimant will seek, in the subsequent judicial review hearing, to persuade the court to make (i) an order quashing KPMG's decision; (ii) declaratory relief from the court and (iii) costs. It is important to note that this JR, if successful, does not mean all affected SMEs will automatically obtain any enhanced redress. Any similarly affected SMEs should obtain [legal advice in respect of their own IRHP review outcome decisions](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) immediately and certainly well within three months of the date of the final redress outcome letter (which is the time limit for seeking judicial review). *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # The Sunday Times: ‘Lloyds pays up on rate swap wrangle’ Source: https://lexlaw.co.uk/solicitors-london/the-times-lloyds-pays-up-on-interest-rate-swap-wrangle/ *Kiki Loizou, of The Sunday Times, reports on our Financial Services Litigation team’s recent successful settlement of a swaps mis-selling litigation case.  A multi-cancellable swap was sold to a Care Home operator by Lloyds Bank. The bank refused to compensate their customer via the FCA-backed IRHP Review Scheme. Litigation forced the bank to pay out £4.6m for it's wrongdoing to this customer. * ![Lloyds Banking Group has settled a claim with a care home operator over the mis-selling of an interest rate swap (Sunday Times)](https://lexlaw.co.uk/wp-content/uploads/Lloyds-pays-up-on-rate-swap-wrangle-Litigation-Lawyers-UK-LEXLAW-Solicitors-Barristers-London.jpg) ## Success: Lloyds pays up... Lloyds Bank settles another claim with LEXLAW client (Coin Group) over mis-selling of interest rate swaps (The Sunday Times, 26 July 2015) A BUSINESSMAN has settled a two-year legal dispute with Lloyds Banking Group over the mis-selling of an interest-rate “swap”. Errol Bland of Buckinghamshire-based care home operator Coin Group has won a £4.6m claim, which covers a multimillion-pound break fee on a 30-year interest rate hedging deal the bank advised him to take on a £1.7m four-year loan. The case was settled out of court two weeks ago. > “Not only have we had to put our business growth plans on hold for the past 5½ years, but we have had to incur legal and professional costs to defend ourselves against something that was mis-sold to us,” said Bland, 50. He will be reimbursed the £900,000 he made in interest payments and £200,000 for his legal costs. About £3.5m will cover the sum needed to cancel the contract. Lloyds denied any wrongdoing. “*We are pleased that this now concludes the matter for the bank and the customer,*” it said. Source: [https://www.thetimes.com/article/lloyds-pays-up-on-rate-swap-wrangle-d0p5zhvjtr5](https://www.thetimes.com/article/lloyds-pays-up-on-rate-swap-wrangle-d0p5zhvjtr5) *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Statement by Coin Group re Litigation Settlement with Lloyds Bank Plc Source: https://lexlaw.co.uk/solicitors-london/statement-by-coin-group-re-litigation-settlement-with-lloyds-bank-plc-swaps-irhp/ **LLOYDS BANK - INTEREST RATE HEDGING PRODUCT (IRHP) MIS-SELLING** ** £4.6 MILLION GBP LITIGATION SETTLEMENT WITH SME CARE HOME** **LONDON, UK** - *Lloyds Bank Plc (LLOY.L) has settled a High Court claim[1] over the mis-selling of three complex financial derivatives[2], sold initially in July 2007 and then restructured in December 2008[3], to The Coin Group Limited, an SME that operates care homes in Buckinghamshire.* ![Lloyds Bank, a leading UK financial institution, has been involved in a significant litigation settlement regarding the mis-selling of interest rate hedging products (IRHPs) to The Coin Group, a care home operator. The case highlights the potential for banks to mis-sell complex financial derivatives to businesses, leading to significant financial losses. The Coin Group, represented by LEXLAW Solicitors & Barristers, successfully argued that Lloyds Bank failed to disclose the risks and potential liabilities associated with the IRHPs, resulting in a settlement of £4.6 million. The case underscores the importance of careful scrutiny when considering complex financial products and the need for regulatory oversight to protect consumers from financial harm. As businesses navigate the complexities of the financial landscape, understanding the risks and benefits of IRHPs and other derivative products is crucial.](https://lexlaw.co.uk/wp-content/uploads/Litigation-Solicitor-London-Bank-Loan-Barrister.jpg)[CGL Statement on *Coin Group v. Lloyds Bank Plc* Litigation Settlement](https://lexlaw.co.uk/wp-content/uploads/2015/08/Lloyds-Bank-Litigation-Settlement-CGL-Statement.pdf) The 30-year restructured trade product sold in December 2008 was a ‘*heads I win, tails you lose’* derivatives product known as a callable (i.e. cancellable) swap. This meant that Lloyds retained an option to cancel and make potentially huge profit from the derivative if interest rates rose (which would be the very time that interest rate protection was needed). The bank could make such a profit by pocketing the break cost via the call option. However, if interest rates remained low and the customer wanted to cancel, the break cost would be prohibitively expensive for the customer. The customer only had a 4-year loan from Lloyds and yet the bank sold a 30-year derivative product, which mis-match left the customer massively over-hedged. In the circumstances, the derivative amounted to a one-sided gamble by the bank with the customer’s assets. Under this settlement, Lloyds has agreed (i) to pay £890,523.98 GBP in respect of all derivatives payments previously paid by the customer, (ii) to bear the break cost of the one extant hedging product estimated in the sum of around £3.5 million GBP, and (iii) to pay £200,000 GBP towards the care home’s legal costs. The litigation settlement has cost Lloyds Bank Plc in the region of £4.6 million GBP, which amounts to almost the entire claim value, although the bank continues to deny any liability. Usually such settlements contain confidentiality clauses and the details cannot be placed in the public domain. On this occasion however, the customer refused Lloyds’ demands of confidentiality for two central reasons. Firstly, in order to demonstrate to the wider public the flaws and inadequacies of the Financial Conduct Authority (FCA) backed IRHP Review Scheme[4], in which the major banks have been allowed to review their own past sales of derivatives (in spite of the FSA, as it then was, publishing[5] a finding of mis-selling in 93% of IRHP sales examined in a pilot review scheme). Coin Group took part in that pilot review scheme but was never informed of the outcome and instead was ousted from the review scheme after the major banks somehow[6] collectively persuaded the FCA to exclude higher value claims[7]. Secondly, because Lloyds refused to put things right fully[8] by not refunding overdraft fees and interest suffered by the care home by reason of the derivative mis-selling. Mr Errol Bland, Director of the Coin Group, stated: > “The hedging payments forced us to go over our agreed overdraft facility limit, and Lloyds charged us unauthorised overdraft fees and interest of almost £130,000 on that unauthorised borrowing. However, Lloyds has refused to return that money, which would not have been charged had it not been for the callable swap that they mis-sold. This is an unfair and immoral decision by Lloyds, which exemplifies the way that we were treated by them throughout this dispute. No matter what Lloyds says about changing its profit-first culture, it continues to fail to put things right. Not only have we had to put our business growth plans on hold for the past five and a half years, but we have had to incur legal and professional costs to defend ourselves against something that was mis-sold to us but still ended up costing us over £130,000 in fees and interest. Since the start of this dispute, Lloyds has tried everything that it could to create hardship and financial instability for my business. Lloyds should be spending its resources on truly supporting businesses and rectifying the problems that it has caused its customers, rather than losing millions of pounds in break costs whilst trying to escape accountability for its mis-selling.” Mr [M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), a partner and dual qualified barrister and solicitor practising at [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/), the City of London law firm that represented the care home stated: >  “The Coin Group took part in the FSA pilot IRHP review scheme without any legal assistance, on the basis of its faith in the financial regulator, until it was ejected by Lloyds due to a change in the IRHP scheme to exclude so-called ‘sophisticated’**[9]** customers. Notably, communication of that ejection decision was delayed by Lloyds for several months for no valid reason except perhaps the hope that the care home’s legal rights would become time barred. Indeed, the decision letter from Lloyds that labelled our client as ‘sophisticated’ finally arrived, seven or so months late, just weeks after our client’s primary legal rights had expired by virtue of the Limitation Act. Fortunately, having taken legal advice in time, an urgent protective claim form was issued and litigation commenced. The litigation was, as usual**[10]**, vigorously defended by Lloyds Bank and the heavyweight legal team they fielded to deny liability**[11]**. Therefore, whilst Lloyds escaped compensating this customer millions of pounds in its FCA-backed (but remarkably self-administered) IRHP review scheme, the bank was forced to settle our client’s litigation claim in order to avoid judicial scrutiny and judgment over its past sales conduct. Lloyds Bank Plc has agreed to bear financial losses which, on this one case alone, are likely to be in the region of £4.6 million however the bank has made no admission of liability. Within this figure lies the break cost of the restructured £6 million 30-year callable swap. If Lloyds had settled this claim around twelve months ago, the break cost of that swap would have been in the region of £1.8 million; instead the bank is likely to have incurred a recent break cost of up to £3.5 million**[12]**. This highlights the massive contingent liabilities involved in these complex financial instruments, which liabilities were purposefully hidden from SMEs to allow the major banks, and their incentivised staff, to make huge profits on these derivatives trades.” Mr [Kumaran Sivathillainathan](https://lexlaw.co.uk/our-people/kumaran-sivathillainathan/), a senior associate solicitor at city law firm [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) which represented The Coin Group stated: >  “A scandal that has not yet been remedied by any review scheme is that many major banks and building societies have routinely sold hidden swaps**[13]** to customers by embedding such derivatives into fixed rate loans to avoid derivatives regulation. In this case, Lloyds Bank defended selling complex financial derivative products by alleging that the Coin Group already understood the risk of break costs because it had two structured collars from Yorkshire Bank**[14]**. Yorkshire Bank however describes these structured collars as ‘fixed rate loans’. Lloyds also sells fixed rate loans but routinely denies these are derivatives, even though they are similar to the ‘fixed rate loans’ sold by Yorkshire Bank. Lloyds and other major banks portray derivatives as ‘fixed rate loans’ to avoid regulation that governs the sale of derivatives to customers. Yorkshire Bank has since accepted that the Coin Group did not understand the risk of break costs involved with these structured collars and has agreed to pay compensation. Lloyds’ hypocrisy in attempting to use Yorkshire Bank’s mis-selling to defend and justify its own poor sales conduct was therefore unsuccessful. This demonstrates the weakness in regulatory scrutiny of banks which the FCA themselves complained to the Treasury about in November 2013**[15]**.” The Coin Group’s derivatives expert, Mr [Abhishek Sachdev](http://www.vedantahedging.com/meet-the-team/#abishek), of FCA-authorised financial risk management consultancy [Vedanta Hedging](http://www.vedantahedging.com/) stated: >  “The derivatives sold to this care home were highly complex and one-sided. Whether interest rates rose, or fell, the callable swap was ‘hard-wired’ to work against the best interests of the Coin Group. Furthermore, Lloyds restructured already complex derivatives**[16]** into even longer-term structures, for no apparent risk management reason. Mr Bland was not told that, even at the time of this restructure in 2008, breakage costs for the existing derivatives were already around £800,000 before the much larger 30-year callable swap was sold. The callable swap did not provide long-term protection and was a speculative derivative rather than a hedging transaction. Lloyds also significantly over-hedged the customer in terms of amount and duration because, at the time of the 30-year callable swap commitment, the Bank had only committed to provide debt for circa 4 years. Lloyds also failed to disclose the material contingent liabilities which were circa £2.5 million at the time of entering into the 30-year callable swap. This contingent liability had a negative impact on the credit worthiness of the Coin Group (similar to an extra loan or overdraft) but this was never explained to the client. Lloyds generated over £400,000 in upfront trading income from the sale of all of the derivatives to the Coin Group.” **NOTES FOR EDITORS:** - Lloyds sold complex callable swaps (*‘heads I win, tails you lose’*) that were speculative ‘gambling’ to benefit the bank rather than hedging to benefit the customer. - Lloyds failed to disclose the break costs of £800,000 from the first two derivatives to the customer before selling the third derivative. - Lloyds failed to disclose the contingent liabilities (estimated break costs) of £2.5 million before selling third derivative to customer. - Lloyds massively over-hedged the customer (30-year callable swap vs. 4-year loan). - Lloyds profited £400,000 by mis-selling three complex derivatives to SME care home. - Litigation settlement cost Lloyds in the region of £4.6 million; break cost almost doubled (from £1.8 million to £3.5 million) in six months due to Lloyds’ denials. - FCA allows banks to review their own past sales of derivatives and decide level of redress to pay; Lloyds likely to have decided in IRHP review scheme that there was wrongdoing in past conduct but decided in any event to pay nothing. - The IRHP review scheme is similar to a trial where the defendant is also the judge. - Lloyds ejected customer from IRHP review but failed to inform SME for 7 months (until after limitation date passed and SME’s legal rights would then be time barred). - Lloyds charged (and refuses to refund) almost £130,000 in overdraft fees and interest to customer which were suffered due to the mis-sold derivative. - Lloyds relied on Yorkshire Bank’s sales mistakes to justify its own mis-selling. Following this logic through from the defence, Lloyds’ own ‘fixed rate loans’ containing swaps can be considered to be regulated embedded derivatives. **CONTACT DETAILS FOR EDITORS:** - **Vedanta Hedging** is the largest FCA-regulated hedging advisory organisation in the UK for SMEs and has advised hundreds of clients in connection with the mis-selling of derivatives in both the FCA-backed IRHP review scheme and in litigation by providing expert witnesses. The Managing Director, Mr Abhishek Sachdev, can be contacted by email on [abhishek@vedantahedging.com](mailto:abhishek@vedantahedging.com) or telephone on 020 7183 2277. - **LEXLAW Solicitors & Barristers** is a unique law firm that partners solicitors and barristers and is the only law firm based in the Middle Temple (an Inn of Court). The firm has conducted more litigation in respect of derivatives mis-selling to SMEs than any other law firm in the UK. The partner in this case, Mr M. Ali Akram, can be contacted by email on [maa@lexlaw.co.uk](mailto:maa@lexlaw.co.uk) or telephone on 020 7183 0529. - **The Coin Group** is an SME operator of care homes and investment property in the Buckinghamshire area, established since 1998. The owner and Managing Director, Mr. Errol Bland, was featured in a news report by Laura Kuenssberg for ITV News titled ‘[Businesses worried about delays in resolving 'swaps' dispute](https://youtu.be/YBXobOk0EZw)’ discussing delays in the IRHP review scheme. Mr Bland can be contacted for further comment by email on [errol@coin-uk.co.uk](mailto:errol@coin-uk.co.uk) or via his legal representatives. [1] The Coin Group Limited v. Lloyds TSB Bank PLC (High Court of Justice, Queen's Bench Division, London Mercantile Court, Claim No: 2013 Folio 944); proceedings were commenced on 15 July 2013. [2] The derivatives were: (i) a £2.25m 14-year Callable Swap entered into on 24 July 2007; and (ii) a £2.25m 14-year Enhanced Collar entered into on 24 July 2007, amended on 14 January 2008; and (iii) a £6m 30-year Callable Swap entered into on 1 December 2008 and represented to CGL by Lloyds as a way of restructuring the first two IRHPs in order to alleviate the financial difficulties caused by them. [3] In July 2007, Lloyds sold a total of £4.5 million of hedging to the Coin Group for 14 years. When the Coin Group complained about the costs of that hedging, Lloyds recommended and sold a restructure in December 2008, which replacement hedging had an even bigger detriment as it had a value of £6 million for 30 years. [4] See LEXLAW letter to FCA dated 10 October 2013 titled [Notice of Failings in and Abuses of the IRHP Review](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf). [5] [FCA Pilot Findings, 31 January 2013](http://www.fsa.gov.uk/pubs/other/interest-rate-swaps-2013.pdf): “*The work on the pilot has confirmed the FSA’s initial findings that there was significant mis-selling of IRHPs. We looked at 173 sales to ‘non-sophisticated’ customers in the pilot and found that over 90% did not comply with one or more of our regulatory requirements.*” [6] Andrew Verity has reported on BBC Newsnight that Her Majesty’s Treasury pressurised the FCA to water down the redress scheme to save billions of pounds of redress for the major banks, two of whom had been bailed out by the UK taxpayer (Lloyds and Royal Bank of Scotland); [Newsnight, 23 July 2015](http://t.co/wUnAo5nBD6). [7] Thousands of small business that have been excluded from the IRHP review scheme are contemplating legal action against the government for its failure to apply the Markets in Financial Instruments Directive (MiFID) rules correctly (see Kiki Loizou reporting for the Sunday Times on 25 January 2015: [‘Taxpayer may face £2bn bill over swaps mis-selling scandal’](http://www.thesundaytimes.co.uk/sto/business/article1510994.ece)). [8] In a recent interview with Jill Treanor published in the [Guardian](http://www.theguardian.com/business/2015/mar/28/lloyds-boss-antonio-horta-osorio-defends-record) (28 March 2015), Lloyds’ CEO, António Horta-Osório, claimed he was “*instilling a new culture, one where people must try to do the right thing*” yet he has refused to credit unauthorised overdraft fees and interest charged because of the mis-selling and has ignored correspondence on the subject. [9] The FSA announced the ‘sophistication test’ on 31 January 2013. It appears from a report by Andy Verity for the BBC that the ‘[Regulator capped mis-selling payments](http://www.bbc.co.uk/news/business-33647312)’ following lobbying by HM Treasury. The 'sophistication test' is not a test of sophistication but a prejudicially named set of criteria designed to save the banks an estimated £28 billion GBP of compensation truly owed to UK SMEs. [10] See James Cusick reporting for the Independent on 23 June 2014: [‘Exclusive: £22bn threat to banks in latest mis-selling ‘scandal’ that could rival PPI payouts’](http://web.archive.org/web/20150802003514/http://www.independent.co.uk:80/news/uk/politics/exclusive-new-bank-interest-rate-protection-scandal-as-big-as-ppi-9558029.html). [11] Lloyds were represented by Norton Rose Fulbright partner Mr Paul Morris, senior associate Mr Dominic Hennessy, and associate Ms Saskia Price, in addition to Lloyds’ Head of Complaints Disputes & Litigation Programme, Mr Ed Massey. [12] In June 2014, the breakage cost of the hedging was £1.8 million. By February 2015, the breakage cost had increased to £3.5 million. [13] For more information on hidden swaps mis-selling see campaign group [Bully-Banks](https://web.archive.org/web/20171119170524/http://www.bully-banks.co.uk/)’ [Hidden Swaps Factsheet](https://web.archive.org/web/20150127064823/http://www.bully-banks.co.uk:80/site/app-hidden-swaps-menu/hidden-swap-fact-sheet) and [Frequently Asked Questions](https://web.archive.org/web/20171119170524/http://www.bully-banks.co.uk/). [14] See paragraphs 6(1), 9(3) and 43(3)(a) of the Defence in The Coin Group Limited v. Lloyds TSB Bank PLC (High Court of Justice, Queen's Bench Division, London Mercantile Court, Claim No: 2013 Folio 944) [15] Martin Wheatley, Chief Executive of the Financial Conduct Authority: “*We have concerns that firms … may consider ’embedding’ all their IRHPs into commercial loans in future and thus avoid our regulatory oversight altogether.  This could include ’embedding’ some of the most complex IRHPs (e.g. Structured Collars), which the banks have agreed to stop marketing to retail customers*” (see [12 November 2013 Letter from FCA’s Martin Wheatley to HM Treasury](https://lexlaw.co.uk/wp-content/uploads/2014/07/121113-Letter-from-FCA-Martin-Wheatley-to-HM-Treasury-LEXLAW-Solicitors.pdf) and Harry Wilson reporting for the Telegraph on 19 December 2013: ‘[FCA chief warns Treasury swaps scandal could be 'significantly' bigger](http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10527353/FCA-chief-warns-Treasury-swaps-scandal-could-be-significantly-bigger.html)’). [16] Including a highly complex ‘Category A’ Enhanced Collar; the major banks have since agreed with the FCA not to market such structured collars to SME customers (see ‘[FSA agrees settlement with four banks over interest rate hedging products](http://www.fsa.gov.uk/library/communication/pr/2012/071.shtml)’) **ENDS** *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* Download CGL Statement [PDF]: [ Coin Group v. Lloyds Bank Plc Litigation Settlement - CGL Statement](https://lexlaw.co.uk/wp-content/uploads/2015/08/Lloyds-Bank-Litigation-Settlement-CGL-Statement.pdf) http://issuu.com/lexlawuk/docs/lloyds_bank_litigation_settlement_- --- # The Sunday Times: ‘We will battle on, warn victims of bank mis-selling’ Source: https://lexlaw.co.uk/solicitors-london/the-sunday-times-we-will-battle-on-warn-victims-of-bank-swaps-irhp-mis-selling/ *The Sunday Times reports on the largest ever publicly disclosed settlement of an interest rate swaps mis-selling case. The derivatives in question were sold to a Care Home by Lloyds Bank, which refused to compensate their customer via the FCA-backed IRHP Review Scheme. The pressure of litigation however forced the bank to pay out £4.6m for it’s wrongdoing.* Interest-rate swaps brought companies to their knees. Now a settlement offers fresh hope to businesses that believe they were misled, writes [Kiki Loizou](https://web.archive.org/web/20170928113013/http://journalisted.com:80/kiki-loizou). [![Interest-rate swaps brought companies to their knees. Now a settlement offers fresh hope to businesses that believe they were misled.](https://lexlaw.co.uk/wp-content/uploads/2015/08/Sunday-Times-We-will-battle-on-warn-victims-of-bank-interest-rate-swaps-IRHP-mis-selling-LEXLAW-717x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/2015/08/Sunday-Times-We-will-battle-on-warn-victims-of-bank-interest-rate-swaps-IRHP-mis-selling-LEXLAW-e1438701732157.jpg)Lloyds Bank refused  to pay out any compensation for the mis-selling of derivatives in the FCA-backed IRHP Review but were forced to pay £4.6m via High Court litigation (The Sunday Times, 2 August 2015) IT HAS been a long, costly fight for Errol Bland. Eight years ago, when Lloyds bank advised him to take an interest-rate swap on the loan he wanted to expand his care homes business, he was told the decision was a no-brainer. Bankers said the 30-year hedging product would protect him from rising interest rates during the four-year term of his £1.7m loan. But Bland was hit by eye-watering costs when rates sank to record lows during the financial crash. Since then, he and thousands of other bosses have been fighting for compensation for the losses that, in many cases, have crippled their businesses. Bland’s Coin Group was one of 10,000 companies refused payouts from a compensation scheme set up by the Financial Conduct Authority (FCA). Coin was judged to be a “sophisticated” borrower — able to judge the risks of the swap — because of the size of its assets, and therefore not eligible for a payout. Convinced he had been wrongly led into the interest-rate swap, Bland took matters into his own hands and instructed lawyers. Last month, he finally settled his £4.6m case against Lloyds out of court. He will be reimbursed £900,000 for interest payments and £200,000 for legal costs. About £3.5m is expected to cover the break fee of the swap. *“Lloyds tried everything it could to create hardship and financial instability for my business,”* said Bland, 50, who is said to have received the largest publicly disclosed settlement of its kind. *“Lloyds should be spending its resources on supporting businesses and rectifying the problems rather than trying to escape accountability for its mis-selling.”* He added that the bank had failed to refund £130,000 in overdraft fees he would not have incurred without the swap. Lloyds denied any wrongdoing.* “We have reached a settlement to the satisfaction of all parties concerned. We are pleased that this now concludes the matter for the bank and the customer,”* it said. In 2012, the FCA began an investigation following evidence that banks had wrongly lured thousands of companies into complex and costly interest-rate hedging. It set up a compensation scheme, but excluded a third of the 30,000 small and medium-sized companies that were sold the deals on the grounds that they were “sophisticated”. Under the terms of the scheme, the banks decide what, if any, compensation borrowers are offered, with the help of an independent reviewer. Companies complain that this has left them short-changed. Experts predicted the banks would have to pay more than £30bn compensation, but just £1.9bn has been handed to businesses so far. A judicial review of the scheme was ordered earlier this year. *“The ‘sophistication test’ is not a test of sophistication but a prejudicially mislabelled set of criteria designed to save the banks tens of billions of pounds of compensation owed to small and medium-sized companies,”* said [Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/) at [Lexlaw](https://lexlaw.co.uk), which acted for Bland. *“While Lloyds escaped compensation of millions of pounds in its FCA-backed — but remarkably self-administered — review scheme, the bank was forced to settle our client’s litigation claim in order to avoid judicial scrutiny and setting case precedent.”* [Akram](https://lexlaw.co.uk/our-people/m-ali-akram/) added: *“We have seen hundreds of cases and the range of victims is incredible. I have little doubt that there are victims in every single industry.”* Adding fuel to the fire, it was recently reported that the Treasury had lobbied the regulator to limit compensation. The Treasury denied the allegation, saying: *“The FCA is an independent regulator and as such the government does not intervene or interfere with its work.”* Despite criticism and the looming judicial review, the regulator continues to defend the scheme. *“We designed a process with small businesses in mind,”* it said. *“We put in place eligibility criteria so we could identify those smaller businesses that were less likely to have understood the risks associated with interest-rate swaps.”* Jeremy Roe of [Bully-Banks](https://web.archive.org/web/20171119170524/http://www.bully-banks.co.uk/), a lobby group for victims of mis-selling, said:* “Only a blind-and-deaf regulator would allow the banks to conduct the scheme in the way it has.”* Bland’s settlement should offer some encouragement. *“Limited companies are often told by solicitors that they face very weak legal prospects for a mis-selling claim,”* said [Abhishek Sachdev](http://www.vedantahedging.com/meet-the-team/#abhishek) at the adviser [Vedanta Hedging](http://www.vedantahedging.com/). *“This case should give hope to many small and large firms that believe the risks of their interest-rate swaps were not explained to them.”* Source: [www.thesundaytimes.co.uk/sto/business/Finance/article1585336.ece](http://www.thesundaytimes.co.uk/sto/business/Finance/article1585336.ece) *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Legal duty to conduct the FCA IRHP Review Fairly – Suremime v Barclays Bank Source: https://lexlaw.co.uk/solicitors-london/suremime-v-barclays-irhp-review-agreement-fca-banks-misselling-swaps-tort/ *The High Court has decided that it is arguable that major banks owe duties of care to their SME customers to conduct the FCA Interest Rate Hedging Product (IRHP) Review in accordance with the rules agreed with the Financial Conduct Authority (previously, the Financial Services Authority). The judgment in Suremime Limited v. Barclays Bank PLC is relevant to any SME customer that is concerned that its redress outcome under the FCA IRHP Review is not fair and reasonable.* [![Barclays Bank IRHP Swaps Mis-selling](https://lexlaw.co.uk/wp-content/uploads/2014/05/1280px-Barclays_logo.svg1_-1024x173.png)](https://lexlaw.co.uk/wp-content/uploads/2014/05/1280px-Barclays_logo.svg1_.png) ## The Derivatives Contract sold by Barclays On 11 June 2008, Barclays sold one of its SME customers, Suremime, a complex 10-year structured collar for an amortising notional amount of £1 million with a cap rate of 6.2% and a floor rate of 5.2%. Under the structured collar, Suremime was unable to benefit from any fall in interest rates below 5.2%. Instead, any fall in interest rates meant that Suremime had to pay Barclays at an increasingly higher interest rate (which was capped at a maximum of 6.2%). The complex and risky nature of structured collars was subsequently recognised when the Financial Conduct Authority [announced](http://www.fsa.gov.uk/library/communication/pr/2012/071.shtml) on 29 June 2012 that several major banks, including Barclays, had agreed to stop marketing structured collars to retail customers. ## Barclays' Conduct of the IRHP Review Scheme On 17 July 2013, Barclays confirmed that Suremime was a "non-sophisticated customer" and invited Suremime to participate in the IRHP Review by way of a [customer fact-find](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/) with Eversheds, a law firm that were appointed by Barclays to conduct this one-sided investigation (however, the bank's derivative salesperson and relationship managers were *never* interviewed). Suremime agreed to participate in that fact-find, which took place on 16 September 2013 and was attended by Suremime, Eversheds and KPMG (who were acting as independent reviewer for Barclays). On 11 March 2014, Barclays offered Suremime limited redress in the form of a replacement swap for a term of 9 years and 10 months at a fixed rate of 5.84%, which Barclays alleged Suremime would have terminated on 3 August 2010 at a breakage cost of £131,533. This sort of redress, a replacement swap, is cheap for banks to provide and is often offered to customers without legal representation. Suremime attempted to argue that, had Barclays complied with the regulations governing the sale of IRHPs, it would have been sold a 5-year interest rate cap at 6.5%. However, Barclays refused to amend its offer of redress. Following [the appearance of John Griffith-Jones (chairman of the FCA) and Martin Wheatley (chief executive of the FCA) before the Treasury Select Committee on 10 February 2015](http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/treasury-committee/financial-conduct-authority-hearings/oral/18119.html), the FCA's confidential June 2012 and January 2013 agreements with several major banks (which established the IRHP Review) was [published](https://lexlaw.co.uk/solicitors-london/irhp-review-agreement-fca-banks-misselling/) openly for the first time. On 24 June 2015, the FCA finally published the [agreements with the banks and instructions to the skilled persons](http://web.archive.org/web/20160324121426/http://www.fca.org.uk:80/consumers/financial-services-products/banking/interest-rate-hedging-products/agreements), despite previously stating (for example to [BBC Panorama in October 2013](https://lexlaw.co.uk/solicitors-london/bbc-panorama-exposes-costly-bank-swap-scandal-swaps-fca-review-irhp/)) that the agreements were confidential. ## Litigation: Application to Amend Particulars of Claim Suremime subsequently applied for permission to amend its particulars of claim to include three new legal claims, namely that: - A contract was formed between Barclays and Suremime (as a result of Barclays' offer to conduct the IRHP Review and Suremime's agreement to participate in the IRHP Review), which included a term that Barclays would conduct the IRHP Review in accordance with the June 2012 and January 2013 agreements with the FCA; - By agreeing to provide redress in accordance with the June 2012 and January 2013 agreements, Barclays owed a duty of care to Suremime to conduct the IRHP Review in accordance with those agreements; and - By entering into the June 2012 and January 2013 agreements with the FCA, Barclays owed a duty of care to Suremime to conduct the IRHP Review properly because, if Barclays failed to do so, the FCA would not suffer a loss whereas Suremime (who was intended to benefit from the IRHP Review) would suffer a loss. Barclays resisted this application by attempting to argue that those new claims stood "no real prospect of success" and were "fanciful and contrived". Barclays also attempted to argue that there was no need for SMEs such as Suremime to be given the right to enforce the terms of the June 2012 and January 2013 agreements between the FCA and the banks. ## Application Judgment: Suremime Limited v. Barclays Bank PLC HHJ Havelock-Allan QC held that it was more than merely arguable that Barclays owed duties of care to Suremime to conduct the IRHP Review in accordance with the June 2012 and January 2013 agreements, and therefore granted permission for Suremime to amend its particulars of claim to that effect. In support of his decision, HHJ Havelock-Allan QC explained, at paragraph 34 of his judgment, that: > The FCA Review was intended to provide a route to fair and reasonable compensation without customers having to sue for mis-selling. Those who stayed their hand and have not sued for the mis-sale in the hope of deriving a satisfactory result from the FCA Review process, but now allege that the specification of the FCA Review has not been faithfully applied, may be left without any remedy if they did not agree a standstill or moratorium with the bank which sold the swap and the mis-selling claim has since become statute-barred. A full copy of the application judgment is available to [download](https://lexlaw.co.uk/wp-content/uploads/2015/08/300715-Suremime-Ltd-v-Barclays-Bank-Approved-Judgment-IRHP-Review-LEXLAW.pdf). ## Impact on Swaps Mis-selling Claims The learned judge recognised the public importance of allowing SME victims of bank mis-selling who are dissatisfied with Review offers (such as swap for swap offers, or decisions by banks that no redress is due) to consider taking legal action. Whilst [Holmcroft v KPMG](https://lexlaw.co.uk/solicitors-london/judicial-review-of-fca-irhp-swaps-mis-selling-review-scheme-permitted/) offers a public law remedy, the private law cause of action set out in Suremime is likely to be more attractive as it can become part of an overall mis-selling claim, in which the bank has often already made admissions of wrongdoing in the IRHP Review scheme. Furthermore, this particular cause of action would not be subjected to the banks' usual contractual estoppel defence, in which they seek to rely on standard non-advisory and non-reliance clauses to prevent claimants from alleging that banks provided advice (even though they did provide advice). In relation to the importance placed by banks on their non-advisory and non-reliance clauses, please see the judgment of Tim Kerr QC in Crestsign v National Westminster Bank PLC & the Royal Bank of Scotland PLC (which is on appeal to the Court of Appeal). A full copy of the judgment in that case is available to [download](https://lexlaw.co.uk/solicitors-london/high-court-judgment-crestsign-limited-claimant-and-1-national-westminster-bank-plc-2-the-royal-bank-of-scotland-plc/). This decision also avoids the limitation hurdles that face most swaps mis-selling claims where the derivatives product in question was sold over six years ago (although such obstacles are not necessarily insurmountable, as demonstrated in the recent case of [Kays Hotel Limited v. Barclays Bank PLC](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/)). Any similarly affected SMEs should obtain [legal advice in respect of their own IRHP review outcome decisions](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) as soon as possible. *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # Manolete Partners Claim Tracker – Get Advice Source: https://lexlaw.co.uk/solicitors-london/manolete-partners-claim-tracker-get-advice-on-your-case/ Our [solicitors & barristers](https://lexlaw.co.uk/) can help you navigate complex litigation with Manolete Partners and bring them to resolution. Manolete is a specialist insolvency litigation financing company that seeks recovery of assets from distressed companies; often by bringing aggressive litigation claims against Directors. Manolete's business model involves acquiring claims from administrators and liquidators, assuming financial risk while pursuing substantial recoveries through the courts. ## Professional Legal Intelligence Our [Manolete Partners Claim Tracker](https://lexlaw.co.uk/solicitors-london/manolete-partners-claim-tracker-get-advice-on-your-case/) shows all publicly recorded cases initiated by Manolete Partners since 2014. This maintained database provides visibility into one of the UK's busiest [insolvency litigation](https://lexlaw.co.uk/solicitors-london/category/insolvency-litigation/) funders; through this our lawyers are able to offer critical insights into claim patterns, outcomes, and strategic litigation approaches, including as to settlement. 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Manolete Cases # Manolete Partners PLC - Case List | No. | Case Ref | Case Title | Case Type | Filed Date | Last Action | | --- | -------- | ---------- | --------- | ---------- | ----------- | | 262 | CR-2026-000732 | Manolete Partners plc v Watson, Stephen Fitzroy and Watson-Mattis, Charmaine Yvonne | Companies - Part 8 Claim - Part 7 Transfer | 02-02-2026 | 02-02-2026 | | 261 | BL-2026-000128 | Manolete Partners Plc v King and another | Business - Part 7 Claim - Miscellaneous | 29-01-2026 | 30-01-2026 | | 260 | CR-2026-000654 | Al Coombs Construction Limited (In Liquidation) | Companies - Application - Miscellaneous Application under the Insolvency Act | 29-01-2026 | 29-01-2026 | | 259 | CR-2026-000653 | APH (UK) Limited (In Liquidation) | Companies - Application - Miscellaneous Application under the Insolvency Act | 29-01-2026 | 29-01-2026 | | 258 | PT-2026-000107 | Manolete Partners Plc v Crump and another | Property - Part 8 Claim - Orders for sale to enforce charging orders | 28-01-2026 | 29-01-2026 | | 257 | BL-2025-001209 | Manolete Partners PLC v Agarwal and others | Business - Part 7 Claim - Miscellaneous | 30-09-2025 | 26-01-2026 | | 256 | CR-2025-005674 | Patrick Michael Associates Ltd | Companies - Part 8 Claim - Part 7 Transfer | 18-08-2025 | 13-01-2026 | | 255 | BL-2025-001095 | Manolete Partners Plc v Watkins and others | Business - Part 7 Claim - Miscellaneous | 05-09-2025 | 12-01-2026 | | 254 | BL-2025-001197 | Manolete Partners PLC v Mishra | Business - Part 7 Claim - Breach of fiduciary duty | 25-09-2025 | 29-12-2025 | | 253 | CR-2025-005401 | Alexander James (Contract Interiors) Limited (In Liquidation) | Companies - Application - Miscellaneous Application under the Insolvency Act | 06-08-2025 | 22-12-2025 | | 252 | PT-2025-MAN-000125 | Manolete Partners Plc v Sharafolziyad and another | Property - Part 8 Claim - Orders for sale to enforce charging orders | 28-08-2025 | 15-12-2025 | | 251 | CR-2025-006308 | Dunchaul Limited (in liquidation) | Companies - Application - Miscellaneous Application under the Insolvency Act | 11-09-2025 | 23-12-2025 | | 250 | BR-2025-CDF-000007 | In The Matter of Paul Fillmore | Bankruptcy - Petition - Creditors | 04-09-2025 | 31-10-2025 | | 249 | BL-2025-001176 | Manolete Partners Plc v Duncan and another | Business - Part 7 Claim - Breach of fiduciary duty | 23-09-2025 | 03-10-2025 | | 248 | BL-2025-000981 | Manolete Partners Plc v Walker and another | Business - Part 7 Claim - Debt | 08-08-2025 | 08-08-2025 | | 247 | BL-2025-000991 | Manolete Partners Plc v Ali | Business - Part 7 Claim - Breach of fiduciary duty | 08-08-2025 | 08-08-2025 | | 246 | CR-2025-005401 | Manolete Partners PLC v Walker, Robert and Sylvie | Companies - Application - Miscellaneous Application under the Insolvency Act | 06-08-2025 | 06-08-2025 | | 245 | BL-2025-000660 | Manolete Partners PLC and another v Trevor Howarth | Business - Part 8 Claim - Miscellaneous | 15-05-2025 | 06-08-2025 | | 244 | BL-2025-000723 | Manolete Partners Plc v El-Hady and others | Business - Part 7 Claim - Miscellaneous | 02-06-2025 | 06-08-2025 | | 243 | BL-2024-001626 | Manolete Partners PLC v Hinde and others | Business - Part 7 Claim - Breach of fiduciary duty | 12-11-2024 | 06-08-2025 | | 242 | BL-2020-000710 | Manolete Partners Plc v Rahman and another | Business - Part 7 Claim - Breach of fiduciary duty | 06-05-2020 | 31-07-2025 | | 241 | BL-2024-001066 | Manolete Partners LLP v Nag and another | Business - Part 8 Claim - Debt | 22-07-2024 | 31-07-2025 | | 240 | BL-2024-001586 | Manolete Partners Plc v Kurnaz | Business - Part 7 Claim - Breach of fiduciary duty | 31-10-2024 | 30-07-2025 | | 239 | PT-2025-000105 | Manolete Partners PLC v Karim and others | Property - Part 8 Claim - Orders for sale to enforce charging orders | 29-01-2025 | 30-07-2025 | | 238 | BL-2025-MAN-000007 | Manolete Partners PLC v Clarke | Business - Part 7 Claim - Breach of fiduciary duty | 03-02-2025 | 29-07-2025 | | 237 | CR-2025-001825 | Manolete Partners Plc v Crump, Thomas & Deborah | Companies - Part 8 Claim - Part 7 Transfer | 17-03-2025 | 29-07-2025 | | 236 | BL-2025-000316 | Manolete Partners Plc v Baker and others | Business - Part 7 Claim - Breach of fiduciary duty | 10-03-2025 | 05-08-2025 | | 235 | BL-2025-000567 | Manolete Partners Plc v Donelan | Business - Part 7 Claim - Breach of fiduciary duty | 30-04-2025 | 01-08-2025 | | 234 | BL-2025-000856 | Manolete Partners Plc v Vyas and others | Business - Part 7 Claim - Breach of fiduciary duty | 09-07-2025 | 24-07-2025 | | 233 | BL-2025-000833 | Manolete Partners PLC v Kotecha and others | Business - Part 7 Claim - Miscellaneous | 07-07-2025 | 28-07-2025 | | 232 | BL-2025-000776 | Manolete Partners Plc v Thompson | Business - Part 7 Claim - Breach of fiduciary duty | 19-06-2025 | 07-07-2025 | | 231 | BL-2025-000789 | Manolete Partners Plc v Soma | Business - Part 7 Claim - Miscellaneous | 24-06-2025 | 03-07-2025 | | 230 | BL-2025-000758 | Manolete Partners plc v Nicholson | Business - Part 7 Claim - Breach of fiduciary duty | 12-06-2025 | 28-06-2025 | | 229 | BL-2025-MAN-000040 | Manolete Partners PLC v Hussain | Business - Part 7 Claim - Debt | 04-06-2025 | 10-08-2025 | | 228 | BL-2025-000719 | Manolete Partners Plc v Saint | Business - Part 7 Claim - Debt | 30-05-2025 | 17-07-2025 | | 227 | BL-2025-000678 | Manolete Partners PLC v Peritore | Business - Part 7 Claim - Breach of fiduciary duty | 21-05-2025 | 23-07-2025 | | 226 | BL-2025-000654 | Manolete Partners PLC v Bayram | Business - Part 7 Claim - Breach of fiduciary duty | 15-05-2025 | 29-05-2025 | | 225 | BL-2025-000586 | Manolete Partners Plc v HSBC UK Bank Plc | Business - Part 7 Claim - Miscellaneous | 06-05-2025 | 03-06-2025 | | 224 | BL-2025-000569 | Manolete Partners PLC v Cliff and another | Business - Part 7 Claim - Breach of fiduciary duty | 01-05-2025 | 15-05-2025 | | 223 | BL-2025-000543 | Manolete Partners Plc v Law | Business - Part 7 Claim - Debt | 28-04-2025 | 23-07-2025 | | 222 | BL-2025-000529 | Manolete Partners PLC v Gormley and another | Business - Part 7 Claim - Breach of fiduciary duty | 23-04-2025 | 08-05-2025 | | 221 | BL-2025-000358 | Manolete Partners Plc v Ahmed | Business - Part 7 Claim - Debt | 19-03-2025 | 29-03-2025 | | 220 | BL-2025-000344 | Manolete Partners Plc v Tomprefa and others | Business - Part 7 Claim - Miscellaneous | 17-03-2025 | 29-03-2025 | | 219 | BL-2025-000242 | Manolete Partners Plc v Fenton | Business - Part 7 Claim - Breach of fiduciary duty | 25-02-2025 | 26-06-2025 | | 218 | BL-2025-000221 | Manolete Partners PLC v Sharman | Business - Part 7 Claim - Breach of fiduciary duty | 19-02-2025 | 14-03-2025 | | 217 | BL-2025-000206 | Manolete Partners PLC v Chandrasekaran | Business - Part 7 Claim - Breach of fiduciary duty | 13-02-2025 | 20-02-2025 | | 216 | BL-2025-000139 | Manolete Partners Plc v Kaur Thaker and others | Business - Part 7 Claim - Miscellaneous | 31-01-2025 | 12-03-2025 | | 215 | BL-2025-000136 | Manolete Partners Plc v Haddington and others | Business - Part 7 Claim - Miscellaneous | 31-01-2025 | 12-02-2025 | | 214 | BL-2025-000135 | Manolete Partners Plc v Barnwell and another | Business - Part 7 Claim - Breach of fiduciary duty | 31-01-2025 | 12-02-2025 | | 213 | BL-2025-000134 | Manolete Partners Plc v Kathikeyan | Business - Part 7 Claim - Debt | 31-01-2025 | 22-02-2025 | | 212 | BL-2025-000124 | Manolete Partners PLC v Lafferty and another | Business - Part 8 Claim - Debt | 30-01-2025 | 12-05-2025 | | 211 | BL-2025-000120 | Manolete Partners PLC v Ioannou and others | Business - Part 7 Claim - Breach of fiduciary duty | 29-01-2025 | 20-05-2025 | | 210 | PT-2025-LDS-000052 | Manolete Partners PLC v Shaw and Shaw | Property - Part 8 Claim - Orders for sale to enforce charging orders | 12-05-2025 | 26-06-2025 | | 209 | PT-2025-000189 | Manolete Partners PLC v Shaw and another | Property - Part 8 Claim - Orders for sale to enforce charging orders | 27-02-2025 | 07-05-2025 | | 208 | CR-2025-003767 | Manolete Partners Plc -vs-Baris Bayram | Companies - Part 8 Claim - Part 7 Transfer | 03-06-2025 | 03-06-2025 | | 207 | CR-2025-003258 | Manolete Partnership PLC-v-1) James Anthony Gorm | Companies - Part 8 Claim - Part 7 Transfer | 13-05-2025 | 10-07-2025 | | 206 | CR-2025-002138 | Manolete Partners PLC v Fenton | Companies - Part 8 Claim - Part 7 Transfer | 27-03-2025 | 27-03-2025 | | 205 | CR-2025-001207 | Manolete Partners Plc | Companies - Part 8 Claim - Part 7 Transfer | 22-02-2025 | 30-05-2025 | | 204 | CR-2025-000651 | Manolete Partners PLC | Companies - Part 8 Claim - Part 7 Transfer | 01-02-2025 | 27-03-2025 | | 203 | CR-2025-000276 | Manolete Partners PLC | Companies - Part 8 Claim - Other Originating Part 8 | 14-01-2025 | 24-04-2025 | | 202 | CR-2024-007091 | Manolete Partners Plc | Companies - Part 8 Claim - Part 7 Transfer | 21-11-2024 | 19-12-2024 | | 201 | CR-2024-007065 | Manolete Partners PLC | Companies - Part 8 Claim - Part 7 Transfer | 20-11-2024 | 10-12-2024 | | 200 | CR-2024-003718 | Manolete Partners PLC | Companies - Part 8 Claim - Part 7 Transfer | 25-06-2024 | 29-05-2025 | | 199 | CR-2024-000419 | Manolete Partners Plc | Companies - Part 8 Claim - Part 7 Transfer | 24-01-2024 | 17-07-2025 | | 198 | CR-2024-000331 | Manolete Partners Plc v Asset Finance UK Limited and another | Companies - Part 8 Claim - Part 7 Transfer | 19-01-2024 | 05-07-2024 | | 197 | CR-2024-000329 | Manolete Partners PLC v Mister Capital Holdings Limited and others | Companies - Part 8 Claim - Part 7 Transfer | 19-01-2024 | 10-09-2024 | | 196 | CR-2023-007335 | Manolete Partners PLC | Companies - Part 8 Claim - Part 7 Transfer | 18-12-2023 | 25-06-2024 | | 195 | CR-2023-006741 | Manolete Partners Plc | Companies - Part 8 Claim - Part 7 Transfer | 01-12-2023 | 05-07-2024 | | 194 | CR-2023-006276 | Manolete Partners PLC | Companies - Part 8 Claim - Part 7 Transfer | 10-11-2023 | 28-10-2024 | | 193 | CR-2023-004713 | Manolete Partners Plc | Companies - Part 8 Claim - Part 7 Transfer | 25-08-2023 | 29-02-2024 | | 192 | CR-2023-004130 | Manolete Partners Plc v Jennings and another | Companies - Part 8 Claim - Part 7 Transfer | 28-07-2023 | 13-10-2023 | | 191 | CR-2023-003047 | Manolete Partners Plc | Companies - Part 7 Claim - Order under Section 955 | 12-06-2023 | 12-06-2023 | | 190 | CR-2023-000967 | Manolete Partners Plc | Companies - Transfer In - Transfer In | 22-02-2023 | 22-03-2023 | | 189 | CR-2022-MAN-000572 | MANOLETE PARTNERS PLC -v- ANTHONY ROGER GOODWIN | Companies - Application - Other | 14-07-2022 | 24-02-2023 | | 188 | CR-2022-004427 | Manolete Partners PLC | Companies - Part 8 Claim - Part 7 Transfer | 28-11-2022 | 16-02-2024 | | 187 | CR-2022-004065 | Manolete Partners Plc | Companies - Part 8 Claim - Part 7 Transfer | 03-11-2022 | 03-11-2022 | | 186 | CR-2022-002670 | Manolete Partners PLC | Companies - Transfer In - Transfer In | 17-08-2022 | 04-09-2023 | | 185 | CR-2022-002444 | Manolete Partners PLC V Thompson | Companies - Transfer In - Transfer In | 03-08-2022 | 08-08-2022 | | 184 | CR-2022-001599 | MANOLETE PARTNERS PLC | Companies - Part 7 Claim - Order under Section 955 | 31-05-2022 | 02-05-2023 | | 183 | CR-2021-MAN-000222 | Manolete Partners PLC -v- Ian Russell White | Companies - Part 7 Claim - Order under Section 955 | 15-04-2021 | 10-08-2024 | | 182 | CR-2021-001219 | Manolete Partners Plc v Mubarak, Patel Ibrahim | Companies - Part 8 Claim - Other Originating Part 8 | 09-07-2021 | 12-01-2022 | | 181 | CR-2021-000496 | Manolete Partners PLC v Coleman, Philip | Companies - Part 8 Claim - Part 7 Transfer | 16-03-2021 | 03-05-2022 | | 180 | CR-2021-000172 | Manolete Partners PLC v Silva, Lynton De, & Spooner, Howard & Stone Valley Limited | Companies - Part 8 Claim - Part 7 Transfer | 01-02-2021 | 08-07-2021 | | 179 | CR-2020-004150 | Manolete Partners Plc v Farrar, Melvyn | Companies - Part 8 Claim - Part 7 Transfer | 10-11-2020 | 27-06-2022 | | 178 | CR-2020-002951 | Manolete Partners Plc v Timol Bashir & Sufyan, Ismail & Dominic, Slattery | Companies - Part 8 Claim - Part 7 Transfer | 02-07-2020 | 07-10-2020 | | 177 | CR-2020-002809 | Manolete Partners Plc v Armstrong, John James & Paula | Companies - Part 7 Claim - Enforce a Director's Liability under Section 370 | 22-06-2020 | 06-05-2022 | | 176 | CR-2020-002370 | Manolete Partners PLC v Campbell, Brian Paul & Clare | Companies - Part 7 Claim - Enforce a Director's Liability under Section 370 | 04-05-2020 | 20-12-2022 | | 175 | CR-2020-002285 | Manolete Partners Plc v Matta, Dr Amir Shafik & Raghida & Sara & MMJ Global Limited | Companies - Application - Miscellaneous Application under the Insolvency Act | 24-04-2020 | 23-02-2021 | | 174 | CR-2019-006609 | Manolete Partners Plc v Brafman, Benjamin & Julia | Companies - Part 8 Claim - Part 7 Transfer | 03-10-2019 | 13-01-2023 | | 173 | CR-2018-010447 | Manolete Partners Plc | Companies - Part 8 Claim - Reduction of Capital/Cancellation of Share Premium Account | 05-12-2018 | 25-02-2019 | | 172 | CP-2022-000044 | Manolete Partners Plc v DAF Trucks Deutschland Gmbh and others | Competition List - Part 7 Claim - Competition | 14-07-2022 | 11-06-2025 | | 171 | CH-2024-000182 | Bell v Manolete Partners Plc and others | Chancery Appeals - Appeals - Permission required Represented | 29-07-2024 | 15-07-2025 | | 170 | CH-2024-000051 | Karim v Manolete Partners Plc | Chancery Appeals - Appeals - Permission required LIP | 26-02-2024 | 10-04-2024 | | 169 | CH-2021-000273 | Manolete Partners Plc v Hope and another | Chancery Appeals - Appeals - Permission required Represented | 21-12-2021 | 14-07-2022 | | 168 | CH-2019-000343 | Siza v Manolete Partnesrs Plc | Chancery Appeals - Appeals - Permission required Represented | 23-12-2019 | 20-04-2020 | | 167 | BR-2019-001206 | MANOLETE PARTNERS PLC | Bankruptcy - Application - Set aside a Statutory Demand | 12-10-2019 | 14-10-2019 | | 166 | BL-2025-MAN-000040 | Manolete Partners PLC v Hussain | Business - Part 7 Claim - Debt | 04-06-2025 | 10-08-2025 | | 165 | BL-2025-MAN-000007 | Manolete Partners PLC v Clarke | Business - Part 7 Claim - Breach of fiduciary duty | 03-02-2025 | 29-07-2025 | | 164 | BL-2024-MAN-000063 | Manolete Partners Plc v Burke | Business - Part 8 Claim - Debt | 10-06-2024 | 15-12-2024 | | 163 | BL-2024-MAN-000040 | Manolete Partners Plc v Saleem and others | Business - Part 7 Claim - Breach of fiduciary duty | 19-04-2024 | 25-07-2024 | | 162 | BL-2024-MAN-000019 | Manolete Partners PLC v Taylors Solicitors LLP | Business - Part 7 Claim - Claims against solicitors and barristers | 22-02-2024 | 27-03-2025 | | 161 | BL-2024-BHM-000083 | Manolete Partners Plc v Crump and another | Business - Part 7 Claim - Breach of fiduciary duty | 26-11-2024 | 17-02-2025 | | 160 | BL-2024-001740 | Manolete Partners Plc v Coulson and others | Business - Part 7 Claim - Debt | 03-12-2024 | 18-12-2024 | | 159 | BL-2024-001702 | Manolete Partners PLC v Keseru-Phillips | Business - Part 7 Claim - Miscellaneous | 25-11-2024 | 16-01-2025 | | 158 | BL-2024-001687 | Manolete Partners PLC v Phillips | Business - Part 7 Claim - Miscellaneous | 26-11-2024 | 05-12-2024 | | 157 | BL-2024-001644 | Manolete Partners PLC v Leivers and another | Business - Part 7 Claim - Debt | 15-11-2024 | 16-12-2024 | | 156 | BL-2024-001626 | Manolete Partners PLC v Hinde and others | Business - Part 7 Claim - Breach of fiduciary duty | 12-11-2024 | 06-08-2025 | | 155 | BL-2024-001620 | Manolete Partners Plc v Behari and others | Business - Part 7 Claim - Breach of fiduciary duty | 11-11-2024 | 14-11-2024 | | 154 | BL-2024-001618 | Manolete Partners PLC v Bell and another | Business - Part 7 Claim - Miscellaneous | 07-11-2024 | 20-01-2025 | | 153 | BL-2024-001602 | Manolete Partners PLC v Yiga | Business - Part 7 Claim - Breach of fiduciary duty | 06-11-2024 | 29-11-2024 | | 152 | BL-2024-001600 | Manolete Partners Plc v AIF 1 LTD and others | Business - Part 7 Claim - Breach of fiduciary duty | 06-11-2024 | 17-04-2025 | | 151 | BL-2024-001586 | Manolete Partners Plc v Kurnaz | Business - Part 7 Claim - Breach of fiduciary duty | 31-10-2024 | 30-07-2025 | | 150 | BL-2024-001527 | Manolete Partners PLC v Barclays Bank UK PLC | Business - Part 7 Claim - Breach of fiduciary duty | 17-10-2024 | 01-07-2025 | | 149 | BL-2024-001453 | Manolete Partners Plc v Donegan | Business - Part 7 Claim - Debt | 07-10-2024 | 17-10-2024 | | 148 | BL-2024-001364 | Manolete Partners Plc v Flack | Business - Part 7 Claim - Debt | 13-09-2024 | 03-10-2024 | | 147 | BL-2024-001319 | Manolete Partners Plc v Whittley-Ryan and another | Business - Part 7 Claim - Breach of fiduciary duty | 05-09-2024 | 15-11-2024 | | 146 | BL-2024-001206 | Manolete Partners plc v Teare and another | Business - Part 7 Claim - Breach of fiduciary duty | 15-08-2024 | 29-11-2024 | | 145 | BL-2024-001177 | Manolete Partners Plc v McKenzie and others | Business - Part 7 Claim - Breach of fiduciary duty | 12-08-2024 | 13-09-2024 | | 144 | BL-2024-001135 | Manolete Partners plc v Brand and another | Business - Part 7 Claim - Breach of fiduciary duty | 06-08-2024 | 10-12-2024 | | 143 | BL-2024-001109 | Manolete Partners PLC v Fanshawe and another | Business - Part 7 Claim - Breach of fiduciary duty | 31-07-2024 | 07-08-2024 | | 142 | BL-2024-001092 | Manolete Partners Plc v Rania | Business - Part 7 Claim - Debt | 26-07-2024 | 05-08-2024 | | 141 | BL-2024-000963 | Manolete Partners PLC v Ablett | Business - Part 7 Claim - Breach of fiduciary duty | 03-07-2024 | 09-07-2024 | | 140 | BL-2024-000860 | Manolete Partners PLC v Brown | Business - Part 7 Claim - Breach of fiduciary duty | 18-06-2024 | 26-06-2024 | | 139 | BL-2024-000841 | Manolete Partners Plc v Basson and others | Business - Part 7 Claim - Miscellaneous | 13-06-2024 | 07-08-2024 | | 138 | BL-2024-000759 | Manolete Partners Plc v Barnard and others | Business - Part 7 Claim - Breach of fiduciary duty | 28-05-2024 | 21-06-2024 | | 137 | BL-2024-000739 | Manolete Partners Plc v Carter | Business - Part 7 Claim - Miscellaneous | 21-05-2024 | 24-05-2024 | | 136 | BL-2024-000428 | Manolete Partners PLC v Phillippa Green of Greygarth and another | Business - Part 7 Claim - Breach of fiduciary duty | 22-03-2024 | 09-04-2024 | | 135 | BL-2024-000313 | Manolete Partners Plc v Lafferty and another | Business - Part 7 Claim - Breach of fiduciary duty | 28-02-2024 | 24-10-2024 | | 134 | BL-2024-000191 | Manolete Partners Plc v MSR Partners LLP | Business - Part 7 Claim - Breach of contract | 13-02-2024 | 31-07-2025 | | 133 | BL-2024-000182 | Manolete Partners Plc v Alam and another | Business - Part 7 Claim - Breach of fiduciary duty | 09-02-2024 | 27-02-2024 | | 132 | BL-2024-000128 | Manolete Partners Plc v Augunas | Business - Part 7 Claim - Debt | 01-02-2024 | 28-05-2025 | | 131 | BL-2024-000030 | Manolete Partners PLC v Brooke | Business - Part 7 Claim - Debt | 12-01-2024 | 19-01-2024 | | 130 | BL-2024-000007 | Manolete Partners Plc v Rahman and others | Business - Part 8 Claim - Debt | 04-01-2024 | 10-07-2025 | | 129 | BL-2023-MAN-000092 | Manolete Partners Plc v Sharafolziyad | Business - Part 7 Claim - Breach of fiduciary duty | 17-10-2023 | 15-07-2025 | | 128 | BL-2023-MAN-000090 | Manolete Partners Plc v Stephen | Business - Part 7 Claim - Breach of fiduciary duty | 12-10-2023 | 10-10-2024 | | 127 | BL-2023-MAN-000068 | Manolete Partners Plc v Wakefield and another | Business - Part 7 Claim - Miscellaneous | 25-07-2023 | 20-12-2023 | | 126 | BL-2023-MAN-000058 | Manolete Partners Plc v Parker and others | Business - Part 7 Claim - Breach of contract | 16-06-2023 | 16-05-2024 | | 125 | BL-2023-LDS-000021 | Manolete Partners Plc v Rawstron | Business - Part 7 Claim - Breach of fiduciary duty | 28-07-2023 | 12-10-2023 | | 124 | BL-2023-LDS-000016 | Manolete Partners Plc v Reynolds and another | Business - Part 7 Claim - Breach of fiduciary duty | 18-05-2023 | 05-09-2023 | | 123 | BL-2023-CDF-000008 | Manolete Partners PLC v Richards | Business - Part 7 Claim - Breach of fiduciary duty | 17-04-2023 | 21-04-2023 | | 122 | BL-2023-BHM-000027 | Manolete Partners PLC v Kelly and others | Business - Part 7 Claim - Breach of fiduciary duty | 23-03-2023 | 16-10-2023 | | 121 | BL-2023-BHM-000013 | Manolete Partners PLC v Babar and others | Business - Part 7 Claim - Breach of fiduciary duty | 02-02-2023 | 05-07-2023 | | 120 | BL-2023-001719 | Manolete Partners PLC v Mister Capital Holdings Limited and others | Business - Part 7 Claim - Miscellaneous | 22-12-2023 | 11-01-2024 | | 119 | BL-2023-001682 | Manolete Partners Plc v Patel and others | Business - Part 7 Claim - Breach of fiduciary duty | 18-12-2023 | 28-07-2025 | | 118 | BL-2023-001641 | Manolete Partners Plc v Pope and others | Business - Part 7 Claim - Breach of fiduciary duty | 13-12-2023 | 17-01-2024 | | 117 | BL-2023-001623 | Manolete Partners PLC v Bargit and others | Business - Part 7 Claim - Breach of fiduciary duty | 12-12-2023 | 18-12-2023 | | 116 | BL-2023-001611 | Manolete Partners Plc v Iqbal and another | Business - Part 7 Claim - Breach of fiduciary duty | 11-12-2023 | 28-04-2025 | | 115 | BL-2023-001570 | Manolete Partners Plc v Jones and another | Business - Part 7 Claim - Miscellaneous | 27-11-2023 | 23-02-2024 | | 114 | BL-2023-001568 | Manolete Partners Plc v Johnston and others | Business - Part 7 Claim - Breach of fiduciary duty | 27-11-2023 | 23-01-2024 | | 113 | BL-2023-001553 | Manolete Partners PLC v Hamilton and others | Business - Part 7 Claim - Breach of fiduciary duty | 23-11-2023 | 12-12-2023 | | 112 | BL-2023-001454 | Manolete Partners PLC v Jones | Business - Part 7 Claim - Breach of fiduciary duty | 31-10-2023 | 29-01-2024 | | 111 | BL-2023-001431 | Manolete Partners Plc v Nicholson and others | Business - Part 7 Claim - Breach of fiduciary duty | 27-10-2023 | 21-01-2025 | | 110 | BL-2023-001405 | Manolete Partners Plc v Davis and others | Business - Part 7 Claim - Breach of fiduciary duty | 20-10-2023 | 02-11-2023 | | 109 | BL-2023-001402 | Manolete Partners PLC v Todner | Business - Part 7 Claim - Breach of fiduciary duty | 19-10-2023 | 14-12-2023 | | 108 | BL-2023-001184 | Manolete Partners PLC v Flynn | Business - Part 7 Claim - Debt | 01-09-2023 | 20-10-2023 | | 107 | BL-2023-001173 | Manolete Partners Plc v Asset Finance UK Limited and another | Business - Part 7 Claim - Debt | 29-08-2023 | 10-01-2024 | | 106 | BL-2023-001169 | Manolete Partners PLC v Bond and another | Business - Part 7 Claim - Breach of fiduciary duty | 24-08-2023 | 15-09-2023 | | 105 | BL-2023-001083 | Manolete Partners PLC v Watson | Business - Part 7 Claim - Breach of fiduciary duty | 07-08-2023 | 28-01-2025 | | 104 | BL-2023-001041 | Manolete Partners Plc v Irving | Business - Part 7 Claim - Debt | 28-07-2023 | 25-08-2023 | | 103 | BL-2023-001001 | Manolete Partners Plc v Jennings and another | Business - Part 7 Claim - Breach of fiduciary duty | 19-07-2023 | 27-07-2023 | | 102 | BL-2023-000995 | Manolete Partners Plc v Neazi | Business - Part 7 Claim - Breach of fiduciary duty | 17-07-2023 | 16-01-2024 | | 101 | BL-2023-000984 | Manolete Partners Plc v Hill | Business - Part 7 Claim - Breach of fiduciary duty | 14-07-2023 | 09-08-2023 | | 100 | BL-2023-000956 | Manolete Partners PLC v Burgin and another | Business - Part 7 Claim - Breach of fiduciary duty | 10-07-2023 | 04-08-2023 | | 99 | BL-2023-000857 | Manolete Partners PLC v Brown and others | Business - Part 7 Claim - Breach of fiduciary duty | 14-06-2023 | 18-07-2023 | | 98 | BL-2023-000625 | Manolete Partners Plc v Allen and another | Business - Part 7 Claim - Breach of fiduciary duty | 27-04-2023 | 31-10-2023 | | 97 | BL-2023-000577 | Manolete Partners Plc v Whiteley and another | Business - Part 7 Claim - Breach of fiduciary duty | 14-04-2023 | 12-06-2023 | | 96 | BL-2023-000483 | Manolete Partners PLC v Timothy | Business - Part 7 Claim - Breach of fiduciary duty | 29-03-2023 | 17-04-2023 | | 95 | BL-2023-000297 | Manolete Partners Plc v Hick and others | Business - Part 7 Claim - Miscellaneous | 01-03-2023 | 11-10-2023 | | 94 | BL-2023-000251 | Manolete Partners PLC v Barclay and another | Business - Part 7 Claim - Breach of fiduciary duty | 15-02-2023 | 22-02-2023 | | 93 | BL-2023-000106 | Manolete Partners Plc v Parker and others | Business - Part 7 Claim - Breach of fiduciary duty | 19-01-2023 | 02-06-2023 | | 92 | BL-2023-000008 | Manolete Partners Plc v Badur | Business - Part 7 Claim - Breach of fiduciary duty | 05-01-2023 | 13-06-2025 | | 91 | BL-2022-MAN-000094 | Manolete Partners PLC v Carman | Business - Part 7 Claim - Breach of fiduciary duty | 20-10-2022 | 04-05-2023 | | 90 | BL-2022-NCL-000011 | Manolete Partners PLC v Stuart and another | Business - Part 7 Claim - Breach of fiduciary duty | 13-10-2022 | 24-02-2023 | | 89 | BL-2022-LIV-000001 | Manolete Partners Plc v Lane | Business - Part 7 Claim - Breach of fiduciary duty | 18-01-2022 | 22-02-2023 | | 88 | BL-2022-002110 | Manolete Partners PLC v Babar and others | Business - Part 7 Claim - Breach of fiduciary duty | 19-12-2022 | 02-02-2023 | | 87 | BL-2022-001951 | Manolete Partners PLC v Bawcutt and another | Business - Part 7 Claim - Breach of fiduciary duty | 17-11-2022 | 28-11-2022 | | 86 | BL-2022-001949 | Manolete Partners PLC v Ayadin and another | Business - Part 7 Claim - Breach of fiduciary duty | 16-11-2022 | 21-06-2023 | | 85 | BL-2022-001853 | Manolete Partners Plc v Greening | Business - Part 7 Claim - Breach of fiduciary duty | 28-10-2022 | 31-10-2022 | | 84 | BL-2022-001434 | Manolete Partners PLC v Wallace and others | Business - Part 7 Claim - Breach of fiduciary duty | 08-09-2022 | 02-11-2022 | | 83 | BL-2022-001421 | Manolete Partners Plc v Achekzai | Business - Part 7 Claim - Breach of fiduciary duty | 02-09-2022 | 28-09-2022 | | 82 | BL-2022-001420 | Manolete Partners Plc v Jones and another | Business - Part 7 Claim - Breach of fiduciary duty | 02-09-2022 | 21-09-2022 | | 81 | BL-2022-001387 | Manolete Partners plc v Bayliss | Business - Part 7 Claim - Breach of fiduciary duty | 26-08-2022 | 06-09-2022 | | 80 | BL-2022-001353 | Manolete Partners Plc v Richards | Business - Part 7 Claim - Miscellaneous | 19-08-2022 | 03-05-2023 | | 79 | BL-2022-001252 | Manolete Partners PLC v Allseas Global Logistics Limited and others | Business - Part 7 Claim - Breach of fiduciary duty | 05-08-2022 | 17-08-2022 | | 78 | BL-2022-001135 | Manolete Partners PLC v Freed and others | Business - Part 7 Claim - Breach of fiduciary duty | 19-07-2022 | 13-06-2023 | | 77 | BL-2022-001119 | Manolete Partners PLC v THOMPSON | Business - Part 7 Claim - Breach of fiduciary duty | 13-07-2022 | 02-08-2022 | | 76 | BL-2022-001085 | Manolete Partners Plc v Shaw and another | Business - Part 7 Claim - Miscellaneous | 08-07-2022 | 03-04-2025 | | 75 | BL-2022-000972 | Manolete Partners Plc v Khan | Business - Part 7 Claim - Breach of fiduciary duty | 13-06-2022 | 10-11-2022 | | 74 | BL-2022-000917 | Manolete Partners Plc v Randhawa and another | Business - Part 7 Claim - Miscellaneous | 01-06-2022 | 06-06-2023 | | 73 | BL-2022-000903 | Manolete Partners PLC v Darwell and another | Business - Part 7 Claim - Breach of fiduciary duty | 30-05-2022 | 02-11-2022 | | 72 | BL-2022-000890 | Manolete Partners Plc v Michael | Business - Part 7 Claim - Miscellaneous | 27-05-2022 | 07-07-2022 | | 71 | BL-2022-000866 | Manolete Partners PLC v Wainwright and another | Business - Part 7 Claim - Breach of fiduciary duty | 23-05-2022 | 19-07-2022 | | 70 | BL-2022-000800 | Manolete Partners Plc v McKibbin and others | Business - Part 7 Claim - Miscellaneous | 11-05-2022 | 07-06-2022 | | 69 | BL-2022-000347 | Manolete Partners PLC v Sampson Coward LLP | Business - Part 7 Claim - Breach of fiduciary duty | 28-02-2022 | 14-09-2023 | | 68 | BL-2022-000232 | Manolete Partners PLC v Coombes and another | Business - Part 7 Claim - Miscellaneous | 09-02-2022 | 06-02-2023 | | 67 | BL-2022-000069 | Manolete Partners PLC v Bell | Business - Part 7 Claim - Breach of fiduciary duty | 12-01-2022 | 08-03-2022 | | 66 | BL-2021-MAN-000105 | Manolete Partners PLC v Afshar and others | Business - Part 7 Claim - Breach of fiduciary duty | 27-10-2021 | 09-07-2022 | | 65 | BL-2021-LDS-000048 | Manolete Partners Plc v Firth and another | Business - Part 7 Claim - Breach of fiduciary duty | 24-11-2021 | 12-07-2024 | | 64 | BL-2021-LDS-000047 | Manolete Partners Plc v Holmes | Business - Part 7 Claim - Breach of fiduciary duty | 09-11-2021 | 18-03-2022 | | 63 | BL-2021-LDS-000012 | Manolete Partners PLC v Richards and another | Business - Part 7 Claim - Debt | 22-04-2021 | 02-09-2021 | | 62 | BL-2021-BHM-000007 | Manolete Partners PLC v Taylor | Business - Part 7 Claim - Transfer in | 05-02-2021 | 01-04-2022 | | 61 | BL-2021-BHM-000005 | Manolete Partners PLC v Paul and another | Business - Part 7 Claim - Breach of fiduciary duty | 28-01-2021 | 02-03-2023 | | 60 | BL-2021-BHM-000003 | Manolete Partners PLC v Firth and others | Business - Part 7 Claim - Debt | 13-01-2021 | 12-04-2024 | | 59 | BL-2021-002267 | Manolete Partners Plc v Castledine and another | Business - Part 7 Claim - Miscellaneous | 20-12-2021 | 23-03-2022 | | 58 | BL-2021-002147 | Manolete Partners PLC v Fullard and another | Business - Part 7 Claim - Breach of fiduciary duty | 24-11-2021 | 24-03-2022 | | 57 | BL-2021-002122 | Manolete Partners Plc v Ambrose | Business - Part 7 Claim - Breach of fiduciary duty | 19-11-2021 | 13-12-2023 | | 56 | BL-2021-001974 | Manolete Partners Plc v Dawson and another | Business - Part 7 Claim - Breach of fiduciary duty | 02-11-2021 | 24-11-2021 | | 55 | BL-2021-001973 | Manolete Partners Plc v Jackson | Business - Part 7 Claim - Breach of fiduciary duty | 02-11-2021 | 20-12-2021 | | 54 | BL-2021-001887 | Manolete Partners Plc v Mumtaz | Business - Part 7 Claim - Breach of fiduciary duty | 18-10-2021 | 20-05-2022 | | 53 | BL-2021-001532 | Manolete Partners Plc v Mash | Business - Part 7 Claim - Debt | 01-09-2021 | 10-12-2021 | | 52 | BL-2021-001222 | Manolete Partners PLC v Ohiorenoya | Business - Part 7 Claim - Breach of fiduciary duty | 02-08-2021 | 30-09-2021 | | 51 | BL-2021-000850 | Manolete Partners PLC v Kensington | Business - Pre-action Application - Miscellaneous | 23-05-2021 | 17-05-2022 | | 50 | BL-2021-000807 | Manolete Partners PLC v Webb | Business - Part 7 Claim - Breach of fiduciary duty | 20-05-2021 | 12-11-2021 | | 49 | BL-2021-000354 | Manolete Partners PLC v Coleman | Business - Part 7 Claim - Breach of fiduciary duty | 25-02-2021 | 16-03-2021 | | 48 | BL-2021-000127 | Manolete Partners PLC v Campbell and another | Business - Part 7 Claim - Breach of fiduciary duty | 28-01-2021 | 12-04-2024 | | 47 | BL-2020-BHM-000035 | Manolete Partners PLC v My Perfect Cosmetics Company Ltd | Business - Part 7 Claim - Transfer in | 05-02-2020 | 12-05-2020 | | 46 | BL-2020-002254 | Manolete Partners PLC v Silva and another | Business - Part 7 Claim - Breach of fiduciary duty | 22-12-2020 | 29-01-2021 | | 45 | BL-2020-002175 | Manolete Partners Plc v Shah and others | Business - Part 7 Claim - Breach of fiduciary duty | 14-12-2020 | 11-10-2022 | | 44 | BL-2020-002055 | Manolete Partners Plc v Khan | Business - Part 7 Claim - Breach of fiduciary duty | 24-11-2020 | 04-12-2020 | | 43 | BL-2020-001821 | Manolete Partners Plc v Farrar | Business - Part 7 Claim - Breach of fiduciary duty | 22-10-2020 | 09-11-2020 | | 42 | BL-2020-001777 | Manolete Partners Plc v Taylor | Business - Part 7 Claim - Debt | 15-10-2020 | 04-02-2021 | | 41 | BL-2020-001668 | Manolete Partners Plc v Regan and others | Business - Part 7 Claim - Debt | 09-10-2020 | 28-01-2021 | | 40 | BL-2020-001088 | Manolete Partners PLC v Connolly and another | Business - Part 7 Claim - Breach of fiduciary duty | 27-07-2020 | 04-08-2020 | | 39 | BL-2020-001013 | Manolete Partners Plc v Wharton and another | Business - Part 7 Claim - Miscellaneous | 09-07-2020 | 17-07-2020 | | 38 | BL-2020-000939 | Manolete Partners Plc v Webster | Business - Part 7 Claim - Debt | 18-06-2020 | 11-12-2020 | | 37 | BL-2020-000927 | Manolete Partners PLC v Mohammed and others | Business - Part 7 Claim - Miscellaneous | 15-06-2020 | 26-11-2024 | | 36 | BL-2020-000678 | Manolete Partners PLC v MacKay | Business - Part 7 Claim - Miscellaneous | 01-05-2020 | 14-04-2021 | | 35 | BL-2020-000574 | Manolete Partners Plc v Patel and others | Business - Part 7 Claim - Breach of fiduciary duty | 30-03-2020 | 06-11-2020 | | 34 | BL-2020-000240 | Manolete Partners PLC v SIZA | Business - Part 8 Claim - Miscellaneous | 05-02-2020 | 06-09-2021 | | 33 | BL-2019-002027 | Manolete Partners PLC v Singh and another | Business - Part 7 Claim - Debt | 01-11-2019 | 02-11-2020 | | 32 | BL-2019-002026 | Manolete Partners Plc v Dalal and others | Business - Part 7 Claim - Debt | 01-11-2019 | 08-07-2024 | | 31 | BL-2019-001847 | Manolete Partners PLC v Walker and another | Business - Part 7 Claim - Breach of fiduciary duty | 02-10-2019 | 16-06-2021 | | 30 | BL-2019-001689 | Manolete Partners PLC v Brafman and another | Business - Part 7 Claim - Breach of fiduciary duty | 11-09-2019 | 09-03-2021 | | 29 | BL-2019-001222 | Manolete Partners PLC v O'Connell | Business - Part 7 Claim - Breach of fiduciary duty | 27-06-2019 | 09-10-2019 | | 28 | BL-2019-001192 | Manolete Partners Plc v My Perfect Cosmetics Company Ltd | Business - Part 7 Claim - Debt | 25-06-2019 | 03-04-2020 | | 27 | BL-2019-000990 | Manolete Partners PLC v Siza | Business - Part 7 Claim - Breach of fiduciary duty | 22-05-2019 | 20-04-2020 | | 26 | BL-2019-000645 | Manolete Partners plc v Harris-Ward | Business - Part 7 Claim - Breach of fiduciary duty | 02-04-2019 | 06-03-2020 | | 25 | BL-2019-000406 | Manolete Partners plc v Bashir and others | Business - Part 7 Claim - Breach of fiduciary duty | 21-02-2019 | 08-02-2021 | | 24 | BL-2019-000080 | Manolete Partners Plc v Vance Charles Peter Tapper Gray | Business - Part 7 Claim - Breach of fiduciary duty | 09-01-2019 | 29-05-2019 | | 23 | BL-2018-002566 | Manolete Partners PLC v Nag and another | Business - Part 7 Claim - Breach of fiduciary duty | 03-12-2018 | 05-04-2022 | | 22 | BL-2018-002488 | Manolete Partners Plc v Akbar and others | Business - Part 7 Claim - Breach of fiduciary duty | 20-11-2018 | 10-02-2021 | | 21 | BL-2018-001276 | Manolete Partners Plc v Olaiya | Business - Part 7 Claim - Breach of fiduciary duty | 05-06-2018 | 01-10-2018 | | 20 | BL-2018-001274 | Manolete Partners Plc v Slatter and another | Business - Part 7 Claim - Breach of fiduciary duty | 04-06-2018 | 04-06-2018 | | 19 | BL-2018-001212 | Manolete Partners plc v Never Second Services LLP | Business - Part 7 Claim - Debt | 24-05-2018 | 29-05-2019 | | 18 | BL-2018-000551 | Manolete Partners plc v Kellaway and others | Business - Part 7 Claim - Breach of fiduciary duty | 08-03-2018 | 08-08-2018 | | 17 | BL-2018-000412 | Manolete Partners PLC v Smith and another | Business - Part 7 Claim - Miscellaneous | 19-02-2018 | 11-06-2018 | | 16 | BL-2017-000540 | Manolete Partners PLC (Company Number 07660874) v Buckley | Business - Part 7 Claim - Breach of fiduciary duty | 12-12-2017 | 19-03-2018 | | 15 | BL-2017-000041 | Manolete Partners Plc v Baylis and others | Business - Part 7 Claim - Breach of fiduciary duty | 06-10-2017 | 31-10-2022 | | 14 | HC-2017-001928 | Manolete Partners Plc v Nisha | Property - Part 8 Claim - Orders for sale to enforce charging orders | 04-07-2017 | 10-08-2017 | | 13 | HC-2017-001643 | Manolete Partners Plc v Phillip | Business - Part 7 Claim - Breach of fiduciary duty | 06-06-2017 | 17-08-2017 | | 12 | HC-2016-003152 | Manolete Partners Plc v Nisha | Business - Part 7 Claim - Breach of fiduciary duty | 03-11-2016 | 16-06-2017 | | 11 | HC-2016-003005 | Manolete Partners PLC-v- Christopher Jewell & anr | Business - Part 7 Claim - Breach of fiduciary duty | 21-10-2016 | 22-05-2023 | | 10 | HC-2016-002834 | Manolete Partners Plc -v- Nathan James Martin David Francis & Leon Devereux | Business - Part 7 Claim - Breach of fiduciary duty | 05-10-2016 | 22-05-2017 | | 9 | HC-2016-000011 | Manolete Partners PLC v Ann Summers Limited | Business - Part 7 Claim - Transfer in | 05-01-2016 | 18-04-2016 | | 8 | QB-2015-007440 | Manolete Partners Plc v Mark Smith | HQ Migrated Case - HQ Migrated Case - HQ Migrated Case | 02-10-2015 | | | 7 | QB-2015-001642 | Manolete Partners Plc v Silverstone Circuits Limited (Company Number 00882843) | HQ Migrated Case - HQ Migrated Case - HQ Migrated Case | 01-05-2015 | | | 6 | QB-2014-006757 | Manolete Partners PLC v Atif Riaz Malik | HQ Migrated Case - HQ Migrated Case - HQ Migrated Case | 18-11-2014 | | | 5 | PT-2019-000502 | Manolete Partners plc v Stuckey Carr & Co (A Firm) and others | Trusts - Part 7 Claim - Disputes relating to trust property | 24-06-2019 | 08-10-2019 | | 4 | LM-2023-000193 | Manolete Partner plc v. Richard Ridley (as executor of the Estate of Lord Timothy Bell) and another | London Circuit Commercial Court - Part 7 Claim - General commercial contracts and arrangements | 28-07-2023 | 20-11-2024 | | 3 | QB-2015-007440 | Manolete Partners Plc v Mark Smith | HQ Migrated Case - HQ Migrated Case - HQ Migrated Case | 02-10-2015 | | | 2 | QB-2015-001642 | Manolete Partners Plc v Silverstone Circuits Limited (Company Number 00882843) | HQ Migrated Case - HQ Migrated Case - HQ Migrated Case | 01-05-2015 | | | 1 | QB-2014-006757 | Manolete Partners PLC v Atif Riaz Malik | HQ Migrated Case - HQ Migrated Case - HQ Migrated Case | 18-11-2014 | | --- # RBS settles mis-sold swaps litigation (Westgate Healthcare Ltd v Royal Bank of Scotland Plc) Source: https://lexlaw.co.uk/solicitors-london/rbs-settles-mis-sold-swaps-litigation-westgate-healthcare-ltd-v-royal-bank-of-scotland-plc/ Today's Sunday Times, reports on settlement in the case of *(1) Westgate Healthcare (Aylesbury) Ltd (2) Westgate Healthcare (Hemel Hempstead) Ltd (3) Westgate Healthcare Ltd v Royal Bank of Scotland Pl*c [2014-522 : CL-2014-000186] which has reportedly settled for around £10m. With revenues of about £15m, Westgate was deemed too “sophisticated” by RBS to be part of the [IRHP Review compensation scheme](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) agreed with the Financial Conduct Authority (FCA) in 2012 for victims of mis-sold swaps. As is often the case, RBS have put in place confidentiality provisions and have refused to admit any liability. The claim was issued on 30 April 2014 in the Commercial Court, a specialist division of the Queens Bench Division of the High Court, and was a claim for damages pursuant to the misrepresentation, breach of contract, negligence and breach of statutory regulations in relation to an interest rate derivative based financial product recommended by the defendant to the claimants. [![swaps mis-selling solicitors in london -derivatives - hedging - compensation](https://lexlaw.co.uk/wp-content/uploads/2016/04/240414-The-Sunday-Times-RBS-Settles-£10m-on-mis-sold-swap-1.jpg)](https://lexlaw.co.uk/wp-content/uploads/2016/04/240414-The-Sunday-Times-RBS-Settles-£10m-on-mis-sold-swap-1.jpg)RBS pays £10m on ‘mis-sold’ swap (c) Kiki Loizou, Sunday Times BANKING AND FINANCE - CONTRACTS - MISREPRESENTATION - BREACH OF CONTRACT - BREACH OF STATUTORY DUTY - DERIVATIVES - INTEREST RATE SWAPS --- # RBS faces call for FCA-agreed GRG Review compensation scheme Source: https://lexlaw.co.uk/solicitors-london/fca-grg-review-rbs-faces-compensation-grg-victims-royal-bank-scotland/ *A soon to be released FCA report on the Royal Bank of Scotland's Global Restructuring Group scandal is to recommend an RBS GRG Review compensation scheme for businesses that were damaged by the GRG division, reports Exaro News.  * While the article quotes are essentially correct that a GRG Review scheme is likely to be quicker and easier than litigation, they miss the fundamental point that litigation is a process that is designed to be fair whereas the conduct of RBS in administering their FCA agreed review schemes is notoriously unfair and is designed to reduce or eliminate redress compensation. It is likely to be sensible for businesses that were victims of GRG to consider their own litigation case against the bank. Indeed, following the pre-action litigation process while the GRG Review is being run in parallel is relatively inexpensive and is likely to yield optimal results. LEXLAW issued more High Court litigation for IRHP mis-selling than any other law firm in the UK and have experience of using litigation against RBS to obtain optimal compensation for victims of RBS wrongdoing. We are the leading law firm with the skill and experience to act for businesses seeking to resolve wrongdoing by bank recovery departments often titled ‘business support’, ‘restructuring’ or ‘turnaround’ departments. We are aware that some major banks have regularly engineered defaults and created and profited from distress, often caused by other departments of the bank including via wrongdoing such as LIBOR manipulation, deliberate concealment of credit utilisation and mis-sold derivatives [... continue reading](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) [![GRG Review Scheme FCA compensation damages mis-selling](https://lexlaw.co.uk/wp-content/uploads/2016/04/190416-Call-for-FCA-report-agreed-RBS-GRG-Review-compensation-scheme.png.png)](https://lexlaw.co.uk/wp-content/uploads/2016/04/190416-Call-for-FCA-report-agreed-RBS-GRG-Review-compensation-scheme.png.png)RBS faces call to compensate GRG victims (c) Mike Yuille, Exaro ## What is GRG? NatWest and RBS’s Global Restructuring Group, was a business support unit (BSU) for troubled businesses set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services.  Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets via [‘Project Dash for Cash’](https://www.buzzfeed.com/heidiblake/dash-for-cash). Following allegations of misfeasance, GRG was reportedly disbanded in August 2014. Distressed customer relationships are now handled by the Restructuring Group. --- # GRG Review: RBS appoint Mark Spurin to minimise compensation payouts to SME victims Source: https://lexlaw.co.uk/solicitors-london/grg-review-rbs-mark-spurin-minimise-grg-review-compensation-payouts-smes/ *Harry Wilson, City Editor of the Times newspaper has today reported that Mark Spurin will take charge of the RBS GRG Review compensation scheme for 'impacted SMEs'.  It is vital that those affected by GRG misconduct take urgent legal advice to ensure they get compensation.* ![](https://lexlaw.co.uk/wp-content/uploads/2016/10/RBS-GRG-Insolvency-Letterhead-Logo-Royal-Bank-of-Scotland-Global-Restructuring-Group-LEXLAW-Solicitors-Barristers.bk.optm.png) ## What is GRG? NatWest and RBS's Global Restructuring Group, was a business support unit (BSU) for troubled businesses set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services.  Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets via ['Project Dash for Cash'](https://www.buzzfeed.com/heidiblake/dash-for-cash). Following allegations of misfeasance, GRG was reportedly disbanded in August 2014. Distressed customer relationships are now handled by the Restructuring Group. ## GRG Review: Who is Mark Spurin? Spurin describes himself on his [LinkedIn profile](https://www.linkedin.com/in/mark-spurin-7852226/) as a 'professional banker' which he certainly is. He served at Barclays for 31 years and is now a Managing Director of the Royal Bank of Scotland in charge of its derivatives mis-selling IRHP Review scheme for the last 4 years; a scheme in which the wrongdoing bank determined itself whether it did anything wrong and if so how much compensation to pay out. Not surprisingly the Bank found many ways to avoid redress and strong legal representation was necessary for customers to secure proper redress. ## RBS GRG Review Compensation Avoidance Strategies The appointment of Spurin has brought severe criticism from many quarters such as the Bully-Banks and [SME Alliance](https://twitter.com/SMEAllianceLtd/status/727047149800833024) lobby groups given the clear redress avoidance strategies evident in the Spurin-controlled RBS swaps mis-selling review even though the FCA were supposed to be monitoring RBS conduct of the review scheme. It is predicted that the bank will seek to avoid and limit any compensation they are forced to pay to stakeholders of their former customers who suffered a loss at the hands of GRG and its associated Westregister companies. Certainly Spurin and the RBS IRHP review team have a [past record of reducing or eliminating the cost of redress](https://lexlaw.co.uk/solicitors-london/fca-irhp-review-kpmg-whistleblower-rbs-interest-rate-swap-compensation/) by avoiding making compensation payments unless forced as commented on by [Guto Bebb MP](https://lexlaw.co.uk/wp-content/uploads/2014/12/RBS-FCA-IRHP-Swaps-Review-KPMG-IR-Whistleblower-Swap4Swap-Collar4Collar-Harry-Wilson.pdf). ## GRG Solicitors: Litigation and Legal Advice In the IRHP Review scheme, RBS told customers they did not need legal representation however they failed to inform customers that RBS was legally represented to the hilt not only with an army of in-house lawyers and external city lawyers but also with a team of ten lawyers hired to work directly within the Project Rosetta review itself. Already, RBS and NatWest have instructed a large number of GRG solicitors to assist them as professional advisers in relation to the GRG Review: Clifford Chance solicitors, CMS Cameron McKenna solicitors, international firm 大成 Dentons solicitors and big four accountancy firm, PwC. SMEs and relevant stakeholders (eg Directors and shareholders) that have suffered because of RBS and NatWest's GRG recovery practices should take urgent legal advice on the GRG Review scheme. If SMEs fail to take legal advice they may find their legal rights have expired by virtue of the Limitation Act. We have issued more litigation against RBS in respect of it's past reviewed misconduct than any other law firm in the UK. Our specialist banking lawyers accept instructions to manage both (i) the RBS GRG review scheme that the bank has ‘voluntarily’ agreed to conduct with the Financial Conduct Authority (FCA) and (ii) litigation in the High Court. All GRG victims should note that that their legal rights will expire (to the satisfaction of RBS) unless legal action is taken to preserve these legal rights. --- [![GRG Compensation Scheme Lawyers RBS London FCA](https://lexlaw.co.uk/wp-content/uploads/2016/05/RBS-GRG-Review-Solicitors-London-1024x726.jpg)](http://www.thetimes.co.uk/edition/business/rosetta-executive-set-to-receive-rbss-next-wave-of-compensation-claims-wkc3lnqwf)Times: 'Rosetta executive to review RBS interest rate hedging claims' by Harry Wilson, City Editor, May 2 2016 ## ‘Rosetta head to lead RBS GRG compensation claims’ *Harry Wilson, City Editor, May 2 2016, 1:01am, The Times* Royal Bank of Scotland has put the manager responsible for a controversial mis-selling redress scheme in charge of a programme to look at victims of its global restructuring division. Mark Spurin is the former head of Project Rosetta, which dealt with thousands of complaints and compensation claims from customers over the sale of interest rate hedging products. He is now leading an internal team in preparation for the findings of a review into the global restructuring group. It could force the bank to pay hundreds of millions of pounds to businesses damaged by the turnaround unit. The appointment of Mr Spurin to the sensitive role could raise questions, given complaints about RBS’s handling of the previous scheme. Rosetta has been criticised by victims and politicians for failing to properly compensate individuals and businesses who had their livelihoods destroyed by the mis-selling of complex interest rate derivatives. Mr Spurin was in charge of Project Rosetta until late last year. While many banks have been criticised about their own schemes, RBS has faced more questions than others as it was the largest seller of interest rate hedging products to small and medium-sized businesses. The bank has been accused of trying to minimise the amount of compensation paid, according to whistleblowers who have worked on the programme, leading to fears that Mr Spurin’s involvement in any global restructuring group scheme could leave victims hoping for large remediation cheques unsatisfied. A copy of a report by [Promontory](https://www.promontory.com/) and [Mazars](https://web.archive.org/web/20160402212032/http://www.mazars.co.uk:80/Home/News/Latest-news/Review-of-RBS-treatment-of-SME-customers), the consultancies appointed to carry out the review into the global restructuring group, was handed to the Financial Conduct Authority last month. The regulator will decide what action should be taken over the scandal. The [FCA is looking at allegations that RBS sought to profit](http://www.fca.org.uk/news/update-on-independent-review-of-rbs-treatment-of-business-customers-in-financial-difficulty) by putting viable companies out of business, as well as claims that customers were hit with charges that scuppered attempts to turn around their performance. Giving evidence to MPs on the Treasury select committee last month, Tracey McDermott, acting chief executive of the FCA, confirmed that the regulator was in “the latter stages” of its work. A spokesman for RBS said: *“We continue to work with the FCA on this review and will respond when the conclusions have been reached”.* --- # LIBOR fraud arguable in swaps mis-selling claims; Resetting the 6-year contractual limitation clock Source: https://lexlaw.co.uk/solicitors-london/libor-fraud-manipulation-rigging-misselling-swaps-derivatives-irhp-litigation-limitation/ *In a damaging judgment for RBS, the High Court has ruled that LIBOR fraud allegations against RBS in a derivatives mis-selling claim are "plainly properly arguable" and that there is evidential "support for an inference of fraud and dishonesty at the highest level of RBS" (**Property Alliance Group Limited v. The Royal Bank of Scotland PLC).  * *The decision is relevant to any SME that has been mis-sold swaps or other interest rate hedging products (IRHPs) by RBS, Barclays Bank, Lloyds, Bank of Scotland, HSBC, Deutsche Bank, JP Morgan, or UBS, especially those that face contractual limitation time bars of six years, which do not apply in the same way to LIBOR fraud mis-selling claims.* ## What is LIBOR (London Interbank Offered Rate)? LIBOR is a benchmark interest rate organised by the British Bankers' Association ("the BBA") that fixes rates for various currencies, including pound sterling, the US dollar, the euro, the Swiss franc, and the Japanese yen. The process of setting LIBOR involved a panel of banks (including RBS), each of whom would submit on a daily basis the interest rates that they would expect to pay for borrowing from other banks. Those submissions were then used to derive the LIBOR rate for a given currency and tenor (such as 3-month GBP). In recent years, several banks have been fined by regulators for their participation in LIBOR rigging, which involved making false submissions at the request of their derivatives traders in order to benefit their trading positions. ## LIBOR manipulation fines against major banks In June 2012, [Barclays was fined £59.5 million](http://www.fsa.gov.uk/library/communication/pr/2012/070.shtml) by the Financial Services Authority (which is now known as the Financial Conduct Authority) for LIBOR fraud, and [UBS was fined £160 million](http://www.fsa.gov.uk/library/communication/pr/2012/116.shtml) by the FSA in December 2012 for its part in LIBOR manipulation. In February 2013, [RBS was fined £87.5 million by the FCA for LIBOR rigging](https://www.fca.org.uk/static/fca/documents/final-notices/rbs.pdf), which had involved RBS taking requests from its derivatives traders in relation to JPY (Japanese yen) and CHF (Swiss franc) LIBOR and then making false submissions. [RBS was also fined £207 million by the US Commodity Futures Trading Commission](http://www.cftc.gov/PressRoom/PressReleases/pr6510-13) and [£150 million by the US Department of Justice](http://www.justice.gov/opa/pr/rbs-securities-japan-limited-agrees-plead-guilty-connection-long-running-manipulation-libor) for the same instances of LIBOR rigging. In July 2014, [Lloyds Bank and Bank of Scotland were together fined £105 million by the FCA for LIBOR manipulation](https://www.fca.org.uk/news/lloyds-banking-group-fined-105m-libor-benchmark-failings) and for attempting to manipulate their fees payable to the Bank of England under the Special Liquidity Scheme (which was a taxpayer-backed government scheme to support British banks during the recent financial crisis). In April 2015, [Deutsche Bank was fined a record £227 million by the FCA for LIBOR manipulation](http://www.fca.org.uk/news/deutsche-bank-fined-by-fca-for-libor-and-euribor-failings), which primarily involved Deutsche Bank managers, traders and submitters based in London. ## Mis-selling Claim for LIBOR fraud against RBS Between October 2004 and April 2008, RBS sold four interest rate swaps  to its customer, Property Alliance Group ("PAG"). PAG made payments of about £5 million to RBS under the swaps and subsequently terminated these swaps in June 2011, which involved paying breakage costs of approximately £8 million. Each of these swaps used 3-month GBP LIBOR as a reference rate. PAG subsequently brought a swaps mis-selling claim against RBS, in which PAG alleged that RBS had made four representations about LIBOR, namely that: - LIBOR represented the interest rate defined by the British Bankers' Association ("the BBA");- RBS had no reason to believe that LIBOR represented or might represent anything other than the rate defined by the BBA;- RBS had not made false or misleading LIBOR submissions to the BBA nor had RBS engaged in attempting to manipulate LIBOR so that it represented a different rate from that defined by the BBA; and- RBS did not intend in future to make false or misleading LIBOR submissions to the BBA or to engage in attempts to manipulate LIBOR so that it represented a different rate from that defined by the BBA. In its Defence pleading, RBS denied making any of those representations but formally admitted its misconduct in relation to JPY and CHF LIBOR rigging. RBS was subsequently ordered by the High Court to provide disclosure in relation to all LIBOR currencies and tenors, rather than just 3-month GBP LIBOR. ## Further allegations of LIBOR rigging fraud After receiving disclosure from RBS, PAG applied to amend its Particulars of Claim to include four additional points: - A further breach of duty arising from [Crestsign v. National Westminster Bank PLC](https://lexlaw.co.uk/solicitors-london/high-court-judgment-crestsign-limited-claimant-and-1-national-westminster-bank-plc-2-the-royal-bank-of-scotland-plc/);- An allegation that RBS provided inadequate information;- Further details of the alleged LIBOR manipulation by RBS, including an allegation that RBS had been involved in LIBOR rigging in relation to GBP and USD LIBOR from August 2007 onwards; and- An allegation that RBS made the LIBOR representations fraudulently. RBS attempted to oppose the third and fourth amendments, which related to LIBOR fraud, by alleging that they were too wide and were unsupported by the disclosure material relied upon. However, Mr Justice Birss held that the allegations of LIBOR fraud were "plainly properly arguable", and therefore granted permission for PAG to amend its Particulars of Claim accordingly. In support of his decision, Mr Justice Birss explained at paragraph 58: > "In my judgment the material relied on by PAG and set out in the Amended Particulars of Claim and its schedule provides ample *prima facie* support for an inference of fraud and dishonesty at the highest level of RBS. The materials show that, arguably, members of the RBS board were aware that LIBOR was "broken" during a period in which RBS was selling swaps to PAG referable to LIBOR. " > > **MR JUSTICE BIRSS > ***Property Alliance Group Limited *v.* The Royal Bank of Scotland PLC* > [2015] EWHC 3272 (Ch) ## LIBOR Fraud: Impact on Mis-sold Derivatives Claims This decision demonstrates that allegations of LIBOR fraud are not only a relevant factor in the court's determination of a claim but also can arguably be a determinative factor in swaps mis-selling claims against RBS and other major banks who have been subjected to regulatory punishments for LIBOR rigging. After all, would businesses have purchased such interest rate swaps had they known the reference interest rate was being fraudulently manipulated by the very bank selling the swaps? Such fines and the trail of evidence they leave behind (which are obtainable via the process of disclosure and inspection of documents in litigation) expose major banks' fraud and dishonesty in setting, or rather rigging, LIBOR rates during the period of mis-selling of interest rate derivatives to SMEs in the UK. ## Limitation: Extra Time for Swaps Mis-selling Claims? Many SMEs have good winnable cases that they ought to have brought against the major banks but failed to do so in time. SMEs are often slow to take legal advice on the basis they are scared to act against their lender and in the belief that the regulator will force the banks to provide redress. These often misguided fears and hopes have resulted in many SMEs becoming time barred from their usual contractual legal rights as the IRHPs were, now, mostly sold over six years ago. Often directors feel they should be given additional time to pursue legal claims for mis-sold derivatives because the bank(s) have made promises to redress the business, for example via the bank complaints process or via the FCA IRHP Review or because they simply couldn't afford to take specialist legal advice. Such sentiment is largely ill-founded and will be ignored by the court which will enforce the Limitation Act 1980 to ensure that there is legal certainty. Limitation hurdles are not necessarily insurmountable, as demonstrated in the case of [Kays Hotel Limited v. Barclays Bank PLC](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/), where Barclays failed to strike out the Hotel's claim as the court determined that s14A of the Limitation Act applied, thereby giving the Hotel an extra three year period from the date of knowledge of the mis-selling. However the decision of the court in PAG v RBS goes further and highlights an arguable route around [the usual limitation hurdles that face most swaps mis-selling claims](http://uk.businessinsider.com/libor-and-mis-sold-interest-swaps-cases-for-lloyds-rbs-hsbc-barclays-2015-7) where the derivatives product in question was sold over six years ago. Any similarly affected businesses that have been sold derivatives such as swaps or collars should obtain specialist legal advice in relation to the possible impact of LIBOR rigging on their IRHP mis-selling claims as soon as possible. *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # The Times: Queen’s award winner sues banks over mis-selling Source: https://lexlaw.co.uk/solicitors-london/queens-award-winner-sues-banks-mis-selling/ [The Times Brief reports ](http://nuk-tnl-deck-prod-static.s3-eu-west-1.amazonaws.com/projects/86c4ad52768c511046fea7b2d42b300c.html)that a company with a Queen’s award for its work in boosting British entrepreneurs is suing two of the country’s biggest banks after they refused to pay up for allegedly mis-selling the not-for-profit business a complicated financial product that went wrong. ![](https://lexlaw.co.uk/wp-content/uploads/2016/06/The-Times-Brief-300616-LEXLAW-Banking-Litigation-Lawyers-London-e1467456019302.png) Lawyers for [Wenta](http://www.wenta.co.uk/) – a Watford-based company that kick-starts new businesses and whose chairman last year was given a lifetime achievement award by the Queen – claim that the disastrous deal cost the business more than £500,000 and could drive it to the wall. The High Court claim alleges not only that the bank mislead Wenta over the risk of the deal, but that two of the bank’s senior figures sat on the business’s board and encouraged it to subscribe to the interest rate hedging product. Several large banks have resolved many high-profile hedging product mis-selling cases, but Wenta’s lawyers at LEXLAW, a London legal practice, claim “RBS and NatWest have been slow to resolve disputes and they have many litigation claims pending”. The case is currently going through a court-ordered mediation, which could arrive at a settlement today. RBS and NatWest will not comment “because of ongoing litigation”, but it understood that the banks argue that the hedging product transaction met its review sale standards. Wenta’s lawyer is [Ali Akram, a partner at LEXLAW](https://lexlaw.co.uk/our-people/m-ali-akram/), an alternative business structure that includes both solicitors and barristers specialising in financial product mis-selling cases. He claims that RBS and NatWest had a “serious conflict of interest” when they advised Wenta to enter the hedging deal as “one of its own bank managers sat on the Wenta board and recommended the deal go through”. Wenta’s chairman, Chris Pichon, who was recently given the Queen’s lifetime achievement award for enterprise promotion, told The Brief: > “We know we were mis-sold this product by RBS who were introduced to us by NatWest. Both banks have refused to acknowledge their wrongdoing over many years and this forced us to litigate. > > > > > > “The sums involved may be small beer to these big banks, but to Wenta and the small businesses we help incubate they are game-changing monies that have been wrongly taken from us.” --- # LEXLAW Case Study: RBS pay £1m to settle derivatives mis-selling claim with social care provider Source: https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/ *The Royal Bank of Scotland PLC (RBS.L) has settled a High Court claim [1] over the mis-selling of two complex collar derivatives [2] in 2007 to Mehnaaz Chaudhry, a businesswoman who provides residential care and social support services to disadvantaged children and families in London.* RBS denied any liability in spite of agreeing to suffer a total financial cost in excess of one million pounds in the settlement, which includes repaying 92% of Ms Chaudhry’s direct losses. Under the litigation settlement, which comes just before the High Court trial (which was scheduled to start on 13th June 2016), RBS has agreed (i) to return nearly £600,000 in respect of derivatives payments previously paid by the customer plus interest, (ii) to pay the break cost of the two hedging products estimated at up to £300,000, and (iii) to pay all suspended payments in respect of the two hedging products estimated in the sum of around £100,000. The litigation settlement has cost RBS around one million pounds. ## Good litigation cases settle Often, such settlements contain confidentiality clauses and the details cannot be placed in the public domain. On this occasion, however, the customer settled the litigation without confidentiality in order to expose RBS’s misconduct and the flaws of the Financial Conduct Authority agreed IRHP review scheme [3] to the wider public. In the review scheme, RBS was allowed to self-review and self-determine redress in respect of its own past sales of derivatives with minimal regulatory oversight save under the auspices of a so-called ‘independent reviewer’, in this case, KPMG, whom RBS selected and appointed. This voluntary arrangement was agreed by the regulator in spite of the FCA publishing a finding of mis-selling in 93% of IRHP sales examined in a pilot review scheme. ## Abuse of the IRHP Review scheme Unfortunately, some banks, RBS in particular, avoided paying proper redress by unfairly applying the rules of the review scheme (which they helped create) to reduce redress paid to customers. RBS regularly replaced derivatives mis-sold to customers with alternative hypothetical derivatives that simply do not exist in the real world, for example in this case 15-year caps. These unfair alternative derivatives effectively allowed RBS to unfairly reduce redress payable to customers. Guto Bebb MP has openly challenged RBS over this compensation avoidance technique in the past (see [4 December 2014 parliamentary debate on the FCA redress scheme](http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141204/debtext/141204-0002.htm#14120439000001) in particular at Hansard 4 Dec 2014 : Columns 480 and 481). It is likely that RBS has avoided more redress payments by way of alternative derivatives than any other bank.  Hundreds of business customers, whose legal rights may have expired for want of litigation (as they trusted the regulatory review scheme) and whose appeal to the Financial Ombudsman Service is limited to £150,000, have been left with little choice but to accept poor redress offers from RBS. Such customers should have taken, and should still take, legal advice. ## Lessons for the FCA John Griffith-Jones, the Chairman of the FCA, has indicated to a parliamentary Treasury Committee that Andrew Bailey, the soon-to-appointed Chief Executive of the regulator, will review how the FCA deals with redress schemes after he takes up the role in July 2016. It is understood that Mr Bailey will work with the regulator’s board to draw upon its experience of dealing with issues including mis-sold payment protection insurance and interest rate swaps and will also question how the FCA should operate redress programmes in future.  Mr Griffith-Jones said: > *“One of the crucial things Andrew Bailey and the board will look at when he arrives is how we deal with these redresses. How do we get a scheme to begin and end to the satisfaction of everybody that we’re doing a decent job? If you look at PPI or swaps, or other difficult cases, it’s still a work in progress. It’s very easy to start these things, but it seems very difficult to finish them.”* ## Litigating ensured proper redress This case is highly relevant to how the IRHP review has been unfairly operated by RBS. The High Court litigation ran in parallel with the IRHP review scheme, which was considered to amount to alternative negotiations leading to settlement. Whilst denying all wrongdoing in the litigation, RBS admitted in the review that it had failed to properly explain the huge risks of the derivatives products that it had offered. However, rather than provide fair compensation to the customer for its mis-selling, which had cost the customer almost £400,000 in derivatives payments (together with around £350,000 breakage cost exposure), RBS instead only offered redress [[Alternative Redress Pr​esentation](https://lexlaw.co.uk/wp-content/uploads/2016/07/101214-Alternative-Redress-Presentation-RBS-NatWest-FCA-IRHP-Review-LEXLAW-Break-Costs-Explanation-COBs.pdf)] with a total financial value of around £300,000 by insisting on replacing the two mis-sold collars with one further costly collar and a costly 15-year cap. This unreasonable decision by RBS was challenged by way of explanatory meetings and written submissions in the Review and by simultaneous pursuit of High Court litigation. This pressure forced RBS to drop its demands for replacement collars and offer replacement caps, which massively increased the total financial value of its redress offer to around £1m. ## RBS - a reputation for behaving badly RBS has thereby demonstrated its ongoing unwillingness to genuinely put right its past wrongs by forcing its clients to pursue litigation and waiting until the eve of trial to settle such litigation. This is entirely unnecessary and reveals RBS’s aggressive approach towards its IRHP mis-selling victims. Ms Chaudhry, the customer whose ability to perform her leading social care services work in London was restricted by RBS’s mis-selling of these complex derivatives products, stated: > *“I was mis-sold two collars by RBS that caused massive unexpected financial losses which affected my ability to provide additional social care support in East London. I have battled with RBS for over six years and finally, on the eve of trial, and after having been ordered to hand over its IRHP review documents, RBS made their first and only litigation offer. ”* > > > > > > *“RBS was ordered by the High Court to disclose its IRHP review documents in my case which revealed admissions of wrongdoing that undermined RBS’s three year defence of this litigation. Whilst I am relieved that my six-year dispute with RBS is at an end I feel aggrieved that RBS behaved as badly as it did, first in mis-selling and then in the FCA IRHP review and finally in forcing me to the door of the court to test my resolve. I understand this is because many customer eventually give up or settle for low amounts.” * > > > > > > *“When first taking on my business, the RBS commercial team were courteous, flexible and helpful however once they got my business and tied me into the collars, RBS were not interested in the negative impact on my business and have been arrogant and dismissive of me ever since. RBS ought to treat their customers with more honesty, respect and fairness.”* Mr [Kumaran Sivathillainathan](https://lexlaw.co.uk/our-people/kumaran-sivathillainathan/), a solicitor practising at [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/), the City of London law firm that represented Ms Chaudhry, stated: > *“The litigation was vigorously defended by RBS, but just weeks before the trial, RBS was forced to settle the litigation claim in order to avoid judicial scrutiny and judgment over both its mis-selling and its conduct of the IRHP Review scheme.” * > > > > > > *“This case is the first in which RBS were ordered, upon application by the Claimant, to hand over all documents generated in the IRHP review scheme. In spite of the clear civil procedure rules on disclosure, RBS had wrongly refused to disclose IRHP Review documents until they were forced to do so by an order of the High Court.” * > > > > > > *“RBS defended the disclosure application with much vigour, even appointing heavyweight banking silk, Adrian Beltrami QC to strengthen their legal team **[4]**. However in spite of the bank’s protestations, the Chief Master of the Chancery Division of the High Court ordered RBS’s solicitors, Dentons, to redo RBS’s disclosure exercise and ultimately to disclose the review scheme documents.” * Leading derivatives expert, Mr [Abhishek Sachdev](http://www.vedantahedging.com/meet-the-team/#abishek), of FCA -authorised financial risk management consultancy [Vedanta Hedging](http://www.vedantahedging.com/) stated: > *“The customer did not fully understand the Collars and therefore RBS should not have sold them. RBS failed to fully explain the risks associated with the Collars, in particular break costs. Had the customer fully understood the complexity and risks of the Collars, she would not have entered into them and would have chosen alternative hedges. The Collars were over-priced at inception by between 149% and 169% whereas the customer could have had more effective hedges at a fraction of the cost.”* > > > > > > *“The FCA-agreed IRHP review scheme has failed to ensure customers get fair redress and instead has significantly reduced the cost of compensation that is truly owed by banks to victims.”  * ## Notes: - RBS sales staff were incentivised to sell complex collars to benefit the bank rather than hedging to benefit the customer. RBS made £79,968 profit by mis-selling the complex derivatives. - RBS failed to disclose the contingent liabilities (estimated break costs risk) of £276,000, even though they had calculated the break costs risk and used up the customer’s credit limit to that extent under an RBS process called ‘Credit Limit Utilisation’ which, unlike all other credit applications, was not discussed with the customer. - This litigation has cost RBS well over one million pounds (including around £130,000 in legal costs). RBS could have settled the matter much sooner but purposely chose not to and instead conducted their review slowly and continued to defend it inappropriately, for example by refusing to disclose documents despite their duty to the Court to do so. - The FCA allows banks to review their own past sales of derivatives and decide the level of redress to pay; RBS attempted to get away with paying only £300,000 but were forced to pay out over three times that amount thanks to the pressure of the litigation which was run in parallel with the review scheme. - RBS tried to reduce compensation by proposing the customer takes out replacement derivatives that she did not want. RBS initially proposed a replacement collar and a 15-year cap in the review which would cost the customer an additional £238,476 plus lost interest (at 8% per annum) which was an attempt to avoid compensation by RBS. - 15-year caps are an invention of the RBS review scheme; there are no commercially known examples of any SMEs ever purchasing longer than approximately 5-7 year caps. Guto Bebb MP has openly challenged RBS over this compensation avoidance technique in the past (see [4 December 2014 parliamentary debate on the FCA redress scheme](http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141204/debtext/141204-0002.htm#14120439000001) in particular at Hansard 4 Dec 2014 : Columns 480 and 481). - FCA’s new Chief Executive, Andrew Bailey, will be examining the conduct of past voluntary review schemes to consider if Banks give customers fair redress. - NatWest/RBS and the FCA are likely to announce an FCA-agreed [GRG Review scheme](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) for victims of NatWest/RBS’s Global Restructuring Group which is alleged to have engineered loan defaults to deprive customers of valuable assets, for example by stripping those assets into West Register companies that the banks own. ## Contact details: Vedanta Hedging is the largest FCA-regulated hedging advisory organisation in the UK for SMEs and has advised hundreds of clients in connection with the mis-selling of derivatives in both the FCA-backed IRHP review scheme and in litigation by providing expert witnesses. The Managing Director, Mr Abhishek Sachdev, can be contacted by telephone on 020 7183 2277. LEXLAW Solicitors & Barristers is a unique law firm that partners solicitors and barristers and is the only law firm based in the Middle Temple (an Inn of Court). The firm has conducted more litigation in respect of derivatives mis-selling to SMEs than all other law firms in the UK combined. The partner in this case, Mr M. Ali Akram, can be contacted by telephone on 020 7183 0529. Mehnaaz Chaudhry is a provider of social support services to children and families in London. She has a BA (Hons) in Social Work, a Post-Qualifying Social Work Award and an Award for Academic Excellence in Social Work. Ms Chaudhry can be contacted for further comment via her solicitor, Mr Kumaran Sivathillainathan by telephone on 0207 183 0529. ## Footnotes: [1] Mehnaaz Chaudhry & Another v. The Royal Bank of Scotland PLC (High Court of Justice, Chancery Division, Claim No: HC-2013-000489); proceedings were commenced on 17 October 2013. [2] The derivatives were: (i) a £1.58m Amortising 15-year Collar sold on 3 December 2007; and (ii) a £0.62m Amortising 15-year Collar sold on 3 December 2007. [3] See letter to the FCA dated 10 October 2013 titled [Notice of Failings in and Abuses of the IRHP Review](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf). [4] RBS instructed Matthew Arnold Baldwin (now Dentons) partner, Mr Stephen Mills and associate, Mr Samuel Parr. Adrian Beltrami QC of 3 Verulam Buildings and Daniel Edmonds of Fountain Court were counsel. --- # The Times: Firms seek payout for ‘mistreatment’ by NatWest & RBS GRG division (GRG Review Scheme) Source: https://lexlaw.co.uk/solicitors-london/times-sme-compensation-redress-natwest-rbs-grg-review-scheme-fca-global-restructuring-group-legal-action/ *James Hurley, Enterprise Editor, The Times reports that small and medium-sized companies that claim they were mistreated by Royal Bank of Scotland’s turnaround division are waiting to hear whether the City regulator will 'voluntarily' set up an FCA-agreed GRG compensation scheme for alleged victims.* ## What is GRG? NatWest and RBS's Global Restructuring Group, was a business support unit (BSU) for troubled businesses set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services.  Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets via ['Project Dash for Cash'](https://www.buzzfeed.com/heidiblake/dash-for-cash). Following allegations of misfeasance, GRG was reportedly disbanded in August 2014. Distressed customer relationships are now handled by the Restructuring Group. [![RBS said that “considerable uncertainty” remained over the conclusions of a review into its turnaround division](https://lexlaw.co.uk/wp-content/uploads/2016/08/Screenshot_20160808-100057-1024x718.jpg)](https://lexlaw.co.uk/solicitors-london/times-sme-compensation-redress-natwest-rbs-grg-review-scheme-fca-global-restructuring-group-legal-action/screenshot_20160808-100057/)RBS said that “considerable uncertainty” remained over the conclusions of a review into its turnaround division ## FCA-ordered 'Independent Review': Promontory and Mazars Report The [Financial Conduct Authority has received a report ](http://www.fca.org.uk/news/update-on-independent-review-of-rbs-treatment-of-business-customers-in-financial-difficulty)into the activities of Global Restructuring Group but has yet to set a set a date for its publication. RBS said that “considerable uncertainty” remained over the conclusions of the review, which has been conducted by Promontory, the financial consultancy, and Mazars, the accountancy firm. As a result it said that it was not possible to estimate a cost impact on the bank. The Times understands that so-called Maxwellisation of the much-delayed report, whereby the bank was allowed to see a draft of the report before publication, has been completed. Among the outstanding issues is whether a compensation scheme is set up. ## FCA and Treasury discuss GRG Review The FCA and the Treasury are understood to have met last week to discuss the issue. GRG sought to repair RBS’s balance sheet in the aftermath of the financial crisis by exiting loans that were no longer profitable and tying up too much capital. Companies could also be transferred to GRG because they were in dispute with the bank, regardless of their financial position. Hundreds of businesses claim that this resulted in their being unfairly treated, with many going to the wall after being transferred to GRG. ## Obtaining Redress in RBS FCA GRG Review Scheme RBS warned investors on Friday that if the regulator found “material failings” in its treatment of small companies the conclusions > *“could result in . . . the imposition of redress requirements and the commencement of litigation claims, as well as potentially leading to wider investigations and litigation related to RBS’s treatment of customers in financial difficulty”.* The bank has always denied what it calls the “principal allegation” levelled against GRG by Lawrence Tomlinson, a former government adviser, that it sought to “artificially distress” viable companies. ## RBS and NatWest Westregister Misconduct Other allegations include that the bank charged excessive fees with little explanation and claims of conflicts of interest related to West Register, the bank’s property division, which acquired assets from RBS customers in GRG, often out of administration. An RBS document seen by The Times reads: > *“Our ability to acquire suitable assets into the West Register Companies is not only a reconstruction tool, but also **a source of future profits**.”* RBS says that West Register was used only as a fallback option to protect the value of the bank’s security when the open market could not yield a better result. ## Specialist GRG Review and GRG Litigation Lawyers The IRHP review scheme has demonstrated that banks will do everything they can to reduce or avoid compensation and that exercise of legal rights can have a significant impact in ensuring satisfactory redress is recovered from major banks. LEXLAW have represented more claimants in cases against major banks than all other law firms in the UK over the last five years. We are the leading law firm operating in this specialist area and have vastly more experience than anyone else of assisting small businesses in bringing successful review and litigation claims against RBS and NatWest. Read more here in our [Litigation & Dispute Resolution](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) pages: - [Bank Business Support & Loan Recovery Claims GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/)- FCA Natwest RBS GRG Review (Global Restructuring Group) *Our specialist lawyers can review your case in a preliminary advisory meeting and thereafter assist in representing your business in any GRG review scheme as well as ensuring your business does not lose it's legal rights of action due to the operation of the Limitation Act 1980.* --- # The Sunday Times: Barclays sued for £4m by GPs for derivatives mis-selling Source: https://lexlaw.co.uk/solicitors-london/barclays-sued-4m-gps-derivatives-mis-selling-litigation-irhp-swaps/ *Kiki Loizou, Small Business Editor of The Sunday Times, reports on one of our derivatives litigation cases where [Barclays Bank plc](http://www.barclays.co.uk/) mis-sold a highly toxic derivative (a 27-year £4.5m Rollercoaster Swap) to an NHS-funded GP practice in London. The Doctors went through the Bank and [FCA IRHP Review](https://www.the-fca.org.uk/consumers/interest-rate-hedging-products) and were found to have been mis-sold but were remarkably offered no redress. They subsequently sought legal advice.* ![Barclays Litigation LAwyers](https://lexlaw.co.uk/wp-content/uploads/Barclays-Bank-Plc-Litigation-LAW-UK-1024x683.jpeg) ## Outcome in the FCA Interest Rate Hedging Product (IRHP) Review On 29 June 2012, the FSA announced (having found mis-selling to SMEs in 93% of cases it had sampled), that the major banks would review their own mis-selling of complex IRHP derivatives to SMEs. There was a very obvious self-interest on the part of the major banks to avoid paying out billions in compensation and indeed the banks spent millions on carefully designing the review scheme so that there was the potential to avoid paying billions of pounds of compensation that was rightfully owed to SMEs. In their own IRHP review, in which the Bank appointed [KPMG](https://home.kpmg.com/uk/en/home/services/advisory/risk-consulting/financial-risk-management-landing.html) as a [skilled person](https://www.fca.org.uk/static/documents/corporate/appendix-1-skilled-persons-reports-13-14.pdf) and [Eversheds](http://www.eversheds.com/global/en/index.page) as solicitors to interview the GPs, Barclays admitted on 27 June 2014 that the Doctors* "were not provided with sufficient information to understand the features, benefits and risks of your IRHP or sufficient information to understand the features, benefits and risks of relevant alternative IRHPs”* and* "were provided with advice to enter into the IRHP in circumstances where no such advice should have been given.”* However Barclays' IRHP review went on to conclude that in spite of admitting the mis-selling, in particular failing to warn about the multi-million pound break costs risks (it is understood from experts that Barclays calculated Credit Equivalent Exposure of around £1m)* "you would have still purchased the IRHP"* and so *"no redress is due.”* Following the unreasonable outcome of the IRHP Review scheme, the partnership instructed LEXLAW to take legal action against Barclays. The Bank have appointed [Matthew, Arnold & Baldwin](https://web.archive.org/web/20171012193817/http://www.mablaw.com/) (now Dentons). ## The Sunday Times Article: Barclays sued for £4m by GPs Three doctors are suing Barclays for £4m, alleging the bank mis-sold them a complex financial product that ended up costing their practice millions of pounds. The bank sold the interest rate swap to Dr Isobel Bleehen and her two partners in 2007, when the trio obtained a £5.2m loan to expand [Pinn Medical Centre](http://thepinn.co.uk/) in Pinner, northwest London. The derivative was meant to protect them against a rise in rates. However, when the cost of borrowing was slashed in the aftermath of the 2008 banking crash, the doctors were hit with crippling charges. They have so far paid almost £2m and would have to fork out more than £2m to break the deal, which they locked into for 27 years. Through a compensation scheme set up by the Financial Conduct Authority, Barclays admitted mis-selling the swap, saying the doctors “were not provided with sufficient information to understand the features, benefits and risks”. It added that the surgery had been “provided with advice to enter into the deal [swap] in circumstances where no such advice should have been given”. However, the bank concluded that the doctors would have taken out the product regardless and declined to give them redress. “If we knew the consequences, we wouldn’t have touched a product like that,” said Bleehen. “They described it to us as being no-cost insurance protection.” The doctors, who are claiming more than £4m in compensation, have been set a court date for July next year. Barclays said it would be “vigorously defending” the case. ## The Sunday Times article: [http://www.thetimes.co.uk/article/barclays-sued-for-4m-by-gps-qpjrwl8jj](http://www.thetimes.co.uk/article/barclays-sued-for-4m-by-gps-qpjrwl8jj) ## Invezz.com article: [https://web.archive.org/web/20161022050737/http://invezz.com:80/news/equities/23612-Barclays-share-price-GPs-sue-lender-for-4m](https://web.archive.org/web/20161022050737/http://invezz.com:80/news/equities/23612-Barclays-share-price-GPs-sue-lender-for-4m) ## Vedanta Hedging article: http://www.vedantahedging.com/gps-sue-barclays-bank-over-mis-selling-swaps/ --- # High Court slams Dentons and RBS for “cavalier” attitude to disclosure Source: https://lexlaw.co.uk/solicitors-london/high-court-slams-dentons-and-rbs-for-cavalier-attitude-to-disclosure/ A Financial List judge has determined Dentons and Royal Bank of Scotland to be *"cavalier"* in failing to comply with a disclosure order handed down last year in the case of* Property Alliance Group Limited v Royal Bank of Scotland*. The Lawyer's Tabby Kinder reported in an article titled *[High Court slams Dentons and RBS for “cavalier” attitude to disclosure](https://www.thelawyer.com/issues/online-august-2016-2/high-court-slams-dentons-rbs-cavalier-attitude-disclosure/)* that Financial List and Chancery High Court judge, Mrs Justice Asplin, criticised RBS and its lawyers, Dentons, for their failure to comply with a disclosure order of the court. [![GRG Solicitor](https://lexlaw.co.uk/wp-content/uploads/2016/08/Dentons-RBS-slammed-by-High-Court-Judge-Asplin-Disclosure-Litigation-PAG-LEXLAW-Solicitors-Barristers-London-1024x678.jpg)](https://lexlaw.co.uk/solicitors-london/high-court-slams-dentons-rbs-cavalier-attitude-disclosure/dentons-rbs-slammed-by-high-court-judge-asplin-disclosure-litigation-pag-lexlaw-solicitors-barristers-london/) Asplin J reportedly said she was *“particularly concerned”* about RBS’s failure to comply with a previous disclosure order that required RBS’s lawyers to hand over around 25 million documents made up of *“high level”* internal reports, reviews and summaries relating to the allegations of Libor misconduct. ## What is Litigation Disclosure? Disclosure (formerly discovery) is a stage of litigation in which the parties disclose documentary evidence by list to each other. Only documents that are relevant because they support or undermine a parties case must be disclosed. Standard disclosure occurs after each party has set out its position in statements of case (formerly pleadings). ## Importance of Disclosure in Litigation Disclosure is a fundamental litigation process whereby, in summary, each party produces all documents they hold or have control over, which are relevant to the litigation regardless of whether they assist or harm their case. Lawyers, as officers of the court, are effectively tasked with ensuring their clients comply with disclosure obligations. The rules around disclosure are designed to ensure a fair and just outcome is reached in the litigation and that all relevant and disclosable documents are seen by both sides. Banks are not in a special class of litigant and must comply with the CPR like any other party to litigation and their legal advisors should ensure compliance. Unfortunately, this is not the first time that RBS and Dentons have failed in respect of adequate disclosure in litigation proceedings. ## Examples of RBS Disclosure misconduct Firstly, in a recent unreported decision by Chief Master Marsh in the case of *Chaudhry v. RBS *[1] the bank were forced to redo their standard disclosure exercise and hand over documents relating to the bank's FCA-agreed review over its past sales of Interest Rate Hedging Products (the IRHP Review). RBS and Dentons had wrongly argued and maintained that the documents generated by and held within the IRHP Review were not disclosable in a claim for the mis-selling of the same IRHP. The bank drafted in heavyweight silk, Adrian Beltrami QC, to rehearse this meritless argument at great cost. Secondly, RBS were also found, by the Court of Appeal in 2013, to to have deliberately and dishonestly failed to disclose relevant documents and thereby, remarkably, obtained judgment by fraud in the case of *[RBS v Highland Financial Partners](https://lexlaw.co.uk/solicitors-london/rbs-v-highland-financial-partners-culture-of-denial-at-rbs/) *[2]. It was held that RBS had misled their client, their own lawyers and the court. Thirdly, RBS' conduct in litigation it pursued in Scotland against Derek Carlyle in 2010 ([*Royal Bank of Scotland Plc v Carlyle* [2010] ScotCS CSOH_3](http://www.bailii.org/cgi-bin/format.cgi?doc=/scot/cases/ScotCS/2010/2010CSOH3.html)) [3] was found by the Court of Session, per Lord Glennie, to fall far below the required standards. The learned judge said that that the Royal Bank of Scotland lacked “candour” in the proceedings, specifically in its deliberate failure to admit to key evidence in the Court of Session. In a [debate in the House of Commons on March 10th, 2010](http://www.publications.parliament.uk/pa/cm200910/cmhansrd/cm100310/halltext/100310h0004.htm) Carlye’s MP, Jim Hood (Labour, Lanark and Hamilton East) said: *"If someone is described in a judge’s language as lacking candour, that might mean to some of us in the House that they were lying through their back teeth."* ## No change in culture at RBS? The 2013 *Highland Financial Partners* judgment, which followed the 2010 judicial comments in the Scottish Court of Sesssion in *RBS v Carlyle*, raised grave doubts about the culture of RBS and its approach to litigation. Both the recent order of Chief Master Marsh in *Chaudhry* and the recent judicial comments made by Asplin J in *PAG *[4]* *suggest that nothing has changed in the culture at RBS. -- FOOTNOTES: [1] [Mehnaaz Chaudhry & Another v. The Royal Bank of Scotland PLC (High Court of Justice, Chancery Division, Claim No: HC-2013-000489)](https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/) [2] [The Royal Bank of Scotland Plc v. Highland Financial Partners LP [2013] EWCA Civ 328](http://www.bailii.org/ew/cases/EWCA/Civ/2013/472.html) [3] [Royal Bank of Scotland Plc v Carlyle [2010] ScotCS CSOH_3](http://www.bailii.org/cgi-bin/format.cgi?doc=/scot/cases/ScotCS/2010/2010CSOH3.html) [4] [Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2015] EWHC 322 (Ch) (19 February 2015)](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2015/322.html) --- # The Times: FCA ‘will not rush’ after receiving delayed RBS GRG report Source: https://lexlaw.co.uk/solicitors-london/the-times-fca-will-not-rush-delayed-rbs-grg-report-solicitor/ *James Hurley, Enterprise Editor, of the Times, reports that the financial services industry's regulatory watchdog, the FCA, will not rush after receiving a two year overdue s.166 report from Mazars and Promontory into the activities of RBS' GRG 'turnaround' division.* ## What is GRG? NatWest and RBS's Global Restructuring Group, was a business support unit (BSU) for troubled businesses set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services.  Following the credit crunch, GRG took control of 16,000 SME customers with £65 billion of assets via ['Project Dash for Cash'](https://www.buzzfeed.com/heidiblake/dash-for-cash). Following allegations of misfeasance, GRG was reportedly disbanded in August 2014. Distressed customer relationships are now handled by the Restructuring Group. The Financial Conduct Authority has received the final version of a much- delayed report into alleged misconduct at Royal Bank of Scotland’s restructuring division. [![RBS GRG Solicitors](https://lexlaw.co.uk/wp-content/uploads/2016/10/rbs-grg-solicitors.jpg)](https://lexlaw.co.uk/solicitors-london/the-times-fca-will-not-rush-delayed-rbs-grg-report-solicitor/rbs-grg-solicitors/) However, despite the completion of a review it commissioned on the activities of the bank’s Global Restructuring Group, the City regulator gave no timetable for issuing the findings. With publication now two years overdue, the FCA told companies that the process must not be rushed. Those companies claim they were charged excessive and opaque fees by GRG and that they were unfairly pushed out of business by the division. The FCA said: > *“There are a number of steps for the FCA to complete before we are in a position to share our final findings, which will include an assessment of all relevant material, of which the . . . report is one. This has been a complex and lengthy review. It is therefore important that we do not rush the final stages of this process.”* One of the outstanding questions for the regulator is whether or not a compensation scheme for alleged victims should be established. Affected companies are concerned that potential legal claims may expire while they wait for the findings to be issued. There are also complaints about the lack of clarity over what form the findings will take. The review was conducted by Promontory, a financial consultancy, and Mazars, an accountancy firm. Documents seen by *The Times *show that RBS customers who were interviewed by reviewers were told that *“the FCA will determine whether it will publish, in full or in part, the report. We will not be able to provide copies to customers.”* RBS has seen the report. A “draft” version of the review was received by the FCA in April and sent to the bank. It is understood that this interim version was subsequently returned to Promontory and Mazars to be finalised. Steve Wilkinson, a Sheffield-based businessman and RBS customer who provided evidence to the reviewers, said: > *“I have been advised by my solicitor to wait for the review. I am not on my own. There are hundreds if not thousands of businesses in the same boat. As each day goes by, genuine claims will be time-barred.* > > > > > > *“I now doubt that the [full] review findings will ever see the light of day. This is a sorry state of affairs for the small and medium-sized companies who are the lifeblood of the economy.”* Andrew Tyrie, the Conservative chairman of the Commons’ Treasury select committee, said that it was: > *“better to get to the bottom of what’s happened than rush it”*, but added:* “This does seem to have the characteristics of watching a kettle and waiting for it to boil.”* A group of companies has threatened the FCA with legal action over the delays to the review. The GRG Business Action group wrote to Andrew Bailey, chief executive of the regulator, last month saying that its members would begin proceedings against it in the High Court unless they were given assurances that the report would be published imminently. [No such proceedings have been commenced] In July, Mr Bailey told the Treasury committee that he hoped the report would be published this year. **Comment: The waiting game with no result** The Financial Conduct Authority’s review into the activities of the Global Restructuring Group (GRG) is finally complete. Yet the waiting game for hundreds of affected companies goes on. It has been almost three years since Lawrence Tomlinson, an entrepreneur and then government adviser, published a report accusing Royal Bank of Scotland’s restructuring division of serious misconduct. Small and medium-sized companies, he claimed, were being systematically forced to the wall by the bank’s restructuring division, GRG. At first, the FCA’s response was swift. It announced an official review into the allegations the following month, and promptly appointed Promontory and Mazars to investigate. Since then, progress has slowed to a crawl. With the review now two years behind schedule, there is still no firm publication date. RBS denies what it calls Mr Tomlinson’s “principal allegation” - that it sought to “artificially distress” viable companies. While companies await the FCA report, some uncomfortable questions for the bank have emerged . While GRG has been referred to as a “turnaround” division designed to return troubled companies to health, GRG’s primary motivation following the financial crisis may have put it odds with its clients. Last year, The Times revealed that as the bank was under pressure to repair its balance sheet, it could improve its capital position by reducing its exposure to certain businesses and sectors, countless small and medium-sized companies among them. Indeed, opaque fees charged by GRG appear to have existed simply to compensate the bank for the capital it had tied up in its business customers. Not that this was explained to affected companies. The FCA reviewers have also heard even more serious allegations. These include the claim, denied by RBS, that assets that loans were secured against were subjected to unfair revaluations to provoke a breach in debt facilities. It is also alleged that West Register, RBS’s property arm, benefited from inside information from GRG when it bought up customers’ assets. Among West Register’s purchases was the The Bold Hotel in Southport. Its former owners, Eddie and Cheryl Warren have spoken about the huge personal toll of losing their business following an encounter with GRG. The FCA has blamed “the complex nature of the review and the seriousness of the allegations” for the delays. That is fair enough, but with hundreds of people in a similar position to the Warrens, the regulator must also pay heed to the urgency of letting alleged victims know where they stand. --- # FCA Statement on the FCA’s review of Royal Bank of Scotland’s treatment of customers referred to its Global Restructuring Group Source: https://lexlaw.co.uk/solicitors-london/fca-statement-fca-grg-review-rbs-royal-bank-scotland-global-restructuring-group/ This statement provides an update on the Financial Conduct Authority’s (FCA) review of Royal Bank of Scotland’s (RBS) treatment of small and medium enterprise (SME) customers in financial difficulty. The statement addresses the announcement made by RBS today regarding customers transferred to its [Global Restructuring Group (GRG)](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/), gives a summary of the findings of the report by Promontory Financial Group (Promontory) and sets out the next steps which the FCA will take. ![](https://lexlaw.co.uk/wp-content/uploads/2016/11/FCA-Press-Release-RBS-GRG-Review-Mazars-Promontory-Solicitors-LEXLAW.png) ## RBS announcement RBS has today announced how it will address poor outcomes faced by certain SME customers who were referred to GRG between 2008 and 2013. The key elements of RBS’s announcement are: - a new complaints review process; and - an automatic refund for complex fees charged to SME customers in GRG. RBS’s proposals were developed with our involvement. We agree these are appropriate steps for RBS to take. While the FCA still needs to see further detail about how the scheme will operate, we believe that it is an important step for RBS to put in place an appropriate complaints review process which should provide certain SME customers with a route to make a formal complaint, should they wish to do so. Additionally, RBS has agreed to provide automatic refunds for complex fees to some SME customers. In particular, the FCA notes and welcomes the involvement of an independent third party to provide oversight of the complaints review process. The independent third party will provide reports to the FCA on a regular basis. ## FCA’s summary of the findings of the Report In January 2014, the FCA appointed Promontory as a skilled person under section 166 of the Financial Services and Markets Act 2000 to review RBS’s treatment of SME customers transferred to GRG between 2008 and 2013.  Promontory, with the assistance of its sub-contractor Mazars, provided its final report to the FCA in September 2016 (the Report). This was a complex and lengthy review. As part of their work, Promontory examined 207 cases and covered a six-year period. RBS provided Promontory during the course of the review with 323 gigabytes of data (approximately 1.5million physical pages and 270,000 emails). The Report is a very comprehensive document and provides a detailed description of the work undertaken and contextual background of the market and the way that GRG operated at the time. We set out below the FCA’s high level summary of the main findings and some key conclusions in the Report. Whilst some isolated examples of poor practice were identified, the Report concluded that: - RBS did not set out to artificially engineer a position to cause or facilitate the transfer of a customer to GRG; - SME customers transferred to GRG were exhibiting clear signs of financial difficulty; - there was not a widespread practice of identifying customers for transfer for inappropriate reasons, such as their potential value to GRG, rather than their level of distress; - there was not a widespread practice of requesting personal guarantees and/or cash injections when GRG had already determined that it had no intention of supporting such businesses; - there was not a widespread practice of RBS making requests for information from customers that were unnecessarily burdensome; - there was not a widespread practice of RBS acting as a “Shadow Director”; - there was no evidence that an intention for West Register to purchase assets had been formed prior to the transfer of the customer to GRG; and - there were no cases identified where the purchase of a property by West Register (as opposed to by another person) alone gave rise to a financial loss to the customer. However, there were other areas in which the inappropriate treatment of SME customers by RBS was identified in the Report as being widespread. These arose from: - the failure to comply with RBS’ own policy in respect of communicating with customers around transfer. The Report found that the standard of much communication was poor and in some cases misleading; - the failure to support SME businesses in a manner consistent with good turnaround practice; - placing an undue focus on pricing increases and debt reduction without due consideration to the longer term viability of customers; - the failure to document or explain the rationale behind decisions relating to pricing following transfer to GRG; - the failure to ensure that appropriate and robust valuations were made by staff, and carrying out internal valuations based upon insufficient or inadequate work – especially where significant decisions were based on such valuations; - the failure of GRG to adopt adequate procedures concerning the relationship with customers and to ensure fair treatment of customers; - the failure to identify customer complaints and handle those complaints fairly; - the failure to handle the conflicts of interest inherent in the West Register model and operation; and - the failure to exercise adequate safeguards to ensure that the terms of certain upside instruments, in particular Equity Participation Agreements, were appropriate. The Report found that some elements of this inappropriate treatment of customers should also be considered systematic as it resulted from a failure on the part of RBS to fully recognise and manage the conflicts of interest inherent in GRG’s twin commercial and turnaround objectives and to put in place the appropriate governance and oversight procedures to ensure that a reasonable balance was struck between the interests of RBS and SME customers. The Report estimates in total over a third of the customers transferred to GRG during the relevant period could be expected to face insolvency or administration regardless of RBS’ actions, i.e. over a third were potentially not viable. Of the potentially viable SME customers transferred to GRG, the Report concluded that most of them experienced some form of inappropriate action by RBS. However, the Report also concluded that, in a significant majority of cases, it was likely that inappropriate actions did not result in material financial distress to these customers. ## Next steps The FCA is carefully considering the Report and other additional material. The activities carried out by GRG and addressed by RBS’s proposals are largely unregulated; therefore, the FCA’s powers are limited in this area. The FCA is currently assessing what further work may be needed given the findings in the Report. The FCA will provide a further update on this matter when it is in a position to do so. The FCA recognises the considerable interest in these issues and will publish a full account of its findings when practicable once our work is concluded. ## Notes to Editors: - ‘Complex fees’ includes management / monitoring fees, ratcheted fees, late management information fees, mezzanine fees, risk fees, exit fees and asset sales fees. - The independent third party appointed by RBS to oversee the new review complaints process is [Sir William Blackburne](https://en.wikipedia.org/wiki/William_Anthony_Blackburne), a retired [High Court Judge](http://www.maitlandchambers.com/barristers/sir-william-blackburne). - [West Register](https://beta.companieshouse.gov.uk/search/companies?q=west%20register) was the property arm of RBS. - The Report described that GRG consistently adopted throughout 2008 and 2013, twin objectives. These objectives were: - to be at the leading edge of a wider rescue culture – focused on turnaround, rehabilitating customers in distress and working with the aim of returning customers to mainstream banking wherever possible (the ‘turnaround objective’); and - to be a major contributor to RBS’s financial objectives, which initially focused on revenue generation with GRG as a profit centre within RBS but later evolved to focus on other metrics relating to the protection of capital (the ‘commercial objective’). ## -- ## Notes to Affected SME Customers: LIMITATION WARNING: Businesses that were or are affected by the restructuring or turnaround divisions of the major banks must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your right to compensation via legal channels. Legal rights can be reserved by instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings. Affected SMEs should take urgent legal advice from a [specialist solicitor experienced in bringing legal actions against RBS GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/). --- # Litigation: What is Unlawful Means Conspiracy? Source: https://lexlaw.co.uk/solicitors-london/rbs-grg-litigation-unlawful-means-conspiracy/ *A tort is a non-contractual wrongful act or infringement of a right leading to legal liability. The tort of conspiracy is a civil wrong.  It is distinct from criminal conspiracy, not least in that it includes a requirement that the conspiracy causes actual loss. There are two sub-categories of civil conspiracy, namely 'unlawful means conspiracy' and 'conspiracy to injure'. In this article we are concerned with unlawful means conspiracy.* ## What is Unlawful Means Conspiracy? An economic tort in which two or more persons combine or conspire together, using unlawful means, and with a common intention of causing damage to the victim of the conspiracy who suffers a loss, which is usually a financial loss. Examples of unlawful means conspiracy cases include: - **Price-Fixing**: Competitors collude to set artificially high prices for a product or service. - **Bid-Rigging**: Companies conspire to manipulate the bidding process for a contract. - **Defamation**: Individuals spread false and harmful information about a person or business. - **Fraud**: Individuals deceive others for financial gain. ## Requirements of unlawful means conspiracy: The elements of this tort can be set out as follows: ### (1) Two or more persons must 'combine'. This might be more simply expressed as saying that they 'conspire' together.  Either way, it is not necessary to show that an explicit agreement was reached, but the conspirators must be shown to have a common intention.  In most cases this will be shown by their overt acts, as a matter of implication, as those engaging in a conspiracy are rarely so foolish as to keep records! ### (2) The conspirators must use 'unlawful means'. At one time it appeared that the requirement of 'unlawful means' meant that there must be a 'primary' tort actionable by the claimant.  This meant that the tort of unlawful means conspiracy was little used, because by definition the claimant would already be able to sue for the primary tort.  The only advantage of alleging a conspiracy in addition would be to bring in additional defendants, e.g. if the chief wrong-doer was impecunious.  However, following the judgment of the House of Lords in *[Total Network v HMRC](http://www.bailii.org/uk/cases/UKHL/2008/19.html)* [2008] UKHL 19, it has been established that 'unlawful means' includes any criminal act directed at the claimant, even if that act is not in itself actionable by the claimant.  Their lordships declined to clarify the position where the conspirators commit a criminal act against a third party (but so as to cause harm to the claimant), but it is suggested that there would (at least) have to be some connection between the crime and the claimant: it is not sufficient merely to point to some criminal element in the defendants' conduct.  It is also worth noting the comments of Lord Walker that in the phrase 'unlawful means' "each word has an important part to play", i.e. the unlawful act must be the *means* of causing harm to the claimant. ### (3) The conspirators must intend to cause damage to the claimant (through the unlawful means). However (and unlike in the case of conspiracy to injure) 'intention' here does not mean that damage to the claimant should be the conspirators' sole or predominant purpose.  This means that it is no defence for the conspirators to show that their *primary* intention was to advance their own interests, if they understood that in doing so they would do harm to the claimant.  In many commercial cases it may be said that "There is little, if any, difference between the conspirators' intention to make money and their intention to deprive the [claimant] of money: each is the obverse of the other" (Lord Neuberger in *Total Network*). ### (4) The claimant must, in fact, suffer a loss as a result ## Benefits to potential claimants There are two primary reasons why a claim of unlawful means conspiracy may assist potential claimants.  Firstly (following the judgment in *Total Network*), this tort allows the claimant to seek compensation for criminal acts which are not do not in themselves give rise to a civil claim.  Secondly, the claimant is able to add additional defendants as well as the primary wrong-doer (and for various reasons it may be easier for the claimant to recover damages against the additional defendants). Moreover, pursuing such a claim can provide a sense of justice and hold wrongdoers accountable. By exposing unlawful means conspiracies, victims can deter future misconduct and raise awareness of this type of illegal activity, potentially protecting others from falling victim. While the outcome of any legal case is uncertain, understanding the potential benefits and consulting with a qualified lawyer can help individuals make informed decisions about whether to pursue a claim. ## Application of Unlawful Means Conspiracy in RBS GRG Claims An interesting recent use of this tort can be seen in the case of *Hockin v RBS*.  This case is still at an early stage, but the Claimants sought and obtained permission for various amendments to their case, including a claim in unlawful means conspiracy.  This involved an alleged conspiracy between various RBS employees.  Allegedly, the purpose of this conspiracy was to persuade the Claimants to enter into two instruments, the effect of which was to enhance RBS's security.  The Claimants allege that RBS employees falsely represented that if they agreed to sign these documents, the bank would "leave them alone" and support them financially in the long term. In fact (it is alleged), as soon as the security documents had been signed, the business was transferred to [Global Restructuring Group](https://lexlaw.co.uk/solicitors-london/tag/global-restructuring-group/) ([GRG](https://lexlaw.co.uk/solicitors-london/tag/grg/)) in what the Claimants say was a prime example of the pattern of misconduct found by [Lawrence Tomlinson](https://lexlaw.co.uk/solicitors-london/tomlinson-report-accuses-rbs-lloyds-bank-of-unscrupulous-practices/) in his report published for the Department of Business, Innovation and Skills in November 2013 ([the Tomlinson Report](https://lexlaw.co.uk/wp-content/uploads/2013/11/Tomlinson-Report.docx)).  As is now well known, the Tomlinson Report concluded that RBS's GRG department, while purporting to support businesses in difficulty, actually engineered artificial or unnecessary defaults with the intention (among others) of making an easy profit from the purchase of assets at artificially low distressed valuations (in some cases acting through West Register, a legally separate entity which effectively acted as another another branch of the bank).  RBS denies all of this.  It is understood that the [Financial Conduct Authority has conducted an investigation into the behaviour of RBS, GRG and West Register](https://www.fca.org.uk/news/statements/update-independent-review-royal-bank-scotland%E2%80%99s-treatment-business-customers), but publication of the final report has been long delayed. In *Hockin* the allegation is that the purpose of all of this was to benefit RBS (and indirectly RBS's employees) by gaining control of the Claimants' business.  This is therefore a classic example of the conspirators' gain being the obverse of the claimants' loss.  In addition to any direct profit from the acquisition of distressed assets, it is alleged that this behaviour formed part of 'Project Dash for Cash', which, since these pleadings, has now come to wider attention following [media reports](https://www.buzzfeed.com/heidiblake/dash-for-cash). It is likely that other businesses who consider themselves to have been mistreated by RBS and GRG will be watching this case with interest. Any victims of GRG misconduct should not wait for the FCA Review and instead should take immediate legal advice to ensure their claim does not become not time-barred. ## Defences to Unlawful Means Conspiracy: While it's challenging to defend against unlawful means conspiracy, there are a few potential defences: - **Lack of Conspiracy:** The defendant may argue that there was no agreement or shared intention to harm the victim. - **Lawful Means:** The defendant may claim that the actions were lawful or justified. - **No Damage:** The defendant may argue that the victim suffered no actual loss. ## Protecting Legal Rights Against Unlawful Means Conspiracy Victims of unlawful means conspiracy should take immediate steps to protect their legal rights. This type of civil wrong can have significant financial and emotional consequences, and seeking legal advice is crucial. ### Here's why it's important to act quickly: - **Statute of Limitations:** There are often time limits for filing lawsuits. If you delay, you may lose your right to seek legal action. - **Preserving Evidence:** Gathering and preserving evidence is essential for building a strong case. Time can diminish the availability of evidence. - **Preventing Further Harm:** Seeking legal action can help prevent the conspirators from continuing their harmful behavior. ### Steps to Protect Your Rights: - **Document Everything:** Keep a detailed record of all interactions, communications, and evidence related to the unlawful conspiracy. This can include emails, phone calls, documents, and witnesses. - **Seek Legal Advice and Counsel:** Consult with lawyers who specialise in civil litigation, particularly those familiar with unlawful means conspiracy cases. They can assess your situation, advise on your legal options, and guide you through the legal process. - **Consider Filing a Lawsuit:** Based on your lawyer's advice, you may decide to file a lawsuit against the conspirators. This can involve gathering evidence, preparing legal documents, and presenting your case in court. - **Explore Alternative Dispute Resolution:** In some cases, mediation or arbitration may be a viable option to resolve the dispute without going to court. These processes can be faster and less costly. The specific steps you should take will depend on the unique circumstances of your case. Consulting with a legal professional is essential to understand your rights and options. --- # RBS Launches a New Complaints Process and Refund of Complex Fees for SME customers in GRG Source: https://lexlaw.co.uk/solicitors-london/rbs-grg-complaints-process-refund-review-fees-grg-review/ *RBS has [announced](https://www.rbs.com/rbs/news/2016/11/GRG.html), with FCA agreement, (1) a new GRG complaints process, and (2) refunds of some fees paid by SME customers in GRG.* LIMITATION WARNING: Businesses that were or are affected by the restructuring or turnaround divisions of the major banks must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your right to compensation via legal channels. Legal rights can be reserved by instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings Businesses affected and entitled to redress should take urgent legal advice. Businesses affected and entitled to redress should take urgent legal advice from a [specialist solicitor experienced in bringing legal actions against RBS GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/). RBS also responded to the [FCA’s update on its review into the treatment of SME customers in the bank’s former Global Restructuring Group (GRG) between 2008 - 2013 and its summary of the Promontory Financial Group report](https://lexlaw.co.uk/solicitors-london/fca-statement-fca-grg-review-rbs-royal-bank-scotland-global-restructuring-group/). RBS said: > As the bank has acknowledged, in some areas, it could have done better for SME customers in GRG. Specifically, the bank could have managed the transition to GRG better and should have better explained to customers any changes to the prices or complex fees it was charging. The bank accepts that it did not always communicate as well or as clearly as it should have done. The bank also did not always handle customer complaints well. > > > > > > RBS notes that the FCA’s update confirms that no evidence was found that the bank artificially engineered a position to cause or facilitate the transfer of a customer to GRG or identified customers for transfer for inappropriate reasons and that all SME customers transferred to GRG were exhibiting clear signs of financial difficulty. The update makes clear that there were no cases where the purchase of a property by West Register alone gave rise to a financial loss to the customer and that there was no evidence of intent for West Register to purchase assets being formed prior to the transfer to GRG. It also states that, in a significant majority of cases, it was likely that RBS’s actions did not result in material financial distress to these customers. > > > > > > As a result of the historical issues identified, RBS is taking two important steps for those SMEs in the UK and ROI that were customers in GRG during the period between 2008 - 2013. This activity is designed to address the bank’s failings. > > > Statement from the Royal Bank of Scotland ## A New Complaints Process: For those customers in scope, overseen by retired High Court Judge, Sir William Blackburne. Sir William’s appointment as Independent Third Party adds a robust, transparent and independent step to the complaints process, should SME customers who were in GRG wish to complain about their treatment or challenge the bank’s decision on a previous complaint. ## An Automatic Refund of Complex Fees: Paid by SMEs in the UK and ROI that were customers in GRG during the relevant period. This will save customers from further delay, ensure that the bank can start refunding fees more quickly and demonstrate our commitment to addressing issues of the past. The bank estimates the costs associated with the new complaints review process and the automatic refund of complex fees to be approximately £400m, to be provided in Q4 2016. This includes the operational costs of both the fee refund and the new complaints process, together with the refund of complex fees and additional estimated redress costs arising from the new complaints process.These proposals have been developed with the involvement of the FCA which agrees that these are appropriate steps for the bank to take. RBS will provide further details of the new complaints process on its website. It is important to remember that the period in question, between 2008 - 2013, was a very challenging time for the bank and its customers. In 2008, there was an unprecedented increase in SMEs falling into financial distress and the number moving into GRG increased by around 400%. RBS lost more than £2bn from lending to SME customers. RBS continues to cooperate fully with the FCA and remains keen to understand, and learn lessons from, any conclusions that the FCA draws in its review.  It would not be appropriate to comment further on that review until those conclusions have been published. ## Ross McEwan, CEO of RBS said: > “We have acknowledged for some time that mistakes were made. Some of our customers went through what was a traumatic and painful experience as a result of the crisis. I am very sorry that we did not provide the level of service and understanding we should have done. > > > > > > “Although the FCA review into the historical operation of GRG continues, we believe that now is the right time to deal with the areas where we accept some customers were let down in the past.  I am pleased that with the agreement of the FCA, we are able to announce a new complaints process overseen by Sir William Blackburne, alongside an automatic refund of complex fees paid by SME customers who were in GRG between 2008 - 2013. > > > > > > “The culture, structure and way RBS operates today is fundamentally different from the period under review. We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank’s capital.” ## RBS GRG Review FAQ: Frequently Asked Questions ### Our announcement #### A) Why are you making this announcement now?  The steps announced today have been developed with the involvement of the FCA who agree these actions are appropriate steps for us to take. We are now in a position to announce a new complaints process overseen by Sir William Blackburne alongside an automatic refund of complex fees paid by SME customers who were in GRG between 2008-2013. #### B) What do I need to do? We have provided the answers to a wide range of frequently asked questions that will hopefully address any initial queries that you may have. There is nothing that you need to do to start the automatic fee refund process. In the next few weeks, we will start sending letters to customers to let them know if they are included in the automatic fee refund. If you have a complaint, please read the relevant section in these FAQs to understand whether or not you are in scope for the new complaints process. We have also explained how to make a complaint. If you have any further questions you can contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### C) What should I do if I need urgent support?  If your current circumstances dictate that you need to speak to us urgently then please contact us as soon as possible. In-scope customers should contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 If you are not in scope, you should contact your relationship manager or if it is in relation to an existing complaint then you should contact your complaint handler. #### Customers affected by our announcement #### A) Which customers are affected by our announcement?  The steps being announced today are for small and medium-sized enterprise (SME) customers that were in GRG during the period 2008-2013. #### B) Does this announcement include GRG customers in the Republic of Ireland?  Ulster Bank in the Republic of Ireland is regulated by the Central Bank of Ireland (CBI). For SME customers of Ulster Bank in the Republic of Ireland that were in GRG during the period 2008-2013, we are working to see how we can apply the same support where appropriate. SME customers of Ulster Bank in the Republic of Ireland can contact the GRG Customer Helpdesk if they have any queries using the same contact details. We have provided a low cost international number to minimise the cost. We will be happy to call customers back so that customers do not incur the cost of the call. You can contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### C) How do I find out if I, or my company, is in scope for the new complaints process?  We will start by writing to customers who are in scope in the next few weeks to let them know. If you do not receive a letter by **12th December 2016 **and wish to check with us whether or not you were in GRG during the relevant period, you can contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### D) How do I know if I, or my company, is also in scope for the automatic refund of complex fees?  Please read the section of the FAQs that relates to the automatic refund of complex fees to understand whether or not you are in scope. #### E) How do you define an in-scope customer?  A customer is in scope if they meet **all **of the following criteria: - A UK or Republic of Ireland customer - and a small or medium-sized enterprise (SME) customer - under the control of GRG - during the period 2008-2013. #### F) Which customers are not considered to be in scope?  Customers are unlikely to be considered a small or medium-sized enterprise if they were or are: - an entity with listed securities - an entity with debt syndicated across a number of banks - registered offshore or the majority of its shareholders are offshore - private equity backed - a Special Purpose Vehicle (SPV), or - a sizeable business based on financial metrics (e.g. debt facilities and/or turnover higher than £20m). #### G) Why are you only looking at the period 2008-2013? The period 2008-2013 is the relevant period under the FCA review. The period 2008-2013 was a very difficult time for the bank, our customers and the wider economy. There was an unprecedented increase in SMEs falling into financial distress and the number of customers managed by GRG increased by around 400%. As GRG adapted to the pressure of growing numbers, the bank accepts that during this period it did not always provide the level of service and understanding that we should have done. #### H) What do I do if I’m not in scope?  If you would like to complain you should contact your relationship manager or if it is relation to an existing complaint then you should contact your complaint handler. ### New complaints process #### A) How do you define an in-scope customer for the new complaints process?  A customer is in-scope for the new complaints process with independent third-party oversight if they meet **all **of the following criteria: - A UK or Republic of Ireland customer - and a small or medium-sized enterprise (SME) customer - under the control of GRG - during the period 2008-2013. #### B) Can I complain if my company is insolvent?  Yes, you can complain. However, we are only able to deal with the officials of the company presently appointed and listed at Companies House. So you will also need to engage with the relevant person at the Administrator or Liquidator should you wish to complain. #### C) How do I make a complaint?  If you would like to raise a complaint in relation to GRG, please complete the complaints form which can be [found on our website [PDF 96KB]](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2016/November/Complaints_form_editable.pdf) and email a copy to the GRG Customer Helpdesk: GRGCustomerHelpdesk@rbs.co.uk If you would prefer, you can also write to us using the postal address: GRG Customer Helpdesk, PO Box 71875, London. N1P 1WZ Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### D) Do I need to wait for the FCA review to be completed?  No, you do not need to wait for the FCA review to be completed. The steps we have announced have been developed with the involvement of the FCA who agree these actions are appropriate steps for us to take now. #### E) Do I need to have a solicitor or third party to represent me?  No. The complaints process is very straight forward and we are here to answer any questions you may have, so we do not believe it is necessary for customers to involve solicitors in making a complaint. The new complaints process, including the Independent Third Party appeals process, will not make any determination on legal causes of action. If you would like a solicitor or third party to represent you, we will need a letter of authority from you to confirm the person or firm you want us to deal with on your behalf. #### F) Are there any reasons why you won’t review my complaints?  Yes. The review process is not appropriate for complaints that have previously been the subject of a decision by the Financial Ombudsman Service (FOS) or of the courts. It also may not be appropriate to consider complaints from customers in ongoing litigation against the bank or who have threatened litigation in formal Letters Before Claim unless the customer and RBS agree to stay those proceedings while the complaint is being considered. The review process will not make a determination on legal causes of action or in relation to allegations of criminal behaviour, fraud, dishonesty or other issues of conscious impropriety by RBS or its staff. Customers should refer any such allegations to the appropriate authorities. Further detail about the complaints process will be provided in the principles governing the review of complaints relating to RBS’s Global Restructuring Group which we will make available on our website shortly: www.rbs.com/grg #### G) What do I do if I’m not in scope?  If you would like to complain you should contact your relationship manager or if it is relation to an existing complaint then you should contact your complaint handler. #### H) How will the new complaints process work?  We are creating a new complaints process for SME customers that were in GRG during the period 2008-2013 which will be delivered by a specialist team. An independent third party, retired Chancery High Court Judge, Sir William Blackburne, will perform an assurance and appeal role as part of the process. This adds a more robust and independent step to the complaints process to deliver fair outcomes should SME customers who were in GRG wish to complain about their treatment. The bank will assess a customer’s complaint in the first instance and then advise the customer in writing whether the complaint has been upheld and, if so, whether we propose to pay any compensation for direct losses incurred by the customer. The customer will have the option to appeal this decision to the Independent Third Party within 28 days of the date of the decision letter. A customer can appeal against any aspect of the decision reached by the bank’s complaints process. This includes appealing against complaints that have been upheld by the bank but where the customer is unhappy with the outcome determined by the bank. If appealed, the Independent Third Party will reach their own conclusion on whether the complaint should be upheld or not and on what basis. The Independent Third Party will record their decision, including any award for direct loss only, and a brief summary of their reasons will be provided to RBS and the customer. Subject to the customer accepting the Independent Third Party’s decision, the decision of the Independent Third Party will be binding on the bank. Further detail about the complaints process will be provided in the principles governing the review of complaints relating to RBS’s Global Restructuring Group which we will make available on our website shortly: www.rbs.com/grg If you have any questions about this process please contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### I) What do you mean by direct losses? We will provide further clarification on direct losses in the principles governing the review of complaints relating to RBS’s Global Restructuring Group which we will make available on our website shortly: www.rbs.com/grg #### J) Will you consider claims for consequential loss?  In the event that a complaint is upheld through the complaints process, and the customer accepts the decision, the bank will consider any claim for consequential loss that the customer wishes to pursue, based on the findings. In considering any claim for consequential loss, the bank will apply established legal principles to determine whether the loss is factually and legally attributable to it. The process for consideration of claims for consequential loss will not be overseen by the Independent Third Party and there will be no right of appeal to the Independent Third Party in respect of consequential loss claims. Further detail about the complaints process will be provided in the principles governing the review of complaints relating to RBS’s Global Restructuring Group which we will make available on our website shortly: www.rbs.com/grg #### K) What is the role of the Independent Third Party?  The Independent Third Party will play a dual role: (1) provide assurance that the process and methodology for the complaints review are appropriate and provide a framework that enables a thorough and robust assessment of complaints both at the outset and on an ongoing basis; (2) operate the Independent Third Party appeals process. This will include: - where a customer appeals a decision made in the bank’s complaints review, assessing RBS’s actions that are the subject of the complaint having regard to certain standards - where the Independent Third Party decides it is appropriate, assessing and awarding compensation for direct loss, and - preparing a record of their decision in a short summary document and providing this to RBS and the customer. #### L) Do all customers that complain have access to the Independent Third Party appeal process?  All in-scope customers will have the right of appeal to the Independent Third Party. Customers that are not in scope will not be able to appeal to the Independent Third Party. #### M) Can I speak to the Independent Third Party directly?  No, that is not thought to be necessary. The Independent Third Party’s role is to provide assurance and oversight of the complaints process and operate the Independent Third Party appeals process. However, in exceptional cases where the Independent Third Party believes it is appropriate to do so, the Independent Third Party will have the option to ask a customer to provide evidence or arguments in person. There will be no obligation on the customer to provide evidence in person and deciding not to do so will not affect the Independent Third Party’s duty to deliver a fair outcome for the customer. Read more at [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) ### Automatic refund of complex fees #### A) How do you define an in-scope customer for the automatic fee refund?  A customer is in-scope for the automatic fee refund if you paid any of the fees being automatically refunded and meet **all **of the following criteria: - A small or medium-sized enterprise (SME) customer - During the period 2008-2013 - Under the control of GRG - A UK or Republic of Ireland customer #### B) Why are you reviewing the complex fees paid by SME customers in GRG?  GRG used a variety of different fees or pricing tools to reflect the increased cost of risk associated with customers in financial difficulty, and sometimes charged fees that our SME customers were not familiar with, either because they were not commonly used, or because they were a bespoke pricing instrument. For SME customers in GRG during the crisis, some of the complex fees charged were not properly communicated or were not explained clearly enough so we have decided to automatically refund them. This will save customers from further delay, ensure that we can start refunding fees more quickly and demonstrate our commitment to addressing issues of the past. #### C) How will the automatic refund of complex fees work?  There is nothing that you need to do. There are a number of steps in the process and we will be doing all of them proactively: - We will start sending letters to customers in the next few weeks to inform them that the fees they paid will be included in the fee review. - We will then review the fees paid by customers in GRG to determine whether or not they are one of the fees that we have agreed to refund (see list below). - Once we have completed the fee review, we will then write to customers to confirm any fee refunds that will be paid. - Refunds will be made automatically to the account of RBS customers. We will discuss with former customers the simplest way to pay any refund due. - We will pay interest on the refunded fees at the prevailing (credit or borrowing) rate applicable at the relevant time to the account which the fees were charged. #### D) When is this process going to start?  There is nothing that you need to do to start the automatic refund of complex fees. In the next few weeks, we will start sending letters to customers to let them know if they are included in this process. The GRG Customer Helpdesk is available to support customers from today. If you have any questions that have not been addressed in these FAQs, you can contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### E) When will this process be completed?  We will be working as quickly as possible to substantially complete the automatic fee refund. Our aim is to complete this part of the process during 2017. For customer complaints, the time required will vary for each customer depending on the nature and complexity of the complaint. We will ensure that customers are kept updated regularly and provide reasonable estimates of the time required in each case. #### F) What fees are being refunded?  During the period 2008-2013, a number of different names or terms may have been used to describe the fees charged. But the list below outlines the fee types charged to SME customers in GRG between 2008-2013 that are included in the automatic fee refund: - **Management / Monitoring Fees: **Fees charged to cover the increased costs incurred in relation to managing customers in restructuring situations. Usually this is a fixed amount per month / quarter. - **Asset Sales Fee: **Fee charged on the sale of an asset to reflect the bank’s increased risk profile such as in circumstances where the customer’s cash flow could not meet the increased margin required by the bank on an ongoing basis. - **Exit Fee: **Fee charged at the point of repayment to reflect the bank’s increased risk profile such as in circumstances where the customer’s cash flow could not meet the increased margin required by the bank on an ongoing basis. - **Mezzanine Fee: **Fee charged to reflect mezzanine risk (i.e. the debt level above the bank’s standard senior debt appetite), usually expressed as a percentage of the mezzanine debt level. - **Ratchet Fee: **Variable fee charged by the bank in relation to a repayment milestone. - **Risk Fee: **Fee charged to reflect an increased risk profile in continuing to support a customer for a period of time following an event of default or failure to agree a formal renewal of expired contractual facilities. - **Late Management Information (MI) Fee: **Fee charged for the late submission of management / financial information by the customer. #### G) Are Property Participation Fee Arrangements (PPFAs) and Equity Participation Arrangements (EPAs) included in this review?  Yes. The fees paid under PPFAs will be refunded. If the PPFA has not yet matured we will contact the customer to discuss releasing them from their obligations under the agreement. We will also contact customers to discuss the return of equity in relation to EPAs. #### H) Will all of my fees be refunded?  We are refunding the complex fees that were paid by SME customers in GRG during the period 2008-2013. Before making any payments in this regard, we will assess each customer’s circumstances on a case-by-case basis and exercise our legal and/or contractual rights of set off where it is appropriate to do so. For example, where we have made demand for repayment the refund will be credited to the current/loan account to reduce amounts outstanding. Where there is no default the customer will receive the full benefit of the refund. For former customers that no longer bank with any part of RBS, we will contact you to agree how any refund due will be paid. #### I) What fees are not being refunded?  - **Facility Fees: **These include Arrangement Fees, Facility Fees and Renewal Fees which are payable to the bank for arranging / amending / renewing new or existing facilities. These fees are usually paid upfront however depending on a customer’s cash flow these fees may be paid on a deferred basis, over an extended period of time or on refinance or exit or from surplus asset sales proceeds. - **Excess Fee: **Fee payable when the balance on a customer’s account is either: (a) overdrawn, with no formal facility in place; or (b) in excess of any agreed overdraft facility limits. - **Commitment Fee: **Fee payable that relates to the provision of a committed facility - **Covenant Waiver / Breach Fee: **Fee payable when a documented facility covenant has been breached. - **Security Fee: **Fee charged by the bank or re-charged via a third party to a customer to cover the cost of carrying out a legal review of security and / or facility documentation held. #### J) Will you be refunding the additional cost of margin increases?  Margins are part of standard banking practice and are not complex. Therefore, margins are not in scope for the automatic refund of complex fees. #### K) Can I receive an automatic refund if my company is dissolved?  Where a refund is due, you will need to reform the dissolved entity in order to receive the refund. #### L) What do I do if I’m not satisfied with the automatic fee refund process?  If you’re not satisfied with the automatic fee refund process you are able to complain under the new complaints process. If you would like to raise a complaint in relation to the automatic fee refund, please contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk [A complaints form can be found on our website: [PDF 96KB]](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2016/November/Complaints_form_editable.pdf) Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 ### Contact details #### A) Who can I speak to about this?  The new complaints process is for UK SME customers in GRG during the period 2008-2013. If you would like to contact us about any of the issues raised in our announcement you can contact the GRG Customer Helpdesk by email or phone. Email: GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 If you would prefer, you can also write to us using the postal address: GRG Customer Helpdesk, PO Box 71875, London. N1P 1WZ #### B) Is there a complaints form I can complete?  Yes. The [complaints form can be found on our website [PDF 96KB]](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2016/November/Complaints_form_editable.pdf) #### C) What are the opening hours for the GRG Customer Helpdesk?  The opening hours for the GRG Customer Helpdesk are 9am – 5pm. You can send an email at anytime to GRGCustomerHelpdesk@rbs.co.uk and we will aim to reply within 48 hours. #### D) Can I speak to my relationship manager about this?  There is no need for you to speak to your relationship manager. We will be proactively contacting customers to let them know if they are in scope. This is designed to be an independent process and our relationship managers have been told to direct any queries related to this announcement to the GRG Customer Helpdesk. Email: GRGCustomerHelpdesk@rbs.co.uk Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### E) What is the email address for queries and complaints?  Email: GRGCustomerHelpdesk@rbs.co.uk #### F) What is the phone number?  Alternatively you can call the helpdesk using one of the following numbers: Telephone: 0800 0294 370 or from abroad: +44 184 222 6142 Text Relay: 18001 0800 0294 370 #### G) Can I speak to the Independent Third Party directly?  No, that is not thought to be necessary. The Independent Third Party’s role is to provide assurance and oversight of the complaints process and operate the Independent Third Party appeals process. However, in exceptional cases where the Independent Third Party believes it is appropriate to do so, the Independent Third Party will have the option to ask a customer to provide evidence or arguments in person. There will be no obligation on the customer to provide evidence in person and deciding not to do so will not affect the Independent Third Party’s duty to deliver a fair outcome for the customer. ### FCA update and ongoing review #### A) What is the review the FCA is working on?  The FCA review of the historical treatment of SME customers in GRG remains ongoing.We are continuing to cooperate fully with the regulator and remain keen to understand any conclusions they will draw from the review and learn the lessons from that. It would not be appropriate to comment further until the FCA has finished its review and published conclusions.More information can be found on the FCA website:[https://www.fca.org.uk/news/press-releases/review-royal-bank-scotland-treatment-customers-referred-global-restructuring-group](https://www.fca.org.uk/news/press-releases/review-royal-bank-scotland-treatment-customers-referred-global-restructuring-group) #### B) Who are Promontory Financial Group and what is their role?  The FCA appointed Promontory Financial Group in 2014 to review RBS’s treatment of SME customers transferred to GRG between 2008 and 2013. The role is referred to as the skilled person and their final report was provided to the FCA in September 2016. #### C) Do you agree with the all of Promontory’s findings published by the FCA today?  We accept many of Promontory’s findings but there are a number of aspects where we have a different view. Irrespective of this, the complaints review process will enable customers to raise any issues they have in respect of their treatment in GRG during the period 2008-2013. Moreover, we believe changes we have already made address the vast majority of the concerns raised by Promontory. #### D) What is your response to the findings in relation to the widespread inappropriate treatment of customers?  We accept many of Promontory’s findings but there are a number of aspects where we have a different view. We have given a comprehensive response to the FCA in relation to the Promontory report and it would not be appropriate to comment further whilst the FCA review is ongoing. Irrespective of this, the new complaints process will enable customers to raise any issues they have in respect of their treatment in GRG during the period between 2008-2013. #### E) Does the FCA agree these steps answer fully the failings identified?  These actions have been developed with the involvement of the FCA who agree they are appropriate steps for the bank to take. #### F) Why haven’t the FCA announced the conclusions of their review?  The FCA shared details of next steps in their update:“The FCA is carefully considering the Report and other additional material. The activities carried out by GRG and addressed by RBS’s proposals are largely unregulated; therefore, the FCA’s powers are limited in this area.The FCA is currently assessing what further work may be needed given the findings in the Report. The FCA will provide a further update on this matter when it is in a position to do so.The FCA recognises the considerable interest in these issues and will publish a full account of its findings when practicable once our work is concluded.”The FCA update is available in full on their website:[https://www.fca.org.uk/news/press-releases/review-royal-bank-scotland-treatment-customers-referred-global-restructuring-group](https://www.fca.org.uk/news/press-releases/review-royal-bank-scotland-treatment-customers-referred-global-restructuring-group) #### G) Do I need to wait for the FCA review to be completed?  No. These actions have been developed with the involvement of the FCA who agree they are appropriate steps for the bank to take. [Download ‘RBS GRG Complaint form’ (specialist GRG solicitors can assist)](https://lexlaw.co.uk/wp-content/uploads/2016/11/GRG-Complaint-Form.pdf) [[PDF 96KB]](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2016/November/Complaints_form_editable.pdf)  [Download ‘RBS Restructuring Explained’ (formerly GRG)](https://lexlaw.co.uk/wp-content/uploads/2016/11/RBSRestructuringExplained-GRG.pdf) [[PDF 47KB]](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2016/November/RBSRestructuringExplained.pdf)  **LIMITATION WARNING:** Businesses that were or are affected by the restructuring or turnaround divisions of the major banks must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your right to compensation via legal channels. Legal rights can be reserved by instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings. Businesses affected and entitled to redress should take urgent legal advice from a [specialist solicitor experienced in bringing legal actions against RBS GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/). --- # The Lawyer: Dentons and RBS accused of non-disclosure of GRG files in High Court claim Source: https://lexlaw.co.uk/solicitors-london/lawyer-dentons-rbs-accused-non-disclosure-rbs-grg-files-high-court-claim/ *In yet [another example of disclosure wrongdoing](https://lexlaw.co.uk/solicitors-london/high-court-slams-dentons-and-rbs-for-cavalier-attitude-to-disclosure/), The Lawyer's [Tabby Kinder](https://www.thelawyer.com/author/tkinder/) reports that [Dentons](http://www.dentons.com/) and [RBS](http://www.rbs.com/) have been accused in the [High Court](https://www.judiciary.gov.uk/you-and-the-judiciary/going-to-court/high-court/) of deliberate non-disclosure of documents relating to the bank’s controversial Global Restructuring Group (GRG). The allegations were made by the claimant's solicitors in Wall v The Royal Bank of Scotland; the outcome of the application is awaited.* ## Non-disclosure allegations [According to The Lawyer magazine](https://www.thelawyer.com/dentons-rbs-accused-withholding-grg-documents-400m-claim/), the application containing the allegations was filed at court in early November and states that a secret cache of documents leaked to [BBC Newsnight](http://www.bbc.co.uk/news/uk-37591335) and Buzzfeed in October, known as the [“Dash for Cash” leaks](https://www.buzzfeed.com/heidiblake/dash-for-cash?utm_term=.pq1q2VWmG#.fsXBvO1YD), prove that *“RBS is in serious and substantial breach of its disclosure duties”* in the case of *Wall v RBS*. The leaked documents demonstrate that RBS and Dentons *“failed to disclose in these proceedings any or the majority of the high level documents which relate to the purpose, structure, organisation and management of GRG”*, according to the application. The evidence supporting the application is reported to state: > “It is difficult to understand how such wholesale non-disclosure can be other than deliberate”; > > “RBS’ approach to disclosure is disrupting an orderly process to trial”; > > “In light of the BBC/Buzzfeed documents, it is now possible to identify some of the obvious and core emissions from RBS’ disclosure”; and > > “What is required is a sea-change in RBS’ attitude to its disclosure obligations”. ## Legal claim against RBS GRG Businessman Stuart Wall is [reported](http://www.telegraph.co.uk/business/2016/05/07/rbs-faces-400m-claim-it-bullied-and-ripped-off-property-company/) to be suing the bank for [£700m](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2016/2460.html&query=(700)+AND+(million)) over claims RBS forced his business, Opal Property Group, into financial distress and subsequent administration. Wall’s business Opal Property Group was the largest private owner of student accommodation prior to it going to administration in spring 2013 following a lengthy restructuring attempt. The non-disclosure application was filed alongside a witness statement by a solicitor seen by [*The Lawyer*](https://www.thelawyer.com/), supporting the allegation of deliberate non-disclosure. The statement said RBS’s failure to disclose documents related to GRG and why his client’s business was put into GRG *“is far more serious than its failures during the PAG litigation”*. ## Previous Non-disclosure by RBS RBS and Dentons also came under fire for recent disclosure failings in the case *Property Alliance Group (PAG) v RBS. *The pair were [criticised by Mrs Justice Asplin for their “cavalier” attitude to disclosure](https://www.thelawyer.com/issues/online-august-2016-2/high-court-slams-dentons-rbs-cavalier-attitude-disclosure/) in the case, which also centres around claims of Libor manipulation and allegations relating to the operations of GRG in running down profitable businesses. Wall’s legal team received disclosure from RBS in August but now say the bank and its lawyers have declined to provide all the relevant documents. Its latest disclosure application is expected to be heard in December. ## What is RBS GRG? NatWest and RBS’s 'Global Restructuring Group', was a business support unit set up in the early nineties and was formerly known as 'Specialised Lending Services'. Following the credit crunch, GRG took control of 12,000 SME customers with £65 billion of assets. Following allegations of wrongdoing, GRG was disbanded in August 2014 and re-named 'Restructuring Group'. GRG is currently the subject of a regulatory investigation by the [Financial Conduct Authority](https://www.fca.org.uk/) with the final report on the probe expected to be published imminently. It emerged on Tuesday (8 November) that RBS will set aside £400m to repay businesses fees charged by the GRG division. ## What is Litigation Disclosure? [Part 31 of the Civil Procedure Rules 1999](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31) (as amended) set out the disclosure rules in full. Disclosure (formerly discovery) is a stage of litigation in which the parties disclose documentary evidence by list to each other. Only documents that are relevant because they support or undermine a parties case must be disclosed. Standard disclosure occurs after each party has set out its position in statements of case (formerly pleadings). ## Importance of Disclosure in Litigation Disclosure is a fundamental litigation process whereby, in summary, each party produces all documents they hold or have control over, which are relevant to the litigation regardless of whether they assist or harm their case. Lawyers, as officers of the court, are effectively tasked with ensuring their clients comply with disclosure obligations. The rules around disclosure are designed to ensure a fair and just outcome is reached in the litigation and that all relevant and disclosable documents are seen by both sides. Banks are not in a special class of litigant and must comply with the [CPR](https://www.justice.gov.uk/courts/procedure-rules/civil) like any other party to litigation and their legal advisors should ensure compliance. Unfortunately, this is *not* the first time that RBS and Dentons have failed in respect of adequate disclosure in litigation proceedings. ## Other examples of RBS Disclosure misconduct Firstly, in a recent unreported decision by Chief Master Marsh in the case of Chaudhry v. RBS [1] the bank were forced to redo their standard disclosure exercise and hand over documents relating to the bank’s FCA-agreed review over its past sales of Interest Rate Hedging Products (the IRHP Review). RBS and Dentons had wrongly argued and maintained that the documents generated by and held within the IRHP Review were not disclosable in a claim for the mis-selling of the same IRHP. The bank drafted in heavyweight silk, Adrian Beltrami QC, to rehearse this meritless argument at great cost. Secondly, RBS were also found, by the Court of Appeal in 2013, to to have deliberately and dishonestly failed to disclose relevant documents and thereby, remarkably, obtained judgment by fraud in the case of RBS v Highland Financial Partners [2]. It was held that RBS had misled their client, their own lawyers and the court. Thirdly, RBS’ conduct in litigation it pursued in Scotland against Derek Carlyle in 2010 (Royal Bank of Scotland Plc v Carlyle [2010] ScotCS CSOH_3) [3] was found by the Court of Session, per Lord Glennie, to fall far below the required standards. The learned judge said that that the Royal Bank of Scotland lacked “candour” in the proceedings, specifically in its deliberate failure to admit to key evidence in the Court of Session. In a debate in the House of Commons on March 10th, 2010 Carlye’s MP, Jim Hood (Labour, Lanark and Hamilton East) said: “If someone is described in a judge’s language as lacking candour, that might mean to some of us in the House that they were lying through their back teeth.” Fourthly, a Financial List judge, Asplin J, determined Dentons and Royal Bank of Scotland to be *“cavalier”* in failing to comply with a disclosure order handed down last year in the case of* Property Alliance Group Limited v Royal Bank of Scotland *[4]. Asplin J was *“particularly concerned”* about RBS’s failure to comply with a previous disclosure order that required RBS’s lawyers to hand over around 25 million documents made up of *“high level”* internal reports, reviews and summaries relating to the allegations of Libor misconduct. ## No change in culture at RBS? The 2013 Highland Financial Partners judgment, which followed the 2010 judicial comments in the Scottish Court of Session in RBS v Carlyle, raised grave doubts about the culture of RBS and its approach to litigation. Both the recent order of Chief Master Marsh in Chaudhry v RBS [1] and the recent judicial comments made by Asplin J in PAG v RBS [4] and now the application made in the Wall v RBS litigation [5] suggest that nothing has changed in the culture at RBS. — FOOTNOTES: [1] [Mehnaaz Chaudhry & Another v. The Royal Bank of Scotland PLC (High Court of Justice, Chancery Division, Claim No: HC-2013-000489)](https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/) [2] [The Royal Bank of Scotland Plc v. Highland Financial Partners LP [2013] EWCA Civ 328](http://www.bailii.org/ew/cases/EWCA/Civ/2013/472.html) [3] [Royal Bank of Scotland Plc v Carlyle [2010] ScotCS CSOH_3](http://www.bailii.org/cgi-bin/format.cgi?doc=/scot/cases/ScotCS/2010/2010CSOH3.html) [4] [Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2015] EWHC 322 (Ch) (19 February 2015)](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2015/322.html) [5] [Wall v The Royal Bank of Scotland Plc [2016] EWHC 2460 (Comm)](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2016/2460.html) --- # Flaws in RBS ‘New Complaints Process’ and ‘Complex Fee Refund’ – RBS GRG West Register compensation scheme examined Source: https://lexlaw.co.uk/solicitors-london/rbs-new-complaints-process-and-complex-fee-refund-grg-compensation-scheme-fca-review/ *Royal Bank of Scotland Plc (RBS) have announced a New Complaints Process and Complex Fee Refunds for SME customers who were in their GRG division between 2008 to 2013. However, this process has serious flaws - t**hose businesses that went into insolvency as a result of RBS GRG or West Register may only participate via an Insolvency Practitioner, f**ormer shareholders and directors have no rights in this so-called new complaints process, and there will be no independent scrutiny of how RBS handles consequential loss claims.* *The GRG compensation scheme is clearly flawed but, remarkably, appears to have been approved and backed by the Financial Conduct Authority (FCA) who have not yet reported their findings and which findings RBS have announced they do not accept. When the [FCA's Andrew Bailey](https://www.fca.org.uk/media/andrew-bailey-chief-executive) was appointed CEO in April, [FCA Chairman John Griffith-Jones](https://web.archive.org/web/20180315022928/https://www.fca.org.uk/about/fca-board/john-griffith-jones) said to the parliamentary Treasury Committee that there were [lessons to be learned](https://www.moneymarketing.co.uk/fca-to-review-how-it-runs-redress-schemes/) from previous redress schemes. However, the lessons have been learned by [RBS's Mark Spurin](https://lexlaw.co.uk/solicitors-london/grg-review-rbs-mark-spurin-minimise-grg-review-compensation-payouts-smes/) (the controversial head of RBS' GRG remediation project) and not by the FCA who have backed a compensation scheme which is obviously designed to limit redress to SME victims.  * ## What is GRG and what did it do wrong? NatWest and RBS’s ‘Global Restructuring Group’ was a business support unit set up in the early nineties and was formerly known as ‘Specialised Lending Services’. Following the credit crunch, GRG took control of 12,000 SME customers with £65 billion of assets. Amid allegations of wrongdoing, GRG was disbanded in August 2014 and re-named ‘Restructuring Group’. Customers expect that they will be treated honestly and responsibly by their banks. While they expect banks to make profit from lending, they do not expect banks to take money by seizing control of customer assets and businesses in a 'Dash for Cash'. Unfortunately, as reported by the Tomlinson Report, BBC Newsnight, Buzzfeed UK and The Times, bank business support units such as RBS GRG did precisely that. ## RBS Ignored Auditor's Conflict of Interests Warnings GRG were well aware there was a massive conflict of interest in what it was doing, in particular with respect to West Register acquiring customer assets, and their external auditors, Deloitte, warned them against such conduct**[1]**. However, RBS was intent on reducing its loan book to improve its capital adequacy by raising cash and in that ‘Dash for Cash’**[2]** process profiting from customers. RBS was bailed out by the taxpayer which makes its misconduct all the more unconscionable. In one of the many GRG cases this firm is acting on, RBS seized 80% of a family-owned business built up over three decades and, while the family lost their business and livelihood, RBS made a huge £9 million net profit. ## Saving Billions: RBS’s New Complaints Process & Complex Fee Refund compensation scheme Remarkably [RBS is advertising its so-called “New Complaints Process” and “Complex Fee Refund” scheme via paid Google AdWords](https://twitter.com/LEXLAWuk/status/796047611925069824). RBS is not doing this for altruistic public service reasons but because their scheme will save them significant redress and no doubt be delayed to allow legal rights to become time-barred. Examining the provisions set aside for this misconduct by RBS reveals the scheme will minimise redress payments and save RBS billions of pounds. ## RBS's Inadequate £400m GRG Provisions Of the £400 million set aside by RBS, it is understood that automatic complex fee refunds amount to £200 million while £100 million will be expended on considering complaints, leaving only £100 million to compensate customers, which is clearly inadequate. In the IRHP review scheme, RBS provisioned £50 million in 2012 but by 2016 had spent at least £1.5 billion, which is a 2900% increase, which highlights that RBS often initially provisions misconduct compensation at a mere fraction of the true liabilities. The sum provisioned by RBS is inadequate if fair and reasonable redress is intended for the 12,000 SME victims but will be sufficient if RBS intend to avoid properly putting right their past wrongs. ## Failings in RBS GRG Compensation Scheme The compensation scheme announced by RBS**[3]** appears to have been, somehow, informally approved by the Financial Conduct Authority**[4]** even though it is clearly inequitable as: - it will not deal with the victims of GRG and West Register misconduct who no longer have control of their businesses**[5]** (who are often former shareholder and director stakeholders in the business ousted by the actions of RBS);- while it is advertised as a “New Complaints Process”, RBS will refuse to deal with any customers who have already made ‘old’ complaints**[6]** via the Financial Ombudsman Service or the courts or who have threatened litigation (there is no regulatory precedent for such exclusions);- RBS does not accept a number of Promontory’s findings**[7]**(which are effectively the FCA’s findings) but will instead self-assess the customer’s complaint, with none of the FCA nor Promontory nor any skilled person playing any role or having any impact whatsoever on RBS's decision on how to deal with its own wrongdoing (save that appeals, over direct losses only, may be made to the independent third party); and- the scheme is purposefully designed to evade any independent third party or FCA review that might ensure proper consequential losses are paid to affected businesses, which will no doubt save RBS billions of pounds of redress truly owed to GRG and West Register victims (as well as millions of pounds arguing over inequitable redress proposals with skilled persons). ## No Consequential Loss Oversight: RBS Avoiding Fair GRG Redress to SMEs In most GRG cases, consequential losses will form the vast majority (if not the entirety) of the losses incurred, and consequential loss claims in the "New Complaints Process" should be determined based on established legal principles. When announcing the scheme, RBS trumpeted that it would be overseen by retired High Court judge Sir William Blackburne. However, Sir William will inexplicably be completely excluded from RBS's decision-making process on consequential loss claims [**[8]**](https://lexlaw.co.uk/solicitors-london/rbs-new-complaints-process-and-complex-fee-refund-grg-compensation-scheme-fca-review/#_ftn8). As a result, RBS's decisions on consequential losses will not be scrutinised or capable of being overturned by anyone independent at all. The absence of independent scrutiny or the ability to appeal to the judge over RBS's consequential loss decisions is likely to minimise both compensation to affected businesses and the costs of the "New Complaints Process" itself. As such, the consequential loss aspect of the "New Complaints Process" is flawed and, in the absence of explanation from RBS appears to amount to an unfair process, given that determining consequential loss based on established law is clearly a judicial role. ## Evading Independent Challenge to Save £Billions redress? RBS's experience of the IRHP review process helps to explain why RBS has excluded any independent challenge to its decision-making on consequential losses in the GRG “New Complaints Process”. We understand that, in the IRHP review process, RBS sometimes faced and continues to face challenges to its decisions from law firms and regulatory compliance consultants acting as skilled persons (also known as “Independent Reviewers”). If RBS did not like the decision of one skilled person, it would shop around amongst their other skilled person organisations in order to find an “Independent Reviewer” that would approve the RBS decision and therefore achieve a less costly outcome for the bank and deny the customer redress. It seems that the “New Complaints Process” is designed to save RBS billions of pounds of redress, particularly given that RBS routinely denied redress in the IRHP review scheme to thousands of customers, often by claiming that customer losses were suffered by virtue of their placement in GRG or due to West Register, which issues were said to be outside the scope of the IRHP review. Now, when it is time to consider the impact of GRG and West Register wrongdoing, RBS’s decisions will not be scrutinised by anyone independent at all. RBS seem to have learnt from recent review experiences and carefully devised their “New Complaints Process” in an effort to possibly minimise the economic costs not only of compensation but of the regulatory review itself. The compensation scheme seems set to possibly minimise compensation on a massive scale. It is possible that RBS are spending millions to save the billions of pounds of redress owed to GRG customers. ## Has Mark Spurin created a GRG Customer Redress Scheme that evades true redress, yet is FCA-backed? This process of lowering the cost of true compensation is consistent with the pattern of a previous voluntary misconduct review scheme led by RBS’s Mark Spurin, who is now leading the GRG resolution process**[10]**. In May 2016, [The Times newspaper's City Editor, Harry Wilson warned that Mark Spurin](http://www.thetimes.co.uk/article/rosetta-executive-set-to-receive-rbss-next-wave-of-compensation-claims-wkc3lnqwf), the former head of Project Rosetta (the IRHP review scheme), was being put in charge of a programme to look at victims of its global restructuring division: > "The appointment of Mr Spurin to the sensitive role could raise questions, given complaints about RBS’s handling of the previous scheme. Rosetta has been criticised by victims and politicians for failing to properly compensate individuals and businesses who had their livelihoods destroyed by the mis-selling of complex interest rate derivatives. Mr Spurin was in charge of Project Rosetta until late last year. While many banks have been criticised about their own schemes, RBS has faced more questions than others as it was the largest seller of interest rate hedging products to small and medium-sized businesses." > > **Harry Wilson, City Editor, The Times** In their past self-review of sales of interest rate hedging products (IRHPs), RBS minimised redress payments to SME customers. In those cases, thousands of RBS customers, based on data released by the FCA,**[11]** found that they had inadequate redress offers but had lost their right to commence legal action as they failed to protect their legal rights in time. ## RBS Delays Result in Time-bar of SME Litigation By discouraging customers from bringing litigation and operating a dilatory complaints process, the majority of legal claims faced by RBS will become time-barred. This aspect of RBS's voluntary misconduct correction schemes leaves the customer with no avenue of legal appeal when such schemes are delayed (as is often the case). Those customers whose legal rights have lapsed may find themselves in disagreement with RBS’s decision and in the position that they can only complain to the Financial Ombudsman Service. The FOS often refuse to accept jurisdiction for most SME businesses and when they do act for micro-enterprises, there is a compensation ceiling of just £150,000. RBS have made (and will continue to make great play) of their appointment of Sir William Blackburne as a so-called ‘Independent Third Party’**[9]** but the true test of the learned judge's robustness will be whether he exercises judicial fairness by automatically protecting customers' legal rights from any time-bar while their complaints are being considered by RBS. However, we suspect that the Judge will be powerless in this regard. Victims of GRG must protect their legal rights, something that can usually be done for a relatively low cost via a standstill agreement or by issuing protective proceedings. -- **FOOTNOTES** [1] Deloitte’s 2012 Management Letter [https://www.documentcloud.org/documents/3127477-RBSG-Non-Core-and-GRG-DRAC-Management-Letter.html#document/p8/a321211](https://www.documentcloud.org/documents/3127477-RBSG-Non-Core-and-GRG-DRAC-Management-Letter.html#document/p8/a321211) via Heidi Blake, BuzzFeed. [2] See the 10 October 2016 Buzzfeed article: ‘The Dash For Cash: Leaked Files Reveal RBS Systematically Crushed British Businesses For Profit’ at [https://www.buzzfeed.com/heidiblake/dash-for-cash](https://www.buzzfeed.com/heidiblake/dash-for-cash) [3] See ‘RBS Launches a New Complaints Process and Refund of Complex Fees for SME customers in GRG’ at: [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) [4] “The steps we have announced have been developed with the involvement of the FCA who agree these actions are appropriate steps for us to take now." per [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) [5] “Can I complain if my company is insolvent?  Yes, you can complain. However, we are only able to deal with the officials of the company presently appointed and listed at Companies House. So you will also need to engage with the relevant person at the Administrator or Liquidator should you wish to complain” per [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) [6] “Are there any reasons why you won’t review my complaints? Yes. The review process is not appropriate for complaints that have previously been the subject of a decision by the Financial Ombudsman Service (FOS) or of the courts. It also may not be appropriate to consider complaints from customers in ongoing litigation against the bank or who have threatened litigation in formal Letters Before Claim unless the customer and RBS agree to stay those proceedings while the complaint is being considered” per [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) [7] “We accept many of Promontory’s findings but there are a number of aspects where we have a different view.” per [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) [8] “The process for consideration of claims for consequential loss will not be overseen by the Independent Third Party and there will be no right of appeal to the Independent Third Party in respect of consequential loss claims” per [https://www.rbs.com/rbs/news/2016/11/GRG.html](https://www.rbs.com/rbs/news/2016/11/GRG.html) [9] Sir William Blackburne. RBS claim that “*Sir William’s appointment as Independent Third Party adds a robust, transparent and independent step to the complaints process, should SME customers who were in GRG wish to complain about their treatment or challenge the bank’s decision on a previous complaint.*” [10] See Harry Wilson’s Times article ‘Rosetta executive to review RBS Global Restructuring Group claims’ at [http://www.thetimes.co.uk/article/rosetta-executive-set-to-receive-rbss-next-wave-of-compensation-claims-wkc3lnqwf](http://www.thetimes.co.uk/article/rosetta-executive-set-to-receive-rbss-next-wave-of-compensation-claims-wkc3lnqwf) and also [https://lexlaw.co.uk/solicitors-london/grg-review-rbs-mark-spurin-minimise-grg-review-compensation-payouts-smes/](https://lexlaw.co.uk/solicitors-london/grg-review-rbs-mark-spurin-minimise-grg-review-compensation-payouts-smes/) [11] [https://www.fca.org.uk/publication/data/aggregate-progress-final.pdf](https://www.fca.org.uk/publication/data/aggregate-progress-final.pdf) --- # Court of Appeal grant permission to appeal based on LIBOR and Negligent IRHP Review arguments Source: https://lexlaw.co.uk/solicitors-london/court-appeal-permission-ww-property-investments-national-westminster-bank-rbs-natwest-libor-suremime-negligent/ *The [Court of Appeal](https://www.gov.uk/courts-tribunals/court-of-appeal-civil-division), the highest court within the Senior Courts of England and Wales, has granted permission to appeal to the Claimant in [WW Property Investments Ltd v National Westminster Bank Plc [2016] EWCA Civ 1142 (29 November 2016)](http://www.bailii.org/ew/cases/EWCA/Civ/2016/1142.html). The case represents welcome news for those customers that were [mis-sold interest rate derivatives](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) and have been short-changed by inadequate offers of [IRHP Review redress](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) and consequential loss offers from major banks such as RBS, NatWest, Barclays and Lloyds. Such customers should take [legal advice on financial services litigation](https://lexlaw.co.uk/) promptly in order to potentially benefit from this decision.* ## LIBOR Manipulation & Negligent Conduct of the FCA IRHP Review The Court of Appeal heard an application by WW Property Investments Limited to appeal from a [decision of HH Judge Roger Kaye QC on 1 March 2016](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/QB/2016/378.html) whereby he struck out the entirety of its claim against [National Westminster Bank plc](http://www.natwest.com) (NatWest) and refused it permission to add a new claim. While the Court of Appeal agreed with the judge at first instance that the appellant had no real prospect of persuading the court that collar and swap agreements were wagers, the Lord Justices of Appeal granted permission to appeal because they considered arguments around [LIBOR manipulation](https://lexlaw.co.uk/solicitors-london/libor-fraud-manipulation-rigging-misselling-swaps-derivatives-irhp-litigation-limitation/) and the [negligent conduct of the IRHP review scheme](https://lexlaw.co.uk/solicitors-london/suremime-v-barclays-irhp-review-agreement-fca-banks-misselling-swaps-tort/) to be arguable. In granting permission to appeal, the learned Lord Justices of Appeal opined favourably as to the arguability of: - the existence of an implied term that the bank would not manipulate LIBOR; - the existence of an implied representation that the bank had not in the past and would not in the future manipulate LIBOR; and - the bank being potentially liable for negligent conduct of the FCA-agreed IRHP Review scheme (per the judgment in Suremime v Barclays Bank plc) ## High Court Litigation: WW Property Investments v NatWest Bank The customer had borrowed money from the bank and had entered into four interest rate hedging derivatives contracts. The first three derivatives were collars and the fourth was a swap. NatWest / RBS carried out an Interest Rate Hedging Product Review agreed with the FCA. The collars were categorised as category A products resulting in automatic provision of some redress. The customer accepted offers in respect of the collars for basic redress but its claim for consequential losses was rejected by the bank (as is often the case). The swap was categorised as a category B product and on assessment the bank determined that no redress was due. As a consequence, the customer brought claims against NatWest seeking further redress and the bank applied to strike out a proposed amendment to the claims. The lower court judge found that the claims in respect of the collars had all been compromised by the binding settlement agreements and that its claim for consequential losses had been rejected so that claims could only be maintained in relation to the swap agreement. The lower court judge rejected the argument that the collars and the swap were wagering contracts which were invalid due to unequal knowledge. He further found that the customer's claim that the bank manipulated LIBOR was incoherent and refused to permit the claimant to amend to plead that the bank had assumed a duty of care to carry out the Review scheme diligently again on the basis that the pleadings were incomprehensible. ## Claiming Consequential Losses in Court after the IRHP Review Whether the claims in respect of the collars had been compromised by reason of the acceptance of basic redress in the IRHP Review was not as clear-cut as the lower court judge envisaged. The bank's outcome determination and offer letter stated that the customer was entitled to claim for [consequential losses incurred as a result of the Review](https://www.fca.org.uk/consumers/interest-rate-hedging-products/claims-consequential-loss) and that if the bank determined that the customer was entitled to consequential losses it would pay them separately. It did not say that such a determination was conclusive or that there could be no further claim. It was arguable with a realistic prospect of success that the words of the compromise did not have the effect relied on. > 15. Whilst I see the force of that contention, it does not seem that matters are as clear-cut as that. The exception from the compromise is that it is subject to "the qualifications in the tax and consequential loss sections of the offer letter of 15 August 2014 permitting" WW "to claim for Consequential Losses you have incurred as result of the IRHP". The letter indicates that it is open to WW to make such a claim and that, if NatWest determined that WW was entitled to additional redress for Consequential Loss it will pay this amount separately. But it does not say that any such determination will be conclusive; or that, if NatWest does not make such a determination, there can be no further claim. I regard it as arguable with a realistic prospect of success that the words of the compromise do not have the effect relied on and that if NatWest wanted to exclude any such claim following an adverse determination by itself it needed to have used clearer words than it did. > > > > > > **Lord Justice Christopher Clarke** ## Court of Appeal Judgment in Summary (per LJ Clarke:) > 71. I would regard it as arguable that it was an implied term of the swap that NatWest would not manipulate the GBP Libor rates used to calculate obligations under it i.e. one month GBP Libor; but not that it would not do so in relation to some rate that had nothing to do with the obligations under the Swap or that it had not done so in the past in relation to any LIBOR rates.** I also regard as arguable in the light of *Graiseley Properties Limited v Barclays Bank PLC* [2013] EWCA Civ 1372 Deutsche Bank v Unitech that there was an implied representation that NatWest had not in the past and did not intend in the future to manipulate any LIBOR rates.** > > > > > > 77. WW sought by amendment to introduce a claim, in paragraph 13.1, that NatWest assumed a duty of care towards WW to carry out the Review diligently, and to take proper account of all the evidence affecting WW's entitlement to redress as provided for by the terms of the Review, taking account of NatWest's compliance with the Sales Standards i.e. what it should do when it sold a hedging product. A number of specific breaches are pleaded at paragraph 16. These asserted a failure on the part of NatWest to consider adequately or at all evidence as to its own breaches of its Sale Standards. The losses alleged to follow are set out in para 18 and include all payments under the Swap plus substantial consequential losses. > > > > > > 78.** There is in my view a reasonable prospect of establishing that NatWest owed WW a duty of care of the type relied on and this court has recently given permission to appeal against the contrary decision of Judge Bird in *CGL Group Ltd v Royal Bank of Scotland* [2016] EWHC 281.** > > > > > > 86. Consideration should be given to listing this appeal to be heard with *CGL Group Ltd v Royal Bank of Scotland* [2016] EWHC 281. ## Impact of the Court of Appeal IRHP Permission Judgment It is noted that these arguments extend the period for limitation of many swaps mis-selling claims allowing those that may otherwise be time-barred to consider legal proceedings. Furthermore, those customers that have rejected redress in the IRHP Review scheme may well consider bringing action for negligent conduct of the review. Any eventual decision is likely to adversely affect some major banks that operated an IRHP Review into their past sales of interest rate hedging products. RBS and NatWest are likely to be most affected given their redress outcomes that many RBS customers perceived to be inadequate. Barclays Bank have also determined some of their IRHP reviews in an illogical manner, in particular in our case of [Pinn Medical Centre v Barclays](https://lexlaw.co.uk/solicitors-london/barclays-sued-4m-gps-derivatives-mis-selling-litigation-irhp-swaps/) (which was recently [reported in the Sunday Times under the headline of "Barclays sued for £4m by GPs"](http://www.thetimes.co.uk/article/barclays-sued-for-4m-by-gps-qpjrwl8jj)). > Though Barclays Bank finally accepted, via the FCA-approved compensation scheme, that it had mis-sold the [27-year, £4.5m notional rollercoaster] swap, it went on to state that it believed the doctors would have taken the product regardless and for that reason, has so far refused to offer redress to them. > > > > > > **[Vedanta Hedging](http://www.vedantahedging.com/gps-sue-barclays-bank-over-mis-selling-swaps/) **- on *Pinn v Barclays* litigation case The learned Lord Justices recognised the importance of allowing SME victims of bank mis-selling who are dissatisfied with Review offers to consider taking legal action. The types of IRHP Review cases affected are those with the following outcome determinations: - mis-selling admissions by the bank but no redress offered at all - mis-selling admissions but alternative product leads to negative redress outcome - swap for swap offers minimising redress - collar for collar offers (such as those offered in [Chaudhry v RBS](https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/)) - long term caps which reduce redress (see [4 December 2014 parliamentary debate on the FCA redress scheme](http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141204/debtext/141204-0002.htm#14120439000001) in particular at Hansard 4 Dec 2014 : Columns 480 and 481). - unreasonable consequential loss refusals Negligent conduct of the review is a private law cause of action, first set out in the case of [Suremime v Barclays](https://lexlaw.co.uk/solicitors-london/suremime-v-barclays-irhp-review-agreement-fca-banks-misselling-swaps-tort/) (a case we understand to have settled). Major banks have argued against such a remedy but the Court of Appeal have approved it as arguable. This remedy is likely to be attractive to claimants as it can become part of an overall mis-selling claim, in which the bank has often already made admissions of wrongdoing in the IRHP Review scheme. Furthermore, this particular cause of action would not be subjected to the banks’ usual [contractual estoppel](https://web.archive.org/web/20190215011537/http://www.nortonrosefulbright.com:80/knowledge/publications/129033/contractual-estoppel-in-mis-selling-claims) defence, in which they seek to rely on standard non-advisory and non-reliance clauses to prevent claimants from alleging that banks provided advice (even though they did provide advice). In relation to the importance placed by banks on their non-advisory and non-reliance clauses, please see the judgment of Tim Kerr QC in [Crestsign v National Westminster Bank PLC & the Royal Bank of Scotland PLC](http://www.bailii.org/ew/cases/EWHC/Ch/2014/3043.html) (which went to appeal to the Court of Appeal but was settled by the wrongdoer banks before the appeal could be heard). This decision also avoids the limitation or time-bar hurdles that face most swaps mis-selling claims where the derivatives product in question was sold over six years ago (although such obstacles are not necessarily insurmountable, as demonstrated in the case of [Kays Hotel Limited v. Barclays Bank PLC](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/)). Any similarly affected SMEs should obtain [legal advice in respect of their own IRHP review outcome decisions](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) as soon as possible. *LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.* --- # GRG WestRegister took 80% Equity in Bowlplex – Cost Owners £50m; while RBS Profited £9m Source: https://lexlaw.co.uk/solicitors-london/grg-westregister-took-80-equity-in-bowlplex-cost-owners-50m-while-rbs-profited-9m/ - **RBS has been accused of deliberately destroying small businesses** - **In the past five years, LexLaw has issued more High Court litigation over bank misconduct than all other law firms in the UK** By [VICKI OWEN FOR THE MAIL ON SUNDAY](http://www.thisismoney.co.uk/home/search.html?s=&authornamef=Vicki+Owen+For+The+Mail+On+Sunday) PUBLISHED: 21:51, 3 December 2016 | UPDATED: 12:29, 4 December 2016 The storm surrounding Royal Bank of Scotland's controversial turnaround division, Global Restructuring Group, has helped drive a business boom for a law firm specialising in small business banking disputes, which has been named the fastest-growing in England and Wales. The accolade for LexLaw came from business intelligence company Plimsoll Publishing, and founder Ali Akram said most of his firm's business banking cases were against RBS. In the past five years, LexLaw has issued more High Court litigation over bank misconduct than all other law firms in the UK, he said. Akram said: 'We've really focused on it. As a result, the firm is financially the fastest-growing law firm in England and Wales. In the first year, from April 2013 when we converted to a limited company, we were the third fastest-growing.' [![GRG Litigation Solicitors London](https://lexlaw.co.uk/wp-content/uploads/2016/12/Bowlplex-RBS-GRG-WestRegister-Litigation-Solicitors-LEXLAW-London-UK.png)](https://www.google.com/url?sa=i&url=http%3A%2F%2Fwordpress-470769-1479668.cloudwaysapps.com%2Fsolicitors-london%2Fgrg-westregister-took-80-equity-in-bowlplex-cost-owners-50m-while-rbs-profited-9m%2F&psig=AOvVaw1ZAiPucBJRluvXGCU5MhqP&ust=1584863700595000&source=images&cd=vfe&ved=0CAIQjRxqFwoTCNDg78CLq-gCFQAAAAAdAAAAABAE)Control: RBS held Bowlplex equity He said LexLaw's compound annual growth was 163 per cent, adding: 'We've dealt with so many of these cases. And when the banks settle they have to pay towards the legal costs.' City-based LexLaw turned over £2.95million last year. Former Government adviser Lawrence Tomlinson's report claimed RBS, through GRG, had artificially distressed viable firms to push them into insolvency. The suggestion was made that one reason was to allow its own West Register division to acquire assets at discounted prices. The Financial Conduct Authority announced a review of these allegations in January 2014. A report, expected in 2015, has not yet been published. A summary update from the FCA cleared RBS of artificially causing the transfer of customers to GRG and profiting from their distress. RBS set up a 'new complaints process' on November 8 but Akram claimed it will spend millions to avoid paying billions of pounds owed. His clients have included Bowlplex, a family business set up in 1976 by husband and wife Tony and Verna Standish in Poole, Dorset. In 2008 and 2009, the bowling industry suffered a downturn. Bowlplex expected to trade through the recession, with RBS's support, but the bank transferred it to GRG in 2010. Tracy Standish, who took over the management in 1986, said: 'Our bowling business had been growing for 25 years and the family, and no doubt RBS, knew we had a very viable business with top-quality locations that would bounce back with the economy. 'The bankers at GRG were intent on charging large complex fees and elevating interest rates and, unbelievably, extracting equity from us. 'Within a short time it became clear the bank was out to take control of the firm. This was communicated by RBS West Register, who said they would take 80 per cent of our equity to maintain support.' RBS, through GRG and West Register, obtained 80 per cent of Bowlplex's equity. It wrote off £4.45million of debt. West Register received almost £14million on the sale of Bowlplex. Standish said: 'Even when the business was sold it was not done so openly, in a way which ensured full value was obtained. As a result of the bank's actions, we were deprived of a business that the family and RBS knew would bounce back to be worth some £60million, which it has.' RBS declined to comment. It has said it let some customers down but denied deliberately causing them to fail. [https://www.thisismoney.co.uk/money/smallbusiness/article-3997128/RBS-scandal-helps-fastest-growing-law-firm-LexLaw-hit-3m.html](https://www.thisismoney.co.uk/money/smallbusiness/article-3997128/RBS-scandal-helps-fastest-growing-law-firm-LexLaw-hit-3m.html) --- # Petition: Establish a Financial Services Tribunal to resolve customer disputes. Source: https://lexlaw.co.uk/solicitors-london/petition-financial-services-tribunal-resolve-bank-customer-litigation-disputes/ *Major banks and other financial services institutions are often in dispute with customers who deserve protection. Access to court is costly. The FOS ombudsman scheme is inadequate. The FCA is not equipped to resolve disputes. Tribunals offer scrutiny, justice and censure which deters misconduct.* ## Support the Petition for a Financial Services Tribunal Major banks and other financial services institutions, who are all legally and financially sophisticated, are far too often locked in complex financial disputes with customers. Such disputes are often difficult for the financial services regulator and ombudsman to resolve and beyond their capability and true remit. Only a tiny fraction of financial services disputes are ever litigated and the vast majority of good litigation cases settle which means there is a lack of meaningful court precedents to force financial services institutions to deal with customer disputes fairly, particularly where those disputes have £multimillion financial values. This leaves a vacuum for a Financial Services Tribunal which could offer not only judicial scrutiny over the financial services industry but also provide a sense of justice for customers who might finally get their 'day in court'. Access to the court system is costly and therefore risky for most SMEs however there is little real costs risk for most financial services institutions, for example RBS which has a market capitalisation in excess of £25 billion. The FOS financial ombudsman scheme is inadequate because it is designed to be simple and to deal with simple disputes with a low financial value of less than £150,000. The FCA is a regulator and was never mandated to be an arbiter of disputes is therefore completely unequipped to resolve disputes in spite of its mandate to protect consumers. The failed FSA-backed IRHP scheme in which banks were allowed to determine compensation for their own wrongdoing and the flawed recently announced RBS GRG scheme, which adopts the same self-determined compensation flaw, each highlight the justice gap that UK SMEs currently face. Perhaps most importantly for every member of the public is that almost all of us have relationships with financial services institutions and public censure by a Financial Services Tribunal would inevitably deter future misconduct. [Please click here to register your support for this petition at the UK Government site.](https://petition.parliament.uk/archived/petitions/175642) M Ali Akram, LEXLAW Middle Temple, City of London --- # The Times: Lawyers launch petition for financial mis-selling tribunal Source: https://lexlaw.co.uk/solicitors-london/lawyers-launch-petition-financial-mis-selling-tribunal/ [The Times Brief reports](http://nuk-tnl-deck-email.s3.amazonaws.com/11/34e420f6e47d96669897a45586997a57.html) that [we have launched an online petition in an attempt to apply public pressure on banks to settle compensation claims for financial product mis-selling](https://lexlaw.co.uk/solicitors-london/petition-financial-services-tribunal-resolve-bank-customer-litigation-disputes/). The petition launched on Friday calls on the government to create a financial services tribunal that would resolve "customer disputes". [![City of London Lawyers-launch-petition-for-financial-mis-selling-tribunal-LEXLAW-SOLICITORS-LONDON-BANK-LITIGATION](https://lexlaw.co.uk/wp-content/uploads/2016/12/Lawyers-launch-petition-for-financial-mis-selling-tribunal-LEXLAW-SOLICITORS-LONDON-BANK-LITIGATION.jpg)](https://lexlaw.co.uk/solicitors-london/lawyers-launch-petition-financial-mis-selling-tribunal/lawyers-launch-petition-for-financial-mis-selling-tribunal-lexlaw-solicitors-london-bank-litigation/)Time Brief report: 'Lawyers launch petition for financial mis-selling tribunal' Behind the campaign is LEXLAW, a firm of solicitors and barristers based in Middle Temple. It is acting for Wenta – whose chairman won the Queen's Lifetime Achievement for Enterprise Promotion last year – which claims that RBS has failed to pay up for [allegedly mis-selling a complicated financial product](http://links.info2.news.co.uk/ctt?kn=12&ms=MTEwNTgxNQS2&r=MTcxODg4MzgxMDAS1&b=0&j=NjkwMzc4NjQ1S0&mt=1&rt=0) that went wrong. The petition states that: > "major banks and other financial services institutions are often in dispute with customers who deserve protection. Access to court is costly. The Financial Ombudsman scheme is inadequate. The Financial Conduct Authority is not equipped to resolve disputes. Tribunals offer scrutiny, justice and censure which deters misconduct." LEXLAW opened the petition after a debate on Friday of a private member's bill in the House of Commons in which MPs were encouraged to support the creation of a ["commercial financial dispute resolution platform"](http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CDP-2016-0247) "Only a tiny fraction of financial services disputes are ever litigated," [Mr M Ali Akram, principal lawyer at LEXLAW](https://lexlaw.co.uk/our-people/m-ali-akram/), said. "And the vast majority of good litigation cases settle, which means there is a lack of meaningful court precedents to force financial services institutions to deal with disputes fairly." [SUPPORT THE PETITION FOR A FINANCIAL SERVICES TRIBUNAL](https://petition.parliament.uk/archived/petitions/175642) --- # Court of Appeal to consider permission to appeal in PAG v RBS Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-to-consider-permission-to-appeal-in-pag-v-rbs/ *[Property Alliance Group Ltd](http://www.propertyalliancegroup.com/) (“PAG”) has recently filed leave to appeal to the Court of Appeal against a [decision of Mrs Justice Asplin in the High Court in December 2016](http://www.bailii.org/ew/cases/EWHC/Ch/2016/3342.html).* The underlying litigation, the outcome of which is being appealed, centred on: - Claims of mis-selling of interest rate swaps by the [Royal Bank of Scotland PLC](https://www.rbs.com/) (“RBS”) who were found by the [Financial Conduct Authority](https://www.fca.org.uk/) to have mis-sold derivatives, along with other major banks, in 93% of cases examined.- PAG also made claims relating to [LIBOR manipulation by RBS](https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/), which claims were also backed by global regulatory findings against RBS of widespread LIBOR misconduct that resulted in £390m fines from UK and US regulators and the US Department of Justice.- Further, PAG complained about its treatment by [RBS’ Global Restructuring Group](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) (“GRG”). The High Court dismissed all of PAG’s claims and this decision is now being appealed. In contrast to most SME claimants, PAG was classified by RBS as a professional client and had received hedging advice from financial risk management consultants before the disputed trades. In addition, PAG also had the benefit of significant in-house financial expertise, albeit not specifically in derivatives. The judge ultimately held that PAG had made its own decisions based on its managing director’s strong views on wanting to achieve a certain rate without paying a premium. ## The Swaps Mis-Selling Claims PAG alleged that RBS had misled it at the pre-contractual stage, by failing to make PAG aware of various adverse features of the products being sold, including potentially massive break costs and the extent to which the products would eat into the customer’s credit limit. However, PAG struggled to identify specific false statements made by RBS employees. The judge held that merely using the word ‘hedge’ to describe the product did not imply that it would operate as a hedge in the technical sense. The Court also held that RBS’s standard terms of business allowed the bank to exclude any claim based on pre-contractual statements. It is clear that Claimants should base their claims on specific statements, rather than only claiming that the whole course of the bank’s communication gave a misleading impression. RBS admitted that the Claimant was not informed of the scale of the potential breakage costs, the mark-to-market value or the extent of the bank's internal credit line (which in fact is not an internal event as portrayed by RBS but a process of credit limit utilisation which affects the customer's creditworthiness massively without the customers knowledge). However, the judge held that banks are not under a duty to advise customers of these risks merely because they provide information about a product. The judgment stressed that any duty going beyond the duty not to misstate is "*entirely fact sensitive and turn[s] upon the precise nature of the circumstances and of the explanation or advice which is tendered*." We would anticipate that this finding (which in effect allows banks to sell products without making any attempt to inform customers of the associated risks) is likely to be central to any appeal. Having determined that the existence of a duty was fact-sensitive, the Court went on to find that none existed in this case for the following reasons: - PAG was a substantial property company;- PAG had a series of banking advisors (albeit not derivatives specialists);- PAG never sought information about the mark-to-market values;- PAG was under no time pressure;- it was not general market practice to give information about potential break costs and mark-to-market values;- PAG had received specific warnings about break costs, mismatch and other matters from their financial risk management consultants before the trades;- extensive explanations were given; and- the duty to advise had been expressly excluded by RBS’s standard terms. These factors will of course vary from case to case and claimants in different positions may still seek to establish the existence of an advisory duty in their own particular circumstances. ## The RBS GRG Claims PAG argued that RBS had breach an implied duty of good faith, firstly in transferring a fundamentally sound business to GRG and then in requiring revaluations and a security review (at PAG’s expense), with the effect of putting the business under additional pressure, rather than supporting it. The judge held that there was no implied duty of good faith in the relationship between PAG and RBS, as any such duty would be contrary to the express terms of the contract (namely RBS’s standard terms stating that the bank was not acting in an advisory or fiduciary capacity). It was held a duty of good faith can only be implied into the contract where the contractual documents provide for the exercise of discretion (which in this case they did not). RBS was able to rely on its records of the reasons for the transfer as showing that it had proper motives and so this claim also failed. "*[A] number of cryptic remarks*" in the bank’s internal emails were dismissed by the Court as the Court will not form a judgment based on isolated remarks, but will look at the whole course of the documents. Given the widely publicised criticisms of GRG’s treatment of its customers (including in a [report by Lawrence Tomlinson](http://www.tomlinsonreport.com/), Entrepreneur-in-Residence at the Department for Business, Innovation and Skills), it is likely that this finding will also be highly contested on appeal, as it could be portrayed as allowing RBS to get off scot-free. Meanwhile claimants should be aware that they may not be able to rely on generalised assertions of improper motives for banking decisions they dislike. Any such claims must be clearly grounded in the specific facts of the individual case. ## LIBOR Claims The LIBOR aspect of *PAG v RBS* was widely watched and took up several weeks of court time, but ultimately brought no joy to claimants. The judge held that, while RBS did come under a duty not to manipulate LIBOR, this was limited to the currency and tenor of the contracts in issue (in this case, 3-month sterling LIBOR). The judge went on to hold that as a matter of fact RBS did not manipulate sterling LIBOR (despite having been previously found to manipulate Yen and Swiss Franc LIBOR). Therefore this aspect of PAG’s claim also failed. Because the Court of Appeal will not reconsider the judge’s findings of fact (since the trial judge had the benefit of seeing the witnesses give their evidence) it may be that this aspect of the case is less likely to be successfully appealed, although PAG may attempt to argue that LIBOR manipulation in other currencies is sufficient to establish its claim. Of course, the situation may well be very different for claims against banks known to have manipulated sterling LIBOR. Certainly by no means does the decision in PAG spell the end of  LIBOR manipulation claims against the rate setter panel banks that manipulated the rate. All such claims should be investigated and such claims are often settled without going to trial. ## Comment from Financial Services Litigation Specialists The judgment in PAG v RBS draws a clear line between the duties of salespersons and the duties of advisers. It shows judicial support for clear and properly drafted exclusion clauses and that reliance will be placed on the contemporaneous documentary evidence (rather than recollections after the event) when assessing the nature of the relationship between the parties. However, the judge repeatedly stressed the fact-sensitive nature of her findings, and PAG were unusual as compared to typical claimants in these cases, not least in having had the benefit of internal and external financial advisers. We wait to see whether the Court of Appeal will take a different view to that of the High Court and overturn the current decision. It is important for anyone considering a claim to seek specialist legal advice from the outset to ensure that the claim is presented in the right way, based on a careful factual and legal analysis of the specific case and not on generalised assertions of banking malpractice. Potential claimants should also be aware that there are time limits within which to bring claims of this nature. If a claim is allowed to expire, it will not subsequently be possible to revive it following any more favourable decision by the Court of Appeal. Anyone who thinks they might have a claim should therefore [immediately seek specialist advice](https://lexlaw.co.uk/legal-case-assessment/). Financial Services Litigation Team, LEXLAW --- # High Court Litigation – Metro Bank Plc Source: https://lexlaw.co.uk/solicitors-london/high-court-litigation-metro-bank-plc/ *Our team of bank litigators can assist on litigation claims or high value Financial Ombudsman Service complaints against Metro Bank Plc. We have brought very high value claims against every major bank in the UK and are currently acting against Metro Bank Plc in an Enterprise Finance Guarantee mis-selling claim based on alleged misrepresentation of the EFG scheme rules. * *Our Financial Services Litigation team of Solicitors and Barristers in London are highly experienced in bank litigation and our high profile and high value cases regularly appear in the national and international media. Our lawyers are therefore exceptionally well-placed to advise on protection of borrowers' legal rights and to manage high value High Court litigation against Metro Bank Plc.* ## Reported Metro Bank Litigation > **High Court litigation against Metro Bank Plc** > Extract from Royal Courts of Justice Cause List, 7 September 2012 > In the High Court of Justice - Chancery Division > Proceedings before the Masters > Before Master Price > *London & Boultbee v Metro Bank* > **Winding-up Petition against Metro Bank Plc** > Extract from Royal Courts of Justice Cause List, 29 January 2015 > THE DAILY LIST > COMPANIES COURT > Before Mr Registrar Jones > Unrobed > At 12 o’clock > *Winding-up Petition No. 7926/2014 Metro Bank PLC* > **Injunction against Metro Bank Plc** > Extract from Royal Courts of Justice Cause List, 11 March 2016 > In the High Court of Justice - Admiralty and Commercial Court > Before Mr Justice Males > *Litigation Claim No. CL-2016-000131 Swiss Singapore Overseas Enterprises PTE Ltd v. Metro Bank PLC and others* ## Metro Bank Claim? Contact our Litigation Solicitors & Barristers: Call us on ☎ 02071830529 or email us on contact@lexlaw.co.uk for more information about the legal services we provide. Our team of London litigation lawyers are based in Middle Temple adjacent to the Royal Courts of Justice. We are committed to providing professional and specialist legal advice. --- # The Lawyer: ‘Charity gains ground in RBS and NatWest mis-selling claim’ Source: https://lexlaw.co.uk/solicitors-london/charity-gains-ground-rbs-natwest-mis-selling-claim/ [*The Lawyer*](https://www.thelawyer.com/charity-rbs-natwest-claim/) reports: Not-for-profit organisation [Wenta](https://www.wenta.co.uk/) has gained ground in its case against [DLA Piper](https://www.dlapiper.com/en/uk/) clients [NatWest](https://www.business.natwest.com/) and the [Royal Bank of Scotland](https://www.business.rbs.co.uk/) for which it is now seeking damages of over £500,000. [![Litigation Lawyers London LEXLAW Wenta RBS Banks](https://lexlaw.co.uk/wp-content/uploads/2017/07/Lawyer-Wenta-v-RBS-LEXLAW-Litigation-Solicitors-London-Tweet.png)](https://www.thelawyer.com/charity-rbs-natwest-claim/)The Lawyer reports on High Court disclosure applications in Wenta v RBS & NatWest (trial in October 2017) The charity has won the right to see documents it claims will illustrate that the banks mis-sold it an interest rate hedging product (IRHP) as part of a wider trend that has since been subject to a review by the Financial Conduct Authority (FCA). Wenta claims that RBS and NatWest breached its alleged “contractual tortious, statutory and fiduciary duties” resulting in loss and damage over the sale of the IRHP, which allows companies to manage fluctuations in interest rates, in April 2009 at the banks’ “strong recommendation”. In 2012, the FCA identified failings in the way that some banks structured collars, swaps, simple collars and cap products, or IRHPs, with a full review launched a year later. The banks implicated in the review include the two defendants and most of the major banks, such as Allied Irish Bank (UK), Bank of Ireland, Barclays, Clydesdale & Yorkshire banks, Lloyds Banking Group, Santander UK, Co-operative Bank and HSBC. Last year, the FCA said that all nine banks had completed their sales reviews and had delivered redress letters to the majority of customers, paying out £2.2bn, including £509m to cover consequential losses. However, a small number of cases remain. [David Berkley QC](https://www.3pb.co.uk/barristers/david-berkley-qc/) of [3 Paper Buildings](https://www.3pb.co.uk/) is acting for the claimant, instructed by [Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/) and [Kumaran Sivathillainathan](https://lexlaw.co.uk/our-people/kumaran-sivathillainathan/) of [LexLaw solicitors](https://lexlaw.co.uk/); while Natwest and RBS are represented by John Odgers QC and Anne Jeavons of 3 Verulam Buildings. They are instructed by Paul Smith, [Hugh Evans](https://www.dlapiper.com/en/uk/people/e/evans-hugh/) and [Yasmin Bailey](http://solicitors.lawsociety.org.uk/person/242602/yasmin-bailey) of [DLA Piper](https://www.dlapiper.com/en/uk/). In April 2009, Wenta, which facilitates the start up of small businesses, was sold a ten-year interest rate hedging product by the two banks, which they said was suitable for the agency’s needs. In March 2013, Wenta sought to buy another business centre but did not receive the expected financial assistance from NatWest to assist with the purchase. It claims that other banks would not accept the interest rate as transferable, forcing Wenta to terminate the swap at a costs of £144,500. Wenta claims NatWest had advised it that the interest rate would be transferable, and that when it complained about its situation it was subjected to a “one-sided and unfair review process”. It says subsequent advice given to the organisation suggests that the swap was inappropriate, overpriced and that the risks of the swap were not adequately disclosed, in what it says amounts to a breach of regulations. The case between Wenta and RBS and NatWest is due to be heard in the [High Court](https://en.wikipedia.org/wiki/High_Court_of_Justice) in October. The litigation against the banks has been ongoing for nearly three years, with the banks continuing to deny wrongdoing. In its skeleton arguments, seen by *[The Lawyer](https://www.thelawyer.com/), *the two banks claim the application for disclosure has been made “far too late, without any explanation”. The banks allege that since first filing an application for disclosure nearly two years ago in August 2015, Wenta failed to follow it up at a case management hearing last year in February 2016, or upon receipt of the banks’ disclosure later in May. It reads: “The application is made after the exchange of all the witness statements from both sides and both parties’ expert reports. It is an attempt to open up new, unpleaded issues based upon whatever might turn up and therefore threatens to make the parties ‘go around again’ on pleadings, witness statements and experts’ reports. All this, shortly before trial of a claim where the combined costs are already estimated to rise to double the damages sought.” It continues: “The arguments of relevance advanced by the claimant in relation to the documents are bare assertions, and the claimant’s delay in bringing the application is entirely inconsistent with its assertion that these documents are of significant relevance to the claim. In reality, this application is a fishing expedition by the claimant, shortly before trial, which threatens to escalate costs to quite a disproportionate level.” Akram told *The Lawyer*: “The disclosure application was successful in forcing the banks and their solicitors to disclose sales training manuals and to review and potentially disclose documents generated in the FCA-backed IRHP review system. “It is clear to us, based on our extensive financial services litigation experience against RBS and NatWest, that the bank’s tactics are to use their financial might to drag out litigation as long as possible, taking advantage of both the heavily discounted panel solicitor rates they have in place and also of the possibility that claims may be discontinued because of costs and the stressful impact of litigation has on parties that are not serial defendants such as RBS and NatWest.” Wenta has said that it has only been able to bring the case this far because of a conditional fee arrangement it has with its lawyers, while RBS has been accused of accruing “staggering” legal fees in the now settled [£4bn rights issue](https://www.thelawyer.com/issues/online-june/rbs-shareholder-group-settles-bank-12bn-rights-issue/) and its [separate ongoing battle with property tycoon Stuart Wall.](https://www.thelawyer.com/rbs-costs-overstatement/) The legal line-up: *For the claimant, Wenta Limited* David Berkley QC of 3 Paper buildings, instructed by Ali Akram and Kumaran Sivathillainathan of LexLaw solicitors *For the defendants, NatWest and RBS* 3 Verulam Buildings’  John Odgers QC and Anne Jeavons, instructed by Paul Smith, Hugh Evans and Yasmin Bailey of DLA Piper. --- # Data Protection Act (DPA) Subject Access Request (SAR) to Obtain Personal Data Held by RBS GRG, Promontory, Mazars, the FCA and the BBC Source: https://lexlaw.co.uk/solicitors-london/data-protection-act-1998-dpa-subject-access-request-sar-rbs-grg-promontory-mazars-fca-bbc/ *In 2014, Promontory Financial Group and [Mazars ](http://www.mazars.co.uk/)were appointed by the [FCA ](https://www.fca.org.uk/)to prepare an independent skilled persons [report into RBS Global Restructuring Group’s conduct](https://www.fca.org.uk/news/press-releases/review-royal-bank-scotland-treatment-customers-referred-global-restructuring-group), which was produced in September 2016. This report provides a detailed review of the GRG "Dash for Cash" and makes findings as to the Bank's misconduct in individual customer cases.* *We understand that the report contains references to each case reviewed by the skilled person and makes comments on the conduct of the bank in specific cases. After 4 years of secrecy, the FCA is [now facing pressure](https://www.theguardian.com/business/2017/sep/07/fca-select-committee-rbs-report-nicky-morgan), including from a [SME Alliance](http://www.smealliance.org/)** and the [Treasury Select Committee](http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/) to publish the report in full, after it was leaked to the [BBC](https://www.bbc.co.uk/).  * *The FCA have now indicated they will issue a summary in due course however this will not go far enough for the victims of [RBS' GRG and West Register](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) who are entitled to know the truth of these investigations. The outcome and finding within the report will clearly affect customer decisions as to whether to pursue their legal rights against RBS and others involved in misconduct at GRG. Importantly the FCA seem to be ignoring their asserted consumer protection role in favour of an effectively state-owned bank which raises questions about HM Treasury's role in what could be described as a cover-up while legal rights expire along with the billion pound plus compensation bill.* [![RBS-GRG-Letterhead-Logo-Royal-Bank-of-Scotland-Global-Restructuring-Group-LEXLAW-Solicitors-Barristers](https://lexlaw.co.uk/wp-content/uploads/2016/10/RBS-GRG-Insolvency-Letterhead-Logo-Royal-Bank-of-Scotland-Global-Restructuring-Group-LEXLAW-Solicitors-Barristers.bk.optm.png)](https://lexlaw.co.uk/wp-content/uploads/2017/09/Template-GRG-Report-Data-Subject-Access-Request-Letter-SAR.docx) ## Obtaining Parts of the GRG Report that Relate to Customers On behalf of our clients affected by GRG, we have submitted data subject access requests (see below) to several organisations including the BBC, the FCA and [RBS](https://www.rbs.com/), as data controllers, in relation to the conduct of [RBS GRG](https://www.rbs.com/GRG). We have included requests for the report or specific extracts which relate to our clients, which organisations should disclose under the [Data Protection Act 1998](https://www.legislation.gov.uk/ukpga/1998/29/contents)**.** For customers who have been affected and have suffered as a result of RBS’s conduct, it is important to obtain legal advice as soon as possible. Our team have [expertise](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in this area and are currently advising many clients in large scale litigation claims. We are unable to assist all of the 12000 or so victims of RBS GRG directly. Therefore in order to assist as many people as possible, [we have produced a subject access request letter](https://lexlaw.co.uk/wp-content/uploads/2017/09/Template-GRG-Report-Data-Subject-Access-Request-Letter-SAR.docx)  that all individual victims can complete and send to these organisations who may be in possession of your personal data. [![](https://lexlaw.co.uk/wp-content/uploads/2017/09/Subject-Access-Request-Under-the-Data-Protection-Act-1998.jpg)](https://lexlaw.co.uk/wp-content/uploads/2017/09/Template-GRG-Report-Data-Subject-Access-Request-Letter-SAR.docx)[Subject Access Request Under the Data Protection Act 1998](https://lexlaw.co.uk/wp-content/uploads/2017/09/Template-GRG-Report-Data-Subject-Access-Request-Letter-SAR.docx) ## Organisation Details When completing the [template subject access request letter](https://lexlaw.co.uk/wp-content/uploads/2017/09/Template-GRG-Report-Data-Subject-Access-Request-Letter-SAR.docx), please use the organisation address and contact details provided below. - **Promontory Financial Group** Address: Promontory Financial Group (UK) Limited, 2nd Floor, 20 Old Broad Street, London, EC2N 1HT Fax: 0207 3772361 - **British Broadcasting Corporation** Address: Room BC2 B6, Broadcast Centre, White City, Wood Lane, London, W12 7TP Email: dpa.officer@bbc.co.uk - **Mazars** Address: Mazars, Tower Bridge House, St Katherine's Way, London, E1W 1DD Email: alice.toon@mazars.co.uk; contact@mazars.co.uk Fax: 0207 0634001 - **Royal Bank of Scotland** Address: Royal Bank of Scotland PLC, 36 St Andrew Square, Edinburgh, Midlothian, EH2 2YB Fax: 0161 8624100 - **Financial Conduct Authority** Address: Information Access Team, The Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS Email: foi@fca.org.uk; andrew.bailey@fca.org.uk; david.desouza@fca.org.uk ## What is a DPA Subject Access Request? Under the Data Protection Act 1998, an individual is entitled to request all personal data, of which they are the subject, which is held by an organisation, as a data controller. The organisations listed above are all data controllers in respect of the GRG Report. A data subject must be an individual and will include sole traders however a limited company is unable to make a request. Individual directors, officers and employees should make such requests personally. You should submit with the request a cheque for £10, payable to the organisation and proof of identification. Upon receipt of a request, organisations have up to 40 days to respond to data subject access request letters. For more detailed information please contact the [Information Commisioner's Office](https://ico.org.uk/) on 0303 123 1113 or visit their website at https://ico.org.uk/for-the-public/personal-information/. --- # Ross McEwan claims RBS “deeply regret the mistakes made in the past” yet fails to accept critical report’s findings in letter to Nicky Morgan MP Source: https://lexlaw.co.uk/solicitors-london/ross-mcewan-claims-rbs-deeply-regret-mistakes-made-past-yet-fails-accept-critical-reports-findings-letter-nicky-morgan-mp/ In a letter to [Treasury Select Committee](http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/) chair Nicky Morgan MP, Ross McEwan, Chief Executive of the Royal Bank of Scotland Group, speaking about the GRG report, acknowledges that the bank could have “done better” in managing SME customers in financial distress but does not accept the critical report's findings. He further claims that the bank and the way it operates has changed fundamentally since the period under review. Andrew Bailey of the FCA has described [RBS's attitude as "*unfortunate*"](http://www.telegraph.co.uk/business/2017/10/31/rbs-should-have-accepted-faults-easily-city-watchdog-tells-mps/), stating if there had been "*a meeting of the minds between the parties early on, then it would have been a quicker process*". The FCA has begun its [second focused investigation](https://web.archive.org/web/20180331191604/http://www.cityam.com:80/274888/live-fca-boss-andrew-bailey-confirms-details-second-rbs-grg) into GRG and Mr Bailey has made it clear that this could lead to enforcement action. ![https://lexlaw.co.uk/wp-content/uploads/2017/11/correspondence-rbs-grg-fca-report-301017.pdf](https://lexlaw.co.uk/wp-content/uploads/Correspondence-from-the-Chief-Executive-of-RBS-relating-to-the-Financial-Conduct-Authoritys-report-into-RBS-Global-Restructuring-Group-dated-30-October.jpg) *Correspondence from the Chief Executive of RBS relating to the Financial Conduct Authority’s report into RBS Global Restructuring Group, dated 30 October* *"Dear Nicky,* *Thank you for your letter of Wednesday 25 October in which you asked me to set out the points that we do not agree with in the [Interim Report](https://lexlaw.co.uk/wp-content/uploads/2017/11/FCA-Interim-Summary-report-October-2017.pdf) published by the FCA on the 23 October and to clarify [GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/)'s objectives versus those of RBS Restructuring. To assist the Committee in its work, I have taken your questions in order and summarised below the key points that we have made to the FCA during the course of the process.* *It is in my view also important to put those points in the context of the findings. that we do accept, and to make clear that we are now very much focused on putting things right for our customers through the automatic refund of complex fees and a [complaints process](https://www.rbs.com/GRG) overseen by retired High Court Judge, Sir William Blackburne. Regardless of our view, any relevant customer who feels they were treated inappropriately whilst in GRG should make use of the complaints process. In the event that a customer does not agree with the bank's determination, they can appeal to Sir William. The bank will adhere to any decision he makes.* *We deeply regret the mistakes we have made in the past when dealing with some of our SME customers in GRG. That is why we were clear in our apology to those who went through what was a difficult experience as a result of the crisis, and to whom we did not provide the level of service and understanding that we should have done. We have made significant changes to how we work with customers in financial distress, both during and since the relevant period (2008 -2013).* *I welcomed the publication of the Financial Conduct Authority (FCA} Interim Report, which was also consistent with the [summary conclusions](https://www.fca.org.uk/news/press-releases/review-royal-bank-scotland-treatment-customers-referred-global-restructuring-group) published by the FCA in November 2016. I also welcomed the FCA's confirmation that the most serious allegations against the bank have not been upheld and that the steps we announced last November remain appropriate.* *I will take each of the points in turn.* ***Accepted findings*** *We fully accept that that we did not, in all cases, fully comply with our own policies or always meet the standards of service that we set ourselves, and, notwithstanding that this was an exceptionally challenging time for the bank, we could have done better in managing our SME customers in financial distress. For customers, this manifested itself in the failings below, which the bank accepts were, during certain periods, widespread:* - *A lack of clarity in some communications with customers as to the reasons for their transfer to GRG;* - *in the identification of customer complaints and/or a failure to address them in an appropriate manner;* - *in the documentation or explanations of rationale behind decisions relating to pricing following transfer to GRG; and,* - *to manage the risk and perception of conflicts of interest in relation to the activities of West Register.* *The bank has taken steps to address these failings. These include significant changes to the governance, mandate, operating model, policies and procedures for managing our SME customers in financial distress. They also include the automatic refund of complex fees and the complaints process overseen by Sir William.* *The bank also notes and agrees with the clear findings that there is no evidence to support numerous serious allegations. The independent review did not find widespread or systematic inappropriate treatment of customers in the following areas:* - *RBS did not set out to artificially engineer a position to cause or facilitate the transfer of a customer to GRG;* - *SME customers transferred to GRG were exhibiting clear signs of financial difficulty;* - *there was not a widespread practice of identifying customers for transfer for inappropriate reasons, such as their potential value to GRG rather than their level of distress;* - *there was not a widespread practice of requesting personal guarantees and I or cash injections when GRG had already determined that it had no intention of supporting such businesses;* - *there was not a widespread practice of RBS making requests for information from customers that were unnecessarily burdensome;* - *there was not a widespread practice of RBS acting as a 'Shadow Director';* - *there was no evidence that an intention for West Register to purchase assets had been formed prior to the transfer of the customer to GRG; and,* - *there were no cases identified where the purchase of a property by West Register (as opposed to by another person) alone gave rise to a financial loss to the customer.* *In addition, we note the acknowledgement that:* - *there was no evidence that the bank adopted an approach to internal valuations that would have systematically resulted in valuations that were too low, nor that the valuation was clearly incorrect on any individual case in the review sample; and,* - *there was no clear causal link between any inappropriate actions of the bank and the insolvency of an otherwise viable business.* ***Areas of Difference*** *The bank has been fully and constructively engaged with the FCA since the outset of this process in 2014, and has provided detailed feedback at various stages.* *The points set out below reflect concerns the bank expressed over the methodology and approach adopted by the Skilled Person, which departed from the approach set out in the FCA's Requirement Notice. These include the use of standards other than market comparators as well as a lack of consideration of customer impact.* - ***Systematic*** *In line with the original allegations, the [FCA Requirement Notice](https://lexlaw.co.uk/wp-content/uploads/2017/11/FCA-Requirement-Notice.pdf) contains a specific definition of 'systematic': as 'an intentional and coordinated strategy' to treat customers inappropriately. This important, defined term has, however, been redefined by the Skilled Person as a failure 'to address an inevitable and foreseeable consequence of a decision (whether by way of act or omission) that some other result would ensue'.* *The Skilled Person has not identified any instances of the bank displaying any actual, strategic intent to systematically mistreat customers. Rather the Skilled Person uses its own expanded and alternative definition of 'systematic' failings as the basis for its conclusions.* *It is clear that the findings do not support a conclusion of 'systematic' inappropriate treatment of customers under the original definition.* *As a result, we do not believe that the term 'systematic' is appropriate for what should, in many areas, be more appropriately described as weaknesses in controls.* - ***Widespread inappropriate treatment*** *We clearly acknowledge that in some areas we could have done better for SME customers in GRG and that some of these shortcomings would have been widespread.* *The bank does not agree that that the evidence relied upon by the Skilled Person substantiates the key finding that the bank is guilty of 'widespread inappropriate treatment of customers'.* *The Skilled Person focused on conduct in isolation from customer outcomes and assessed inappropriate treatment independent of identification of any customer detriment or causal link.* *There is also no distinction drawn between process failings and conduct failings. Taken together, these approaches result in misleading conclusions likely to be misunderstood as suggesting that the bank was guilty of serious conduct failings and that these led to poor outcomes for customers.* *A significant number of shortcomings identified by the Skilled Person were process failings that did not, and indeed could not, have caused any customer detriment. By way of example, in the 118 findings in relation to pricing, the Interim Report states that they primarily related to the failure to record the rationale for the pricing increases and I or a failure to properly inform customers of the rationale for the pricing increases. Furthermore, the Skilled Person did not assess customer outcomes as part of its review.* - ***Material Financial Distress*** *The report acknowledges that there was no clear causal link between any inappropriate actions of the bank and the insolvency of an otherwise viable business. However, one of the most significant findings in the report is that in a minority of the review sample 111% total, 16% of what the Skilled Person identified as potentially viable cases the bank is likely to have caused material financial distress to customers.* *We do not agree that the bank's actions caused material financial distress in these cases. In addition, we do not accept that there was any causal link between the actions of the bank and the insolvency of any of those businesses. The Skilled Person appears to classify an unquantified level of financial detriment as 'material financial distress', regardless of whether a customer has suffered any financial impact at all.* *By way of example, seven of the nineteen cases identified by the Skilled Person, relate to pricing proposals which were either not implemented by the bank or not paid by the customer. As such, the customer's business cannot have suffered any financial detriment, let alone have become distressed.* - ***Implications of the 'turnaround' findings*** *As acknowledged in the Interim Report, 'commercial lenders have no obligation to lend to a business customer on terms that they find unacceptable or to continue to lend on terms that are no longer being met by a business customer in default'.* *The bank has serious concerns regarding the wider implications for both RBS and commercial lending generally in relation to certain findings and recommendations, particularly those relating to 'turnaround practice'. These concerns include, amongst others: the definition of a 'customer' and duties to third parties; the finding that the absence of extended forbearance or debt forgiveness may constitute unfair or inappropriate customer treatment; and an obligation to consider all potentially credible customer proposals in each case, notwithstanding the increased risks to lenders' advances or collateral and the contractual rights open to lenders in the event of default by borrowers.* *The turnaround obligations inferred or implied by the Skilled Person do not, in fact, exist. If they did, they would profoundly change the credit risks that banks are prepared to take and would set a precedent that would undermine the certainty of contractual bargains. In reaching many of its conclusions, we consider that the Skilled Person has paid insufficient regard to the underlying contractual relationship between the bank as lender and the customer as borrower.* *These findings appear to be at odds with a bank's contractual rights and prudential obligations and to the best of our knowledge do not reflect how the SME lending market operates in practice. Indeed, some of these findings and recommendations seem more suited to a consumer lending landscape than to a commercial one. As such they could have, if implemented as suggested, significant implications for SME lending and the flexibility afforded to SME customers in distress.* - ***GRG relations with customers*** *The Interim Report found that RBS's relations with its customers were often insensitive, dismissive and sometimes unduly aggressive. Whilst it may have been the case that examples of such behaviour did occur, we have seen no evidence to support this assertion on a widespread basis.* *The bank was not afforded the opportunity to review the allegations made by those customers who were interviewed by the Skilled Person. We would have investigated any such claims of poor behaviour as we take them extremely seriously.* *GRG staff had to deliver very difficult messages in what were extremely stressful situations. This is not an easy task and we are sorry that we did not always get it right. As a bank, we continue to embed our desired culture, values and standards, and our approach to customer treatment, including in Restructuring.* *That is why the steps we announced in November 2016 were developed with the involvement of the FCA; should any customer feel they were treated inappropriately, they should make use of the complaints process.* *In response to your second question requesting clarification of GRG's objectives I believe two separate points are being conflated. In our press notice of 23 October, the passage quoted is referring to the current mandate of RBS Restructuring, rather than what had been GRG's objectives.* *'We recognise there has been debate around the perceived or potential conflict in GRG's objectives. To give greater clarity, the bank's Restructuring function has a single, clear purpose: To protect the bank's capital. Where practicable it will do this by working with commercial and corporate customers to support their turnaround and recovery strategies and enable a return to mainstream banking. It will always aim to recover capital in a fair and efficient manner.'* *The Interim Report sets out that GRG historically had the following objectives:* - *To be a major contributor to RBS's financial objectives (often expressed as a contribution to RBS's bottom line) which initially focused on revenue generation but later in the review period evolved to focus on the protection of capital, (the 'commercial objective'); and,* - *To be at the leading edge of a wider rescue culture - focused on turnaround, rehabilitating customers in distress and working with the aim of returning customers to the frontline wherever possible (the 'turnaround objective').* *I believe that this is consistent with the evidence previously supplied by RBS to the Committee. I have also enclosed a document that sets out the key changes made to RBS Restructuring that have been designed to improve our customers' experience.* *In closing, I should like to be clear that we made mistakes in the past. This was at a time when customers were going through a traumatic and painful experience and RBS was experiencing an exceptionally challenging period. The culture, structure and way RBS operates today has changed fundamentally since the period under review. We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank's capital. Most importantly, however, for customers who were in GRG during 2008 -13 we have put in place two processes, with the agreement of the FCA, to assist customers who were affected: an automatic fee review for complex fees and an independent complaints process. I firmly believe that these are the right steps to take, and the FCA agrees they are appropriate. We are working hard to ensure a fair outcome for our customers as soon as we can."* *Yours sincerely* *Ross McEwan"* Download a copy of the letter here: [Letter from Ross McEwan dated 30 October 2017](https://lexlaw.co.uk/wp-content/uploads/2017/11/correspondence-rbs-grg-fca-report-301017.pdf) For customers who have been affected and have suffered as a result of RBS’s conduct, it is important to obtain legal advice as soon as possible. Our team have [expertise](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in this area and are currently advising many clients in large scale litigation claims. On behalf of our clients we are submitting subject access requests to obtain clients' personal data from organisations such as RBS, the FCA and the BBC in relation to the conduct of RBS GRG which include [requests for the report or specific extracts](https://lexlaw.co.uk/solicitors-london/data-protection-act-1998-dpa-subject-access-request-sar-rbs-grg-promontory-mazars-fca-bbc/) which relate to our clients, which organisations should disclose under the [Data Protection Act 1998](https://www.legislation.gov.uk/ukpga/1998/29/contents)**. ** --- # Mis-selling of Unsuitable Financial Products: Credit Suisse Loses S138D FSMA Litigation Case Source: https://lexlaw.co.uk/solicitors-london/s150-s138d-fsma-2000-mis-selling-complex-financial-credit-suisse-derivatives-structured-products/ *In [Abdullah and others v Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited [2017] EWHC 3016 (Comm)](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2017/3016.html&query=(abdullah)), the High Court has given judgment in favour of private person claimants in their mis-selling action for damages against a major bank. Credit Suisse lost the claim because they were judged to have mis-advised and mis-sold complex financial instruments (structured products) causing a USD $30 million loss to the Haider Abdullah family.* Mr Justice Andrew Baker determined this claim for breach of statutory duty under [s.138D(2) of the Financial Services  and Markets Act 2000 (FSMA)](https://www.legislation.gov.uk/ukpga/2000/8/section/138) by the bank in advising the Claimants to invest in three structured capital at risk products (SCARPs) sold under an advisory agreement that were unsuitable because it should have known that the Claimants were *“low-risk investors unwilling to contemplate anything more than minimal risk of loss of capital”*. The Claimants were judged to be entitled to damages to reflect the position they would have been in had they not purchased one of the complex structured products. [![London Litigation Lawyers UK](https://lexlaw.co.uk/wp-content/uploads/2018/01/litigation-solicitor-in-london-bank-litigation-credit-suisse-LEXLAW-1024x304.jpg)](https://lexlaw.co.uk/?attachment_id=3915) ## Abdullah v Credit Suisse: Summary of the Facts  The Claimants are a wealthy Kuwaiti family who held a joint private banking account with Credit Suisse. During 2008, following the advice of the bank, they invested in three SCARP Notes net of borrowing for approximately USD $26 million: - Note 18 (the first Note mis-sold by the bank) was a USD $20 million 3-year equity barrier SCARP bet on major stock indices (referenced to the Eurostoxx 50, S&P 500 and Nikkei 225 indices as well as the Swiss Market Index) purchased in May 2008.- Note 19 (the second Note) was a USD $2.4 million 1-year bet on the stock prices of three major international banks.- Note 20 (the final Note) was bought during the fiscal turmoil following the collapse of Lehman Brothers in October 2008. The contemporary market volatility caused the in-built barriers of some of the Claimant’s other Notes with the bank to be breached and as such Note 20 was issued as a “switch” trade where their existing portfolio was subject to “jumbo” restructuring into a consolidated Note. Immediately after the final Note settled in October 2008, the Claimants decided not to meet a margin call issued by Credit Suisse and refused to deposit further securities to cover potential losses (they were assured that the switch would not require additional funds) resulting in the liquidation of their USD $30 million investment and leaving them overdrawn by over USD $300,000. ## Credit Suisse Breached Statutory Duties Owed under FSMA The Claimants sought damages under s.138D of FSMA 2000 which provides that a private person who suffers financial loss as a result of breach of the regulatory rules may bring a statutory claim for compensation. > *“contravention by an authorised person of a rule made by the FCA is actionable at the suit of a private person who suffers loss as a result of the contravention” * > > *- S**ection 138D of FSMA 2000*** The Claimants then argued that the bank owes them the duties enshrined in the [FCA’s Conduct of Business Sourcebook (COBS) rules](https://www.handbook.fca.org.uk/handbook/COBS.pdf): The products were **unsuitable** for the Claimants - [Credit Suisse] did not take reasonable steps to ensure that any personal recommendation was suitable for the client (in breach of COBS 9.2.1R).- [Credit Suisse] did not have a reasonable basis for believing that the transaction recommended met the client’s investment objectives nor that the client had the necessary experience and knowledge to understand the risks involved (in breach of COBS 9.2.2R); and The Claimants were **mislead ** - [Credit Suisse] did not ensure that a communication or financial promotion was fair, clear and not misleading (in breach of COBS 4.2.1R). Overall, they alleged that the bank did not ensure that the communication or financial promotion was *“fair, clear and not misleading”*.The Claimants argued that they were *“low risk investors”* and it was clear from their long relationship with the bank that they were only willing to invest on the basis of very limited risk of loss of capital. They alleged that Credit Suisse gave *“bad positive advice”* and the bank failed to take reasonable steps to ensure the personal recommendation of a high-risk product was suitable for the clients. This advice neither met their* “investment objectives”* nor did they ascertain whether their clients had the necessary knowledge to understand the risks involved. The crux of their claim- like many customers who have been mis-sold derivatives- was that the bank *“under-estimated the magnitude of risks”* involved to them and as such the bank’s bad advice created an ill-conceived willingness in the Claimants to run those risks. ## When is a Bank Considered to have Breached its Statutory Duties? *Note 18: This product was **unsuitable** for their “low risk appetite” and the sale of the product was **misleading *** - It was **misleading** for the bank to convey to the Claimants that the structured product was a low risk investment and that it was very unlikely that the Note barriers would be breached.- Their advisor at the bank told them that there was *“only a small chance of loss”* and *“pushed them”* into investing. He wrongly assured them that the product was suitable for their *“conservative risk appetite”*.- The advisor coerced them into purchasing by assuring them that his own family had invested on the same terms presented and moreover the judge worryingly found that the Claimants were most likely not even shown an indicative term sheet at their meeting.- In fact, the judge agreed with expert evidence that Note 18 was taking a *“50:50 bet”* on having no capital protection and therefore leaving the Claimants exposed: that is not what the Claimants thought they were buying and not what the bank could reasonably have believed they wanted to buy. *Note 19: The product was **not unsuitable** as the Claimants knew they were “making a bold, risky investment” and the bank did **not mislead** them into believing it to be a safe investment* - Unlike for Note 18, the reason why the bank was not in breach of its duties here was because the Claimant chose on an *“informed basis”* to take a real risk on what was a relatively small investment of USD $2.4 million for potentially high returns in a volatile market.- On this occasion, Credit Suisse did make it very clear that it would be a bold and hazardous investment with a view to a very high return.- Therefore, the crux of whether the bank is in breach of its duties comparing the two findings on the Notes is that the *“nature of the recommendation”* was different. The bank is at fault if it recommends a risky product to a conservative client and misleads them as to the nature of the risk. The bank is not at fault if it recommends a risky product to a client that is well aware of that risk. *Note 20: The product was **not unsuitable** as the Claimants knew about the risk but the bank did make **misleading** assurances to induce the purchase of the switch trade * - The claim for suitability breaches under COBS Rules 9.2.1R and 9.2.2R failed as it was obvious that the investment was highly risky whilst the markets were in turmoil following the collapse of Lehman Brothers. The bank was not in breach as it was reasonable for Credit Suisse to have believed that Note 20 met the clients’ objectives at that particular time.- The judge found that the Claimants were well aware of the risk as Note 20 *“was obviously not a Note to be buying if you had only a conservative appetite for risk.”* The difference with Note 18 and the reason why the Claimants could not demonstrate that they were misled was quite simply that they were aware of the risks.- However, Credit Suisse did breach COBS 4.2.1 by asserting that the switch trade would not require further funds. Although the bank was correct in claiming that the switch trade would not require a net purchase price payable for the trade (to buy Note 20 in return for giving up their previous Notes)- due to the different basis for the mark-to-market pricing used for Note 20 and its lower LTV ratio- as soon as the Note was issued the bank assessed the account to suffer from a large collateral shortfall with the margin call that followed leading to the closing of the account.- Therefore, there was a breach of COBS 4.2.1 because the assurances given by the bank that the switch trade would not result in needing further investment from them was inaccurate and **misleading**. This reading of the COBS rule demonstrates that the court applies subtlety in determining whether a Claimant has been induced to buy in a misleading way by taking a wide interpretation. This is promising for future Claimants. [![Abdullah-Haider-v-Credit-Suisse-Bank-Litigation-Solicitors-in-London-LEXLAW](https://lexlaw.co.uk/wp-content/uploads/2018/01/Abdullah-Haider-v-Credit-Suisse-Bank-Litigation-Lawyers-in-London-LEXLAW.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/01/Haider_Abdullah_v_Credit_Suisse_High-Court-Litigation-Lawyers-London-UK-LEXLAW.pdf)Click to Download Haider Abdullah v Credit Suisse - Commercial Court Judgment ## Resounding Rejection of Credit Suisse’s Defence Credit Suisse attempted to persuade the court that the family were *“aggressive investors”* looking for high returns who accepted the significant risk of loss of capital and as such were not badly advised. In addition, the bank argued that the losses were not caused by their breach of duty but resulted from the financial crash. The bank also tried to pin the blame on the Claimants by claiming they had committed *“financial suicide”* when they chose to close their investments after Note 20, which it alleged was so unreasonable a decision that is was the exclusive cause of their loss.  The three main arguments in the Bank's defence were: *(1) Credit Suisse loses their defence that the Claimants committed “financial suicide” which broke the chain of causation* - The court did not accept that the Claimant’s refusal to meet the margin call was so unreasonable as to amount to a failure to mitigate loss/was the sole cause of the loss. The judge stated that the family’s decision to close their portfolio was not *“irrational”* but out of concern that the worst may not be over and *“they also felt let down and misled”* by the bank.- The court robustly rebuked the *“financial suicide”* defence and therefore provided welcome reassurance to customers that a bank will not be permitted to pin the blame on them for leaving an investment early if the decision is not irrational. * (2) **Credit Suisse loses their defence that the loss was too remote as it was caused by the severity of the financial crash * - The court did not accept the bank’s contention that the losses were not caused by any breach of duty on its part as they resulted from the extreme nature and severity of the 2008 crash. The essence of the duty of a financial advisor is precisely to protect clients from major market falls by assessing with *“due care”* that any capital protection barriers were highly unlikely to be breached.- Although the loss was exacerbated by the market crash, the resulting loss was still within the scope of the duty broken.- Banks will not be permitted to completely abdicate their duties owed to customers by blaming resulting losses solely on extreme fluctuations in the financial market. *  * * (3) **Credit Suisse loses their defence that the Claimants were contributory negligent * - The court rejected the bank’s weak defence claiming that the investors failed to read the terms and conditions; failed to take adequate steps to understand the investments and failed to complete a customer profile form (to ensure Credit Suisse had no doubt as to their investment objectives).- Judge Davis said: *“[The investors took] adequate steps to understand their investments given that they were relying on [Credit Suisse] for risk evaluation. They were simply let down... in respect of that evaluation”.*- Unsophisticated customers will not be penalised for a lack of due diligence when agreeing to purchase a complex structured product. ## Relevance to those Mis-sold Complex Derivative Products? This is one of very few cases that consider the practical meaning and effect of the FCA’s Conduct of Business Sourcebook rules governing the sale of complex derivatives and the extent of duties owed by banks to their customers. It elucidates the rules concerning the suitability of structured product sales and provides a useful barometer of the court’s future reasoning on when a product is considered to have been sold in a misleading way and how suitability issues will be interpreted under the COBS rules. Our senior partner, [M Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/) said: > "This judgment should go some way in encouraging smaller claimants considering or facing litigation against major banks not to abandon their cause of action under s.138D FSMA 2000. It demonstrates that litigation for private persons is a potentially meritorious option with an arguable chance of success either at trial or via alternative dispute resolution settlement. A successful outcome is of course dependent on the facts of any individual case." Those with cases against major banks and other financial services institutions should [contact our Financial Services Litigation Team](https://lexlaw.co.uk/legal-case-assessment/) to book a preliminary consultation. ## LEXLAW Financial Services Litigation & Dispute Resolution Our Financial Services Litigation team of Solicitors and Barristers in London are highly experienced in banking litigation. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on ☎ 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # FCA expresses “Serious Concerns” over Complex and Highly Risky Contracts For Difference (CFD) Products Mis-sold to Retail Investors Source: https://lexlaw.co.uk/solicitors-london/mis-selling-complex-financial-derivatives-structured-products-fca-review-cfd/ *The FCA, following a year-long review, have published a “Dear CEO” letter addressed to firms providing and distributing products in the CFD market to amateur investors. The FCA used strong language to criticise firms for employing “poor practices” in promoting and selling speculative products leaving unsophisticated consumers at a “serious risk of harm” with over three-quarters of users losing money. Industry-wide failings were identified as firms were unable to properly define their target market leading to mis-selling to unsuitable customers; widespread due diligence problems and the inability to manage conflicts of interest.* [![Financial Conduct Authority FCA UK Logo - LEXLAW Litigation Law Firm in London](https://lexlaw.co.uk/wp-content/uploads/2018/01/FCA-Financial-Conduct-Authority-UK-Logo-LEXLAW-Litigation-Solicitors-London.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/01/FCA-Financial-Conduct-Authority-UK-Logo-LEXLAW-Litigation-Solicitors-London.jpg) The FCA’s intervention represents an overdue crackdown on the spread betting market by toughening the application of regulations and is another damning indictment for the majority of CFD firms and banks who have been largely ignoring the rulebook at the expense of their customers. ## What are CFDs (Contracts for Differences)? CFDs are a type of derivative trading allowing the investor to speculate on the value of an asset (such as shares or currency prices) without ever owning the commodity. CFDs are highly risky, complex financial products and are in essence a gamble on the entry and exit prices of a market asset within a set time period. This risk is exacerbated by the fact that CFDs are often highly leveraged, resulting in many consumers losing significantly more than their original investment as losses are greatly magnified. The massive leverage underpinning the spread betting market means that CFD providers are meant to strictly adhere to FCA guidelines and should only sell to sophisticated investors who are in a position to risk capital and who understand the high levels of risk involved. However, sellers of CFDs regularly target inexperienced consumers, which is evidenced by the fact that the FCA review found that the majority (76%) of retail customers lost money and in an [earlier review](https://www.fca.org.uk/publication/consultation/cp16-40.pdf) found the average losses totalled £2,200 per person. Worryingly in several instances, pension funds have been invested in CFDs based on the bad advice of marketing companies or financial advisers through [Self-Invested Personal Pensions](https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/contract-based-schemes/self-invested-personal-pensions-sipp) (SIPP). Mis-sold SIPPs gamble entire retirement savings in volatile and risky markets instead of investing in regulated and secure asset classes. ## Increased Offering of Bitcoin CFD Trading The FCA have noted a steady growth in the volume of CFDs gambling on the ever-changing value of cryptocurrencies such as bitcoin or ethereum. The biggest story in finance recently has been the surge in value and price volatility of bitcoin- akin to the tulip mania of the 17th century- with the [FCA in November 2017 describing digital currencies](https://www.fca.org.uk/news/news-stories/consumer-warning-about-risks-investing-cryptocurrency-cfds) *“extremely high risk, speculative products”*. The risks of the cryptocurrency market have been amplified by trading platforms offering large leverages up to 50:1 to consumers, which means that CFD speculators trading on margin stand to lose huge sums if (or when) the bitcoin bubble bursts. Moreover, unsophisticated consumers are at risk because cyptocurrency CFD brokers typically only hedge in the market when they perceive volatility increasing and most bitcoin brokers remain anonymous, leaving unsuspecting customers with huge losses. ## FCA Highlights Areas of Concern in the CFD Market Causing Significant Consumer Harm The scope of the FCA's review was to examine 19 firms providing CFDs on an advisory/discretionary basis and 15 firms distributing CFDs to the end consumer. This is the FCA’s second *“Dear CEO”* letter in just two years to the spread betting market (in addition to other warnings), demonstrating that previous concerns have yet to be adequately addressed by CFD firms.  The Executive Director of Supervision at the FCA, Megan Butler, said: > *“Given the significant weaknesses we found…there is a high risk that firms across the sector are not meeting our rules and expectations when providing and distributing CFDs. As a result, consumers may be at serious risk of harm from poor practices in this sector.”    * The FCA’s intervention represents a welcome crackdown on the CFD market with one unnamed firm now being subject to *“further action”* by the FCA and several firms intending to stop distributing to retail consumers. The FCA highlighted its serious concerns about several breaches of the [FCA Handbook](https://www.handbook.fca.org.uk/handbook) that led to the mis-selling of CFDs: *(1) Poor target market identification* The FCA found that firms used *“excessively broad definitions of target markets”* such as *“experienced”*, *“sophisticated”* and *“financially literate”*. Undefined investor descriptions led them to target the majority of potential customers for selling CFDs when these were highly unsuitable for most customers and did not align to their needs (breaching [Principles 2 & 5](https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html) and [RPPD 1.17(1)](https://www.handbook.fca.org.uk/handbook/document/RPPD_FCA_20130401.pdf)). As CFDs are high-risk complex products, it is very important for firms to ensure their target market (of sophisticated investors willing to make risky bets) is properly identified to ensure that unsophisticated, risk-averse customers were not sold complex and risky CFDs. *(2) Lack of communication, oversight and challenge by providers over how distributors sell the product* All providers reviewed were in breach of the FCA’s [RPPD](https://www.handbook.fca.org.uk/handbook/document/rppd/RPPD_Full_20160321.pdf) guidance. Information was not provided to distributors on key characteristics of specific CFDs such as the inherent risk, the intended target market and whether such information was available to the end consumer. The lack of due skill, care and diligence (breaching [Principles 2 & 6](https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html) and [RPPD 1.18(2)](https://www.handbook.fca.org.uk/handbook/document/RPPD_FCA_20130401.pdf)) in the dissemination of crucial information has led to distributors blindly selling CFDs without understanding enough to give suitable advice to consumers. Moreover, 18 out of 19 firms were unable to demonstrate that they had used robust due diligence in assessing whether an intermediary even had the necessary knowledge and experience to sell CFDs, thereby increasing the risk of poor consumer outcomes. Unfortunately, it is clear that many CFD firms failed to take proper care towards their unsophisticated customers. *(3) Ineffective conflict of interest management arrangements and weak use of management information* The FCA found a widespread culture of failing to identify, manage and mitigate potential conflicts of interest affecting the consumer’s best interests (breaching [Principles 3 & 8](https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html) and [SYSC 10.1.3R](https://www.handbook.fca.org.uk/handbook/SYSC/10/?view=chapter))).  All firms identified had ineffective conflict of interest management systems and, unbelievably in several cases, some firms failed to record even one potential conflict of interest over a period of one year. Moreover, firms failed to effectively use management information to assess the performance of their distributed products, challenge bad practice and analyse poor customer outcomes. *(4) Inadequate client categorisation processes* Firms are duty bound to undertake an adequate assessment of a consumer’s *“expertise, experience and knowledge”* to ensure the product is suitable for the consumer and that they properly understand the risks ([COBS 3.5.3R](https://www.handbook.fca.org.uk/handbook/COBS.pdf)). Much like Mr Justice Andrew Baker’s reasoning in [*Abdullah v Credit Suisse [2017]*](https://lexlaw.co.uk/wp-content/uploads/2018/01/Haider_Abdullah_v_Credit_Suisse_High-Court-Litigation-Lawyers-London-UK-LEXLAW.pdf) (discussed in [our article](https://lexlaw.co.uk/solicitors-london/s150-s138d-fsma-2000-mis-selling-complex-financial-credit-suisse-derivatives-structured-products/)), the FCA found that firms asked poor qualitative questions to assess an investor’s knowledge and accepted weak answers. As a result of an inadequate threshold test, unsophisticated customers were categorised as *“elective professional”,* which allowed firms to sell unsuitable products to unsuspecting clients. *(5) Unsuitable remuneration structures* Many firms paid employees and portfolio managers on a 100% variable basis which *“significantly increase(s) the risk of mis-selling” *since staff working on commission feel pressured to achieve minimum sales targets regardless of the harm done to consumers. [![FCA-Review-UK-CFD-SIPP-Bitcoin- London- Litigation- Solicitors- Financial Mis-selling- Misconduct](https://lexlaw.co.uk/wp-content/uploads/2018/01/FCA-Review-Letter-CFD.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/01/FCA-Review-into-CFD.pdf)Click to Download the FCA Review Letter into the CFD Market ## What Next for the CFD Market? The FCA’s letter and continuing review of the spread betting industry is encouraging for consumers because it demonstrates that the financial watchdog intends to hold firms to account for breaching the regulatory framework. Nevertheless, in a rapidly growing industry where 76% of consumers are losing money, *“Dear CEO”* letters are not enough: the FCA must do more. If CFD market behaviour does not improve, supervisory intervention may be taken by the FCA through a skilled person review or restrictions may be applied to certain wrongdoing firms. However, the FCA has not always championed transparency when investigating misconduct by banks, having refused, for example to publish their [commissioned review](https://www.fca.org.uk/news/press-releases/update-fca-review-rbs-treatment-sme-customers-global-restructuring-group) into RBS’s treatment of SME customers referred to its rogue GRG division; a decision which has been roundly criticised and suggests that the FCA are abdicating their regulatory responsibilities. The FCA’s warning is also unlikely to effect revolutionary change in the way CFDs are sold by large established providers in the market. However, it may ensure that smaller, low-quality operators who are relatively new arrivals to the CFD market will not be able to operate whilst disregarding the FCA guidelines and dangerously mis-selling highly leveraged inappropriate products to ignorant consumers. The best hope of meaningful reform for unsophisticated purchasers of mis-sold CFDs is from Europe. The European Securities and Market Authority (ESMA) [announced](https://www.esma.europa.eu/sites/default/files/library/esma71-99-910_pi_statement_december_2017.pdf) in December 2017 that it will consider utilising product intervention powers under the new Markets in Financial Instruments Directive ([MIFID II](http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0065)) to minimise risks to investors of CFDs by restricting their marketing, distribution and/or sale. A [public consultation](https://www.esma.europa.eu/press-news/esma-news/esma-issues-statement-preparatory-work-in-relation-cfds-binary-options-and) will commence in January 2018 and it is hoped that ESMA maintains its tough stance and considers significant interventions in the CFD market to protect consumers. ## Consumer Rights: Claiming for Financial Loss Suffered Following a Mis-sold CFD or SIPP A purchaser of a mis-sold CFD or SIPP would have to prove that their loss was caused by bad advice provided by the financial advisor showing: - The investment was unsuitable to the client’s needs; or- The level of risk was inadequately explained; or- The consumer did not have sufficient knowledge of CFD trading. If a consumer has suffered loss of capital due to CFD mis-selling there are a number of solutions available that we can assist with: (1) Request a copy of the bank or financial company’s internal complaints process and lodge a formal complaint for compensation. (2) Complain to the independent Financial Ombudsman Service or Pensions Ombudsman. (3) Issue legal proceedings against the bank or financial broker. ## Financial Mis-selling Dispute Lawyers Our market-leading Financial Services Litigation team of Solicitors and Barristers in London are highly experienced in banking litigation and other financial mis-selling claims. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on ☎ 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # RBS’ GRG ‘Just Hit Budget’ Memo: ‘let customers hang themselves’ Source: https://lexlaw.co.uk/solicitors-london/rbs-grg-just-hit-budget-memo-bsu-turnaround-litigation/ *"Rope: Sometimes you need to let customers hang themselves." *A damning 2009 internal memo entitled *"Just Hit Budget!"* was published on 17 January by the Treasury Select Committee as MPs ramp up [their investigation](https://old.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/inquiries1/parliament-2017/rbs-global-restructuring-group-17-19/) into RBS's Global Restructuring Group's mis-treatment of SME's. The leaked tipsheet, which according to a [secret report](https://lexlaw.co.uk/solicitors-london/fca-statement-fca-grg-review-rbs-royal-bank-scotland-global-restructuring-group/) being withheld from publication by the FCA, was not an isolated example of the misconduct of RBS. The memo highlights the underhand pressure tactics deployed by GRG to close deals and squeeze owners of struggling businesses for profit. Many SME customers claim they were pushed to the brink and restructured for profit by GRG. The memo- written by a manager- was circulated among staff and represents a step by step guide on how to swindle their customers. [![Bank RBS Just Hit Budget Memo GRG LEXLAW Litigation Solicitors London](https://lexlaw.co.uk/wp-content/uploads/2018/01/RBS-Just-Hit-Budget-Memo-GRG-LEXLAW-Litigaiton-Solicitors-London.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/01/RBS-GRG-Just-Hit-Budget-LEXLAW-London-Law-Firm.pdf)Download the RBS GRG 'Just Hit Budget' Memo ## Protecting Legal Rights against RBS GRG It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights.  This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. ## The Transcript of the "Just Hit Budget!" Memo **Just Hit Budget!** **Tactics:** **1. Manage expectations** - Set the tone at the handover meeting. - Handover presentation puts a marker down in the first 10 minutes. - Fit the solution to the problem. - Get sanction! **2. Maintain the momentum** -follow up with handover letter, ideally with a facility letter even if only for a short period. -The ball should hardly ever be in our court - nag sanctioners. -Anticipate delays - credit docs turnaround, flag up key equity points before the documentation is issued. -Leverage upsides with high initial monthly fees that substantially reduce upon completion of the upside [REDACTED] was £9.5K now £750 with PPAs). **3. Deliver** -**30 days’ notice**: Under standard Bank terms and conditions we can change terms and conditions with 30 days' written notice - hence post-handover letter. With a fresh facility letter, no notice period is required ... as long as they sign! -Monthly fees or else! -Record each deal on RMP. If it's not on RMP, your deal does not exist. **Tips:** -**Use facility letters**: If they sign, they can't complain. Heads of Terms cannot be enforced. -**Basket cases**: Time consuming but remunerative. -**Perfect deals**: they don't exist - if [REDACTED]'s unhappy and customer's unhappy then you probably have the balance right. -**Deal  or no deal?** No deal, no way. Missed opportunities will mean missed bonuses.  You can always revisit an earlier deal. -**Handover debt**: if you formalise the handover debt: not new money but customer likely to sign the facility letter to confirm the new limit, avoids immediate excesses and locks in immediate income. -**Be specific**: avoid round number fees - £5,300 sounds as if you have thought about it, £5K sounds like you haven't. -**Rope**: Sometimes you need to let customers hang themselves. You have then gained their trust and they know what's coming when they fail to deliver. -**Never**: Issue "until further notice" overdraft letters. **16 Ways to generate Income:** **1. Monthly fees**: minimum £500.  Ideally on average we need c10% premium on our debt (current return will be <5%, mezz return should be about 15%). E.g. Debt £2m suggest £200K premium i.e. monthly fee £16K! They normally cannot afford this and you can then leaverage an upside.  Set up recurring income action on RMP. Diary note for when they expire. **2. Exit fees**: Normally monthly 0.5% of all the balances to drive a re-finance. Consider ratcheting. Useful for property developments. **3. Facility fees**: Aim for 2% but if doing a restructure aim much higher although may have to add to our debt. **4. Redemption premiums/Other upsides**: Include in new loan facilities if significant (min. 10% premium) and deferred e.g. £50K in 6 months time then record as "other upside". Use with caution. **5. Conditional Support Fees**: E.g. equity concluded by date X or fee £Y applies - helps deliver a deal or secure income if deal falls away. **6. Default Interest Rates**: Check each loan facility prior to handover, formal notice of default required, refer to the paragraph, change back office and register the margin enhancement. Need to allow 3 days for them to remedy the breach. **7. IIS**: Care - no margin enhancements and no fees, but if a refinance likely then you can claim back all the IIS! [REDACTED] £600K). Also turns off Bankline, practically may have to have IIS only on loans. **8. Excess fees**: Charge for any pre-notified excess. **9. Non-receipt of MI**: Minimum £100 per month. **10. Margin enhancement**: Minimum margin should be as per Bank matrix unless/until you agree an upside. Claim the margin until new limits formalised. **11. New money**: With a new money action on RMP you can claim ALL the margin on the new money **12. Royalty fees**: If equity going to have no value, consider a percentage of turnover (formal documentation available). **13. Service charge**: We should have everyone on standard tariff.• [REDACTED] and [REDACTED] can help. **14. RBSIF**: You can claim one off "notional income" for the margin on RBSIF facilities if they drawdown and you introduce them.  E.g. RBSIF drawdown with £1m funds in use limit at 3% margin - you get £30K income. **15. GBM**: They should email us with income elements of SWAPs etc. when they enter them and when they redeem. **16. Security fees**: Standard pricing per item per the standard Commercial Bank tariff to apply - on taking as well as on releasing. Financial Services Litigation Team, LEXLAW --- # Court of Appeal hands down judgment in Property Alliance Group (PAG) v RBS (2 March 2018) Source: https://lexlaw.co.uk/solicitors-london/property-alliance-group-rbs-grg-appeal-solicitors-london/ *The Court of Appeal has today (2 March 2018) handed down judgment in the highly anticipated appeal in [Property Alliance Group Limited v The Royal Bank of Scotland PLC [2018] EWCA Civ 355. ](https://www.judiciary.gov.uk/wp-content/uploads/2018/03/pag-v-rbs.pdf)* *Although the claimant's appeal was unsuccessful, the judgment contains useful grounds for future claims for potential claimants and the case can be distinguished. **The appeal failed in this case because the Court of Appeal found that RBS's admission of manipulating LIBOR was irrelevant, as the swaps were confined to GBP LIBOR, and the judge found no evidence of the latter's manipulation. * *PAG appealed on four claims and all four were dismissed. However, on the claim of LIBOR manipulation, future litigants will find comfort in the court's finding that a "party to a contract containing a swap needs to be certain of the counterparty’s honesty at the beginning of the deal not just in the future but throughout its course." The Court of Appeal's decision on the LIBOR claim opens up other banks to future claims of LIBOR manipulation.  * ## The High Court Judgment [Property Alliance Group Limited v The Royal Bank of Scotland PLC [2016] EWHC 3342 (Ch)](http://www.bailii.org/ew/cases/EWHC/Ch/2016/207.html) before Mrs Justice Asplin was the first High Court case to consider a claim involving RBS's Global Restructuring Group (“GRG”).  The case focused on 3 claims: - **Swaps:** alleged mis-selling of 4 interest rate swaps to PAG- **GRG:** alleged abuse of discretion and bad faith- **LIBOR:** alleged implied representations relating to the setting of LIBOR. The High Court dismissed all of PAG's claims. ## The Importance of the Court of Appeal Judgment The importance of the Court of Appeal judgment lies in determining how the judiciary will view the prospects of success for claimants bringing LIBOR mis-selling claims and alleging that GRG caused the failure of their businesses. [![](https://lexlaw.co.uk/wp-content/uploads/2018/03/PAG-v-RBS-2018-Court-of-Appeal.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/03/pag-v-rbs.pdf) Click to Download Court of Appeal Judgement in Property Alliance Group v RBS [2018] EWCA Civ 355 ## PAG's claims against RBS PAG made the following claims against RBS: - **Negligent Misstatement Claim:** A claim that RBS is liable in tort for negligent misstatement as a result of its failure to provide PAG with information about potential break costs;- **Misrepresentation Claim**: A claim that RBS falsely represented to PAG that each of the Swaps was a “hedge” and, hence, that they would reduce PAG’s interest rate risk;-  **LIBOR Claims:** A claim that RBS fraudulently made implied representations about LIBOR and how it was set;- **Valuation Claim:** A claim that RBS was wrong to have PAG’s portfolio revalued in August 2013. ##  Court of Appeal's Judgment The Court of Appeal dismissed the claimant's appeal on all 4 claims. Nevertheless, the Court provided some welcome elucidation on LIBOR issues. Future claimants-especially those from smaller businesses- should not be discouraged from litigating as this judgment can be distinguished from this case, which involved a large investment and development business with derivative advisors. Below are some sections from the judgment for each of PAG's claims. ### 1. Negligent Misstatement Claim > We do not agree that there was any such breach of duty. It is clear from the documentation and other evidence at the trial that PAG was made fully aware that (1) breaking any of the Swaps could carry adverse financial consequences, (2) the size of those financial consequences would depend upon interest rates at the time the Swaps were broken, and (3) the precise calculation of any amount to be paid by PAG would take into account the extent to which, if at all, the floating-rate payable by RBS under the Swaps was lower than the fixed interest payable by PAG. > >     PAG v RBS [2018] at para 72 > > In short, there was no error in the way that RBS explained the terms of the Swaps, including the circumstances in which break costs might be incurred and how they would be calculated.  PAG v RBS [2018] at para 75 ### 2. Misrepresentation Claim > We consider that, on the evidence and in the factual context in which the expression “hedge” was used by RBS and those acting on its behalf, the Judge was entitled to reach her conclusion (in paragraph 230 of her judgment) that the reasonable representee would not have understood that expression in the way for which PAG contends. > >   PAG v RBS [2018] at para 90 > > In the absence of evidence sufficient to justify a finding that one or more of Mr Bescoby, Mr Jones and Mr Goldrick thought that “hedge” in relation to the Swaps bore Mr Virji’s meaning and intended that references by them to “hedge” should be understood to have that meaning or were reckless as to whether such references would be understood in that way, there is no foundation for a finding of fraudulent misrepresentation against RBS. > > PAG v RBS [2018] at para 111 ### 3. LIBOR Claims > We do not accept this submission since the law relating to misrepresentation fulfils a different function from the law relating to implied terms. The former deals with the present not the future and gives potential remedies which may be more appropriate than a claim for damages. A party to a contract containing a swap needs to be certain of the counterparty’s honesty at the beginning of the deal not just in the future but throughout its course. If a claimant has suffered no loss, that may be relevant to remedy but should not exclude a right to rely on misrepresentation if any misrepresentation has occurred. > > PAG v RBS [2018] at para 125 > > In the present case there were lengthy discussions between PAG and RBS before the Swaps were concluded as set out by the Judge in the earlier part of her judgment. We have particularly in mind the facts and matters set out in paragraphs 51-54 and 82-83 of the judgment. RBS was undoubtedly proposing the swap transactions with their reference to LIBOR as transactions which PAG could and should consider as fulfilment of the obligations contained in the loan contracts. In these circumstances we are satisfied that RBS did make some representation to the effect that RBS itself was not manipulating and did not intend to manipulate LIBOR. Such a comparatively elementary representation would probably be inferred from a mere proposal of the swap transaction but we need not go as far as that on the facts of this case in the light of the lengthy previous discussions. In this sense the case is comparable to UBS v KWL in which a not dissimilar representation was implied from what Depfa had been told by UBS and the fact that the relevant transaction was put forward to Depfa by UBS. It is true that UBS had also told Depfa that it had done due diligence as KWL but we do not consider that fact to have been decisive on its own in the mind of Males J in that case. > > We therefore disagree respectfully with the Judge when she held (paragraph 407), admittedly in the context of the intricate pleaded representations, that the proffering of the Swaps was not in the context of this case conduct from which any representation could be inferred. > > PAG v RBS [2018] at para 133-134 ### 4. The Valuation Claim > In short, although we differ from the Judge on whether the power conferred on RBS by clause 21.5.1 of the 2011 facility was subject to an implied limitation, there is no reason to doubt her conclusion that RBS was entitled to commission the 2013 valuation and to recover its cost from PAG. This ground of appeal therefore fails. > > PAG v RBS [2018] at para 175 ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights.  This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of Solicitors and Barristers in London are [highly experienced](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on ☎ 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # Property Alliance Group v RBS [2018]: Court of Appeal Opens the Door for Implied Misrepresentation Claims against Banks Mis-selling LIBOR-linked Derivatives Source: https://lexlaw.co.uk/solicitors-london/property-alliance-group-pag-rbs-grg-2018-appeal-libor-manipulation-mis-selling-derivatives-swaps/ *The Court of Appeal (Sir Terence Etherton MR, Longmore LJ and Newey LJ) handed down judgment in the highly anticipated appeal from Asplin J’s decision in [Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2016] EWHC 207 (Ch)](http://www.bailii.org/ew/cases/EWHC/Ch/2016/207.html). The litigation has been viewed as a “test case” by potential Claimants alleging the mis-selling of complex derivatives. This judgment is now the leading authority on claims concerning a customer’s ability to rescind contracts with a [bank that has manipulated the London Interbank Offered Rate (LIBOR)](https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/). * *The Court of Appeal dismissed the £30 million appeal brought by [Property Alliance Group (PAG)](http://www.propertyalliancegroup.com/) on the sale of interest rate hedging products and the bank’s exercise of its contractual facility rights. Although the Court dismissed all four of PAG’s claims on the facts, two legal principles have been decided that may pave the way for future claims against banks.* *It has been reported that it is likely that PAG are likely to seek a [direct appeal to the UK Supreme Court. ](https://www.thetimes.co.uk/article/mis-selling-claim-set-for-supreme-court-appeal-3pc5gl86v) * *[Click here to download the full judgment](https://lexlaw.co.uk/solicitors-london/property-alliance-group-rbs-grg-appeal-solicitors-london/): [Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] EWCA Civ 355](https://lexlaw.co.uk/wp-content/uploads/2018/03/pag-v-rbs.pdf)* ![](https://lexlaw.co.uk/wp-content/uploads/2018/03/RBS-royal-bank-scotland-logo-grg-lexlaw-litigation-solicitors-london.png) ## Court of Appeal decides two legal principles to protect customers from banks The good news for potential Claimants against banks was two-fold. Firstly, the Court of Appeal found that there was certainly an implied representation that the [Royal Bank of Scotland (RBS)](https://personal.rbs.co.uk/personal.html) was not manipulating and did not intend to manipulate [LIBOR](https://www.bankrate.com/rates/interest-rates/libor.aspx) when it entered into a Swaps agreement. Although the scope of this representation failed on the facts, the re-formulation of this legal principle by the judiciary in banking law provides welcome encouragement for potential litigants that have been mis-sold LIBOR-linked derivatives and are suing banks that have been at fault for manipulating this key benchmark. Secondly, it was held that RBS’s (through [GRG](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/)) contractual facility rights to call for valuations of a customer’s assets was not unfettered but subject to an implied term that it could only be exercised for a purpose related to the bank’s *“legitimate commercial interests”*. This paves the way for stronger arguments against GRG, especially given the publication of the [section 166 skilled person’s report](https://lexlaw.co.uk/wp-content/uploads/2018/03/s166-rbs-grg.pdf). Future Claimants may be able to rely on this implied term and the evidence in the section 166 report and the *[“Just Hit Budget” memo](https://lexlaw.co.uk/solicitors-london/rbs-grg-just-hit-budget-memo-bsu-turnaround-litigation/)* to decisively to a Court that GRG did indeed exercise its facility rights not for *“legitimate commercial interests”*. ## PAG v RBS [2018]: Summary of the facts PAG is in the business of property investment and development and has a portfolio of industrial sites, offices, retail and leisure properties. RBS was PAG’s primary source of commercial banking facilities and entered into 11 transactions in derivatives between 2003 and 2014. PAG employed banking specialists and took advice from a leading derivatives advisory firm to consult on strategies including interest rate hedging. The proceedings focus on four Swaps sold to PAG between 2004 and 2008. The first Swap was a cancellable *"Multi Callable Libor Value Collar"* for a notional amount of £10 million referenced to 3 month LIBOR. In simple terms, no matter how high the 3 month LIBOR rate went up, PAG would pay interest at no more than 6.25% and if the 3 month LIBOR rate fell below 3.30%, PAG would pay interest at 5.25% and would be liable to pay a break cost. The second Swap was a *"Libor Cancellable Discount Swap (Bank)"* for a notional amount of £15million for 4 years and then £30million for a further 6 years, referenced to LIBOR. The third Swap was a cancellable *"Libor Collar"* for a notional amount of 20 years for up to five years. The fourth Swap was a cancellable *"Switchable LIBOR to base rate callable Swap"* for a notional amount of £15million up to a five year term. In 2010, RBS transferred PAG to the auspices of its Global Restructuring Group (GRG). GRG proceeded to demand valuations of PAG’s properties over which RBS held security.  In 2011, PAG terminated the Swaps and incurred a break cost of over £8 million. In 2014, PAG sought funding elsewhere, securing a facility with [HSBC](https://www.hsbc.co.uk/), and completed repayment of all outstanding indebtedness to RBS by July 2014. ## PAG v RBS [2018]: Summary of the proceedings In 2013, PAG issued proceedings against RBS and sought rescission of the Swaps and/or damages. In 2016, PAG alleged to the High Court it had been mis-sold four interest rate Swaps referable to GBP 3 month LIBOR. PAG asserted that they were entitled to rescind the Swaps due to the implied representations made by RBS on the authenticity and integrity of LIBOR. PAG alleged that RBS’s representations were both false and fraudulent due to the manipulation of LIBOR, which had been proved by the regulatory findings against RBS. In addition, PAG alleged that GRG breached implied terms in their facility agreement and thereby abused its discretion and acted in bad faith. The Hon. Mrs Justice Asplin dismissed the Swaps, LIBOR and GRG claims in their entirety. PAG appealed the High Court decision. Lord Justice Patten when granting PAG permission to appeal, described the case as a *“vehicle”* to determine important issues in banking law. PAG relied on certain points in the Court of Appeal, namely: - ** Negligent Misstatement Claim:** A claim that RBS is liable in tort for negligent misstatement as a result of its failure to provide PAG with information about potential break costs;- **Misrepresentation Claim**: A claim that RBS falsely represented to PAG that each of the Swaps was a *“hedge”* and, hence, that they would reduce PAG’s interest rate risk;-  **LIBOR Claims:**A claim that RBS fraudulently made implied representations about LIBOR and how it was set; and- ** Valuation Claim:**A claim that RBS was wrong to have PAG’s portfolio revalued in August 2013. Although the Court of Appeal unanimously dismissed PAG’s appeal, the points of law formulated in the LIBOR claims and Valuation claim may pave the way for future claims against banks accused of manipulating LIBOR and who have sold LIBOR-linked derivatives. ## Claimants can rely on a banks’ implied representation that it was not and will not manipulate LIBOR when selling a Swap The question answered by the Court of Appeal on whether the bank’s LIBOR representations could be implied was described by RBS as *“the most important legal issue in the case”*. RBS lost this legal issue as the Court found that there was enough conduct on RBS’s part for such a representation about LIBOR to be implied. An important principle in banking law has been elucidated at the highest level thus far: a bank which sells a LIBOR referenced derivative will be taken to impliedly represent that it has not and will not manipulate LIBOR. If a Claimant can show that that a bank manipulated LIBOR for the particular currency to which the Swap is referenced, then there are potentially grounds to rescind the contract. ### RBS’s “deeply shocking” misconduct undermined the integrity of LIBOR The importance of the LIBOR claims lies in the fact that RBS has [been found guilty of manipulating LIBOR](https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/). Between 2006 and 2012, it is widely accepted that on many occasions submissions were made by panel banks which did not reflect the rate at which those banks legitimately believed they could borrow funds but were instead rates which were thought to benefit the banks’ trading position. The [Financial Services Authority (FSA)](https://www.fca.org.uk/) (now known as the FCA) investigated widespread LIBOR manipulation and in particular found that RBS had committed substantial breaches of Principles 3 and 5 of the [Principles for Businesses](https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html). These breaches [resulted in a fine of £87.5 million for RBS](https://www.fca.org.uk/news/press-releases/rbs-fined-%C2%A3875-million-significant-failings-relation-libor) in February 2013. The FSA concluded that RBS’s misconduct undermined the integrity of LIBOR- in particular with the manipulation of rates that formed part of the calculation of Japanese yen and Swiss franc LIBOR. The Court did strongly chastise RBS for its LIBOR manipulation and noted that the admitted manipulation of Japanese yen LIBOR and Swiss franc LIBOR was *“deeply shocking”*. However, crucially for PAG’s case, no specific findings were made in relation to GBP LIBOR and as such there have been no regulatory findings of misconduct on the part of RBS in connection with GBP LIBOR. ### When a bank says nothing about LIBOR there is an implied representation that their role in the setting of LIBOR was an honest one PAG’s claim was that, if it had realised LIBOR was manipulated, it would never have agreed to enter into the Swaps in the first place and as such, the Swaps should be rescinded. No such representation was expressly made by RBS, so therefore the question was whether this representation could be implied. PAG alleged that 4 representations should be implied from RBS’s conduct in proposing the Swap contracts; however, the Court proceeded on the simpler formulation that* “RBS was representing that, at the date of the Swaps, RBS was not itself seeking to manipulate LIBOR and did not intend to do so in the future”*. There has not been a substantial amount of authority on the material required for the making of an implied representation for a banking transaction, The Court considered the interlocutory observations in *[Graiseley Properties Ltd v Barclays Bank plc [2013] EWCA Civ 1372](http://www.bailii.org/ew/cases/EWCA/Civ/2013/1372.html)* and determined that to some extent, these comments should represent the law. In *Graiseley*, Longmore LJ strongly disagreed with the submission that when nothing was said by a bank in connection with LIBOR, there was no obligation to disclose its own dishonesty: > *“In the present case, however, the banks did propose the use of LIBOR and it must be arguable that, at the very least, they were representing that their own participation in the setting of the rate was an honest one. It is, to my mind, surprising that the banks do not appear to be prepared to accept that even that limited proposition is arguable. It was also submitted that doing nothing cannot amount to an implied representation. But it is (arguably) the case that the banks did not do nothing in that they proposed transactions which were to be governed by LIBOR. That is conduct just as much as a customer's conduct in sitting down in a restaurant amounts to a representation that he is able to pay for his meal, see DPP v Ray [[1974] AC 370](http://www.bailii.org/cgi-bin/redirect.cgi?path=/uk/cases/UKHL/1973/3.html), 379D per Lord Reid."* > > *Graiseley Properties Ltd v Barclays Bank plc [2013] at para 27- 28* The Court assented to Longmore LJ’s reasoning that when a bank says nothing about LIBOR, there is an implied representation that *“their own participation in the setting of the rate was an honest one”*. Therefore, there was sufficient conduct on the bank’s part for such a representation to be duly implied. The Court rejected RBS’s submission that it would be wrong to hold that any representation should be implied as it *“covered ground which would normally be covered by an implied term”*. The Court found that a counterparty should be able to rely on misrepresentation: > *“We do not accept this submission since the law relating to misrepresentation fulfils a different function from the law relating to implied terms. The former deals with the present not the future and gives potential remedies which may be more appropriate than a claim for damages. A party to a contract containing a Swap needs to be certain of the counterparty's honesty at the beginning of the deal not just in the future but throughout its course. If a Claimant has suffered no loss, that may be relevant to remedy but should not exclude a right to rely on misrepresentation if any misrepresentation has occurred.” * > > *Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] at para 125* ### Court re-formulated Colman J’s “helpful test” on the existence of an implied representation As well as accepting the reasoning of Longmore LJ in *Graiseley*, the Court also considered *Geest plc v Fyffes plc [1999] 1 All ER (Comm) 672* and endorsed Colman J’s *“helpful test”*: > *“In evaluating the effect of the beneficiary's conduct a helpful test is whether, having regard to the beneficiary's conduct in such circumstances, a reasonable potential surety would naturally assume that the true state of facts did not exist and that, had it existed, he would in all the circumstances necessarily have been informed of it." * > > *Geest plc v Fyffes plc [1999] at p683* Therefore, the Court endorsed the test that the existence of an implied representation can be found if a reasonable potential surety would naturally assume that the true state of facts did not exist and that if it did, he would necessarily be informed of it. This is the first occasion where this *“helpful test”* has been considered at this level and may now pave the way for future misrepresentation claims. The approval of the dicta of Colman J is an important win for potential Claimants on this essential point of law, but it must be noted that there must be clear words and/or conduct from a bank from which the representation can be implied. ### “RBS did make some representation to the effect that RBS itself was not manipulating and did not intend to manipulate LIBOR” Having reformulated the implied representation test, the Court did find that RBS had indeed made an implied representation to PAG that it was not manipulating LIBOR: > *“In the present case there were lengthy discussions between PAG and RBS before the Swaps were concluded as set out by the Judge in the earlier part of her judgment….RBS was undoubtedly proposing the Swap transactions with their reference to LIBOR as transactions which PAG could and should consider as fulfilment of the obligations contained in the loan contracts. In these circumstances we are satisfied that RBS did make some representation to the effect that RBS itself was not manipulating and did not intend to manipulate LIBOR.” * > > *Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] at para 133* Therefore, the Court disagreed with Asplin J’s judgment that the proffering of Swaps was *“not in the context of this case conduct from which any representation could be inferred”*. There was an implied representation by RBS that it was not manipulating LIBOR when it sold PAG the Swaps. The door has been opened for misrepresentation claims to be brought by a counter-party to derivative which is linked to LIBOR, where the Swap is with a LIBOR panel bank which has been found to have engaged in the manipulation of LIBOR. ## Implied representation cannot extend further than particular transactions induced by representations PAG’s LIBOR claim failed on the facts because, although the Court found that there was an implied representation that RBS was not manipulating and did not intend to manipulate LIBOR, the manipulation was limited to Swiss franc LIBOR and Japanese yen LIBOR and crucially there was no factual finding that GBP LIBOR had been manipulated and the Swaps in PAG’s case were specifically referenced to the latter. ### Representation extends to all tenors of GBP LIBOR but not to LIBOR in other currencies The Court was unwilling to extend the scope of the representation to a currency to which the Swaps were not referenced. PAG contended that RBS should be held to have made general representations about *“LIBOR encompassing every tenor and every currency”*, whereas RBS claimed that any such representation should be confined solely to 3 month GBP LIBOR. The Court did not go as far as either contention. It was found that RBS during its discussions with PAG had made an implied representation and this representation extended to all tenors of GBP LIBOR, but not to LIBOR in other currencies. The approach of Flaux J in *Graiseley* was raised by PAG, Flaux J having noted that: > *“it is a wholly artificial exercise to seek effectively to divide up the various LIBOR fixings or manipulations into separate currencies. It is quite clear that there was fixing not only of sterling LIBOR but also of dollar LIBOR and of EURIBOR, and that, as I said during the course of argument, there is inevitably scope for cross-infection here.”* > > *Graiseley Properties Ltd v Barclays Bank plc [2013] at para 19* The court recognised the issue of *“cross infection”* but distinguished RBS because the main sterling submitter for RBS was a different person to other currency submitters. The Court did strongly chastise RBS for its LIBOR manipulation and noted that the admitted manipulation of Japanese yen LIBOR and Swiss franc LIBOR was *“deeply shocking”*. But decisively,* “that is not, of itself, a reason for holding that representations made to PAG should go further than representations about the sterling LIBOR rate.”* Although the Court were clear that *“any implied representation cannot legitimately extend further than the particular transactions allegedly induced by the representations”*, the door was left open to extending the scope of implied representation if the facts of a case so dictate. Future cases may test the boundaries of the scope of implied representation. One such example of when the *“cross-infection”* argument may become relevant was raised by the court: “*If, of course, a submitter in yen or Swiss francs had also made sterling submissions, that might render false the representation about sterling LIBOR”.* The Court’s reformulation of Colman J’s helpful implied representation test failed on the facts of this case because although there was an implied representation, due to the particular derivative sold, this was not misrepresentation. Nevertheless, future Claimants will be assured that the Court left open the possibility of future cases extending the scope of implied representation beyond the particular transactions induced in this case. ## RBS’s contractual facility right to call for valuations of security is not unfettered but subject to an implied term that it can only exercise its’ right for “legitimate commercial aims” Under the provisions of one of the facility agreements with the bank, RBS had the right to require a valuation at PAG’s cost of all of the assets over which it held security. Clause 21.5.1 of the 2011 facility provided as follows: > *"The Lender [i.e. RBS] may, at any time, require the Valuer to prepare a Valuation of each Property [i.e. each of the properties over which RBS held security]. The Borrower [i.e. PAG] shall be liable to bear the cost of that valuation once in every 12 month period from the date of this Agreement or where a default is continuing."* PAG advanced the argument that this contractual right was not unfettered but was subject to an implied term, of the kind found in *[Socimer International Bank Ltd v. Standard Bank London Ltd [2008] EWCA Civ 116](http://www.bailii.org/ew/cases/EWCA/Civ/2008/116.html)*, requiring RBS to act: > *"reasonably, in a commercially acceptable or rational way, in good faith, for a proper purpose (i.e. the purpose for which such power or discretion was conferred), not capriciously or arbitrarily and not in a way that no reasonable lender, acting reasonably, would do"*  (to quote from the Particulars of Claim). > > *Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] at para 162* PAG argued that GRG’s request for valuation was arbitrary and pointless because, according to a witness statement from an RBS manager, RBS had decided by May 2013 against refinancing PAG and clause 21.5.1 was exercised without rational reason after this time in August 2013. Moreover, the convincing argument was advanced that if clause 21.5.1 was not constrained by a *Socimer*-type implied term, then *“there would have been nothing to stop RBS requiring a valuation every week or even every day.”* On the other hand, Mrs Justice Asplin in the High Court agreed with RBS’s submission that a *Socimer*-type implied term did not arise as clause 21.5.1 had been inserted primarily for RBS’s benefit and RBS was (in her view) not obliged to take account of PAG’s interests when deciding to invoke the provision. ### Socimer-type implied terms accepted to limit a bank’s exercise of contractual rights The Court of Appeal examined the *Socimer* line of authorities and looked favourably upon the previous authorities submissions on implied terms. Rix LJ in *Socimer* held: > *"It is plain from these authorities that a decision-maker's discretion will be limited, as a matter of necessary implication, by concepts of honesty, good faith, and genuineness, and the need for the absence of arbitrariness, capriciousness, perversity and irrationality. The concern is that the discretion should not be abused.”* > > *Socimer International Bank Ltd v. Standard Bank London Ltd [2008]* at para 66 Moreover, in *Paragon Finance plc v Nash [[2001] EWCA Civ 1466](http://www.bailii.org/ew/cases/EWCA/Civ/2001/1466.html)*, Dyson LJ submitted that power was not completely unfettered and an *“implied term is necessary in order to give effect to the reasonable expectations of the parties.”* Jackson LJ agreed in *[Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd](http://www.bailii.org/ew/cases/EWCA/Civ/2013/200.html) *[[2013] EWCA Civ 200](http://www.bailii.org/ew/cases/EWCA/Civ/2013/200.html) that, where there was a one-sided contract under which only one party is permitted to exercise discretion (such as RBS’s right to demand a valuation pursuant to the 2011 facility agreement), there is an implied term* “that the relevant party will not exercise its discretion in an arbitrary, capricious or irrational manner”*, which is *“extremely difficult to exclude”*. The Court of Appeal adapted the *Socimer*-type implied term. In accepting PAG’s appeal on this point of law, the power conferred by clause 21.5.1* “was not wholly unfettered”* and: > *“In the circumstances, it seems to us that RBS must have been free to act in its own interests and that it was under no duty to attempt to balance its interests against those of PAG. It can, however, be inferred that the parties intended the power granted by clause 21.5.1 to be exercised in pursuit of legitimate commercial aims rather than, say, to vex PAG maliciously. It appears to us, accordingly, that RBS could not commission a valuation under clause 21.5.1 for a purpose unrelated to its legitimate commercial interests or if doing so could not rationally be thought to advance them.” * > > *Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] *at para 169 Therefore, the Court has formulated an important principle and accepted *Socimer*-type implied terms in banking law: contractual facility rights of banks which are one-sided in their application are subject to an implied term that their exercise must not be for a purpose *“unrelated to its legitimate commercial interests.”* Contractual powers must not be used to *“vex* [a customer] *maliciously”*. On the facts, PAG’s claim failed as *“there is no reason to doubt* [Asplin J’s]* conclusion that RBS was entitled to commission the 2013 valuation and to recover its cost from PAG.”* However, although PAG could not prove GRG’s exercise of their contractual facility rights was used to *“vex maliciously”*, perhaps the overwhelming evidence gathered against GRG will ensure a Court is more likely to accept this submission in the future. ## Relevance to those Mis-sold Complex Derivative Products? ### Future Claimants may have a stronger case that they were wrongfully transferred to GRG PAG claimed it was wrongfully put into RBS’s GRG unit at a time when it was trading well. However, PAG can be distinguished from other potential Claimants- especially those indirectly referenced in the section 166 report. PAG were a particularly unworthy Claimant for reasons explained by Asplin J, including rejecting the advice of a leading derivatives advisory firm on the first Swap; leasing a private jet and trading 58 currency forwards to hedge its FX exposure and requesting quotes to convert its debt to Japanese yen and Swiss francs to take advantage of their low interest rates. In PAG’s case, RBS were arguably entitled to act as they did when they transferred the business to GRG as the bank were concerned that the business was incurring exorbitant costs on a private jet and significant entertainment costs whilst it had a very high LTV and market conditions were worsening at the time in 2008. Perhaps future litigants will be deemed a more deserving Claimant by a Court, especially given the publication of the section 166 report. ### Opens the door for Claimants to rescind a LIBOR-linked derivatives contract if an implied representation that a bank is not manipulating LIBOR is made out On the LIBOR claim, the court clarified the interlocutory observations in *Graiseley *and reformulated Colman J’s *“helpful test”* in *Geest. *An important legal principle in banking law has been accepted at the Appellate level: a bank which sells a LIBOR referenced derivative will be taken to impliedly represent that it *“was itself not manipulating and did not intend to manipulate LIBOR.”* If a Claimant can show that that a bank manipulated LIBOR for the particular currency the Swap is referenced to (e.g. through regulatory findings), then there are grounds to rescind the contract. This ruling opens the door for customers to argue that an implied misrepresentation by a bank is a ground to rescind a derivatives contract. ### Publication of section 166 report will add evidence to the principle that a bank cannot exercise its contractual facility rights for a purpose that does not not reflect a “legitimate commercial aim” The Court’s acceptance of *Socimer*-type implied terms ensures that a bank cannot exercise its contractual rights in an unfettered away and for a purpose that does not reflect a “*legitimate commercial aim”*. PAG claimed that GRG had forced them to pay for valuations of property which they felt were unnecessary. Although on the facts, PAG’s claim failed, many customers feel that GRG used such clauses as form of punishment to artificially distress their businesses. A full discussion on [RBS GRG’s parasitic treatment of SMEs can be found in our article](https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/). The Court’s acceptance that the abuse of a contractual term can be used in an argument against a bank will prove encouraging for former customers of GRG, especially given the publication of section 166 report and other damning evidence such as the *[“Just Hit Budget” memo](https://lexlaw.co.uk/solicitors-london/rbs-grg-just-hit-budget-memo-bsu-turnaround-litigation/)*, which may go some way in proving the intention that GRG did indeed exercise rights in a way that did not reflect a *“legitimate commercial aim”*. ## LEXLAW LIBOR Litigation & Financial Services Dispute Resolution Our Financial Services Litigation team of Solicitors and Barristers in London are highly experienced in banking litigation. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on ☎ 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # HM Parliament Condemns RBS GRG’s Parasitic Treatment of SMEs Source: https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/ *On 18 January 2018, a [Parliamentary backbench motion](https://hansard.parliament.uk/commons/2018-01-18/debates/662C3FBE-7CAA-47F9-A63A-D01564E21B44/RBSGlobalRestructuringGroupAndSmes) on [RBS](https://personal.rbs.co.uk/personal.html)’s Global Restructuring Group’s (GRG) systemic failure to protect SMEs has received unanimous Ministerial support in condemning the bank’s parasitic relationship and systematic asset stripping of the British business sector. The debate provided further evidence of widespread endemic malpractice leading to accusations that [Lloyds](https://www.lloydsbank.com/) and RBS’s turnaround divisions committed the “largest theft anywhere, ever."* ![London Litigation Lawyers SME GRG](https://lexlaw.co.uk/wp-content/uploads/2016/10/RBS-GRG-Logo-Royal-Bank-of-Scotland-Global-Restructuring-Group-LEXLAW-Solicitors-Barristers.png) RBS was criticised for its *“extraordinarily aggressive”* approach to litigation and bullying SMEs into submission. [LEXLAW](https://lexlaw.co.uk/) was the only law firm referenced by Parliament for our work in highlighting the inherent legal inequality of power between lenders and businesses.  Concerns were raised about RBS’s *“entirely unsatisfactory”* ad hoc compensatory redress scheme akin to a *“burglar… [picking] the jury for his trial.”* GRG’s *“horrifying”* *“Just Hit Budget”* memo- bleakly stating *“let customers hang themselves”*- acted as damning evidence of the *“profoundly sick culture”* within that bank. The [FCA](https://www.fca.org.uk/)’s Kafkaesque cloaking of Promontory’s skilled persons report into deliberate mistreatment by the rogue unit was unanimously criticised; especially after the bombshell revelation that RBS *“knew or shown of known… [about GRG’s] intended and co-ordinated strategy”* to artificially distress and raid SMEs to re-build their own profits after the financial crash. The House assented to the essential need to reform the banking system with the following suggestions: an independent inquiry to provide transparent accountability; a Treasury-backed FCA proposal to widen access to the [Financial Ombudsman Service](http://www.financial-ombudsman.org.uk/) (FOS); the APPG on Fair Business Banking-backed establishment of an impartial Financial Services Tribunal to resolve customer disputes ([LEXLAW led calls for a Tribunal in 2016](https://lexlaw.co.uk/solicitors-london/petition-financial-services-tribunal-resolve-bank-customer-litigation-disputes/)); a proposal to introduce an Office of the Whistleblower to protect the rights of those exposing endemic bank wrongdoing and finally LEXLAW’s call on the FCA to release the independent report into GRG misconduct to bring justice to their victims. The evidence against RBS has mounted, so too does the responsibility to act. The overriding message coming from Parliament is: *“enough is enough”*. ## What is GRG? GRG is shorthand for Global Restructuring Group, which was [NatWest](https://personal.natwest.com/personal.html)/RBS’s turnaround or business support unit (BSU) for troubled businesses. GRG was set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services. Following the financial crash in 2008, GRG took control of 16,000 SME customers with assets of £65 billion. After suffering a maelstrom of controversy following the publication of the Tomlinson Report [and former Bank of England deputy Sir Andrew Large’s report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx), RBS announced in August 2014 that it would be shutting down its controversial GRG team after allegations of misfeasance and wrongful profiting were brought to light. The bank recovery team were tasked to recover debt owed to the bank but were purposefully mis-described as providing *“business support”*. In fact these departments managed RBS’s distressed and impaired customers that had lending secured by property based assets. The members of these teams prepared and submitted exit strategies and liaised with LPA Receivers and Administrators and the bank’s solicitors to recover debt owed to the bank. Some of these recovery teams, for example, at RBS GRG, Barclays BSR and Lloyds BSU behaved in an aggressive and arguably dishonest and unfair way designed to maximise profit for the bank. Bank recovery departments were often highly incentivised to overstate the bank’s write-down provisions in order to obtain bonuses for recovering more than the bank expected to recover. This included for example moving lending rates to rigged rates (LIBOR); setting up pre-pack administration deals without the customer’s knowledge; and pressurising customers into Profit or Property Participation Fee Agreements (PPFA) whereby associated parts of the bank (West Register) would take up free shares in a business or gain a percentage of sale proceeds. Instead of SMEs getting the help they needed in a weak economy, GRG targeted the unregulated SME sector and became a profit churning processing unit to exacerbate the demise of SMEs and squeeze capital to improve RBS’s own post- credit crunch balance sheet. In November 2016, RBS admitted it had failed SME customers and established a so-called independent (but [heavily criticised by LEXLAW](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf)) FCA-backed [complaints process fund](https://www.rbs.com/rbs/GRGComplaintsProcess.html) of £400million to refund complex fees paid by SME customers between 2008 and 2013. In November 2017, the FCA published a heavily redacted Promontory summary report into GRG mistreatment of customers. LEXLAW (through a campaign of [DPA Subject Access Requests](https://lexlaw.co.uk/solicitors-london/data-protection-act-1998-dpa-subject-access-request-sar-rbs-grg-promontory-mazars-fca-bbc/)), SME victims and Parliament are still awaiting the publication of the full report. ## Parliamentary Charge Sheet against GRG ***(i) GRG was an “abattoir” unit at the centre of “the largest theft” in British Banking History*** During the debate, every MP gave a damning indictment of GRG’s bad practices as a whole and most Ministerial remarks were informed by vivid personal testimonies from SME owners who all suffered huge financial losses as well as personal hardship. Jim Shannon MP referred to the HBOS scandal as the second worst failure in *“British banking history”*. The worst is RBS’s GRG unit. Clive Lewis MP accused RBS of the *“largest theft anywhere, ever”* and said businesses under the supposed care of GRG were instead *“carved up like a Sunday roast”* with many perfectly healthy SMEs moved to GRG simply because they wanted to move banks or had complained. MPs also heard that GRG was less an intensive care unit for struggling businesses but *“an abattoir”*,* “slaughterhouse”* or *“mortuary”* of organised fraudulent asset stripping on a huge scale. GRG held assets of more than £90 billion but 90% of their administered businesses never made it back to mainstream banking whilst GRG became RBS’s most profitable sector. Reports from SME constituents all shared the common feature that whilst under the administration of GRG, advisers to the bank (now part of a *“conspiracy of denial”*) consistently undervalued company assets whilst simultaneously overvaluing its liabilities to falsely perpetrate a conclusion that the business was unviable and ultimately forcing companies into receivership. GRG’s aggressive tactics in manipulating property values which resulted in alleged covenant breaches; the unlawful possession of property; the manipulation of overdraft facilities and unfair inflated bank charges has been described as an *“extortion racket”*. These personal accounts and the strategic focus prioritising the realisation of assets for the bank has been confirmed in the summary of the independent Promontory report with *“inadequate”* and *“inappropriate”* tactics employed leading to *“systemic failure”*. In addition, GRG was also heavily criticised in the [Tomlinson Report](http://www.tomlinsonreport.com/docs/tomlinsonReport.pdf): > *“GRG artificially distresses otherwise viable businesses. Through such actions, GRG placed businesses on a journey towards administration, receivership and liquidation.”* Although GRG was the primary focus for the debate, malpractice is not simply contained to one rogue unit. Bill Esterson MP found similarities between RBS and [Carillion](https://www.pwc.co.uk/carillion): in both cases small businesses have been *“imperilled”* by the actions of huge institutions and as Ian Fraser notes both should not have been *“wholly trusted”* by government as they were both *“built on sand.”* Widespread banking malpractice exacerbated by an opaque regulatory system plagues the sector which has scavenged off small businesses and broken the backbone of our economy. 60% of lending to SMEs was conducted by two *“shameful”* conglomerates: RBS and Lloyds. Both these institutions have defined the banking culture towards SMEs and both were accused of *“systematically destroying”* confidence in the British banking system. Instead of supporting small businesses, RBS and Lloyds were parasitically thriving off of the lifeblood of the economy. ***(ii) RBS’s “extraordinarily aggressive” approach in Litigation: LEXLAW’s research referenced by Parliament*** The House highlighted the *“inherent inequality of power”* between lenders and businesses starting with a one-sided contract laden with *“onerous and ambiguous”* terms. The lack of accountability is a result of an expensive court process exploited by banks to bully claimants into submission meaning none but the richest litigants have their day in court. Banks use their army of lawyers and financial firepower to obfuscate and delay forcing claimants to capitulate and in some cases, statutory limitation periods are run down through deliberate delays by banks. Kate Green MP highlighted the *“extraordinarily aggressive approach”* that RBS takes to litigation. In particular, she criticised the bank for its endemic failure to provide full and frank disclosure when defending its claims of wrongdoing. Disclosure is a fundamental litigation process ([CPR Part 31](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31)) whereby each party are required to produce all documents they hold which are relevant to litigation regardless of whether they assist or harm their case. RBS and its law firm Dentons have consistently declined to provide all relevant documents. Kate Green MP praised LEXLAW’s work in highlighting cases of RBS’s non-disclosure. In [*Mehnaaz Chaudhry & Another v. The Royal Bank of Scotland PLC (High Court of Justice, Chancery Division, Claim No: HC-2013-000489)*](https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/), Dentons advanced the meritless argument that documents generated by the IRHP review scheme were non-disclosable. RBS were forced to redo their standard disclosure exercise and hand over the documents.  Moreover, in [*The Royal Bank of Scotland Plc v. Highland Financial Partners LP [2013] EWCA Civ 328*](http://www.bailii.org/ew/cases/EWCA/Civ/2013/472.html), the Court of Appeal found a deliberate and dishonest failure by RBS to disclose relevant documents and misled their client, their own lawyers and the court. In addition, the Court of Session in [*Royal Bank of Scotland Plc v Carlyle [2010] ScotCS CSOH 3*](http://www.bailii.org/cgi-bin/format.cgi?doc=/scot/cases/ScotCS/2010/2010CSOH3.html) found the bank lacked *“candour”* in its deliberate failure to admit evidence. Finally, in [*Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2015] EWHC 322,* ](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2015/322.html)the High Court criticised the bank’s *“cavalier”* attitude to disclosure in hiding 25 million documents relating to allegations of LIBOR manipulation. ![LEXLAW solicitors in london banking litigation](https://lexlaw.co.uk/wp-content/uploads/2018/01/LEXLAW-snip.jpg)LEXLAW referenced in Parliament by Kate Green MP Christine Jardine MP correctly stated that victims of RBS misconduct are *“caught in a trap without fair protection of law.”* There is no incentive for banks to avoid malpractice if they can bully claimants with unnecessary delays and extend the costly litigation process. Moreover, their continual tactics of unfairly (and in breach of CPR 31) failing to disclose essential documents, represents yet another hurdle for swindled customers and their legal representation. ***(iii) RBS’s Inadequate Compensation Scheme treats Customers with “Disdain”*** The House found that RBS are not only at fault for their past actions but their present behaviour as the bank *“continues to do all it can to avoid its responsibilities”* by treating its customers with *“disdain”* with the unfair operation of their supposed *“independent”* compensation scheme. The bank has set aside a £400 million fund for victims of GRG. However, research by the Property Alliance Group suggests the real size of the compensation scheme should be ten times that amount at £4 billion. Having examined the balance sheets of RBS’s subsidiary, SIG Holdings, the bank profited £400 million from just one area of its misconduct: giving away equity stakes. It is clear that the £400million fund only addresses this limited range of GRG misconduct. Furthermore, this fund has not even come close to being paid out by RBS. The FCA’s chief executive, Andrew Bailey, told the Treasury Select Committee in October 2017, that only £115million had been paid out. This is clearly an inadequate situation for RBS’s customers who deserve compensation. The compensation scheme is essentially a self-regulatory review scheme run by the wrongdoers themselves under the cloak of purported FCA regulation. Clearly, RBS has not created a redress scheme for altruistic public service reasons but because their scheme will save them significant redress and no doubt be delayed to allow legal rights to become time-barred.  Clive Lewis MP criticised the *“discredited”* ad hoc redress scheme as *“wholly unsatisfactory”* and a *“cynical exercise in limiting… (the banks’) liability rather than a genuine attempt at restitution”* akin to a *“burglar being allowed to pick… the jury for his trial.”* In addition, LEXLAW has brought the [failings in and abuses of the IRHP review](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf) to the attention of the FCA. We have found inherent flaws in that particular scheme and the continued abuse of the review. The GRG compensation scheme appears to have been [approved by the FCA](http://www.rbs.com/news/2016/november/GRG.html#KZfg2Hjv7TpeiWhz.99) even though it is clearly inequitable as: (a) it does not deal with the victims of GRG and West Register misconduct who no longer have control of their businesses (who are often former shareholder and director stakeholders in the business ousted by the actions of RBS); (b) while it is advertised as a *“New Complaints Process”*, RBS will refuse to deal with any customers who have already made [‘old’ complaints](http://www.rbs.com/news/2016/november/GRG.html#KZfg2Hjv7TpeiWhz.99) via the Financial Ombudsman Service or the courts or who have threatened litigation (there is no regulatory precedent for such exclusions); (c) RBS does not accept a number of [Promontory’s findings](http://www.rbs.com/news/2016/november/GRG.html#KZfg2Hjv7TpeiWhz.99) (which are effectively the FCA’s findings) however will self-assess the customer’s complaint and make the decision and neither the independent third party nor the FCA nor Promontory nor any skilled person will play any role or have any impact whatsoever on the banks decision on its own wrongdoing save that appeals, over direct losses only, may be made to the independent third party; and (d) the scheme is purposefully designed to evade any independent third party or FCA review that might ensure proper consequential loss is paid to affected businesses, which will no doubt save the bank billions of pounds of redress truly owed to GRG and West Register victims (as well as millions of pounds arguing over inequitable redress proposals with skilled persons). *** (iv) GRG’s “Gloating and Cruel” “Just Hit Budget” Memo Confirms a “Profoundly Sick Culture” *** A [damning 2009 internal memo](https://lexlaw.co.uk/solicitors-london/rbs-grg-just-hit-budget-memo-bsu-turnaround-litigation/) entitled *“*[*Just Hit Budget!*](https://lexlaw.co.uk/wp-content/uploads/2018/01/RBS-GRG-Just-Hit-Budget-LEXLAW-London-Law-Firm.pdf)*”* was published on 17 January 2018 by the Treasury Select Committee. The leaked tipsheet, which according to a [secret report](https://lexlaw.co.uk/solicitors-london/fca-statement-fca-grg-review-rbs-royal-bank-scotland-global-restructuring-group/) being withheld from publication by the FCA, was not an isolated example of the misconduct of RBS. The memo highlights the underhand pressure tactics deployed by GRG to close deals and represents a step-by-step guide on how to swindle their customers. MPs labelled the memo disgraceful and were scathing in their criticism of RBS staff, especially for the callous sentiments referring to struggling business owners as *“basket cases”* and to *“let customers hang themselves.”* The latter remark is particularly concerning because it has been reported that at least one customer did take their life after their business was stripped by RBS. The memo adds to the evidence that GRG were intentionally squeezing owners of struggling businesses for profit with Nicky Morgan MP noting *“there is clearly something very wrong occurring.”* Neil O’Brien MP summarised the opinions of SME owners and the public alike by saying: > *“[Every MP is] horrified and sickened by the contents of the RBS memo…Gloating and cruel, it is a symbol of the profoundly sick culture within that bank.”* The chief executive of RBS, Ross McEwan, attempted to downplay the significance of the memo in a[ letter to the Treasury Committee](https://web.archive.org/web/20191003125633/https://www.parliament.uk/documents/commons-committees/treasury/Ross-McEwan-RBS-GRG-090118.pdf) on 9 January 2018, by saying the document should be viewed *“in context”*, because it was written by a *“junior manager.”* Frankly, this excuse is unconvincing. Stephen Kerr MP- a former RBS employee himself- agrees that this justification* “does not wash”* as a junior bank manager certainly would not have written the memo *“without understanding that it conformed to the culture of the business that they were operating in.”* ***(v) Serious Allegations of Enterprise Finance Guarantee Scheme (EFG) Manipulation*** The debate also brought to light the fact that the [Department of Business, Energy and Industrial Strategy](https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy) (BEIS) are in the early stages of investigating whether RBS improperly manipulated and profited from the Enterprise Finance Guarantee Scheme (EFG). The EFG Scheme was established during the financial crisis and was designed to help small businesses requiring credit that could not secure lending. The government backed 75% of the lender’s liability if the customer went into default. However, customers were improperly pushed into taking up an EFG loan and RBS even admitted that a number of SME borrowers were incorrectly led to believe they would be backed by the government in the event of default, when in fact it was the bank. LEXLAW has represented many clients whose banks misrepresented the mechanics and requirements of the EFG scheme in litigation and in front of the FOS. RBS publicly admitted to this mis-selling scandal in 2013 and have paid out only £3.5million in 2016 to defaulting customers who were misled to believe they would benefit from the scheme. It is understood that the FCA’s investigation into GRG is not focusing on EFG manipulation.  However, the BEIS have the power to refer its findings to the FCA. RBS’s use of the EFG scheme was criticised by Sir Vince Cable in 2015, however, it has taken campaigning from a victim of a mis-sold EFG ([Clive May](https://twitter.com/efgbricklayer?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor)) for the BEIS to re-open its file. As David Hanson MP noted, it is imperative RBS are fully held to account for EFG loan mis-selling to *“secure justice”* for all SME owners that have suffered loss. ***(vi) Skilled Persons Review: Extraordinary Revelation that RBS knew about GRG’s Strategy to Fleece Customers*** The FCA have refused to publish their full Promontory review- due to Maxwellisation of s.166 reports - despite mounting public and Parliamentary pressure. A [leaked minute](https://www.thetimes.co.uk/article/fca-grb-watchdog-forced-to-keep-rbs-scandal-report-secret-over-fears-bank-would-sue-fndjzk9ct) from an FCA board meeting suggests the FCA will not release the full report for fear of being sued by RBS. Lord Cromwell criticised the FCA’s decision as not regulating but *“supplicating”* and Kevin Hollinrake MP raised the question of *“whom is regulating whom in this relationship?”*   [The FCA’s final summary](https://www.fca.org.uk/publication/corporate/final-summary-independent-review-rbs-grg.pdf) on RBS’s treatment of SME customers referred to GRG was published on 28 November 2017. Although just a redacted summary, it does expose a *“litany of poor conduct”* including: (a)* “insensitive, dismissive… and aggressive”* treatment of customers; (b) an *“inadequate and inappropriate”* complaints handling process; (c) a failure to *“handle inherent conflicts of interest”*; and (d) a rampant *“culture of deal making…that set little store by the interests of customers.”* Given the nature of the bad banking practices exposes, it is particularly disappointing that the FCA and RBS jointly stated that *“the most serious allegations made against the bank have not been upheld.”* However, Sir Vince Cable’s bombshell revelation certainly dismisses this protestation of innocence. A full report has been [leaked to the BBC](http://www.bbc.co.uk/news/business-41048691), and although the public have been denied access to the document, Sir Vince Cable used parliamentary privilege to reveal an incriminating phrase which was omitted from the detailed summary: > *“Management knew or should have known that this was an intended and co-ordinated strategy and that the mistreatment of business customers was a result of that”.* He also named [Santander UK](https://www.santander.co.uk/uk/index)’s chief executive, [Nathan Bostock](http://www.telegraph.co.uk/business/2018/01/18/santander-uk-boss-linked-rbs-business-mistreatment-scandal/)- the former head of GRG in charge of restructuring and risk at RBS- as *“responsible”* for that strategy. Prior to this revelation, there was limited evidence publicly available to judge whether RBS were ignorant or complicit in the actions of GRG. This leak proves the latter: RBS’s management were complicit in the systematic defrauding of SMEs. Moreover, Norman Lamb MP expressed concern that this damning conclusion was omitted from the FCA’s summary and suggests the omission potentially makes the FCA complicit in the cover-up, which is *“incredibly serious and needs to be considered.”* [![RBS-Global-Restructuring-Group-SMEs-Litigation-Solicitors-in-London-LEXLAW](https://lexlaw.co.uk/wp-content/uploads/2018/01/SME-GRG-Hansard-Parliament-LEXLAW-RBS.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/01/Hansard-RBS-Global-Restructuring-Group-and-SMEs-PDF.pdf)Click to Download the House of Commons Hansard Report on: RBS Global Restructuring Group and SMEs ## Next Steps: Holding the Major Banks to Account ***(i) Independent Inquiry and/or Release the Full GRG Review *** Clive Lewis MP led calls for an independent inquiry into the treatment of businesses by all banks. It is essential to secure *“proper transparent accountability”* to start rebuilding the social contract of trust between borrowers and lenders. MPs were critical of the Financial Ombudsman’s ability to effectively provide accountability and the FCA’s abdication of its full regulatory powers. As such, Jeff Smith MP called for a *“proper”* Select Committee inquiry to bring justice to the victims of mis-selling and unjustified asset stripping. A supposed independent inquiry has taken place by Promontory, however, the FCA have refused publication. LEXLAW, on behalf of our clients affected by GRG, have submitted a [data subject access request](https://lexlaw.co.uk/solicitors-london/data-protection-act-1998-dpa-subject-access-request-sar-rbs-grg-promontory-mazars-fca-bbc/) under the Data Protection Act 1998 to view extracts from the report which may help the cases of GRG’s victims. Its publication is *“long overdue”* and the public are tired of the *“foot-dragging that has gone on far too long”* (Clive Lewis MP). Moreover, this was only part one of Promontory’s review; the FCA has complied with RBS’s demand to not carry out part two. Its publication and a second investigation would be the first step in ending the inherent inequality of power between banks and their customers. RBS has long breached its disclosure obligations whilst at the same time extracting information from its victims using its army of lawyers to ask leading questions in the hope of finding incriminating evidence. The report would aid claimants in their litigation process by showing there was an intention to deliberately mis-sell and to purposefully set SMEs on a path to liquidation. The full independent report would act as a deterrent to other banks as they would be put on notice that bad banking practices cannot be hidden and justice will be served. Furthermore, its release would end accusations that the FCA are abdicating their regulatory responsibilities and that the watchdog has no teeth. Perhaps the Maxwellisation procedural principle would have to be re-litigated, but in the midst of the largest crisis in British banking history, public interest and necessity should trump the wrongdoer’s ability to object to critical findings in a report before a final version is published. ***(ii) FCA Proposal to Widen Ambit of Financial Ombudsman Service (FOS)*** Following the debate, the FCA released proposals to widen the ambit of FOS to permit more smaller SMEs access to the free independent dispute resolution service. Currently, only SMEs with fewer than 10 staff can use the service. The FCA’s proposals (if adopted) will come into effect on 1 December 2018 and would result in a further 160,000 small businesses having the right to take their complaints to the ombudsman. To be eligible an SME must have: (a) fewer than 50 employees; (b) an annual turnover below £6.5million; and (c) an annual balance sheet of less than £5million. Although both the Treasury and the Federation of Small Businesses (FSB) have favoured this extension; many MPs and the APPG on Fair Business Banking expressed doubts over the FCA’s solution and effectiveness of the FOS procedure as* “merely a sticking plaster” *in dealing with complaints from SMEs. The FOS has been criticised as only being suitable for low-level disputes; lacking powers of disclosure; unable to enforce decisions; lacking *“teeth”*; no ability to adjudicate and it *“cannot deal with complex cases.” *Instead, a more effective solution would be for the government to establish a more effective dispute resolution system in the form of a specialist Financial Services Tribunal. ***(iii) Establish a Financial Services Tribunal to Resolve Customer Disputes*** It is time for Parliament, the executive and the financial watchdog to ensure SMEs get access to fair and affordable justice. Major banks are all legally and financially sophisticated and are far too often locked in complex financial disputes with customers. Such disputes are often difficult for the FCA and FOS to resolve and beyond their capability and remit. The FCA is a regulator and was never mandated to be an arbiter of disputes and is therefore completely unequipped to resolve disputes in spite of its mandate to protect consumers. The financial ombudsman scheme is inadequate because it is designed to be simple and to deal with simple disputes with a low financial value of less than £150,000 (this will increase to £600,000 under the new FCA proposals).  The failed FSA-backed IRHP scheme in which banks are allowed to determine compensation for their own wrongdoing and the flawed RBS GRG scheme, which adopts the same self-determined compensation flaw, each highlight the justice gap that UK SMEs currently face. Only a tiny fraction of financial services disputes are ever litigated and the vast majority of good litigation cases settle, which means there is a lack of meaningful court precedents to force financial services institutions to deal with customer disputes fairly, particularly where those disputes have multimillion financial values. This leaves a vacuum for a Financial Services Tribunal which could offer not only judicial scrutiny over the financial services industry but also provide a sense of justice for customers who might finally get their day in court. LEXLAW [led calls](https://lexlaw.co.uk/solicitors-london/lawyers-launch-petition-financial-mis-selling-tribunal/) for a Financial Services Tribunal in 2016 by [submitting a petition](https://lexlaw.co.uk/solicitors-london/petition-financial-services-tribunal-resolve-bank-customer-litigation-disputes/) at the UK Government site. The APPG on Fair Business Banking has formed a working group to look at proposals for a tribunal. The Banking Futures Project has also brought together stakeholders and formulated an [ambitious plan](https://web.archive.org/web/20200204210951/http://www.meteos.co.uk/wp-content/uploads/METEOS-BF-2017-RE-EXECSUM-LOW-RES.pdf) to rebuild trust in the banking system including: *“the introduction of a new Financial Arbitration Service that is fast, affordable and available to all SMEs”*. It seems since our petition in 2016, the political will has become much more receptive to the proposal of a permanent commercial financial dispute resolution platform. It is hoped that Ministerial support during the debate will be more than mere talk but lead to the rapid establishment of an independent external service to give justice to the victims of banking misconduct.  If justice is to be delivered and standards of conduct to be corrected then maintained at fair levels in future, then there is only one choice: a Financial Services Tribunal. ***(iv) Expose Endemic Bank Wrongdoing by Protecting Whistleblower Rights*** A novel and interesting proposal was advanced during the debate by Norman Lamb MP on behalf of Bank Confidential. RBS whistleblowers have been offered scant legal and regulatory protection for exposing wrongdoing and risking their own careers in the process. In particular, the FCA revealed the name of one whistleblower to RBS; a move described by Norman Lamb MP as a *“cavalier disregard of a whistleblowers’ rights”*. In contrast, the USA have an Office of the Whistleblower, protecting the legal rights of those who speak out. In fact, whistleblowing is actively encouraged as whistleblowers are rewarded financially for doing so (between 10% to 30% of the sanction collected against the firm: a sum that could run into the millions). In light of the damaging evidence, especially the *“Just Hit Budget!”* memo of 2009, whistleblowing must be actively encouraged and anonymity protected in the UK to prevent continuing institutional malpractice behind closed doors. ***(v) Criminal Charges*** Many MPs called for a criminal investigation into the senior management at RBS GRG. Chris Matheson MP made an interesting point that this is *“in a league way beyond”* the PPI scandal. Skimming from extra money in a customer’s payment protection insurance is one thing but *“deliberately driving down, crashing and destroying someone’s business… is a league beyond anything we can comprehend.”* Clearly this is criminality, and it should be dealt with as such. Thames Valley police successfully investigated [HBOS Reading](https://www.theguardian.com/business/2017/jan/30/cash-cruises-sex-parties-hbos-manager-lynden-scourfield) and finally secured the convictions of six *“utterly corrupt”* bankers for fraud in February 2017. Tonia Antoniazzi MP is right: the HBOS case must be the norm and not a one-off.  Underhand tactics destroying small businesses must not be allowed to continue. Criminal prosecutions will act as a deterrent to any errant bank employee in the future. The HBOS Reading case cost Thames Valley police £7million to investigate and similar financial resources must be provided to the [Serious Fraud Office](https://www.sfo.gov.uk/). It is surely time for a criminal investigation into the substantial number of claims and evidence that RBS engineered businesses into default whilst profiting from their struggles. The relevant authorities could quite easily commence their investigations by obtaining and reading through the report and evidence gathered by the FCA's skilled person. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights.  This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of Solicitors and Barristers in London are [highly experienced](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on ☎ 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # Letter from the FCA to the Treasury Select Committee detailing FCA powers and regulatory perimeter (30 January 2018) Source: https://lexlaw.co.uk/solicitors-london/fca-letter-powers-regulatory-perimeter-treasury-london-litigation-solicitors/ *The **Treasury Select Committee **has published a* *[Letter from the Chief Executive of the FCA relating to the powers and perimeter of the FCA, dated 30 January](https://lexlaw.co.uk/wp-content/uploads/2018/02/FCA-powers-perimeter-300118.pdf). The letter provides a useful outline on the FCA's regulatory ambit, especially in relation to [RBS GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/), [embedded swaps](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/), [Spot FX transactions](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/foreign-exchange-hedging-mis-selling-claims-fx-forex-hedge/) and the [IRHP Review Scheme](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/). The text of the FCA letter is below: * Rt Hon Nicky Morgan MP Treasury Select Committee House of Commons London SW1A OAA   30 January 2018 Dear Nicky, ## Re: FCA powers and perimeter I am writing to you following our appearance at the Committee on 31 October. During the session Mr Mann asked if I could write to you regarding the powers we do not have that it might be useful for the  Committee to consider whether we should have. The question was framed around RBS Global Restructuring Group (RBS GRG) but also more broadly. Mr Mann also asked me to set out what we have been doing on areas outside our regulatory perimeter. This letter sets out an overview of what the FCA regulates, the aim of regulation, the powers available  to us, and specific examples of areas where issues have arisen about the nature and extent of the FCA's role. I hope this will provide helpful context for some of the questions we have grappled with in the past. I also set out the steps we have taken to explain our understanding of the FCA's remit where there is less clarity about the role we should play. ## What the FCA regulates Certain types of financial services activity require a license or "permission" before they can be carried on. The definition of these activities, and the "specified investments" to which the activity relates, is at the heart of FCA regulation. The activities are described at a high-level in the Financial Services and Markets Act 2000 (FSMA), and in more detail in the Financial Services and Markets Act 2000 (Regulated Activities) Order (the RAO). We usually refer to such activities simply as "regulated activity" or as being within the "FCA's perimeter". Much of the regulatory framework set out in FSMA, and most of the FCA's powers, are targeted at regulating the conduct of this activity. Persons licensed to perform such activities are "authorised persons". Obvious examples of regulated activity are giving advice on whether to invest in particular securities or, since 2014, providing consumer credit. Performing such activities without an FCA permission is a criminal offence. The regime set out in FSMA and in the RAO governing "regulated activity" is not, however, the only basis for the FCA's regulatory responsibilities. The FCA performs the role of the UK's listing authority. The listing regime applies to firms whether they are authorised under FSMA to conduct regulated activities or not; and in fact the majority of listed companies are not FCA authorised firms.  Another example is the market abuse regime which applies to behaviour conducted by any person irrespective of whether they are authorised by the FCA. We are also responsible for regulating some entities or conduct under standalone legislation outside the FSMA framework altogether. The Payment Services Regulations, for example, set out a separate regime for registering or authorising payment service providers, and give the FCA a different set of responsibilities and powers. Similarly, the Money Laundering Regulations 2017 specify responsibilities for the FCA which extend beyond those for authorised firms conducting regulated activities. Finally, as of 1 April 2015 the FCA became a competition regulator. The FCA has a specific objective to promote competition in the interests of consumers (I cover this in more detail later), and has also been given what are usually referred to as "concurrent competition powers" available to the Competition and Markets Authority (CMA) and other sectoral regulators. Such powers may be exercised in respect of "financial services activity" rather than being tied to the more specific and narrower concept of "regulated activity" from the RAO. The decision as to what or whom should be regulated by the FCA is of course one for Government and Parliament. Often the choice will be made for domestic policy reasons, such as the transfer of consumer credit from the Office of Fair Trading (OFT) to the FCA in 2014. At other times EU legislation has shaped whether and how a financial service should be regulated; it then falls to Member States to decide which body within their jurisdiction should be the national competent authority for the activity in question. The Payment Services Directive and the Benchmark Regulation are two examples of recent EU legislation which have resulted in additional responsibilities being given to the FCA. ## Why we regulate The FCA's aim and purpose is set out in FSMA. We have a single strategic objective - to ensure that relevant markets function well. The strategic objective is underpinned by three statutory "operational objectives": - to secure an appropriate degree of protection for consumers;- to protect and enhance the integrity of the UK's financial system; and- to promote effective competition in the interest of consumers. Many of the FCA's core powers, especially the rule-making power, require that action by the FCA should be to advance one of these three operational objectives. A key concept is the meaning of "consumer" for these purposes. The definition in FSMA is broad, but it does not extend to all consumers of all products. Rather, the emphasis is upon persons who use, may use, or have used, regulated financial services or have invested, or may invest, in relation to financial investments. This is something we have to consider both when making rules and if we contemplate firm-specific action to further our consumer protection objective. In pursuing the aims set out in the statutory objectives, we are concerned not only with the behaviour of the firms we regulate, but also - at least for the firms authorised only by the FCA- their financial health. In this sense, we are both a conduct regulator for 56,000 firms and a prudential regulator for 18,000 firms. The FCA prudentially regulates those firms for which such regulation apples that are not regulated by the Prudential Regulation Authority (PRA). ## How we regulate The FCA's powers are extensive, but the availability of the powers, and how we use them, will depend on who and what it is we are dealing with. In particular, it will depend upon whether the person in question is an authorised firm (that is, a person given permission to carry on regulated activity), an individual at such a firm, or a person subject to our criminal prosecution powers or our competition law jurisdiction. *Authorised firms* To carry on regulated activity at all, a person must satisfy us that they meet the "threshold conditions" set out in FSMA. This provides us with the opportunity to assess their suitability at the "gateway", and impose requirements or restrictions upon how they carry on the relevant activity.  Among other things, we look at whether a firm's business model is viable and the firm is suitable to carry on regulated activity. These threshold conditions also apply on a continuing basis to authorised firms, and therefore are the minimum standards a firm is required to satisfy. The unregulated activities of a firm may be relevant to whether that firm continues to meet the threshold condition on suitability which requires that the firm must be fit and proper. Whether this is the case or not will depend very much on the particulars of the firm's conduct. The conduct in question would need to be sufficiently serious before it called into question the firm's ability to meet this condition. Once a firm is authorised, we can: - write rules governing their conduct;- impose requirements on individual firms that they do or do not do specific things;- investigate them if circumstances suggest that that they have broken our rules, and impose financial or other penalties if we conclude that they have done so;- require that "skilled persons" report on aspects of the firm's business. We can make rules only if they advance our operational objectives. Importantly, the power allows us to make rules governing unregulated activity by authorised persons. This means that we have some regulatory oversight of activities which do not themselves require authorisation. As explained above, one of the constraints on the exercise of the power in the context of consumer protection has been the need to consider whether "consumers", in the sense defined in FSMA,, are the object of any intended protection. The FCA's Principles for Businesses are 11 high level rules which apply to all FCA regulated firms.   They include requirements that firms must conduct their business with integrity, exercise reasonable skill and care, treat their customers fairly, and observe proper standards of market conduct. With three exceptions, the Principles are directed at firms' conduct in respect of regulated activity. The exceptions  relate to: - the adequacy of a firm's financial resources (Principle four);- the adequacy of the firm's systems and controls - to the extent that these are likely to have a negative effect on the firm's ability to satisfy the threshold conditions or the integrity of the UK financial system (Principle three); and- the duty to deal with the FCA in an open and co-operative way (Principle 11). The fact that these three Principles extend to all of a firm's activities provides the FCA with some regulatory grip over everything that a firm does; but the breadth of the rules is not intended to dissuade the FCA from its focus on the regulated activities of a firm and the detailed rules governing such conduct. We do nonetheless look to the Principles when we are concerned about how firms behave "outside the perimeter". This was the case, for example, when we took action in respect of the LIBOR (London Interbank Offered Rate) manipulation and in respect of firms' foreign exchange practices. *Individuals* FSMA requires that individuals performing "controlled functions" within authorised firms must be approved by the regulator. The FCA's (and PRA's) role has been to designate these functions, assess whether individuals are fit and proper to perform the functions, and take disciplinary action against individuals who break the regulators' rules. For the most part, the FCA's ability to take action against individual "approved persons" has been limited to conduct within the scope of the particular function for which they were approved (unless the individual was "knowingly concerned" in the breach of rules by a firm). With the introduction of the Senior Managers and Certification regime (SMCR), this is changing. The SMCR asks that the regulators concentrate on the assessment of the suitability of senior managers at the gateway; but allows the regulators to extend rules governing individuals' conduct beyond those who have been vetted by the FCA (or PRA). The FCA's conduct rules for banks apply to senior managers, certified persons and other non-ancillary staff. Once the SMCR is extended beyond banks to all firms, we propose to adopt a similar approach. One of the key differences under the SMCR is that the conduct rules are not limited to an individual's behaviour only in relation to the regulated activity carried on by the firm. They can also apply to conduct in relation to the firm's unregulated activity. The rules require, among other things, that individuals act with integrity, that they have due regard to the interest of consumers, and that they observe proper standards of market conduct. Senior managers are also required to comply with four additional conduct rules: - take reasonable steps to ensure that the business of the firm is controlled effectively;- take reasonable steps to ensure that the business of the firm complies with the relevant requirements and standards of the regulatory system;- take reasonable steps to ensure that any delegation of responsibilities is to an appropriate person and that this is overseen effectively; and- disclose appropriately any information of which the FCA or PRA would reasonably expect notice. Under the SMCR's' overall responsibility' requirement, firms need to ensure they assign overall responsibility for all business areas to a senior manager, including those in unregulated markets. They must then operate their business in line with our rules, including putting in place governance, systems and controls to ensure this. ## Setting the boundary: where the perimeter lies I set out below some of the areas where there have been calls for the FCA to intervene, questions asked about the extent of FCA involvement or action, or where uncertainty has arisen. These are not intended to be exhaustive examples, but rather to illustrate how questions have arisen about the scope of FCA regulation. *Bank activities outside the perimeter – GRG and "embedded swaps"* In contrast to mortgage lending and consumer credit activity, commercial lending is not a regulated activity. In other words, a person lending money commercially does not need to be authorised by the FCA (unless the lending constitutes "consumer credit'). So some lenders are therefore completely outside the scope of FCA regulation. Banks, on the other hand, are regulated by the FCA (because they are deposit-takers), but the FCA's interest is primarily in the extent which the banks' activity outside "the perimeter' is relevant to the banks' standing as a deposit taker. This is consistent with the scope of the FCA's Principles, and the fact that the FCA will look at a firm's financial resources, its systems and controls (to the extent that they reflect on the fitness of the firm itself or adversely impact the wider financial system), and the firm's relationship with its regulators, even where concerns might arise from unregulated activity. The extent of the FCA's responsibility for the unregulated activity of banks has nonetheless been the subject of public debate and scrutiny. *RBS GRG* During my appearance at the Committee in October, I explained some of the complexities around GRG and our perimeter. Engaging in the sort of restructuring activity conducted by GRG is not of itself regulated activity. Our detailed conduct rules on the design and governance of products and services do not apply. The initial allegations about the conduct at GRG were, however, sufficiently serious to raise questions about RBS beyond the immediate business area. We took the view therefore that - despite the fact that the conduct in issue was unregulated - the test for the appointment of a 'skilled person' under section 166 FSMA was met. As I explain above, the SMCR will promote greater accountability within regulated firms in future, even in respect of unregulated activity. The SMCR cannot be applied retrospectively, but we would expect the new framework to assist with a GRG type scenario in the future. *Embedded swaps* Commercial loans with marked to market break costs, sometimes known as embedded swaps or "tailored business loans", provide another illustration of the issue. Again, these are not regulated products, but they do have similar characteristics to interest rate hedging products (IRHPs). After the FSA agreed the IRHP redress scheme with the banks, there were calls for the banks to extend the scheme to commercial loans of this type. In a letter to the Committee on 26 April 2014, our General Counsel, Sean Martin, set out in detail why these types of loans do not sit within the regulatory perimeter: [http://www.parliament.uk/documents/commons-committees/treasury/140626_Sean_Martin_to_Andrew_Tyrie.pdf](https://old.parliament.uk/documents/commons-committees/treasury/140626_Sean_Martin_to_Andrew_Tyrie.pdf) *Crypto-currencies* Crypto-currencies are not 'specified investments' for the purposes of the RAO. This means that typically the issuing of, or trading in, a cryptocurrency itself will not involve regulated activity. However, derivatives which reference a cryptocurrency (such as a future, or a contract for difference based on a particular cryptocurrency) are capable of being regulated investments. So trading, arranging or advising activities related to cryptocurrency derivatives can amount to regulated activities. Since the increased public awareness of certain cryptocurrencies, including Bitcoin, there has been discussion about whether the FCA should regulate this sector. I have spoken publicly of my concerns regarding cryptocurrencies, and that investors should be prepared to lose their money if they invest. Cryptocurrencies are not a secure investment given the volatility in the pricing of the asset and the limited nature of its liquidity. *Spot FX* Spot FX transactions where the exchange of currencies takes place within two trading days are not regulated investments for the purposes of the RAO. The serious concerns about conduct in the foreign exchange (FX) markets were, however, one of the drivers for setting up the Fair and Effective Markets Review (FEMR). The FEMR recommendations published in June 2015, and the subsequent work of industry and central banks under the auspices of the Global FX Committee, led to publication of the FX Global Code in May 2017. This is a new industry code that sets out global principles of best practice for the Wholesale FX Market. The FCA contributed to the preparation of the Code, drawing in particular on deficient practices identified as part of our supervisory work. I will set out later how our proposals on industry codes of conduct could support similar initiatives in the future. *Funeral Plans* Generally the regulation of pre-paid funeral plans, as opposed to regulated insurance products, also falls outside the FCA's remit. While the authorisation and registration of funeral plans is a regulated activity under the RAO, there are exclusions that apply if certain conditions are met. Broadly speaking, the exemption applies if the funeral plan is set up under a trust, or if the funeral plan provider applies the sums paid under the plan to a whole of life insurance policy with a regulated provider for the purposes of providing the funeral. Funeral plan providers that meet these criteria are subject to a self-regulatory regime under the Funeral Planning Authority (FPA). We understand that all relevant funeral plan providers use these exclusions. No funeral plan provider is authorised and regulated by the FCA. We liaise with the FPA on perimeter matters as appropriate. *Investment consultants* Investment consultancy services provide another example of a concern arising from the delineation of the perimeter. In June 2017 we published the findings from our Asset Management Market Study, which identified weak competition in the market. The Final Report is available on our website: [https://www.fca.org.uk/publication/market-studies/ms15-2-3.pdf](https://www.fca.org.uk/publication/market-studies/ms15-2-3.pdf) In particular, we found that pension trustees have limited ability to assess the quality of the advice they receive from consultants. There are also relatively high levels of market concentration and barriers to expansion which restrict smaller or newer consultants from developing their business. We also found that vertically integrated business models were creating conflicts of interest. Investment consultants play a significant role advising pension fund trustees when they are procuring asset management services. There are areas of investment consulting that are not regulated by us but still have a significant impact on returns for investors, such as strategic asset allocation advice. Therefore, to allow a complete assessment, and to enable any remedies to cover the whole market, we referred the sector to the CMA for a market investigation. Subject to the findings of the market investigation, we have recommended HM Treasury bring the provision of investment consulting and employee benefit consulting asset allocation advice within the FCA's regulatory perimeter. *Unregulated mortgage purchasers* There are three regulatory activities relating to mortgage lending: "entering into", "administering", and advising on a regulated mortgage contract. Mortgage lenders who "enter into" a regulated mortgage contract are able to transfer the ownership of those contracts or the rights under them to other entities, often as a funding source. The regulatory framework does not require the purchasing entity to be regulated, as long as they employ an authorised third party to "administer" the mortgage contracts. However, the administering activity is narrowly drawn, essentially amounting to notifying the consumer of interest or payment changes, or taking necessary steps to collect or recover payments due. This potentially exposes consumers to harm if, for example, an unregulated entity were to charge higher interest rates to captive borrowers, not reduce rates in a falling market, or treat customers in arrears unfairly. As you may recall, the Public Accounts Committee raised this area as a point of concern in the recent asset sale undertaken by UK Asset Resolution (UKAR) to Cerberus. Depending on the regulated status of the purchaser of the book, there is the potential for consumers to be exposed to greater harm. There is also a risk that this harm might not be apparent to us because when mortgages are sold to an unauthorised entity, the new owners are not subject to our reporting requirements and so we have no way of knowing how these loans are performing in terms of arrears and repossession levels. *Perimeter complexities - British Steel Pension Scheme (BSPS)* Recently we have seen the complexities of navigating the regulatory perimeter brought into the spotlight due to BSPS, along with restrictions on the action we can take. The regulation of pensions falls to a number of different bodies - the FCA regulates primarily defined contribution pensions, whereas the Pensions Regulator (TPR) regulates defined benefit pensions. There are also other schemes that fall within the Government's direct remit, but the FCA and TPR are responsible for the majority of the pensions market. The BSPS is a defined benefit pension scheme and is regulated by TPR. The FCA has no role or oversight of BSPS, or any other defined benefit pension scheme - such as the BHS or Carillion schemes. However, we do regulate financial advisers - including those providing pension transfer advice to BSPS members. We became aware of reports that financial advisers were potentially providing poor advice to BSPS members resulting in them transferring out of their defined benefit pension scheme. This had potentially far reaching implications, including the loss of safeguarded benefits, such as a guaranteed income. We therefore took swift action in respect of the advice being provided to BSPS members. Despite this, some stakeholders have suggested that we should have done more. They argue that we should have provided better communications to BSPS members about the choice they face, provided advice directly to BSPS members, or extended the relevant deadlines. None of these actions fall within our remit and we have no legal power to take such action or require the TPR to do so. We have however been working closely with TPR and The Pensions Advisory Service (TPAS)to ensure that BSPS members are able to obtain helpful advice and guidance and that their interests are properly protected. *Unregulated introducers* Also relevant to the BSPS example is an issue relating to unregulated introducers. As explained above, the RAO defines what a regulated activity is, but the RAO also exempts some specific activities from FCA regulation. One such exemption applies to certain types of introducers. Article 33 of the RAO excludes individuals or firms from needing FCA authorisation where they introduce consumers to an advice firm, but the introduction must be made to a firm offering independent, regulated advice or the exemption will not apply. Introducers that find potential customers for independent financial advisers, advisory stockbrokers or independent investment managers, are allowed to receive a payment for making introductions. Where we have concerns with unregulated introducers is where they may exercise influence over a regulated adviser. We published an alert in August 2016 which highlights some of the risks arising from authorised firms accepting business from unauthorised introducers; and we recently reminded pension transfer advisers of their obligations when dealing with unregulated introducers. Ultimately, introducers are legally permitted to carry out the activity because they are outside the FCA's perimeter - as such, despite our concerns, if they are not breaching the legal exemption we are unable to take any direct action against them. ## Limits to our powers - redress schemes to benefit SMEs Questions about the extent of the FCA's remit, or the adequacy of our powers, do not always arise because of the scope of "regulated activity" set out in the RAO. A separate issue arose in the context of IRHPs relating to the FCA's power to require an industry-wide redress scheme. FSMA gives the FCA the power to require regulated firms to establish and operate an industry• wide redress scheme under section 404 where the failure by firms would otherwise have given the consumer a right of action in court. Where the action relates to a breach of an FCA rule, rights of action under FSMA are limited to "private persons". Incorporated businesses are therefore excluded in industry-wide consumer redress schemes based solely on a breach of our rules. As many of the customers affected by the mis-selling of IRHPs were SMEs, this limited the action we could take to secure compensation for them. Exercising our formal powers to make an industry-wide redress scheme under s404 requires the FCA to undertake a public consultation and to put in place procedural rights for firms. This does mean that in complex cases, like IRHPs, securing formal redress would be likely to take a considerable length of time. The Financial Services Authority's, our predecessor organisation, approach for IRHPs was to agree a voluntary scheme with the banks in 2012. This was established more quickly, and reached more of the affected businesses, than a formal scheme could have done. In addition a formal scheme would likely have encountered issues with limitation periods while the voluntary scheme extended back to December 2001. ## The perimeter - our approach in future The challenges arising from the scope of the regulatory perimeter - in terms of deciding upon our own focus and in communicating our role to external stakeholders - encouraged us to address these issues openly and candidly when we consulted on the FCA's proposed Mission statement. We acknowledged the inevitable complexity which arises when a firm's activities extend into both regulated and unregulated activity. After consultation on the proposed statement of our approach, we said this: *“Financial services markets are dynamic, so defining where and how we might act outside the perimeter is not simple. But we are more likely to act where the unregulated activity:* - *is illegal or fraudulent,*- *has the potential to undermine confidence in the UK financial system,*- *is closely linked to, or may affect, a regulated activity.* *Where we cannot act, we will clarify publicly why the issue falls outside our remit, or why our powers are limited, and raise this with Government and other relevant bodies.* *We will also work with industry to help create industry standards that span activities outside the RAO. These standards can be a useful way for the industry to police itself in support of our regulatory work, and can help firms to communicate expectations of individuals when linked to the Senior Managers and Certification Regime.”* The full Mission document can be found on our website at the following address: [https://www.fca.org.uk/publication/corporate/our-mission-2017.pdf.](https://www.fca.org.uk/publication/corporate/our-mission-2017.pdf) The explanation about the circumstances in which the FCA is more likely to act in respect of unregulated activity reflects the current drafting of the FCA's Principles. But the text also reveals our appreciation of the importance of articulating clearly when and why we will take action in respect of unregulated activity and when and why we will not. *SMCR and industry written codes* The Mission refers to the FCA's proposed work with industry on industry standards as part of our intended approach towards conduct outside the perimeter. I thought it would be helpful to say a little more about this. A key issue identified by the FCA, HM Treasury and Bank of England from FEMR was that there is little incentive for firms to comply with voluntary codes. And further to that, many codes lacked methods to ensure compliance. This is something we are conscious of, and as such in November 2017 we published our Consultation Paper on Industry Codes of Conduct. This can be found on our website at: [www.fca.org.uk/publication/consultation/cp17-37.pdf.](http://www.fca.org.uk/publication/consultation/cp17-37.pdf) Our consultation sets out how the SMCR can help support voluntary industry written codes of conduct and standards. For example, the SMCR requires firms to assess the fitness and propriety of their staff for particular roles and activities whether regulated or unregulated. And, as explained above, the SMCR's individual conduct rules apply to both the individual's conduct in regulated and unregulated activities. The industry code or standard could therefore form the basis for the firm to communicate its expectations in order to assess their staff's fitness in line with the requirements of the SMCR, and whether their behaviours meet the standards of the individual conduct rules. We also propose to give formal recognition to certain codes and standards in unregulated markets, such as lending codes, as meeting our expectations on proper conduct. This will help raise awareness and improve accountability for conduct issues, including where poor conduct in unregulated markets has an effect on regulated markets. In our view, these proposals are proportionate and supportive of industry efforts to improve conduct in areas where we do not have powers to act. *SME consultation* As already stated, the majority of commercial lending remains unregulated. This is in part to recognise that businesses are generally considered to be more sophisticated than individual consumers. It also, in part, reflects the Government's wider policy objective of ensuring businesses have the greatest possible access to finance. However, we recognise that not all businesses are the same. In reality many SMEs behave in a similar way to individual consumers when buying and using financial products, for example when taking out credit. They can therefore also experience similar types of harm, such as entering into an unsuitable product, receiving poor customer service or suffering financial loss. The RBS GRG case is an example of the potential impact this can have on SMEs in particular. Although the FCA's powers in relation to commercial lending are limited, the Financial Ombudsman Service can consider some disputes about financial products and services we do not regulate, including lending to businesses. There are, however, restrictions that mean the Ombudsman Service cannot always consider complaints brought to it by businesses- many of which are SMEs. This includes, for example, where the SME is too large to meet the eligibility thresholds for the Ombudsman Service or where the value of their dispute significantly exceeds the Ombudsman's binding award limit of £150,000. On 23 January we published a consultation on changes to our rules to allow more SMEs to refer complaints to the Ombudsman Service. We believe our proposals will make a significant difference to a large number of SMEs. Over time, our changes will contribute to better service to SME customers, leading to fewer complaints and better outcomes for SMEs. The consultation paper is available on our website and we are accepting responses to our proposals until 22 April 2018[: https://www.fca.org.uk/publications/consultation-papers/cp18-3-consultation-sme-access-financial-ombudsman-service.](https://www.fca.org.uk/publications/consultation-papers/cp18-3-consultation-sme-access-financial-ombudsman-service) ## Conclusion I hope that this letter has provided a fuller explanation of the parameters for the FCA's regulation than was possible when I appeared before the Committee last year. And in particular that the illustrations of how the RAO operates, and the FCA's approach to concerns about firm conduct outside "the perimeter", demonstrate that we seek to strike a balance between: (a) focusing on the conduct that Parliament has identified as subject to full regulatory scrutiny; and, (b) ensuring that firms and individuals licensed by us behave responsibly, even in areas where their activities are outside the core jurisdiction of the regulator. Where to draw the boundary between regulated and unregulated activities is a decision for Government and Parliament, not the FCA. I believe that it would be wrong for the FCA to ignore the distinction between regulated and unregulated activities. To do so, and seek to regulate all the activities of an authorised firm in the same manner, would be to ignore the clear choice expressed in legislation about the degree of regulatory scrutiny expected. I do believe however that the approach described in the FCA's Mission, and the increased regulatory oversight we will enjoy over the senior management of firms in the future, will provide a firmer foundation for FCA intervention outside the perimeter than has been possible in the past. ![](https://lexlaw.co.uk/wp-content/uploads/2018/02/Andrew-Bailey-FCA-Signature.jpg) **Andrew Bailey** **Chief Executive** [![](https://lexlaw.co.uk/wp-content/uploads/2018/02/FCA-Snip-672x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/02/FCA-powers-perimeter-300118.pdf)Click to Download the FCA's Letter to the Treasury Committee: FCA Powers and Perimeter (30 January 2018) --- # APPG on Fair Business Banking: Improve SMEs access to justice and establish a Financial Services Tribunal Source: https://lexlaw.co.uk/solicitors-london/appg-fair-business-banking-sme-access-to-justice-financial-services-tribunal/ *The APPG on Fair Business Banking launched their highly anticipated [dispute resolution report](https://lexlaw.co.uk/wp-content/uploads/2018/07/180710122917-FairBusinessBankingforAll.pdf) on 11 July 2018. The report, authored by [Kevin Hollinrake MP](https://www.kevinhollinrake.org.uk/) and undertaken by the [Centre for Policy Studies](https://www.cps.org.uk/), sets out the position of the APPG on how to improve access to justice for SMEs in financial services disputes.* *The two key recommendations of the report are that rights of action under [section 138D Financial Services and Markets Act 2000](https://www.legislation.gov.uk/ukpga/2000/8/section/138D) ("[FSMA](https://www.legislation.gov.uk/ukpga/2000/8/contents)") should be extended to SMEs and a new Financial Services Tribunal should be established to resolve disputes between small businesses and banks.* ![](https://lexlaw.co.uk/wp-content/uploads/2018/07/APPG-Fair-Business-Banking-2018-report-LEXLAW-solicitors-london-UK.jpg) ## APPG criticises current methods of resolving disputes between SMEs and Banks The report highlights that business banking scandals- in particular the actions of [RBS](https://personal.rbs.co.uk/)'s [GRG](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) and [Lloyds HBOS](https://lexlaw.co.uk/solicitors-london/banks-frauds-and-accomplices-lloyds-uk-fraud-hbos-scandal/) has adversely affected many SMEs. To compound the behaviour of the Banks in mis-selling complex derivatives, there are not adequate protections in place to offer an easily accessible forum for dispute resolution if a bank does not adequately deal with a complaint and banks are not held to account to rectify their poor practices. The author of the report, Kevin Hollinrake MP criticised the inadequate protections available for SMEs in financial disputes with banks: >  *“It is clear to me, and to the other members of the All Party Parliamentary Group on Fair Business Bank that there is a systematic failure here, with many of those firms that have suffered from mistreatment and malpractice denied access to justice. Not only are our banks too big to fail, there are also often too big to take to court”. * > > *Kevin Hollinrake MP, co-chair of APPG on Fair Business Banking* The key failings of the current financial dispute resolution system highlighted in the report are: - Business customers have *"less regulatory protection and fewer options for pursuing redress"* than individual consumers, even though they are subject to the same problems but lack the resources or financial sophistication of larger companies.- Private individuals have the right to pursue damages for breaches of the [Conduct of Business Sourcebook Rules](https://www.handbook.fca.org.uk/handbook/COBS/) ("COBS Rules") under section 138D FSMA. However, small businesses do not have adequate protections as they do not have the same right of action under s.138D FSMA, leading to the untenable and unfair position that most commercial banking and lending is not regulated.- The [Financial Ombudsman Service](http://www.financial-ombudsman.org.uk/) ("FOS") aims to provide a free, impartial and informal forum of Alternative Dispute Resolution. However, many SMEs are denied jurisdiction because only EC defined "micro-enterprises" can have their complaints heard (with a turnover not exceeding €2 million and fewer than 10 employees). The compensation limit of £150,000 is also inadequate to cover the losses suffered by the majority of SMEs.- The FOS lacks the power to offer appropriate redress. It operates behind closed doors without public scrutiny of its decisions; it cannot act where a business has gone into administration; it lacks the powers of a court to require disclosure and compel witnesses to give evidence and it is not designed for complex disputes.-  There are *"significant barriers"* to SMEs accessing the courts. Many SMEs are put off by the litigation process because there is often *"an insurmountable imbalance of power and resources between financial firms and their business customers"*, with SMEs being unable to afford the costs; can afford the time it takes for a resolution; and risk paying the other side's costs (Banks will on the whole instruct large firms of expensive London lawyers).- The common law is insufficient in financial services disputes, and despite regulations in the [FCA Handbook](https://www.handbook.fca.org.uk/) and [PRA Rulebook](http://www.prarulebook.co.uk/), many small businesses are unable to bring actions for the breach of FCA or PRA rules.- The cross-party group of MPs have recognised that there is a *"currently a significant problem for businesses in accessing justice"* due to the gap in provisions between disputes dealt with by the FOS (£150,000 claim limit) and those capable of being pleaded in court (which claims would usually have to be valued at at least £5 million to attract litigation funding). ## LEXLAW's M Ali Akram contributes to APPG Report: Banks shape precedent to maintain tactical control in financial services dispute litigation [LEXLAW](https://lexlaw.co.uk/) have significant and industry-leading experience in representing SMEs in banking disputes. Our banking litigators- lead by[ M Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/)- have advised on and acted to protect borrower legal rights in the face of predatory bank practices in the High Court than all other law firms in the UK combined. M Ali Akram provided witness evidence on the effectiveness of the courts in resolving banking disputes to the APPG's Bridging the Gap inquiry, the statements in which contributed to the APPG's July 2018 report. In particular, his comments on the clear imbalance of power between the resources of financial firms and SMEs, which has been exploited by the banks to control which cases went to court, was relied upon by the APPG in compiling the report: > *"That is one of the major problems that we see in our litigation cases: precedent. The cases that have gone to court have been modelled and shaped by the banks. They're legally and financially sophisticated so they can overwhelm their opposition and what they do is pick off the good cases and settle them...We've had dozens and dozens listed in the past and not one ever went to trial. So what they do is, if a carefully constructed claim is put against them, they will settle it. If a badly managed and badly constructed set of pleadings faces them, they'll take advantage of that to create a precedent and to maintain tactical control..."* > > M Ali Akram, LEXLAW Solicitors & Barristers, in APPG's Fair Business Banking for All Report, July 2018 ![](https://lexlaw.co.uk/wp-content/uploads/2018/07/Ali-Akram-APPG-Fair-Business-Banking-Access-to-Justice-LEXLAW-Litigation-Solicitors-London-UK.jpg)Ali Akram, LEXLAW Solicitors, quoted in the APPG's Fair Business Banking for All Report ##  APPG's key reform proposals To *"create a more level playing field between financial firms and businesses"*, the APPG on Fair Business Banking recommends: ***1.Enhance the Legal Rights of SMEs*** - The simplest and most effective way to extend the legal rights of SMEs is to extend the section 138D FSMA right of action. It is suggested that this can be done by amending the "private person" definition in FSMA's [Right of Action Regulations 2001 (FSMA (RAR) 2001)](http://www.legislation.gov.uk/uksi/2001/2256/contents/made). Widening the ambit of the definition would give SMEs a right of action for breach of FCA rules.- An alternative would be to extend SME's rights of action for a breach of the FCA Principles for Business. It is suggested that [PRIN 3.4.4R](https://www.handbook.fca.org.uk/handbook/PRIN/3/4.html) be amended to remove the restriction. ***2. Extend Regulatory Protection*** - It is anomalous that some financial services provided by banks is unregulated, which includes commercial lending and the selling of fixed-rate loans.- The APPG suggest the definition of regulated activities set out in FSMA and [FSMA (RAO) 2001](http://www.legislation.gov.uk/uksi/2001/544/contents/made) be amended to include unregulated activities including commercial lending. ***3. Establish a Financial Services Tribunal *** - A new Financial Services Tribunal (which LEXLAW has [advocated for over 2 years](https://lexlaw.co.uk/solicitors-london/petition-financial-services-tribunal-resolve-bank-customer-litigation-disputes/)) would* "fill the gap in dispute resolution provision"*.- It is proposed that the Financial Services Tribunal be created under the[ Tribunals, Courts and Enforcement Act (2007)](https://www.legislation.gov.uk/ukpga/2007/15/contents). It will be modeled on the current tribunal system (akin to the Employment Tribunal), with a judge supported by two wing members (one from business and the other from financial services).- The proposal includes a Tribunal with powers far greater than the FOS have at their disposal with full legal powers to enforce disclosure, compel witness evidence and governed by transparent procedural rules.- The inherent cost risks of litigation for small businesses would be removed with the default position being that the losing side would not pay the other side's costs. In more complex and costlier cases, *"qualified one-way cost shifting"* could be utilised to ensure SMEs could recover their costs (subject to a cap) whereas banks (and their team of expensive London lawyers) would not. ***4. Consultation on Insolvent Firms*** - Owners of insolvent businesses cannot take their cases to the FOS. If the current right of action under section 138D is extended to include SMEs, it should be possible for liquidators or adminstrators to bring s.138D FSMA claims.- It is proposed that the government should launch a consultation to improve the common-place situation where insolvency practitioners are reluctant to pursue claims under the apprehension that the costs outweigh the benefits. ***5. Address Time Limitations*** - The limitation period for bringing a claim in financial services disputes is six years in England and Wales and five years in Scotland. Many cases involving SMEs go back many years and their claims have become unactionable as time has run out to commence a claim.- In some cases, time can be extended, for example by agreeing a standstill with the errant bank. In addition, section 72 of the [Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58) can postpone time running in certain situations, for example where fraud is claimed or where facts relevant to the right of action have been deliberately concealed.- The APPG has called on the Government to ensure the time limits are extended, so that SMEs that have suffered historic banking abuses (within the past 10-15 years) can take their case to the Financial Services Tribunal. [![](https://lexlaw.co.uk/wp-content/uploads/2018/07/pixlr.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/07/180710122917-FairBusinessBankingforAll.pdf)Click here to download the APPG on Fair Business Banking report: "How to improve access to justice for businesses in financial services disputes", July 2018. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of Lloyds BSU, RBS GRG or other bank BSUs protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the Royal Bank of Scotland or National Westminster Bank. Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors to issue a protective claim form or by instructing us to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of Solicitors and Barristers in London are highly experienced in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on  02071830529 or complete our online contact form. *Financial Services Litigation Team, LEXLAW* --- # Potential claims against HM Treasury: Government department allegedly controlled RBS GRG’s mis-treatment of SMEs Source: https://lexlaw.co.uk/solicitors-london/potential-claims-against-hm-treasury-government-department-allegedly-controlled-rbs-grgs-mis-treatment-of-smes/ *Documents disclosed by [RBS](https://personal.rbs.co.uk/personal.html)’s [Global Restructuring Group (GRG)](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in the High Court case of Morley v The Royal Bank of Scotland Plc have reportedly revealed that the Treasury played a significant role in GRG’s systematic asset stripping of the British business sector. Official [Treasury](https://www.gov.uk/government/organisations/hm-treasury) documents have allegedly indicated that the now defunct [Asset Protection Agency](https://www.gov.uk/government/organisations/asset-protection-agency) (a Treasury- controlled executive agency established to operate the [Asset Protection Scheme](https://www.nao.org.uk/report/hm-treasury-the-asset-protection-scheme/) which insured RBS’s loans) played a crucial role in influencing GRG’s widespread endemic predatory decision making. The potential revelation may open the door to possible new claims by SMEs against HM Treasury seeking compensation for the government agency’s role in artificially distressing and asset stripping businesses.    * ## What is GRG? RBS's Global Restructuring Group (GRG) was originally set up in the early nineties by Derek Sach (described as "[the last of Fred Goodwin's trusty lieutenants](https://www.independent.co.uk/news/business/news/derek-sach-and-rbs-last-of-fred-goodwin-s-trusty-lieutenants-comes-under-fire-over-restructuring-8963226.html)") as a turnaround or business support unit (BSU) for troubled businesses. Following the financial crash in 2008, GRG took control of 16,000 SME customers with assets of £65 billion. After suffering a maelstrom of controversy following the publication of the Tomlinson Report [and former Bank of England deputy Sir Andrew Large’s report](https://lexlaw.co.uk/wp-content/uploads/2014/01/Sir-Andrew-Large-RBS-Independent-Lending-Review-Report.docx), RBS announced in August 2014 that it would be shutting down its controversial GRG team after allegations of misfeasance and wrongful profiting were brought to light. GRG were tasked to recover debt owed to RBS and Natwest but were purposefully mis-described as providing *“business support”*. However, GRG instead prioritised distressing and stripping assets from customers rather than assisting those customers in returning to mainstream banking. In November 2016, RBS admitted it had failed SME customers and established a so-called independent (but [heavily criticised by LEXLAW](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf)) FCA-backed [complaints process fund](https://www.rbs.com/rbs/GRGComplaintsProcess.html) of £400million to refund complex fees paid by SME customers between 2008 and 2013. In November 2017, the FCA published a heavily redacted Promontory summary report into GRG mistreatment of customers. In February 2018, pressure from SME victims and Parliament eventually led to the publication of the [FCA’s section 166 report](https://old.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news-parliament-2017/rbs-global-restructuring-group-s166-report-17-19/). ## What is the Asset Protection Agency? The [Asset Protection Agency (APA)](https://www.gov.uk/government/organisations/asset-protection-agency) was set up in 2009 as part of the Government’s bank rescue package is 2009 as an executive agency of HM Treasury. The department’s primary objective was to apply the [Asset Protection Scheme (APS)](https://www.nao.org.uk/report/hm-treasury-the-asset-protection-scheme/): the Government’s insurance scheme created to aid banks manage bad loans and assets, and in theory to encourage banks to more willingly offer lending to SMEs and individuals.    In 2009 alone, RBS placed assets valued at £325 billion with the Asset Protection Scheme and covered 60% of the debt within GRG; the bad assets which the Government essentially guaranteed to insure. The APA’s role in insuring GRG’s assets meant that the unit was involved in the daily decision making at GRG. ## What role did HM Treasury play in RBS’s GRG unit? Documents disclosed to the High Court in *Morley v The Royal Bank of Scotland Plc *allegedly show that officials in the APA were involved in instructing GRG to withdraw customer support, even when the notoriously predatory GRG unit did not want to. In particular, the Asset Protection Agency reportedly instructed GRG to resist an economically viable rescue package for the distressed business and instead encouraged GRG to sell the assets at an artificially distressed price to RBS’s own [West Register](https://lexlaw.co.uk/solicitors-london/rbs-new-complaints-process-and-complex-fee-refund-grg-compensation-scheme-fca-review/) division. It is also alleged that the HM Treasury agency exercised a veto over any banking re-financing decisions and effectively prevented RBS from discharging GRG customers from secured loans without its approval. ## Claims against HM Treasury for its alleged role in the GRG scandal The disclosure of official APA documents may open the door to claims by SMEs and individuals against HM Treasury for its officials' roles in influencing GRG decisions on re-financing. It is expected that once more information about the Government’s role in the GRG scandal comes to light, claims may start to be made against the Treasury by GRG’s former customers seeking compensation. There are also potentially compensation claims against the Treasury for [misfeasance in public office](http://www.lawcom.gov.uk/app/uploads/2016/01/apb_tort.pdf). If it can be proved that the state agency used its powers for an improper purpose, then there may be a claim if: (i) the conduct was carried out by an employee of a state agency; and (ii) that conduct caused financial loss. Our team can assist clients with bringing claims for misfeasance in public office. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of Solicitors and Barristers in London are [highly experienced](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # LIBOR, FX and Key Benchmark Rigging Claims against RBS, Barclays, HSBC & Lloyds set to Strengthen for Customers Mis-sold Derivatives Source: https://lexlaw.co.uk/solicitors-london/libor-fx-key-benchmark-rigging-claims-against-rbs-barclays-hsbc-lloyds-strengthen-for-customers-mis-sold-derivatives/ *The door has been opened by the Court of Appeal in [PAG v RBS [2018]](https://lexlaw.co.uk/solicitors-london/property-alliance-group-rbs-grg-appeal-solicitors-london/) for misrepresentation claims to be brought by a counter-party to a derivative which is linked to LIBOR, FX or key benchmark where the Swap is with a bank which has been found to have engaged in the manipulation of a benchmark.* *This judgment is now the leading authority on claims concerning a customer’s ability to rescind contracts with a [bank that has manipulated the London Interbank Offered Rate (LIBOR)](https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/). Although this case focused on LIBOR-linked derivatives, the same principles will surely apply to other key benchmark rigging (including the manipulation of FX markets). * *This decision will be of particular interest to customers that believe they have been mis-sold a Forex hedging products or a LIBOR-linked derivative. These customers of [RBS](https://personal.rbs.co.uk/personal.html), [Barclays](https://www.barclays.co.uk/), [HSBC](https://www.hsbc.co.uk/) and [Lloyds Plc](https://www.lloydsbank.com/) may potentially have grounds to rescind the derivative contract if the implied representations made by the banks are considered false due to regulatory findings of benchmark rigging. RBS, Barclays, HSBC and Lloyds Plc have all either undermined the integrity of LIBOR or have been fined for Forex failings.* [The full facts and analysis of PAG v RBS [2018] can be found here.](https://lexlaw.co.uk/solicitors-london/property-alliance-group-pag-rbs-grg-2018-appeal-libor-manipulation-mis-selling-derivatives-swaps/) ## PAG v RBS [2018]: The steps for a successful mis-sold LIBOR, FOREX or key benchmark referenced derivative claim Steps 1-4 are laid out below. ## 1. A bank made an implied representation that it was not and will not manipulate LIBOR/FOREX/key benchmark when selling a Swap The Court did find that RBS had indeed made an implied representation to PAG that it was not manipulating LIBOR: > *“In the present case there were lengthy discussions between PAG and RBS before the Swaps were concluded as set out by the Judge in the earlier part of her judgment….RBS was undoubtedly proposing the Swap transactions with their reference to LIBOR as transactions which PAG could and should consider as fulfilment of the obligations contained in the loan contracts. In these circumstances we are satisfied that RBS did make some representation to the effect that RBS itself was not manipulating and did not intend to manipulate LIBOR.”* > > *Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] at para 133* Therefore, the Court disagreed with Asplin J’s judgment that the proffering of Swaps was *“not in the context of this case conduct from which any representation could be inferred”*. There was an implied representation by RBS that it was not manipulating LIBOR when it sold PAG the Swaps. ### If a bank says nothing about LIBOR/FOREX/key Benchmarks this counts as sufficient conduct to create an implied representation that they have not participated in benchmark rigging PAG’s claim was that, if it had realised LIBOR was manipulated, it would never have agreed to enter into the Swaps in the first place and as such, the Swaps should be rescinded. No such representation was expressly made by RBS, so therefore the question was whether this representation could be implied. The Court considered the interlocutory observations in *[Graiseley Properties Ltd v Barclays Bank plc [2013] EWCA Civ 1372](http://www.bailii.org/ew/cases/EWCA/Civ/2013/1372.html)* and determined that to some extent, these comments should represent the law. In *Graiseley*, Longmore LJ strongly disagreed with the submission that when nothing was said by a bank in connection with LIBOR, there was no obligation to disclose its own dishonesty. The Court accepted the principle that when a bank says nothing about LIBOR, there is an implied representation that *“their own participation in the setting of the rate was an honest one”*. Therefore, there was sufficient conduct on the bank’s part for such a representation to be duly implied. The Court rejected RBS’s submission that it would be wrong to hold that any representation should be implied as it *“covered ground which would normally be covered by an implied term”*. ### An implied representation exists if the reasonable customer would naturally assume a key benchmark had not been rigged and if it was he would have been informed at the outset As well as accepting the reasoning of Longmore LJ in *Graiseley*, the Court also considered *Geest plc v Fyffes plc [1999] 1 All ER (Comm) 672* and endorsed Colman J’s *“helpful test”*: > *“In evaluating the effect of the beneficiary’s conduct a helpful test is whether, having regard to the beneficiary’s conduct in such circumstances, a reasonable potential surety would naturally assume that the true state of facts did not exist and that, had it existed, he would in all the circumstances necessarily have been informed of it.”* > > *Geest plc v Fyffes plc [1999] at p683* Therefore, the Court endorsed the test that the existence of an implied representation can be found if a reasonable potential surety would naturally assume that the true state of facts did not exist and that if it did, he would necessarily be informed of it. This is the first occasion where this *“helpful test”* has been considered at this level and may now pave the way for future misrepresentation claims. The approval of the dicta of Colman J is an important win for potential Claimants on this essential point of law, but it must be noted that there must be clear words and/or conduct from a bank from which the representation can be implied. ## 2. There have been regulatory findings or bank admissions of manipulation of LIBOR, FX or other key Benchmark If there are regulatory findings of LIBOR (or other benchmark) rigging and the same benchmark has been used in the derivative, a customer will have an implied misrepresentation claim. The Court did strongly chastise RBS for its LIBOR manipulation and noted that the admitted manipulation of Japanese yen LIBOR and Swiss franc LIBOR was *“deeply shocking”*. However, crucially for PAG’s case, no specific findings were made in relation to GBP LIBOR and as such there have been no regulatory findings of misconduct on the part of RBS in connection with GBP LIBOR. The regulatory findings against panel banks (RBS, Barclays, HSBC & Lloyds Plc) are detailed below. ## 3. The proven manipulation of that particular benchmark is used in the derivative sold to the customer The Court was unwilling to extend the scope of the representation to a currency to which the Swaps were not referenced. PAG contended that RBS should be held to have made general representations about *“LIBOR encompassing every tenor and every currency”*, whereas RBS claimed that any such representation should be confined solely to 3 month GBP LIBOR. The Court did not go as far as either contention. It was found that RBS during its discussions with PAG had made an implied representation and this representation extended to all tenors of GBP LIBOR, but not to LIBOR in other currencies. The Court’s reformulation of Colman J’s helpful implied representation test failed on the facts of this case because although there was an implied representation, due to the particular derivative sold, this was not misrepresentation. Nevertheless, future Claimants will be assured that the Court left open the possibility of future cases extending the scope of implied representation beyond the particular transactions induced in this case. ## 4. Potentially claims could extend beyond manipulation of that particular benchmark if “cross-contamination” between benchmarks can be proved The approach of Flaux J in *Graiseley* was raised by PAG, Flaux J having noted that: > “it is a wholly artificial exercise to seek effectively to divide up the various LIBOR fixings or manipulations into separate currencies. It is quite clear that there was fixing not only of sterling LIBOR but also of dollar LIBOR and of EURIBOR, and that, as I said during the course of argument, there is inevitably scope for cross-infection here.” > > Graiseley Properties Ltd v Barclays Bank plc [2013] at para 19 The court recognised the issue of *“cross infection”* but distinguished RBS because the main sterling submitter for RBS was a different person to other currency submitters. The Court did strongly chastise RBS for its LIBOR manipulation and noted that the admitted manipulation of Japanese yen LIBOR and Swiss franc LIBOR was* “deeply shocking”*. But decisively, *“that is not, of itself, a reason for holding that representations made to PAG should go further than representations about the sterling LIBOR rate.”* Although the Court were clear that *“any implied representation cannot legitimately extend further than the particular transactions allegedly induced by the representations”*, the door was left open to extending the scope of implied representation if the facts of a case so dictate. Future cases may test the boundaries of the scope of implied representation. One such example of when the* “cross-infection”* argument may become relevant was raised by the court:* “If, of course, a submitter in yen or Swiss francs had also made sterling submissions, that might render false the representation about sterling LIBOR”.* ## Claims against RBS, Barclays, HSBC & Lloyds for LIBOR, FX or key Benchmark rigging: regulatory findings LIBOR is a key interest rate which is set daily by a group of major London banks in relation to a variety of periods and currencies.  While this notionally represents the interest rate applying when banks lend and borrow money between themselves (hence “Interbank”), we now know that at least some of the banks were making fraudulent submissions so as improve their trading positions. The FCA began its investigations into the FX trading market in October 2013 and has found that, between January 2008 and October 2013, many banks and financial institutions did not exercise adequate and effective control over the business practices in the G10 spot FX market, including insufficient training and supervision of the FX traders. The FCA also found attempts by banks to manipulate the ECB and WM Reuters fix rates for their own benefit and to the potential detriment of some of their clients. Many banks also attempted to trigger clients’ stop-loss orders (which are designed to limit a client’s losses if exposed to adverse exchange rate movements) for their own benefit and to the potential detriment of some of their clients. Moreover, it was found that many banks conducted the inappropriate sharing of confidential information (including client identities and information about clients’ orders). The following panel banks undermined the integrity of LIBOR or have been fined for FX failings. [Please click here for a full list of benchmark fines issued by the FCA against panel banks.](https://www.fca.org.uk/publication/publications/benchmark-fines.pdf) **If a customer has entered into a benchmark- linked derivative with any of these banks, a claim could exist that there are grounds to rescind the contract, due to implied representation**: ## Claims against RBS ### Regulatory findings that RBS was involved in LIBOR manipulation As the PAG case demonstrated, RBS has [been found guilty of manipulating LIBOR](https://lexlaw.co.uk/solicitors-london/rbs-fined-for-libor-manipulation/). The [Financial Services Authority (FSA)](https://www.fca.org.uk/) (now known as the FCA) investigated widespread LIBOR manipulation and in particular found [that RBS had committed substantial breaches of Principles 3 and 5](http://www.fsa.gov.uk/static/pubs/final/rbs.pdf) of the [Principles for Businesses](https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html). These breaches [resulted in a fine of £87.5 million for RBS](https://www.fca.org.uk/news/press-releases/rbs-fined-%C2%A3875-million-significant-failings-relation-libor) in February 2013. In addition to the FSA fine, RBS had also been fined [$325 million by the US Commodity Futures Trading Commission](http://www.cftc.gov/PressRoom/PressReleases/pr6510-13) and [$150 million by the US Department of Justice](http://www.justice.gov/opa/pr/2013/February/13-crm-161.html). The US Attorney General has described RBS’s conduct as “a stunning abuse of trust”.  The CFTC notes that the unlawful conduct went back to at least 2006 and continued even after RBS was aware of the Commission’s investigation.  The FSA describe the abuse as “widespread” and notes that in response to a specific query in March 2011, RBS assured the FSA that it had proper systems in place to prevent LIBOR manipulation, when this was false.  All in all, the outcome of this international investigation into RBS’s affairs is a damning indictment of its culture and management practices. ## Regulatory findings that RBS was involved in FX rigging [RBS were fined £217 million by the FCA](https://www.fca.org.uk/publication/final-notices/final-notice-rbs.pdf) for FX failings in November 2014. RBS were also fined $290 million by the United States Commodity Futures Trading Commission ("CFTC") in relation to investigations into failings in the bank’s Foreign Exchange business within its Corporate & Institutional Banking division. The fines were for “attempted manipulation of, and for aiding and abetting other banks’ attempts to manipulate, global foreign exchange (FX) benchmark rates to benefit the positions of certain traders.” One of the primary benchmarks that the FX traders attempted to manipulate was the World Markets/Reuters Closing Spot Rates (WM/R Rates). ## Claims against Barclays ## Regulatory findings that Barclays was involved in LIBOR & EURIBOR manipulation [Barclays was fined £60 million by the FSA](http://www.fsa.gov.uk/static/pubs/final/barclays-jun12.pdf) in June 2012. Barclays  [**admitted**](http://www.justice.gov/opa/pr/2012/June/12-crm-815.html) to misconduct. The US Department of Justice and the [**Commodity Futures Trading Commission**](http://www.cftc.gov/PressRoom/PressReleases/pr6289-12) (CFTC) imposed fines worth £102m and £128m respectively, forcing Barclays to pay a total of around £290m. According to the FSA, Barclays acted inappropriately and breached Principle 5 on numerous occasions between January 2005 and July 2008 by making US dollar LIBOR and EURIBOR submissions which took into account requests made by its interest rate derivatives traders ## Regulatory findings that Barclays was involved in FX rigging In the largest fine imposed for any banks by the FCA, [Barclays was fined £284 million by the FCA](https://www.fca.org.uk/publication/final-notices/barclays-bank-plc-may-15.pdf) in May 2015. The bankers attempted to manipulate vital benchmarks used by companies around the world as a peg for foreign exchange transactions in the $5.3 trillion-a-day market. One Barclays trader wrote in electronic chats: “If you aint cheating, you aint trying.” Barclays also received fines from the Commodity Futures Trading Commission, New York State Department of Financial Services, US Departement of Justice and The Federal Reserve totalling $2.3 billion. ## Claims against HSBC ## Regulatory findings that HSBC was involved in FX rigging HSBC was [fined £216 million by the FCA](https://www.fca.org.uk/publication/final-notices/final-notice-hsbc.pdf) in November 2014. HSBC was also fined $275 million by the CFTC, and [recently paid a $100 million settlement of currency rigging to the US Departement of Justice](https://www.telegraph.co.uk/business/2018/01/18/hsbc-pay-100m-currency-rigging-settlement/). The FCA found that HSBC failed properly to control its London voice trading operations in the G10 spot FX market, with the result that traders in this part of its business were able to behave in a manner that put HSBC’s interests ahead of the interests of its clients, other market participants and the wider UK financial system. ## Claims against Lloyds Bank plc ## Regulatory findings that Lloyds Bank of Scotland was involved in LIBOR & BBA Repo rigging [Lloyds Bank of Scotland was fined £105 million by the FCA](https://www.fca.org.uk/publication/final-notices/lloyds-bank-of-scotland.pdf) in July 2014. The bank breached Principle 5 and Principle 3 of the Authority’s Principles for Businesses through manipulating submissions to two benchmark reference rates, the Repo Rate and LIBOR, in order to seek to manipulate those rates. The Repo Rate benchmarked the rates offered by major banks in London for dealing GBP general collateral repo transactions, and was in operation between May 1999 and December 2012 when it was abolished. ## LEXLAW LIBOR Litigation & Financial Services Dispute Resolution Our Financial Services Litigation team of Solicitors and Barristers in London are highly experienced in banking litigation. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on  02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # The Price of Refusing to Discuss Costs: Court of Appeal backs issuance of professional negligence claim to recover pre-action costs Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-professional-negligence-claim-pre-action-costs-advice/ *The Court of Appeal in [Ayton v RSM Bentley Jennison [2018] EWHC 2851 (QB)](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/Ayton-Bentley-2018-judgment.pdf), has provided authoritative dicta on [whether a claim can be issued](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/), solely to recover costs, in a claim in which the defendant had agreed to settle during the pre-action stage. * *The claimant claimed that in reliance of advice from a firm of accountants, he entered into a transaction and lost around £100,000. The defendants were prepared to pay the full sum of £100,000 but crucially would not countenance any contribution whatsoever to the claimant’s legal costs to that date. The claimant issued proceedings for £100,000 plus costs and on appeal the claimant was awarded £430,000 in respect of the costs element of the claim (60% of the claimant’s bill).* *The Court of Appeal have now found that a claimant is entitled to issue a claim to solely recover the costs of complying with the [Professional Negligence PAP](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg), especially in circumstances where the defendants have conceded the substantive claim but have failed to make any contribution towards costs.* ## What is the Pre-Action Protocol for Professional Negligence? Both parties are encouraged to attempt to settle the professional negligence claim without issuing formal proceedings in court. The [Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) contains the [Professional Negligence Pre-Action Protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). The protocol sets out the framework to be followed and encourages an exchange of information and a set timetable, which both parties must comply with to encourage early settlement without the need for a costly court process. The updated PAP for professional negligence came into effect in May 2018, on which date claims to be issued from that point onwards must comply with. ## What happened during the pre-action stage and why did the defendants not offer any costs contribution? The claimant followed the [Pre-action Protocol for Professional Negligence](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg), and sent a [letter of claim](https://professionalnegligenceclaimsolicitors.co.uk/letter-before-action-claim-protocol-pre-action-advice/) to the accountant’s legal representatives (Clyde & Co). The reason why costs were not agreed is because the pre-action protocol fails to make any provision for the costs arising from preparing the [pre-action letter](https://professionalnegligenceclaimsolicitors.co.uk/letter-before-action-claim-protocol-pre-action-advice/) and investigating the merits of the claim. No detailed response to the letter of claim was provided except for a cheque attempting to settle the matter for the sum claimed in the [letter of claim](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) (save for costs). The defendant made it clear that it had no intention of paying the claimant’s legal costs (in circumstances where a Conditional Fee Agreement is agreed this is not an ideal situation for a claimant or their legal representatives). ## What did the defendant's solicitors advise their client? The defendant’s legal representatives tried to argue a technical point and utilise the lacuna in the [PAP Professional Negligence](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg) to the advantage of their client. Clyde & Co claimed that the defendant had no obligation to pay the claimant’s legal costs under the pre-action protocol and there was apparently no mechanism by which a claimant could seek payment of costs in circumstances where the defendant had paid the full amount. ## What did the claimant's solicitors advise their client? As no agreement as to costs was forthcoming, the claimant issued proceedings claiming £100,000 for damages, plus some £1,500 for consequential loss and expenses and of course costs. The defendants responded by filing a defence which pleaded tender before claim and paid circa £100,000 into court. The defendant continued to defend the remainder of the claim and pleaded that it had no obligation to pay any of the defendant’s pre-action costs. ## What did the Court of Appeal decide? May J awarded costs to the claimant in the sum of around £400,000, and in the leading judgment stated: > *“The PAP makes it clear that the onus is not just on a claimant to avoid proceedings. Once the process has started, by the issuing of a letter of claim, it is for both parties to seek to resolve their disagreements. What the defendants did at the pre-action phase in this case was to offer an ex gratia payment, with no admission of liability, of the full amount of the damages claimed plus interest at 1 per cent. There was no offer to pay costs, and when the claimant enquired about costs, it was clear that the defendants were adopting a position (of refusing to pay) which they intended to maintain and to fight, as they did, all the way to the Court of Appeal.* > > *The only option left to a claimant in circumstances where a pre-action offer is made to pay damages but there is a persistent refusal to cover legal costs is to issue proceedings…*” > > *May J in *[Ayton v RSM Bentley Jennison [2018] EWHC 2851 (QB)](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/Ayton-Bentley-2018-judgment.pdf) ## Did Clyde & Co provide negligent advice? A successful claim in the tort of negligence must satisfy three basic requirements proved on the balance of probabilities: a duty of care was owed by the professional; the professional breached this duty and the breach caused a loss. One step is for the court to assess whether a [reasonable solicitor](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/) with the skill and expertise expected of a senior specialist in litigation would consider the approach taken by Clyde & Co to be reasonable. Arguably, their course of action **was** indeed reasonable. Clyde’s put forward a highly technical and tactical argument which on this occasion failed (but it was by no means an unreasonable strategic course to pursue). It was of course open to Clyde's to choose to run the tactical course that they did, seeking to rely upon the wording of the [CPR](https://www.justice.gov.uk/courts/procedure-rules/civil) in relation to a tender before claim (on some occasions tactical game playing in litigation works- see one of our cases [here](https://lexlaw.co.uk/wp-content/uploads/2019/06/WOODWARD-v-PHOENIX-HEALTHCARE-DISTRIBUTION-LTD-2019-AC5007411CA-Lexlaw-Litigation-Solicitors-London.pdf) (which was far more clear cut in that the Defendant’s solicitors were entitled to pursue their tactical course of action): [Woodward and Another v Phoenix Healthcare Distribution Limited [2019] EWCA Civ 985](https://lexlaw.co.uk/wp-content/uploads/2019/06/WOODWARD-v-PHOENIX-HEALTHCARE-DISTRIBUTION-LTD-2019-AC5007411CA-Lexlaw-Litigation-Solicitors-London.pdf)). However, Clyde’s course of action was risky – the key question therefore is whether the client was warned of these risks. Indeed, Clyde & Co would certainly have realised that costs must have been incurred by the claimant in complying with the [pre-action protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg). Moreover, the firm also must have ascertained that the clear risk in adopting this tactical course (which had no clear guarantee of success) was that interest and costs would rise whilst they continued to deny the claimant’s claim for costs. If no clear warnings were given then the defendant [accountants](https://professionalnegligenceclaimsolicitors.co.uk/compensation-negligent-accountants-financial-tax-advisors/) may be able to issue a claim for professional negligence between the settlement amount offered at the outset (plus costs) in response to the letter of claim and the consequent amount they were ordered to pay the claimant by the [Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/). Furthermore, did the law firm advise the defendant that they could have settled the substantive sum and agreed to pay the claimant’s costs to be the subject of assessment (which is an inherent mechanism provided for by [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36))? If the defendant had misgivings about the claimant’s costs, the extent of the uplift, the amount of hours claimed, the rates charged- these could all have been challenged on assessment (when costs were far lower). ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # RBS to Expand GRG Redress Scheme: Independent Oversight for Consequential Loss Compensation Appeals Process Source: https://lexlaw.co.uk/solicitors-london/rbs-expand-grg-redress-scheme-consequential-loss-compensation-appeals/ *[The Royal Bank of Scotland (RBS)](https://personal.rbs.co.uk/personal.html) has [recently announced](https://www.thetimes.co.uk/article/independent-appeals-are-available-for-grg-victims-p7h6p6l5n) that it will expand its [redress scheme](https://www.rbs.com/rbs/GRGComplaintsProcess.html) to include appeals with independent third- party oversight for consequential losses incurred by businesses in its [Global Restructuring Group](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) (GRG) turnaround division. * *RBS’s Chief Executive Ross McEwan, divulged the expansion of its current GRG appeal process to introduce an "independent appeals procedure” in a letter to John Glen MP (City Minister) to fill a “gap in our previous position”.  Former customers of GRG can currently claim compensation for consequential losses, but this has proved inadequate because (unlike for direct loss claims) if a customer’s claim is rejected, there is no right of appeal to the independent third party (Sir William Blackburne). RBS’s announcement represents a [U-turn on their previous position](https://old.parliament.uk/documents/commons-committees/treasury/Correspondence/2017-19/Ross-McEwan-RBS-follow-up-130318.pdf) that it was not practicable to build a third-party assurance and appeals process to provide oversight of the decisions reached by the bank on consequential loss.    * *[It has been reported](https://www.reuters.com/article/us-britain-banks-rbs/rbs-to-consider-appeals-for-indirect-losses-to-businesses-in-turnaround-unit-idUSKBN1IB25F) that RBS will finalise the details of widening the remit of the Independent Third Party Appeals Process to include a consequential loss appeals process with Sir William Blackburne (a former High Court Judge) in the next few weeks. RBS has received just one consequential loss claim thus far but it is expected that the Bank will receive many claims with high value for consequential losses in the near future. However, doubts remain over the effectiveness of the redress on offer. * *Ex-GRG customers have the right to refer complaints to the Financial Ombudsman Service and pursue claims for consequential losses through the courts with the benefits of independent judicial oversight, expert evidence and established judicial principles. RBS’s announcement to expand the GRG complaints process ensures, to some extent at least, that third- party assurance and independent oversight of the decisions the bank reaches on consequential loss will be in place. * *It is essential to seek early legal advice from LEXLAW to advise you on all the potential options to secure compensation, through articulating consequential loss claims in the GRG complaints scheme to High Court [litigation](https://lexlaw.co.uk/solicitors-london/grg-westregister-took-80-equity-in-bowlplex-cost-owners-50m-while-rbs-profited-9m/).    * ![](https://lexlaw.co.uk/wp-content/uploads/2016/10/RBS-GRG-Logo-Royal-Bank-of-Scotland-Global-Restructuring-Group-LEXLAW-Solicitors-Barristers.png) ## What is GRG? GRG is shorthand for Global Restructuring Group, which was [NatWest](https://personal.natwest.com/personal.html)/RBS’s turnaround or business support unit (BSU) for troubled businesses. ## What did GRG do wrong? The bank recovery team were tasked to recover debt owed to the bank but were purposefully mis-described as providing *“business support”*. In fact these departments managed RBS’s distressed and impaired customers that had lending secured by property based assets. The members of these teams prepared and submitted exit strategies and liaised with LPA Receivers and Administrators and the bank’s solicitors to recover debt owed to the bank. Like other recovery units such as Barclays’ BSR and Lloyds’ BSU, RBS’s GRG behaved in an aggressive and arguably dishonest and unfair way designed to maximise profit for the bank. Bank recovery departments were often highly incentivised to overstate the bank’s write-down provisions in order to obtain bonuses for recovering more than the bank expected to recover. This included for example moving lending rates to rigged rates (LIBOR); setting up pre-pack administration deals without the customer’s knowledge; and pressurising customers into Profit or Property Participation Fee Agreements (PPFA) whereby associated parts of the bank (West Register) would take up free shares in a business or gain a percentage of sale proceeds. ## GRG misconduct comes to light In November 2016, RBS admitted it had failed SME customers and established a [complaints process fund](https://www.rbs.com/rbs/GRGComplaintsProcess.html) of £400million to refund complex fees paid by SME customers between 2008 and 2013 to be overseen by an Independent Third Party. In November 2017, the FCA published a heavily redacted Promontory summary report into GRG mistreatment of customers. In January 2018, Parliament [condemned GRG’s parasitic treatment of SMEs, documented by LEXLAW here](https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/). LEXLAW (through a campaign of [DPA Subject Access Requests](https://lexlaw.co.uk/solicitors-london/data-protection-act-1998-dpa-subject-access-request-sar-rbs-grg-promontory-mazars-fca-bbc/)), SME victims, the APPG, Treasury Select Committee and Parliament called for the publication of the skilled persons report into GRG’s mistreatment of small business customers. The Treasury Select Committee published the [final, unredacted section 166 report](https://old.parliament.uk/documents/commons-committees/treasury/s166-rbs-grg.pdf) on 16 February 2018. Instead of SMEs getting the help they needed in a weak economy, GRG targeted the unregulated SME sector and became a profit churning processing unit to exacerbate the demise of SMEs and squeeze capital to improve RBS’s own post- credit crunch balance sheet. ## What is the current GRG redress scheme? RBS announced the implementation of a £400million GRG complaints process in November 2016 (and updated in May 2017) to process complaints by SME customers for losses incurred as a result of GRG’s misconduct. RBS will review a complaint from eligible ex-GRG customers (see below) and if the complaint is upheld, redress for direct losses and/or automatic complex fee refunds may be offered. In order to make a claim for consequential loss, the customers’ complaint must first have been upheld. LEXLAW have helped many small businesses in analysing consequential loss and whether it is the type of loss that can be adequately evidenced. RBS has agreed to meet the customers’ reasonable costs of meeting with a professional loss assessor or solicitor in establishing a consequential loss claim. RBS’s redress scheme is overseen by  Sir William Blackburne (the Independent Third Party), whose *“assurance and appeal”* role is to oversee the process and to run an Independent Third Party Appeals Process (ITP Appeals Process) to consider appeals against decisions made in the RBS complaints process for direct losses but not consequential losses. The remit of the ITP Appeals Process will be expanded to include consequential loss in the near future. The GRG complaints process is different to the FCA Interest Rate Hedging Products Review scheme (IRHP Review Scheme), the failings of which have previously been highlighted by LEXLAW. In some respects, the GRG complaints process suffers from the same defects as the IRHP review scheme in that they are both essentially voluntary reviews undertaken by the banks themselves with- in essence- limited independent oversight. ## What is the new consequential loss compensation appeal process? The [current GRG Complaints Process](https://www.rbs.com/rbs/GRGComplaintsProcess.html) has been heavily criticised for its lack of adequate compensation for businesses that have suffered consequential losses. The loss of potential profits by an SME forced to close due to GRG misconduct is often the largest head of loss in a claim against a Bank. The current complaints process has been restricted to appealing claims only for direct losses whilst at GRG, whereas now businesses will able to appeal for indirect consequential losses. Under the RBS complaints process, if a direct loss complaint is upheld, then a customer can apply to have consequential losses assessed. The reformed appeal process for companies harmed by GRG will now allow those customers to appeal to the independent third party, mirroring the current process for direct loss complaints. Ross McEwan’s letter to John Glen MP stated that the new consequential loss appeals process will be finalised in the upcoming weeks. The independent third party, Sir William Blackburne, will be consulted on how the process should work and whether he will take on the role of hearing consequential loss appeals. **It is expected that once the RBS complaints scheme appeal process for consequential losses gets underway, many ex-GRG customers will be entitled to claim compensation with the assurance that third-party independent oversight is built into the process to ensure the bank’s decisions on consequential loss compensation are reasonable.** ## Are customers likely to receive adequate compensation through the GRG redress scheme? The compensation scheme has been criticised by politicians as being both time-consuming and ineffective. [RBS publish weekly progress reports of compensation paid out to SMEs here](https://www.rbs.com/content/dam/rbs_com/rbs/PDFs/weekly_progress_report.pdf).  An average of 25 claims a week advance through each stage of the compensation process. RBS earmarked  a £400million pot in November 2016 and despite thousands of businesses suffering loss due to the misconduct of GRG, the pay-outs have been relatively small (on average around £30,000). Approximately £115million has been paid out as an automatic refund of complex fees. Of the remaining £285million which is available in the GRG complaints process, only £3.6million has been offered in compensation and only £2.2million has been paid out. Liberal Democrat leader Sir Vince Cable has criticised the scheme: > *“to see that RBS is processing this compensation, which is almost certainly too little anyway, so slowly is another disgrace in this scandal and suggests that the current leadership of RBS has not learned from the many failure of its predecessors”* > > [Sir Vince Cable](https://twitter.com/vincecable) Clearly adequate compensation for SMEs has not yet been forthcoming through the GRG complaints process. The direct loss compensation scheme appeals system has received independent oversight and the [damning indictments of the levels of redress offered](https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/) leads to assumptions that independent oversight of consequential loss appeals will not ensure effective redress for ex-GRG customers. ## Which customers are eligible for redress in the GRG review scheme? According to the *[“Principles governing RBS’s new complaints process for SME customers in GRG”](https://www.rbs.com/content/dam/rbs_com/rbs/Images/news/2016/11/New_complaints_process_principles.pdf)*, RBS customers are eligible for redress if they were: -  A UK or Republic of Ireland customer;- and a small or medium-sized enterpyrise (SME) customer;- under the control of GRG; and- during the period 2008-2013. Customers are excluded from the definition of an SME if they are: - an entity with listed securities- an entity with debt syndicated across a number of banks- registered offshore or the majority of its shareholders are offshore- private equity backed- a Special Purpose Vehicle (SPV), or- a sizeable business based on financial metrics (e.g. debt facilities and/or turnover higher than £20m). Eligible customers have the right to enter the automatic fee refund process and automatically receive the refund of complex fees. RBS believe that this refund process is substantially complete. GRG utilised a number of different terms to describe fees charged, and the following fees during 2008-2013 are included in the automatic fee refund: - management/monitoring fees;- asset sales fee;- exit fee;- mezzanine fee;- ratchet fee;- risk fee;- late management information (MI) fee. ## What is the GRG redress scheme process for direct loss claims? [Guidance on a direct loss complaint can be found on the RBS website here](https://www.rbs.com/content/dam/rbs_com/rbs/Images/news/2016/11/New_complaints_process_principles.pdf). Direct loss is defined as any *“sums of money paid by a customer to RBS or a customer’s out of pocket costs of meeting RBS’s requirements that were a direct result of an upheld complaint”*. Examples of direct losses include: - arrangement fees;- renewal fees;- excess fees;- increased interest payments made to RBS by a customer;- costs and expenditure incurred in connection with an independent business review, valuation report, security review or other actions required by RBS; or- costs and expenditure incurred by a customer for the appointment of a third party to the customer at the request of RBS. The RBS complaints process initially involves the bank itself assessing the complaint and deciding whether to award compensation for direct losses to a customer. Direct losses include sums paid by a customer to RBS and out of pocket costs of meeting RBS’s requirements. RBS will self-investigate the complaint based on documentary evidence held by the bank and provided by the customer. LEXLAW are experienced in identifying the causes of action, the evidence required and formulating the complaint on behalf of SMEs and submitting this to Bank’s review team. Unlike a truly independent Court process, no detailed written arguments or oral evidence is considered. LEXLAW have pursued all avenues in the pursuit of justice for SME customers and have managed cases in the courts and complaints to the [Financial Ombudsman Service](http://www.financial-ombudsman.org.uk/) (FOS) which offer a more detailed assessment of misconduct claims. The basis of assessment is NOT a test of legality. The GRG complaints team assess customer complaints on standards of reasonableness (whether RBS’s actions were justifiable), transparency (timeliness and clarity of communication) and compliance (with their own internal procedures). In the event that the complaint is upheld by RBS, the bank assesses what it considers to be fair and reasonable compensation. In addition, at its sole discretion without an appeal to the Independent Third Party, the bank may award a *“goodwill payment”* in respect of disruption that was caused to the business. Following the Outcome letter, the customer has 28 days to either accept or appeal against RBS’s offer of redress for direct losses. If accepted, this is taken a full and final settlement of the claim and no further action is permitted to recover further sums for direct loss. If compensation is not forthcoming or inadequate, the customer has 56 days to appeal the decision to the Independent Third Party Appeals Process (ITP Appeals Process) overseen by Sir William Blackburne. The customer is required to complete an appeal form explaining the reasons why RBS’s decision was wrong. The Independent Third Party will reach their own conclusion on whether the complaint should be upheld or not and on what basis. The decision will be based on contemporaneous documents gathered by RBS, evidence submitted by the customer and materials created during the initial RBS complaints process. The Independent Third Party will record their decision, including any award for direct loss only, and a brief summary of the reasons will be provided to RBS and the customer. Subject to the customer accepting the Independent Third Party’s decision, the decision of the Independent Third Party will be binding on the bank. ## What is the current GRG redress scheme process for consequential loss claims? [Guidance on the current process for obtaining compensation for consequential loss can be found here](https://www.rbs.com/content/dam/rbs_com/rbs/Documents/News/2017/May/20170831ConsequentialLossGuidance.pdf). If redress is awarded by RBS for direct losses, the customer then has a limited right to claim for any consequential losses. Consequential losses (or indirect losses) are lost potential profits as result of a business being forced to close due to GRG’s misconduct. The bulk of the losses incurred by small businesses lie in consequential losses. RBS will assess a claim for consequential losses based on evidence and information submitted by a customer. The claim is assessed using the bank’s sole discretion. The bank self-determines whether the consequential loss is factually and legally attributable to it. Crucially, *“this will be considered by the same team in RBS that conducted the RBS Complaints Process but, for the avoidance of doubt, this process will not be overseen by the ITP and there will be no right appeal to the ITP”*. Although RBS apply a self-described *“fairness test”* in their complaints process, an upheld complaint does not relate to a breach of legal obligations. Nevertheless, the bank does assess consequential loss complaints by reference to established legal principles. Therefore, it is important to seek legal advice if considering a consequential loss claim. The bank will apply the following legal tests which LEXLAW are adept at presenting on behalf of businesses: - the consequential losses would not have happened but for the misconduct of GRG and/or the direct loss. In other words, it must be shown that the bank caused the loss. Often a counterfactual scenario is conducted to ascertain whether the losses would have incurred if the actions of the bank were fair and reasonable.- The consequential loss must have been reasonably foreseeable at the time GRG’s unfair actions caused the direct loss.- Only claims supported by contemporaneous evidence will be considered.- The burden is on the customer to demonstrate on a balance of probabilities that a loss has been incurred and would not have occurred but for the actions of RBS. RBS will send a final letter to the customer setting out the findings and any offer for compensation for consequential loss. If this is accepted, the customer is required to enter into a full and final settlement of any consequential loss claim with RBS. However, a major criticism of the current redress scheme for consequential losses is that if a customer chooses to reject RBS’s compensation, the decision of the bank is final and the Independent Third Party has no power to review the decision. This has meant there is a lacuna in the GRG complaints process, whereby the Independent Third Party can review a compensation redress offer for relatively small direct loss claims but has no power to review compensation (or lack of) for the much larger consequential loss claims. ## Which consequential losses can a former GRG customer make a claim for? Consequential losses (or indirect losses) are lost potential profits as result of a business being forced to close due to GRG’s misconduct. Compensation for consequential loss covers the knock-on effect of RBS’s mistreatment of small businesses. RBS already to a limited extent will consider claims for consequential loss involving quantifiable financial loss. Claims involving non-financial loss, for example stress, illness or inconvenience caused by GRG’s misconduct, is not recoverable through the complaints process. RBS have stated that it will meet the costs of an initial meeting with a professional loss assessor to *“assist you in establishing whether you may have suffered a Consequential Loss”. * In the current complaints scheme, RBS refund direct losses and in some cases have additionally compensated for the cost of being deprived of direct loss funds by adding 8% simple interest annually to all payments. RBS considers that in the majority of cases this 8% is enough to compensate customers for consequential loss claims. For the majority of ex-GRG customers, this will not be the case and they are encouraged to make a separate consequential loss claim. Consequential losses include the following: ### Loss of profits in relation to a lost new business opportunity A claim for consequential loss will be unsuccessful if the lost profit was less than the 8% simple interest received from the direct losses claimed in the initial stage of the complaints process. An ex-GRG customer would need to demonstrate that there was a specific opportunity available contemporaneously which had to be forgone due to the unfair actions of GRG, for which a complaint must have previously been upheld and/or direct losses been attributed. It is important to demonstrate that the lost profits were caused and occasioned by the misconduct of GRG rather than extraneous factors, such as the depressed economic climate in 2008-2013. It is essential to gather supporting documentary evidence such as: - evidence of the concrete opportunity at the time (e.g. planning permission granted, architect drawings, builder quotes);- correspondence which documents that the opportunity was foregone (letters, emails);- evidence of a causal link between the bank’s unfair actions and the failure to pursue the new opportunity (e.g. revised cash flow statements);- evidence that the same or similar opportunity has been undertaken when funds became available (e.g. details of actual costs incurred);- evidence of additional profits forgone at the time (e.g. increased demand, evidence that the new opportunity has led to increased profits). ### Loss of profits in relation to lost opportunity for the grossing up of business profits A claim would be successful if it can be demonstrated that but for the unfair actions of GRG, additional stock would have been purchased AND the additional demand for said stock existed at the time. It is essential to gather and submit supporting documentary evidence such as documented above. A claim will be unsuccessful if the lost profit was below 8% and if the evidence only demonstrates a “speculative or generic opportunity”. ### Loss of profits in relation to lost opportunity for acquiring assets A SME that was not able to acquire new assets as a result of GRG’s misconduct and/or direct loss can then go on to make a consequential loss claim. The associated losses due to not purchasing property assets can include: lost capital appreciation, lost rental income and lost development opportunity. It is essential to gather supporting evidence of a specific opportunity at the time and evidence of a causal link between the unfair actions of the bank and the failure to pursue the asset acquisition. ### Loss of profits due to asset disposal Ex-GRG customers that were forced to dispose of assets due to the unfair actions of the bank are entitled to make a consequential loss claim. ### Increased cost of borrowing This head of consequential loss is incurred by businesses that have had to borrow money to meet payment of a direct loss (defined above) or refinance externally with another lender at an increased cost due to GRG’s actions. A claim has a higher chance of success if evidence can be gathered to demonstrate a causal link, for example revised cash flow showing the business would have had sufficient funds and not required the additional loan. It is also important to evidence the loan agreement which quantifies the loss. ### Legal and professional fees Businesses are entitled to claim costs for fees incurred in relation to the complaints process. The complaints process team will assess whether it is fair and reasonable for the business to have obtained legal or professional advice on aspects of the complaints process. The evidence required would be copies of invoices which includes a detailed narration of the tasks performed in relation to the complaints process. ## How do you protect legal rights from expiring against RBS GRG? It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights. Businesses that were affected must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your legal right to compensation via the courts. If no adequate redress is achieved through the GRG complaints process for direct loss and/or consequential loss and your claim becomes time barred, your legal rights will expire. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. ## Should you consider a GRG litigation claim? Customers should be aware that their right to take legal action cannot be compromised by a GRG complaint. In addition, another option involves a legal claim again against RBS- litigation will give customers far greater prospects of a successful outcome. The courts are the most appropriate forum for a consequential loss claim where detailed legal arguments can be elucidated. In addition, claims which are often of a high value and involve complex technical arguments will need expert evidence. If a business is not satisfied with redress for direct or consequential loss in the GRG complaints process and/or independent third party appeals process, redress can also pursued through litigation. LEXLAW have pursued litigation on behalf of many businesses that have been mistreated by RBS’s GRG, [one client was featured in a BBC report here](http://www.bbc.co.uk/news/business-41048691). The legal basis for claims against GRG is as follows: - Breach of contractual terms specific to each case;- Breach of an implied duty of good faith whereby contracting parties have a duty of good faith under which they are obliged to treat each other honestly and responsibly;- Breach of fiduciary duties by directors including where the bank forces appointment of a director or otherwise acts as shadow director;- Unlawful means conspiracy where two or more parties agree to use unlawful means to injure the business customer causing the business damage;- Misrepresentation where Natwest, RBS and/or GRG make a false statement of fact to a customer, which induces the customer to enter into a contract such as a profit participation agreement (PPA) or property participation fee agreement (PPFA) or exit fee agreement or loan agreement;- Negligence in the form of a failure to treat GRG customers with proper care and attention. ## LEXLAW: City of London Specialist GRG Litigation Lawyers *We are the [leading law firm](https://lexlaw.co.uk/) with the skill and experience to act for businesses seeking to resolve wrongdoing by bank recovery departments often titled ‘business support’, ‘restructuring’ or ‘turnaround’ departments. We are aware that some major banks have regularly engineered defaults and created and profited from distress, often caused by other departments of the bank including via wrongdoing such as LIBOR manipulation, deliberate concealment of credit utilisation and mis-sold derivatives. * *In recent years, we have litigated and settled more banking disputes for UK SMEs in the High Court in England & Wales than all other law firms in the UK combined. We provide strong legal representation and use our banking and financial services litigation expertise to ensure we obtain the best possible results which means optimal compensation for our clients.* *Our GRG litigation lawyers pursue every avenue to ensure compensation for ex-GRG customers including the GRG complaints process, claims to the FOS and litigation in the courts. * *Our lawyers are regularly interviewed by journalists and broadcasters and featured in international and UK print and television media commenting on bank litigation and insolvency (see our [Media Appearances](https://www.youtube.com/channel/UCDAvge6fi_2850cF88dH-2w) section). * ## Book an Initial Consultation with our GRG Litigation Solicitors If your business has been mis-treated by RBS’s Global Restructuring Group and are entitled to obtain redress compensation or are considering a legal claim, get in touch so we can assess the legal merit of your case. Our expert legal team of leading GRG complaints Solicitors and Barristers can provide urgent help, advice or representation to you.  Just call us on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). Financial Services Litigation Team, LEXLAW --- # LEXLAW Submits Evidence to the Treasury Committee’s SME Finance Inquiry Source: https://lexlaw.co.uk/solicitors-london/lexlaw-submits-evidence-to-the-treasury-committees-sme-finance-inquiry/ *We have today submitted evidence on the ineffectiveness of existing arrangements for dispute arbitration and settlement between SMEs and banks to the [Treasury Committee](https://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/)'s [SME Finance Inquiry](https://old.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/inquiries1/parliament-2017/sme-finance-17-19/). * [**Re: Submissions to the Treasury Select Committee’s SME Finance Inquiry in relation to *“The ability of SMEs to resolve disputes and access fair and reasonable compensation when they borrow money”***](https://old.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news-parliament-2017/sme-finance-tor-17-19/) ## The effectiveness of existing arrangements for dispute arbitration and settlement At present, the main avenues available for the settlement of disputes between SMEs and banks are the courts, mediation, arbitration, regulatory review schemes, and the Financial Ombudsman Service. ### Courts The primary disadvantages of the courts as a means of settling disputes between SMEs and banks are that: 1. The costs of financial services litigation, which is recognised as being particularly complex litigation, will be in the hundreds of thousands of pounds at the very least (and will often be much greater than this). Given that banks have considerably greater financial resources than SMEs, it is much easier for banks to afford these costs than for SMEs, which severely prejudices the ability of SMEs to place the banks under judicial scrutiny. For example, if a claim includes GBP LIBOR manipulation against Lloyds Bank PLC who have been fined for such misconduct, the bank have been known to regularly instruct two international law firms at the same time, bringing their costs budget up to £2.5 million to take such disputes to trial. Such costs become massive adverse costs risk for claimants, thereby deterring the majority of SMEs from advancing such claims, which have obviously arguable merit given the regulatory fines. 2. Litigation is frequently a time-consuming process, as it often takes at least two years (and frequently longer) for cases to reach the trial stage. This level of delay exacerbates the aforementioned costs disadvantage faced by SME claimants and consequently makes it easier for banks (with their greater financial resources) to use increasing legal costs and adverse costs risks as leverage against SMEs in order to minimise any financial redress paid out to the wronged SMEs. 3. Banks are able to shape the case law in financial services litigation to their advantage via a process of “unnatural selection”, which operates as follows: a. Banks use their greater financial resources and the burden of substantial legal costs to pressure smaller SMEs into giving up their legal claims, thereby leaving only the larger SMEs able to afford to go to trial (and, even then, with some difficulty). b. At trial, the courts are more likely to decide that larger SMEs have similar commercial bargaining power as banks and, on that basis, set legal precedent that banks owe greatly limited duties (if any) to their customers. c. Banks then use the accretion of case law favourable to them (together with their greater financial resources) to pressure smaller SMEs into giving up their legal claims, and so the cycle continues. This ultimately creates a barrier that hinders SMEs from seeking redress against banks through the courts. ### Mediation While mediation has the advantages of being confidential and relatively inexpensive, its effectiveness is hindered by its voluntary nature, which means that banks with large financial resources can simply refuse to mediate as part of a deliberate strategy to strengthen their own negotiating position and “starve out” SMEs. Furthermore, mediation usually takes place during litigation (rather than before litigation is commenced), and therefore the costs saving involved with mediation is limited. ### Arbitration Like mediation, arbitration is a confidential and voluntary process, but the effectiveness of arbitration as a form of dispute resolution is limited because the rules by which arbitrations are conducted are not widely known or understood (unlike the Civil Procedure Rules that govern civil litigation) and there are limited opportunities to appeal or challenge any wrongly determined cases. ### Regulatory review schemes Regulatory review schemes, the most prominent example of which is [the review of past sales of interest rate hedging products by banks to SMEs](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/), should involve the regulator (i.e. the Financial Conduct Authority). However, in reality, the FCA abdicates its regulatory responsibilities in these review schemes - for example, in the aforementioned IRHP review, the FCA *“agreed with the banks that they [i.e. the banks] will review all sales of IRHPs”*. It was both unfortunate and surprising that the FCA believed that the best party to investigate the banks’ wrongdoing was the banks themselves, and this mistake is being repeated in [the review of the activities of RBS’s Global Restructuring Group](https://lexlaw.co.uk/solicitors-london/rbs-new-complaints-process-and-complex-fee-refund-grg-compensation-scheme-fca-review/) that was announced in November 2016, which RBS is conducting itself. In addition to the inherent conflict of interest in allowing wrongdoing banks to adjudicate claims themselves, which [incentivises banks to reduce the amount of financial redress offered to wronged SMEs](https://lexlaw.co.uk/solicitors-london/fca-irhp-review-kpmg-whistleblower-rbs-interest-rate-swap-compensation/), regulatory review schemes are beset by other significant problems, including the substantial delays involved. The IRHP review, for example, was announced on 29 June 2012 but took several years to complete, which meant that many SMEs’ legal claims were time-barred and therefore incapable of being pursued in the courts. Further, due to the one-sided conduct of such review schemes, as the banks are the only party to see all of the information involved, SMEs are prevented from understanding the full force of the wrongdoing against them (which is the first step to holding banks to account). ### Financial Ombudsman Service The Financial Ombudsman Service is of limited utility to SMEs attempting to settle disputes with banks because it is only able to deal with cases for losses of up to £150,000 and does not either punish wrongdoer banks or monitor banks to ensure that they comply with the applicable rules and regulations. Further, a large number of SMEs do not qualify as micro-enterprises and the banks are adept at raising technical arguments on jurisdiction to prevent the FOS from acting. By way of example, we have seen a recent case where the FOS accepted a complaint for an SME assessed as a micro-enterprise and then reached a provisional decision against Lloyds Bank PLC, awarding over £100,000 for the mis-selling of a fixed rate loan. However, Lloyds then argued (belatedly) that the FOS should not adjudicate the dispute as the complainant was allegedly not a micro-enterprise and therefore not eligible to bring a complaint. Remarkably, the FOS seems set to accept this as a basis not to reach a final decision, demonstrating the skill and persistence with which banks and their legal teams seek to elude any regulatory accountability for their actions. ### The merits of the Financial Conduct Authority’s proposals for expanding SME access to the Financial Ombudsman Service While the [FCA’s proposals](https://www.fca.org.uk/publication/consultation/cp18-03.pdf) are welcome, particularly in relation to the extension of the rights of larger SMEs, charities and trusts, they do not go far enough in rectifying the existing flaws in the limited role and ambit of the FOS, which is an organisation set up to deal only with simple customer complaints rather than anything of a complex nature. In addition, the FOS deals with cases on a one by one basis and does not set precedents for other cases and in so doing does not create any proper impetus for change in conduct. ### The case for establishing a new tribunal body for settling SME banking disputes and the means by which such a body could be created It is clear that SMEs are too often drawn into complex disputes with banks and other financial institutions, which disputes are beyond the remit of the FOS to address due to FOS’s maximum threshold of £150,000. Furthermore, the court system is costly and risky for SMEs (who do not have the financial and legal sophistication of the banks). The FCA is a regulator and is neither mandated nor equipped to be an arbiter of disputes. Moreover, regulatory review schemes are fatally undermined by the reliance placed by the FCA on the wrongdoer banks to conduct such review schemes (premised on the inherently unjust and flawed self-determined compensation flaw). It is clear that the current avenues for redress are not working for SMEs; if justice is to be delivered and standards of banking conduct to be corrected and then maintained at fair levels in the future, a new avenue for redress needs to be created. A Financial Services Tribunal would offer a permanent independent commercial dispute resolution platform and, modelled on the Employment Tribunal, can be subsumed within the current framework of the Tribunals, Courts and Enforcement Act 2007.  Such a tribunal would be able to exercise appropriate judicial control over the financial services industry where a lacuna currently exists in practice for SMEs. The tribunal would fill the redress vacuum that SMEs are often trapped in, where their disputes involve sums over the FOS’s compensation limit but where High Court litigation is too costly. A Financial Services Tribunal would serve to restore faith in the banking sector by providing a platform for justice for SME customers and instill confidence in the banking sector by operating as a safeguard that the prospect of public censure would deter future financial misconduct. [LEXLAW Solicitors & Advocates ](https://lexlaw.co.uk/) [Middle Temple (Inn of Court)](https://lexlaw.co.uk/) [![](https://lexlaw.co.uk/wp-content/uploads/2018/06/Treasury-Select-Committee-snip.jpg)](https://lexlaw.co.uk/wp-content/uploads/2018/06/Submissions-to-Treasury-Select-Committee-LEXLAW-Solicitors-London-1.pdf)Click here to download LEXLAW's submissions to the Treasury Select Committee's SME Finance Inquiry --- # High Court bars extradition to US: is there a judicial shift towards greater protection for UK citizens? Source: https://lexlaw.co.uk/solicitors-london/extradition-act-2003-case-law-forum-bar-lawyers/ *In the case of [Scott v Government of the United States of America [2019] 1 W.L.R. 774](https://lexlaw.co.uk/wp-content/uploads/2019/08/Scott-v-United-States-USA-LEXLAW-extradition-solicitors-city-of-london.pdf), the High Court (Lord Burnett LCJ, Males J) exhibited an evolving (more sympathetic) judicial approach to US-UK extradition and found that the extradition should not take place in the interests of justice utilising the relatively novel "forum bar" submission. * *The United States sought an order for [Stuart Scott's extradition](https://www.theguardian.com/business/2018/jul/31/former-hsbc-banker-wins-appeal-against-extradition-to-us-stuart-scott-charges-foreign-exchange-rigging) to the US under section 70 of the [Extradition Act 2003 ](https://lexlaw.co.uk/wp-content/uploads/2019/08/Extradition-Act-2003-LEXLAW-solicitors-London.pdf)in order for Mr Scott to stand trial in the American jurisdiction for alleged [fraudulent FX trading](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/foreign-exchange-hedging-mis-selling-claims-fx-forex-hedge/) and conspiracy to commit wire fraud. The senior court accepted submissions on the forum bar under [section 83A(3)](https://www.legislation.gov.uk/ukpga/2003/41/section/83A) of the [Extradition Act 2003](https://lexlaw.co.uk/wp-content/uploads/2019/08/Extradition-Act-2003-LEXLAW-solicitors-London.pdf) i.e. that extradition would not be in the interests of justice as the majority of the quantified harm occurred in the UK and Mr Scott had no material links to the requesting state whatsoever. The US subsequently *[*abandoned its' attempt to extradite*](https://www.ft.com/content/07551c34-d796-11e8-ab8e-6be0dcf18713)* the ex-[HSBC](https://www.hsbc.co.uk/) currencies trader and the CPS Extradition Unit were not instructed to appeal the decision to the Supreme Court. * ## Why did the US pursue an extradition request? The US government sought the extradition of Mr Scott under [section 70 of the Extradition Act 2003](https://lexlaw.co.uk/wp-content/uploads/2019/08/Extradition-Act-2003-LEXLAW-solicitors-London.pdf) (given that the US is classified as a category 2 territory under the Act and consequently Part 2 of the 2003 Act applies). The [Serious Fraud Office (SFO)](https://www.sfo.gov.uk/) found that there was insufficient evidence for a realistic prospect of convicting Mr Scott in the UK. Accordingly, the US sought extradition in order for Mr Scott to stand trial in the US in connection with alleged [fraudulent FX trading](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/foreign-exchange-hedging-mis-selling-claims-fx-forex-hedge/) and wire fraud connected with manipulation of the US markets which carries a maximum sentence of 30 years imprisonment. The USA's extradition request alleged that whilst Mr Scott was employed as a banker by HSBC in London, he participated in a scheme to defraud a British oil and gas exploration company, [Cairn Energy plc](https://www.cairnenergy.com/). The US's argument was that there was a fiduciary relationship between HSBC and Cairn and as a result, HSBC (and Mr Scott) was obliged to act in Cairn's best interests. However, it was alleged that Mr Scott devised a scheme to benefit HSBC by using insider knowledge to front-run the transaction to maximise the benefit for HSBC (in breach of the fiduciary duty owed to Cairn Energy plc). ## Why did the court of first instance support extradition to the USA? The [Home Secretary](https://www.gov.uk/government/ministers/secretary-of-state-for-the-home-department) had ordered Mr Scott's extradition following the judgment of District Judge Snow at the Central London Magistrates' Court. DJ Snow rejected Mr Scott's submissions appealing against extradition, in particular: - **Abuse of process/dual criminality:** although it is open to an individual to challenge extradition on the grounds that his conduct had not been fairly or accurately described in the extradition request, the court re-iterated the approach in *[Zakrzewski v District Court in Torun, Poland](https://lexlaw.co.uk/wp-content/uploads/2019/08/Zakrzewski-Poland-LEXLAW-extradition-lawyers-london.pdf)* [2013] 1 WLR 324 that *"the true facts required to correct the error or omission must be clear and beyond legitimate dispute"*. This requirement was not satisfied on the facts of the case. - **Conduct "in" the US**: the test for determining whether the relevant conduct substantially took place in a jurisdiction is found in[ ](https://lexlaw.co.uk/wp-content/uploads/2019/08/Office-Kings-Prosecutor-Cado-Armas-2004-LEXLAW-extradition-solicitor-london.pdf)*[Office of the King's Prosecutor, Brussels v Cando Armas](https://lexlaw.co.uk/wp-content/uploads/2019/08/Office-Kings-Prosecutor-Cado-Armas-2004-LEXLAW-extradition-solicitor-london.pdf)* [2006] 2 AC 1 and *R (Bermingham) v Director of the Serious Fraud Office* [2007] QB 727. The respective tests were satisfied because: (i) parts of the alleged fraudulent trading occured in HSBC's New York office; and (ii) harm caused by market manipulation included harm to US financial markets (and other trading companies in New York).- [**Article 8 right to respect for private and family life**](https://www.echr.coe.int/Documents/Guide_Art_8_ENG.pdf): extradition was not incompatible with Mr Scott's and his family's rights under Article 8 "despite their sad personal circumstances." Article 8 arguments failed on the facts of this case, but the key to a successful Art 8 submission is to follow the judicial approach in* [Norris v Government of the United States of America (No 2)](https://lexlaw.co.uk/wp-content/uploads/2019/08/Norris-v-USA-2010-court-of-appeal-LEXLAW-extradition-solicitors-london.pdf)* [2010] 2 AC 487; *H (H) v Deputy Prosecutor of the Italian Republic, Genoa (Official Solicitor intervening)* [2013] 1 AC 338 and *[Polish Judicial Authority v Celinski (Practice Note)](https://lexlaw.co.uk/wp-content/uploads/2019/08/Polish-judicial-authority-celinski-2016-LEXLAW-extradition-lawyer-in-london.pdf)* [2016] 1 WLR 551. ## What is the "forum bar" to prevent an extradition? The forum bar was added as [section 83A of the Extradition Act 2003 ](https://lexlaw.co.uk/wp-content/uploads/2019/08/Extradition-Act-2003-LEXLAW-solicitors-London.pdf)by the [Crime and Courts Act 2013](http://www.legislation.gov.uk/ukpga/2013/22/contents/enacted). Interestingly, the legislative change was likely brought about by Theresa May's refusal to extradite Scottish cyber-hacker Gary McKinnon to the US in 2012. Section 83A(2) of the [Extradition Act](https://lexlaw.co.uk/wp-content/uploads/2019/08/Extradition-Act-2003-LEXLAW-solicitors-London.pdf) provides that extradition to certain requesting states (which includes the US) is barred if the place where most of the harm caused by the extradition offence is in the UK. The forum bar is a novel ground for practitioners of extradition law and following *[Love v Government of the United States of America](https://lexlaw.co.uk/wp-content/uploads/2019/08/Lauri-Love-v-USA-hacking-case-2018-LEXLAW-extradition-lawyers-in-london.pdf)* [2018] 1 WLR 2889 and the present successful quashing of the extradition order, is now a ground which the courts will take account alongside an accused's connection to the UK. ## On what grounds was the extradition order quashed? The appeal succeeded as the court properly applied the forum bar in section 83A of the [Extradition Act 2003](https://lexlaw.co.uk/wp-content/uploads/2019/08/Extradition-Act-2003-LEXLAW-solicitors-London.pdf), which provides that extradition of an individual to a category 2 territory (for example the US) is barred by reason of forum if the extradition is not in the interests of justice. The factors that the court takes into account when considering what is *"in the interests of justice"* include: > *"(3) These are the specified matters relating to the interests of justice— (a) the place where most of the loss or harm resulting from the extradition offence occurred or was intended to occur; (b) the interests of any victims of the extradition offence; (c) any belief of a prosecutor that the United Kingdom, or a particular part of the United Kingdom, is not the most appropriate jurisdiction in which to prosecute D in respect of the conduct constituting the extradition offence; (d) were D to be prosecuted in a part of the United Kingdom for an offence that corresponds to the extradition offence, whether evidence necessary to prove the offence is or could be made available in the United Kingdom; (e) any delay that might result from proceeding in one jurisdiction rather than another; (f) the desirability and practicability of all prosecutions relating to the extradition offence taking place in one jurisdiction, having regard (in particular) to— (i) the jurisdictions in which witnesses, co-defendants and other suspects are located, and (ii) the practicability of the evidence of such person being given in the United Kingdom or in jurisdictions outside the United Kingdom; (g) D's connections with the United Kingdom."* > > Section 83A(3), Extradition Act 2003 The leading case on the forum bar is [Love's case [2018] 1 WLR 2889](https://lexlaw.co.uk/wp-content/uploads/2019/08/Lauri-Love-v-USA-hacking-case-2018-LEXLAW-extradition-lawyers-in-london.pdf) (a judgment which was decided after the extradition hearing but before this appeal). Lauri Love is a student that the [US Department of Justice](https://www.justice.gov/) accused of hacking US government websites. This was an appeal against the decision by Westminster Magistrates' Court in September 2016 and represents the first significant case in which the forum bar was argued successfully to prevent an extradition. Applying the dicta alongside a close analysis of section 83A, the court found that *"a substantial measure of the appellant's activity was performed in the United Kingdom"* which [Love's case](https://lexlaw.co.uk/wp-content/uploads/2019/08/Lauri-Love-v-USA-hacking-case-2018-LEXLAW-extradition-lawyers-in-london.pdf) is authority for the fact that this will usually be *"a very weighty factor"*. Respectfully, it is submitted that DJ Snow did not accord arguments about where the most harm took place their due worth, and thankfully the High Court did correct this oversight by making clear that the harm was suffered by a British company in the UK. The US Department of Justice (in a business crime case) will likely cite market manipulation damaging the integrity of the United States financial markets as a factor supporting any request for extradition. [Love's case](https://lexlaw.co.uk/wp-content/uploads/2019/08/Lauri-Love-v-USA-hacking-case-2018-LEXLAW-extradition-lawyers-in-london.pdf) and now [Scott's case](https://lexlaw.co.uk/wp-content/uploads/2019/08/Scott-v-United-States-USA-LEXLAW-extradition-solicitors-city-of-london.pdf) provide the UK courts with the higher judiciary authority to question the US's attribution of where the greater harm is caused. In this case, although the transaction did involve the sale of US dollars (so that it was necessary for funds to be routed through the US market), this was in essence a technicality as the substance of the quantifiable harm caused to Cairn was in the UK. Another factor considered "important" was Mr Scott's connections to the UK. In a welcome clarification to section 83A forum bar cases (although the court accepted that there is no hierarchy in section 83A *"interests of justice*" factors) , the court did place weight on the appellant's circumstances. In particular, that Mr Scott is: - *"a UK national with very strong connections to the UK"*;- *"a British citizen, resident and domiciled here"*;- *"the sole carer for his children who are also British citizens until he met his current wife, who was widowed with two children"*; and- facing *"substantial personal pressures because of family illnesses"*. Most importantly, extradition would not be in the interests of justice given that he has no links to the UK, save for the fact that at the relevant time he worked for HSBC which was conducting business internationally. As an aside, an important clarification was made by the Court of Appeal in Love's case on the ambit of "connection". "Connection" to the UK is not defined in the 2003 Act, and the Court of Appeal took a purposive interpretation (as opposed to the narrow definition accorded to it by the CPS) of the term by equating it to the definition of *"ties"* in bail decisions which covers *"family ties, their nature and strength, employment and studies, property, duration and status of residence, and nationality"*. ## Are the Courts favouring greater protection for UK citizens in extradition requests from the United States? It would be remiss to make a sweeping generalisation that UK courts are weighing the decision making process in favour of UK citizens. This is not how the court reviews the forum bar factors in section 83A. The court will weigh all the individual factors in section 83A to consider whether an extradition is in the interests of justice or not. Obviously the fact that the appellant was a UK citizen in this case was an important factor to consider in the judicial decision making process. What is clear is that the court will review the individual factors and in particular that the court will not blindly accept a US submission that the US courts are the appropriate forum on the generalised grounds that US markets would have been affected by market manipulation. Of course, this factor is something that the courts will take into account in the extradition decision, however, this cannot be to the detriment of two other important factors, namely: (i) which jurisdiction most of the harm took place; and (ii) whether the appellant has a strong connection to the UK or not. The Love and Scott cases will be helpful to practitioners as precedent decisions where the forum bar argument is successfully deployed, however, the floodgates have not opened (yet) and both cases demonstrate that only a particular combination of factors will result in a successful forum bar argument to prevent extradition. Nevertheless, the generally purposive judicial interpretation of section 83A of the Extradition Act 2003 is to be welcomed. ## Expert UK Criminal Defence Advice Our lawyers are highly effective and have many years of experience of advising and representing clients in cases of alleged fraud, money laundering, asset forfeiture, serious and organised crime, regulatory issues and in complex and high-profile appeals against conviction. They bring to bear all their specialist legal acumen in order to provide clients with results that often surpass expectations and regularly exceed the outcomes of co-defendants. We have obtained bail for clients in circumstances where all other co-defendants have been refused bail and even in circumstances where our new client has previously had bail refused. We assist with initial consultation and advice, Police and other co-operative investigation through to representation at Court and Appeal where necessary. We provide immediate legal assistance and are often instructed by clients who are due to attend court or need advice at short notice. In such circumstances, our team will prioritise your case and ensure that you receive urgent legal assistance. ## Instruct Specialist Extradition Solicitors and Barristers If you require assistance or advice in relating to an extradition, our highly experienced solicitors and barristers are able to assist. We have practical knowledge of challenging extradition requests, European arrest warrants, Interpol Red Notices, securing bail, voluntary surrender and appeals of extradition orders. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our expert legal team of leading Criminal Defence solicitors and barristers. Just call or email us now; our specialist Extradition lawyers are waiting to help. To contact us about your case please call us on: 0207 1830 529 or email: contact@lexlaw.co.uk --- # Peril of leaving (ineffective) service of litigation claim form to the last minute Source: https://lexlaw.co.uk/solicitors-london/professional-negligence-late-service-of-claim-form-particulars-limitation-expiry/ The Court of Appeal today handed down judgment in the case of *Woodward & anor. v Phoenix Healthcare Distribution Limited*. Lexlaw represented the Appellants in place of their former solicitors, Collyer Bristow, who had left service of the Claim Form to the last minute and then served it in an invalid and ineffective way. ## What is Service of a Claim Form in litigation? Service is critical as it is the method by which documents used in court proceedings are brought to a party's attention. The claim form is the form that commences litigation proceedings and as a result is an important legal document. [Part 6 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06) set out guidance on service. How should a claim form be served? Service can be in person or by first class post, document exchange, fax or email along with other methods. [CPR Rule 6.7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.7) allows service in a solicitor instructed by a defendant but only if the solicitor has indicated it is instructed to accept service at its business address. In the instant case that never happened and no attempt to serve was made directly on the defendant. ## Background: Ineffective Service of the Claim Form Our client's former solicitors (Collyer Bristow) ineffectively served a claim form and pleadings on the solicitors acting for Phoenix (Mills & Reeve), instead of serving on Phoenix directly. It is important to note both (i) that service of legal proceedings on the defendant is a critical procedural step for litigation claimants in England & Wales and (ii) that Mills & Reeve had not indicated that they had instructions to accept service in place of their client. Having been served ineffectively, Mills & Reeve's client(s) decided not to alert Collyer Bristow until two days later, when the legal right to pursue the claim had expired by virtue of a limitation time bar. The claimants via Collyer Bristow (who continued to act in spite of a potential [own interest conflict](https://www.sra.org.uk/solicitors/handbook/code/part2/rule3/content.page) - given their ineffective service was potentially fatal to their clients' claim) applied to the High Court in an effort to remedy their error. Master Bowles was minded to remedy the ineffective service of the claim form by Woodward's former solicitors by retrospectively validating service per [CPR 6.15(1) and (2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.15). Phoenix appealed the Master's decision to His Honour Judge David Hodge QC (sitting as a Judge of the High Court), who allowed Phoenix’s appeal against the decision of Master Bowles following the Supreme Court decision in *[Barton v Wright Hassall LLP](https://www.supremecourt.uk/cases/uksc-2016-0136.html)*[ [2018] 1 WLR](https://www.supremecourt.uk/cases/uksc-2016-0136.html). Our clients, again via Collyer Bristow, then appealed the decision of HHJ Hodge QC to the Court of Appeal whereupon Lexlaw was instructed in place of Collyer Bristow. ## No duty to alert litigation opponent of their own procedural error The central question that the Court of Appeal was asked to consider was in what circumstances is it appropriate, on an application for retrospective validation of service under [CPR 6.15](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.15), to allow a defendant to take advantage of a mistake on the part of a claimant giving rise to defective service where any new claim would be time-barred. It was held that the Master was wrong to validate service of a claim form retrospectively under [CPR r.6.15(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.15) where the defendant's solicitors had allowed the validity of the claim form to expire before alerting the claimant to the fact that service had been ineffective. Mills & Reeve did not have a professional duty to draw attention to mistakes made by the other party in circumstances where the mistake was not of their making and arose in a situation not calling for a response. The Master had erred in holding that Mills & Reeve engaged in inappropriate "technical game playing" in breach of a duty owed to the court under the overriding objective (see [CPR r.1.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part01#1.3)). [![Woodward v Phoenix - Solicitor](https://lexlaw.co.uk/wp-content/uploads/2019/06/Woodward-v-Phoenix-Cover-Court-of-Appeal-LEXLAW-Solicitors-London-Lawyers-Barristers.png)](https://lexlaw.co.uk/wp-content/uploads/2019/06/WOODWARD-v-PHOENIX-HEALTHCARE-DISTRIBUTION-LTD-2019-AC5007411CA-Lexlaw-Litigation-Solicitors-London.pdf)Click above image to download full judgment in *Woodward & anor. v Phoenix Healthcare Distribution Limited* [2019] EWCA Civ 985 **Counsel: **For the appellant: [David Berkley QC](https://www.3pb.co.uk/barristers/david-berkley-qc/), [Christopher Snell](http://www.newsquarechambers.co.uk/barristers/christopher-snell) For the respondent: Andrew Onslow QC, Hannah Glover **Solicitors: **For the appellant: [Lexlaw Solicitors & Advocates](https://lexlaw.co.uk/) For the respondent: [Mills & Reeve LLP](https://www.mills-reeve.com/) **Related Proceedings: **Phoenix Healthcare Distribution Ltd v Woodward [[2018] EWHC 2152 (Ch), [2018] 7 WLUK 635](https://www.bailii.org/ew/cases/EWHC/Ch/2018/334.html) --- # GRG Complaints Process Outcomes: What next? Source: https://lexlaw.co.uk/solicitors-london/grg-complaints-process-outcomes-what-next/ *In October 2018, the complaints process closed to individuals with claims against the Royal Bank of Scotland's notorious Global Restructuring Group. Individuals and SMEs are now starting to receive updates on their complaints with some receiving outcome letters.* ## Your complaint to GRG The complaints process is a lengthy one and RBS have provided information on each of the stages on their website. [![](https://lexlaw.co.uk/wp-content/uploads/2019/01/Screen-Shot-2019-01-31-at-19.24.08.png)](https://lexlaw.co.uk/wp-content/uploads/2019/01/GRG-Complaints-journey-.pdf) The Bank is also publishing a [weekly progress report](https://www.rbs.com/rbs/GRGComplaintsProcess.html)[ ](https://lexlaw.co.uk/wp-content/uploads/2019/01/GRG-Weekly-Progress-Report-2.pdf)together with information on some of the [outcomes](file:///Users/Sophia/Downloads/OUTCOME%20EXAMPLES.pdf) of consequential loss claims. [![GRG RBS Bank LEXLAW Litigation Solicitors City of London](https://lexlaw.co.uk/wp-content/uploads/2019/01/grg-weekly-report-e1548944537406.png)](https://lexlaw.co.uk/wp-content/uploads/2019/01/GRG-Weekly-Progress-Report-2.pdf)[Click here to see the progress report of GRG Complaints dated 18 January 2019](https://lexlaw.co.uk/wp-content/uploads/2019/01/GRG-Weekly-Progress-Report-2.pdf) ## GRG Appeals If you are unhappy with your GRG complaint outcome, you may have the opportunity to appeal. As at 25th January, RBS GRG had received 2,615 complaints 2,359 of which were eligible for appeal. ## Who will conduct the GRG complaints appeal? The Independent Third Party is [Sir William Blackburne](https://www.maitlandchambers.com/barristers/sir-william-blackburne), a retired high court judge. Sir William has been appointed by RBS to oversee the bank’s new GRG Complaints Process, and to consider any Appeals. The ITP is funded by RBS and reports into the [Financial Conduct Authority](https://www.fca.org.uk/publication/corporate/statement-on-fcas-further-investigative-steps-in-relation-to-rbs-grg.pdf) (FCA) and the Board of RBS. Sir William’s role is to provide external independent scrutiny to the Complaints Process, and help ensure that fair outcomes are reached for customers. ## How to appeal You can appeal all of your complaint outcome or part of it. To appeal, you must complete the appeal form enclosed with your decision letter, setting out exactly which parts of the complaint you are appealing. There is a 56 day deadline (from the date of your outcome letter) by which to submit your appeal. **Contact details for the GRG Appeal team:** GRG team: GRGCustomerHelpdesk@rbs.co.uk Appeals: appeals@itp.org.uk Telephone: 0800 0294 370 Address: Independent Third Party Review, PO Box 74346, London, EC3P 3DU ## What will happen to my offers if I appeal? If you appeal a Direct Loss offer, that Direct Loss offer will lapse once you submit your Appeal Form, and will be replaced by the amount that the ITP decides is appropriate. On appeal the ITP will reassess the amount of Direct Loss that should be paid. Consequently, it is possible for the ITP to change the Direct Loss offer. This could be more or less than the amount originally offered to you. It is possible for the ITP to dismiss the offer altogether. Once you receive a Final Outcome letter, which will incorporate the outcome of your Appeal in full and any other offers that were carried forward from your first Outcome Letter, you will have 28 days to appeal the same. If you have received an outcome letter from GRG and you are unhappy with the decision but eligible to [appeal](https://www.rbs.com/rbs/GRGComplaintsProcess/Howtomakeanappeal.html), we can assist you in the process. Get in touch to arrange a consultation with our Financial Services Litigation team. ## Consequential Loss claims Some customers whose complaints are upheld, may feel that they suffered a consequential loss which has not been adequately compensated for in the bank’s offer. In such circumstances they may submit a [claim for consequential loss](file:///Users/Sophia/Downloads/20180814ConsequentialLossPrinciplesHR01.00.pdf). We have assisted many clients in consequential loss claims both in complaints to RBS and in litigation. If you consider you have a consequential loss claim, get in touch to book a consultation as soon as possible. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of Solicitors and Barristers in London are [highly experienced](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # Financial Ombudsman increases award limit to £350,000 Source: https://lexlaw.co.uk/solicitors-london/financial-ombudsman-increases-award-limit-to-350000/ From 1 April 2019, the [Financial Ombudsman Service (](https://www.financial-ombudsman.org.uk/news/2019.html#FCAAL)**[FOS](https://www.financial-ombudsman.org.uk/news/2019.html#FCAAL)**[)](https://www.financial-ombudsman.org.uk/news/2019.html#FCAAL) can make awards against regulated firms of up to £350,000, which represents an increase of 133%. The following award limits will apply: - £350,000 for complaints about acts or omissions by firms which took place on or after 1 April 2019; or- £160,000 for complaints about acts or omissions by firms which took place before 1 April 2019 and which are referred to the ombudsman service on or after 1 April 2019; and- £150,000 for existing complaints. ## Good news for potential complainants This development raises interesting questions about the role of the FOS, a route which was originally intended to be a quick, informal and free service to handle low value complaints. The change highlights the Financial Ombudsman Service (FOS) as an even more attractive forum for complainants when faced with the alternative of complex, costly, court proceedings. Small and medium-sized enterprises (SMEs) with an annual turnover below £6.5 million and fewer than 50 employees, or an annual balance sheet below £5 million, will now be able to refer complaints to the FOS. Currently businesses with less than 10 employees and annual turnover or annual balance sheet of less that £2million (referred to as a "micro-enterprise"), can refer complaints to the FOS. (See the [FCA's rules on eligibility ](https://www.handbook.fca.org.uk/handbook/DISP/2/7.html)here) As a consequence of these changes it seems likely that there will be more FOS complaints from larger businesses together with a greater number of high compensation awards. The FCA estimates that the new rules will mean that around 210,000 additional UK SMEs will be eligible to complain to the FOS. Another objective of the FCA and FOS is that the increased limit will encourage firms to improve their conduct, for example behaviour and product governance, in situations where the higher compensation limit could be awarded. This could result in greater consumer protection levels and a fairer financial services industry. ## Implications for financial advisers The changes will have knock on effects for a range of professions. [The FCA](https://www.fca.org.uk/news/press-releases/fca-confirms-increase-financial-ombudsman-service-award-limit) received 130 responses to its consultation paper on the increase to the ombudsman's compensation limit, with most responses coming from personal investment firms, particularly small independent financial advisers, and insurers providing professional indemnity insurance (PII) to these firms. Many of these firms have been sceptical due to the affect FOS's decision is likely to have on the professional indemnity insurance market. The changes will lead to an increase in premiums which in turn could force small firms to stop providing advice. Furthermore these firms providing financial advice will need to revisit and update their claims management procedures as they now face a greater exposure to claims from SMEs. ## LEXLAW Financial Services Litigation & Dispute Resolution Our Financial Services Litigation team of Solicitors and Barristers in London are [highly experienced](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks.  Whether you're an individual or part of an SME or charity, where FOS is the appropriate or preferred course of action, we can assist eligible complainants in making complaints to the FOS by preparing submissions and evidence on your behalf. Call us on 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) Financial Services Litigation Team, LEXLAW --- # FCA’s final report on GRG: Financial watchdog fails (again) to take enforcement action against RBS’s misconduct Source: https://lexlaw.co.uk/solicitors-london/fca-final-report-on-rbs-grg-misconduct/ *The Financial Conduct Authority has today published its' *[*final report*](https://lexlaw.co.uk/wp-content/uploads/2019/06/FCA-Final-Report-on-GRG-LEXLAW-Litigation-Solicitors-London.pdf)* into the misconduct of the *[*Royal Bank of Scotland*](https://personal.rbs.co.uk/personal.html)*'s GRG unit. The report purports to explain the FCA's reasoning behind its decision in July 2018 not to take action against the bank's senior managers, despite the FCA- commissioned Promontory *[*final, unredacted section 166 report*](https://old.parliament.uk/documents/commons-committees/treasury/s166-rbs-grg.pdf)* on 16 February 2018 finding that "there was widespread inappropriate treatment of customers by GRG".* *The upshot of the FCA's report is that although GRG "fell short" of standards expected by its clients and even in cases where the mistreatment of customers has been identified and accepted, the regulatory body's powers are very limited given that at the time, the rogue unit was purportedly unregulated. * ## Download the FCA's final report on GRG [![FCA Report GRG Misconduct](https://lexlaw.co.uk/wp-content/uploads/2019/06/FCA-Report-on-Further-investigative-steps-RBS-GRG-LEXLAW-Litigation-Solicitors-London.jpg)](https://lexlaw.co.uk/wp-content/uploads/2019/06/FCA-Final-Report-on-GRG-LEXLAW-Litigation-Solicitors-London.pdf)*Click above image to download the FCA's final full report into its' investigation of GRG * ## Key findings of the FCA's final report ### GRG's activities were largely unregulated The FCA have claimed that its' role as the financial services watchdog does not apply to the commercial lending to RBS's GRG customers as it was largely unregulated. Therefore, even where misconduct is clear and apparent (the first s.166 report confirms that misconduct was prevalent and this report concludes that the relationship between GRG and West Register was inappropriate), the FCA do not have the parliamentary mandate to take action against RBS or its' senior management. Therefore, in effect, the FCA's role is limited to investigation but not enforcement. This leaves victims of GRG's rogue unit in a regulatory black hole and means that the FCA have not been able to hold senior mangement at GRG to account, or levy financial penalties on RBS, despite the loss suffered by its' victims. ### Evidence of serious and widespread malpractice at GRG The report re-affirms that the FCA found multiple instances of GRG not treating customers fairly, for example by: - failing to comply with RBS’s own policy for communicating with customers about their transfer to GRG; - failing to support SME businesses in a way that was consistent with good turnaround practice;- focusing too much on increasing prices and reducing debt without properly considering the impact of this on the longer-term viability of customers’ businesses; - failing to document or explain the rationale behind pricing decisions for customers after they were transferred to GRG;- failing to ensure staff made appropriate and robust valuations, and carrying out internal valuations based on insufficient or inadequate work, especially where GRG based significant decisions on these valuations; and- failing to handle the conflicts of interest in the West Register model and operation. ## Regulatory history of investigating GRG's misconduct In November 2016, RBS admitted it had failed SME customers and established a [complaints process fund](https://www.rbs.com/rbs/GRGComplaintsProcess.html) of £400million to refund complex fees paid by SME customers between 2008 and 2013 to be overseen by an Independent Third Party. In November 2017, the FCA published a heavily redacted Promontory summary report into GRG mistreatment of customers. In January 2018, Parliament [condemned GRG’s parasitic treatment of SMEs, documented by LEXLAW here](https://lexlaw.co.uk/solicitors-london/uk-parliament-condemns-rbs-grg-mistreatment-sme-bank-misconduct-litigation-solicitors-london/). LEXLAW (through a campaign of [DPA Subject Access Requests](https://lexlaw.co.uk/solicitors-london/data-protection-act-1998-dpa-subject-access-request-sar-rbs-grg-promontory-mazars-fca-bbc/)), SME victims, the APPG, Treasury Select Committee and Parliament called for the publication of the skilled persons report into GRG’s mistreatment of small business customers. The Treasury Select Committee published the [final, unredacted section 166 report](https://old.parliament.uk/documents/commons-committees/treasury/s166-rbs-grg.pdf) on 16 February 2018. The report estimated that one in six SMEs had been damaged by the actions of GRG and the FCA's conclusion was *"there was widespread inappropriate treatment of customers by GRG"*. However despite the litany of evidence against GRG, in July 2018, the FCA stated that no action would be taken by the regulatory body against either RBS or its' senior mangers over GRG's widespread misconduct. The FCA claimed that its regulatory powers were limited given that GRG was largely an unregulated body. The report published today purports to expand on the reasons why the FCA have decided not to pursue the senior managers at RBS. ## How do you protect legal rights from expiring against RBS GRG? It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights. Businesses that were affected must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your legal right to compensation via the courts. If no adequate redress is achieved through the GRG complaints process for direct loss and/or consequential loss and your claim becomes time barred, your legal rights will expire. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. ## LEXLAW: City of London Specialist GRG Litigation Lawyers *We are the [leading law firm](https://lexlaw.co.uk/) with the skill and experience to act for businesses seeking to resolve wrongdoing by bank recovery departments often titled ‘business support’, ‘restructuring’ or ‘turnaround’ departments. We are aware that some major banks have regularly engineered defaults and created and profited from distress, often caused by other departments of the bank including via wrongdoing such as LIBOR manipulation, deliberate concealment of credit utilisation and mis-sold derivatives. * *In recent years, we have litigated and settled more banking disputes for UK SMEs in the High Court in England & Wales than all other law firms in the UK combined. We provide strong legal representation and use our banking and financial services litigation expertise to ensure we obtain the best possible results which means optimal compensation for our clients.* *Our GRG litigation lawyers pursue every avenue to ensure compensation for ex-GRG customers including the GRG complaints process, claims to the FOS and litigation in the courts. * *Our lawyers are regularly interviewed by journalists and broadcasters and featured in international and UK print and television media commenting on bank litigation and insolvency (see our [Media Appearances](https://www.youtube.com/channel/UCDAvge6fi_2850cF88dH-2w) section). * ## Book an Initial Consultation with our GRG Litigation Solicitors If your business has been mis-treated by RBS’s Global Restructuring Group and are entitled to obtain redress compensation or are considering a legal claim, get in touch so we can assess the legal merit of your case. Our expert legal team of leading GRG complaints Solicitors and Barristers can provide urgent help, advice or representation to you.  Just call us on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). Financial Services Litigation Team, LEXLAW --- # Steps taken towards a Business Banking Resolution Service (BBRS) for SMEs but will it work? Source: https://lexlaw.co.uk/solicitors-london/banking-dispute-resolution-service-bdrs-for-smes-will-it-work/ *In October 2018, the [UK Finance](https://www.ukfinance.org.uk/)-commissioned [Walker Review](https://www.icaew.com/technical/corporate-governance/codes-and-reports/walker-report) of the redress landscape for SMEs was published. Amongst the recommendations for the settlement of both past and future disputes was the mooted introduction of a voluntary ombudsman scheme and dispute resolution service (DRS). It is now understood that leading banks have largely agreed to adopt the proposals outlined in the Walker Report and steps are being taken to establish a new Business Banking Resolution Service (BBRS) by the end of 2019 as an alternative redress scheme for businesses that have been victim to banking misconduct. * *It is clear that the current avenues for redress (litigation, [regulatory review schemes](https://lexlaw.co.uk/solicitors-london/category/irhp-reviews/) and the [Financial Ombudsman Service](https://lexlaw.co.uk/solicitors-london/tag/financial-ombudsman-service/)) are not working for SMEs; if justice is to be delivered and standards of banking conduct to be corrected and then maintained at fair levels in the future, a new avenue for redress needs to be created. * ## Why is a Business Banking Resolution Service (BBRS) needed? [LEXLAW have made submissions to the Treasury Select Committee's SME Finance Enquiry](https://lexlaw.co.uk/solicitors-london/lexlaw-submits-evidence-to-the-treasury-committees-sme-finance-inquiry/) in June 2018 outlining the current disadvantages of SMEs utilising the current means of redress. ### The ineffectiveness of the court system for SMEs LEXLAW have consistently highlighted the tactics used by banks to undermine SMEs access to justice in the courts. Major banks have been criticised for their failure to provide full and frank disclosure when defending claims of wrongdoing against them. Disclosure is a fundamental part of litigation whereby each party are required to produce all relevant documents regardless of whether they assist or harm their case. In January 2018, Kate Green MP praised LEXLAW’s work in highlighting cases of RBS’s non-disclosure. In [*Mehnaaz Chaudhry & Another v. The Royal Bank of Scotland PLC (High Court of Justice, Chancery Division, Claim No: HC-2013-000489)*](https://lexlaw.co.uk/solicitors-london/rbs-royal-bank-scotland-swaps-irhp-derivatives-mis-selling-1m-gbp-litigation-settlement-social-care-provider/), Dentons advanced the meritless argument that documents generated by the IRHP review scheme were non-disclosable. RBS were forced to redo their standard disclosure exercise and hand over the documents.  Moreover, in [*The Royal Bank of Scotland Plc v. Highland Financial Partners LP [2013] EWCA Civ 328*](http://www.bailii.org/ew/cases/EWCA/Civ/2013/472.html), the Court of Appeal found a deliberate and dishonest failure by RBS to disclose relevant documents and misled their client, their own lawyers and the court. In addition, the Court of Session in *[Royal Bank of Scotland Plc v Carlyle [2010] ScotCS CSOH 3](http://www.bailii.org/cgi-bin/format.cgi?doc=/scot/cases/ScotCS/2010/2010CSOH3.html)* found the bank lacked *“candour”* in its deliberate failure to admit evidence. Finally, in [*Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2015] EWHC 322,* ](http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2015/322.html)the High Court criticised the bank’s *“cavalier”* attitude to disclosure in hiding 25 million documents relating to allegations of LIBOR manipulation. ### Inherent conflicts of interests in regulatory review schemes It was unfortunate and that the[ FCA](https://www.fca.org.uk/) believed that the best party to investigate the banks’ wrongdoing was the banks themselves, and this mistake is being repeated in [the review of the activities of RBS’s Global Restructuring Group](https://lexlaw.co.uk/solicitors-london/rbs-new-complaints-process-and-complex-fee-refund-grg-compensation-scheme-fca-review/) announced in November 2016, which RBS is conducting itself. In addition to the inherent conflict of interest in allowing wrongdoing banks to decide claims themselves, which [incentivises banks to reduce the amount of financial redress offered to wronged SMEs](https://lexlaw.co.uk/solicitors-london/fca-irhp-review-kpmg-whistleblower-rbs-interest-rate-swap-compensation/), regulatory review schemes are beset by other significant problems, including the substantial delays involved. The IRHP review, for example, was announced on 29 June 2012 but took several years to complete, which meant that many SMEs’ legal claims were time-barred and therefore incapable of being pursued in the courts. Further, due to the one-sided conduct of such review schemes, as the banks are the only party to see all of the information involved, SMEs are prevented from understanding the full force of the wrongdoing against them (which is the first step to holding banks to account). Redress under compensation schemes is frequently criticised for the inherent conflicts of interest underpinning the schemes themselves. For example, under a [recent swaps case](https://www.thetimes.co.uk/article/santander-set-for-swaps-court-battle-b8f3jgtw5), the claimant was offered compensation of around £350,000 for what is a claim (including consequential interest) of around £12 million. ### Jurisdictional hurdles in SME access to the Financial Ombudsman Service (and potentially to the BDRS) The [Financial Ombudsman Service](https://www.financial-ombudsman.org.uk/) is of limited utility to SMEs attempting to settle disputes with banks because it is only able to deal with cases for losses of up to £150,000 and does not either punish wrongdoer banks or monitor banks to ensure that they comply with the applicable rules and regulations. Further, a large number of SMEs do not qualify as micro-enterprises and the banks are adept at raising technical arguments on jurisdiction to prevent the FOS from acting. It is hoped that the BBRS does not employ such stringent (and unfair) jurisdictional hurdles, denying businesses access to alternative redress. However, the [SME Alliance have warned ](https://www.smealliance.org/blog/press-release-7th-july-2019)that it will not support a Banking Dispute Resolution Scheme with eligibility criteria which excludes the majority of its' members. We understand that eligibility criteria will be forthcoming in next few weeks. ## Will a Business Banking Resolution Service (BBRS) work? SMEs are too often drawn into complex disputes with banks and other financial institutions, which are beyond the remit of the [FOS](https://www.financial-ombudsman.org.uk/) to address due to FOS’s maximum threshold of £150,000 ([now £350,000 from 1 April 2019 against regulated firms](https://lexlaw.co.uk/solicitors-london/financial-ombudsman-increases-award-limit-to-350000/)). Furthermore, the court system can be costly and risky for SMEs (who do not have the financial and legal sophistication of the banks). The [FCA](https://www.fca.org.uk/) is not equipped to be an arbiter of disputes, and so regulatory review schemes are fatally undermined by the FCA's reliance on the wrongdoer banks to conduct such review schemes into their own alleged wrongdoing. It is clear that the current avenues for redress are not working for SMEs; if justice is to be delivered and maintained in the future, a new avenue for redress needs to be created. However, it remains to be seen whether another redress apparatus with voluntary compliance by major banks (the BBRS) will be able to provide a platform for justice for SME customers and instill confidence in the banking sector by operating as a safeguard against past and future financial misconduct. In particular, safeguards need to be put in place to ensure that banks do not simply repeat their previous tactics (used in litigation and in regulatory review schemes) of withholding potentially damaging information. A big step towards creating a functional BBRS that can exercise appropriate control over the financial services industry and fill the lacuna that currently exists in practice for SMEs is for the BBRS to have the power to control the disclosure process and to sanction non-compliance publicly. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of [Lloyds](https://www.lloydsbank.com/) BSU, [RBS](https://personal.rbs.co.uk/personal.html) [GRG](https://lexlaw.co.uk/solicitors-london/potential-claims-against-hm-treasury-government-department-allegedly-controlled-rbs-grgs-mis-treatment-of-smes/) or other bank BSUs protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the Lloyds or RBS. Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors to issue a protective claim form or by instructing us to prepare and agree a carefully written standstill agreement. Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks and have widespread experience in managing claims through redress schemes (which are similar to the Business Banking Resolution Service (BBRS)). Call us on 02071830529 or complete our online contact form. --- # Business Banking Resolution Service (BBRS): complainants expected to include SMEs mis-sold EFGs by RBS & loans by Clydesdale Source: https://lexlaw.co.uk/solicitors-london/bdrs-banking-dispute-resolution-scheme-efgs-rbs-tbls-clydesdale/ *The [Financial Conduct Authority (FCA)](https://www.fca.org.uk/) has said that business owners who were mis-sold tax-payer backed [Enterprise Finance Guarantees (EFGs)](https://lexlaw.co.uk/solicitors-london/enterprise-finance-guarantee-efg-loan-mis-selling-review/) by the [Royal Bank of Scotland (RBS)](https://personal.rbs.co.uk/personal.html) may be eligible to submit a complaint for financial redress to the new [Banking Dispute Resolution Scheme](https://lexlaw.co.uk/solicitors-london/banking-dispute-resolution-service-bdrs-for-smes-will-it-work/) (even if the complaint has already been heard by RBS's own compensation process). * *The FCA also expects the new dispute resolution service to accept a large number of complaints from SMEs mis-sold business loans by [Clydesdale Bank ](https://secure.cbonline.co.uk/)(formerly known as Yorkshire Bank and soon to be re branded as [Virgin Money](https://uk.virginmoney.com/virgin/)). * *The Business Banking Resolution Service (BBRS) is due to be launched at the end of 2019. However, organisations such as the [SME Alliance](https://www.smealliance.org/) have *[*withdrawn support for the service*](https://www.smealliance.org/blog/press-release-7th-july-2019)* over concerns that its' eligibility criteria will bar many businesses from redress on jurisdictional grounds. * ## What is the Business Banking Resolution Service? The [Business Banking Resolution Service](https://lexlaw.co.uk/solicitors-london/banking-dispute-resolution-service-bdrs-for-smes-will-it-work/) is an alternative redress service for businesses that have been victim to banking misconduct. Seven leading UK banks have voluntarily accepted the proposals outlined in the [UK Finance-](https://www.ukfinance.org.uk/) commissioned [Walker Review](https://www.icaew.com/technical/corporate-governance/codes-and-reports/walker-report), creating an alternative to legal action, the [Financial Ombudsman Service](https://www.financial-ombudsman.org.uk/) and bank-run compensation schemes for SMEs mis-sold complex derivative products. ## When will the Business Banking Resolution Service start? The new banking dispute resolution scheme offering businesses mis-treated by Banks an alternative route to financial redress is due to be announced by the end of 2019. Customers who have been mis-sold loans by [RBS](https://personal.rbs.co.uk/personal.html), [Lloyds](https://www.lloydsbank.com/), [Clydesdale](https://secure.cbonline.co.uk/), [Barclays](https://www.barclays.co.uk/) et al should seek legal advice as soon as possible (before the scheme is announced) to consider whether legal redress is an option before your claim becomes [time-barred](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/). ## What is an Enterprise Finance Guarantee Loan? The [Enterprise Finance Guarantee scheme](http://british-business-bank.co.uk/market-failures-and-how-we-address-them/enterprise-finance-guarantee/) is a loan guarantee scheme that was set up by the Government in November 2008 to encourage banks to lend to businesses who had insufficient security to obtain normal commercial lending. ## How do EFGs work? Under the Enterprise Finance Guarantee loan scheme, the Government agreed to guarantee 75% of the value of each individual loan, but had no involvement in lending decisions, which were entirely at the prerogative of the lender banks. The EFG loan scheme has been available through many lenders, including Barclays, Clydesdale, Yorkshire, HBOS, HSBC, Lloyds, RBS/NatWest, Bank of Scotland and the Cooperative Bank. ## Have I been mis-sold an EFG loan? It has been [reported](https://twitter.com/lexlawuk/status/555998182996738048) that there are a number of serious issues in relation to how banks sold Enterprise Finance Guarantee loans to their customers. Many banks failed to explain to their customers that, for each individual EFG loan, the customer would remain responsible for repaying 100% of the EFG loan (and not just the 25% of the EFG loan that was outside of the Government’s guarantee). Consequently, many customers did not realise that their liability to their bank was greater than anticipated and that the EFG loans served primarily to protect banks from the risk of loan default rather than borrowers. Furthermore, despite having the security of a 75% guarantee from the Government, many banks obtained charges over their customers’ primary private homes or arranged personal guarantees for the sole or main purpose of guaranteeing the 25% of the EFG loan not guaranteed by the Government, even though the banks were expressly prohibited from seeking these forms of additional PG or charged security by the rules of the EFG scheme. ## What is the RBS EFG Review Scheme? This was RBS's own purportedly "independent" review into whether EFG loans were mis-sold to its customers. RBS's review purportedly examined whether RBS properly explained borrower and guarantor liabilites to EFG customers. [LEXLAW's position at the time](https://lexlaw.co.uk/solicitors-london/enterprise-finance-guarantee-efg-loan-mis-selling-review/) the review was announced in 2015 (and still is for Bank-run reviews) is that customers should take independent legal advice and make detailed and authoritative written submissions via their lawyers rather than submitting to what is in effect a "partisan" review by RBS itself. ## I have been through RBS's EFG Review Scheme, can I still bring a complaint to the BDRS? Details have yet to be announced but it is understood that the FCA expects that some complaints from eligible companies that have been through RBS's review scheme may have grounds to have their complaints reconsidered. In particular, if evidence can be submitted demonstrating that the past redress decision was unfair then those companies may be eligible to get a second verdict. ## I have been mis-sold an enterprise finance guarantee loan, what do I do? We consider that it is important for customers who have fallen victim to EFG loan mis-selling to maintain their option of seeking redress through legal proceedings. The period of initiating legal proceedings for EFG loan mis-selling will usually be six years from the date of the sale (or from the date when the bank first proposed an EFG loan to the customer). Given that EFG loan mis-selling has occurred since November 2008, it is likely that more victims will progressively become time-barred from seeking legal redress although [s14A of the Limitation Act may provide a further three year period from the ‘date of knowledge’ of the mis-sold EFG](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/). Those customers will then risk finding themselves with no or limited legal recourse if RBS’s review proves unsatisfactory (or if they were mis-sold and EFG loan by another bank). EFG claims can be progressed either via litigation or via the review or by both processes which can result in significant advantages for claimants resulting in an optimal financial outcome. Please contact us to discuss this further in an initial meeting. ## I have been mis-sold a business loan by Clydesdale Bank, am I eligible to use the BDRS? Clydesdale Bank (formely Yorshire Bank) [have been found in the past](https://lexlaw.co.uk/solicitors-london/clydesdale-yorkshire-bank-nab-complaint-review-tbl-fixed-rate-tailored-business-loan-missold-hidden-swap-irhp/) to have mis-sold fixed rate loans or TBLs usually containing (or are backed by) swaps or other over-the-counter derivatives and are often widely described as 'embedded derivatives’ or ‘hidden swaps’. Clydesdale have concluded its' own partisan internal review of its' own misconduct in selling the embedded derivatives. However, the FCA have suggested that the new resolution service will be able to deal with complaints from businesses mis-sold business loans by Clydesdale Bank. ## Preserving Litigation Rights – Limitation Warning There are strict time limits for bringing legal claims against banks for the mis-selling of hidden swaps and EFG loans. The time limit is generally six years from the date the bank first started mis-selling products or the date of the loan contract. After the limitation date, claims will face limitation challenges by the bank. However, steps can be taken to protect legal rights and prevent banks from asserting a limitation defence. Affected Clydesdale Bank, Yorkshire Bank and RBS customers should urgently seek legal advice. ## Will a Banking Dispute Resolution Scheme (BDRS) work? SMEs are too often drawn into complex disputes with banks and other financial institutions, which are beyond the remit of the [FOS](https://www.financial-ombudsman.org.uk/) to address due to FOS’s maximum threshold of £150,000 ([now £350,000 from 1 April 2019 against regulated firms](https://lexlaw.co.uk/solicitors-london/financial-ombudsman-increases-award-limit-to-350000/)). Furthermore, the court system can be costly and risky for SMEs (who do not have the financial and legal sophistication of the banks). The [FCA](https://www.fca.org.uk/) is not equipped to be an arbiter of disputes, and so regulatory review schemes are fatally undermined by the FCA’s reliance on the wrongdoer banks to conduct such review schemes into their own alleged wrongdoing. It is clear that the current avenues for redress are not working for SMEs; if justice is to be delivered and maintained in the future, a new avenue for redress needs to be created. However, it remains to be seen whether another redress apparatus with voluntary compliance by major banks (the BDRS) will be able to provide a platform for justice for SME customers and instill confidence in the banking sector by operating as a safeguard against past and future financial misconduct. In particular, safeguards need to be put in place to ensure that banks do not simply repeat their previous tactics (used in litigation and in regulatory review schemes) of withholding potentially damaging information. A big step towards creating a functional BDRS that can exercise appropriate control over the financial services industry and fill the lacuna that currently exists in practice for SMEs is for the BDRS to have the power to control the disclosure process and to sanction non-compliance publicly. ## Our Mis-sold TBL and EFG Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide [specialist senior legal advice](https://lexlaw.co.uk/) from solicitors and barristers (including at QC level) at the outset when it absolutely matters in pursuing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in swaps mis-selling cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the mis-selling claim;- Assisting you in preparation of evidence to support your mis-sold hidden swap case;- Appointing the right derivatives and hedging experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the Financial Ombudsmen Service;- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of  [RBS,](https://personal.rbs.co.uk/personal.html) [Clydesdale Bank](https://lexlaw.co.uk/solicitors-london/potential-claims-against-hm-treasury-government-department-allegedly-controlled-rbs-grgs-mis-treatment-of-smes/), Yorkshire Bank or other banks protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the Lloyds or RBS. Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors to issue a protective claim form or by instructing us to prepare and agree a carefully written standstill agreement. Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks and have widespread experience in managing claims through redress schemes (which are similar to the Banking Dispute Resolution Scheme (BDRS)). Call us on 02071830529 or complete our online contact form. --- # UK Supreme Court finds Daiwa Capital Markets in breach of its Duty and upholds $153 million Negligence Claim Source: https://lexlaw.co.uk/solicitors-london/negligent-banks-quincecare-duty-of-care-professional-negligence-advice/ *[The UK Supreme Court](https://www.supremecourt.uk), in the much anticipated judgment in [Singularis Holdings Ltd (the “Respondent”) v Daiwa Capital Markets Europe Ltd (the “Appellant”) [2019] UKSC 50](https://lexlaw.co.uk/wp-content/uploads/2019/10/Singularis-v-Daiwa.pdf), have unanimously ruled that the Appellant Bank had breached its duty to protect the Respondent. The Respondent was at all times material, the manager to the assets of Maan Al Sanea, a Saudi billionaire. * ## Summary of the facts in Singularis Singularis (now in liquidation) was registered in the Cayman Islands in order to manage the personal assets of Mr Al Sanea who was the sole shareholder, a director, chairman, president and treasurer of the Respondent. In 2007 they entered into a stock financing arrangement with [Daiwa, the London subsidiary of a Japanese investment bank. ](https://www.uk.daiwacm.com) Daiwa provided Singularis with loan financing which enabled it to purchase shares. Those shares were later sold in 2009, leaving Daiwa holding a surplus of $204 million. Between 12 June and 27 July 2009, Daiwa were instructed by Singularis to make eight payments of this cash surplus, to Saad Specialist Hospital Company and Saad Air. These payments were deemed a misappropriation of funds as it rendered the Respondent unable to meet the demands of its creditors. In 2009, Al Sanea placed Singularis into voluntary liquidation. Following this the Grand Court of the Cayman Islands made a compulsory [winding up order](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) and joint liquidators were appointed. Those liquidators brought a claim against Daiwa in 2014 for the full amount of the payments. There were two bases for the claim: 1. Dishonest assistance in Mr Al Sanea’s breach of fiduciary duty in misapplying the company’s funds; and 2. Breach of the *Quincecare* duty of care to the company by giving effect to the payment instructions. The first basis was dismissed in the [Chancery Division of the High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/), as it was held that the Daiwa employees had acted honestly. However, the negligence claim was upheld with a deduction of 25% under the Law Reform (Contributory Negligence) Act 1945 to reflect the contributory fault of Mr Al Sanea and the company’s inactive directors ## What is the Quincecare duty of care? In the famous case of *Barclays Bank plc v Quincecare Ltd* [1992] 4 All ER 363, Steyn J held there is an implied term in any contract between a bank and its customers, that in the case where **a bank knows a customer’s order is being given dishonestly or shut their eyes to it, the Bank owes a duty of care not to execute that order.** This duty includes the instance where the bank acts recklessly in failing to make inquiries.  The difficulty for banks is that they must balance their use of reasonable skill and care in and about executing the customer’s orders, with the conflicting duty to execute their orders in a timely manner. Thus, avoiding causing financial loss to the customer. ## Who is to blame for the loss: the fraudulent director or the bank for failing to spot this fraud?                                                It was accepted that Al Sanea breached his fiduciary duty in misappropriating funds from Singularis in order to prevent creditors from accessing them. Therefore this only left the question: whether there was a Quincecare duty of care in this instance? Lady Hale stated that: > *“Any reasonable banker would have realised that there were many obvious, even glaring, signs that Al Sanea was perpetrating a fraud on the company. He was clearly using the funds for his own purposes and not for the purpose of benefiting Singularis”.* > > > Lady Hale *[Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2019] UKSC 50](https://lexlaw.co.uk/wp-content/uploads/2019/10/Singularis-v-Daiwa.pdf), 11* Daiwa disputed this point, arguing that the fraud should be attributed to Singularis, thus proving their loss was caused by its own fault and not theirs. To forward this point Daiwa cited Lord Hoffman who referred to: > “*the sound intuition that there is a difference between protecting people against harm caused to them by third parties and protecting them against harm which they inflict upon themselves … People of full age and sound understanding must look after themselves and take responsibility for their actions”. * > > *Reeves v Comr of Police of the Metropolis* [2000] 1 AC 360, at 368 However, Lord Hoffman proceeded to say: > *“This philosophy expresses itself in the fact that … a duty to protect a person of full understanding from causing harm to himself is very rare indeed. But, once it is admitted that this is the rare case in which such a duty is owed, it seems to me self-contradictory to say that the breach could not have been a cause of the harm because the victim caused it to himself” * > > *Reeves v Comr of Police of the Metropolis* [2000] 1 AC 360, at 368 This seems to be the case here, as the strict purpose of the *Quincecare* duty is to protect a bank’s customers from the harm caused by people for whom the customer is responsible. **If it had not been for the breach of the Appellant’s (i.e. the Bank) duty of care, the money would still be available for the liquidators and the creditors alike. ** ## Did Daiwa act negligently? Lady Hale agreed with the Counsel for the respondent, Jonathan Crow QC, who boldly asserted at the outset of his submissions that this case was in fact* "bristling with simplicity”*. Singularis, a company with a substantial business, traded for years and ran up debts in doing so. Additionally, it had a substantial sum of money standing to its credit, as a result of its legitimate business activities, with its broker-bankers. > *When it appeared that the company was running into difficulties, its “directing mind” and sole shareholder fraudulently deprived the company of that money by directing Daiwa to pay it away. Daiwa should have realised that something suspicious was going on and suspended payment until it had made reasonable enquiries to satisfy itself that the payments were properly to be made.* > > [ Lady Hale ](https://lexlaw.co.uk/wp-content/uploads/2019/10/Singularis-v-Daiwa.pdf)*[Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2019] UKSC 50, ](https://lexlaw.co.uk/wp-content/uploads/2019/10/Singularis-v-Daiwa.pdf)*[39](https://lexlaw.co.uk/wp-content/uploads/2019/10/Singularis-v-Daiwa.pdf) Therefore, it was clear to Lady Hale (dissenting) that the company (and through the company its creditors) was clearly a victim of Daiwa’s negligence. ## What does this mean for Banks who fail to spot fraudulent activity? Will banks be held to be negligent? In short: yes. The Law Lords were scathing towards the Bank in this case for failing to spot the obvious fraud of the director. This means liquidators not only have a claim against a fraudulent director but also or alternatively against a Bank for failing to act with the reasonable care and skill expected to spot such fraud at the outset. This case has cemented [the public interest](https://www.supremecourt.uk/cases/docs/uksc-2018-0039-press-summary.pdf) in requiring banks to play an important part in uncovering financial crime and money laundering, reinforcing the role of lenders in tackling financial crime. This judgment will definitely please the creditors of Singularis, which have been pursuing Al-Sanea after his family defaulted in 2009 following the global financial crisis. ## City of London Specialist Professional Negligence Lawyers We specialise in [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of [success](https://professionalnegligenceclaimsolicitors.co.uk/case-studies/), you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want [expert legal advice](https://professionalnegligenceclaimsolicitors.co.uk/), get in touch so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # Business Banking Resolution Service Pilot Launches for SMEs: Is your business eligible to apply for redress? Source: https://lexlaw.co.uk/solicitors-london/bbrs-business-banking-resolution-service-sme-claim-advice/ *[The Business Banking Resolution Service (BBRS)](https://thebbrs.org/) is the latest independent organisation set up to offer alternative redress for businesses that have been victim to banking misconduct. * *On 1 November 2019 the [BBRS](https://thebbrs.org/) launched [the dispute resolution pilot](https://thebbrs.org/live-pilot/) for [selected complainants](https://thebbrs.org/eligibility/) in preparation for the full implementation of the dispute resolution service in 2020. The BBRS have released its eligibility criteria (with eligible complaints being businesses that have a turnover of between £6.5 million and £10 million), with the intention being that the BBRS will accept SMEs that would otherwise not be eligible to present their complaints to the Financial Ombudsman Service (the "FOS"). * ## What is the Business Banking Resolution Service? The [Business Banking Resolution Service](https://lexlaw.co.uk/solicitors-london/banking-dispute-resolution-service-bdrs-for-smes-will-it-work/) is an alternative redress service for businesses that have been victim to banking misconduct. Seven leading UK banks have voluntarily accepted the proposals outlined in the [UK Finance-](https://www.ukfinance.org.uk/) commissioned [Walker Review](https://www.icaew.com/technical/corporate-governance/codes-and-reports/walker-report), creating an alternative to legal action, the [Financial Ombudsman Service](https://www.financial-ombudsman.org.uk/) and bank-run compensation schemes for SMEs mis-sold complex derivative products. ## Which banks are participating in the BBRS? The BBRS accepts complaints made against the following banks: - [Barclays Bank](https://www.barclays.co.uk/);- [Clydesdale Bank](https://secure.cbonline.co.uk/) (including Yorkshire Bank and Virgin Money);- [Danske Bank](https://danskebank.co.uk/personal);- [HSBC](https://danskebank.co.uk/personal);- [ Lloyds Banking Group](https://www.lloydsbank.com/) (including Lloyds Bank and Bank of Scotland);- [RBS Group](https://personal.rbs.co.uk/personal.html) (including Royal Bank of Scotland, NatWest and Ulster Bank Northern Ireland); and- [Santander UK plc](https://www.santander.co.uk/). ## What is the BBRS live pilot? The [live pilot](https://thebbrs.org/live-pilot/) has been launched prior to the roll out of the full service which is expected to be available in early 2020. It is anticipated that a limited number of complaints will be considered for the live pilot. ## Which businesses are eligible to use the BBRS? An SME must first have submitted a complaint to its bank in line with the bank's own internal complaints handling procedure. Complaints with only be accepted from businesses registered in England, Wales, Scotland or Northern Ireland. In terms of eligibility, the criteria for a company must meet the following turnover and assets criteria in order to be eligible for the BBRS: For the period from 1 April 2019 onwards: - Turnover up to £10m per annum; and- Total assets up to £7.5m. For the period from 1 December 2001 to 31 March 2019: - Maximum turnover up to £6.5m per annum; and- Total assets up to £5m. ## How does eligibility for the BBRS differ from the FOS? [ The FOS](https://www.financial-ombudsman.org.uk/) only accepts [complaints from a "micro-enterprise" or a "small business"](https://sme.financial-ombudsman.org.uk/complain/can-help). The Financial Ombudsman Service is of limited utility to SMEs attempting to settle disputes with banks because it is only able to deal with cases for losses of up to £150,000 and does not either punish wrongdoer banks or monitor banks to ensure that they comply with the applicable rules and regulations. Further, a large number of SMEs do not qualify as micro-enterprises and the banks are adept at raising technical arguments on jurisdiction to prevent the FOS from acting. By way of example, we have seen a case where the FOS accepted a complaint for an SME assessed as a micro-enterprise and then reached a provisional decision against Lloyds Bank PLC, awarding over £100,000 for the mis-selling of a fixed rate loan. However, Lloyds then argued (belatedly) that the FOS should not adjudicate the dispute as the complainant was allegedly not a micro-enterprise and therefore not eligible to bring a complaint. Remarkably, the FOS seems set to accept this as a basis not to reach a final decision, demonstrating the skill and persistence with which banks and their legal teams seek to elude any regulatory accountability for their actions. ## Will the Business Banking Resolution Service (BBRS) work? SMEs are too often drawn into complex disputes with banks and other financial institutions, which are beyond the remit of the [FOS](https://www.financial-ombudsman.org.uk/) to address due to FOS’s maximum threshold of £150,000 ([now £350,000 from 1 April 2019 against regulated firms](https://lexlaw.co.uk/solicitors-london/financial-ombudsman-increases-award-limit-to-350000/)). Furthermore, the court system can be costly and risky for SMEs (who do not have the financial and legal sophistication of the banks). The [FCA](https://www.fca.org.uk/) is not equipped to be an arbiter of disputes, and so regulatory review schemes are fatally undermined by the FCA’s reliance on the wrongdoer banks to conduct such review schemes into their own alleged wrongdoing. It is clear that the current avenues for redress are not working for SMEs; if justice is to be delivered and maintained in the future, a new avenue for redress needs to be created. However, it remains to be seen whether another redress apparatus with voluntary compliance by major banks (the BDRS) will be able to provide a platform for justice for SME customers and instill confidence in the banking sector by operating as a safeguard against past and future financial misconduct. In particular, safeguards need to be put in place to ensure that banks do not simply repeat their previous tactics (used in litigation and in regulatory review schemes) of withholding potentially damaging information. A big step towards creating a functional BBRS that can exercise appropriate control over the financial services industry and fill the lacuna that currently exists in practice for SMEs is for the BBRS to have the power to control the disclosure process and to sanction non-compliance publicly. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of  [RBS,](https://personal.rbs.co.uk/personal.html)[Clydesdale Bank](https://lexlaw.co.uk/solicitors-london/potential-claims-against-hm-treasury-government-department-allegedly-controlled-rbs-grgs-mis-treatment-of-smes/), Yorkshire Bank or other banks protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the Lloyds or RBS. Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors to issue a protective claim form or by instructing us to prepare and agree a carefully written standstill agreement. Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks and have widespread experience in managing claims through redress schemes (which are similar to the Business Banking Resolution Service (BBRS)). Call us on 02071830529 or complete our online contact form. --- # A Warning to Lawyers in Professional Negligence Claims: Solicitors owe a duty to warn clients of risks Source: https://lexlaw.co.uk/solicitors-london/lawyers-professional-negligence-claims-solicitors-duty-to-warn-clients-advice/ *Recent judicial authority provides guidance on the scope of a solicitors standard of care when giving advice on risks for the client. Although each case with turn on its fact, the judicial advice is clear: although a solicitor is not necessarily under a general duty to warn clients about risks relating to matters which fall outside the scope of the retainer, a that solicitor fails to warn a client on risks which are material to the retainer leaves open a [potential professional negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/).* *The principle in *[*Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 *](https://professionalnegligenceclaimsolicitors.co.uk/landmark-famous-uk-tort-cases-advice/)*has been accepted as the established test for breach of a duty of care in all professional liability cases: a professional is not necessarily [negligent](https://professionalnegligenceclaimsolicitors.co.uk/) if they conform to a practice accepted as proper by members of that profession, even if other professionals would have taken a different approach.* *The courts have regularly divined the parameters of what a reasonably competent professional would do for a variety of different professionals, for example, Asplin LJ in [Barker v Baxendale Walker Solicitors and another [2017] EWCA Civ 2056](https://lexlaw.co.uk/wp-content/uploads/2019/12/Barker-v-Baxendale.pdf), sets out the principles determining what advice should be provided by a solicitor in particular factual circumstances.* ## Do solicitors have a duty to warn clients of risks? This is heavily dependent on the factual matrix of the particular case, but recent judicial authority is clear that [solicitors have a duty to warn](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/professional-negligence-claim-against-lawyers-barristers/) clients of risks which are material to their retainer. The leading authority is expounded by the Court of Appeal in*[Barker v Baxendale Walker Solicitors](https://lexlaw.co.uk/wp-content/uploads/2019/12/Barker-v-Baxendale.pdf)* were asked to consider whether solicitors were under a duty to give specific warning to the client prior to entering into a tax scheme that there was a significant risk that their interpretation of the legislation might be wrong. By way of background, the client wished to mitigate capital gains tax on the sale of his company and was instructed to the solicitors as specialists in [employee benefit trusts (EBTs)](https://taxdisputes.co.uk/hmrc-tax-investigations/) as a means of [tax avoidance](https://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/). The solicitors suggested that the client could technically transfer his shares to the trustee of an EBT which was resident in a jurisdiction that did not levy CGT on transfer and then the shares could purportedly be sold tax free. The solicitors told the client that although he had to be an excluded person under the trust, members of his family and descendants could purportedly benefit instead after his death (through a purposive- but incorrect- interpretation of the[ Inheritance Tax Act 1984](http://www.legislation.gov.uk/ukpga/1984/51/contents)). Crucially, the solicitors did not warn the client that there was a risk that the legislation could be construed differently by [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) and that his family and descendants would have to be excluded persons throughout the trust’s lifetime. HMRC did indeed later assess the client for tax in respect of the sale of his company and specifically stated that the post-death exclusion construction was the correct one and as such the EBT scheme had failed. As a result of the incorrect interpretation of the legislation, and given that the scheme had failed, the client was advised to settle for a substantial sum. Although at first instance the client’s [negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-faqs/) was dismissed on the basis that the post-death exclusion construction was doubtful and the solicitors were not negligent in their failure to warn of that significant risk. However, the Court of Appeal construed the relevant legislation and found that given the proper construction of the legislation, the amounts at stake, the legal fees paid to the solicitors and the nature of the transaction (tax avoidance where the other side is HMRC who are well-resourced), then there was a duty to give a specific warning about the significant risk the scheme entailed. > When determining whether a reasonably competent adviser would have advised that there was a significant risk that a contrary view would be taken in relation to section 28(4) and that the post-death exclusion construction might well be correct, the relevant facts included the fact that this was a very aggressive tax avoidance scheme which was marketed to Mr Barker on the very basis that his family would be able to benefit from the property within the EBT at the date of his death free of Capital Gains Tax and Inheritance Tax, an outcome which might appear on the face of it to be too good to be true. It was for that reason that the sub-trust was established at the outset and section 28(4) and paragraph (d) in particular, were the focus of the drafting and ought to have been at the centre of the advice. It is also relevant that the potential charge to tax was very large and the Respondents’ fee was in the region of £2.4m. > > Lady Justice Asplin in *[Barker v Baxendale Walker Solicitors](https://lexlaw.co.uk/wp-content/uploads/2019/12/Barker-v-Baxendale.pdf)* [2017] ## What does the duty to warn mean for the Bolam test? The [Bolam](https://professionalnegligenceclaimsolicitors.co.uk/landmark-famous-uk-tort-cases-advice/) test might have previously been used by defendants to attempt to absolve[ professionals of alleged negligence](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) when they have followed a practice of reasonable body of professional opinion. Recent judicial authority is clear that a solicitor that has followed the practice of a reasonable body of professional opinion does not have much application when it comes to the duty to give legal advice on a particular piece of legislation. ## Further judicial authority: lawyers are under a duty to advise clients on risks ### Failure to advise on the acquisition of the lease In *Luffeorm v Kitsons LLP*, the client’s solicitors were found negligent by the court in circumstances where their retainer was to advise on the acquisition of the lease of a public house, and the lawyers had failed to notice the absence of any covenant in restraint of competition and failed to draw such absence to the purchasers’ attention. ### Failure to advise on the definitions in an underlease In *Balogun v Boyes Sutton*, the Appellate court found that solicitors had breached their duty by failing to warn their client that a court may come to a different interpretation than them as to what fell within the definition of ‘service media’ within a draft underlease. The Court of Appeal stated that in determining whether a breach has occurred is *“necessarily highly fact-specific”* and of course would also depend on the strength of a different interpretation. ### Duty to warn of any substantial risks *[Credit Lyonnais SA v Russell Jones & Walker ](https://lexlaw.co.uk/wp-content/uploads/2019/12/Credit-Lyonnais-v-Russell-Jones.pdf)*[[2002] EWHC 1310 (Ch)](https://lexlaw.co.uk/wp-content/uploads/2019/12/Credit-Lyonnais-v-Russell-Jones.pdf) sets the bar high for solicitors in that it was held that solicitors are under a duty to warn a client of any substantial risks that would be apparent to a competent [property lawyer](https://professionalnegligenceclaimsolicitors.co.uk/property-professional-negligence-claims/). A firm of solicitors had been negligent in failing to draw a client’s attention to the fact that time was of the essence in the case of a condition precedent concerned with the early termination of a lease. Although a solicitor was not to be taken as a general insurer against his client’s problems but rather his duties were determined by the scope of his agreed retainer. If, in the course of his work on the matters in respect of which he had been retained, a solicitor became aware of a risk or potential risk to his client, it would be his duty to inform the client of that risk. In so doing the solicitor would not be going beyond the scope of his instructions nor could he be deemed to be doing any extra work for which he was not to be paid.  ### Solicitors are under an implied duty to carry out work (including risk warnings) that are reasonably incidental to the retainer In *[Minkin v Landsberg](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf)*[ [2015] EWCA Civ 1152](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf), the client had settled divorce proceedings with her ex-husband by negotiating a financial settlement. The client was warned by her solicitors that the financial settlement did not seem satisfactory. The solicitors advised of alternatives, including negotiation, mediation and litigation with full disclosure. However, the client decided to adhere to the agreed settlement. She changed solicitors and instructed the new firm to put the agreement into a form that the court could approve. The client subsequently regretted signing the consent order and claimed damages for professional negligence on the basis that the new firm had failed to advise or warn her against entering into the agreement. However, there was no duty to warn given that the new firm were acting under a very limited retainer and there would be very serious consequences for both the courts and litigants in person generally if solicitors felt unable to accept instructions to act on a limited retainer basis for fear that what they anticipated to be a modest and relatively inexpensive drafting exercise, albeit complex to a lay person, might lead to a far broader duty of care being imposed on them. Nevertheless, Lord Justice Jackson in *[Minkin](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf)* summarises the relevant principles of when a solicitor is under a duty to warn based on the scope of the retainer as follows: > i) A solicitor’s contractual duty is to carry out the tasks which the client has instructed and the solicitor has agreed to undertake. > ii) It is implicit in the solicitor’s retainer that he/she will proffer advice which is reasonably incidental to the work that he/she is carrying out. > iii) In determining what advice is reasonably incidental, it is necessary to have regard to all the circumstances of the case, including the character and experience of the client. > iv) In relation to (iii), it is not possible to give definitive guidance, but one can give fairly bland illustrations. An experienced businessman will not wish to pay for being told that which he/she already knows. An impoverished client will not wish to pay for advice which he/she cannot afford. An inexperienced client will expect to be warned of risks which are (or should be) apparent to the solicitor but not to the client. > v) The solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor’s retainer. As a matter of good practice the solicitor should confirm such agreement in writing. If the solicitor does not do so, the court may not accept that any such restriction was agreed. > > Lord Justice Jackson, *[Sharon Minkin v Lesley Landsberg (Practising As Barnet Family Law)](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf)*[2015] EWCA Civ 1152 ### A solicitor’s duty to warn is limited to matters pertinent to the retainer In [Lyons v Fox Williams LLP [2018] EWCA Civ 2347](https://lexlaw.co.uk/wp-content/uploads/2019/12/Lyons-Fox-Williams-2018.pdf), a solicitor instructed to deal with a client’s claim under an accident, death and disablement policy was held to not have been under a duty to warn his client about the rights arising out of the same accident under a long-term disability insurance policy that was not covered by the retainer. The important take away from the Court of Appeal is that a solicitor’s obligation to bring to a client’s attention risks which became apparent to the solicitor when performing his retainer did not involve the solicitor in doing extra work or in operating outside the scope of his retainer. > 41. It is, I think, worth emphasising that although cases like *[Minkin](https://uk.westlaw.com/Document/IE144F5008D2411E5BF2B8FC8C735137D/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.Search))* are often cited as authority in support of a legal duty to warn, they are in fact decisions about the scope of a solicitor’s duty based on a particular retainer. As Laddie J explained in his judgment in *Credit Lyonnais* which was approved in *[Minkin](https://uk.westlaw.com/Document/IE144F5008D2411E5BF2B8FC8C735137D/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.Search))* , the solicitor’s obligation to bring to the client’s attention risks which become apparent to the solicitor when performing his retainer does not involve the solicitor in doing extra work or in operating outside the scope of his retainer. The risks in question are all matters which come to his attention when performing the tasks the client has instructed him to carry out and which therefore as part of his duty of care he must make the client aware of. > > > 42.  Neither *Credit Lyonnais* nor *Minkin* are authority for the proposition that the solicitor is required to carry out investigative tasks in areas he has not been asked to deal with however beneficial to the client that might in fact have turned out to be.  > > Lord Justice Patten at paras 41 and 42, *Cathal Anthony Lyons v Fox Williams LLP* [2018] EWCA Civ 2347 ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our [Professional Negligence Lawyers](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # LEXLAW Raises Concerns with the FCA on its Implementation and Oversight of the IRHP Review & Redress Scheme Source: https://lexlaw.co.uk/solicitors-london/lexlaw-raises-concerns-with-the-fca-on-its-implementation-and-oversight-of-the-irhp-review-redress-scheme/ *In June 2019, the [FCA](https://www.fca.org.uk/) appointed [Mr John Swift QC](https://www.monckton.com/barrister/john-swift-qc/) as an i[ndependent reviewer for the lessons learned review commissioned by the FCA's board](https://www.monckton.com/fca-appoints-john-swift-qc-to-review-the-redress-scheme-for-interest-rate-hedging-products/). The review of the redress scheme for [Interest Rate Hedging Products](https://lexlaw.co.uk/solicitors-london/category/irhp-reviews/page/3/) (IRHP) is expected to last 15 months, following which the FCA intend to publish in full the report by the independent reviewer.* *LEXLAW have [previously written to the FCA in 2013](https://lexlaw.co.uk/wp-content/uploads/2014/12/101013-Letter-LEXLAW-to-FCA-FAILINGS-IN-AND-ABUSES-OF-THE-IRHP-REVIEW.pdf), on behalf of our SME clients who have been mis-sold IRHPs by a wide range of banks (including [Barclays Bank](https://www.barclays.co.uk/), [HSBC](https://www.hsbc.co.uk/), [Lloyds Bank](https://www.lloydsbank.com/), the [Royal Bank of Scotland](https://personal.rbs.co.uk/personal.html) and [Clydesdale ](https://secure.cbonline.co.uk/)and Yorkshire Banks ) to share their grave concerns about the review, which views we share. * [*LEXLAW have now written to Mr John Swift QC,*](https://lexlaw.co.uk/wp-content/uploads/2019/10/260919-Letter-to-John-Swift-QC.pdf)* putting the FCA on (repeated) notice of its continuing failings in relation to the Financial Conduct Authority's (FCA) implementation and oversight of the Interest Rate Hedging Products (IRHP) review and redress scheme. * A copy of our letter to the FCA is below. ![Financial Conduct Authority FCA UK Logo - LEXLAW Litigation Law Firm in London](https://lexlaw.co.uk/wp-content/uploads/2018/01/FCA-Financial-Conduct-Authority-UK-Logo-LEXLAW-Litigation-Solicitors-London.jpg)[Click here to download our letter to the FCA](https://lexlaw.co.uk/wp-content/uploads/2019/10/260919-Letter-to-John-Swift-QC.pdf) For the attention of: Mr John Swift QC FCA Head Office 12 Endeavour Square London, E20 1JN Dear Sirs ## REPEATED NOTICE OF FAILINGS IN THE FCA’S IMPLEMENTATION AND OVERSIGHT OF THE INTEREST RATE HEDGING PRODUCTS (IRHP) REVIEW AND REDRESS SCHEME We write further to the investigation into the FCA’s implementation and oversight of the Interest Rate Hedging Products (IRHP) Review and Redress Scheme (“the Review”) on behalf of our SME clients, who have been mis-sold interest rate hedging products by a wide range of banks (including Barclays Bank, HSBC, Lloyds Bank, the Royal Bank of Scotland and Clydesdale and Yorkshire Banks). Our clients expressed grave concerns to us about the Review prior to its implementation; however, the FCA’s chief executive (Martin Wheatley) disregarded those concerns. Given the prescience of those concerns, we ask the FCA to take urgent action in order to ensure that the failings in the FCA’s implementation and oversight of the Review are not repeated. ## Conflict of Interests in the Review On 29 June 2012, the FCA (formerly the Financial Services Authority) announced that it had found serious failings in the sale of interest rate hedging products by a wide range of banks (including Barclays Bank, HSBC, Lloyds Bank and RBS), including *“the inappropriate sale of complex varieties of IRHPs [Interest Rate Hedging Products] to ‘non-sophisticated’ customers and a range of poor sales practices”*. According to the FCA, the types of poor sales practices committed by these banks included: - Poor disclosure of exit costs;- Failure to ascertain the customers’ understanding of the risks;- Giving advice in supposedly non-advisory sales;- Selling interest rate hedging products where the amount and/or duration exceeded that of the underlying loans; and- Allowing internal incentives and rewards to encourage these poor sales practices. The FCA was clearly and correctly of the view that the banks’ mis-selling of interest rate hedging products needed to be investigated, with redress to be offered to wronged customers who had suffered losses due to the mis-selling that had taken place.  It is unfortunate that the FCA decided that the best party to investigate the banks’ mis-selling of interest rate hedging products and determine the extent of the banks’ regulatory misconduct was the banks themselves. The banks were obliged to present their findings under the Review to an “independent reviewer” to supposedly ensure that an impartial, independent and thorough review had been conducted of each customer’s case.  However, the “independent reviewer” was, in fact, appointed by the respective banks; for example, HSBC Bank appointed Deloitte LLP to *“review our assessments of (i) whether customers meet the sophistication customer criteria, (ii) whether redress is owed and (iii) if the redress that is proposed is fair and reasonable”*.  While we understand that the FCA was able to reject a bank’s choice of “independent reviewer”, we are not aware of any instances in which the FCA actually did so. Furthermore, the fact that the banks were able to appoint their own “independent reviewers” at all clearly demonstrated that these reviewers were not independent and therefore did not provide the proper scrutiny and oversight required for effective conduct of this Review. This is particularly the case where the appointed reviewer is a large financial institution who inevitability has an ongoing relationship with the bank in question that they will be anxious to preserve. The banks were reviewing their own mis-selling practices, deciding whether each customer should be included in the Review, determining whether to offer any redress and (if so) finally determining the amount and form of any redress.  After this process, the banks then had their decisions scrutinised by “independent reviewers” whom they themselves appointed. This was a fundamentally flawed basis for the conduct of the Review and failed to achieve the impartial, independent and thorough investigation of the banks’ mis-selling of interest rate hedging products for which purpose the Review presumably existed. The dangers inherent to the conflict of interests in the Review between the banks and their “independent reviewers” were highlighted dramatically by [credible reports that KPMG (an “independent reviewer” for RBS) were pressured and *“browbeaten”* by RBS into minimising compensation paid for mis-sold IRHPs to RBS’s customers](https://lexlaw.co.uk/solicitors-london/fca-irhp-review-kpmg-whistleblower-rbs-interest-rate-swap-compensation/). There are obvious questions as to why the wrongdoer banks were allowed by the regulator to review their own wrongdoing. We invite you to explain why on this occasion you decided that the wrongdoer could review its own wrongdoing and why you chose not to appoint your own independent reviewers (as you have done in the past) in order to ensure that a truly independent review took place. For the reasons set out above, it is misleading to describe the Review as an “independent review” or an “FCA review”. We are concerned that the use of these and similar descriptions gave an inaccurate impression to customers and members of the public as to the terms and conduct of the Review. We quote one such example from DLA Piper UK LLP, acting for RBS and NatWest against our client whom we shall call Partnership G: *“The Bank considers the FCA review to be analogous to the methods of ADR listed in paragraph 8.2 of the Practice Direction, and we note that it is an independent review conducted at no cost to your client”* (added emphasis). However, the Review was not being conducted by the FCA or by an independent party appointed by the FCA. The Review could not and should not have been described as an “independent review” and the FCA must take steps to ensure banks desist from such inaccurate and misleading descriptions in future. Furthermore, the FCA’s approach to the Review enabled several questionable practices by the banks in the conduct of the Review, including: - Unreasonable exclusion of customers from the Review;- Lengthy and unreasonable delays in conduct of the Review; and- Scheme manipulation (i.e. unfair and one-sided conduct of the Review). ## A. Unreasonable Exclusion of Customers from the Review by the Banks ### Unreasonable Exclusion by Improper Application of the Sophistication Assessment Customers were only able to have their cases considered under the Review if they were assessed by the banks as being “non-sophisticated” customers. It is therefore concerning that allowing the banks to decide which customers were included in the Review allowed the banks to unfairly exclude some of their customers from the Review. We note from the FCA that over 34% of IRHP sales were excluded from the Review on the basis that those customers were allegedly “sophisticated”. However, we know from our own experience that this included customers who were not sophisticated in any normal sense of the word. It is also concerning that any customer who disagreed with their bank’s decision to classify them as “sophisticated” had to appeal to their bank rather than to an independent body capable of making a fair and independent decision. By way of a first example, we wrote to Lloyds regarding their erroneous assessment of our client, Company C, as “sophisticated”. However, despite the arguments advanced on behalf of Company C, Lloyds were able to continue improperly excluding our client from the Review, and our client had no effective recourse to obtain regulatory redress. By way of a further example, we also refer to the experience under the Review of another of our SME clients, Family K, who agreed a suspension of payments under their interest rate hedging product with Lloyds in February 2013. However, Lloyds stated that it could terminate that suspension in the event that Family K was notified that *“you are not within scope of the Review because you are a “sophisticated customer”*. Lloyds subsequently stated in May 2013 that it had classified Family K as an intermediate/professional customer, as a result of which our client was required to resume making payments that it could not afford. Despite repeated requests by us, Lloyds declined to provide any explanation of this incorrect classification, which only served to wrongly exclude Family K from the Review. As the case fell just inside the limitation period, Family K instructed us to investigate and commence legal proceedings, following which [Lloyds were forced to pay Family K full compensation (in excess of £1 million) for the mis-sold product](https://lexlaw.co.uk/solicitors-london/swap-misselling-case-settlement-revealed-irhp-the-times-lloyds-missold-derivatives/). It is of grave concern that, had circumstances been slightly different, Family K might have been unjustly excluded from any effective redress by their apparently arbitrary exclusion from the scope of the Review. There does not appear to have been any objective basis for determining whether a particular customer is “sophisticated”, and this unfair application of the sophistication assessment was symptomatic of a review process that allowed the wrongdoer banks to determine their own regulatory misconduct. ### Unreasonable Exclusion by Improper Sophistication Assessment Criteria In addition to the significant issues concerning the application of the sophistication assessment by the banks (as explained above), there were also fundamental flaws in the criteria contained within the sophistication assessment itself. We refer with great concern to the experience of our client, Company G, who was classified by Yorkshire Bank as a retail client before being sold an interest rate swap on that basis in May 2008. Company G was classified as a retail client rather than a professional client because Yorkshire Bank correctly recognised that our client did not have any experience or knowledge of interest rate hedging products and was therefore non-sophisticated. However, Yorkshire Bank subsequently attempted to exclude Company G from the Review by including the turnover and net assets of Company G’s parent company and thereby mis-classifying Company G as a “sophisticated” customer (under the revised sophistication assessment criteria). Retail clients such as Company G are entitled to the “most regulatory protection” and it is therefore unacceptable that the FCA allowed wrongdoer banks to deny their SME customers any regulatory protection even when those customers were previously considered (at the time of sale) to be non-sophisticated. In addition, according to [the FCA’s own flowchart about the Review](http://www.fca.org.uk/your-fca/documents/fsa-irs-flowchart), there was a stage in the sophistication assessment where a bank could decide that a customer had, at the time of sale, *“the necessary experience and knowledge to understand the service to be provided and the type of product or transaction envisaged, including its complexity and the risks involved”*, thereby defining that customer as “sophisticated” and so excluding that customer from the Review. However, there were no stated parameters as to how a bank should decide whether a customer actually had that level of experience and knowledge in relation to interest rate hedging products at the time of sale. Therefore, given the astonishing level of discretion allowed to the banks in making this decision, it was possible for a bank to arbitrarily exclude a customer from the Review by claiming that the customer had the requisite level of knowledge and experience. Furthermore, we also note that customers were defined as sophisticated (and therefore excluded from the Review) if they had existing IRHPs with a total value of more than £10 million. However, this criterion was flawed and unjust: what would happen if a customer who had a loan of £3 million with a bank was sold £11 million in IRHPs (which that customer could not afford to break) by that bank? Under the criterion in the Review, that customer would have been assessed as “sophisticated” and excluded from the Review, even though that customer would have been the victim of substantial over-hedging by its bank. Given that the FCA noted back in June 2012 that over-hedging had been a recurrent problem with the banks’ mis-selling of IRHPs, this was a disturbing and illogical omission by the FCA and only served to deny redress to many customers who suffered most from the banks’ mis-selling of IRHPs precisely because of the high and excessive value of the IRHPs in question. ## B. Lengthy and Unreasonable Delays in the Conduct of the Review by the Banks On 31 January 2013, the FCA announced that *“We expect the banks to aim to complete their review within six months, although the priority must be delivering fair and reasonable outcomes for customers. We accept that for banks with larger review populations this may take up to 12 months”*. As a result of the FCA’s announcement, customers were led to believe that the Review would be completed by 31 January 2014 at the latest. However, according to [the FCA’s own data](https://www.fca.org.uk/publication/data/aggregate-progress-final.pdf), the Review was not completed until 30 September 2016 (i.e. over two and a half years after that announcement). The lengthy nature of this delay in the Review was inevitable once the FCA surrendered control of the Review to the banks, who had no incentive to complete the Review within a reasonable timescale (particularly as the banks were still able to collect payments from the vast majority of their customers under the mis-sold IRHPs). By contrast, in response to complaints from customers about the mis-selling of payment protection insurance (“PPI”), the Financial Services Authority created a scheme in August 2010 requiring banks to deal with PPI mis-selling complaints within eight weeks. By contrast, the FCA’s approach to the timescale of the Review was dithering and indecisive, and led to distress and uncertainty among customers. This delay must be considered against the backdrop of the prejudice suffered by customers, not least of which was the ongoing loss of the right to pursue legal remedies which for many customers became time-barred. This is a matter of grave concern which we expand on below. ### The FCA’s Irresponsible Attitude towards Limitation [The FCA stated in its press release dated 4 September 2013](https://www.fca.org.uk/news/press-releases/fca-publishes-four-month-update-banks%E2%80%99-reviews-sales-interest-rate-hedging) that the *“IRHP review can deliver fair and reasonable redress to customers without them needing to hire lawyers”*, which was merely the latest of a series of claims by the FCA that customers did not need to obtain legal advice in relation to the mis-selling of IRHPs. The FCA had always been aware that the majority of these products were sold to SMEs in the period between 2005 and 2008. These claims were dangerous because many of those cases were coming up to their “limitation date”, which is usually six years after the date when the IRHP was presented or sold. Once that limitation date has passed, it was too late for many thousands of customers to bring legal proceedings against their banks, and customers needlessly lost an avenue of potential redress in reliance on the FCA’s advice. This was a failure of the FCA’s regulatory responsibility towards consumers. By way of illustration of the dangers of expiring limitation periods, consider the experience of Company C, which was sold two Category A interest rate hedging products by Lloyds on 24 July 2007, and was sold another Category A product on 1 December 2008 (with Category A being the category designated by the FCA for the most complex interest rate hedging products). On 27 September 2012, Lloyds wrote to Company C to confirm that they had been assessed as a “non-sophisticated” customer and were included in the pilot Review for the sales of all three products. Company C was asked to provide additional information to Lloyds in order to *“assist us with the Review of your cases”*, and provided this information in October 2012. Company C then met with Lloyds under the Review on 25 October 2012, and then heard nothing further from Lloyds about the Review, even though customers who had been sold Category A products should have proceeded straight into the redress phase. Following the FCA’s revision of the sophistication assessment criteria on 31 January 2013, Lloyds decided to erroneously re-assess Company C as instead being a “sophisticated” customer. However, for reasons that Lloyds failed to explain, Lloyds failed to communicate this decision to Company C until 23 August 2013, even though the applicable limitation date was on 24 July 2013 (being six years after the first sale). Fortunately, Company C sought legal advice in time and protected its limitation period by issuing a protective claim form in July 2013, and subsequently obtained [redress](https://lexlaw.co.uk/solicitors-london/statement-by-coin-group-re-litigation-settlement-with-lloyds-bank-plc-swaps-irhp/) through litigation. However, had Company C followed the FCA’s and Lloyds’ advice to rely solely on the Review, it would have been denied legal and regulatory redress. In the circumstances, it is dismaying that the FCA advised customers not to seek legal advice, especially given the potential expiration of limitation periods and the enormous delays that plagued the Review. Any observer of this conduct would have to question whether the banks’ legal advisers and Review team were using delay precisely to exclude their customers’ rights to seek redress through the courts. ## C. Scheme Manipulation – Unfair and One-Sided Conduct of the Review by the Banks It is also surprising that the FCA would advise customers not to seek legal advice in relation to the Review given that the banks (who are already more legally and financially sophisticated than their customers) were instructing City law firms to act on their behalf in the Review. For example, Barclays instructed Eversheds LLP *“to gather all relevant information from customers and Barclays staff regarding the sale of IRHPs and to present that factual information to Barclays”*. We note it is part of the FCA’s regulatory duties to seek to protect customers of financial services institutions. ### Unequal Access to Information in the Review The role of Eversheds LLP in Barclays’ conduct of the Review also highlights another fundamental problem with the Review, namely that customers were expected to provide information to the banks, and the banks were then able to use that information to decide what level of redress (if any) to offer. However, there was no reciprocal obligation for the banks to provide information to their customers about their incentives for selling IRHPs or their reasons for believing that IRHPs were suitable and/or appropriate for customers. It was therefore difficult for customers to judge whether an offer of redress (once eventually received) was appropriate when they did not have the full information about the banks’ mis-selling. Furthermore, this unequal access to information made it simple for the banks to provide low offers of redress in the safe knowledge that customers were unable to make an impartial assessment of the redress offered, especially if they had followed the FCA’s advice and not sought independent legal advice. Given that the Review needed to be conducted fairly, [it is impossible to understand why the FCA did not insist that information be fairly shared between the banks and their customers](https://lexlaw.co.uk/solicitors-london/fca-fsa-review-interest-rate-hedging-irhp-sales-written-statements-fact-find-meetings-swaps/). It is also concerning that the banks gathered information from customers in an unfair manner designed to limit any attribution of liability to the banks. For example, HSBC gathered information from its customers using a standard Interest Rate Hedging Review Customer Response Form, in which one of the questions customers had to answer was: *“Please provide your recollection of what you were looking to achieve as a business and how you and the bank reached a conclusion that interest rate protection was required and/or desirable”* (added emphasis). This was a “leading question”, because the question how the customer and the bank reached a conclusion presupposes that they did in fact reach such a conclusion. The purpose of the Review was to analyse whether the banks mis-sold IRHPs to customers who did not require or desire those products. However, that question by HSBC took it for granted that (a) interest rate protection was required and/or desirable; and (b) the customer and the bank had reached that conclusion together. These were clearly inappropriate assumptions for the banks to make, which prejudged the outcome of the Review process, and it is dismaying that the FCA allowed banks to put such dangerously leading questions to customers under the Review. ## The Role of the FCA [The FCA states on its customer-facing website](http://www.fca.org.uk/about/the-fca) that the FCA has three purposes: - Protecting consumers – *“we secure an appropriate degree of protection for consumers”*;- Protecting financial markets – *“we protect and enhance the integrity of the UK  financial system”*; and- Promoting competition – *“we promote effective competition in the interests of consumers”*. However, in relation to the mis-selling of IRHPs, the FCA allowed the wrongdoer banks to review their own mis-selling. Consequently, the banks were able to unfairly exclude customers from the Review, delay the conduct of the Review, withhold information from their customers, and decide the extent to which they should provide redress to customers. The mis-selling of IRHPs occurred because the banks were incapable of adhering to the required legal and regulatory requirements without external oversight. It is therefore extremely disappointing that the FCA refused to heed the lessons of the past and allowed the banks to regulate themselves, thereby acting as a banking trade union and abdicating its responsibilities as a regulator. We invite you to consider urgently the above representations made on behalf of our clients and other SME customers who have been similarly affected and to re-evaluate both the Review and your role within it. We look forward to hearing from you. Yours faithfully LEXLAW ## LEXLAW: City of London Specialist IRHP Litigation Lawyers *We are the [leading law firm](https://lexlaw.co.uk/) with the skill and experience to act for businesses seeking to resolve wrongdoing by bank recovery departments often titled ‘business support’, ‘restructuring’ or ‘turnaround’ departments. We are aware that some major banks have regularly engineered defaults and created and profited from distress, often caused by other departments of the bank including via wrongdoing such as LIBOR manipulation, deliberate concealment of credit utilisation and mis-sold derivatives. * *In recent years, we have litigated and settled more banking disputes for UK SMEs in the High Court in England & Wales than all other law firms in the UK combined. We provide strong legal representation and use our banking and financial services litigation expertise to ensure we obtain the best possible results which means optimal compensation for our clients.* *Our GRG litigation lawyers pursue every avenue to ensure compensation for ex-GRG customers including the GRG complaints process, claims to the FOS and litigation in the courts.* *Our lawyers are regularly interviewed by journalists and broadcasters and featured in international and UK print and television media commenting on bank litigation and insolvency (see our [Media Appearances](https://www.youtube.com/channel/UCDAvge6fi_2850cF88dH-2w) section). * --- # Shanks v Unilever [2019]: UK Supreme Court potentially opens floodgates for further intellectual property claims by inventors Source: https://lexlaw.co.uk/solicitors-london/shanks-v-unilever-supreme-court-intellectual-property-claims-by-ipo-lawyers/ *[The Supreme Court](https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwj3g4GGjsHlAhVTXMAKHch2BBsQFjAAegQIBRAD&url=https%3A%2F%2Fwww.supremecourt.uk%2F&usg=AOvVaw1mkMRtDcBQckxovu5Qvn0A) (Lord Kitchin, Lady Hale, Lord Reed, Lord Hodge and Lady Black sitting) this week have handed down the highly anticipated judgment in [Shanks v Unilever Plc and others](https://lexlaw.co.uk/wp-content/uploads/2019/10/Shanks-Unilver-2019.pdf). This has been a long battle for Professor Shanks who has been fighting for compensation for an invention he created in 1982. Professor Shanks has previously failed to receive compensation through a UK IPO Hearing, Patent Court and Court of Appeal. However, his battle has finally concluded this week receiving £2 million from his former employer.* *In 1982 Professor Shanks (the "Appellant") was an employee of *[*Unilever*](https://www.unilever.co.uk/)* UK Central Resources Ltd (“CRL”), where he created a new way to measure blood sugar levels. Professor Shanks sought his ‘fair share’ for this invention, as it bought his employer over £23 million in revenue. After nearly 13 years of battling through the UK Courts, Professor Shanks has received compensation of £2 million, as the Supreme Court state that the invention was of 'outstanding benefit' to his employer.* ## Shanks v Unilever [2019]: Summary of the facts In 1982 Professor Shanks observed that a droplet of liquid placed onto the glass plates of a liquid crystal display (“LCD”) was drawn by capillary action into a minute gap between them. He realised that this would occur regardless of the liquid, and utilising enzyme electrochemical techniques, created a system for measuring the glucose concentration in blood, serum or urine. Professor Shanks proceeded to use his daughter’s microscope kit and bulldog clips to create his first prototype for a system measuring blood sugar, which has since become known as the Electrochemical Capillary Fill Device (“ECFD”). Additionally, he developed another similar system which uses fluorescence rather than conductivity, which is known as the Fluorescent Capillary Fill Device (“FCFD”). In 1984 Unilever Plc filed a UK patent application for both the ECFD and FCFD but in the following year an [EU patent application in relation to the ECFD only](https://data.epo.org/publication-server/pdf-document?pn=0170375&ki=A3&cc=EP&pd=19860219). Notwithstanding these applications, Unilever were not interested in pursuing ECFD as it would mean direct competition with companies which were established in the therapeutic sector. ## Was there a benefit to Unilever? In total seven licences of the Shanks patents were granted by Unilever for a net consideration of £19.55 million. In 2001 these were sold to Inverness Medical Innovations (“IMI”) with £5 million being attributed to the Shanks patents. Therefore, Unilever’s total earnings from the Shanks patents amounted to £24.55 million. It was accepted by the Appellant that the rights in the invention did not belong to him but to CRL pursuant to [section 39(1) of the Patents Act 1977](http://www.legislation.gov.uk/ukpga/1977/37/section/39) (“PA”), as they were made in the course of the normal duties of the employee [Professor Shanks]. However, the Appellant applied for compensation under section 40 of the Patents Act 1977, as it was his belief that the invention, which he made in 1982, was of outstanding benefit to his employer, CRL. ## What determines an “outstanding benefit”? In its unamended form [section 40(1) PA](http://www.legislation.gov.uk/ukpga/1977/37/section/40) reads: > *“Where…the employee has made an invention belonging to the employer for which a patent has been granted, that the patent is (having regard among other things to the size and nature of the employer’s undertaking) of outstanding benefit to the employer and that by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer, the court or the comptroller may award him such compensation…”* > > Section 40 Patents Act 1977 At the first instance decision in the Intellectual Property Office ("IPO") hearing the application under section 40(1), it was held by Mr Julyan Elbro, the hearing officer acting for the Comptroller General of Patents (“the Comptroller”), that: > *“Having regard to the size and nature of Unilever’s business, the benefit provided by the Shanks patents falls short of being outstanding”.* > > *[IPO BL O/259/13 ](https://www.ipo.gov.uk/p-challenge-decision-results/o25913.pdf)at para 223* On appeal, the IPO's decision was further examined in the [Court of Appeal (Patten, Briggs and Sales LJJ)](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2017/2.html&query=(A3/2014/2556))[, ](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2015/787.html&query=(A3/2014/2556))considering whether Mr Elbro had erred by only considering ‘outstanding benefit’ comparatively between the benefits from the patents and Unilever’s overall profits. The Court dismissed the appeal, finding that the Mr Elbro properly considered the issues and that whilst there was a clear benefit to the employer, it could not be deemed to be ‘outstanding’ when considering the wider undertaking. ## Where did the Court of Appeal go wrong? Lord Kitchin in the leading judgment submitted that the previous decisions and judgments had erred in determining whether the Shanks patents had been of ‘outstanding benefit’ to the employer.  He stated that he found it: > *"...very hard to see how a failure materially to affect the aggregated sales value or overall profitability of the business could, in and of itself, justify a finding that the benefit of a patent has not been outstanding". * > > *[Shanks v Unilever Plc and others [2019] UKSC 45](https://www.supremecourt.uk/cases/docs/uksc-2017-0032-judgment.pdf) at para 5*4 Additionally, Lord Kitchin believed that the Shanks' patents clearly had an outstanding benefit to CRL, having regard to their size and the nature of their undertaking, citing the case of *Kelly and Chiu v GE Healthcase Ltd,* which defined these terms: > *“Outstanding’ means ‘something special’ or ‘out of the ordinary’ and more than ‘substantial’, ‘significant’ or ‘good’. The benefit must be something more than one would normally expect to arise from the duties for which the employee is paid”.* > > *[Kelly and Chiu v GE Healthcare Ltd [2009] EWHC 181 (Pat)](http://www.bailii.org/ew/cases/EWHC/Patents/2009/181.html#para5) at para 60 (iv)* Lord Kitchin added that this benefit cannot be determined by simply comparing the income derived from a patent with the overall turnover and profitability of the employer’s undertaking. Concluding that: > *"a highly material consideration must be the extent of the Shanks patents to the Unilever group and how that compares with the benefits the group derived from other patents resulting from the work carried out at CRL."* > > *[Shanks v Unilever Plc and others [2019] UKSC 45](https://www.supremecourt.uk/cases/docs/uksc-2017-0032-judgment.pdf) at para 51* ## What is a fair share for inventors? [Section 41 of the PA](http://www.legislation.gov.uk/ukpga/1977/37/section/41) awards compensation to an employee that will secure for them a fair share of the benefit which the employer has derived from the patent, having regard to all the circumstances. It was held that in this circumstance that a fair share would equate to 5% of the benefit which Unilever enjoyed. When taking into account inflation, Lord Kitchin concluded that £2 million represented a fair share for Professor Shanks. ## What does the Supreme Court's liberal interpretation mean for creators of inventions with "outstanding benefit"? The judgment in this case may open the floodgates for individual disgruntled inventors who now seek compensation for their fair share. For larger businesses, that heavily invest in research and development, this judgment may mean reconsidering their compensation provisions for employees. Ensuring they get their fair share and are rewarded for their inventions, without the need for legal proceedings. ## Our Patent Application and Appeals Lawyers get the best results We endeavour to make the patent application process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in intellectual property cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support your intellectual property claim and/or appeal;- Assisting you in preparation of evidence to support your patent application;- Appointing the right experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on any potential consequential losses due;- Liaising with the defendant(s) employer and the Court and/or the Intellectual Property Office; and- Providing first class Court and IPO representation and advocacy. ## Book an Initial Consultation with our Intellectual Property Litigation Lawyers If you have a claim against a previous employer and want expert legal advice, get in touch so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the matter. **Our expert legal team of leading Intellectual Property and Employment Law Litigation Solicitors & Barristers can provide urgent help, advice or representation to you. Just call on 02071830529 or **[**email us now.**](https://lexlaw.co.uk/contact-us/) --- # Court of Appeal rules that Part 36 offers excluding interest are not valid Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-rules-on-invalid-part-36/ *[The Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) (Lord Newey, Lord Coulson and Lord Arnold sitting) have handed down the much anticipated judgement in [King v City of London Corporation [2019] EWCA Civ 2266](https://www.bailii.org/ew/cases/EWCA/Civ/2019/2266.html)** **where they found that any Part 36 that excludes interest is not valid.  * *The predominant question raised by this appeal was whether a Part 36 offer exclusive of interest could be valid generally or at least in the context for detailed assessment proceedings under [CPR Part 47](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-47-procedure-for-detailed-assessment). * ## Background to the claim Francis King settled a claim against the [City of London Corporation](http://www.appgbanking.org.uk/) for £250,000 plus costs “to be assessed if not agreed on a standard basis” in February 2017. As to the costs in the matter, Mr King served his bill of costs and detailed assessment proceedings ensued. On 12 December 2017 Mr King made a Part 36 offer to settle the proceedings for £50,000 excluding interest, which was rejected by the City of London Corporation. Mr King’s bill was assessed at £52,470 in June 2018, exclusive of interest, beating his previous Part 36 offer of £50,000. Mr King’s solicitors therefore believed that he was entitled to rely on [CPR 36.17 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17)which provides favourable costs consequences to the claimant where the judgment against the defendant is at least as advantageous as the Part 36 offer. However, the Deputy Master found that the offer was not valid because the term as to interest was inconsistent with Part 36. The Costs Judge dismissed King’s appeal so he appealed to the Court of Appeal where similarly it was dismissed. ## What was in dispute? There were three predominant issues which the Court of Appeal were to determine: - Can a Part 36 offer generally exclude interest?- If not, can a Part 36 offer nevertheless exclude interest in the context of detailed assessment proceedings?- As per CPR 36.5(4) should Mr King’s offer be treated as inclusive of interest? ### Issue 1: Can a Part 36 offer generally exclude interest? Delivering the leading judgment in this case, Newey LJ made it abundantly clear that in order for a Part 36 offer to be valid it must comply with the requirements of [CPR Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) in an essential respect and any which fail to do so will not take effect as a Part 36 offer even if it is expressed to be one. Simply, in this instance, the Part 36 offer was not made in accordance with [rule 36.5](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.5) which states that a 'Part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest'. Read in the alternative this could indicate that an offer which was not to include interest could not be a valid Part 36 offer.   > It was the view of Newey LJ that: > “an offer of "£x exclusive of interest" would not have been one relating to "part" of a claim under the original version of CPR Part 36 and is no more to be seen as one in respect of "part" of a claim for the purposes of the present-day Part 36. Part 36 proceeds on the basis that interest is ancillary to a claim, not a severable part of it.” Therefore, as to the first issue it was determined that a Part 36 offer cannot generally exclude interest. ### Issue 2: Can a Part 36 offer exclude interest in the context of detailed assessment proceedings? Newey LJ held that a Part 36 offer made excluding interest in detailed assessment proceedings could not be a valid offer. It was determined that an application of the straightforward principle that the same words in the same part of the CPR cannot and should not have two opposite meanings dependent upon the stage of litigation. ### Issue three: the offer The judges determined whether or not Mr King’s offer of 12 December 2017 should be taken to have been inclusive of interest, briefly. Newey LJ believed that it was inconceivable that CPR 36.5(4) was intended to turn a Part 36 offer, which specifically stated that is was to exclude interest, into one including interest, stating that it would grossly distort the offeror’s intentions. Therefore, Mr King’s offer was not treated as inclusive of interest but that it did not comply with [CPR 36.5(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.5) and the appeal was dismissed. ## CPR Committee It may not be the end of this matter as Lord Justice Arnold was troubled by the decision of Newey LJ and only reluctantly agreed that the appeal should be dismissed. He believed that the issue merits consideration by the [Civil Procedure Rules Committee](https://www.gov.uk/government/organisations/civil-procedure-rules-committee) as there were arguments in favour of permitting Part 36 offers to be made which are exclusive of interest. ## Consequences for legal representatives? This judgment clearly demonstrated how tight the wording of CPR Part 36 is and the dangers of failing to adhere to them. Therefore, following this decision, to ensure that a Part 36 offer is valid, solicitors must calculate interest and add it to the principal sum so that it is included in the offer amount. If a solicitor fails to do this, or uses wording such as ‘excluding interest’ then they risk invalidating the offer. ## Need legal advice? If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our [Professional Negligence Lawyers](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). *Please note that your legal rights may be subject to limitation and thereby irreversibly time-barred if you fail to take legal action or defend a legal claim in time. Therefore you should not delay in seeking legal advice.* --- # Court of Appeal: Indemnity costs order for “speculative” claims are not constrained by approved costs budget Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-indemnity-costs-speculative-claims-costs-budget-advice/ In [*Lejonvarn v Burgess and Burgess* [2020] EWCA Civ 114](https://lexlaw.co.uk/wp-content/uploads/2020/02/Lejonvarn-v-Burgess-Burgess-2020.pdf), the [Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) have confirmed that the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) was wrong not to punish the claimants who pursued a speculative [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claim against an [architect](https://professionalnegligenceclaimsolicitors.co.uk/riba-property-expert-no-win-no-fee-advice-claims/) with indemnity costs, after they racked up hundreds of thousands costs simply in an effort to recover their earlier costs of the litigation. In the substantive claim, although it was held by both the High Court and the Court of Appeal that the [architect](https://professionalnegligenceclaimsolicitors.co.uk/riba-property-expert-no-win-no-fee-advice-claims/) owed the claimants a duty of care, the architect had *“provided very few services and not been negligent in any of them*”. The High Court ordered the architect's costs be assessed on the standard basis however, the Court of Appeal found that the claims were out of the norm such as to warrant indemnity costs. Crucially, the assessment of indemnity costs is not constrained by the costs budget. The Court held that it is no objection to an order for costs on the indemnity basis that it is likely to permit the recovery of significantly larger costs than would be recoverable on an assessment on the standard basis having regard to the approved costs budget; that possibility is inherent in the different bases of assessment, and costs on the indemnity basis are intended to provide more nearly complete compensation for the costs of litigation. ## What are indemnity costs? An indemnity costs order provides a party in [litigation](https://lexlaw.co.uk/practice-areas/) with compensation to as full an extent as possible for the outlay and trouble of litigation. A court will not look at proportionality of costs if costs are assessed on the indemnity basis as there is a presumption of proportionality in favour of the receiving party [(CPR 44.3(3)).](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) It is highly advatangeous for a perty to be awarded costs on the indemnity basis given that the onus is on the (losing) paying party to show that the costs claimed are unreasonable. Any doubt is in favour of the receiving party. This means that the receiving party is more likely to obtain a higher recovery than on the standard basis. An indemnity costs order is often penal in nature as they are ordinarily ordered to compensate one party following another party's wrongful conduct of proceedings. Although it is always up to the court's discretion, case law demonstrates that indemnity costs are often ordered when there is some culpability or abuse on the part of the party who has to pay costs.  ## The Facts The appellant in these proceedings is a qualified architect, who was a friend and former neighbour of the respondents. She provided assistance to the respondents when they wanted to undertake major landscaping works in their London garden without charge. There was a falling-out which led the respondents to commence proceedings against the appellant for [breach of contract and/or negligence](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/). The appellant made a [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) in the sum of £25,000 three weeks after the start of proceedings, which was not accepted by the respondents. Although it was found that the appellant owed the respondents a [duty of care](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-faqs/), the Court made plain that, in these particular circumstances, the duty of care related to only such professional services as the appellant in fact provided; in other words, she could have no liability in respect of any alleged omissions. That meant that what the appellant actually did was critical to any [claim in negligence](https://lexlaw.co.uk/guide-to-starting-professional-negligence-claim-pre-action-protocol-no-win-no-fee-advice/) against her. Following numerous further interlocutory skirmishes and a 5-day trial, the judge concluded that the appellant had in fact provided very few services and had not been [negligent](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) in providing any of them. The claim failed in its entirety. ## The High Court Decision: Costs to be assessed on the standard basis The appellant's costs were presented to the judge in the eye-watering amount of £724,265 (and even that was incomplete, because it excluded some items such as the costs of the earlier appeal). She sought assessment on an indemnity basis. The respondents argued, and the judge agreed, that costs should be assessed on the standard basis. When he considered the claim for indemnity costs by reference to [CPR 44.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) and the relevant authorities, he rejected the contention that the respondents' pre-action conduct and their non-compliance with the pre-action protocol justified an award for indemnity costs. ## The costs issues on appeal The first issue considered was, even leaving aside the question of the [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36), whether the judge erred in principle in failing to find that the respondents' conduct was out of the norm, such that indemnity costs should have been ordered. The central element of this debate is whether or not, prior to trial, the respondents (or their advisors) should have realised that these were speculative/weak claims which were most unlikely to succeed and that, in pursuing them to trial, their conduct was out of the norm and should have been recognised by an award of indemnity costs in favour of the appellant. The second issue is whether, when seen against the background of the respondents' claims, the fact that the appellant bettered her own Part 36 offer meant, in all the circumstances of the case, that the judge again erred in principle in failing to make an award of indemnity costs. The question was and remains whether, in all the circumstances of this case, the respondents' failures to accept and then to beat the offer meant that indemnity costs should have been awarded, not automatically, but in the exercise of the judge's discretion pursuant to [CPR Part 44.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs). Finally, there is the separate issue, raised by way of the Respondents' Notice, as to whether an award of indemnity costs should not be made because of the gap between what is said to have been her approved cost budget of £415,000 and her actual costs of not less than £724,265.63. That raises potential questions as to the overlap, if any, between the cost budgeting regime on the one hand, and the basis of assessment of costs after trial, on the other. ## The Court of Appeal decision The judge found that indeed indemnity costs were right to be ordered given that the respondent's conduct was out of the norm: > I have asked myself why, in all those circumstances, these speculative/weak claims were pursued to trial. The answer may very well lie in the judge's comment at [108] of his main judgment: that the decision to continue was borne out of the respondents' desire "to punish the appellant for her alleged negligent mistakes rather than seek fair and reasonable compensation for her alleged mistakes". An irrational desire for punishment unlinked to the merits of the claims themselves is precisely the sort of conduct which the court is likely to conclude is out of the norm. > > > In summary therefore, although the judge dealt with the specific criticisms that were made of various aspects of the respondent's conduct of the litigation, he was at no time invited to stand back and, on the evidence before him, consider whether or not there came a time when the respondents knew or ought to have known that their claims were speculative/weak and therefore likely to fail. That was the relevant question. For the reasons that I have given, I consider that, if he had asked himself the question, the judge would have concluded that such a time came not later than one month after the Court of Appeal judgment (namely by 7th May 2017). It was, in my view, out of the norm for these respondents to continue to pursue the appellant with these speculative/weak claims, each of which the judge himself described in very similar terms, beyond that date. > > Lord Justice Coulson, [*Lejonvarn v Burgess and Burgess* [2020] EWCA Civ 114](https://lexlaw.co.uk/wp-content/uploads/2020/02/Lejonvarn-v-Burgess-Burgess-2020.pdf) In addition, LJ Coulson's comments on the relationship between an approved costs budget and an order for indemnity costs are parituclatly interesting in that in principle, the assessment of costs of an indemnity basis are not constrained by the approved costs budget. > The figure produced by an approved cost budget mechanism (CPR r.3.12-r.3.18) is a different thing to the final assessment of costs following the trial. The former is prospective; the latter is retrospective. True it is that, in many cases, the approved costs budget will be the appropriate starting point for the final costs assessment. But that does not detract from the underlying proposition that they are different figures produced by different considerations with different purposes.... > > In principle, the assessment of costs on an indemnity basis is not constrained by the approved cost budget, and to the extent that my obiter comments in Elvanite or Bank of Ireland v Watts suggested the contrary, they should be disregarded. > > Lord Justice Coulson, [*Lejonvarn v Burgess and Burgess* [2020] EWCA Civ 114](https://lexlaw.co.uk/wp-content/uploads/2020/02/Lejonvarn-v-Burgess-Burgess-2020.pdf) ## Lessons for litigants The lesson for litigants is clear, a litigant is at risk of indemnity costs (which are not constrained by an approved costs budget) if a litigant either: - pursues a speculative or weak claim; and/or- unreasonably refuses to accept a [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) offer that was made early which they then fail to beat ## London Litigation Solicitors Our[ London litigation lawyers](https://www.google.com/url?q=https://lexlaw.co.uk/&sa=D&ust=1581686644092000) act as tenaciously as the client’s needs and case demands. Our chambers are located near the ​High Court and Central London County Courts in the ​Royal Courts of Justice​​ in Central London​ and can act with speed on your litigation matters​. We ​can accept urgent instructions and obtain injunctions rapidly. For example we obtained an ​out of hours emergency worldwide freezing injunction​ for a client in the diamond trade.​ ​Our client's case required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We​ achieved all this in-house as we are a firm of solicitors and barristers. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Can coronavirus excuse non-performance? How will COVID-19 affect force majeure clauses and breach of contract litigation? Source: https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-force-majeure-clauses-breach-of-contract-litigation-advice/ *The recent outbreak of [coronavirus (COVID-19)](https://www.nhs.uk/conditions/coronavirus-covid-19/) has closed schools, cancelled major sporting events, suspended the [Premier League](https://www.bbc.co.uk/sport/football/51867989), and forced many institutions to close or recommend employees stay at home. Share prices around the world continue to fall sharply. The [Bank of England](https://www.bankofengland.co.uk/) has lowered interest rates to stem the downward economic trend. Public gatherings may soon be banned in the UK. The [World Health Organisation](https://www.who.int/) has declared coronavirus a worldwide pandemic. * *But how will coronavirus affect the effective enforcement of contractual terms? It will likely cause problems for manufacturing activity, to businesses, supply chains and the availability of staff. Defaulting parties will likely seek to invoke force majeure provisions in contracts in order to excuse non-performance or delay. The key takeaway point is that any contract that contains a force majeure claim may be subject to a claim and may lead to [litigation.](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) * *The invocation of force majeure clauses in litigation (to our knowledge) has not yet been the subject of a claim issued at the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/). However, it is likely a claim will be forthcoming, given the number of contractual non-performances that have been and will likely continue whilst coronavirus impacts the global supply chain and the domestic routine. * ## What is a force majeure? Force majeure is the happening of events outside the control of the parties, for example natural disasters. It is a clause that is included in contracts to remove liability for unavoidable catastrophes that interrupt the expected course of events. Ordinarily it is for parties to provide in a contract that events outside the control of the parties will not make the defaulting party if they preclude it from performing its contractual obligations. However, if a contract does not contain a force majeure clause then a defaulting party cannot rely on coronavirus to get out a bad bargain and will be in breach of the agreement if it fails to perform its obligations. ## What is a force majeure clause? A force majeure clause is a contractual terms by which one or all parties are (upon an event happening beyond their control) can: - either wholly or in part be excused from performance of the contract;- suspend performance of the contract;- claim an extension of time for performance of its contractual obligations. Force majeure clauses typically operate by excusing non-perfomance when a particular defined force majeure event occurs. ## Which types of contracts have force majeure clauses? - Consumer contracts;- Construction contracts;- Supply contracts;- Contracts for commodities; or- Contracts with a long term ongoing supply ## Examples of template force majeure clauses in commercial contracts If you as a party to a commercial contract are either considering defaulting on your contract or you as a party seek to enforce the other party's contractual obligations, then you must check your contract for boilerplate force majeure clauses such as the following: > Notwithstanding anything to the contrary contained herein, neither party shall be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, acts of war or terrorism, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties or civil unrest. Notwithstanding the foregoing, in the event of such an occurrence, each party agrees to make a good faith effort to perform its obligations hereunder. > Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including but not limited to fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority; provided, however, that the party so affected shall use reasonable commercial efforts to avoid or remove such causes of nonperformance, and shall continue performance hereunder with reasonable dispatch whenever such causes are removed. Either party shall provide the other party with prompt written notice of any delay or failure to perform that occurs by reason of force majeure. The parties shall mutually seek a resolution of the delay or the failure to perform as noted above. ## Is the outbreak of coronavirus pandemic a force majeure event? To ascertain whether COVID-19 is a force majeure event is the key question. Some contracts will specifically list defined force majeure events. Generally it will of course be a lot easier for a party to invoke a force majeur clause if an epidemic is listed. Epidemics are not wholly uncommon, for example, foot and mouth disease, SARS, ebola, swine flu, therefore contracts may contain the outbreak of disease as a force majeure event. Also the opposite may be true, in that certain contracts may specifically define events which are precluded from evoking the force majeure clause. Savvy parties will often utilise such techniques to allocate risk to the other side but these risks ordinarily do not include global epidemics and instead are related to such events as economic downturns and other financial issues. This also raises another interesting question, there could arise a situation where there is a tension between a defined force majeure event and an excluded event. For example, what if one party seeks to rely on a global pandemic to excuse non-performance and the other party relies on the specifically eluded event of an economic downturn (which we are currently in the midst of). ## Can a party claim that coronavirus is covered by a general force majeure clause? A party must first examine the contract and consider whether the force majeure clause includes a speciifc trigger under which a party may invoke rights of termination and/or suspension. Check the contract for specific wording such as quarantines, pandemics, epidemic, widespread disease and/or government intervention as a result. It is likely, perhaps even certain, that contracts will not include the specific word "coronavirus" given that it as a novel strain of flu. It is likely that the triggering event for a claim would not be the virus itself, but the resulting action that would be taken such as closing of posts, substantial impact to infrastructure, quarantines and government intervention. Therefore a party should be able to rely on force majeure for non-performance if the force majeure clause includes reference to "quarantines, epidemics or diseases". ## Can the coronavirus pandemic be defined as an "act of god"? Most force majeure clauses will include wording such as an "act of god" or a catch all phrase such as an ""irresistible act of nature". Such a provision may include the coronavirus pandemic, however, it is difficult to advise without understanding the nature of the particular contract, the specific wording of the force majeure clause and the general terms of the contract (alongside the governing law clause). NB: Parties to a contract should NOT assume that standard force majeur catch all clauses will be sufficient to permit a party to no longer perform its contractual obligations. Please seek legal advice immediately to check the provisions of your force majeure clause carefully. ## What remedies are there for a party when the other party terminates the contract as a result of coronavirus? If one party invokes either a specific force majeure clause or the general act of god catch all clause, the "defaulting" party must not be able to determine another way of performing the contract, otherwise said party will be in breach of contract. For example, if a buyer of goods refuses to make contractual payments for goods, said party would need a contractual provision which allows it to withhold payment otherwise it will be in breach of contract. However, if the force majeure clause is invoked and a court later rules that the clause does not cover the coronavirus pandemic, then substantial damages may be awarded against the defaulting party who has breached the contract. ## Claims for breach of contract as a result of force majeure clauses The key question is, in a specific contract, whether the coronavirus pandemic and the resultant consequences consitutes a force majeure event. - In order to successfully invoke the force majeure clause without breaching the contract, if the clause states that the event must prevent performance, the "defaulting" party must successfully show that performance of its contractual obligations has become impossible and not merely hindered.- On the other hand, should the force majeure clause state that the event "hinders" contractual performance, then the threshold is obviously lower and it will be easier for the "defaulting" party to show that even though it can technically still perform, such performance has been hindered. ## Force majeure claims in English law To summarise, in order to rely on a force majeure clause, UK case law demonstrates that a claimant should follow the 4 steps below. ### 1.Burden of Proof The burden of proof is on the party seeking to rely on the force majeure clause. A claimant must demonstrate that the event (such as the coronavirus pandemic) falls within the clause and that non-performance was due to said frustrating event. ### 2.Interpretation of the specific contractual clause In Coastal (Bermuda) Petroleum Ltd v VTT Vulcan Petroleum SA (No 2) (The Marine Star) [1996] 2 Lloyd's Rep 383, the Court of Appeal held that a court should interpret a force majeure clause by reference to the words the parties had used, not their general intention. [Tennants (Lancashire) Ltd v G.S. Wilson & Co. Ltd [1917] AC 495](https://lexlaw.co.uk/wp-content/uploads/2020/03/Tennants-v-GS-WIlson.pdf) is authority for the principle that if the triggering event "prevents" perfomance, a claimant must prove that the performance is either physically or legally impossible. As stated above, words such as "delay" or "hinder" have a far broader scope. However, say for example a manufacturer is unwilling to supply goods given that the majority of its workforce are self-isolating and as such the costs of manufacturing have increase, the increased cost in performing the contract is unlikely to be enough to trigger the clause. ### 3.The force majeure event must be the only effective cause of default In [Classic Maritime Inc v Limbungan Makmur SDN BHD [2019] EWCA Civ 1102](https://lexlaw.co.uk/wp-content/uploads/2020/03/classic-maritime.pdf), the Court of Appeal held that a charterer could not rely on the exceptions clause (which in effect was a force majeure clause) in the affreightment contract as it would not have been ready and willing to provide cargoes for shipment even if the exceptions event had not occurred. Therefore, a force majeure event must be the only cause of deault. A party will not be excused performance of its obligations under the contract because of an exceptional event if it was not able and willing to perform its obligations in the absence of any supervening event preventing performance. ### 4.A defaulting party must show that it took reasonable steps to mitigate the effects of the event In [Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd's Rep 323,](https://lexlaw.co.uk/wp-content/uploads/2020/03/1989_110.pdf) the court held that a clause which referred to events *"beyond the control of the relevant party"* can only be relied upon had that party taken all reasonable steps to avoid its operation or mitigate its results. ## If coronavirus allows a party to invoke a force majeure clause what is the effect on the contract? - ***Suspension:*** most force majeure clauses are suspensory. The affected obligations are suspended while the force majeure event continues, unless come to an alternative agreement. When the global/nationwide conditions return to normality, the contract is re-activated.- ***Termination:*** certain force majeure clauses allow either or both parties to serve notice terminating the agreement after a specified period so that they can make alternative arrangements.- ***Non-liability:*** the non-performing party's liability for non-performance or delay in performance is removed ordinarily for as long as the force majeure event continues. ## London Litigation Solicitors Our[ London litigation lawyers](https://www.google.com/url?q=https://lexlaw.co.uk/&sa=D&ust=1581686644092000) act as tenaciously as the client’s needs and case demands. Our chambers are located near the ​High Court and Central London County Courts in the ​Royal Courts of Justice​​ in Central London​ and can act with speed on your litigation matters​. We ​can accept urgent instructions and obtain injunctions rapidly. For example we obtained an ​out of hours emergency worldwide freezing injunction​ for a client in the diamond trade.​ ​Our client’s case required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We​ achieved all this in-house as we are a firm of solicitors and barristers. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Property developer loses £multi-million RBS claim: Lessons for future claimants Source: https://lexlaw.co.uk/solicitors-london/property-developer-multi-million-rbs-grg-west-register-claim-claimant-advice/ *Judge Timothy Kerr handed down judgment yesterday in the case of Oliver Dean Morley (trading as Morley Estates) v. The Royal Bank of Scotland PLC (case number HC-2017-002318). Unfortunately for potential claimants against[ RBS](https://personal.rbs.co.uk/personal.html) ([or other banks](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/)), the High Court found that Morley's contentions of intimidation and economic duress against RBS (and [GRG](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/)) were not established on the balance of probabilities. This case is [another example](https://lexlaw.co.uk/wp-content/uploads/2020/01/090316-SKS-NLJ-Unnatural-selection-in-financial-mis-selling.pdf) of unscrupulous banks in mis-selling litigation using their superior financial resources to discourage poorly resourced claimants with strong cases from being able to litigate to trial and shaping precedent by instead fighting cases all the way to trial which are winnable for them (and creating poor precedents for future claimants). * *However, one bonus from this litigation is the disclosure acquired by Morley. Disclosure reportedly revealed* *that the Treasury played a significant role in GRG’s systematic asset stripping of the British business sector. Official [Treasury](https://www.gov.uk/government/organisations/hm-treasury) documents have allegedly indicated that the now defunct [Asset Protection Agency](https://www.gov.uk/government/organisations/asset-protection-agency) (a Treasury- controlled executive agency established to operate the [Asset Protection Scheme](https://www.nao.org.uk/report/hm-treasury-the-asset-protection-scheme/) which insured RBS’s loans) played a crucial role in influencing GRG’s widespread endemic predatory decision making. The potential revelation may open the door to possible new claims by SMEs against HM Treasury seeking compensation for the government agency’s role in artificially distressing and asset stripping businesses.   * ## What was the claimant's case against RBS? The claimant was advised to issue a claim against RBS (and later amend the pleadings to include a claim against West Register) in 2017. The claim was in the region of over £30 million in damages after his company suffered financial losses as a result of a £75 million loan and a £49 million interest rate arrangement dating from around 2006. The gist of the claim was that RBS allegedly attempted to improve the bank's own financial position after he struggled to repay the loan and put him under "unlawful and illegitimate pressure" to transfer assets to RBS's West Register division. ## What did the High Court decide in Morley v RBS? The High Court dismissed Morley's claim and stated that RBS was not at fault in this case and had not subjected him to economic duress. In this case, the court stated that: > “The bank’s duty of skill and care did not require it to negotiate the restructuring any differently from the way it did so,” > > Mr Justice Kerr In addition, what may distinguish this case from others is Morley's personal (frivolous) spending, and had he kept around £5 million in reserve, he may have retained ownership of his properties rather than them being transferred to West Register: > “He did not put any of it aside for a rainy day. He spent it on South African mining investments, property, cars, a yacht and a jet. These assets turned out not to be very liquid when the impact of the downturn hit home” > > Mr Justice Kerr ## Another example of case law being shaped by heavily resourced defendant banks A disparity of resources between claimants (who are usually individuals, not­ for profits or small and medium ­sized enterprises) and defendants in bank dispute litigation is common. Heavily resourced defendant banks usually seek to capitalise on such an advantage by increasing the costs of litigation and leave claimants with no choice but to discontinue their claims. Consequently, defendant banks have been able to carefully shape [mis-selling and bank disputes litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) via a process (in a term coined by[ LEXLAW's Kumaran Sivathillianathan) of "unnatural selection". ](https://lexlaw.co.uk/wp-content/uploads/2020/01/090316-SKS-NLJ-Unnatural-selection-in-financial-mis-selling.pdf) Therefore, this case did not settle because (it seems from the comments of the judge) that the claim as pleaded for the Claimant was weak. If the case was stronger, it would likely have been settled before trial or (if the claimant is not well-resourced) would have been discontinued to avoid the risk of being liable for substantial legal costs. It is key to get advice from [financial services litigation specialists ](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)at an early stage in order to get advice on a strategy to maximise financial return (either through settlement or litigation) going forward. ## What role did HM Treasury play in RBS’s GRG unit? Documents disclosed to the High Court in *Morley v The Royal Bank of Scotland Plc *allegedly show that officials in the APA were involved in instructing GRG to withdraw customer support, even when the notoriously predatory GRG unit did not want to. In particular, the Asset Protection Agency reportedly instructed GRG to resist an economically viable rescue package for the distressed business and instead encouraged GRG to sell the assets at an artificially distressed price to RBS’s own [West Register](https://lexlaw.co.uk/solicitors-london/rbs-new-complaints-process-and-complex-fee-refund-grg-compensation-scheme-fca-review/) division. It is also alleged that the HM Treasury agency exercised a veto over any banking re-financing decisions and effectively prevented RBS from discharging GRG customers from secured loans without its approval. ## Claims against HM Treasury for its alleged role in the GRG scandal The disclosure of official APA documents may open the door to claims by SMEs and individuals against HM Treasury for its officials’ roles in influencing GRG decisions on re-financing. It is expected that once more information about the Government’s role in the GRG scandal comes to light, claims may start to be made against the Treasury by GRG’s former customers seeking compensation. There are also potentially compensation claims against the Treasury for [misfeasance in public office](http://www.lawcom.gov.uk/app/uploads/2016/01/apb_tort.pdf). If it can be proved that the state agency used its powers for an improper purpose, then there may be a claim if: (i) the conduct was carried out by an employee of a state agency; and (ii) that conduct caused financial loss. Our team can assist clients with bringing claims for misfeasance in public office. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of RBS GRG or other bank BSUs protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the [Royal Bank of Scotland](http://www.rbs.com/) or [National Westminster Bank](http://www.natwest.com/).  Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing [specialist GRG solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) to issue a protective claim form or by instructing [GRG litigation solicitors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/) to prepare and agree a carefully written standstill agreement. Our Financial Services Litigation team of Solicitors and Barristers in London are [highly experienced](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/) in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks. Call us on 02071830529 or complete our online [contact form.](https://lexlaw.co.uk/legal-case-assessment/) --- # Is an email confidential if I copy in a lawyer? Court of Appeal clarifies the scope of legal advice privilege Source: https://lexlaw.co.uk/solicitors-london/confidential-communications-legal-litigation-professional-advice-privilege/ The [Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) handed down a significant decision on 28 January 2020 in [Civil Aviation Authority v R (on behalf of the application of Jet2.com Ltd) [2020] EWCA Civ 35](https://lexlaw.co.uk/wp-content/uploads/2020/02/Civil-Aviation-Authority-v-Jet2-2020-legal-advice-privilege.pdf) which provides welcome clarity on when legal advice privilege applies to a particular document or communication. To come within the scope of legal advice privilege, it is not enough for a document to have had the purpose of receiving or seeking legal advice, rather that purpose must also be the "dominant" purpose.  The judgment is of particular relevance to [litigators](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) assessing the application of privilege to existing documents and communications and for organisations with in-house lawyers considering how they communicate internally in relation to sensitive legal matters. In practice, the decision clarifies that in communications with lawyers which are at the same time widely circulated to non-lawyers, legal advice privilege is not ipso facto applied, but instead the dominant purpose of the communication must be to seek or receive legal advice. ## What is legal advice privilege? Legal advice privilege covers confidential communications (written or oral) between a lawyer and their client for the purpose of giving or receiving legal advice. It applies to all advice in relation to a client’s legal rights and obligations. It does not apply to strategic or commercial advice. As originally formulated by the courts, the privilege covered only confidential communications made between a lawyer and his client, or a lawyer or client and a third party, which came into existence for the purposes of litigation ("litigation privilege"). The rationale of the privilege was said to be that: > "it is an absolute necessity that a man, in order to prosecute his rights or defend himself from an improper claim, should have resource to the assistance of professional lawyers" and that "he should be able to make a clean breast of it to the gentlemen whom he consults" in the sure knowledge that his communications to and from the lawyer will be "kept secret" unless disclosed with his consent" > > Anderson v Bank of British Columbia (1876) 2 Ch D 644 at page 649 per Sir George Jessel MR Although legal professional privilege is regarded of such importance that it has been described as "absolute"; but, like most rights, it is not absolute in the true sense of that word, as the case at hand demonstrates. ## Does legal advice privilege apply to accountants? No. For privilege to apply, there must be a lawyer (i.e. a solicitor or barrister) in the communication for legal advice privilege to apply. Legal advice privilege does NOT extend to other professionals such as accountants. Therefore, in [disputes with HMRC](https://taxdisputes.co.uk/) for example, (potentially incriminating) communications with an accountant can be disclosed and are not privileged. Therefore, in order to ensure confidentiality, a lawyer must be involved in the communications. ## The Facts and Procedural Background [Judicial review proceedings](https://taxdisputes.co.uk/judicial-review-applications-against-hmrc-challenge-decision-advice/) were issued in April 2018 by the Respondent ("Jet2"), a company which operates flights to and from the United Kingdom, against the Appellant ("the CAA"), the UK aviation industry regulator. Judicial review proceedings were brought challenging the lawfulness of the CAA's decisions - to issue a press release in December 2017; and - subsequently to publish correspondence between the CAA and Jet2 in February 2018 including the provision of such correspondence to the Daily Mail. Both the press release and the CAA correspondence criticised Jet2's refusal to participate in an [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) scheme for the resolution of consumer complaints which the CAA had promoted and in which almost all other large domestic airlines, and a substantial number of non-domestic airlines flying into the UK, had chosen to participate. The grounds of challenge to those decisions relevant to this appeal are that the CAA had no power to make the publications or alternatively, if it had such power, it exercised the power for unauthorised and improper purposes namely to damage Jet2's trading interests, to punish Jet2 for its decision not to join the ADR Scheme and to put pressure on Jet2 to join the voluntary scheme. Jet2 made an application in the [judicial review claim](https://taxdisputes.co.uk/judicial-review-applications-against-hmrc-challenge-decision-advice/) for disclosure of several categories of document. The Respondent claimed the documents attracted legal advice privilege on the basis that its in-house lawyers had been involved in the discussions and had given advice on the drafts. Many of the relevant documents consisted of emails and attachments circulated to a number of individuals for their input, including in-house lawyers, whose legal advice was sought at the same time. At first instance, the judge concluded that most of the documents were liable to be disclosed as they had not been prepared for the dominant purpose of obtaining legal advice. ## The Court of Appeal decision The key takeaway points from the [Court of Appeal decision](https://lexlaw.co.uk/wp-content/uploads/2020/02/Civil-Aviation-Authority-v-Jet2-2020-legal-advice-privilege.pdf) are: i) Consideration of legal advice privilege has to be undertaken on the basis of particular documents, and not simply the brief or role of the relevant lawyer. ii) However, where that brief or role is qua lawyer, because "legal advice" includes advice on the application of the law and the consideration of particular circumstances from a legal point of view, and a broad approach is also taken to "continuum of communications", most communications to and from the client are likely to be sent in a legal context and are likely to be privileged. Nevertheless, a particular communication may not be so – it may step outside the usual brief or role. iii) Similarly, where the usual brief or role is not qua lawyer but (e.g.) as a commercial person, a particular document may still fall within the scope of legal advice privilege if it is specifically in a legal context and therefore, again, falls outside the usual brief or role. iv) In considering whether a document is covered by legal advice privilege, the breadth of the concepts of legal advice and continuum of communications must be taken into account. v) Although of course the context will be important, the court is unlikely to be persuaded by fine arguments as to whether a particular document or communication does fall outside legal advice, particularly as the legal and non-legal might be so intermingled that distinguishing the two and severance are for practical purposes impossible and it can be properly said that the dominant purpose of the document as a whole is giving or seeking legal advice. vi) Where there is no such intermingling, and the legal and non-legal can be identified, then the document or communication can be severed: the parts covered by LAP will be non-disclosable (and redactable), and the rest will be disclosable (see, e.g., Curlex Manufacturing Pty Limited v Carlingford Australia General Insurance Limited [1987] Qd R 335 and GE Capital Corporate Finance Group Limited v Bankers Trust Company [1995] 1 WLR 172). vii) A communication to a lawyer may be covered by the privilege even if express legal advice is not sought: it is open to a client to keep his lawyer acquainted with the circumstances of a matter on the basis that the lawyer will provide legal advice as and when he considers it appropriate. ## The Dominant Purpose test Lord Justice Hickenbottom conducted a careful consideration of all the key case law in relation to legal advice privilege (and is recommended reading for all [litigation practitioners](https://lexlaw.co.uk/)). He concluded that the majority of the authority supported the inclusion of a dominant purpose criterion into legal advice privilege. Therefore the judge at first instance was right to proceed on the basis that, for legal advice privilege to apply to a particular communication or document, the proponent of the privilege must show that the dominant purpose of that communication or document was to obtain or give legal advice. ## Will an email remain confidential if I copy in a lawyer? Again, the Court of Appeal clarified the position when it comes to multi-addressees using the dominant purpose test. Accordingly, most communications between a lawyer and a client were likely be privileged. However, **if the dominant purpose is to find out the commercial views of a non-lawyer addressee (such as a financial adviser or accountant), then it will not be privileged,** even if a subsidiary purpose is simultaneously to obtain legal advice from the lawyer. ## City of London Litigation Solicitors Our[ London litigation lawyers](https://lexlaw.co.uk/) are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firms location adjacent to the Royal Courts of Justice in Central London. We have for example obtained an out of hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://lexlaw.co.uk/legal-case-assessment/)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://lexlaw.co.uk/about/) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure the minimum risk possible in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. ## Initial consultation with Litigation Lawyer Our [City of London litigation solicitors and barristers](https://lexlaw.co.uk/) provide bespoke legal advice. We invite you to contact us so one of our[ legal team](https://lexlaw.co.uk/our-people/) can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading dispute resolution lawyers. Call or email us to start the process of instructing us; our litigation team are waiting to help. #### To contact a leading London Litigation Lawyer ☎ 02071830529 --- # Professional Negligence: Solicitors held to be negligent after illegality defence is rejected by the Court of Appeal Source: https://lexlaw.co.uk/solicitors-london/professional-negligence-solicitors-held-to-be-negligent-after-illegality-defence-is-rejected-by-the-court-of-appeal/ *In  [Grondona v Stoffel & Co [2018] EWCA Civ 2031](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/Stoffel-Co-v-Grondona-2018-EWCA-Civ-2031-13-September-2018.pdf), the Court of Appeal placed more importance on the public policy argument of clients being able to seek damages for solicitors’ negligence even in claims where the claimants have potentially committed fraud and the illegality defence is argued* ## Conveyancing solicitor’s negligence This Court of Appeal case involved a claim brought by Ms. Grondona against the Defendant law firm Stoffel & Co following the firm’s failure failure to register the transfer of Ms Grondona’s property together with the discharge of the existing charge and registering a new legal charge i.e. in carrying out the crucial, familiar steps of a conveyancing transaction in preparing and submitting essential legal documents to the Land Registry, namely forms [TR1](https://www.gov.uk/government/publications/registered-titles-whole-transfer-tr1) and [DS1](https://www.gov.uk/government/publications/mortgage-cancellation-of-entries-for-lenders-ds1). This resulted in the Claimant suffering financial loss when her mortgagee sought to enforce its security and was unable to do so therefore obtained a money judgment against the Claimant. The Claimant subsequently sought damages from the Defendant. ## The illegality defence The Defendant admitted to its error in provision of completing the necessary documents. However, it sought to use the defence of illegality whereby Ms. Grondona was not the actual owner of the property at all and had committed mortgage fraud. The Defendant’s case was that the mortgage was for the original owner of the property, Mr. Mitchell, however it would have been harder to obtain due to his unreliable financial history. In light of this, the parties had entered into an agreement whereby Mr. Mitchell continued to be the owner and managed the property and its rents while Ms. Grondona was to receive 50% of the profit on the sale of the property. The Defendant claimed that the claim was tainted by illegality the illegality principle of *ex turpi causa* applied so the Claimant’s recovery of damages should be barred. The Claimant rejected the defence of ex turpi causa on the grounds that the Claimant did not have to rely on the illegality in question in order to prove her claim (the test in [*Tinsley v Milligan* [1993] UKHL 3](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/Tinsley-v-Milligan-1993-UKHL-3-24-June-1993.pdf)*)*. ## Public interest and solicitor‘s negligence outweighed potential illegality In considering the issues in this case, the Court of Appeal approached the balancing exercise as set out in *[Patel v Mirza [2016] UKSC 42](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/Patel-v-Mirza-2016-UKSC-42-20-July-2016.pdf). *Notwithstanding the dishonest purpose of the transaction, there had been a genuine intention to transfer the legal ownership of the property to the Claimant and the mortgage agreement itself was genuine.The Defendant had been retained to carry out this work for the Claimant and it had failed to do so. In handing down its judgment, the Court of Appeal considered the following factors: - **Public Interest**: While the Claimant was involved in mortgage fraud, the Court could see “*no public interest in allowing negligent conveyancing solicitors who are not party to and know nothing about the illegality to avoid their professional obligations simply because of the happenstance that two of the clients for whom they act are involved in making misrepresentations to the mortgagee financier*“.- **Proportionality**: It would be disproportionate to reject the claim in the absence of any complaint being raised by the lender against the Claimant on the grounds of fraud. Furthermore, the Claimant had not sought to evade her obligations under the charge and had pursued the negligence claim, not to profit from the fraud, rather to obtain funds to discharge her liability to the lender. The Claimant’s illegal conduct was not central or relevant to her retainer with the Defendant but held to be part of the “background story”.- **Negligence of the Solicitors**: The solicitors had been negligent in that they had failed to provide adequate services to the client.- **Illegality Principle Non-Applicable**: The Court also focused on the fact that since the mortgage fraud was not connected to the negligence claim filed by Ms. Grondona and did not directly affect it, the illegality principle was not applicable to this appeal. The Defendant had still been negligent. ## Good news for claimants in negligence claims It may come as as surprise that a client can commit fraud but still be entitled to damages from their solicitors. In this case the public interest argument in upholding a claim for solicitors’ negligence outweighed any potential fraud committed by the Claimant. This Court of Appeal case is positive for Claimants and should make solicitors and insurers more cautious in terms of negligence or breach of contract in the provision of their services as it shows they cannot escape liability for their negligence. ## Clarification on Illegality Defence This case was particularly important as it further cleared the confusion regarding the ‘illegality defence’ that was previously brought up in *Patel v Mirza*. Lord Toulson observed: > “in *considering whether it would be disproportionate to refuse relief to which the Claimant would otherwise be entitled as a matter of public policy various factors may be relevant …potentially relevant factors include the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was a marked disparity in the parties’ respective culpability*” For a claim to be dismissed in accordance with the illegality defence, it must have a close connection with the claim rather than a mere aspect to the background story. Moreover, this case clarified that the illegality defence is to apply, taking into account the nature and seriousness of the illegality. ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* ## Book an Initial Consultation with our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us-london/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our [Professional Negligence Lawyers](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) on [02071830529](tel:02071830529) or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # How will coronavirus (COVID-19) affect commercial contracts? Source: https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-commercial-contracts-breach-frustration-litigation-advice/ *The global and unprecedented ramifications of the [coronavirus (COVID-19)](https://www.nhs.uk/conditions/coronavirus-covid-19/) pandemic have exposed many businesses to legal complications and difficulties with their commercial contacts. How will coronavirus affect the effective enforcement of contractual terms? It will likely cause problems for manufacturing activity, to businesses, supply chains and the availability of staff. * *Some businesses are looking to avoid performing their contractual obligations (for example through the [invocation of a force majeure clause](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-force-majeure-clauses-breach-of-contract-litigation-advice/)), whether because COVID-19 has genuinely prevented them from fulfilling their legal responsibilities or because coronavirus serves as a 'convenient' pretext to avoid complying with the contract.* *It is important, in times of great national uncertainty, to seek advice from specialist [breach of contract litigation solicitors](https://lexlaw.co.uk/corona-coronavirus-covid-19-legal-litigation-insolvency-tax-employment-dispute-advice/) who understand the effect that coronavirus can have on commercial contracts. * ## What legal remedies are available when a contract cannot be performed? Where a contract has become genuinely difficult or impossible to perform, there are two main remedies in English law: - using a [force majeure](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-force-majeure-clauses-breach-of-contract-litigation-advice/) clause in the contract; and- the common law doctrine of frustration. Frustration will terminate a contract automatically when: - an unexpected event occurs; - that unexpected event is beyond the control of the parties; and - that unexpected event either makes performance of the contract impossible or makes the relevant obligations different from those considered by the parties at the time that the contract was agreed. ## How might coronavirus (COVID-19) frustrate a commercial contract? The coronavirus (COVID-19) outbreak might frustrate a contract in one of the following ways: - **Method of performance of the contract becomes impossible** - If the method of performance under contract becomes impossible, then the contract will likely be frustrated. However, a contract will not be frustrated if performance of the contract is possible in a different way and if the change in method of performance is not fundamental.- **Illegality** - If changes in law (for example, the emergency legislation recently introduced to deal with the COVID-19 pandemic) make the contract illegal, then that contract would be frustrated.- **Failure to provide person or object essential to performance of the contract** - If a person or object that is essential to the performance of the contract is unavailable due to the fault of neither party (for example, due to restrictions on imports arising from the COVID-19 pandemic), then it is likely that the contract would be frustrated. ## What is the effect of a contract being frustrated? The effect of a contract being frustrated is that the contract is automatically terminated. Parties to a frustrated contract are - by virtue of the [Law Reform (Frustrated Contracts) Act 1943](http://www.legislation.gov.uk/ukpga/Geo6/6-7/40/contents) - able to recover any monies paid under that contract (although the Court can allow the other party to keep expenses incurred before the contract was frustrated). ## London Litigation Solicitors Our[ London litigation lawyers](https://www.google.com/url?q=https://lexlaw.co.uk/&sa=D&ust=1581686644092000) act as tenaciously as the client’s needs and case demands. Our chambers are located near the ​High Court and Central London County Courts in the ​Royal Courts of Justice​​ in Central London​ and can act with speed on your litigation matters​. We ​can accept urgent instructions and obtain injunctions rapidly. For example we obtained an ​out of hours emergency worldwide freezing injunction​ for a client in the diamond trade.​ ​Our client’s case required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We​ achieved all this in-house as we are a firm of solicitors and barristers. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Litigation: Can Recorded Conversations be used as evidence in Court? Source: https://lexlaw.co.uk/solicitors-london/recorded-conversations-court-admissibility-evidence-confidentiality-disclosure-legal-advice/ *Modern technology has allowed anyone to be able to record a conversation very easily. However recording a conversation without the participants knowledge could be considered a breach of that person’s privacy, however if the recording provided proved a fact in dispute it is important that the law has a balance to protect the individuals rights while also ensuring justice is carried out. * ## Can you record a conversation between two people?  Conversation that takes place between two private individuals is not considered prohibited conversation, however if the recorded conversation is provided to a third party without the consent of both parties, problems may arise.  ## Do I have to get consent to record a conversation? Consent may be obtained retrospectively, or it may be argued that the content of the conversation is within public interest. An example of this is reporters record conversations covertly, however their defence is argued to be within public interest and therefore should be disclosed due to the significance of the conversation.  ## Can I get an urgent injunction to prevent the publication of a recording? Whether or not the recorded conversation is in public interest is a factor that may be argued in court. If the person who has been recorded believes that the recording has not been made with consent they may wish to obtain an injunction along with claims for any damages as a result of the recording.  ## Can companies record conversations?  Companies have different rights when recording conversations than private individuals. Companies are permitted to record conversations for business purposes, such as security or training, however can only do so for the regulated reasons.  ## What is the Regulation of Investigatory Powers Act 2000 (RIPA)? The Regulation of Investigatory Powers Act 2000 (RIPA) permits a company to lawfully record conversations only to: - Establish facts;- Ensure regulatory compliance; or- demonstrate standards that are achieved or need to be achieved by training. Any recording that is retained must be relevant to that business and only used for that business. The company must make all reasonable efforts to inform the parties involved that the conversation was recorded. By noting that conversation are recorded in terms and conditions, websites and other documents this allows companies to inform customers that calls will be recorded.  ## Are employers allowed to record conversations? Employers should be wary of employees recording disciplinary or grievance conversations without their knowledge. Previously, the Employment Tribunal has, in certain circumstances, permitted such conversations to be used in court.  Employers may wish to amend employment contacts by amending Employment Contracts to explicitly exclude employees from recording disciplinary or grievance conversations. ## Can recordings be used as Court Evidence? Yes. Even non-consensual covert audio or video recordings can be used as admissible evidence in UK legal proceedings. [Rule 32.1 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.1) however allows the Court however to exclude evidence. The Judge has to undertake a balancing exercise to determine what is fair between getting to the truth and restricting recordings obtained improperly. ## Can I produce recordings as evidence in court?   The RIPA prohibits the product of unlawful interceptions to be admissible in court, however in civil case, some judges may take a pragmatic approach that the information is already disclosed and highly relevant to the matter.  Once the recording has been admitted it may be used to prove the case, however once the party is aware of the recordings existence it must be disclosed which may arise other issues, such as the unlawful obtaining of the evidence.  If the recording  has been obtained illegally or unfairly then a party can address this by alternative means outside the proceedings, such as a claim for breach of the Data Protection Act and claim for any damages suffered as a result of the recording.  There is not a clear answer as to the law behind using a recording of a conversation as evidence. The basic principles to follow are the consent for the recording and to keep in mind when relying on a recording as evidence the risks behind using it. ## London Litigation Solicitors Our[ London litigation lawyers](https://www.google.com/url?q=https://lexlaw.co.uk/&sa=D&ust=1581686644092000) act as tenaciously as the client’s needs and case demands. Our chambers are located near the ​High Court and Central London County Courts in the ​Royal Courts of Justice​​ in Central London​ and can act with speed on your litigation matters​. We ​can accept urgent instructions and obtain injunctions rapidly. For example we obtained an ​out of hours emergency worldwide freezing injunction​ for a client in the diamond trade.​ ​Our client’s case required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We​ achieved all this in-house as we are a firm of solicitors and barristers. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # COVID-19 and Financial Distress: Directors’ duties Source: https://lexlaw.co.uk/solicitors-london/covid-19-advice-for-directors-in-financial-distress/ *As a result of COVID-19, many companies are facing financial difficulties and distress. How directors respond will depend on the nature of the business, the current financial status and what assistance lenders and the government provide to these companies. Directors should remain aware of their duties to the company and under the [Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/contents), particularly concerning wrongful trading. We highlight these duties in detail below. * ## Directors' compliance with statutory obligations The government has recognised the imminent threat to the solvency of many businesses but we are yet to see the processes in place for accessing funds and payment mechanisms. During this time, directors will be desperately trying to operate businesses, assess cashflow whilst also complying with statutory obligations and potential liabilities in the event of a breach. The [Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/contents) sets out duties owed by directors to a company including: - a duty to act in accordance with the constitution of the company and to use powers only for the purposes for which they were conferred;- a duty to promote the success of the company for the benefit of the members;- a duty to exercise reasonable care, skill and diligence ;- a duty to exercise independent judgment;- a duty to avoid conflicts of interest;- a duty not to accept benefits from third parties; and- a duty to declare to the other directors any interest that a director has in any proposed transaction or arrangement with the company. Directors and boards of companies have a duty to promote the success of the company and act in the best interests of the company which will include taking into account: - Profitability of the company; - Well being and interests of the company's staff including all employees, workers and contractors;- Interests of the shareholders and any potential action taken by them; - Relationships with the company's suppliers and customers;- The reputation of the company; and - The need to act fairly as between the members of the company. The financial status of the company and the duty of the directors to act in the best interests of the company will be paramount at the moment however directors should consider the likely consequences of any decision in the long term. ## Wrongful trading Directors should be aware of the consequences of failing to comply with their statutory duties. A company can continue to trade in times of financial uncertainty if the company has realistic options to pursue which will result in any insolvency process being avoided. These options may include locating alternative suppliers, tightening credit terms and pursuing [debt recovery](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/). The [Insolvency Act 1986](http://www.legislation.gov.uk/ukpga/1986/45/section/214) provides that a director can be personally liable for the losses of a company where they continue to trade in circumstances where there was no realistic prospect of avoiding a formal insolvency event, such as liquidation or administration or even a [winding up petition](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/). ## Disqualification of Directors The court can [disqualify a director](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/) for many reasons, for example: - certain criminal offences connected with the Companies Act legislation;- wrongful trading (such as trading while insolvent;- failure to comply with filing requirements under the Companies Act Legislation; and- unfit conduct in insolvent companies. ## Potential insurance claims Company directors, or the company itself, will usually hold directors' and officers' liability (D&O) insurance to indemnify themselves against losses relating to regulatory investigations by a financial regulator or a fall in value of the company. Companies and its directors may face claims relating to employment liability, cybersecurity liability and compensation claims following exposure to coronavirus-related disruption. Companies should review their existing cover and consider discussing with their insurers or brokers any need for bespoke cover on specific new exposures. ## Steps to be taken by directors - Stay up to date with [government guidance](https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19) on COVID-19 and any measures introduced for companies. - All directors of the company should have access to the relevant financial information to be able to make collaborative, informed decisions. - It may be helpful for directors to meet regularly (via teleconferencing or video conferencing) to discuss the status of the business.- Look out for and effectively manage contractual, operational and insolvency risks in the business. - Directors should ensure their decisions and the factors considered in their decision making are well documented i.e. board minutes and resolutions even where meetings have been held over video conferencing due to present circumstances. - It is important to also seek legal advice from professionals to assist you throughout this time and in any decisions concerning the company. - Seek advice from accountants, legal advisers and insurers in light of the present circumstances. ## City of London Commercial Solicitors Our[ ](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)leading Commerical Solicitors and Barristers provide bespoke legal advice including on directors duties, [director disputes](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/), [corporate insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/). We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading commercial lawyers. We regularly advise companies on a range of legal and commercial matters. Call or email us to start the process of instructing us. Please note we do not offer any financial or tax planning advice. To contact a leading London Commercial Lawyer ☎ 02071830529 --- # Coronavirus (COVID-19) and its impact on UK Litigation Source: https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-and-its-impact-on-uk-litigation/ Following the outbreak of coronavirus (COVID-19), social distancing has been important when controlling the spread of the virus. In response to this the following changes have been made to ensure legal matters may continue while still following government guidelines. It has been stated by the [Lord Chief Justice](https://www.judiciary.uk/about-the-judiciary/who-are-the-judiciary/judicial-roles/judges/lord-chief-justice/) of England and Wales that hearings will only be postponed where absolutely necessary and otherwise take place as remote hearings. ## Remote Hearings The judiciary of England and Wales has stated that [remote hearings should be used wherever possible](https://www.gov.uk/government/news/should-an-oral-hearing-be-impacted-by-the-coronavirus) during the current pandemic. Such protocol applies to hearings of all kinds including trials, applications and those in which litigants are involved in the County Court, High Court and Court of Appeal (Civil Division), including the Business and Property Courts.  Although most Court buildings have remained open the objective of remote hearings is to minimise the spread of Covid-19.  It is the judge’s decision as to how a remote hearing will be conducted. Hearings conducted remotely will be treated in accordance with CPR and it is still the judge’s duty to determine all issues that arise in the case in accordance with normal principles. #### Available methods for Remote Hearings - BT conference call- Skype for Business- Court video link - BT MeetMe- Zoom- Telephone call  Before ordering a remote hearing a judge must check with the listing office that suitable facilities are available.  If the parties do not agree with the court’s proposal in relation to the hearing, they should make a submission in writing, email or CE-filing, copied to the other party, proposing a more appropriate solution. The judge will then make the decision as to what way the hearing will take place and give the necessary directions.  Court may also wish to fix s short remote case management conference in advance of the hearing to allow for directions to be made in relation to what technology will be used and any other relevant matters.  #### Issues to be addressed prior to the hearing: - In accordance with [CPR 39.2(3)(g)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part39) – whether the hearing is to be in public or private, and if private, on what grounds should it be private.  The judiciary of England and Wales states that remote hearing should as far as possible still be public hearings. This can be achieved if a judge, clerk or official relays the audio and video footage to an open court room; allowing accredited journalists to login in the remote hearing; and/or live streaming the hearing over the interment.  - In accordance with [CPR 39.9 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part39)– how the hearing is to be recorded, or if an order can be made to properly dispense with the recording. In compliance with CPR 39.9 recording the hearing can be achieved in a number of ways; recording audio using a courtroom’s normal recording systems; recording the hearing using the remote communication programme used i.e. skype business; or the court using a mobile telephone to record the hearing. It is not permitted for the parties to record the hearing without the judge’s permission.  #### Delays in Hearings Hearings may be delayed due to illness if court finds they are unable to adequately staff the system. If parties are considering commencing action, it is advised that they issue and serve claim forms as soon as possible to avoid no further delays and avoid any time limits whether contractual or statutory. The court have confirmed that if resourcing does become an issue urgent applications such as injunctions will be given priority and heard remotely through video links and e-bundles. It is expected that there will be difficulty where there may be multiple witnesses or experts involved who are expected to give oral evidence. in these circumstances it is likely that the hearing is postponed ## Electronic Signatures Government guidelines have indicated that all who are able to work from home should work from home. Therefore, signing documents in person is no longer a possibility, instead electronic signatures are to be used instead. #### What is considered an Electronic Signature? An electronic signature is a way to sign a document in the online world. Electronic signatures may come in a variety of forms including:  - Typewritten - Scanned- An electronic representation of a handwritten signature- A digital representation of characteristics e.g. fingerprint or retina scan- A signature created by cryptographic means.   #### The Validity of Electronic Signatures  The Courts consider the use of electronic signatures generally acceptable, including where there may be a requirement for a signature. A judge will also consider the facts of the case to consider whether the signature has an authenticating intention. There may also be other requirements for the validity of the signature such as a witness that will be satisfied.  #### Standards of Electronic Signatures eIDAS is the EU regulation that requires electronic signatures to meet a certain standard which fall into either ‘Advanced’ or ‘Qualified’  An advanced electronic signature is one that is:  - Uniquely linked to the signatory; - Capable of identifying the signatory; - Created using electronic signature creation data that the signatory, with a level of confidence, use under their sole control; and- Linked to the data signed therewith in such a way that any subsequent change in the data is detectable.    Whereas a qualified electronic signature required an enhanced identity proof. Qualified electronic signatures are not widely used in the UK. ## London Litigation Solicitors Our[ London litigation lawyers](https://www.google.com/url?q=https://lexlaw.co.uk/&sa=D&ust=1581686644092000) act as tenaciously as the client’s needs and case demands. Our chambers are located near the ​High Court and Central London County Courts in the ​Royal Courts of Justice​​ in Central London​ and can act with speed on your litigation matters​. We ​can accept urgent instructions and obtain injunctions rapidly. For example we obtained an ​out of hours emergency worldwide freezing injunction​ for a client in the diamond trade.​ ​Our client’s case required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We​ achieved all this in-house as we are a firm of solicitors and barristers. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Statement by LEXLAW re Coronavirus (COVID-19): HMRC’s Failure to Process NHS Uniformed Workers Claims for Laundering Uniforms Source: https://lexlaw.co.uk/solicitors-london/statement-coronavirus-covid-19-hmrc-failure-nhs-uniformed-keyworkers-tax-relief-claims-laundering-ppe-uniforms/ ## CORONAVIRUS (COVID-19): HMRC’S FAILURE TO PROCESS NHS UNIFORMED WORKERS CLAIMS FOR LAUNDERING UNIFORMS **LONDON, UK** – The HMRC Director General for Customer Services has taken and continues to pursue an unreasonable decision to suspend the processing of thousands of claims for tax relief made by NHS and other frontline Uniformed PAYE employees where they are seeking to claim tax relief for laundering their uniforms. The Government has made it a number one priority to protect NHS staff including the provision of Personal Protective Equipment (PPE) which forms part of their uniform. This priority ought to encompass the protection of other uniformed persons that serve the public such as police officers and firemen and so on. Given the current unprecedented societal conditions brought about by the COVID-19 pandemic, it is a necessity (and a governmental imperative) to support the nation’s front-line uniformed keyworkers. In particular, to ensure healthcare workers from the NHS and other critical keyworkers are able to claim from HMRC the tax rebates rightfully due to them. Uniformed workers who pay tax through PAYE are entitled to claim tax credit from HMRC. HMRC have published an array of different rules for different uniformed employees online but these rules are cumbersome and difficult to understand. Critics of HMRC might say this is purposeful in order to reduce the number of rebate claims. Because of this many workers prefer to use a pro forma to make a rebate claim by post to HMRC. HMRC are now identifying pro forma claims and have as against certain organisations issued a refusal to process legitimate rebate claims from frontline uniformed workers. HMRC claim that although most claims are correctly made out, some of them fail.  For instance, they say a health worker may be low paid and fall beneath the income tax threshold and so are not entitled to credit. These are not reasonable explanations to justify blanket refusals by HMRC to process claims submitted using ease to use pro forma claim forms. Mr [M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), a dual qualified barrister and solicitor practising at City of London law firm [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/), stated: > *“Thousands of frontline uniformed workers have correctly reclaimed tax against keeping their uniforms hygienically clean, which has meant HMRC having to pay out tens of Millions of Pounds in tax credits. I appreciate that HMRC are trying to maximise government Revenue, but it is completely wrong to delay the processing of claims for tax relief on essential hygiene by frontline NHS health staff and other uniformed workers. Not only should HMRC be speeding up the processing of claims, they should actively consider increasing allowances to take account of the necessary increased laundering of health and other workers uniforms. I fear that some of the hard working, but low paid health workers may find themselves unable to launder as often as they would want. This could lead to contaminated uniforms passing COVID-19 on to vulnerable patients and family members”* LEXLAW has written directly to Ms Angela MacDonald, the relevant Director General at HMRC (copied to the Prime Minister, Boris Johnson) lobbying to seek that she reconsider her draconian policy decision, and in particular has requested that: - HMRC should not be refusing to process any claims for tax relief on laundering and, in fact, the tax allowance should be significantly increased to take account of the increased and critical need for cleanliness promulgated by the COVID-19 threat to the UK.- HMRC should be publicising the fact that tax relief for cleaning and laundering uniform is available to PAYE employees in particular to NHS staff and other uniformed keyworkers who continue to serve the UK for the greater good.- Laundering is a critical service which ought properly to be maintained and that this service be immediately zero rated for the purposes of VAT in the wider public interest, such zero rating to include the cost of collection and delivery as appropriate.- Low paid uniformed workers should be paid an equivalent to the tax relief they would have been given to reimburse them for laundry and cleaning costs. Mr [M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/) further stated: > *“It is surely wrong to penalise low paid health workers who are putting their lives at risk for the greater good. A lot of retired health workers have come back to aid the nation in this time of global crisis. Because their employment may be short, they may fall below the income tax threshold. Some workers may have to take unpaid leave to care for others. I believe the right thing to do is for us to support the NHS and its workers. Credit for the basic hygiene of uniforms should be given to all and not just those who are higher earners”* LEXLAW acts for taxpayers against HMRC and are instructed in ongoing judicial review permission proceedings against HMRC’s unreasonable decision to refuse to process proforma claims. Affected taxpayers include front line keyworkers such as NHS healthcare workers, nurses, midwives, paramedics and any other uniformed workers. Mr [Karim Oualnan](https://lexlaw.co.uk/our-people/karim-oualnan/), a solicitor and partner at City of London law firm [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) with conduct of the judicial review proceedings against HMRC stated: *“NHS staff have already reportedly suffered enough through the state’s lack of provision of Personal Protective Equipment (PPE). Exposing NHS health workers and other uniformed frontline workers to unwarranted and unnecessary financial concerns at this difficult time is wrong. It will also be a disaster in terms of the aim for reduction of the spread of the coronavirus if some workers have to cut back on laundering their uniforms particularly given the unprecedented COVID-19 pandemic because of the Director General, Ms MacDonald’s unreasonable decision to stop HMRC from processing legitimate rebate claims which is contrary to HMRC’s obligations under the Taxpayer’s Charter. I trust that common sense and fairness will prevail within HMRC and that they will choose to give our essential uniformed keyworkers support at this critical and unprecedented time.”* HMRC’s unreasonable policy decision is antithetical to the national policy. On the one hand, the government urges the nation to protect the NHS but on the other hand HMRC’s draconian policy decision does not protect the personal finances of key NHS workers during a time of economic uncertainty. To that end we have instructed specialist Tax Counsel who will advocate on behalf of frontline keyworkers at the earliest opportunity. The public interest would be best served by an immediate processing of all outstanding claims without HMRC imposing arbitrary criteria the breach of which will inevitably lead to HMRC not processing any claims from a significant portion of uniformed workers in the UK including frontline NHS staff and other keyworkers protecting our communities. ## Summary: - A HMRC Commissioner on the executive committee, has taken a draconian policy decision to suspend the processing of thousands of claims for tax relief made by NHS and other frontline uniformed PAYE employees such as the police and fire services where they are trying to claim tax relief for laundering their work uniforms. - HMRC are trying to maximise government revenue, but it is completely wrong to issue a blanket refusal to the processing of claims for tax relief on essential hygiene by key frontline health and other uniformed workers particularly given the COVID-19 pandemic. - The Government has made it the number one priority to protect the NHS particularly given the COVID-19 pandemic however HMRC have taken the policy decision not to reimburse NHS workers for laundering their uniforms.- HMRC is exposing key health workers and other uniformed frontline workers to unwarranted and unnecessary financial concerns at this difficult time not least given the national coronavirus (COVID-19) pandemic when laundering of healthcare unfirms is vital to slow the spread of the disease and save lives. ## Contact details for editors: - [LEXLAW](https://lexlaw.co.uk/) is a unique law firm that partners solicitors and barristers and is the only law firm based in the Middle Temple (an Inn of Court). The [Tax Disputes](https://taxdisputes.co.uk/) team has years of experience in challenging decisions against HMRC and handling tax appeals at the Tax Tribunals and in the High Court in contentious tax dispute cases. - Andrew Young, Barrister of Prince Henry’s Chambers, is counsel in Judicial Review proceedings against HMRC. Andrew is a former Principal Revenue Lawyer and has headed Tax Litigation practices at Deloitte and PWC. #### ENDS ![hmrc uniformed keyworkers nhs tax relief claims london tax dispute lawyers](https://lexlaw.co.uk/wp-content/uploads/2020/03/LEXLAW-coronavirus-covid19-nhs-tax-rebate-keyworkers-hmrc-litigation-lawyer-london.png) [Download LEXLAW statement [PDF]](https://lexlaw.co.uk/wp-content/uploads/2020/03/HMRC-Uniformed-Workers-Press-Release-LEXLAW-270320-1.pdf) --- # Solicitor’s advice on disclosure Source: https://lexlaw.co.uk/solicitors-london/solicitors-advice-on-disclosure/ *The Court discussed the principles of disclosure in the recent case of [Square Global Ltd v Leonard [2020] EWHC 1008](https://lexlaw.co.uk/wp-content/uploads/2020/04/Square-Global-Ltd-v-Leonard-2020-EWHC-1008-QB-disclosure-duties-litigation.pdf)* *which case highlights the importance* *of involving solicitors in the disclosure exercise.* *If you are currently involved in litigation and approaching disclosure, we can advise and assist you in the exercise. * This [employment law](https://lexlaw.co.uk/ukemploymentlawyers/) dispute in the field of financial services concerned Square Global Ltd ("the Company") who brought a claim against its employee alleging breach of restrictive covenants relating to his employment. At the time of Mr Leonard's dismissal, he had been in discussions for over 7 months with a financial services competitor called Market Securities, about leaving the Company to join them. The Company's contract with Mr Leonard prohibited him from undertaking competitive employment or any other form of work with a third party while he remains an employee of the Company and six months following termination. ## Defendant's non-compliance with duties of disclosure At trial, the Company alleged that Mr Leonard had been remiss in complying diligently with his disclosure duties, under the Civil Procedure Rules. Mr Leonard had only disclosed three emails which passed between himself and Market Securities which included cover emails without the relevant attachments. This prevented the Company and its advisers from being able to see whether there were offers made by Market Securities which were capable of acceptance. When this was challenged by the Company, Mr Leonard initially responded that there were no other written communications exchanged, beyond what had been disclosed. A month later, Mr Leonard disclosed the attachments to the emails together with further communications and explained that the omitted documents had been inadvertently overlooked by his advisers. From the parties' witness evidence, it was established Mr. Leonard himself conducted a [review of his documents](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) (rather than the solicitors), and importantly he had also selected which documents he considered relevant. The parties were required by the Judge to put in written submissions on the issue of disclosure. The Company clarified that they were not suggesting any breach by Mr Leonard's solicitors but alleged a lack of candour on Mr Leonard's part. The Company stated that* "the solicitors “are under an obligation only to advise their clients properly on their [disclosure obligations](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/)“*. The Judge held that he was not prepared to find, on the basis of evidence he had seen, that there had been a breach of professional duties on either side. The Judge commented: > *I am well aware of the immense strains placed on both advisers and litigants by expedited proceedings of this nature, and I have been highly impressed with the skill, efficiency and industry of all the legal advisers in this case.* He however emphasised the extent of a solicitor's relevant disclosure duties in civil litigation stating: > "*It is fundamental that the client must not make the selection of which documents are relevant"* > > "*The best way for the solicitor to fulfil his own duty and to ensure that his client’s duty is fulfilled too is to take possession of all the original documents as early as possible. The client should not be allowed to decide relevance—or even potential relevance—for himself, so either the client must send all the files to the solicitor, or the solicitor must visit the client to review the files and take the relevant documents into his possession. It is then for the solicitor to decide which documents are [relevant and disclosable](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/).”* ## What is the duty of disclosure? In litigation, the purpose of disclosure is to make available evidence which either supports or undermines the respective parties' cases. The exercise of disclosure is governed by [CPR 31](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31). Please see our detailed page on [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) for further information. ## Do parties have to disclose all documents in litigation? Parties are required to disclose to each other any documents that damage their case, as well as any helpful documents. The duty of disclosure is strict, and the court takes it very seriously. The underlying principle is that the court can only deal with a case fairly and justly if all of the relevant material is preserved and disclosed. ## Can I conduct disclosure myself? It may be appropriate that you conduct the search for disclosure yourself, in which case [specialist litigation solicitors](https://lexlaw.co.uk/our-people/) should provide you with instructions as to how this should be done. Clients frequently underestimate the extent of the search required and it is important that you strictly follow any instructions from a solicitor. ## Solicitor assistance with disclosure This case highlights the importance of having solicitors involved in the disclosure exercise. Solicitors are under a duty to investigate the position carefully and to ensure so far as is possible that full and proper disclosure of all relevant documents is made. [Specialist litigation solicitors](https://lexlaw.co.uk/our-people/) must carefully consider what might be the most appropriate approach to disclosure in your case, to ensure that what is proposed is proportionate. This is something we should discuss in detail once we have done some preliminary scoping in relation to the likely volume of documentation and how many electronic documents will have to be disclosed. Not less than seven days before the first [CMC](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/), the parties must discuss (and seek to agree) a proposal for the disclosure exercise. In many cases, it will be necessary to begin these discussions at a much earlier stage. This is because much modern litigation (including most cases dealt with by this firm) involves a very large volume of documentation (including electronic documents) and it is important that the parties co-operate to agree a way of conducting the disclosure exercise which ensures that relevant material is disclosed while minimising the time and costs to be expended. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. Get in touch with our litigation solicitors now on 02071830529 or contact@lexlaw.co.uk. --- # Business tenancies under the Coronavirus Act 2020 Source: https://lexlaw.co.uk/solicitors-london/business-tenancies-under-the-coronavirus-act-2020/ * In light of the current circumstances surrounding COVID-19 which are affecting many small businesses and individuals including commercial landlords, new legislation has been issued to assist these individuals.  If you need help with renewals, evictions or breach of tenancy, our expert business tenancy solicitors are ready to help you.* ## Legislation governing business tenancies Business tenancies are governed by Part II of the Landlord and Tenant Act 1954. This will apply wherever the premises let (or part of them) are being used for the purposes of a business, unless that business is purely incidental to residential use. However, where the tenancy agreement prohibits business use, the tenancy will not be a business tenancy unless the landlord consents or acquiesces to the change in use. Similarly, if a business tenant ceases trading from the premises and starts to live in them, that will not usually convert them to a residential tenancy. ## Effect of the Coronavirus Act on commercial landlords [Section 82 of the Coronavirus Act 2020](http://www.legislation.gov.uk/ukpga/2020/7/section/82/enacted) deals with protection from forfeiture in relation to business tenancies. The Act stipulates a 'relevant period' whilst the COVID-19 emergency situation continues which currently applies from 26 March 2020 to 30 June 2020, unless extended by the Government. ## Forfeiture for non-payment of rent If the tenant breaches the terms of the lease (including breaching the term to pay rent) and the landlord wishes to evict the tenant, then the landlord needs to forfeit the lease, which is only possible if the lease provides for re-entry in the circumstances of the breach which occurred.  [Section 146 of the Law of Property Act 1925](http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/146) also applies and (except for non-payment of rent) requires the landlord to give the tenant notice of the breach and an opportunity to remedy it (if this is possible). If intending to forfeit the lease, the landlord must avoid doing anything which might amount to a waiver of the right to forfeit. The [Coronavirus Act 2020](http://www.legislation.gov.uk/ukpga/2020/7/section/82/enacted) stipulates: - A right of re-entry or forfeiture for non-payment of rent may not be enforced during the relevant period- 'Rent' will include all payments due by the tenant under the lease, including, service charge, insurance, repair costs- The right of re-entry can only be waived by an express waiver in writing- Where forfeiture proceedings for non-payment of rent have already been commenced, the Court cannot make an order for possession which expires before the end of the relevant period ## Possession claims In line with current public health advice to prevent all non-essential movement, during the relevant period (26 March 2020 to 25 June 2020), there is a suspension of possession cases which will affect new and existing claims. The grounds to terminate a business tenancy are set out in [Section 25 of the Landlord and Tenant Act 1954](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/section/25). Landlords who are seeking possession during this time must show a 'very good reason' for doing so. ## Potential issues for landlords The Act will raise concerns for commercial landlords as they are not likely to receive any rent from their properties until at least June 2020 and tenants will be protected from eviction. This will lead to cash flow issues and therefore many commercial landlords will be looking to banks and other lenders at the moment for financial assistance. If they do not receive income covering service charge, this may affect a landlord's ability to comply with his or her own obligations under the lease which could result in action from the tenant. ## Debt recovery route for landlords Landlords may seek to use other methods of [debt recovery](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/) against tenants e.g. [Commercial Rent Arrears Recovery](http://www.legislation.gov.uk/ukpga/2007/15/part/3/chapter/2/crossheading/commercial-rent-arrears-recovery) or action against guarantors. We can be instructed to advise on the best possible course of action in the current circumstances. ## Instruct Property Litigation Lawyers Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. To contact our property litigation team, please call us on ☎ 02071830529 --- # COVID-19: Protection for Commercial Tenants Source: https://lexlaw.co.uk/solicitors-london/covid-19-protection-for-tenants/ *The Government has announced [measures](https://www.gov.uk/government/news/extra-protection-for-businesses-with-ban-on-evictions-for-commercial-tenants-who-miss-rent-payments) to protect commercial tenants who cannot pay rent because of COVID-19, from eviction. If you need help with renewals, evictions or breach of tenancy, our expert business tenancy solicitors are ready to help you.* ## Business tenancy Tenancies of business premises will usually be business tenancies governed by [Part II of the Landlord and Tenant Act 1954](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/part/II). This is a completely different regime from residential tenancies. If you are unsure what [type of tenancy](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/what-sort-of-tenancy-do-i-have) you have, we can review your lease agreement and advise you. [Section 82 of the Coronavirus Act 2020](http://www.legislation.gov.uk/ukpga/2020/7/section/82/enacted) has been introduced to afford more protection to commercial tenants during this pandemic. ## What can I do if I cannot pay my rent during COVID-19? If the tenant breaches the terms of the lease (including breaching the term to pay rent) and the landlord wishes to evict the tenant, then the landlord needs to forfeit the lease, which is only possible if the lease provides for re-entry in the circumstances of the breach which occurred.  [Section 146 of the Law of Property Act 1925](http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/146) also applies and (except for non-payment of rent) requires the landlord to give the tenant notice of the breach and an opportunity to remedy it (if this is possible).  Between 26 March 2020 and 30 June 2020 ("the relevant period"), under the [Coronavirus Act 2020](http://www.legislation.gov.uk/ukpga/2020/7/section/82/enacted), a landlord is unable to exercise a right of re-entry or forfeiture (termination) of a tenancy for non-payment of rent, evict a tenant or treat failure to pay rent as persistent delay in paying rent. Commercial tenants should note however that the protections only offer a rent deferment in the current circumstances and they will still be liable to pay rent arrears after the relevant period. It is recommended that tenants engage in discussions with their landlords to seek to agree a rent suspension or reduction. If you have been unsuccessful in reaching an agreement, our [Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) solicitors can assist you in conducting negotiations in order to reach an optimal resolution. Tenants should also contact their insurers and consider their insurance policy to see if business interruption is covered. We can review your lease agreements and insurance policies and advise you on the best possible course of action. ## My landlord wants to close the property because of COVID-19 Tenants should consider their lease carefully if it contains a force majeure clause, however the majority of leases are unlikely to contain express wording dealing with the event of a pandemic. If [COVID-19](https://www.gov.uk/coronavirus) amounts to a force majeure event, it may entitle the landlord to suspend or terminate the lease. Although the majority of commercial leases often contain similar provisions, all leases are different and each situation will need to be considered on its particular facts. The grounds to terminate a business tenancy are set out in [Section 25 of the Landlord and Tenant Act 1954](http://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/section/25). Landlords who are seeking possession during this time must show a ‘very good reason’ for doing so. If your landlord is seeking to terminate your tenancy, we can review your lease agreement and advise you on your rights and any possible course of action. ## Can my landlord seek possession of the property during the pandemic? In line with current public health advice to prevent all non-essential movement, during the relevant period (26 March 2020 to 25 June 2020), there is a suspension of possession cases which will affect new and existing claims. If your landlord is threatening or seeking possession, we can advise you on your rights and any possible course of action. ## Instruct Property Litigation Lawyers Our primary aim is to get results for our clients. The property litigation team includes qualified solicitors and barristers whom have leading experience of high value landlord and tenant commercial disputes. We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. If you are a commercial tenant and wish to obtain advice on your current position, please call our property litigation team on ☎ 02071830529 (Please note our minimum fee for advice from a Solicitor and Barrister in conference is £1750 plus VAT) --- # Can a witness be sued for defamation in respect of false wording in a witness statement? Source: https://lexlaw.co.uk/solicitors-london/can-a-witness-be-sued-for-defamation-in-respect-of-false-wording-in-a-witness-statement/ *The defence of absolute privilege will usually apply in respect of allegations of defamatory wording contained in statements made in the course of judicial proceedings*.* If you are concerned about any statements you have made or of which you are the subject, our [defamation team](https://lexlaw.co.uk/defamation-libel-and-slander-claims) can assist. * ## What is defamation? [Defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims) is the publication of a statement about an individual or company which has caused or is likely to cause serious harm to the subject's reputation. The defamatory publication will either be a libel or a slander. - Libel: relates to a defamatory publication which is permanent. Most obviously this includes written material (books, newspaper and magazine articles or material published online), as well as allegations appearing on TV or radio- Slander: relates to more transient publications, principally spoken words or even physical gestures. The key element of a [defamation claim](http://www.legislation.gov.uk/ukpga/2013/26/contents/enacted) is that the statement must have caused or is likely to cause *serious harm* in the form of serious financial loss ([section 1 of the Defamation Act 2013](http://www.legislation.gov.uk/ukpga/2013/26/section/1/enacted)). ## Consequences of defamatory statements in a witness statement Qualified privilege provides a defence to the publisher of a defamatory statement in circumstances where the publisher had a legal or moral duty to make the publication and where the publishee has a corresponding interest in receiving it.  If a defendant successfully establishes that a statement was made on an occasion of qualified privilege this offers a complete defence, unless the claimant can prove the statement was made maliciously (the statement was knowingly made dishonestly and for some dominant improper motive). The defence of absolute privilege will usually apply in respect of allegations of defamatory wording contained in statements made in the course of judicial proceedings ([*Mr Mashood Iqbal v Dean Manson Solicitors & Ors (No 2) *[2013] EWCA Civ 149](https://lexlaw.co.uk/wp-content/uploads/2020/04/Mr-Mashood-Iqbal-v-Dean-Manson-Solicitors-Ors-No-2-2013-EWCA-Civ-149-lexlaw-defamation-solicitors.pdf)). The rule of absolute privilege provides that no action will be brought against a witness for defamatory statements used with reference to the subject upon which he is called to give evidence. This privilege however does not extend to statements which have no reference at all to the subject matter of the proceedings. In this case the High Court held that the witness statements produced by Dean Manson Solicitors were covered by absolute privilege. Mr Iqbal appealed the decision on the basis that the witness statements had "no reference at all to the proceedings." and the Court of Appeal dismissed the appeal. Mr Iqbal claimed that the lower court had misapplied the relevant principles when it stated that the documents in question had "no reference at all to the proceedings." The Court of Appeal, however, determined that although the statements in question had only a weak relevance to the subject matter of the proceeding, this was sufficient to satisfy the test and it could not be said that the documents as a whole had **no reference at all** to the subject-matter of proceedings. ## Consequences of inaccurate statements verified by a statement of truth In litigation, any statement of case or witness statement must be verified by a statement of truth. [Part 22 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22) sets out provisions for statements of truth. Signing a statement of truth or allowing a solicitor to sign where you know that a document contains a false statement may lead to you being contempt of court ([CPR 32.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.14)). [Part VI of Part 81 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court#IDAABTBB)of the Civil Procedural Rules contains rules about committal applications in relation to making, or causing to be made a false statement in a document verified by a statement of truth without an honest belief in its truth. ## Instruct expert defamation solicitors We understand how damaging defamatory statements can be to an individual or business and we invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients whose reputation and privacy is at risk. To instruct our specialist solicitors and barristers, please call our [defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims) team on 0207 183 0529 or email: contact@lexlaw.co.uk. --- # Court and Tribunal Status: Coronavirus (COVID-19) Source: https://lexlaw.co.uk/solicitors-london/court-tribunal-status-coronavirus-covid-19/ The [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and [HM Courts and tribunal service ](https://www.gov.uk/government/organisations/hm-courts-and-tribunals-service)have announced that due to the coronavirus pandemic, the work of the courts and tribunals will be consolidated to fewer buildings for public safety reasons. Temporary changes have been designed by [HM Courts and Tribunal Service](https://www.gov.uk/government/organisations/hm-courts-and-tribunals-service) and will focus to help maintain a core justice system and focus on the most essential cases. These measures came into effect from Monday 30 March 2020 and will be kept for as long as it is necessary to comply with the public health and government advice. The measures will be reviewed regularly. ### How many courts will be open? For essential face-to-face hearings for the public, 157 courts will be open. HMCTS is publishing daily operational [summaries](https://www.gov.uk/guidance/hmcts-daily-operational-summary-on-courts-and-tribunals-during-coronavirus-covid-19-outbreak) on courts and tribunals open during the coronavirus (COVID-19) outbreak. ### What are staffed courts? These buildings are where the staff and judges will work from however theses courts will not be open for the public. Parties that may be involved in the video or telephone hearings will be able to attend remotely. 124 staffed courts are open. ### How many courts have been suspended? 75 courts have been suspended and these courts will be temporarily closed. ## Do I need to attend Court? The judiciary of England and Wales has stated that [remote hearings should be used wherever possible](https://www.gov.uk/government/news/should-an-oral-hearing-be-impacted-by-the-coronavirus) during the current pandemic. Please see our [page](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-and-its-impact-on-uk-litigation/) on further information on remote hearings. ## Where do I issue a claim? If you are contemplating issuing proceedings it is important you seek legal advice as soon as possible. Whether a money claim, injunction or petition, we can advise you on the Court where you need to present your claim and the procedure on how to do so. ## Impact of COVID-19 on litigation In response to the ongoing impact COVID-19 continues to have on the justice system, [changes](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-and-its-impact-on-uk-litigation/) have been introduced to ensure legal matters may continue while still following government guidelines. ## Useful links - [Gov Guidance: Courts and tribunals tracker list during coronavirus outbreak](https://www.gov.uk/guidance/courts-and-tribunals-tracker-list-during-coronavirus-outbreak#changes-to-status-23-april-2020)- [Court or Tribunal finder](https://www.gov.uk/find-court-tribunal)- [HMCTS telephone and video hearings during coronavirus outbreak](https://www.gov.uk/guidance/hmcts-telephone-and-video-hearings-during-coronavirus-outbreak) ## London Litigation Solicitors Our[ London litigation lawyers](https://lexlaw.co.uk/) act as tenaciously as the client’s needs and case demands. Our chambers are located near the ​High Court and Central London County Courts in the ​Royal Courts of Justice​​ in Central London​ and can act with speed on your litigation matters​. We ​can accept urgent instructions and obtain injunctions rapidly. For example we obtained an ​out of hours emergency worldwide freezing injunction​ for a client in the diamond trade.​ ​Our client's case required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court. We​ achieved all this in-house as we are a firm of solicitors and barristers. --- # Urgent Injunctions: Can I apply to the court for a freezing order during Covid-19? Source: https://lexlaw.co.uk/solicitors-london/urgent-fast-injunctions-freezing-order-coronavirus-covid-19-remote-hearing-ebundle-mareva-order-legal-advice/ During this current time of uncertainty during the lockdown, can an applicant still apply for an urgent injunction at the court? Our London Lawyers are based minutes from the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) and can be deployed with speed as the client’s needs and case demands. However, is the court still open and can you apply remotely for an injunction? The answer is yes. You can still get an urgent injunction and the courts are still open for business. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. ## Are the courts open to hear an urgent injunction? Yes. The Queen’s Bench Division, the Commercial Court, and the Interim Applications List (Chancery) all continue to hear applications for urgent injunctive relief throughout the coronavirus lockdown.  The way in which the hearing will be conducted will depend upon the individual Judge. Hearings for urgent injunctive relief are currently being heard by telephone or via Skype for Business. We recently conducted a hearing via Skype for Business. The judge's clerk sends a skype link in advance of the hearing and you click on it to access the hearing. There is no need to purchase Skype for Business, a free Skype account can be used. Further information updated information can be found on the websites for the daily cause lists of the [Queen’s Bench Division](http://www.justice.gov.uk/courts/court-lists/list-queens-bench) and the [Business and Property Courts (Ch)](https://www.justice.gov.uk/courts/court-lists/list-cause-rolls2/interim-applications-list-chd)  ## Remote bundling during Covid-19 Any court hearing now will likely proceed remotely. As such, instructing solicitors should take care in preparing an e-bundle, as different considerations are required to hard copy bundling. An e-bundle: - must be a single PDF not exceeding 20mb in size;- must be numbered in ascending order regardless of whether multiple documents have been combined together (the original page numbers of the document will be ignored and just the bundle page number will be referred to)- Index pages and authorities must be numbered as part of the single PDF document (they are not to be skipped; they are part of the single PDF and must be numbered).- The default display view size of all pages must always be 100%.- Texts on all pages must be selectable to facilitate comments and highlights to be imposed on the texts- The bookmarks must be labelled indicating what document they are referring to (its best to have the same name or title as the actual document) and also display the relevant page numbers.- The resolution on the electronic bundle must be reduced to about 200 to 300 dpi to prevent delays whilst scrolling from one page to another.- The index page must be hyperlinked to the pages or documents it refers to. ## What is an Injunction?  An injunction is a Court order that will prohibit a party from taking a particular action which is called a prohibitory action; or may require them to take a particular action which is called a mandatory injunction. Usually the first step is to obtain an interim injunction which will usually be granted pending a further hearing or until a further hearing or until a full trial of the dispute.  If a party breaches an injunction the party can be held in contempt of Court which in some circumstances may lead to imprisonment.  ## What are the types of injunctions?  The CPR have codified the court’s power to grant types of interim order in [CPR 25.1(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part25). Such interim injunctive relief includes:  - Freezing injunctions – restricting someone from dealing with their assets;- Orders requiring a party to provide information about the location of property or assets, which may be sought to to support a freezing injunction or as a standalone order;- Search orders – to permit the search of a respondent;s property to preserve evidence and property; and/or- Orders requiring delivery up of property. ## What is a freezing order? A freezing order or freezing injunction (formerly known as a Mareva injunction) is an order that is used by a creditor who is concerned that a company may sell their assets and fail to pay the amount due to the creditor. The order can freeze almost any asset including: a company bank account, property, land or investment and shares. ## What documents need to be filed electronically to get a freezing order? The following documents should be completed which will be best prepared by a legal advisor to ensure the best chases in obtaining the freezing order: - Application Notice along with evidence in support if the application.- A draft Order – which will set out the terms for the freezing Order.- Ancillary Orders (only sometimes needed) – this may include an order for cross-examination, delivery of passport, or order for a company receiver. If a freezing order is then granted at a without prejudice hearing it will usually be made for a specific amount of time and a return date will be fixed for a full hearing. Following the granting or the order it should then promptly be served by the applicant on the respondent and any third parties known, or believed to hold assets of the respondent. At the full hearing the court will determine whether the injunction should be continued, varied or discarded. ## What are the consequences of a freezing injunction? The granted freezing order will also be endorsed with a penal notice in case the respondent does not comply. If the respondent does not comply they will be in contepmt of court and therefore face a fine and/or imprisonment. ## I am a victim of fraud, how do I get a freezing order? The court will exercise its discretion to grant a freezing order and must only grant the order if it convenient. The court must establish the following conditions to grant a freezing order: - The applicant must have a strong case. The applicant must establish that its case is capable of a serious argument.- There must be a substantive cause of action against the defendant- The applicant must demonstrate the risk of the asset being disposed of if the order is not put into place.- It must be ‘just and convenient’ to grant the order – it would cause unnecessary and disproportionate hardship to the defendant to grant the order.    ## What must be proven to to freeze someone's assets during Covid-19? Case law states that the following six conditions must be met in order to grant a freezing order: - The applicant my have a cause of action, that is, an underlying legal or equitable right.- The English court must have jurisdiction.- The applicant must have a good arguable case.- The existence of assets.- There is a risk of dissipation.- The applicant must provide an undertaking in damages. ## What must an applicant provide for a successful freezing order injunction appplication? Full disclosure of all relevant information must be provided by the applicant including an undertaking in damages to compensate if it is then decided that the freezing order should not have been awarded. in some cases the applicant will also need to provide security when making an application for a freezing order. It is important that in the disclosure the applicant provides all facts and information so that court is able to properly exercise it’s discretion. These facts include anything that could adversely affect the applicant’s own case; how long the dispute has been ongoing; and facts that the applicant or their advisors did not know but could have discovered if they made reasonable enquiries. ## How is a freezing order enforced during Covid-19? Freezing orders are generally enforced by committal proceedings for contempt of court. Committal proceedings may generally only be brought against a person who the order was original served on. Committal proceeding are classified as civil proceedings in England and Wales, however the penalty may be a fine, seizure of assets or up to two years imprisonment. To commit a person for breach of injunction a deliberate or wilful breach of the order must be established beyond reasonable doubt, which is the criminal standard of proof. ## How much does an injunction cost?  The cost for an injunction is dependent on the circumstances and facts in the particular case.  The level of costs will be affected by:  - The urgency of the application;- The number of witnesses involved in the matter; and- Whether the matter is with or without notice.  ## Specialist Injunction Solicitors in London Our [London Private Prosecution and Injunction Lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firms location adjacent to the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) in Central London. We have for example obtained an out of hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the [High Court.](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) We ensure that we provide the [best possible outcome](https://privateprosecutionservice.co.uk/private-prosecution-cases/) for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. --- # The Doctrine of Legal Precedent: When is a Court decision binding? Source: https://lexlaw.co.uk/solicitors-london/the-doctrine-of-legal-precedent-when-is-a-court-decision-binding/ The general rule is that Courts are bound by the past decisions of courts of the same level and bound by the decisions of courts that are higher in the hierarchy. However, are Courts bound by a judgment at the same level? In certain circumstances (explained below), yes. [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). ## What is the doctrine of precedent? The doctrine of precedent comprises of several rules to which there are sometimes exceptions: - Courts are bound by the past decisions of courts of the same level. So for example the[ Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) is bound to follow earlier decisions of the Court of Appeal on the same point. - Courts are not bound by decisions of courts lower in the hierarchy. So for example the [Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) is not bound to follow earlier decisions of the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) on the same point. - Courts are bound by the decisions of courts that are higher in the hierarchy. So for example the Court of Appeal is bound by decisions of the [Supreme Court](https://www.supremecourt.uk/). ## What is the hierarchy of courts? In the Civil (non-public) law context such as the law of contract the hierarchy of the courts is as follows. The [highest court is the Supreme Court](https://www.supremecourt.uk/), followed by the Court of Appeal, the High Court and the [County Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/county-court/).  The [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/), when not acting in an appellate capacity (from the County Court) and the County Court are known as Courts of first instance.  Assuming that there is no appeal the litigation will be concluded in one of these two forums. The High Court can only be used in a non-personal injury claim if the value of the claim exceeds £15,000. In claims for personal injury the claim in the High Court must exceed £50,000.      ## Is the Supreme Court bound by its own past decisions? Traditionally the House of Lords **was **bound by its own past decisions: [*London Tramways v. London County Council* [1898] AC 375](https://lexlaw.co.uk/wp-content/uploads/2020/04/Tramways-case-1898.pdf). The rule applied even if a subsequent House of Lords were unhappy with the consequences of following their own past decision. A good example is the case on privity of contract where the House of Lords in [*Scruttons Ltd. v. Midland Silicones Ltd.* [1962] AC 446](https://lexlaw.co.uk/wp-content/uploads/2020/04/Scruttons-case-1961.pdf) were compelled to follow [*Dunlop Pneumatic Tyre Co. Ltd v. Selfridge & Co. Ltd* [1915] AC 847](https://lexlaw.co.uk/wp-content/uploads/2020/04/Dunlop-case.pdf), even though Lord Reid in particular was unhappy with the consequences.  Since 1966 the position has changed. The Practice Statement of 1966 read as follows: > Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules. > > > > > > Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose therefore, to modify their present practice and, while treating formal decisions of this house as normally binding, to depart from a previous decision when it appears to be right to do so. > > > > > > In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlement of property, and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law. This announcement is not intended to affect the use of precedent elsewhere than in this House. > > > > > > > > > The Practice Statement of 1966 Note that this does not mean that it was intended that the House of Lords would depart from earlier decisions on a regular basis. Indeed since 1966 the House of Lords have only departed from their own past decisions on a handful of occasions. A good example occurs in the law of tort where the House of Lords in [*Murphy v. Brentwood* [1991] 1 AC 398](https://lexlaw.co.uk/wp-content/uploads/2020/04/Murphy.pdf) overruled the earlier decision of the House of Lords in [*Anns v. Merton* [1978] AC 728](https://lexlaw.co.uk/wp-content/uploads/2020/04/anns.pdf). The Practice statement was not intended to change the rules for courts other than the House of Lords. ## Can the Court of Appeal bind itself? The rules of precedent for the Court of Appeal were laid down in the 1940s in [*Young v. Bristol Aeroplane Co.* [1944] KB 718](https://www.bailii.org/ew/cases/EWCA/Civ/1944/1.html): The rule is that the [Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) is bound by its own past decision with three exceptions: - Where the decision of the Court of Appeal conflicts with a later decision of the House of Lords the Court of Appeal must follow the House of Lords; - Where there are two earlier conflicting decisions of the Court of Appeal then the later Court of Appeal in a third case must choose between them; - Where an earlier decision of the Court of Appeal was made *per incuriam* i.e. the earlier Court of Appeal overlooked something that was binding on it such as a statute the later Court of Appeal are not bound to follow their earlier decision. Following the 1966 Practice Statement, Lord Denning in the Court of Appeal conducted what Lord Diplock called a ‘one-man crusade’ to adopt a similar position in the Court of Appeal i.e. to overturn the rule that the Court of Appeal was bound by its own past decisions. In [*Davis v. Johnson* [1979] AC 264](https://swarb.co.uk/davis-v-johnson-hl-2-jan-1978/), the House of Lords stamped on this attempt to relax the rules in the Court of Appeal.    The Court of Appeal is bound by earlier decisions of the House of Lords. A good example in the context of contract law occurs in [*Re Selectmove* [1995] 1 WLR 474](https://swarb.co.uk/in-re-selectmove-ltd-ca-21-dec-1993/) in which the Court of Appeal found itself bound by [*Foakes v. Beer* (1884) 9 App Cas 605](https://lexlaw.co.uk/wp-content/uploads/2020/04/foakes-beer-case.pdf) a decision of the House of Lords, even though the outcome was clearly distasteful to them.  ## Are judges in the High Court and County Court bound by past decisions in these courts? The judges of courts of first instance are not bound to follow the decisions of judges in the same court. He or she is only bound to follow decisions of the Court of Appeal and House of Lords. Even at this level certainty is important and judges will usually follow the earlier decisions of judges at the same level see, [*Colchester Estates v. Carlton Industries* [1986] Ch 80](https://swarb.co.uk/colchester-estates-cardiff-v-carlton-industries-plc-1984/). [County Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/county-court/) judges are bound by decisions of the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/). ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Indemnity costs: Paying for unreasonable conduct Source: https://lexlaw.co.uk/solicitors-london/indemnity-costs-losing-party-unreasonable-conduct-proportionality-reasonable-standard-assessment-court-order-legal-advice/ A litigation court order for indemnity costs means the party that lost has been ordered to pay a higher costs contribution to the winner than is standard. Judges order indemnity costs to punish litigants that engage in poor litigation conduct. An award of indemnity costs can provide a significant advantage to a party in litigation because the paying party will be liable for their legal costs and the principle of proportionality is disapplied. The indemnity costs principle (contained in the [Civil Procedure Rules 44.3(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3)) is in effect punitive in nature as costs on the standard basis are the norm. The court must be satisfied that the paying party’s conduct was wrongful enough to take it *“out of the norm” *of the general conduct of litigation. The key question is what conduct does the court consider to be *"out of the norm"* in order to justify costs on the indemnity basis? [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. ## What is the court's basis of assessment of costs? Pursuant to [CPR 44.3:](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) (1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs – (a) on the standard basis; or (b) on the indemnity basis, But the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount. ## What does it mean when costs are assessed on the standard basis? Pursuant to [CPR 44.3(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3), where the amount of costs is to be assessed on the standard basis, the court will: (a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and (b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party. ## What is the difference between indemnity costs and standard costs? CPR [44.4(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) and CPR [44.4(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) draw a distinction between the difference in substance between a standard order for costs and an indemnity order for costs. The differences are two-fold. First, the differences are as to the onus which is on a party to establish that the costs were reasonable. In the case of a standard order, the onus is on the party in whose favour the order has been made. In the case of an indemnity order, the onus of showing the costs are not reasonable is on the party against whom the order has been made. The other important distinction between a standard order and an indemnity order is the fact that, whereas in the case of a standard order the court will only allow costs which are proportionate to the matters in issue, this requirement of proportionality does not exist in relation to an order which is made on the indemnity basis. This is a matter of real significance. On the one hand, it means that an indemnity order is one which does not have the important requirement of proportionality which is intended to reduce the amount of costs which are payable in consequence of litigation. On the other hand, an indemnity order means that a party who has such an order made in their favour is more likely to recover a sum which reflects the actual costs in the proceedings. ## What is the advantage of being awarded indemnity costs? Where the amount of costs is to be assessed on the indemnity basis under [CPR 44.3 (1)(b)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) above, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party. ## Do indemnity costs have to be proportionate? The significance of costs being ordered to be paid on an indemnity as opposed to the standard basis is that, although the beneficiary of such an order will still only be paid costs which have been reasonably incurred, **there is no requirement of proportionality** and in cases of doubt on assessment it is for the payer to show that the costs were not reasonably incurred. In this regard, see *Three Rivers District Council v Bank of England* [[2006] EWHC 816 (Comm)](https://lexlaw.co.uk/wp-content/uploads/2020/05/Three_Rivers_District_Council_and_others_v_B.pdf) at [14]: > Whilst an indemnity costs order does carry at least some stigma the purpose of such an order is not to punish the paying party but to give a more fair result for the party in whose favour a costs order is made > > Mr Justice Tomlinson, *Three Rivers District Council v Bank of England* [[2006] EWHC 816 (Comm)](https://lexlaw.co.uk/wp-content/uploads/2020/05/Three_Rivers_District_Council_and_others_v_B.pdf) at [14] ## Can indemnity costs be disproportionate? Yes, indemnity costs must be reasonably incurred but they can be disprpoptionate: > I recognise, of course, that under an indemnity costs order the receiving party only recovers the amount of costs actually incurred. But those costs may well be disproportionate (proportionality not being an issue under an indemnity order).  > > para 14, **[Kiam v MGN Ltd (No 2) - [2002] 2 All ER 242](https://lexlaw.co.uk/wp-content/uploads/2020/05/Kiam_v_MGN_Ltd_No_2_-_2002_2_All_ER_242.pdf)** ## Indemnity costs can be awarded where one party rejects a reasonable settlement offer The approach of the CPR is a relatively simply one: namely, if one party has made a real effort to find a reasonable solution to the proceedings and the other party has resisted that sensible approach, then the latter puts himself at risk that the order for costs may be on an indemnity basis. The provision in CPR Part 36 that, where it applies, the court will order indemnity costs 'unless it considers it unjust to do so' is— > 'intended to provide an incentive to a claimant to make a Pt 36 offer. The incentive is that a claimant who has made a Pt 36 offer (which is not accepted) and who succeeds at trial in beating his own offer stands to receive more than he would have received if he had not made the offer.' > > **McPhilemy v Times Newspapers Ltd and others (No 2)** [[2001] 4 All ER 861 at [19]](https://lexlaw.co.uk/wp-content/uploads/2020/05/McPhilemy_v_Times_Newspapers_Ltd_and_others_.pdf) ## Indemnity costs are justified where conduct is out of the norm An order for costs to be awarded on the indemnity basis is justified where the court decides that there is something in the conduct of the action, or the circumstances of the case in general, which takes it out of the norm. There are an infinite variety of situations which can come before the courts and which justify the making of an indemnity order. One such example is pursuing a misconceived claim: > The discretion is a wide one to be determined in the light of all the circumstances of the case. To award costs against an unsuccessful party on an indemnity scale is a departure from the norm. There must, therefore, be something – whether it be the conduct of the claimant or the circumstances of the case – which takes the case outside the norm. It is not necessary that the claimant should be guilty of dishonesty or moral blame. Unreasonableness in the conduct of the proceedings and the raising of particular allegations, or in the manner of raising them may suffice. So may the pursuit of a speculative claim involving a high risk of failure or the making of allegations of dishonesty that turn out to be misconceived, or the conduct of an extensive publicity campaign designed to drive the other party to settlement. The marking of a grossly exaggerated claim may also be a ground for indemnity costs > > Christopher Clarke J in [*Balmoral v Borealis* ](https://lexlaw.co.uk/wp-content/uploads/2020/05/UKT_2006_10_10546363.pdf)at paragraph 1 ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Costs Judge rules divorce solicitors’ bill “requires explanation” in ordering detailed assessment Source: https://lexlaw.co.uk/solicitors-london/https-lexlaw-co-uk-solicitors-london-scco-costs-judge-orders-detailed-assessment-divorce-excessive-legal-bill-reduce-dispute/ *In [Iwuanyawu v Ratcliffes Solicitors](https://lexlaw.co.uk/wp-content/uploads/Iwuanyawu-v-Ratcliffes-Solicitors-sollicitor-client-assessment.pdf), the [SCCO](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) granted an application for detailed assessment of fourteen invoices delivered by her former divorce solicitors, many of which were out of the twelve month time period for [assessment](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) on the basis that they did not contain sufficient information to enable the Claimant to know what she was being charged for. * ## Excessive solicitor charges The Claimant, Genevieve Iwuanyawu, issued an application in her solicitor-client costs dispute in the [Senior Courts Costs Office ("the SCCO")](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) for [detailed assessment](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) of thirteen of fourteen bills of her former solicitors, Ratcliffe Solicitors ("the Firm"), who represented her in divorce proceedings. The invoice that the Claimant excluded from assessment was a disbursement only bill for the court fee for the divorce petition. Some of the invoices totalling just over £13,000 had been delivered more than a year prior to the Claimant issuing a claim. The Claimant considered the charges to be excessive and that the bill should be reduced. ## Issues between the parties - Whether the Firm's invoices contained enough information to be statute bills.- If they did, whether the Firm was entitled to render interim statute bills; and - If the bills were bills which were capable of assessment, whether there were special circumstances to justify the assessment of the bills. ## Detailed assessment of solicitors bills [Section 70](http://www.legislation.gov.uk/ukpga/1974/47/section/70) of the [Solicitors Act 1974](http://www.legislation.gov.uk/ukpga/1974/47/contents) states: > *(1) Where before the expiration of one month from the delivery of a solicitor’s bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be [[F2](http://www.legislation.gov.uk/ukpga/1974/47/section/70#commentary-c19669591)assessed] and that no action be commenced on the bill until the [[F3](http://www.legislation.gov.uk/ukpga/1974/47/section/70#commentary-c19669661)assessment] is completed.* > *2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the [[F4](http://www.legislation.gov.uk/ukpga/1974/47/section/70#commentary-c19670111)assessment]), order—* > *(a) that the bill be [[F5](http://www.legislation.gov.uk/ukpga/1974/47/section/70#commentary-c19670711)assessed]; and* > *(b) that no action be commenced on the bill, and that any action already commenced be stayed, until the [[F4](http://www.legislation.gov.uk/ukpga/1974/47/section/70#commentary-c19670111)assessment] is completed.* > *(3) Where an application under subsection (2) is made by the party chargeable with the bill—* > (a) after the expiration of 12 *months* from the delivery of the bill, or > *(b) after a judgment has been obtained for the recovery of the costs covered by the bill, or* > *(c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill.* ## Invoices falling within the time limits for detailed assessment At a hearing on 16 March 2020, the Master ordered that 8 invoices should be the subject of detailed assessment because they had been delivered less than 12 months before the Claimant commenced proceedings and therefore she was entitled to an assessment without having to rely on special circumstances. The Firm opposed assessment of the other bills for the following reasons: - Two invoices had been paid [more than 12 month](http://www.legislation.gov.uk/ukpga/1974/47/section/70)s before proceedings were commenced and so the Court did not have jurisdiction to order assessment;- Four invoices had been paid but within 12 months of the commencement of the proceedings and so the Claimant would need to show [special circumstances](http://www.legislation.gov.uk/ukpga/1974/47/section/70). The Master therefore ordered an adjournment and for the Claimant to file and serve evidence in response to the Firm's objections. Just before the adjourned hearing, the Firm filed copies of its client care letter and terms of business. Although these were produced late, the Claimant accepted that she had signed the client care letter and her representative had the opportunity to obtain her instructions on the same. ## Issue of statute bills The parties were in disagreement over whether the firm's invoices could be classed as statute bills with the Claimant arguing that they did not contain enough information. The second issue in dispute was whether the firm was entitled to render interim statute bills. The Firm argued that it had a contractual right to render interim statute bills pursuant to its client care letter issued in October 2018. Master Gordon-Saker held that the firm's terms of business did not enable the firm to render interim statute bills. The Master further held that the Firm's bills totalling just over £13,000 called for an explanation. > A second potential special circumstance is that the bills, at least as presented in the hearing bundle, did not contain the usual information about the client’s right to seek an assessment by the court under the Solicitors Act. In my experience it is the invariable practice of solicitors still to provide that information. Yet here it was not apparently included on the bills nor was it mentioned in the client care letter. The Master held that the fourteen invoices were not interim statute bills and part of a running account to be considered as one bill delivered on 18 October 2019 (delivery of the final bill). It was held that that bill had not been paid and was within 12 months of the issue of proceedings therefore that the bill should be subject to detailed assessment. Read the full judgment for [*Iwuanyawu v Ratcliffes Solicitors* SC-2020-APP-000080](https://lexlaw.co.uk/wp-content/uploads/Iwuanyawu-v-Ratcliffes-Solicitors-sollicitor-client-assessment.pdf). ## Solicitors' fees in divorce proceedings In defence of the fees charged, the Firm argued that the Claimant was a 'demanding client' however the Master was unable to opine on this without witness evidence from the Firm, that the Firm had failed to file and serve. The Judge held that it was also 'unrealistic' to expect a client to challenge her solicitors' bills in the middle of family or divorce proceedings. > A client receiving monthly invoices may well have no idea > whether she will wish to challenge them until either she has received sufficient to be caused concern or has reached the end of the matter and can consider the total, perhaps against any estimate that may have been given. In most cases it will be unrealistic to expect a client to be able to challenge her own solicitors’ bills in the middle of matrimonial proceedings Often when a client is involved in stressful litigation in particular, family proceedings, the costs can escalate and clients are not given clear information on fees being charged by professionals. We can assist you in considering your [solicitors' charges](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/) and advise you in [detailed assessment ](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/)proceedings. ## Instruct City of London Specialist Legal Costs Lawyers Our SCCO Legal Costs Dispute Lawyers are experienced in checking and disputing legal fees. We are experts in assessing whether the time claimed for is reasonable and whether your solicitor may have overcharged. We are well versed in both negotiating a reduction with your solicitor and attending detailed assessment proceedings at court if necessary. Our team have an in-depth knowledge of litigation against the client or solicitor under the Solicitors Act 1974. As a leading high-profile law firm regularly featured in the national and international media and with a track record of success, you can be assured your Legal Costs claim will proceed with precision and care. --- # Costs: The perils of making a Calderbank offer without a time limit Source: https://lexlaw.co.uk/solicitors-london/legal-costs-without-prejudice-calderbank-offer-part-36-time-limit-no-win-no-fee-detailed-assessment-hearing-representation-advice/ In [MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB)](https://lexlaw.co.uk/wp-content/uploads/MEF-v-St-Georges-Healthcare-NHS-Trust-judgment-final-lexlaw-no-win-no-fee.pdf), the High Court reaffirmed the first instance decision of Master Rowley and accepted that a Calderbank offer could be accepted part way through the detailed assessment hearing itself. Unlike [Part 36 offers](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) (which require the court's permission to be accepted during trial under CPR 36.11(3)(d)) common law principles govern Calderbank offers and all that is required is offer and acceptance. The decision reaffirms that offers open for acceptance should always be monitored as cases progress. The lesson for practitioners is that when making a Calderbank offer, consideration should always be given to time limit such offers, or withdraw any outstanding offers to prevent savvy litigants from tactically benefiting should trial be going badly for their client. ## The Background The Claimant brought a clinical negligence claim in relation to a severe hypoxic brain injury at around his birth. The claim in relation to liability settled in March 2017 and was approved by the court on 25 April 2017 with an order that the Claimant's liability costs be assessed forthwith. The total liability costs claimed in the Claimant's bill of costs was £621,455.57. Detailed assessment proceedings were commenced on 6 April 2018. ## The Facts In the lead up to the [detailed assessment hearing](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/), a number of Calderbank and Part 36 offers and counteroffers were made, varied or rejected. ### The September 2018 offer In particular, on 27 September 2018, the Defendant responded by letter "without prejudice save as to costs", rejecting the Claimant's Part 36 offer and going on to offer to pay £440,000 in full and final settlement ("the 27 September 2018 Offer"). That offer "excludes any entitlement to interest and costs of assessment". However, unlike the previous offers, this offer **did not set any time for acceptance **nor include any express condition that the Claimant would be responsible for the Defendant's costs of the detailed assessment after a date for acceptance of the offer. In response, by letter dated 11 October 2018, the Claimant stated that it "will not be accepting the Defendant's offer". That letter went on to make a further Part 36 Offer in the sum of £490,000 on the same basis as the first Part 36 offer. ### The August 2019 offer By email dated 19 August 2019, and 29 days before the detailed assessment hearing was due to start, the Defendant wrote to the Claimant, enclosing the annex to their Points of Dispute alongside an analysis of the documents schedule, which the Defendant had filed with the court that day. The email continued, making an offer in the following terms ("the August 2019 Offer"): > "We shall now proceed to the Detailed Assessment in September. > The Defendant's offer dated 27/09/18 is only capable of acceptance subject to the agreement of the Defendant's costs of Detailed Assessment incurred since that date." > > The August 2019 offer Whilst the Defendant assumed that the 27 September 2018 Offer was still in place, it was common ground between the parties that the email amounted to a re-instatement of the earlier offer, but subject to a variation that the Claimant was to pay the Defendant's costs of the detailed assessment from 27 September 2018 (and not from any later date) ("that date" refers to 27 September 2018). ### The detailed assessment hearing The detailed assessment hearing commenced on 17 September 2019 before Master Brown. By the end of the second day, 18 September 2019, according to the Defendant's representatives, the Claimant's bill had been reduced to below £440,000. This arose from reductions made in the course of the hearing by the Master and in the light of concessions already made in the Claimant's Replies. There was a dispute between the parties (after the hearing) about the precise figures, but it is not disputed that by that stage (and indeed by lunchtime on the second day), the Claimant would recover less than £440,000. In any event, it was likely clear by lunchtime that the Claimant had known that things were not going well for him. ### The acceptance (during the hearing) During the detailed assessment hearing, by letter dated 18 September 2019 and sent by email at 1611 (before the second day of hearing finished), the Claimant wrote to the Defendant in the following terms: > "We write further to the offer in your letter of 27 September 2018 and to Danny Stott's email to Alexandra Bennett of 18 August 2019, reaffirming the offer, to confirm that the Claimant will accept that offer and will pay the Defendant's reasonable costs of Detailed Assessment." The Claimant claimed, but the Defendant did not accept, that the Claimant's letter constituted a valid settlement of the proceedings. That dispute was then listed to be heard before a different Cost Judge, Master Rowley, on the morning of 19 September 2019. ## The First Instance Decision Master Rowley commented (paragraph 7) that he was sceptical of the Claimant's claim that this was simply a commercial settlement without an indication of how the detailed assessment had been going generally. However that did not matter for the purposes of his decision. At paragraph 10 he commented that, even in the case of Part 36 offers, there is still a discretion to allow an offer to be accepted after the trial has started, despite the provisions of CPR 36.11(3). He took the view that Part 36 did not apply to the present case, because this was not a Part 36 offer case. The Defendant had decided to make Part 44 offers as it was entitled to do. Having done so, the offers were common law offers rather than based on [Part 36](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/). He continued: > "Based on that, all that is required is common law offer and acceptance, unlike the situation in Part 36 where offers may still continue even if they have been rejected." > > Master Rowley Master Rowley noted that the Defendant could have made Part 36 offers and would then have had the protection of the claimant having to require the court's permission to accept an offer. He continued at paragraph 13: > "It seems to me that the defendant could have protected its position if it had wanted to do so. The fact that it has not done so is no reason for me to say that the offer has not been validly accepted in accordance with ordinary common law principles." > > > Master Rowley ## The High Court Decision Firstly, it is correct to state that the court's permission is required to accept a [Part 36 offer](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) during a trial. It is also correct to state that the court will unlikely give permission to accept a Part 36 offer where the offeree is doing badly mid-trial. CPR 36.11(2) provides that, subject to sub-paragraphs (3) and (4), a Part 36 offer may be accepted at any time, unless it has already been withdrawn. However CPR 36.11(3) provides that: *"The court's permission is required to accept a Part 36 offer where - …(d) a trial is in progress".* Where the offeree is doing badly mid-trial, permission under CPR 36.11(3)(d) will rarely be granted. Secondly, the August 2019 offer did not lapse "at the door of the Court". The issue was whether the "reasonable time" for acceptance of the August 2019 Offer expired at the point of the commencement of hearing on 17 September 2019 or rather continued during that hearing. Mr Justice Morris held that: - *"By express provision, a Part 36 offer can only be accepted once a hearing has commenced with the court's permission. However Part 36 does not provide that the offer lapses at the door of the court nor impose an absolute bar on acceptance post-commencement. It is not possible to rely on this position under Part 36 to support the (stricter) contention that a Calderbank offer lapses at the door of the court."* [paragraph 35]- *"the Defendant was aware throughout that it could withdraw the offer made, but consciously decided not to do so."* [paragraph 36]- *"It was always open to the Defendant to put a time limit on the offer. Equally it was open to it to withdraw the offer at any time. This is so even once the hearing had started. In this regard, the Judge's reasons are essentially sound. His experience of time limited offers has been confirmed to me by Master Haworth's own experience. As regards the feature of ongoing re-calculation in a detailed assessment, the offeror (here the Defendant) is equally in a position to do that calculation, and is free at any time to withdraw the offer, if it is doing much better than the offer. Here, the Defendant could have withdrawn the offer at lunchtime on the second day of the hearing."* [paragraph 43] ## Analysis Both Master Rowley and Mr Justice Morris's decisions are welcome and provide clear guidance for litigants in the future on the perils of leaving Calderbank offers open for acceptance during a [detailed assessment ](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/)hearing. It is clear that as to CPR Part 36 itself, the regime for offers under [CPR Part 36](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) is a self-contained code; general contract principles of offer and acceptance do not apply. It is interesting that both courts did not accept the Defendant's (tenuous) submissions that there can be no direct read across from Part 36 procedure to the contractual position of a Calderbank offer. Calderbanks and Part 36 offers are jurisprudentially separate regimes and the sanctity of contract cannot be subverted by importing the rationale behind the Part 36 legislation into the legal analysis of Calderbank offers. The Defendant also deliberately chose to renew the offer (which had previously been rejected) setting an express condition which, on a continuing basis, protected against the effect of late acceptance in costs, even if such acceptance occurred after the start of the hearing. In this way there was no need for the Court to imply a term that the offer was only open for a limited period. This is an interesting point for a court to consider in the future, whether a time limit can be implicitly read into such an offer, it is likely that the answer will be no. ## Lessons for litigants in detailed assessment proceedings In this case, the Claimant was savvy and took advantage of an offer that had been left open for acceptance. Further, at a detailed assessment hearing (unlike a trial in any other issue), the parties will have an understanding of what the Master will order the longer the hearing progresses. In essence, parties will be able to re-calculate a bill during the hearing as the Master makes mini-decisions on individual issues when he conducts his line-by-line analysis. Moreover, given the use of electronic bills, it is ever easier for parties to re-calculate the bill as the hearing progresses. Therefore, the very feature of a detailed assessment hearing makes it distinct from other hearings where a party may get the inkling from the judge that the hearing is not going well but will not be able to know financially how much the claim will be decided for. Therefore, in particular for[ detailed assessment hearings](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/), it is imperative that Calderbank offers are time limited (or withdrawn) before the hearing itself, otherwise a savvy litigant can sit back, do their calculations and make a commercial decision at the very last moment to save their client a few thousand pounds (perhaps at least £100,000 in this case). ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-1.png)](https://lexlaw.co.uk/wp-content/uploads/MEF-v-St-Georges-Healthcare-NHS-Trust-judgment-final-lexlaw-no-win-no-fee.pdf) ## We represent you at Detailed Assessment Hearings We are based in the legal heart of London as the only law firm in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/) we provide comprehensive nationwide coverage to represent you at any detailed assessment hearing. Unlike most law firms, we are a mutli-disciplinary firm of solicitors and barristers with full rights of audience in England and Wales. We are based just minutes from the Senior Courts Costs Office in the Royal Courts of Justice where all detailed assessment hearings proceed. We regularly represent clients at the Senior Courts Costs Office. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our legal costs team members will contact you by phone to discuss your matter and assess whether we can help you. ## No win No fee for solicitor and own client costs disputes We specialise in [costs disputes](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) at the Senior Courts Costs Office (SCCO) proceeding under the Solicitors Act 1974. That is why we can offer a no win no fee agreement to clients once we have had sight of the relevant papers (and ideally a detailed bill of costs). This means you do not have to pay us anything should your solicitor’s bill not be reduced. We will advise you on the merits of reducing your solicitor’s invoice. Discuss the merits of early protective without prejudice settlement offers. We draft Points of Dispute (for clients) and Points of Reply (for solicitors). We will Represent you at any directions hearing, preliminary issues hearing and the detailed assessment hearing before the SCCO. ## City of London Specialist Legal Costs Lawyers Our SCCO Legal Costs Dispute Lawyers are experienced in checking and disputing legal fees. We are experts in assessing whether the time claimed for is reasonable and whether your solicitor may have overcharged. We are well versed in both negotiating a reduction with your solicitor and attending detailed assessment proceedings at court if necessary. Our team have an in-depth knowledge of litigation against the client or solicitor under the Solicitors Act 1974. As a leading high-profile law firm regularly featured in the national and international media and with a track record of success, you can be assured your Legal Costs claim will proceed with precision and care. --- # COVID-19: Government’s non-statutory guidance on responsible contractual behaviour Source: https://lexlaw.co.uk/solicitors-london/covid-19-coronavirus-government-guidance-note-responsible-performance-contractual-behaviour-enforcement-contract-breach-litigation-advice/ *In response to the Covid-19 emergency, the Cabinet Office has released a non-statutory [guidance note entitled "Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19 emergency" ](https://lexlaw.co.uk/wp-content/uploads/Covid-19_and_Responsible_Contractual_Behaviour.pdf)calling for parties to contracts to "act responsibly and fairly". * *The rationale behind the [guidance](https://lexlaw.co.uk/wp-content/uploads/Covid-19_and_Responsible_Contractual_Behaviour.pdf) is that responsible and fair behaviour in contracts now – in particular in dealing with potential disputes – will result in better long-term outcomes for jobs and our economy. In complex contracting arrangements, this should apply throughout the contracting chain. It will in the long term protect businesses, supply chains and opportunities in the economy. * ## What is the rationale behind the Government's guidance? The rationale behind the guidance is that reasonable and fair behaviour in contractual arrangements would contribute to the following objectives being met: - where possible, maintaining contractual performance which is required to support the immediate response to Covid-19, protect public health, jobs and the economy;- ensuring cashflow in those contracts is maintained, including to pay the workforce and individuals and businesses throughout the supply chain;- where continued contractual performance is not possible or is not essential, ensuring those contracts, supply chains and markets can be preserved during the public health emergency, avoiding destructive disputes and insolvencies; and- generally, ensuring that contractual and economic activity can be preserved and will be ready to continue in a sustainable way once the current emergency is over, supporting the restart of the economy and maximising UK productivity and growth. ## What is reasonable and fair behaviour in contractual relations? The Government are encouraging responsible and fair behaviour in performing and enforcing contracts where there has been a material impact from Covid-19. Indicative behaviour for contracting parties includes being *"reasonable and proportionate in responding to performance issues and enforcing contracts (including dealing with any disputes)"* and *"acting in a spirit of cooperation and aiming to achieve practical, just and equitable contractual outcomes having regard to the impact on the other party (or parties)"*. In particular, the Cabinet Office strongly encourages reasonable and fair behaviour in the following: - requesting, and giving, relief for impaired performance, including in respect of the time for delivery and completion, the nature and scope of goods, works and services, the making of payments and the operation of payment and performance mechanisms;- requesting, and allowing, extensions of time, substitute or alternative performance and compensation, including compensation for increased cost or additional performance;- making, and responding to, [force majeure](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-force-majeure-clauses-breach-of-contract-litigation-advice/), frustration, change in law, relief event, delay event, compensation event and excusing cause claims;- requesting, and making, payment under the contract;- making, and responding to, claims for damages, including under liquidated damages provisions;- returning deposits or part payments;- exercising remedies in respect of impaired performance, including enforcement of security, forfeiture or repossession of property, calling of bonds or guarantees or the initiation or continuation of insolvency or winding up (or equivalent) proceedings;- claiming breach of contract and enforcing events of default and termination provisions (including termination rights arising by reason of the insolvency or potential insolvency of a party);- making, and responding to, requests for information and data under the contract;- giving notices, keeping records and providing reports under the contract (recognising that the need to keep records of contractual behaviours and decisions));- making, and responding to, requests for contract changes and variations;- making, and responding to, requests for consents (including funder consents);- commencing, and continuing, formal dispute resolution procedures, including proceedings in court;- requesting, and responding to, requests for mediation or other alternative or fast-track dispute resolution; and- enforcing judgments. ## Is the guidance binding on parties to a contract? No. This guidance is non-statutory and simply provides examples of good indicative behaviour for contracting parties with the overarching aim to act fairly and reasonably during Covid-19. ## When does the guidance apply? This guidance applied with immediate effect from 7 May 2020. This guidance will will be reviewed on or before 30 June 2020, together with any feedback on compliance with the behaviours set out in the note and the need for further measures. ## Guidance Note on responsible contractual behaviour during COVID-19 [![](https://lexlaw.co.uk/wp-content/uploads/image.png)](https://lexlaw.co.uk/wp-content/uploads/Covid-19_and_Responsible_Contractual_Behaviour.pdf)[Click to download the Cabinet Office's Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19 emergency](https://lexlaw.co.uk/wp-content/uploads/Covid-19_and_Responsible_Contractual_Behaviour.pdf) ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # The Cost of an Unreasonable Refusal to Mediate Source: https://lexlaw.co.uk/solicitors-london/litigation-costs-refusal-mediation-indemnity-adr-cpr/ Is [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) mandatory? If a party completely foregoes mediation will that party be punished in costs? The case law suggests that although the court cannot compel parties to mediate, an unreasonable refusal to do so is likely to result in costs penalties for a defaulting party. The costs risks of unreasonably refusing to mediate or not responding to a mediation proposal may be severe.  [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. ## What is mediation? [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) provides a private forum in which the disputing parties can better understand each other’s position and then work together (with the assistance of the mediator) to explore options for settling the dispute. ## Government guidance on mediation during COVID-19 In response to the Covid-19 emergency, the Cabinet Office has released a non-statutory [guidance note entitled “Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19 emergency” ](https://lexlaw.co.uk/wp-content/uploads/Covid-19_and_Responsible_Contractual_Behaviour.pdf)calling for parties to contracts to “act responsibly and fairly”. In particular: > “the Government strongly encourage[s] parties to seek to resolve any emerging contractual issues responsibly – through negotiation, mediation or other alternative or fast-track dispute resolution.” > > [Cabinet Office’s Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19 emergency](https://lexlaw.co.uk/wp-content/uploads/Covid-19_and_Responsible_Contractual_Behaviour.pdf) ## ADR requirements in the pre-action stage The [Pre-action protocols](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) require parties: - To consider whether alternative dispute resolution would be suitable and, if so, to agree which ADR procedure to attempt.- To provide evidence, if required by the court, that alternative dispute resolution was considered. The pre-action protocols refers to the courts' power to take account of the parties' compliance with the Pre-action PD when providing directions for the management of claims and making costs orders. It provides several examples of non-compliance, including where a party has unreasonably refused to consider alternative dispute resolution. Possible sanctions include staying the proceedings until the parties have complied with the relevant steps, or even order for a party at fault to pay costs - possibly on an indemnity basis. For example, see *[Burchell v Bullard [2005] EWCA Civ 358](https://lexlaw.co.uk/wp-content/uploads/Bullard-case.pdf)* where the court penalised a party who ignored an offer to mediate made before the claim was issued.  ## Can a court force parties to mediate? No. It remains the case that a court cannot compel parties to resolve their disputes through mediation ([Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)). The Court concluded that it had no jurisdiction to force the parties to mediate. To oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.  The hallmark of ADR procedures, and perhaps the key to their effectiveness in individual cases, is that they are processes voluntarily entered into by the parties in dispute with outcomes, if the parties so wish, which are non-binding. Consequently the court cannot direct that such methods be used but may merely encourage and facilitate. If the court were to compel parties to enter into a mediation to which they objected, that would achieve nothing except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process. In [Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf), the court relied on Article 6 of the European Convention on Human Rights and stated: > "It is one thing to encourage the parties to agree to mediation, even to encourage them in the strongest terms. It is another to order them to do so. It seems to us that to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court….it seems to us likely that *compulsion* of ADR would be regarded as an unacceptable constraint on the right of access to the court and, therefore, a violation of Article 6." > > [Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf) ## Successful party can be deprived of costs following refusal to mediate In *[Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)*, the court considered whether a refusal to mediate should give rise to costs sanctions. [CPR 44.3(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) provides that “if the court decides to make an order about costs (a) the general rule is that the unsuccessful party will be ordered to pay the cost of the successful party; but (b) the court may make a different order”. [CPR 44.3(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) provides that “in deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including-(a) the conduct of the parties”. [Rule ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs)[44.3(5)](https://uk.practicallaw.thomsonreuters.com/Document/I11189031E45011DA8D70A0E70A78ED65/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.DocLink)) provides that the conduct of the parties includes “(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol.”  In deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to mediate, it must be borne in mind that such an order is an exception to the general rule that costs should follow the event. **The burden is on the unsuccessful party to show why there should be a departure from the general rule.** The fundamental principle is that such departure is not justified unless it is shown (the burden being on the unsuccessful party) that the successful party acted unreasonably in refusing to agree to mediate. ## Halsey principles: when should an unreasonable refusal to mediate lead to costs sanctions? In [Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf), the court accepted the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following: - **the nature of the dispute**: in the Court's view, most cases are not by their very nature unsuitable for ADR; - **the merits of the case**: the fact that a party reasonably believes that he has a strong case is relevant to the question whether he has acted reasonably in refusing ADR. If the position were otherwise, there would be considerable scope for a claimant to use the threat of costs sanctions to extract a settlement from the defendant even where the claim is without merit; - **the extent to which other settlement methods have been attempted:** the fact that settlement offers have already been made, but rejected, is a relevant factor. It may show that one party is making efforts to settle, and that the other party has unrealistic views of the merits of the case; - **whether the costs of the ADR would be disproportionately high: **This is a factor of particular importance where, on a realistic assessment, the sums at stake in the litigation are comparatively small; - **whether any delay in setting up and attending the ADR would have been prejudicial**; and - **whether the ADR had a reasonable prospect of success**.  In *[Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)* itself, the refusal to mediate was considered to not be unreasonable. The claimant had lost the case, but had asked to be released from paying some, or all, of the costs of the successful party on account of that party's refusal to mediate. The defendant had a strong defence, the costs of mediation would have been disproportionate and the claimant had not satisfied the burden of showing that mediation would have had a reasonable prospect of success. ## Post-Halsey case law: when is it unreasonable to mediate? - In *[Burchell v Bullard & Others [2005] EWCA Civ 358](https://lexlaw.co.uk/wp-content/uploads/Bullard-case.pdf)* the court considered that the nature of the case (a small building dispute) lent itself to mediation; and the cost of mediating was small ("a drop in the ocean" the court said) when compared to the cost of litigation in a case of this kind. - In *[Garritt-Critchley and others v Ronnan and another [2014] EWHC 1774 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Ronan-case.pdf)*, the defendants were ordered to pay the claimant's costs on an indemnity basis because their position of consistently refusing to mediate due to confidence in their position and a belief that the parties were too far apart, was wrong. - In *[DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB) (20 March 2020)](https://lexlaw.co.uk/wp-content/uploads/Blackpool-case.pdf)*, the judge considered that indemnity costs should apply because of the defendant's refusal to engage in mediation. This was conduct "out of the norm" as the court did not accept the defendant's justification that it believed it had a strong defence. No defence by itself justified a failure to engage in any kind of ADR. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # Norwich Pharmacal Relief: Non-party disclosure sought from Bank Source: https://lexlaw.co.uk/solicitors-london/pre-action-disclosure-norwich-pharmacal-relief-bank-pre-action-protocol-costs-litigation/ *The [Court of Appeal](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/court-of-appeal-home/) considered the rules regarding Norwich Pharmacal applications for [non-party disclosure](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/) and the costs of the same. The [decision](https://lexlaw.co.uk/wp-content/uploads/Jofa-Limited-and-Joseph-Farah-v-Benherst-Finance-Limited-and-Chestone-Industry-Holding-2019-EWCA-Civ-899.pdf) concerning Natwest bank and a limited company, provides helpful guidance to parties when making applications for third party disclosure and understanding the importance of pre-action correspondence which may impact any order for costs. * ## Background to the Norwich Pharmacal application The applicants, Benherst Finance Limited and Chestone Industry Holding invested in a property development which they believed to be [fraudulent](http://www.legislation.gov.uk/ukpga/2006/35/contents). In an attempt to recover the funds they considered were [dishonestly appropriated](http://www.legislation.gov.uk/ukpga/1968/60/contents), they sought information from [National Westminster Bank plc](https://personal.natwest.com/personal.html) ("the Bank") and Jofa Limited, a building contractor ("the Company") to assist them in bringing a claim. ## Pre-action application for disclosure from Bank with prior agreement The applicants sought a [Norwich Pharmacal order](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/) for disclosure from [Natwest Bank](https://personal.natwest.com/personal.html) of further information on the bank accounts of the alleged fraudsters. Leggatt LJ considered the importance of the Bank's duty of confidentiality and how it could not easily provide [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) without a court order, at the risk of breaching confidentiality and therefore it was not unreasonable for the Bank to have required the applicants to seek a court order for disclosure. The Bank had previously stated in [pre-action](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) correspondence that it would not oppose the order sought and the applicants had agreed to pay the Bank's costs of complying with the order. The application was granted without the attendance of the Bank at the hearing. This outcome highlights the benefit of engaging with the party prior to making an application and compliance with the [pre-action protocols](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/). An individual or organisation who is not a party to proceedings does not owe a legal duty to provide disclosure, therefore they may not be likely to provide the same without a court order, however steps can be taken for the parties to reach an agreement thereby facilitating the process. ## Application for disclosure from Company who failed to engage in pre-action correspondence Unlike the smooth process with the Bank above, the applicants sent pre-action correspondence to Jofa Limited, however the sole director of the company, Mr Farah failed to engage. The applicants therefore had no alternative but to apply to the Court for a Norwich Pharmacal Order without reaching any agreement as to costs. Upon granting the application, the Judge ordered that the Company should pay a proportion of the applicants' costs of applying for the order, taking into account that the Company had failed to engage in [pre-action](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) correspondence or comply with pre-action requests for disclosure. On appeal, Leggatt LJ held that the long established principle for Norwich Pharmacal applications is that the applicant is liable to pay the respondent's costs of the application which include the costs of providing the disclosure. This is based on the view that the respondent is not at fault and would not be able to recover its costs from the wrongdoer, which is what the applicant is able to do (*[Totalise plc v The Motley Fool Ltd](https://lexlaw.co.uk/wp-content/uploads/Totalise-Plc-v-Motley-Fool-Ltd-Anor-2001-EWCA-Civ-1897-19-December-2001.pdf)). * In this case, the applicants argued that the application would not have been necessary had the Company engaged in pre-action correspondence and the justification for the order was plain. They argued that on this basis, the Company should contribute to the costs of their application. The Court of Appeal disagreed holding that while there was no absolute rule, it would be difficult to award costs against a respondent who has required the applicant to satisfy the court that such an order is appropriate before providing disclosure. The respondent is not legally required to provide disclosure to the applicant without a court order. In this particular case, the disclosure sought included bank statements which the Court noted, the Company would also be entitled to declare confidential. ## Costs of applications for Norwich Pharmacal Relief This case highlights that a court will not impose a costs order on a respondent for requiring an applicant to obtain a formal court order before providing disclosure particularly where issues of confidentiality are involved in providing the disclosure sought. Once a court order is obtained, the respondent is required to comply with the same and is entitled to reimbursement of its costs of compliance and providing the disclosure. Applicants are warned of this costs risk before pursuing such disclosure applications. It is therefore important to seek legal advice on the disclosure being sought and approaching the non-party for the same, including complying with the [pre-action protocol](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/), which may facilitate seeking an order. ## Instructing our specialist Litigation Lawyers in disclosure ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We can advise you from the outset and throughout the [disclosure process](https://lexlaw.co.uk/solicitors-london/solicitors-advice-on-disclosure/) to include [disclosure from parties to the proceedings](https://lexlaw.co.uk/solicitors-london/solicitors-advice-on-disclosure/) in addition to [non parties](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/). Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # LIBOR fraud claim falls at the limitation hurdle Source: https://lexlaw.co.uk/solicitors-london/libor-fraud-misselling-claim-time-barred-limitation-struck-out-litigation/ *The High Court has struck out [a LIBOR fraud claim](https://lexlaw.co.uk/wp-content/uploads/Boyse-International-Ltd-v-Natwest-Markets-Plc-Anor-2020-EWHC-1264-Ch-27-May-2020.pdf) brought by a property investment firm against two renowned banks Natwest and RBS, two weeks after the publication of [FCA's findings](https://lexlaw.co.uk/wp-content/uploads/FCA-Final-Notice-RBS-6-February-2013-USD-JPY-CHF-bank-misconduct.pdf) against the banks, concluding that it was time barred. * A fraud claim against [Natwest](https://personal.natwest.com/personal.html) and [RBS](https://personal.rbs.co.uk/) concerning two [LIBOR](https://lexlaw.co.uk/libor-manipulation-mis-selling-loan-hedging-financial-product-claims-advice) referenced interest rate hedging products entered into in 2008, has been struck out due to limitation The claim was commenced by [Boyse (International) Ltd](https://lexlaw.co.uk/wp-content/uploads/Boyse-International-Ltd-v-Natwest-Markets-Plc-Anor-2020-EWHC-1264-Ch-27-May-2020.pdf) ("the Claimant") a property investment trust company on 19 February 2019, twelve years after entering into the complex [LIBOR](https://lexlaw.co.uk/libor-manipulation-mis-selling-loan-hedging-financial-product-claims-advice) interest rate hedging products in 2007 and 2008. In 2012, the Claimant was forced to sell some of its properties as a result of the excessive, unreasonable costs of the interest rate hedging products (IRHPs) and the tragic effect on the company's cash flow and profit. ## FCA Final Notice: Bank's misconduct In February 2013, the FCA released its [Final Notice](https://lexlaw.co.uk/wp-content/uploads/FCA-Final-Notice-RBS-6-February-2013-USD-JPY-CHF-bank-misconduct.pdf) which set out the misconduct of banks including Natwest and RBS in relation to USD, JPY and CHF currency rates. [RBS was fined £87.5 million](https://www.fca.org.uk/news/press-releases/rbs-fined-%C2%A3875-million-significant-failings-relation-libor) for significant failings in relation to LIBOR. Between January 2006 and November 2010 the bank's misconduct included: - RBS making Japanese yen (JPY) and Swiss franc (CHF) LIBOR submissions that took into account its derivatives trading positions.  - RBS allowing derivatives traders to act as substitute submitters and make JPY LIBOR submissions that took into account its derivatives trading positions.- RBS making JPY, CHF and US dollar (USD) LIBOR submissions that took into account the profit and loss (P&L) of its money market trading books.  - RBS derivatives traders colluding with other LIBOR panel banks and interdealer broker firms to influence the JPY LIBOR submissions made by other panel banks, including one derivatives trader entering into “wash trades” (i.e. risk free trades that cancelled each other out and for which there was no legitimate commercial rationale) in order to make corrupt brokerage payments to one broker firm to garner influence.  The derivatives trader used this influence to get the broker firm to try to change other panel banks’ JPY LIBOR submissions.  - RBS derivatives and money market traders colluding with individuals at other panel banks and interdealer broker firms who sought to influence RBS’ JPY and CHF LIBOR submissions. The Claimant sought to rely on FCA's findings above, claiming the Bank had made fraudulent misrepresentations in relation to LIBOR which had induced the Claimant to enter into the interest rate hedging products and the Claimant had subsequently suffered significant [consequential losses](https://lexlaw.co.uk/solicitors-london/court-appeal-permission-ww-property-investments-national-westminster-bank-rbs-natwest-libor-suremime-negligent/). ## Mis-selling LIBOR Claim against the Bank Where a claim concerns fraud allegations, limitation does not begin to run until the Claimant has discovered the fraud or "could with reasonable diligence have discovered it" ([section 32 Limitation Act 1980](http://www.legislation.gov.uk/ukpga/1980/58/part/II/crossheading/fraud-concealment-and-mistake)). The Bank argued that the Claimant had become aware of the Bank's conduct through [FCA's findings](https://lexlaw.co.uk/wp-content/uploads/FCA-Final-Notice-RBS-6-February-2013-USD-JPY-CHF-bank-misconduct.pdf) on 6 February 2013 and therefore the Claim that had been issued on 19 February 2019 was out of time. The Claimant argued that it could not reasonably be held to have discovered the fraud until at least a couple of weeks after FCA published its findings and their claim was issued less than two weeks after the publication. The Court rejected the Claimant's argument, concluding that the Claimant was aware that the interest rate hedging products had a LIBOR referenced rate and that it sold its properties prior to 6 February 2013 and therefore was aware that something had gone wrong so the FCA's findings only confirmed certain suspected action of the Bank. ## Importance of acting promptly and seeking legal advice in relation to limitation Establishing the limitation date can be a technical matter and more complex than it appears. This case highlights the importance of taking prompt action and seeking legal advice in relation to potential [limitation](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/) of your litigation case as any delay or error in calculating limitation can be fatal to a case. ## Limitation: Extra Time for Swaps Mis-selling Claims? Many individuals and SMEs have strong cases against major banks and financial institutions that they ought to have brought but failed to do so in time. This may be because of a delay in obtaining legal advice, either due to a lack of resources, concern of the impact on the banking relationship or in the hope that the regulator will provide adequate redress or sometimes even upon receipt of incorrect or negligent advice from financial or legal advisers. This results in potentially successful claims becoming time barred from their usual contractual legal rights as the IRHPs were, now, mostly sold over six years ago. The Court has taken an increasingly firm stance on time barred claims in recent years. Limitation hurdles are not necessarily insurmountable, as demonstrated in the case of [Kays Hotel Limited v. Barclays Bank PLC](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/), where Barclays failed to strike out the Hotel’s claim as the court determined that s14A of the Limitation Act applied, thereby giving the Hotel an extra three year period from the date of knowledge of the mis-selling. However the decision of the court in PAG v RBS goes further and highlights an arguable route around [the usual limitation hurdles that face most swaps mis-selling claims](http://uk.businessinsider.com/libor-and-mis-sold-interest-swaps-cases-for-lloyds-rbs-hsbc-barclays-2015-7) where the derivatives product in question was sold over six years ago. If you have a claim but are concerned about limitation, get in touch with our specialist litigation solicitors for a consultation. ## Limitation: Issuing a protective claim form In the event the parties cannot agree a standstill agreement, or negotiations are ongoing between the parties (as part of the [pre-action process](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/)), you may need to issue a protective claim form if there is a risk that your claim will be time-barred pursuant to any of the time limits above. The period of [limitation](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) stops when the claimant issues proceedings and the critical date is issue, not service. The Claimant will then have four months to serve the Claim Form and [Particulars of Claim](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/). The Court will seal the claim form with the date the claim form was received, reflecting your compliance with the relevant time limits. It is important to note the Court closing times for issuing a claim as most Courts will close at 4pm, therefore your claim form must make it to a court clerk or be received by the Court before then. Where possible, issuing a claim form at least one business day before the date of limitation may avoid any administrative or human error which may lead to your claim becoming time barred. ## My solicitor or adviser failed to advise me about time limits It is crucial for practitioners to consider [limitation](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/) issues as soon as instructed in order to prevent the possibility of a claim being time-barred. If you have been inadequately or [negligently](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/) advised by a [solicitor](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/), [barrister](https://professionalnegligenceclaimsolicitors.co.uk/sue-a-barrister/) or any other professional adviser in relation to a [potential claim](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-faqs/), then you may be able to recover any losses in a claim for professional negligence against the firm or individual providing the advice. Our [professional negligence team](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) can assist by assessing your case and advising you on the next steps. ## LEXLAW LIBOR Litigation Our [Financial Services Litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) team of Solicitors and Barristers in London are highly experienced in this area of banking litigation and have and are acting on LIBOR rigging claims against major UK banks. Our high profile and high value cases regularly appear in the [national and international media](https://lexlaw.co.uk/media-interest/). Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks.  --- # FCA Test Case: Are insurers obliged to pay out for Covid-19 business losses? Source: https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/ *The FCA's test case is likely to be the quickest route to clarity on whether losses caused by Covid-19 are covered by Business Interruption insurance. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic. This case is focused on the remainder of policies that could be argued to include cover.* *Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a [test case](https://www.fca.org.uk/news/press-releases/update-fca-test-case-validity-business-interruption-claims) recently in the High Court), it is is essential that you [seek expert legal advice](https://lexlaw.co.uk/contact-us/) early in order to prepare your Business Interruption Insurance claim.* ## What outcome are the FCA seeking? The FCA aims to achieve clarity for all concerned in an unprecedented situation. To do this, the FCA are taking a representative sample of cases to court. High Court judgment is being sought that will help policyholders and insurers have a much clearer view of which business interruption policies respond to the pandemic, and those that don’t. Therefore, the court may well decide a number of these policies respond to the pandemic and others do not. ## Which insurer's will have their policy wordings examined by the court? The following 16 insurers use at least one of the policy wordings in the FCA's representative sample which will be examined in the test case: - Allianz Insurance plc (part of Allianz SE)- American International Group UK Limited (part of American International Group, Inc.)- Arch Insurance (UK) Limited (part of Arch Capital Group Limited)- Argenta Syndicate Management Limited (part of Hannover Re)- Aspen Insurance UK Limited (part of Aspen Insurance Holdings Limited)- Aviva Insurance Limited (part of Aviva plc)- Axa Insurance UK plc (part of AXA SA)- Chubb European Group SE (part of Chubb Limited)- Ecclesiastical Insurance Office plc- Hiscox Insurance Company Limited (part of Hiscox Limited)- Liberty Mutual Insurance Europe SE (part of Liberty Mutual Group)- MS Amlin Underwriting Limited (part of MS&AD Insurance Group Holdings, Inc.)- Protector Insurance UK (part of Protector Forsikring ASA)- QBE UK Ltd (part of QBE Insurance Group Limited)- Royal & Sun Alliance Insurance plc (part of RSA Insurance Group plc)- Zurich Insurance plc (part of Zurich Insurance Group Limited) The wordings that they use are set out in [this list](https://www.fca.org.uk/publication/corporate/preliminary-list-affected-insurers-policies.pdf). ## How will any judgment affect insurers who are not participating in the test case? Given the representative nature of the policies and wordings, the test case is expected to provide guidance for the interpretation of many other BI policies that are not in the representative sample. This means that other insurers will also be affected by the test case and its conclusions. In early July, the FCA expects to publish a comprehensive list of other insurers and many other Business Interruption insurance policies in the market that the test case is likely to affect. ## When will the test case be decided? The directions are expedited, and a 5-10 day court hearing is listed to be heard in the second half of July. ## Is my business entitled to Business Interruption insurance? Specific advice can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Download the Business Interruption Insurance test case Claim Form [![](https://lexlaw.co.uk/wp-content/uploads/image-3.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-claim-form.pdf) ## Download the Business Interruption Insurance test case Particulars of Claim [![](https://lexlaw.co.uk/wp-content/uploads/image-4.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-particulars-of-claim.pdf) ## Why use a Specialist Business Interruption Insurance Claim Solicitor? We work to achieve our client’s interests by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Business rescue and Insolvency advice We specialise in [Litigation](https://lexlaw.co.uk/practice-areas/), [Winding-up](https://windinguppetitionsolicitors.co.uk/) and [Insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) work and as a consequence we are able to add value by our legal services by guiding clients in these areas which are often ancillary to Business Interruption insurance litigation. We can and have helped clients successfully defend [winding up petitions](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) brought by their banks and we can challenge the appointments of LPA Receivers, Auctioneers and also advise as to how best businesses can be rescued and turned around and how debts can be written off or restructured. If your business has already suffered terminal loss due to (either in full or part) a denial of a legitimate coverage claim by your insurer please still contact us. We can provide advice on obtaining an assignment of the right to bring legal proceedings against the insurer from the Administrator or the Trustee in Bankruptcy as appropriate and have experience in doing so. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Practice Direction 51Z: Automatic stay of possession hearings and appeals Source: https://lexlaw.co.uk/solicitors-london/practice-direction-51z-automatic-stay-of-possession-hearings-and-appeals/ In [*London Borough of Hackney -v- Okoro* ](https://lexlaw.co.uk/wp-content/uploads/London-Borough-of-Hackney-v-Okoro-2020-EWCA-Civ-681-27-May-2020.pdf)[2020] EWCA Civ 681 the Court of Appeal found that the automatic stay on possession proceedings imposed by [Practice Direction 51Z](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part51/practice-direction-51z-stay-of-possession-proceedings,-coronavirus) also applies to appeals against possession orders. The stay has been imposed until 25 June 2020 and is likely to be reviewed alongside government guidance on COVID-19. ## Practice Direction 51Z [Practice Direction 51Z](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part51/practice-direction-51z-stay-of-possession-proceedings,-coronavirus) was introduced on 27 March 2020 as part of the measures introduced in the face of the coronavirus pandemic for [protection for tenants.](https://lexlaw.co.uk/solicitors-london/covid-19-protection-for-tenants/) [![](https://lexlaw.co.uk/wp-content/uploads/Screen-Shot-2020-05-28-at-19.06.19.png)](https://lexlaw.co.uk/wp-content/uploads/PRACTICE-DIRECTION-51Z_-STAY-OF-POSSESSION-PROCEEDINGS-CORONAVIRUS.pdf) The main change introduced was that all possession proceedings brought under [CPR 55](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part55) and all proceedings for enforcement of an order for possession (by a warrant or writ of possession) were stayed for a period of up to 90 days i.e. until 24 June 2020. This effectively gave a three month licence for tenants of commercial properties and any claims against "trespassers" could be issued (particularly in the face of a limitation period) but were automatically stayed. Following concerns raised by the Property Litigation Association, the Practice Direction was amended on 18 April 2020 to clarify that it excluded claims against trespassers within [rule 55.6 of the CPR](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part55#55.6), or applications for interim possession orders. ## Court of Appeal holds automatic stay of possession hearings applies to appeals In [*London Borough of Hackney -v- Okoro* [2020] EWCA Civ 681](https://lexlaw.co.uk/wp-content/uploads/London-Borough-of-Hackney-v-Okoro-2020-EWCA-Civ-681-27-May-2020.pdf) the Court of Appeal held that the automatic stay on possession proceedings imposed by Practice Direction 51Z shall also apply to appeals against possession orders. This case concerned a claim issued on 20 December 2019 by the London Borough of Hackney. On 24 January 2020, a possession order was granted by the court and refused permission to appeal. On 25 February 2020, the Defendant was granted permission to appeal and this was listed to be heard on 21 May 2020. Practice Direction 51Z was implemented on 27 March 2020 and the appeal hearing was vacated and the case was sent to the Chancery Division and the parties were directed to file submissions on the issue of whether the appeal court had jurisdiction to hear the appeal during the stay. The claim was referred to the Court of Appeal to determine whether the stay in Practice Direction 51Z applied to appeals. The appeal was allowed and the Court of Appeal held that Practice Direction 51Z does apply to appeals. The Practice Direction does not however apply to appeals to the Supreme Court as the Master of the Rolls had no jurisdiction to make Practice Directions affecting cases heard in the Supreme Court. ## Expiry of stay under Practice Direction 51Z (25 June 2020) The stay of possession proceedings is set to expire on 25 June 2020 although there is scope within Practice Direction 51Z for the stay to continue until 30 October 2020 however this is dependent on the status of [COVID-19 and government guidance](https://www.gov.uk/coronavirus). If the stay is lifted, possession claims which have been stayed will be re-listed and potentially at shorter notice as the court is likely to have availability following the lift of the lockdown. There will also be an increase in the issuance of claims for those who withheld from doing so due to the automatic stay. It is not clear yet whether applications will be heard remotely or in person and due to social distancing measures which are likely to continue, the courts may continue to hold [remote hearings](https://lexlaw.co.uk/solicitors-london/coronavirus-covid-19-and-its-impact-on-uk-litigation/). If you are a landlord considering your options for possession, our expert property solicitors and barristers can assist. If you are a tenant who has received a possession notice, order or warrant you should seek legal advice as soon as possible to understand your rights and protect your position. ## Seeking possession: Section 21 and Section 8 Notices A landlord can [evict tenants](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions/) who have an assured shorthold tenancy using a [Section 21](http://www.legislation.gov.uk/ukpga/1988/50/section/21) or [Section 8](http://www.legislation.gov.uk/ukpga/1988/50/section/8) notice, or both. In most cases where it is available (and you should seek advice on the same), a [Section 21](http://www.legislation.gov.uk/ukpga/1988/50/section/21) notice will be the preferred method of eviction, as it allows for accelerated possession proceedings. The court will be able to grant an order for possession ‘on the papers’, unless the tenant files a defence. It should be noted that the accelerated possession procedure does not allow for the recovery of rent arrears and a separate action should be brought for these if necessary. A [section 8](http://www.legislation.gov.uk/ukpga/1988/50/section/8) notice can be used if the tenant has broken the terms of the tenancy. Possession under [section 8](http://www.legislation.gov.uk/ukpga/1988/50/section/8) can only be sought on one or more of the grounds set out in Schedule 2, i.e. possession cannot be obtained simply because the stated term of the tenancy has expired and the landlord would like the property back. There are 18 grounds, of which 8 are mandatory and 10 are discretionary.  If one of the mandatory grounds is made out, the court must grant the order. If the application is made on one or more of the discretionary grounds, then the court has a discretion as to whether or not to grant the order.  ## Instruct Property Litigation Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on possession, interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. --- # Relaxed procedural rules for obtaining extensions of time: COVID-19 Source: https://lexlaw.co.uk/solicitors-london/relaxed-cpr-rules-extension-of-time-litigation-covid-19/ *In these uncertain times, with many, including legal representatives working from home and the courts operating with limited resources, the judiciary is making it easier for parties to agree or apply for extensions of time.* ## Civil Procedure Rules on extensions of time Under [rule 2.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part02#2.11) of the Civil Procedure Rules, some court deadlines can be extended by agreement in writing between the parties for an indefinite period, whereas some can never be extended. Under [CPR 3.8](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.8), where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction. Under [CPR 3.8 (4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.8) the parties can agree to extend a deadline by a period of up to 28 days provided that it will not put a hearing date at risk. If more time is needed, the party requiring the extension must apply to the Court, either by application or by a consent order agreed with the opponent. ## New Practice Direction for extensions of time [Practice Direction 51ZA](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/practice-direction-51za-extension-of-time-limits-and-clarification-of-practice-direction-51y-coronavirus) has been introduced to amend these rules, at least until 30 October 2020. - Parties can now agree to extend time under [CPR 2.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part02#2.11) and [CPR 3.8](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.8) by 56 days rather than 28 days- If an extension beyond 56 days is required, permission of the court must be sought An application for such permission will be considered by the court on the papers. Any order made on the papers must, on application, be reconsidered at a hearing. >  In so far as compatible with the proper administration of justice, the Court will take into account the impact of the Covid-19 pandemic when considering applications for the extension of time for compliance with directions, the adjournment of hearings, and applications for relief from sanctions. It remains the case that parties should substantiate requests for more time or an adjournment or relief and not simply rely on the circumstances surrounding COVID-19, particularly in light of remote working.  ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Update on FCA’s Business Interruption Insurance test case: Insurers file Defences Source: https://lexlaw.co.uk/solicitors-london/update-covid-19-coronavirus-fca-business-interruption-insurance-test-case-defences-insurer-litigation-advice/ *The Defendant Insurers in the FCA's test case on the limits of [Business Interruption Insurance ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)have now filed their Defences which all plead that their policy wordings are not intended to cover pandemics and the Government's reaction to Covid-19 is not sufficient to trigger policy coverage. * *[The FCA’s test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) is likely to be the quickest route to clarity on whether losses caused by Covid-19 are covered by Business Interruption insurance. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic. This case is focused on the remainder of policies that could be argued to include cover.* ## What has happened in the FCA test case so far? [On 10 June 2020](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/), the FCA filed its [Claim Form](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-claim-form.pdf) and [Particulars of Claim](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-particulars-of-claim.pdf). The First Case Management Conference took place on 16 June 2020. The Insurer's Defences were published on 24 June 2020. The FCA is due to file its Reply by 3 July 2020. ## The Insurers' Defences The gist of the Defences is that ultimately the Insurers plead that the pandemic and the government's reaction to it do not trigger policy coverage. They argue that the pandemic is a national issue which should not be covered by Business Interruption Insurance (and not a local issue which must be covered by policies). In addition, although the government imposed restrictions on businesses, some businesses could still stay open and operate (for example restaurants with takeaway services). ## Download the Insurers' Defences The insurers have all submitted separate Defences which can be downloaded here: - [Defence of Arch Insurance (UK) Ltd](https://lexlaw.co.uk/wp-content/uploads/defence-arch-insurance-uk-ltd.pdf)- [Defence of Argenta Syndicate Management Ltd](https://lexlaw.co.uk/wp-content/uploads/defence-argenta-syndicate-management-ltd.pdf)- [Defence of Ecclesiastical Insurance Office Plc and MS Amlin Underwriting Ltd](https://lexlaw.co.uk/wp-content/uploads/defence-ecclesiastical-insurance-office-plc-ms-amlin-underwriting-ltd.pdf)- [Defence of Hiscox Insurance Company Ltd](https://lexlaw.co.uk/wp-content/uploads/defence-hiscox-insurance-company-ltd.pdf)- [Defence of QBE UK Ltd](https://lexlaw.co.uk/wp-content/uploads/defence-qbe-uk-ltd.pdf)- [Defence of Royal & Sun Alliance Insurance Plc](https://lexlaw.co.uk/wp-content/uploads/defence-royal-sun-alliance-insurance-plc.pdf)- [Defence of Zurich Insurance Plc](https://www.fca.org.uk/publication/corporate/defence-zurich-insurance-plc.pdf) [![](https://lexlaw.co.uk/wp-content/uploads/image-5.png)](https://lexlaw.co.uk/wp-content/uploads/defence-zurich-insurance-plc.pdf)Download the Insurers' Defences in the FCA's Business Interruption Insurance test case ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Is my business entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why use a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Judgment set aside: Unfair to serve on empty offices in COVID-19 and prospects of successful defence Source: https://lexlaw.co.uk/solicitors-london/default-judgment-set-aside-application-cpr-12-litigation-costs-service-of-claim-form-covid-19/ The High Court [set aside a default judgment](https://lexlaw.co.uk/wp-content/uploads/Stanley-v-London-Borough-of-Tower-Hamlets-2020-EWHC-1622-QB-26-June-2020.pdf) because the Claim Form had been served on "empty offices" during the COVID-19 lockdown. Despite the Claimant's solicitors attempts to engage in pre-action correspondence and check requirements for service, the Court was satisfied that the Defendant showed real prospects of successfully defending the claim. ## GDPR Data protection breach by the Council This case concerned a claim issued by Melanie Stanley against [London Borough of Tower Hamlets](https://www.towerhamlets.gov.uk/Home.aspx) ("the Council") for breach of the [General Data Protection Regulation ("GDPR")](https://lexlaw.co.uk/wp-content/uploads/GDPR.pdf). The Claimant had attended a child protection conference and following the conference, the Council disclosed the Claimant's GP records to those who had attended without the Claimant's consent. Upon receipt of a [complaint](https://www.gov.uk/data-protection/make-a-complaint) by the Claimant, the Council accepted there had been a data protection breach. ## Issue of claim for brach of data protection and damages The Claimant instructed solicitors to issue a claim against the local authority for compensation and claimed damages up to £10,000. Before the [Claim Form and Particulars of Claim](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/) were drafted, the Claimant's solicitors were mindful of their duties under the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) to engage in [pre-action](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) [correspondence](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/). ## Claimant's unsuccessful attempts to engage in pre-action correspondence with the Council The Claimant's solicitors sent a [letter before claim](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/) to the Council by post and email on 23 January 2020. When the Council failed to respond, the Claimant's solicitors sent a further letter highlighting the Council's breach of the [pre-action protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) ([Pre-Action Protocol for Media and Communications Claims](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_def) for data protection cases) and gave the Council a further seven days to respond. On 13 February 2020, the Claimant's solicitor phoned the Council's Legal Services Department and obtained [contact details](https://www.towerhamlets.gov.uk/content_pages/contact_us/contact_us.aspx) for the file handler. The Claimant's solicitor then emailed the file handler warning of the Claimant's intention to issue proceedings and asked if the Council would accept service of proceedings by email but was told that service had to be by post. ## Service of claim form at "empty offices" On 25 March 2020, two days after the country went into [lockdown](https://www.gov.uk/government/speeches/pm-address-to-the-nation-on-coronavirus-23-march-2020) after [government guidance was issued on COVID-19](https://www.gov.uk/coronavirus), and over a month since the last contact with the Council, the Claimant's solicitor, Mr McConville, posted Particulars of Claim to the London Borough of Tower Hamlets' offices. The deemed date of service ([CPR 7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07#7.5)), was 27 March 2020 and therefore the Council had to acknowledge service within 14 days i.e. by 9 April 2020. Due to the lockdown, the Council's offices were short staffed. ## What is default judgment? If the defendant fails to file a defence within the relevant time limit, the claimant may obtain a judgment in default of defence (under [CPR 12](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12)), which means that judgment is entered on the claim without a trial. [CPR 10.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part10#10.3) and [CPR 15](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part15#15.4) set out the time periods for the filing of the acknowledgement of service and serving the defence. It is up to the defendant to apply to court to have the judgment set aside or varied (under [CPR 13](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13)) because he has a real prospect of successfully defending the claim or for some other good reason. ## Claimant's successful application for default judgment As the Defendant did not file an [Acknowledgement of Service](https://www.gov.uk/government/publications/form-n9-response-pack), the Claimant's solicitor made an application to the Court for [default judgment under CPR 12](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12) on 15 April 2020 (six days after the Defendant's deadline to file an Acknowledgment of Service). The Council had admitted there had been a breach of data protection therefore in the Claimant's view, there was no real prospect of the Council defending the claim. The application was granted on 17 April 2020. ## Council's application to set aside default judgment The Council's solicitor, Nicola McDougall, filed and served witness evidence in support of the Council's application to set aside default judgment under [CPR 13.3(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.3) on the basis that: - the Council had a real prospect of successfully defending the claim; and/or- there is some other good reason. The Council's solicitor claimed she was instructed on 27 April 2020 and following contact with the Claimant's solicitor, she was informed that the Claimant had already obtained default judgment. She cited that due to the circumstances surrounding [COVID-19](https://www.gov.uk/coronavirus) and the government ordered lockdown, a lot of the Council's staff were working from home and that as far as she was aware, the Council's legal services department had not received the papers. The Council's solicitor stated that the Council intended to defend the claim and claimed it was unreasonable for the Claimant's solicitor to effect service by post knowing that the officers were likely to be shut. > He should have made contact by phone or otherwise to ascertain how to effect service 'in these unfortunate and unprecedented times'. ## Court's decision on setting aside default judgment In finding that the reason for the Council's default was the [COVID-19](https://www.gov.uk/coronavirus) crisis and that but for the Council's offices being closed as a result of the lockdown, the Council would have responded in time, the judge set aside the judgment in default. The Judge held that [CPR 13.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.3) requires an applicant to show that he has real prospects of a successful defence or some other good reason to set the judgment aside. The Judge concluded that this test was satisfied. > The world shifted on its axis on 23 March 2020 and it was incumbent on him as a responsible solicitor and an officer of the court to contact the Council to acknowledge that the situation had changed, and to discuss how proceedings could best and most effectively be served. > I do not find that he unscrupulously took advantage of the situation, but I do find he exercised poor judgement. ## Costs of Defendant's application to set aside The Council was awarded its costs, after some criticism of the Claimant's solicitors by the Court. Costs sanctions are usually imposed on parties who behave unreasonably and many legal advisers may be divided in this case. The Claimant's solicitors had taken steps to check requirements for service however had not taken extra measures in light of the COVID-19 pandemic. Although they may have had good reasons to defend their actions, their opposition to the opponent's application to set aside eventually resulted in a costs order against them. [CPR rule 1.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part01#1.3) requires parties to help the court to further the [overriding objective](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part01#1.1). This case serves as a reminder for parties to cooperate, particularly in light of the court's approach to the current difficulties faced in the COVID-19 pandemic. This may include agreeing extensions of time where possible and agreeing applications by consent thereby avoiding time and costs of the parties and utilisation of the resources of the court. ## How do I apply for default judgment? If you have issued and served a claim and have not received an Acknowledgement of Service or the Defence, you may be entitled to apply for default judgment. [CPR 10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part10) and [CPR 15](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part15) set out the time periods for the filing of the acknowledgement of service and serving the defence. The rules governing default judgment are set out at [Part 12 of the Civil Procedure Rules ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12). Depending on the type of claim, default judgment is sought either by filing a request (*[CPR 12.4(1) or (3)](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part12.htm#IDA5CSIC)*) or by an application to the Court (*[CPR 12.4(2)](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part12#IDAEVSIC)*, *[CPR 12.9](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part12.htm#IDAEVSIC)* and *[CPR 12.10](http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part12.htm#IDA4WSIC)*). [CPR 20](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part20) governs default judgment for counterclaims. ## How do I set aside a default judgment? [CPR 13.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.2) sets out the circumstances under which the court **must** set aside a default judgment and under [CPR 13.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part13#13.2) the Court exercises its discretion. An application to set aside default judgment requires an application from relief from sanctions. [CPR 3.9](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.9) states: > (1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need – > (a) for litigation to be conducted efficiently and at proportionate cost; and > (b) to enforce compliance with rules, practice directions and orders. > (2) An application for relief must be supported by evidence. ## Instruct specialist litigation lawyers Our team of litigation solicitors and barristers can advise on a range of [interim remedies including default judgment](https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/?preview_id=9245&preview_nonce=857cfd6853&preview=true&_thumbnail_id=9249). We can provide you with preliminary advice in a fixed fee conference on an application for default judgment or to set aside. ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Unexplained Wealth Orders: High Court challenge National Crime Agency Source: https://lexlaw.co.uk/solicitors-london/high-court-challenge-nca-uwo-specialist-defence-lawyers/ ## What is an Unexplained Wealth Order? The power was introduced by section 1 of the [Criminal Finances Act 2017 (“CFA”) ](http://www.legislation.gov.uk/ukpga/2017/22/section/1/enacted)which created a new section [362A of the Proceeds of Crime Act 2002 (“POCA”).](http://www.legislation.gov.uk/ukpga/2002/29/section/362A) A UWO requires that the respondent explains how they acquired property. If the respondent does not provide adequate evidence the property is deemed by the relevant authority to be “recoverable property” for the purposes of a civil recovery ([s.362C](http://www.legislation.gov.uk/ukpga/2002/29/part/8)). ## What are the facts of this case? The NCA brought three UWO against properties which they believed to have been purchased with the embezzled funds by Rakhat Aliyev. Rakhat Aliyev had been accused of crimes including murder and a plethora of financial crimes before his death in prison. The details of the properties can be seen below: - A high security mansion at 33 The Bishops Avenue in Hampstead - one of the most expensive roads in Britain known as "Billionaires' Row". The 10-bedroom home has an underground pool, "tropical showers", a glass domed roof, a dedicated cinema and separate quarters for staff- A mega apartment in a luxury secure development at 21 Manresa Road, Chelsea, constructed following a multi-million pound merger of two already enormous flats- Another secure mansion at 32 Denewood Road, Highgate, a private cul-de-sac with views over one of London's most exclusive golf clubs ## What did the NCA have to prove? Contrary to the standard used in a criminal trial where the relevant authority must decide whether the evidence is strong enough that a jury would find **[beyond reasonable doubt ](https://lexlaw.co.uk/unexplained-wealth-orders-specialist-lawyers/)**that there had been a criminal act**, **in order to successfully apply for a UWO one of the above authorities must only meet the civil standard of proof. Civil recovery proceedings under [POCA](http://www.legislation.gov.uk/ukpga/2002/29/contents) only require the relevant authority to prove to the High Court that **on the balance of probabilities** there has been a criminal act. The High Court must also be satisfied that there is reasonable cause to believe that: - the respondent hold the property;- the value of the property is greater than **[£50,000](https://lexlaw.co.uk/unexplained-wealth-orders-specialist-lawyers/)**;- there are [**reasonable grounds** ](https://lexlaw.co.uk/unexplained-wealth-orders-specialist-lawyers/)for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property;- the respondent is a **politically exposed** person or there are reasonable grounds to suspect they have been or are **involved with serious crime** or a person connected to serious crime Additionally, the respondent can hold the property in part or in its entirety alone or with any other persons. It is irrelevant whether the property was obtained before or after the legislation permitting the UWOs came into force, namely the [CFA.](http://www.legislation.gov.uk/ukpga/2017/22/section/1/enacted) ## Why was this case successful? It was ruled by Mrs Justice Lang at the High Court that simply because property is held in a complex and opaque manner, which many properties are in London, should not give rise to suspicion that the underlying funds used to purchase them are proceeds of crime. In this case it was not sufficient for the NCA to show that the respondent's known lawful income was insufficient to have purchased the property. This evidence must refelct the actual interest the respondent has in the property. This decision may be impactful as it may limit the effectiveness of UWO's against trustees, who usually do not have an interest of real value in the property. The judgment can be read below: [![](https://lexlaw.co.uk/wp-content/uploads/Screenshot-2020-07-01-at-17.09.38.png)](https://lexlaw.co.uk/wp-content/uploads/NCA-v-Baker-Ors.pdf) ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our debt recovery team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with a senior member of our debt recovery team. This meeting will take place either in person or using our telephone conference facilities or via Skype if you prefer. Therefore, no matter where you are based in England or Wales we can represent you. ## Unexplained Wealth Order Defence Lawyers The legislation in respect of the above have become a field of great importance in recent years. The consequences of falling foul of a UWO can be very serious and devastating for individuals and corporations. Therefore considered, timely and accurate expert advice is essential. Our Defence and Private Prosecution team advises both corporate clients and individuals on all legal issues concerning offences created by way of the [Proceeds of Crime Act 2002](http://www.legislation.gov.uk/ukpga/2002/29/contents). We regularly deal with complex, large and difficult confiscation proceedings in the criminal courts under the Proceeds of Crime Act and the previous statutory regimes. We are experienced in asset tracing, restraint orders, the appointment of Receivers under the Proceeds of Crime Act, third party rights and directors’ disqualification proceedings. We are also happy to appear for interested parties in receivership proceedings and have particular expertise in forfeiture/cash/property seizure hearings. We are frequently instructed in defendant High Court restraint work and have in depth experience of lifting restraint or receivership orders from assets of defendants or third parties to criminal proceedings. --- # High Court rule service of Claim Form to be ineffective Source: https://lexlaw.co.uk/solicitors-london/high-court-claim-form-service-ineffective-litigation-specialist-solicitors/ ## Background Whilst the background to this [defamation claim](https://lexlaw.co.uk/defamation-libel-and-slander-claims/) is inconsequential to the issue of service of a claim form, it has been briefly summarised below: The [underlying claim](https://lexlaw.co.uk/wp-content/uploads/Dr-Theodore-Piepenbrock-v-Associated-Newspapers-Limited-DMG-Media-of-Daily-Mail-General-Trust-plc-The-London-School-of-Economics-and-Political-Science-Joanne-Hay.pdf) in this matter related to alleged harassment of the Claimant during the course of his employment with the second Defendant. That claim was initially dismissed by Justice Nicola Davies on 5 October 2018 who determined that the psychiatric damage caused to the Claimant was not reasonably foreseeable.  Following this judgment, the [Daily Mail published an article on 12 October 2018 ](https://www.dailymail.co.uk/news/article-6270937/Professor-forward-MeToo-martyr-not-associate-claims.html)titled: “‘*He's a master manipulator': Professor who put himself forward as a MeToo martyr after being accused of impropriety by spurned assistant is not what he seems, associate claims”*. A similar article was also published in the print edition of the Daily Mail on 13 October 2018. Prior to the publication of that article, the Claimant’s wife (Prof. Sophie Marnette-Piepenbrock) had emailed the Daily Mail on 12 October 2018 threatening libel proceedings if that article was published; her emails went unanswered. On 8 October 2019, the Claimant’s wife sent an 11-page letter to the First Defendant’s editor (Mr Grieg) alleging that the Claimant had been seriously defamed by the article and seeking its immediate removal, together with a public apology, damages and the Claimant’s legal costs.  Subsequently, the Claimant, as a litigant in person, attended the Royal Courts of Justice and issued the Claim Form on 11 October 2019. While he was given the option to have the Claim Form served by the Court, he chose to serve it himself but did not do so immediately.  The Claimant’s wife emailed the Defendants on 10 February 2020 (and copied in the Defendants’ solicitors) purporting to serve the Claim Form and Particulars of Claim. The Defendants’ solicitors contested the Court’s jurisdiction to deal with the claim on the basis that the Claim Form had not been validly served during the four-month validity period.  ## Time for service The Court has tirelessly reiterated that there are no exceptions made for litigants in person, who must comply with the same pre-action protocols and procedural rules as solicitors, as held in the similar case of ***[Barton v Wright Hassall](https://lexlaw.co.uk/wp-content/uploads/1119-Barton-v-Wright-Hassall-llp.pdf)***.  Under [CPR 7.5](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07#7.5), the Claimant had four months from the date of issue of the Claim Form to serve the Claim Form on the Defendants. Therefore, service needed to be effected by midnight on 11 February 2020. It was clear in this instance that the Claimant had therefore not complied with this Rule, as he subsequently sent the Claim Form via post on 11 February 2020, thereby the date of service would be 13 February 2020 (per [CPR 6.26](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.26)). ## Upon whom the Claim Form must be served The Court again dealt with this issue swiftly as [CPR Part 6](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06) is clear upon whom a Claim Form must be served. For service to be deemed effective on a firm of solicitors, the conditions in [CPR 6.7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.7) below must be true: *(1) Solicitor within the jurisdiction: Subject to [rule 6.5(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.5), where –* *(a) the defendant has given in writing the business address within the jurisdiction of a solicitor as an address at which the defendant may be served with the claim form; or* *(b) a solicitor acting for the defendant has notified the claimant in writing that the solicitor is instructed by the defendant to accept service of the claim form on behalf of the defendant at a business address within the jurisdiction,* *the claim form must be served at the business address of that solicitor.* In any event, none of the Defendants had provided their solicitors’ addresses as addresses to which the Claim Form could be served. Furthermore, the Defendants’ solicitors had not notified the Claimant that they were instructed to accept service on behalf of the Defendants, whether by email (as permitted by [CPR 6.3(1)(d)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.3)) or at all.  Therefore, the requirements of [CPR 6.7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.7) had not been met, and so the Claim Form was deemed not to have been validly served on the Defendants.  In the case of the Third Defendant, where they have not given an address at which they will accept service, [CPR 6.9(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.9) provides a table which must be adhered to in order to successfully serve the Claim Form. Again, this Rule was not complied with and the Claim Form was deemed to not have been validly served on her.  Whilst the Claimant in this instance was a litigant in person, had he instructed a solicitor or direct access barrister, then the failure to serve the Claim Form would amount to [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/). This would give the [Claimant another avenue,](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) following this dismissal, to [seek damages](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). ## Extension of time? The question then arose as to whether the Claimant should be relieved of the consequences of invalid service of a Claim Form. Justice Nicklin looked at the potential applicability of [CPR 7.6](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07#7.6) in this case on the issue of an extension of time for service of the Claim Form.  The critical factor when determining if an application under CPR 7.6 will be successful is the efforts the claimant has taken to serve the Claim Form during the whole four month period of its validity (**[*Hallam Estates Ltd -v- Baker *[2012] EWHC 1046 (QB)](https://lexlaw.co.uk/wp-content/uploads/Hallam-Estates-Ltd-Michael-Stainer-v-Theresa-Baker.pdf) **[18] *per *Tugendhat J). There must be a “*good reason*” for the failure to properly serve the Claim Form (**[*Hashtroodi -v- Hancock *[2004] 1 WLR 3206](https://lexlaw.co.uk/wp-content/uploads/3206-Hashtroodi-v-Hancock.pdf) **[19] *per *Dyson LJ). In this instance, Justice Nicklin held that not understanding the law of defamation and preparing for two other hearings did not constitute “*good reasons*” for the failure to serve.  ## Other applications Justice Nicklin dealt with the [Claimant’s various other applications](https://lexlaw.co.uk/wp-content/uploads/Dr-Theodore-Piepenbrock-v-Associated-Newspapers-Limited-DMG-Media-of-Daily-Mail-General-Trust-plc-The-London-School-of-Economics-and-Political-Science-Joanne-Hay.pdf), namely orders under [CPR 6.16](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.16), [3.9](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.9) and [3.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.10), swiftly.  For the application of an order dispensing with service of a Claim Form under CPR 6.16, the case must be “*truly exceptional*” (**[*Olafsson -v- Gissurarson (No.2) *[2008] 1 WLR 2016](https://lexlaw.co.uk/wp-content/uploads/Jon-Olafsson-v-Hannes-Holmsteinn-Gissurarson.pdf) **[21] *per *Sir Anthony Clarke MR), which J. Nicklin determined it was not.  The Claimant applied for relief from sanctions under [CPR 3.9](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.9), which was refused on the grounds that there were no sanctions to award in this instance. The obstacle in this claim was that the limitation period for defamation and malicious falsehood had expired.  Finally, the Claimant sought the rectification of an error of procedure under [CPR 3.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.10). Upon an in-depth analysis of the case law (referenced below), J. Nicklin determined that the comments made in these cases, as to whether [CPR 3.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.10) can validate and rectify an error in serving a Claim Form, are strictly *obiter *and the consistent line of authority suggests that [CPR 3.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.10) cannot and should not be used to rescue a claimant in these circumstances.  ## The implications of leaving service of a claim form until the last minute Justice Nicklin reiterated that it is very *“unwise”* for any Claimant to adopt a non-engagement approach, which as in this case, can cause your claim to be dismissed. Justice Nicklin also noted that, as long as defendants do nothing to mislead or obstruct, they can hardly be criticised if they decided to follow Napoleon's advice ‘not to interrupt an enemy when they were making a mistake’, thereby restating the argument from [***Woodward -v- Phoenix healthcare Distribution Ltd*** **[2019] EWCA Civ 985**](https://lexlaw.co.uk/wp-content/uploads/Woodward-v-Phoenix-Healthcare-Distribution-Ltd.pdf)** **[44-47] that there is no duty on a defendant to warn a claimant about failure to validly serve a Claim Form. This judgment serves as a stark reminder, to both litigants in person and solicitors alike, that strict adherence to the CPR is vital and the consequences of failing to do so can be fatal to any litigation, which is why you should instruct [specialist litigation solicitors.](https://lexlaw.co.uk/contact-us/) Had the Claimant done so in this matter and the solicitor then failed to serve the Claim Form, there would be strong grounds for a [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) case which would enable him to seek [damages from them](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). You can read the [full judgment here.](https://lexlaw.co.uk/wp-content/uploads/Dr-Theodore-Piepenbrock-v-Associated-Newspapers-Limited-DMG-Media-of-Daily-Mail-General-Trust-plc-The-London-School-of-Economics-and-Political-Science-Joanne-Hay.pdf) ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Solicitor-client dispute: Firm’s failure to update cost estimate Source: https://lexlaw.co.uk/solicitors-london/solicitor-client-dispute-failure-to-update-cost-estimate-scco-detailed-assessment-reduction/ *In a [trial of a preliminary issue](https://lexlaw.co.uk/wp-content/uploads/Newman-v-Gordon-Dadds-LLP-2020-EWHC-B23-Costs-04-June-2020.pdf), [Senior Courts Costs Office](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) [Costs Judge, Master Leonard](https://www.supremecourt.uk/about/costs-officers.html), held that a law firm breached its professional and contractual duties by failing to adequately advise a client on mounting costs and failing to update an initial costs estimate for work on a matter after the estimate was exceeded. * ## Background to detailed assessment proceedings The Defendant firm, [Gordon Dadds LLP](http://www.gordondadds.com/) was retained by Adam Newman (the Claimant) in August 2017 in a family company dispute concerning Jabac Finances Limited (JF Ltd). The ultimate aim of the Claimant was settlement of the dispute without litigation, potentially by way of a [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/). A mediation between the directors of JF Limited did take place in March 2018 but a resolution was not reached. The Claimant received an initial estimate from the solicitors in August 2017 for £10,000 which was set out in the retainer. He subsequently paid almost £76,000 across a series if bills rendered until the end of 2017. The Firm rendered further invoices for the total sum of £61,025 from January 2018 to May 2018, which were unpaid and remained outstanding at the time of the detailed assessment proceedings. The Claimant made an application for detailed assessment to obtain a reduction on the solicitors' bills. On 16 November 2018, the [SCCO](https://courttribunalfinder.service.gov.uk/courts/senior-courts-costs-office) granted an order for detailed assessment of six bills rendered to the Claimant between January 2018 and May 2018 under [section 70 of the Solicitors Act 1974](http://www.legislation.gov.uk/ukpga/1974/47/section/70). In his Points of Dispute (challenge to the solicitors' bill), the Claimant sought to restrict the costs and recoverable fees to the initial estimate of £10,000 provided by the Firm in alleging that there was 'hardly any discussion' from the Firm about the expected costs of the litigation. The Court ordered a hearing of the preliminary issue concerning the issue of estimates and their effect upon the Claimant's bills. ## Claimant's complaints about solicitors firm and potential negligence The Claimant made a number of complaints about the Firm and the work carried out for him, many of which may be considered to have amounted to [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). The Claimant stated that the solicitor had failed to set out his position in writing priori to a meeting of the directors of JF Ltd which prejudiced his position as the solicitor failed to present his case. The Claimant had been suspended as a director of the family company JF Ltd and he alleged that his solicitor failed to adequately advise on any challenge to the suspension. The Claimant further alleged that the solicitors had failed to adequately prepare for his case at the [Employment Tribunal](https://www.gov.uk/courts-tribunals/employment-tribunal). He claimed that the solicitor also failed to advise him of the need to contact the [FCA](https://www.fca.org.uk/) to inform them of his suspension. This led the Claimant to seek alternative advice from another law firm, Shakespeare Martineau to maintain his [FCA authorisation](https://www.fca.org.uk/firms/authorisation) which resulted in further costs. The Master acknowledged the Claimant's complaints and has referred to them in his judgment, however he stated that they were not matters raised for the purposes of the detailed assessment and made no finding of them. ## Solicitors fail to provide adequate estimate or costs advice It was held in this case that the solicitors had failed to provide the Claimant with any estimates of potential future costs, save for a very limited estimate in August 2017 of £10,000 plus VAT for initial work. The Firm in this case failed to produce evidence to satisfy the Court otherwise. Master Leonard held the firm's failure to advise adequately on estimates was in breach of its contractual and professional obligations and prevented the Claimant from seeking alternative representation. > The Defendant's failure to provide any further estimates of potential future costs after August 2017 deprived the Claimant to make an informed choice as to whether to seek out less expensive representation for the litigation that followed ## Solicitors' costs not limited to initial estimate Despite agreeing with the Claimant that the Firm had failed to provide an updated estimate beyond the estimate of £10,000 in August 2017, Master Leonard did not agree that the costs the Firm should be able to recover should be limited to £10,000. It was accepted that the Firm had delivered regular bills to the Claimant and therefore the Claimant had been aware of the fees being charged every month. The Master further held that the strategy to achieve settlement which carried the cost estimate of £10,000 would have changed at the failed mediation in the early stages of the matter. The Master concluded that the costs that the Defendant can reasonably recover from the Claimant should not be limited to any specific figure. The case will now proceed to detailed assessment. Read the full judgment for [Newman v Gordon Dadds LLP [2020] EWHC B23 here](https://lexlaw.co.uk/wp-content/uploads/Newman-v-Gordon-Dadds-LLP-2020-EWHC-B23-Costs-04-June-2020.pdf). ## Solicitor client disputes The judgment highlights the importance of seeking legal advice on any challenge to solicitors' bills from the outset, to be able to narrow down issues in dispute and strengthen a case for detailed assessment. It is also advisable to seek advice on any complaints against solicitors in the event you have a potential claim for [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/) and you should avoid becoming time barred. Our [costs team](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/) and [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/) can assist you in such matters. If you have received a bill or bills from your solicitors and you think that the fees are higher than they should have been then a specialist court exists to deal with such disputes with its own rules and guidance. Many law firms simply do not understand what is a niche area of legal practice. Unlike most law firms, we understand [solicitor/client costs disputes](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/). ## City of London Specialist Legal Costs Lawyers Our [SCCO Legal Costs Dispute Lawyers](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/) are experienced in checking and disputing legal fees. We are experts in assessing whether the time claimed for is reasonable and whether your solicitor may have overcharged. We are well versed in both negotiating a reduction with your solicitor and attending detailed assessment proceedings at court if necessary. Our team have an in-depth knowledge of litigation against the client or solicitor under the [Solicitors Act 1974](http://www.legislation.gov.uk/ukpga/1974/47/contents). --- # Damages Based Agreements: High Court confirms DBA enforceability Source: https://lexlaw.co.uk/solicitors-london/damages-based-agreements-dba-high-court-judgment-lexlaw-vs-shaista-zuberi-comments-analysis-legal-advice/ *Judgment has been handed down today by the High Court in the case of[ LEXLAW Ltd v Shaista Zuberi [2020] EWHC 1855 (Ch)](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf). The [judgment](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf) provides much needed judicial clarity on the use of damages based agreements (DBAs) by lawyers.* *The Damages Based Agreements Regulations 2013 allow legal representatives such as solicitors and barristers to share a percentage of the fruits of litigation with clients. The key question in this trial of a preliminary issue was whether a DBA was unenforceable if it included a payment provision other than the percentage share operable in the event of early termination. The High Court found that the Defendant’s attempt to escape payment under the DBA by asserting it was void and unenforceable for having a payment mechanism in the event of early termination was wrong and entirely contrary to what Parliament was trying to achieve in respect of DBAs.* *HHJ Parfitt found that the DBA was not void nor unenforceable as such an interpretation would be wholly inconsistent with Parliamentary intent, the structure of the CLSA and the 2013 Regulations and would produce a result that would be “irrational” - that is, such a construction would prevent a solicitor recovering time costs in any circumstances other than when the agreement continued to apply at the conclusion of successful litigation.* ## Summary Lexlaw Solicitors & Barristers, a Middle Temple based litigation law firm, brought the claim against Ms Shaista Zuberi in respect of her non-payment of fees due pursuant to a DBA. The fees sought amounted to 10% plus VAT of the damages she received in an underlying Financial Services dispute with two major UK banks. Ms Zuberi had been mis-sold a speculative and complex financial swap instrument with a peak notional value of £2,321,800.00 by National Westminster Bank Plc (NWBD) and the Royal Bank of Scotland Plc (RBS.L) which had caused her to suffer a massive financial loss made up of past, ongoing and future swap payments. The Claimant law firm worked on the matter for several years, both in the format of High Court litigation and in an FCA-agreed interest rate hedging product review scheme. Representation in the review was initially by Ms Zuberi’s accountant who failed to get her acceptable compensation. Eventually, after considerable legal pressure both in the litigation and in the review scheme, the Banks indicated they would provide a significantly improved redress offer to Ms Zuberi giving her a financial benefit in excess of £1 million. Shortly after that indication, Ms Zuberi purported to terminate the DBA. She argued that no money was due under the DBA (or at all) as the DBA was void and unenforceable under [section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) as it included within it an obligation for her to pay legal costs and expenses in the event of early termination. Such an early termination payment clause was expressly permitted in the regulations in respect of employment matters but the regulations were silent in respect of contentious litigation matters that could only be conducted by regulated solicitors and barristers. ## What is a Damages Based Agreement (DBA)? Damages-based agreements were first introduced as a form of funding for civil cases on 19 January 2013 when [section 45 of the* Legal Aid, Sentencing and Punishment of Offenders Act 2012* ](http://www.legislation.gov.uk/ukpga/2012/10/section/45)(“**LASPO**”) came into force. The effect of [s45 LASPO](http://www.legislation.gov.uk/ukpga/2012/10/section/45) was to introduce an amendment to [section 58AA of the *Courts and Legal Services Act 1990*](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA)* *(damages-based agreements). The 2013 Regulations were made pursuant to an amended[ section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) (“Section 58AA” and “the CLSA”). The relevant section is found in Section 58AA: > 58AA **Damages-based agreements** > > (1) A damages-based agreement which satisfies the conditions in subsection (4) is not unenforceable by reason only of its being a damages-based agreement. > > (2) But (subject to subsection (9)) a damages-based agreement which does not satisfy those conditions is unenforceable. > > (3) For the purposes of this section— > > (a) a damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that— > > (i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and > > (ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained; > > (4) The agreement— > > (a) must be in writing; > > (aa) must not relate to proceedings which by virtue of section 58A(1) and (2) cannot be the subject of an enforceable conditional fee agreement or to proceedings of a description prescribed by the Lord Chancellor; > > (b) if regulations so provide, must not provide for a payment above a prescribed amount or for a payment above an amount calculated in a prescribed manner; > > (c) must comply with such other requirements as to its terms and conditions as are prescribed; and > > (d) must be made only after the person providing services under the agreement has complied with such requirements (if any) as may be prescribed as to the provision of information. > > [section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) ## Trial of a Preliminary Issue In spite of obtaining compensation exceeding £1 million the Defendant refused to pay arguing instead that the DBA was unenforceable under section 58AA of the Courts and Legal Services Act 1990 as the DBA included within it an obligation on the Defendant to pay Lexlaw’s costs and expenses on termination. By judgment dated 26 June 2018, Master Clark ordered the trial of a preliminary issue in the claim as follows:  > “*Whether the DBA is enforceable by virtue of section 58AA(2) of the CLSA 1990, by reason of failing to satisfy the conditions in section 58AA(4) CLSA 1990, as pleaded in paragraph 64 to 71 of the Amended Defence dated 22 June 2016*”. > > Lexlaw Ltd v Zuberi [2017] EWHC 1350 (Ch) (09 June 2017) ## The High Court Judgment HHJ Parfitt agreed with [Lexlaw](https://lexlaw.co.uk/)’s position. The statutory background and context is of particular relevance because section 58AA and the 2013 Regulations extended DBAs to litigation. The 2013 Regulations replaced the previous 2010 Regulations and in doing so made provision for DBAs to be used in both litigation and employment matters.  In both restrictions are set out on the payments that can be made by clients from dispute recoveries but only in employment matters do the 2013 Regulations explicitly provide for provisions dealing with payment on termination. The key provision in dispute between the Defendant and Lexlaw was the interpretation and meaning of Regulation 4(1) and in particular “*a damages-based agreement must not require an amount to be paid by the client other than – (a) the payment…and (b) any expenses…*”. The DBA between the parties required the Defendant to pay time costs to Lexlaw if she terminated and consequently the Defendant sought to argue that the DBA contained a requirement which is not allowed under the 2013 Regulations thus making it unenforceable.  However, the Defendant’s submissions were rejected by HHJ Parfitt at paragraph 62 of the judgment: > *“Primarily, I disagree for the contextual reasons I have summarised above. The suggested construction by the Defendant is inconsistent with the purpose of the legislation and the structure of the CLSA and the 2013 Regulations.  It produces a result which, in context, would be irrational and without apparent justification. In a similar way, if the legislature considered it necessary that damages-based agreements should prevent the solicitor recovering time costs in any circumstances other than when the agreement continued to apply at the conclusion of successful litigation then it would have said so in terms and not as a side consequence of addressing a different subject – how sharing the spoils should work ”* > > [*LEXLAW Ltd v Shasita Zuberi* **](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf)*[[2020] EWHC 1855 (Ch)](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf)* at paragraph 62 HHJ Parfitt agreed with Lexlaw’s submissions for a number of reasons: > *a.   There would be an inexplicable difference between employment matter representatives and general civil representatives.  The Defendant has suggested no positive reason why the legislature would want to allow employment representatives to recover work done costs on a client termination (regardless of the ultimate outcome of the dispute) but disallow such recovery by non-employment representatives.* > > *b.  A choice by the legislature to prevent a non-employment representative to get incurred costs on such termination would be inconsistent with the expressed purpose of not needing to regulate as between legal representatives and clients, in contrast with needing to do so in the employment sphere where clients might deal with unregulated service providers.* > > *c.   It would be inconsistent with the enabling legislation which provided for regulations to address separately (a) the sharing of recoveries between client and representative and (b) other terms and conditions that might be prescribed.  The posited bar on work done costs in a termination situation has nothing to do with (a) but was considered by the legislature to be well within (b) when it prescribed the termination terms for employment matters.  It would be curious to achieve by a side wind that which would most obviously be done using the power to make T&C Conditions, if that was what Parliament wanted to do.* > > *d.  It would restrict a general civil representative’s time costs recovery in a situation which is not to do with enabling the sharing of the spoils of litigation – i.e. it would impose a limitation on freedom of contract without any justification arising from the express purpose of legalising damages-based agreements.* > > *e.   It is an obvious consequence of preventing representatives getting their time costs on a client termination that those representatives would be reluctant to enter into damages-based agreements and that would be contrary to the purpose of making such agreements lawful so as to facilitate access to justice.* > > *f. This would have the knock-on consequence of creating less choice (within regulated representatives) for clients wanting to bring general civil litigation claims than in employment claims, again contrary to the purpose of the expansion of damages-based agreements into general civil litigation. * > > *g.  It is no answer to posit client agreements in general civil disputes that would prevent a client from terminating the agreement because that would be an unreasonable fetter on a client’s right not to continue with the representative they want and again why regulate in the employment area but not the general civil area if the intention was to be more restrictive of a representative’s cost recovery in the civil litigation arena.  The legislature did provide regulations for employment matters that recognised but restricted the parties’ contractual rights to terminate to protect market participants (regulation 8(3), client termination; regulation 8(4) representative termination).”* > > *[LEXLAW Ltd v Shasita Zuberi](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf)* *[[2020] EWHC 1855 (Ch)](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf)* ## Comments This question is of paramount importance to the legal profession and to all litigants as a whole. Should a DBA be unenforceable for reasons that it includes an obligation on a client to pay a solicitor’s time costs and expenses on early termination then DBAs would not be of any utility as a method of funding meritorious litigation claims and widening access to justice. Cunning and commercially savvy clients would be granted a judicial imprimatur to exploit the defects of the DBA Regulations 2013 by terminating the retainer with their legal representatives on the eve of successful litigation or settlement and evading all liability, even on a quantum meruit basis, to pay for work that the legal representative had carried out on the client’s behalf. This is clearly not what was envisaged or intended by Parliament. Mr[ M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), a dual qualified barrister and solicitor practising at City of London law firm[ LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/), stated: > "*HHJ Parfitt’s landmark judgment provides welcome judicial clarity on the validity of early termination payment clauses in DBAs which in turn promotes access to justice as more legal professionals will now be willing to enter into such funding arrangements.”* > > [M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), Senior Partner at LEXLAW Mr[ Karim Oualnan](https://lexlaw.co.uk/our-people/karim-oualnan/), a solicitor and partner at City of London law firm[ LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) with conduct of the proceedings stated: > *“It is common knowledge that the DBA Regulations 2013 have a number of serious drafting gaps and thereby have to date failed to achieve their goals. Where a joint venture approach has been agreed and the risk of funding a claim to conclusion has been taken up by a legal professional and success has been achieved, it is clearly inequitable to seek to evade fair payment. Such an outcome could never have been Parliament's intention yet the drafting of the regulations allowed such meritless argument. This is an important judgment for lawyers and clients equally as it provides much needed judicial clarity on the effect of termination in respect of DBAs in litigation matters but more needs to be done and the recommendations of the [Civil Justice Council’s](https://www.judiciary.uk/related-offices-and-bodies/advisory-bodies/cjc/) DBA Regulations Reform Project (An Independent Review of the DBA Regulations 2013) need to be progressed. I hope that this judgment will go some way in putting DBAs (and amendments of the DBA Regulations) back on the agenda as a means of promoting and furthering individual access to justice particularly during these unprecedented and uncertain economic times”.* > > [Karim Oualnan](https://lexlaw.co.uk/our-people/karim-oualnan/), Solicitor at LEXLAW ## Statement by Lexlaw https://issuu.com/lexlawuk/docs/100720_statement_lexlaw_v_zuberi_dba_judgment DAMAGES BASED AGREEMENTS: HIGH COURT CONFIRMS ENFORCEABILITY OF CIVIL LITIGATION DBAS THAT PERMIT REPRESENTATIVES FEES TO BE PAID ON EARLY TERMINATION ## Download the High Court Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-6.png)](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf)[Download the High Court judgment in Lexlaw Ltd v Shaista Zuberi here](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf) ## Contact details [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) is a unique law firm that partners solicitors and barristers and is the only law firm based in the Middle Temple (an Inn of Court). The City of London Law Firm specialises in Financial Services Litigation and is regularly instructed in high-profile high-value litigation disputes. The senior partner, Mr M. Ali Akram, can be contacted via email on [maa@lexlaw.co.uk](mailto:maa@lexlaw.co.uk) or by telephone on 020 7183 0529. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Update on Business Interruption Insurance test case Source: https://lexlaw.co.uk/solicitors-london/update-business-interruption-insurance-test-case-fca-high-court-litigation-covid-19-bi-claim-advice/ *The FCA’s test case on the limits of [Business Interruption Insurance ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)will have significant impact on insurers and policyholders. The FCA has filed its reply and skeleton arguments and the 8 day hearing at the High Court has commenced. * *[The FCA’s test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) is likely to be the quickest route to clarity on whether losses caused by Covid-19 are covered by Business Interruption insurance. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic. This case is focused on the remainder of policies that could be argued to include cover.* ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## What has happened in the FCA test case so far? [On 10 June 2020](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/), the FCA filed its [Claim Form](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-claim-form.pdf) and [Particulars of Claim](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-particulars-of-claim.pdf). The First Case Management Conference took place on 16 June 2020. The Insurer’s Defences were published on 24 June 2020. At the [Case Management Conference](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/) the court allowed intervening claims by certain other policyholder representatives (the Hiscox Action Group and the Hospitality Insurance Group) so that they may be heard at trial on the issues that relate to their policy wordings. The trial of the claim has commenced and is taking place across eight days from 20 July, and is being heard by Lord Justice Flaux and Mr Justice Butcher. ## The Insurers’ Defences The gist of the Defences is that ultimately the Insurers plead that the pandemic and the government’s reaction to it do not trigger policy coverage. They argue that the pandemic is a national issue which should not be covered by Business Interruption Insurance (and not a local issue which must be covered by policies). In addition, although the government imposed restrictions on businesses, some businesses could still stay open and operate (for example restaurants with takeaway services). ## The FCA's Reply The Reply rejects the Insurers' Defences. In short, they depend upon adopting unduly restrictive meanings of particular words (such as ‘prevention’ and ‘occurrence’) and approaches to proof as to the presence of COVID-19, and causal tests prescribing unrealistic, impractical counterfactuals, depriving the cover clause of much of its apparent and intended scope, none of which reflect what the reasonable person in the position of the parties would understand. Furthermore, the Reply argues that the Defences fail properly or at all to take account of the relevant matrix and the true nature of the insurance provided, including but not limited to: - the insureds are generally very small businesses or SMEs, many within the jurisdiction of the FOS;- the insureds are generally unsophisticated purchasers of insurance;- the policies provide generally low, or very low, limits of indemnity for the business interruption cover;- the policies are meant to be (either because of their stated terms and/or their nature) readily comprehensible to these purchasers of the insurance; and - the policies were generally purchased “off the shelf” in standard form written by insurers, whether through brokers or not. ## Download the FCA's Reply [![](https://lexlaw.co.uk/wp-content/uploads/image-7.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-fca-defences-reply.pdf) ## Is my business entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why use a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # APPG complaint to SRA against Lloyds’ legal advisers Herbert Smith Freehills in HBOS review scheme Source: https://lexlaw.co.uk/solicitors-london/appg-sra-complaint-hbos-lloyds-solicitors-herbert-smith-freehills-fraud-litigation/ *The [All-Party Parliamentary Group ("APPG")](https://www.parliament.uk/about/mps-and-lords/members/apg/) have submitted a lengthy [complaint](https://lexlaw.co.uk/wp-content/uploads/APPG-complaint-to-SRA-Herbert-Smith-Freehills-Lloyds-Banking-Group-HBOS.pdf) to the [SRA](https://www.sra.org.uk/) against [Herbert Smith Freehills](https://www.herbertsmithfreehills.com/), legal advisers to [Lloyds Banking Group](https://www.lloydsbankinggroup.com/) during the lender's compensation review scheme in relation to fraud at [HBOS](https://www.bankofscotland.co.uk/). The scheme is due to reopen following Sir Ross Cranston's report that Lloyds' original customer review had ‘serious shortcomings’*. In a [21 page complaint](https://lexlaw.co.uk/wp-content/uploads/APPG-complaint-to-SRA-Herbert-Smith-Freehills-Lloyds-Banking-Group-HBOS.pdf) to the [Solicitors Regulation Authority ("SRA")](https://www.sra.org.uk/consumers/problems/), APPG MPs have alleged that City of London law firm, [Herbert Smith Freehills](https://www.herbertsmithfreehills.com/) has either compromised its independence or provided incompetent advice in advising [Lloyds Banking Group ("Lloyds")](https://www.lloydsbankinggroup.com/) on the [HBOS](https://www.bankofscotland.co.uk/) Reading scandal. ## HBOS fraud review compensation scheme Stated in the submissions as "*one of the biggest frauds in English banking history*", the complaint concerns large-scale fraud which took place at Lloyds HBOS Reading branch estimated to have caused losses of around £1 billion. Six people, including directors of HBOS’ Impaired Assets Division in Reading, were sentenced to jail in January 2017 for defrauding and forcing vulnerable businesses customers into distress between 2003 and 2007 by referring the companies into a restructuring and turnaround unit. This led to excessive fees, charges and debts which the companies could not handle. The solicitors firm, Herbert Smith Freehills (HSF) was instructed by Lloyds to assist with the review of compensation for fraud victims. This was intended to be an independent review carried out by Professor Russel Griggs. Lloyds denied any liability for fraud and it appeared from the review scheme findings that Lloyds was the only victim of the fraud to have suffered financial loss and that all the business failures and all of the suffering were of Lloyds customers were due to their own making. ## Shortcomings in inadequate HBOS review scheme Following widespread public and Parliamentary concern about the review, a former High Court judge, Sir Ross Cranston investigated and published a [report](https://lexlaw.co.uk/wp-content/uploads/Sir-Ross-Cranstons-report-HBOS.pdf) stating that there were "serious shortcomings" in the review process. > Professor Griggs was placed in an impossible position and his appearance of independence was undermined by the way the process was structured. ## APPG's regulatory complaint to the SRA regarding legal advisers in HBOS review scheme Beyond the allegations against Lloyds HBOS, the APPG have submitted a complaint to the Solicitors Regulation Authority, the regulator of HSF who were legal advisers to Lloyds at the time. APPG have requested assurances from the SRA that: - HSF’s knowledge of the ‘Reading Incident’ was not such as at any time to compromise its ability to exercise independent judgment.- HSF was not responsible for the unreasonableness and unfairness in the review scheme in either:Structure (including the decision as to what information was provided to the bank’s customers/victims); or- Implementation (in devising the relevant tests applied by Professor Griggs in his evaluation of their claims) of the review scheme.- So far as HSF was responsible for unreasonableness and unfairness in the review, the cause was incompetence of HSF and inadvertence rather than intentional/designed unfairness and unreasonableness.- HSF at no point ceased to maintain proper professional independence so that it aligned its own interests and actions with those of its client so as to subordinate to those interests its higher duties and independence of judgment owed as solicitors and officers of the court. This, in particular, in presenting to the victims and public under the Griggs Review the misleading impression that LBG was the only victim of the fraud to have been caused financial loss, that all the business failures and all of the suffering were of LBG’s customers’ own making and the related ‘unacceptable’ denial of liability by LBG. - HSF has taken proper steps to correct statements of fact made by it on behalf of LBG as its client in or about 2014 to statutory bodies/authorities that Ms Masterton had prepared the PLT report without instructions from LBG, but rather of her own volition and at her own initiative, statements now known to have been false. It would also seem appropriate for the SRA to be satisfied that at the time those statements were made, given their importance, HSF was reasonably satisfied that the statements made were true.- So far as HSF were unable to appreciate that Professor Griggs had been placed in an impossible position and that his appearance of independence had been compromised, and that this had happened by oversight rather than design, the SRA will take such steps as it is able to in ensuring appropriate relevant guidance is provided by the Law Society to the solicitors’ profession. ## Were you a victim of the HBOS Reading fraud scheme? Sir Cranston found that the review process, which involved 1919 victims of the fraud, had been unsatisfactory and this has led to Lloyds being forced to set up another review (to be carried out under former High Court Judges Sir David Foskett or Dame Linda Dobbs) to examine the extent to which it may itself be said to have covered up the Reading scandal since the time it acquired HBOS. Sir Cranston has recommended that an independent body (‘the Panel’) be set up to reassess the direct and consequential losses suffered by victims of the HBOS fraud. If your business was a victim of the HBOS fraud scheme you may be entitled to have your complaint reassessed. Our specialist litigation team (who successfully assisted clients in the [FCA IRHP review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) and [RBS GRG complaints process](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fca-rbs-grg-solicitors/)) can be instructed to assist you in the review once the Panel has published its methodology and procedure. ## Instruct our banking and fraud specialist litigation lawyers Our [Financial Services Litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) team of Solicitors and Barristers in London are highly experienced in this area of banking litigation and have acted on IRHP mis-selling, GRG and LIBOR rigging claims against major UK banks including Lloyds, RBS and Barclays. Our high profile and high value cases regularly appear in the [national and international media](https://lexlaw.co.uk/media-interest/). Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks.  --- # Norwich Pharmacal Pre-Action Disclosure Order granted for barrister to disclose defamatory Twitter messages Source: https://lexlaw.co.uk/solicitors-london/high-court-norwich-pharmacal-relief-pre-action-disclosure-cpr-litigation/ *In the High Court case of [Collier & Ors v Bennett](https://lexlaw.co.uk/wp-content/uploads/Collier-Ors-v-Bennett-2020-EWHC-1884-QB-15-July-2020.pdf), three claimants obtained a Norwich Pharmacal order against [Doughty Street Chambers](https://www.doughtystreet.co.uk/)' barrister, [Daniel Bennett](https://uk.linkedin.com/in/daniel-bennett-43647426) for pre-action disclosure of messages and details of a Twitter account to assist victims of [libel](https://lexlaw.co.uk/defamation-libel-and-slander-claims/) and [harassment](https://lexlaw.co.uk/private-prosecutions-lawyers-london/). * The case concerned a [Twitter](https://twitter.com/) account "Harry Tuttle", for which [Daniel Bennett](https://uk.linkedin.com/in/daniel-bennett-43647426) accepted responsibility and tweets posted from the account harassing activists campaigning against antisemitism in the Labour Party. Three anti-Semitism campaigners, one of whom is David Collier, [Rachel Riley](https://en.wikipedia.org/wiki/Rachel_Riley) and [Tracy Ann Oberman](https://en.wikipedia.org/wiki/Tracy_Ann_Oberman) in claiming [defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims/) and [harassment](https://lexlaw.co.uk/private-prosecutions-lawyers-london/), sought disclosure of tweets which had been deleted and the metadata surrounding the same. This would enable them to use the tweets in evidence and also assess who had access to the accounts i.e. by revealing IP addresses of where the account had been accessed and where tweets had been posted. ## Scope of Norwich Pharmacal application narrowed The claimants initially sought not only the identity of the user of the account but all tweets, metadata and analytics referring directly or indirectly to the claimants from 2010 to 2019. The defendant barrister argued that the claimants were carrying out a 'fishing expedition' and that the publication of the tweets were outside the limitation period, which is one year for defamation claims. The Judge agreed with the defendant to some extent and indicated that the scope was too wide and the claimants eventually narrowed their application to focus on just the identity of *Harry Tuttle *and on a much shorter time period for documentary disclosure from March 2018 to 9 July 2019. He concluded that he did not consider that seeking the identity of a publisher and a limited number of focused publications could be regarded as "fishing". ## Conditions of Norwich Pharmacal relief Taking into account [CPR 31.18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.18) and relevant case law, the Judge carefully considered the legal principles of Norwich Pharmacal relief and the test to be applied. - The applicant has to demonstrate a good arguable case that a form of legally recognised wrong has been committed against them by a person (the Arguable Wrong Condition);- The respondent to the application must be mixed up in so as to have facilitated the wrongdoing (the Mixed Up In Condition);- The respondent to the application must be able, or likely to be able, to provide the information or documents necessary to enable the ultimate wrongdoer to be pursued (the Possession Condition);- Requiring disclosure from the respondent is an appropriate and proportionate response in all the circumstances of the case, bearing in mind the exceptional but flexible nature of the jurisdiction (the Overall Justice Condition). In considering each Claimant separately, the Judge was satisfied that the above tests including the Overall Justice Condition were met. ## Tweets held to be defamatory statements The defendant argued that the claimants could not show to the requisite degree that the statements in issue were likely to be defamatory or that the serious harm test would be met. He also argued that the law of defamation concerns publication of "a statement" which is defamatory of the claimant and that only one of the claimants had identified a statement which had been published about them. The Honourable Mr Justice Saini disagreed with the defendant barrister concluding that the statements, if made were arguably defamatory and likely to cause serious harm and therefore the barrister should disclose all tweets and relating metadata and analytics and details of who had access to the Twitter account. ## Pre-action disclosure application The primary purpose of the Norwich Pharmacal application, which succeeded as above, was to identify the owner of the Harry Tuttle account or author of the tweets. The claimants had also made an alternative application for pre-action disclosure under [CPR 31.16](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.16) for the defendant to disclose all tweets on the Harry Tuttle account between March 2019 and 9 July 2019 which referred to the Claimants by name or other reference. The relevant issues to be considered are: - For the purposes of [CPR 31.16(3)(c)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.16) the extent of standard disclosure cannot easily be discerned without clarity as to the issues which would arise once pleadings in the prospective litigation had been formulated- If there would be considerable doubt as to whether the disclosure stage would ever be reached, that is a matter which the court can and should take into account as a matter of its discretion- For jurisdictional purposes the court is only permitted to consider the granting of pre-action disclosure where there is a real prospect in principle of such an order being fair to the parties if litigation is commenced, or of assisting the parties to avoid litigation, or of saving costs in any event. The Judge held that where he could not conclude that there would have been a claim at all, let alone a claim with a real prospect of success, the Court would not permit a [pre-action](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) application. Whilst the Judge did not consider that the third claimant, Ms Oberman, could show a harassment claim with sufficient prospect of success, he was satisfied that the first and second claimants would succeed in a pre-action disclosure application in respect of the libel claim. In conclusion, the first and second claimants' claims for [Norwich Pharmacal relief](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/) and pre-action disclosure, albeit modified by the Court and narrowed, succeeded. Read the full judgment here: [*Collier & Ors v Bennett* QB-2020-000588](https://lexlaw.co.uk/wp-content/uploads/Collier-Ors-v-Bennett-2020-EWHC-1884-QB-15-July-2020.pdf). ![norwich pharmacal order pre-action disclosure CPR application litigation high court](https://lexlaw.co.uk/wp-content/uploads/Collier-Ors-v-Bennett-.png) ## What is a Norwich Pharmacal order? A Norwich Pharmacal order (NPO) requires an individual or organisation involved in wrongdoing, whether intentionally or innocently but who is unlikely to be a party to the proceedings to disclose certain documents or information to the applicant. You may wish to apply for an NPO to identify a wrongdoer, obtain the source of information contained in a publication, trace assets and identify the full nature of the wrongdoing to enable you to plead your case. A Norwich Pharmacal Order can be used in [defamation](https://lexlaw.co.uk/defamation-libel-and-slander-claims/) proceedings where one can apply for an order for a website or social media platform to disclose details of a user account publishing defamatory statements about the individual or organisation (*[Totalise plc v Motley Fool Ltd [2001] EWCA Civ 1897](https://www.bailii.org/ew/cases/EWCA/Civ/2001/1897.html)*). Norwich Pharmacal relief should be used where [CPR 31.16](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.16) and [31.17 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.17)are not applicable. An application can be made under CPR Parts [8](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part08) and [23](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part23). The applicant will normally be required to pay the respondent’s legal cots and the costs of providing the disclosure sought however can seek to recover these costs from the wrongdoer. In accordance with the general rule under [CPR 31](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31), the information disclosed can only be used for the purpose of the proceedings in which it was disclosed (*[CPR 31.22](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31#31.22)*). The respondent may be able to refuse to provide the information on the basis of privilege against self-incrimination. ## Instructing our disclosure specialist litigation lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We can advise you from the outset and throughout the disclosure process to include pre-action [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) from parties to the proceedings in addition to [non parties](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/). Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Bridging Loans: When are interest rates & charges unfair? Source: https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/ *Bridging loan companies tend to be predatory and aggressively pursue debt recovery cases to the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) to obtain an eviction notice once a borrower has defaulted on the loan. Members of our legal team are also [insolvency and winding up petition experts](https://windinguppetitionsolicitors.co.uk/) so if our clients face [winding up proceedings](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) or appointment of receivers as a result of a mis-sold bridging loan we can quickly assist and advise in these areas. It is important to contact specialist bridging loan lawyers immediately because further delay means that the lender takes up all your equity in default interest and court costs.* ## What is a bridging loan? [Bridging loans](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) are a temporary short term financing option normally with a maturity of less than 18 months secured against a property. Bridging finance provides fast access to cash ordinarily used by a borrower purchasing a property to bridge the finance gap between the sale date of the current property and the completion date of the new property. However, [bridging loans](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) are ordinarily a financing means of last resort given that they come with much higher interest rates than traditional mortgages and are typically offered by advisers, specialist bridging finance companies and mortgage brokers and are not normally offered by high street banks. Failure to repay a bridge loan will likely lead to repossession and very significant adverse costs consequences. ## Why are bridging loans risky for a borrower? Whilst personal [bridging loans](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) are regulated by the [FCA](https://www.fca.org.uk/), commercial loans secured against properties for investment are not. Therefore, commercial bridging is unregulated. Unscrupulous lenders may make incorporation of a company a condition precedent of a bridging loan, which on its’ face would means that the loan is unregulated and can lead to hidden charges. Given the short term focus of bridging finance, bridging loans will also be more expensive and have higher interest rates than a traditional mortgage, typically alongside additional legal and administration costs. ## When will a court find the credit relationship between a creditor and debtor is unfair? The key statutory provision is found under section [140A of the Consumer Credit Act 1974](https://www.legislation.gov.uk/ukpga/1974/39/section/140A). The Act enables the court to re-open credit agreements that give rise to unfair credit relationships. The court may make an order under [section 140B](https://www.legislation.gov.uk/ukpga/1974/39/section/140A) in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following— - any of the terms of the agreement or of any related agreement;- the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;- any other thing done (or not done) by, or on behalf of, the creditor (either before or after the- making of the agreement or any related agreement).- In deciding whether to make a determination under section 140 the court has regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor). ## In what circumstances will a court find that interest rates are unfair? Although [section 140B](https://www.legislation.gov.uk/ukpga/1974/39/section/140A) does not mention interest rates when defining when a relationship between a creditor and debtor might be unfair, it is clear from legal precedent that interest rates and charges are factors to be taken into account. For example, in [Patel v Patel [2009] EWHC 3264 (QB)](https://lexlaw.co.uk/wp-content/uploads/Patel-v-Patel.pdf), an unfair relationship was found where the creditor charged an interest rate 3 times that of retail banks, compounded monthly, which was regarded as "exorbitant" and compounded in that case by a "lack of transparency" by the creditor. In [Chubb v Dean [2013] EWHC 1282 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Chubb-v-Dean.pdf), a second charge short term bridging loan of £176,000 where the interest rate was 1.85% a month compounded on a monthly basis, and what was described as a facility fee of 1.25% per month which was waived if the loan was repaid in full by a set date. The debtor argued that the facility fee amounted to additional interest and that the fee either in itself or in combination with the contractual interest made the relationship between the parties unfair. However, Judge Cooke found the interest rate was not unfair: > "The rate of interest, whether one adds the facility [fee] to it or not, is > high. It is not however, it seems to me, even in combination so high that it would lead the court to the conclusion that the relationship between the two parties to such an agreement was unfair even if the consumer was fully aware of all the terms that he was entering into. There may, of course, be such cases but it seems to me that that would require a very much higher interest rate than even the combination of these two amounts gives rise to in this case. What the defendants signed up to was a stiff commercial bargain, no doubt but it was not in my judgment an unfair one and the relationship that it created was not unfair by virtue of those terms" > > [Chubb and Bruce v Dean and Another [2013] EWHC 1282 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Chubb-v-Dean.pdf), HHJ Cooke Therefore, although a default interest rate of 3% per month (which followed the industry standard at the time) was "a stiff commercial bargain", it was not penal or unfair. This of course leaves open the possibility that a court may find an interest rate higher than 3% to be penal in nature. In addition, other factors persuaded the court in that case that 3% was not unfair such as the fact that the rate was clear on the face of the documents; it was not buried in small print; the borrower was legally advised; the borrowers were intelligent consumers; and they therefore must have known the stiff commercial bargain they were making. Thus, there is the possibility that if there is an agreement with the interest rate buried in the small print made, made with a non-sophisticated borrower, that a default interest rate which does not follow the industry standard, may be regarded by a court as unfair. ## When will a court find that charges in a bridging loan agreement are unfair? The size of charges levied by a creditor are definitely a consideration for a court in determining whether the relationship is unfair. In [Holyoake v Candy [2017] EWHC 3397 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Holoake-v-Candy.pdf) Nugee J confirmed: > “the size of charges made by a creditor to a debtor for further accommodation seems to me to be plainly something that can be taken account of in assessing the fairness of the relationship” [and s.140B(1)(a) and (c)] “expressly confer powers on the Court to require the creditor to repay part of a sum paid by the debtor or to reduce any sum payable by the debtor, and the obvious circumstances in which that would be appropriate would be if the Court thought that a particular charge that had been paid or was payable (a fee, or a rate of interest) was unfairly high”. > > [Holyoake v Candy [2017] EWHC 3397 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Holoake-v-Candy.pdf), Nugee J Precedent is clear that default administration fees can be unfair. In [Greenlands Trading Ltd v Pontearso [2019] EWHC 278 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Greenlands-v-Pontearso.pdf), Nugee J, found that a secured a six month bridging loan with rate of interest of 1.45% per month (i.e. 17.4% per annum), with a £1,995 “default administration fee” and 3% per month default interest fee rate to be paid on default, had an unfair default administration fee. Therefore, for reasons similar to case of [Chubb v Dean ](https://lexlaw.co.uk/wp-content/uploads/Chubb-v-Dean.pdf)above, the 3% interest rate was not unfair but crucially for purchasers of short term secured lender, a default administration fee is. ## Why use a Specialist Bridging Loan Solicitor? Bridging finance is a niche and complex subject matter which most generalist lawyers simply will not be familiar with or understand to a level adequate enough to be able to recognise and formulate a mis-selling claim. Our specialist lawyers are degree level educated in banking and securities law and have professional experience in both financial services regulatory auditing and in litigation against banks, brokers and advisers. This experience has been gained not only at other leading city law firms but at the legal and compliance departments of banks themselves. Our team will ensure your bridging loan mis-selling claim achieves the best possible result in terms of putting you back in the position your business would have been in but for the mis-sold bridging loan. We work to achieve our client’s interests by attempting to negotiate with the banks, mortgage brokers or advisers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of our legal team are also insolvency and winding up petition experts so if our clients face winding up proceedings or appointment of receivers as a result of a mis-sold bridging loan we can quickly assist and advise in these areas. ## Case Study: Lender Default Charge of £150k Completely Defeated Our client was ready, able and willing to redeem a bridging loan except that the Bridging Lender was unlawfully seeking payment of over £150k as a purported contractually agreed default fee (the Purported Default Fee). Our view was that in fact the Bridging Lender was not contractually entitled to the Purported Default Fee under the Loan Agreement, and even if they were so entitled (which they were not) it would be deemed unlawful under the laws of England & Wales (for operating as a penalty and clog fettering our clients equitable right of redemption). Our client instructed us on an emergency basis to seek (a) mandatory injunctive relief to permit redemption per the Agreement; (b) injunctive relief to restrain the lender from anticipatory breach of the Agreement; and (c) put the Bridging Lender on notice of an intention to commence legal proceedings to recover very substantial damages should the Lender breach the Agreement. Our view after our initial fixed fee case review was that no such default fee was due whatsoever. Our advice was not to pay anything at all towards the Purported Default Fee as the contract contained unenforceable penal clauses. Our very robust approach against the Bridging Lender and their legal team worked and forced the Bridging Lender to back down such that our client saved the entirety of the Purported Default Fee. ## Our Mis-sold Bridging Loan Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in mis-selling cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the bridging loan mis-selling claim;- Assisting you in preparation of evidence to support your mis-sold bridging finance case;- Appointing the right short term finance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the defendant(s) and the Court and/or the Financial Ombudsmen Service;- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue or ensuring bankruptcy steps are not taken. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in high value bridging finance mis-selling disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers. --- # Alternative Dispute Resolution: Mediation v Arbitration Source: https://lexlaw.co.uk/solicitors-london/alternative-dispute-resolution-adr-mediation-v-arbitration-pros-and-cons-second-opinion/ *If your case has started and you’re worried about the most effective strategy going forwards, our [will provide a second opinion](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) on the merits of your case and whether settlement can be reached without litigation. Instruct us to advise you on alternative means to resolve a dispute, be it through negotiation, [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) or [arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/) at any stage of your case.* *If you have a dispute that is subject to an [arbitration clause](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/), our team of alternative dispute solicitors and barristers have extensive experience in overseeing all manner of arbitration. We provide authoritative advise on single issue disputes to high value, complex cross-border disputes for individuals, SMEs and companies.* *Our firm is unique in that we are based in a leading set of barristers chambers with access to top level QCs and we are based opposite the [International Arbitration Centre](https://www.int-arb.com/).* ## What is arbitration? [Arbitration](https://lexlaw.co.uk/alternative-dispute-resolution-lawyer-arbitration-advice/) is a form of alternative dispute resolution where an impartial arbitrator makes a final and binding decision to settle a dispute between the parties. Arbitration is utilised as an alternative to litigation as means of resolving disputes without involving the courts. Arbitration is fundamentally based on all parties agreeing to submit the dispute in question to arbitration, for example, by way of an arbitration agreement or a clause in a contract relating to the resolution of disputes. ## Advantages of arbitration - In disputes where the subject matter is highly technical, arbitrators with an appropriate degree of expertise can be appointed (for example in construction disputes).- The arbitration process on the whole is faster than court proceedings (especially at the moment with the courts experiencing delays due to COVID-19).- Arbitration may be cheaper and offer more flexible for companies.- Arbitral awards are generally non-public and can be made confidential (unlike in litigation where judgments are publicly available).- Arbitration awards are generally easier to [enforce](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/) in other countries than court judgments.- If you are successful in arbitration, there are limited avenues for the other party to appeal an arbitral award. ## How does arbitration differ from litigation? - **Contractual foundation:** arbitration is based on contract with the rights and duties of the parties to arbitrate arise from the contract itself.- **Location:** the parties can choose the location of arbitration proceedings.- **Appointment of the arbitrator/panel: **the parties are able to choose the arbitral tribunal.- **Primacy of confidentiality:** arbitration is ordinarily confidental- **Finality of the decision:** a decision by an arbitral tribunal is usually final and cannot be appealed (however a court may set aside an award in exceptional circumstances)- **Enforceability:** tribunal decisions are widely enforceable given the primacy of a number of conventions such as the New York Convention ## What is an arbitration agreement? This is either a free standing agreement or a clause in a contract whereby the parties agree to refer any disputes between them for a binding decision by an arbitrator or arbitral panel chosen by the parties. An arbitration agreement does not necessarily preclude court proceedings (which will depend on the arbitration law of the seat of arbitration). The arbitration agreement will determine important elements of the process, including the number of people on the tribunal, how the arbitrators are selected, where the arbitration takes place and whether the arbitration is conducted in accordance with the rules of a particular arbitration institution or whether it will be ad hoc. ## What is mediation? Mediation makes use of a neutral third party to find an agreement between parties, utilising their expertise. The mediator importantly does not form a decision on the case, they are there simply to facilitate an agreement. However, that is not to say that a mediator will not look at the facts of a case as they may be called to evaluate the strengths and weaknesses of a particular matter. Mediation provides a forum for which parties can develop an understanding of their respective cases, enabling established or new options for resolution to be proposed ## What are the advantages of mediation? - **Time**: Whilst pursuing litigation can take months or years, mediation can be undertaken within a few days. This can pose a significant saving of time for your case.- **Costs**: Similarly, due to the time savings, most matters can be resolved efficiently saving both sides significant costs.- **Control**: With ADR the parties have control over how they proceed with their matter, as they can decide which form best suits their interests. For example, whether or not they want the decision to be legally binding.- **Confidentiality**: Mediation is usually conducted confidentially, which enables full and frank negotiations.- **Business Relationships**: Pursuing ADR as a form of reaching a settlement increases the likelihood of maintaining relationships, as settlements are reached with consent of both parties.- **Requirement**: Parties in contentious disputes are [required by the Courts](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) to attempt ADR and may make adverse costs orders against parties which refuse. ## What are the disadvantages of mediation? - **Costs**: the double edged sword. Whilst mediation is seen as a method to save costs, if unsuccessful it will add time and costs to the dispute.- **Strategy**: the risk with mediation is that you expose your litigation strategy by inadvertently releasing information to the other side.- **Voluntary nature**: As mediation is a non-binding form of ADR uncooperative parties may use it as an opportunity to build legal costs and not act in good faith.- **Disclosure**: mediators do not have the ability to order or require parties to disclose documents which may be essential to an effective mediation. ## Should a solicitor attend mediation? It is usual for your [solicitors](https://lexlaw.co.uk/) to attend the mediation (if instructed to do so), unless it is a low value claim and costs are an issue. Solicitors can serve a useful role in advising you on settlement proposals, which is particularly important in larger and more complex claims. ## Why you should consider ADR **Time**: Whilst pursuing litigation can take months or years, most forms of ADR can be undertaken within a few days. This can pose a significant saving of time for your case. **Costs**: Similarly, due to the time savings, most matters can be resolved efficiently saving both sides significant costs. **Control**: With ADR the parties have control over how they proceed with their matter, as they can decide which form best suits their interests. For example, whether or not they want the decision to be legally binding. **Confidentiality**: The aforementioned procedures are usually conducted confidentially, which enables full and frank negotiations. **Business Relationships**: Pursuing ADR as a form of reaching a settlement increases the likelihood of maintaining relationships, as settlements are reached with consent of both parties. **Requirement**: Parties in contentious disputes are [required by the Courts](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) to attempt ADR and may make adverse costs orders against parties which refuse. ## Our Alternative Dispute Resolution Service We do things differently to other law firms in England & Wales. We will consider your case with you (no matter at what stage your case is at i.e. the pre-action stage, once a claim is issued, when pleadings are submitted, before a Costs & Case Management Conference, before a contemplated mediation). At any stage, if you are unhappy with the way your case is progressing, we provide an alternative dispute resolution service to consider the merits of your case, and if ADR is appropriate, we will transfer the handling of your case to us. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # Update: FCA’s Business Interruption Insurance Test Case Source: https://lexlaw.co.uk/solicitors-london/update-fca-business-interruption-insurance-test-case-disputed-bi-claim-solicitor/ *[The FCA’s test case](https://lexlaw.co.uk/solicitors-london/update-business-interruption-insurance-test-case-fca-high-court-litigation-covid-19-bi-claim-advice/) on the limits of [Business Interruption Insurance ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)will have significant impact on insurers and policyholders. The 8 day hearing at the High Court has commenced.* *[The FCA](https://www.fca.org.uk/firms/business-interruption-insurance) have argued that COVID-19 and the legislative reaction to it should be considered a single cause of lost income and hence should automatically trigger payments on most business interruption insurance policies. Judgment is not expected until September 2020. * *[The test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) has come about as a large number of disputed insurance claims have been made by SMEs under policies covering business interruption (“BI”) losses, particularly – and relevantly in this action – under extensions or other coverage clauses that do not require property damage, instead being focused entirely on events causing an impact to the insured business. * ## Why is the FCA's BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate would be. It is against that background that the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, thus seeks legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your Business Interruption Insurance claim. ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## What has happened in the FCA test case so far? [On 10 June 2020](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/), the FCA filed its [Claim Form](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-claim-form.pdf) and [Particulars of Claim](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-particulars-of-claim.pdf). The First Case Management Conference took place on 16 June 2020. The Insurer’s Defences were published on 24 June 2020. At the [Case Management Conference](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/) the court allowed intervening claims by certain other policyholder representatives (the Hiscox Action Group and the Hospitality Insurance Group) so that they may be heard at trial on the issues that relate to their policy wordings. The gist of the [Defences](https://lexlaw.co.uk/solicitors-london/update-covid-19-coronavirus-fca-business-interruption-insurance-test-case-defences-insurer-litigation-advice/) is that ultimately the Insurers plead that the pandemic and the government’s reaction to it do not trigger policy coverage. They argue that the pandemic is a national issue which should not be covered by Business Interruption Insurance (and not a local issue which must be covered by policies). The Reply rejects the Insurers’ Defences. In short, they depend upon adopting unduly restrictive meanings of particular words (such as ‘prevention’ and ‘occurrence’) and approaches to proof as to the presence of COVID-19, and causal tests prescribing unrealistic, impractical counterfactuals, depriving the cover clause of much of its apparent and intended scope, none of which reflect what the reasonable person in the position of the parties would understand. The trial of the claim has commenced and is taking place across eight days from 20 July, and is being heard by Lord Justice Flaux and Mr Justice Butcher. ## Download the FCA's Skeleton Argument [![](https://lexlaw.co.uk/wp-content/uploads/image-8.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-fca-skeleton-argument.pdf) ## Download Hiscox's Skeleton Argument [![](https://lexlaw.co.uk/wp-content/uploads/image-9.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-hiscox-skeleton-argument.pdf) ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why instruct a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # LCIA launches new Arbitration and Mediation Rules Source: https://lexlaw.co.uk/solicitors-london/lcia-london-court-of-international-arbitration-updated-arbitral-meditaion-rules/ *Our s[pecialist commercial arbitration lawyers](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) have market-leading experience of handling multi-million pound arbitration and bringing complex claims to settlement. We understand the potential benefits of arbitration and how it can be a valuable alternative to litigation, particularly where confidentiality and privacy are of paramount concern. Our clients are confident that their case receives high-level personal care and supervision and all of our commercial arbitration cases are conducted by small, partner-led teams.* *Our firm is unique in that we are based in a leading set of barristers chambers with access to top level QCs and we are based opposite the [International Arbitration Centre](https://www.int-arb.com/).* ## How has Covid-19 impacted arbitrations? These[ forward thinking rules](https://lexlaw.co.uk/wp-content/uploads/LCIA-Arbitration-Rules-PDF-Download-2-1.pdf) have attempted to provide some practical solutions to the challenges now being faced by parties, arbitrators and counsel. The [London Court of International Arbitration](https://www.lcia.org/) have [updated their guidance](https://lexlaw.co.uk/wp-content/uploads/LCIA-Arbitration-Rules-PDF-Download-2-1.pdf) for Arbiters to account for remote Arbitrations. The previous rules and practice did give prominence to electronic communications with the LCIA and the tribunal, but the updates to the rules have introduced even more clarity on the use of electronic communications as a valid method (especially when it comes to applying for expedition of proceedings). > *"The update to the LCIA Rules has enabled us to clarify a number of procedural issues, to emphasise the broad discretion for Tribunals to conduct arbitrations expeditiously and to reflect the ever evolving nature of arbitration including the use of electronic means of communication and virtual hearings. We have endeavoured to do this with a light touch and hope that parties will view the updated rules as a modern, user-friendly means to resolve their international disputes."* > > ***Paula Hodges QC, President of the LCIA*** ## What is arbitration? Arbitration is a form of alternative dispute resolution where an impartial arbitrator makes a final and binding decision to settle a dispute between the parties. Arbitration is utilised as an alternative to litigation as means of resolving disputes without involving the courts. Arbitration is fundamentally based on all parties agreeing to submit the dispute in question to arbitration, for example, by way of an arbitration agreement or a clause in a contract relating to the resolution of disputes. ## Advantages of arbitration - In disputes where the subject matter is highly technical, arbitrators with an appropriate degree of expertise can be appointed (as opposed to litigation).- The arbitration process on the whole is faster than court proceedings.- Arbitration may be cheaper and offer more flexible for companies.- Arbitral awards are generally non-public and can be made confidential.- Arbitration awards are generally easier to enforce in other nations than court judgments.- If you are successful in arbitration, there are limited avenues for the other party to appeal an arbitral award. ## How does arbitration differ from litigation? - Contractual foundation: arbitration is based on contract with the rights and duties of the parties to arbitrate arise from the contract itself.- Location: the parties can choose the location of arbitration proceedings.- Appointment of the arbitrator/panel: the parties are able to choose the arbitral tribunal.- Primacy of confidentiality: arbitration is ordinarily confidental- Finality of the decision: a decision by an arbitral tribunal is usually final and cannot be appealed (however a court may set aside an award in exceptional circumstances)- Enforceability: tribunal decisions are widely enforceable given the primacy of a number of conventions such as the New York Convention ## Download the updated LCIA Arbitration Rules [![](https://lexlaw.co.uk/wp-content/uploads/image-12.png)](https://lexlaw.co.uk/wp-content/uploads/LCIA-Arbitration-Rules-PDF-Download-2-1.pdf) ## Our Alternative Dispute Resolution Service We do things differently to other law firms in England & Wales. We will consider your case with you (no matter at what stage your case is at i.e. the pre-action stage, once a claim is issued, when pleadings are submitted, before a Costs & Case Management Conference, before a contemplated mediation). At any stage, if you are unhappy with the way your case is progressing, we provide an alternative dispute resolution service to consider the merits of your case, and if ADR is appropriate, we will transfer the handling of your case to us. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # Case Study: Supreme Court rules on Reflective Loss in Sevilleja v Marex Financial Ltd Source: https://lexlaw.co.uk/solicitors-london/case-study-supreme-court-judgment-on-reflective-loss-sevilleja-v-marex-financial-ltd-analysis-company-insolvency-advice/ *On 15 July 2020, the Supreme Court handed down judgment in the case of [Sevilleja v Marex Financial Ltd [2020] UKSC 31](https://lexlaw.co.uk/wp-content/uploads/Sevilleja-v-Marex-Financial-Ltd-Rev-1-2020-UKSC-31-15-July-2020.pdf). Their Lordships thoroughly re-examined the [principle of reflective loss](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/case-study-sevilleja-v-marex-financial-ltd-supreme-court-reflective-loss-judgment-analysis/) i.e. the principle that a company’s shareholders cannot recover damages against a wrongdoer for loss which is “reflective” of a loss caused by the wrongdoer to the company itself.* *It has been previously established by the courts that a shareholder cannot bring a claim for a loss suffered by the company (by way of an example, damages based on the diminution in the market value of shares).  The company is the proper claimant and a shareholder’s loss is said to be merely a “reflection” of the loss suffered by the company.* *Our team of litigation solicitors and barristers can advise on a range of company and shareholder disputes. We can provide you with preliminary advice in a fixed fee conference.* ## Background Marex Financial Ltd (“Marex”),  a forex broker, obtained judgment against two separate BVI companies of which Mr Sevilleja was the owner and controller. Following the circulation of the judgment in draft, it was alleged that Mr Sevilleja dishonestly stripped the Companies of their assets, thereby rendering them insolvent.   Marex accused Mr Sevilleja of dishonestly stripping the two companies of its assets and transferring monies from the Companies' English bank accounts into a personal account, so that the Companies would be unable to pay their judgment debt to Marex. Marex issued proceedings against Mr Sevilleja for economic torts, including intentionally causing it to suffer harm by unlawful means. Mr Sevilleja challenged jurisdiction in respect of a prior court decision which had granted permission to serve proceedings out of jurisdiction, resulting in this judgment.  He argued the rule against reflective loss would bar Marex claims. ## What is the Reflective Loss Rule? The reflective loss rule bars a party who has suffered loss through a reduction in value of their interest in a company from claiming directly against the person who caused the loss to the company, rather than letting the company make the claim. This appeal raises the question of how far the rule applies to creditors. ## The Present Appeal The appeal is brought against an order of the Court of Appeal, allowing an appeal against an order made by Knowles J in the Commercial Court. In summary, an application was made to Knowles J to set aside an order giving permission for service of proceedings out of jurisdiction on Mr Sevilleja. The judge held that Marex had a good arguable case that its claim was not precluded by the “reflective loss” principle, and therefore dismissed Mr Sevilleja’s application: [[2017] EWHC 918 (Comm); [2017] 4 WLR 105](https://www.bailii.org/cgi-bin/redirect.cgi?path=/ew/cases/EWHC/Comm/2017/918.html). On appeal, the Court of Appeal accepted that the “reflective loss” principle applied to about 90% of Marex’s claim: [[2018] EWCA Civ 1468](https://www.bailii.org/ew/cases/EWCA/Civ/2018/1468.html); [[2019] QB 173](https://www.bailii.org/cgi-bin/redirect.cgi?path=/ew/cases/EWCA/Civ/2018/1468.html). The effect of the Court of Appeal’s decision is that although Marex’s permission to serve out was not set aside, it can pursue its claim only as regards the 10% of its alleged losses which were conceded not to be “reflective”. ## What were the main issues? The issues in the appeal, as agreed by the parties, were the following: 1. Whether the No Reflective Loss Rule applies in the case of claims by company creditors, where their claims are in respect of loss suffered as unsecured creditors, and not solely to claims by shareholders. 2. Whether there is any and if so what scope for the court to permit proceedings claiming for losses which are prima facie within the No Reflective Loss Rule, where there would otherwise be injustice to the claimant through inability to recover, or practical difficulty in recovering, genuine losses intentionally inflicted on the claimant by the defendant in breach of duty both to the claimant and to a company with which the claimant has a connection, and where the losses are felt by the claimant through the claimant's connection with the company.” Paragraph 22 of the [Judgment](https://lexlaw.co.uk/wp-content/uploads/Sevilleja-v-Marex-Financial-Ltd-Rev-1-2020-UKSC-31-15-July-2020.pdf) ## What was the Supreme Court's judgment in this case? Following a detailed exposition of the origins of the Reflective Loss Rule, the Supreme Court (majority) held that the speech of Lord Bingham in *Johnson *was consistent with the decision in *Prudential* that a shareholder is usually unable to recover a diminution in the value of their shareholding or in dividends/distributions due to them, as a result of loss suffered by the company and where the company has a cause of action to recover such loss (regardless of whether it has declined or failed to take action to recover that loss). In such a situation, any personal action by the shareholder against the wrongdoer is barred. There is no longer any exception to the bar: the case of *Giles v Rhind*, which recognised an exception where the wrongdoer’s conduct prevented the company from pursuing its own claim, has been overruled. In relation to the claims by non-shareholders, and claims pursued by shareholders for other types of loss, the rule no longer applies. It was accepted by the Court that this will give rise to the need to avoid double recovery, but if such a situation arises, the courts will have to resolve these by reference to ordinary principles. ## The Minority Judgment Lord Sales gave the judgment for the minority. In his judgment, he stated that he would abolish the doctrine of reflective loss in its entirety and further noted that the reflective loss principle was a “*flimsy foundation*” on which to “*build outwards into other areas of the law*”.  He concluded by noting that, even if the reflective loss principle exists, it did not apply to the Marex case.  ## What are the implications of this Judgment? This decision confirms the rule against reflective loss as an important tool to protect the payment waterfall for unsecured creditors in the event of a company’s insolvency.  The[ Supreme Court’s decision](https://lexlaw.co.uk/wp-content/uploads/Sevilleja-v-Marex-Financial-Ltd-Rev-1-2020-UKSC-31-15-July-2020.pdf) has confined the principle to the narrow situation in which a shareholder’s claim would, on the majority’s analysis, offend the rule in *Foss v Harbottle* (that is, that the only person who can seek relief for an injury done to a company, where the company has a cause of action, is the company itself).  ## Read the full Judgment here: [![](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2020/07/image-1.png)](https://lexlaw.co.uk/wp-content/uploads/Sevilleja-v-Marex-Financial-Ltd-Rev-1-2020-UKSC-31-15-July-2020.pdf) ## Instruct specialist litigation lawyers Our team of litigation solicitors and barristers can advise on a range of company and shareholder disputes. We can provide you with preliminary advice in a fixed fee conference. ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # New Practice Note: Remote Hearings in the Senior Courts Costs Office Source: https://lexlaw.co.uk/solicitors-london/new-practice-note-remote-detailed-assessment-hearings-in-scco-solicitor-client-costs-dispute-litigation/ *[Master Gordon-Saker](https://www.supremecourt.uk/about/costs-officers.html), the Senior Costs Judge, has published a [Practice Note](https://lexlaw.co.uk/wp-content/uploads/Senior_Courts_Costs_Office_Practice-Note-update.pdf) on 24 July 2020 relating to hearings and detailed assessments in the [Senior Courts Costs Office](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) (SCCO) from 1 August 2020. The [Practice Note](https://lexlaw.co.uk/wp-content/uploads/Senior_Courts_Costs_Office_Practice-Note-update.pdf) updates the guidance based on the SCCO's experience during the coronavirus pandemic. The key point for costs lawyers is that the SCCO expect a greater use of remote hearings in appropriate cases. * *If you have received a bill or bills from your solicitors and you think that the fees are higher than they should have been, then a specialist court exists to deal with such disputes with its own rules and guidance. Many law firms simply do not understand what is a niche area of legal practice. Unlike most law firms, [we understand solicitor/client costs disputes.](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/)* ## What is Detailed Assessment? If a statute bill has been delivered to a client and the client believes they have been overcharged then the client can commence detailed assessment proceedings or a request can be made to the[ Senior Courts Costs Office](https://www.gov.uk/courts-tribunals/senior-courts-costs-office) to make a detailed assessment of the bill. If upon assessment, the bill is determined to be unreasonable, the bill will be reduced. Our costs lawyers have extensive experience in assessment of bill proceedings before the SCCO. ## Practice Note by the Senior Costs Judge ### Introduction 1. As a result of the hard work and determination of the court staff and the willingness to adapt shown by most practitioners we have managed to hear almost all cases listed since March 2020. Very few hearings have been adjourned. 2. Based on our experience over the last few months we can now say how hearings will need to be conducted for the foreseeable future. This practice note applies only to hearings in the SCCO and applies from 1 August 2020. ### Detailed assessment hearings 3. It is for the costs judge or costs officer to decide the format of the hearing. Hearings will fall into one of 3 formats: (1) Remote hearings with the judge and all parties appearing by telephone or video. (2) Partly remote hearings with the judge and one or more parties in court and one or more parties appearing by telephone or video. (3) Hearings with the judge and all parties in court. 4. The notice of hearing sent by the court to the parties will state the format of the hearing. Parties may apply in writing for a different format within 14 days of receipt of the notice of hearing. The court will make the arrangements for video hearings and invitations will be sent to the representatives nominated by the parties. If the hearing is to be held by telephone, the receiving party should arrange the conference call in accordance with paragraph 6.10 of PD 23A, unless the court has directed otherwise. ### Filing papers in support of the bill electronically 5. A party who wishes to lodge its papers in support of the bill electronically should discuss how it should do so with the clerk to the relevant costs judge or with the costs officer well in advance of the deadline for lodging the papers. There are 3 ways in which papers may be filed electronically: a) Via CE File. The size limit on CE File is 50MB although parties can in one filing file up to 10 documents with each not exceeding 50MB: PD51O paragraph 5.2(2). b) With the permission of the court, via the HMCTS document upload centre. This enables the court staff to invite professional court users to upload documents required for hearings, which may be too large to be submitted via CE File. Documents uploaded are then accessible by the costs judge or costs officer. c) With the permission of the court, via a safe third party online file-sharing platform. (However, please note that Ministry of Justice rules prevent costs officers from accessing third party systems). 6. Documents filed electronically, whether by CE File or by the document upload centre, must comply with paragraph 10 of PD 51O and also with the guidance on PDF bundles published at: https://www.judiciary.uk/wp-content/uploads/2020/05/GENERAL-GUIDANCE-ON-PDF-BUNDLES-f-1.pdf They must be formatted as one PDF document with bookmarks as appropriate for each constituent document and must be the subject of optical character recognition. They must be filed not less than 7 days before the start of the hearing, as required by PD 47 paragraph 13.11. ### Filing papers in advance of detailed assessment hearings other than electronically 7. Experience has shown that hearings work much more efficiently where the receiving party has filed its papers electronically. Parties are encouraged therefore to file their papers in support of the bill electronically whether or not they have been working paperlessly. Where the receiving party’s solicitors have been working paperlessly, it is unlikely that the cost of printing their files will be recoverable. 8. If the receiving party files its papers in support of the bill other than electronically: a) The receiving party will nevertheless be expected to file an electronic bundle of key documents (that is, the documents relevant to the issues raised in the points of dispute, but not including the documents already filed by CE File) rather than “core bundles” or the like on paper. The bundle should comply with paragraph 10 of PD 51O and the guidance referred to at paragraph 6 above. b) The papers must be physically received at the SCCO not less than 7 days before the start of the hearing (as required by PD 47 paragraph 13.11). If papers are filed late the hearing may be adjourned. 9. Parties should file electronically any documents to which they will wish to refer at a hearing, because handing up papers or files in hearings may not now be permitted. That will be a matter for the costs judge or costs officer conducting the hearing. 10. Skeleton arguments and the like must be filed electronically (by CE File or email) at least 2 days before the hearing. Statements of costs for summary assessment must be filed using CE File not less than 24 hours before the time fixed for the hearing. ### Applications and criminal costs appeals 11. While applications and criminal costs appeals can be heard in court with the parties present, greater use will be made of remote hearings (by video or telephone) in appropriate cases. The application notice or notice of hearing will identify the format of the hearing. 12. PD 51O paragraph 10.1 requires the applicant to file by CE File an electronic bundle at least 3 days before the hearing in the format required by paragraph 10.3. Provisional assessments and Court of Protection bills 13. Between the parties bills under £75,000 will continue to be provisionally assessed, however the receiving party will not be required to file papers in support of the bill unless expressly requested by the court. The court may request all of the papers in support of the bill or only those relating to a particular issue or issues. Where papers in support of the bill are requested, they should where possible be filed electronically. 14. The provisions relating to detailed assessment hearings (above) will apply to oral hearings of provisional assessments and appeals from costs officers. 15. On the provisional assessment of the bill of a deputy appointed by the Court of Protection, the deputy’s solicitor must still file the papers in support of the bill with the bill, but is encouraged to do so electronically via either CE File or the HMCTS document upload centre (see paragraphs 5 and 6 above). **Andrew Gordon-Saker** **Senior Costs Judge** **July 2020** ## Download the Practice Note by the Senior Costs Judge [![](https://lexlaw.co.uk/wp-content/uploads/image-10.png)](https://lexlaw.co.uk/wp-content/uploads/Senior_Courts_Costs_Office_Practice-Note-update.pdf) ## What happens at the detailed assessment hearing? The Court’s Costs Judge will determine what was a reasonable amount for the solicitor to have charged on their bill based on the challenges raised in the Points of Dispute and the Reply. The Costs Judge examines the bill in detail and in particular, examines how reasonable the costs are to the case’s issues judged on an indemnity basis. Once the SCCO has decided the amount of the bill payable, usually payment must be made within 14 days or the solicitor will be required to return funds to the client together with any accrued interest. ## Can I get my legal costs of the solicitor/client proceedings? Ordinarily, in litigation the CPR provides that the unsuccessful party pays the costs of the successful party. However, in legal costs assessment proceedings, a crucial factor is the amount by which the solicitors’ invoice is reduced by on assessment. According to the Solicitors’ Act 1974: > *“the costs of an assessment shall be paid according to the event of the assessment, that is to say,** if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs**, but otherwise the party chargeable shall pay the costs.”* > > (s.70(9) Solicitors Act 1974) Therefore, if the client reduces the solicitors’ bill by one fifth (20%) or more, then the client is entitled to the costs of the statutory detailed assessment proceedings. ## We represent you at Detailed Assessment Hearings We are based in the legal heart of London as the only law firm in the historic [Middle Temple Chambers](https://www.middletemple.org.uk/) we provide comprehensive nationwide coverage to represent you at any detailed assessment hearing. Unlike most law firms, we are a mutli-disciplinary firm of solicitors and barristers with full rights of audience in England and Wales. We are based just minutes from the Senior Courts Costs Office in the Royal Courts of Justice where all detailed assessment hearings proceed. We regularly represent clients at the Senior Courts Costs Office. ## Not based in London? We provide nationwide representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our [contact form, by email or by phone](https://windinguppetitionsolicitors.co.uk/contact-us/), one of our legal costs team members will contact you by phone to discuss your matter and assess whether we can help you. ## No win No fee for solicitor and own client costs disputes We specialise in [costs disputes](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) at the Senior Courts Costs Office (SCCO) proceeding under the Solicitors Act 1974. That is why we can offer a no win no fee agreement to clients once we have had sight of the relevant papers (and ideally a detailed bill of costs). This means you do not have to pay us anything should your solicitor’s bill not be reduced. We will advise you on the merits of reducing your solicitor’s invoice. Discuss the merits of early protective without prejudice settlement offers. We draft Points of Dispute (for clients) and Points of Reply (for solicitors). We will Represent you at any directions hearing, preliminary issues hearing and the detailed assessment hearing before the SCCO. ## City of London Specialist Legal Costs Lawyers Our [SCCO Legal Costs Dispute Lawyers](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) are experienced in checking and disputing legal fees. We are experts in assessing whether the time claimed for is reasonable and whether your solicitor may have overcharged. We are well versed in both negotiating a reduction with your solicitor and attending detailed assessment proceedings at court if necessary. [Our team](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/) have an in-depth knowledge of litigation against the client or solicitor under the Solicitors Act 1974. As a leading high-profile law firm regularly featured in the national and international media and with a track record of success, you can be assured your Legal Costs claim will proceed with precision and care. --- # Worldwide freezing order against Saudi national discharged Source: https://lexlaw.co.uk/solicitors-london/freezing-order-injunction-mareva-relief-application-cpr-litigation-assets-dissipation-enforcement-judgment-foreign-debt-default-discharge/ *In [Les Ambassadeurs Club Ltd v Albluewi [2020] EWHC 1313 (QB)](https://lexlaw.co.uk/wp-content/uploads/Les-Ambassadeurs-Club-Ltd-v-Albluewi-aka-Sheikh-Salah-Hamdan-Albluewi-And-Mr-Salah-Hamdan-Albelwi-2020-EWHC-1313-QB-22-May-2020-1.pdf), the High Court discharged a [worldwide freezing order](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) (WFO) obtained by a casino against its high net wealth customer in finding that the claimant had failed to establish a real risk of dissipation of assets and that there had been material non-disclosures which were directly relevant to the risk.* ## Background to application for freezing injunction The Claimant, [Les Ambassadeurs Club Limited](https://www.lesambassadeurs.com/) is the owner of a casino based in Mayfair, London and issued proceedings against the Defendant, one of its customers, [Sheikh Salah Hamdan Albluew](http://208.106.152.213/whowe)i, a Saudi Arabia national, for the sum of £2,000,000 plus contratual interest arising out of the dishonour of 17 cheques issued between 7 to 9 September 2019 (and returned unpaid on 25 September 2019) pursuant to a cheque cashing facility and/or a loan for the same sum which was said to be suspended until or unless the cheques were dishonoured. The Claimant did not allege dishonesty however relied on the fact that the cheques had been dishonoured and also on subsequent assurances from the Defendant that the cheques would be honoured. Justice Freedman held that the Claimant had a good arguable case but noted that the proceedings were defended and furthermore the Defendant argued that the debts comprised illegal gambling debts. ## What is a freezing order or injunction? A [freezing order or freezing injunction (formerly known as a Mareva injunction)](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) is an order that is used by a creditor who is concerned that a company may sell their assets and fail to pay the amount due to the creditor. The order can freeze almost any asset including: a company bank account, property, land or investment and shares. ## Claimant's application for worldwide freezing order On 6 February 2020 applied without notice for a [worldwide freezing order ("WFO")](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) against the Defendant, which WFO was granted. On 17 February 2020, the Claimant applied for the continuation of the WFO. In justifying the basis for a WFO, the Claimant claimed that there was no reason to believe that he had sufficient assets within the jurisdiction, and there was a reasonable inference that he had assets outside of England and Wales and not simply in Saudi Arabia. The Claimant made submissions as to the real risk of dissipation which would then make enforcement of a judgment impossible or more difficult. The Defendant had allegedly returned to Saudi Arabia in the middle of his default of the loan agreement, which the Claimant stated was an indication of his intention to remove assets and enforcement of a 'gambling debt' in Saudi Arabia, where the Defendant resided would not be possible. ## Defendant's Challenge to worldwide freezing order The Defendant made a discharge application on 9 March 2020 on the basis that: - there was no real risk of dissipation of assets;- it was not just and convenient to have a WFO; and- the Claimant failed to make full and frank disclosure in its application. ## Court's discharge of worldwide freezing order The Court dismissed the Claimant's application and discharged the WFO in holding there was no real risk of dissipation of assets and the Claimant had failed to give a fair presentation to the Court as to the real risk of dissipation of assets i.e. there had been material non-disclosures regarding the risk therefore a WFO would not be just and convenient. Although the Defendant had returned to Saudi Arabia in the middle of his default of the agreement with the Claimant, the Judge held this coincided with his return to that country. The Judge found that the Defendant had substantial connections with London which were contrary to the Claimant's conclusion that the Defendant would remove all his assets to Saudi Arabia and that he owned assets which exceeded the value of the sums owed to the Claimants in jurisdictions that would be amenable to enforcement. Read the full judgment [here](https://lexlaw.co.uk/wp-content/uploads/Les-Ambassadeurs-Club-Ltd-v-Albluewi-aka-Sheikh-Salah-Hamdan-Albluewi-And-Mr-Salah-Hamdan-Albelwi-2020-EWHC-1313-QB-22-May-2020-1.pdf). ## Importance of full and frank disclosure in application for worldwide freezing order The duty of full and frank disclosure extends to all material facts and not just those known to the applicant but also those which would result from enquiries which would be expected to be made in the course of [applying for a freezing order](https://privateprosecutionservice.co.uk/fast-injunctions-injunctive-relief-freezing-search-unlawful-orders-urgent-london-legal-advice/). Any breaches of the duty of full and frank disclosure can result in a costs order being made against the applicant. ## How to apply for a freezing order? The following documents should be completed which will be best prepared by a solicitor to ensure the best chances in obtaining the freezing order: - Application Notice along with evidence in support if the application.- A draft Order – which will set out the terms for the freezing Order.- Ancillary Orders (only sometimes needed) – this may include an order for cross-examination, delivery of passport, or order for a company receiver. If a freezing order is then granted at a hearing it will usually be made for a specific amount of time and a return date will be fixed for a full hearing. At the full hearing the court will determine whether the injunction should be continued, varied or discharged. ## Specialist Injunction Solicitors in London Our [London Private Prosecution](https://privateprosecutionservice.co.uk/fast-injunctions-injunctive-relief-freezing-search-unlawful-orders-urgent-london-legal-advice/) and [Injunction Lawyers ](https://lexlaw.co.uk/private-prosecutions-lawyers-london/)are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firms location adjacent to the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) in Central London. We have for example obtained an out of hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the [High Court.](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) We ensure that we provide the [best possible outcome](https://privateprosecutionservice.co.uk/private-prosecution-cases/) for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. --- # High Court: Costs penalties for a failure to engage in mediation Source: https://lexlaw.co.uk/solicitors-london/high-court-costs-penalties-for-a-failure-to-mediate-successful-litigant-adr-second-opinion-advice/ The High Court in [Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor [2020] EWHC 1050 (Comm)](https://lexlaw.co.uk/wp-content/uploads/High-Court-costs-mediation-judgment-2020.pdf), following judgment in favour of the defendants disallowed a proportion of the first defendant's costs, for its failure to engage in mediation. It also disallowed a proportion of the second defendant's costs, on the basis that they had been wasted, due to the way in which the second defendant advanced its case. [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. ## What is mediation? [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) provides a private forum in which the disputing parties can better understand each other’s position and then work together (with the assistance of the mediator) to explore options for settling the dispute. ## The Facts in Wales v CBRE The Claimant is an independent financial adviser, who has for many years practised in the name of "Selective Investment Services". He sought to recover commission, in the revised sum of £204,392.44, for his services in connection with the group pension scheme ("the Group Pension Scheme") of a corporate client. The First Defendant ("CBRE") was Mr Wales's corporate client and the Second Defendant ("Aviva") was pension provider. The dispute originates from CBRE's decision to move its employees to a new pensions platform and dispense with Mr Wales's services following legislation for eligible employees to be automatically enrolled on a workplace pension scheme. On 8th January 2020, Judge Halliwell handed down judgment following the trial of these proceedings and made an order dismissing Mr Wales's claims against CBRE and Aviva. This is Judge Halliwell's judgment on costs following a hearing on 11th March 2020. Mr Wales was the unsuccessful party on his claims against each defendant. Under CPR 44.2 he should thus be ordered to pay their costs unless there is good reason to the contrary. ## The Judgment: Costs penalties for a successful litigant who fails to engage in ADR CBRE repeatedly declined and, indeed, refused to participate in mediation. Upwards of eight months before proceedings were commenced, it refused to participate in the three party mediation proposed by solicitors for the claimant. Once proceedings were issued, it was not prepared to refer the dispute to mediation until *"conclusion of pleadings"*. CBRE's conduct in refusing or at least declining to refer the dispute to mediation prior to the issue of proceedings and, again, in the week commencing 17th June 2019, was unreasonable. > CBRE's refusal to engage in mediation prior to the issue of proceedings compounded its failure to provide a detailed response to Clarke Willmott's letter of claim in breach of the requirements of the Practice Direction for Pre-Action Conduct and Protocols. More particularly, at this stage it meant that the parties were denied the opportunity to fully canvass and engage with the underlying issues, including the issues arising from Aviva's erroneous allegation - unchallenged by CBRE - that CBRE had purported to terminate Mr Wales's appointment in September 2012, a fact implicitly concealed from Mr Wales himself. Had CBRE been willing to engage in mediation, there would in all likelihood have been a tripartite mediation in which all the material issues were properly considered and addressed. There is a real prospect that Aviva's erroneous allegation would have been corrected at that stage. There is also a possibility that other issues and obscurities could have been eliminated. CBRE's stance precluded a tripartite mediation and CBRE can be taken to have been aware it would at least imperil bilateral negotiations or discussions between Mr Wales and Aviva. > > > [Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor [2020] EWHC 1050 (Comm)](https://lexlaw.co.uk/wp-content/uploads/High-Court-costs-mediation-judgment-2020.pdf), Judge Halliwell was therefore satisfied that CBRE should be deprived of a substantial proportion (50%) of its costs in the period up to the date when CBRE made an offer to compromise the proceedings. ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-11.png)](https://lexlaw.co.uk/wp-content/uploads/High-Court-costs-mediation-judgment-2020.pdf) ## Can a court force parties to mediate? No. It remains the case that a court cannot compel parties to resolve their disputes through mediation ([Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)). The Court concluded that it had no jurisdiction to force the parties to mediate. To oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.  The hallmark of ADR procedures, and perhaps the key to their effectiveness in individual cases, is that they are processes voluntarily entered into by the parties in dispute with outcomes, if the parties so wish, which are non-binding. Consequently the court cannot direct that such methods be used but may merely encourage and facilitate. If the court were to compel parties to enter into a mediation to which they objected, that would achieve nothing except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process. In [Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf), the court relied on Article 6 of the European Convention on Human Rights and stated: > “It is one thing to encourage the parties to agree to mediation, even to encourage them in the strongest terms. It is another to order them to do so. It seems to us that to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court….it seems to us likely that *compulsion* of ADR would be regarded as an unacceptable constraint on the right of access to the court and, therefore, a violation of Article 6.” > > > [Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf) ## Successful party can be deprived of costs following refusal to mediate In *[Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)*, the court considered whether a refusal to mediate should give rise to costs sanctions. [CPR 44.3(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) provides that “if the court decides to make an order about costs (a) the general rule is that the unsuccessful party will be ordered to pay the cost of the successful party; but (b) the court may make a different order”. [CPR 44.3(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) provides that “in deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including-(a) the conduct of the parties”. [Rule ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs)[44.3(5)](https://uk.practicallaw.thomsonreuters.com/Document/I11189031E45011DA8D70A0E70A78ED65/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.DocLink)) provides that the conduct of the parties includes “(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol.”  In deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to mediate, it must be borne in mind that such an order is an exception to the general rule that costs should follow the event. **The burden is on the unsuccessful party to show why there should be a departure from the general rule.** The fundamental principle is that such departure is not justified unless it is shown (the burden being on the unsuccessful party) that the successful party acted unreasonably in refusing to agree to mediate. ## Halsey principles: when should an unreasonable refusal to mediate lead to costs sanctions? In [Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf), the court accepted the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following: - **the nature of the dispute**: in the Court’s view, most cases are not by their very nature unsuitable for ADR; - **the merits of the case**: the fact that a party reasonably believes that he has a strong case is relevant to the question whether he has acted reasonably in refusing ADR. If the position were otherwise, there would be considerable scope for a claimant to use the threat of costs sanctions to extract a settlement from the defendant even where the claim is without merit; - **the extent to which other settlement methods have been attempted:** the fact that settlement offers have already been made, but rejected, is a relevant factor. It may show that one party is making efforts to settle, and that the other party has unrealistic views of the merits of the case; - **whether the costs of the ADR would be disproportionately high: **This is a factor of particular importance where, on a realistic assessment, the sums at stake in the litigation are comparatively small; - **whether any delay in setting up and attending the ADR would have been prejudicial**; and - **whether the ADR had a reasonable prospect of success**.  In *[Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)* itself, the refusal to mediate was considered to not be unreasonable. The claimant had lost the case, but had asked to be released from paying some, or all, of the costs of the successful party on account of that party’s refusal to mediate. The defendant had a strong defence, the costs of mediation would have been disproportionate and the claimant had not satisfied the burden of showing that mediation would have had a reasonable prospect of success. ## Post-Halsey case law: when is it unreasonable to refuse to mediate? - In *[Burchell v Bullard & Others [2005] EWCA Civ 358](https://lexlaw.co.uk/wp-content/uploads/Bullard-case.pdf)* the court considered that the nature of the case (a small building dispute) lent itself to mediation; and the cost of mediating was small (“a drop in the ocean” the court said) when compared to the cost of litigation in a case of this kind. - In *[Garritt-Critchley and others v Ronnan and another [2014] EWHC 1774 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Ronan-case.pdf)*, the defendants were ordered to pay the claimant’s costs on an indemnity basis because their position of consistently refusing to mediate due to confidence in their position and a belief that the parties were too far apart, was wrong. - In *[DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB) (20 March 2020)](https://lexlaw.co.uk/wp-content/uploads/Blackpool-case.pdf)*, the judge considered that indemnity costs should apply because of the defendant’s refusal to engage in mediation. This was conduct “out of the norm” as the court did not accept the defendant’s justification that it believed it had a strong defence. No defence by itself justified a failure to engage in any kind of ADR. ## No need to chase a response: Northamber Plc v Genee World Ltd [2024] EWCA Civ 428 This case involved a dispute between Northamber Plc (distributor) vs Genee World Ltd (importer) concerning an exclusivity agreement for IT equipment sales. Northamber claimed Genee World breached the agreement by selling directly to customers. Northamber offered mediation to resolve the dispute, but Genee World did not respond. Additionally, Genee World failed to comply with a court order requiring them to explain their decision on mediation in a witness statement. The Court of Appeal considered the consequences of failing to respond to an offer to mediate, particularly when a court order mandates an explanation for declining. The Court of Appeal overturned the lower court's decision and imposed cost sanctions on Genee World. The court highlighted two crucial points: - **Silence is Unreasonable:** Generally, not responding to a mediation offer is considered unreasonable, even if a refusal might have been justified. The onus is on the recipient to explain their position. - **Court Orders Matter:** Breaching court orders designed to promote Alternative Dispute Resolution (ADR) will not be tolerated. Disobeying an order requiring an explanation for declining mediation has consequences. This case sends a clear message: - Parties involved in litigation are strongly encouraged to engage with mediation or explain their reasons for refusal. Silence is not an acceptable response. - Court orders promoting ADR carry weight. Ignoring such orders can lead to cost sanctions. The "burden of chasing a response" does not lie with the party offering mediation. The recipient has a responsibility to respond or explain their position. This case reinforces existing legal principles regarding mediation offers and court orders. Northamber Plc v Genee World Ltd serves as a reminder for parties in disputes to take mediation offers seriously. Responding positively or providing a justified explanation for refusal is crucial to avoid potential cost penalties and encourage a more collaborative approach to resolving conflicts. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # Claimant’s Part 36 offer of 99.7% was genuine offer to settle proceedings Source: https://lexlaw.co.uk/solicitors-london/claimant-valid-part-36-offer-genuine-offer-to-settle-cpr-bank-misrepresentation-litigation-costs-indemnity-summary-judgment/ *In a multi million pound breach of contract [case](https://lexlaw.co.uk/wp-content/uploads/Rawbank-SA-v-Travelex-Banknotes-Ltd-2020-EWHC-1619-Ch-23-June-2020.pdf), where there was no substantive defence to the claim and the Defendant accepted summary judgment and liability for the Claimant's costs, the High Court held that a Claimant’s Part 36 offer to accept only 0.3% less than the full sum being claimed was a “genuine offer to settle” under CPR 36.17(5)(e)*. ## Bank's £48 million claim for breach of contract and misrepresentation The underlying [claim](https://lexlaw.co.uk/wp-content/uploads/Rawbank-SA-v-Travelex-Banknotes-Ltd-2020-EWHC-1619-Ch-23-June-2020.pdf) was for breach of contract and misrepresentation brought by a bank in the Democratic Republic of Congo, [Rawbank S.A](https://www.rawbank.com/en/) against [Travelex Banknotes Ltd](https://www.travelex.co.uk/business-services/outsourcing-wholesale-banknotes) for their failure to supply the bank with an order of $60million (approximately £48 million) of banknotes. The Defendant allegedly said they would not refund the bank because they were facing financial difficulties following the global pandemic and could not deliver the banknotes because of travel restrictions brought in as a result of [COVID-19](https://www.gov.uk/coronavirus). ## What is a Part 36 offer? [Part 36 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36)of the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) aims to encourage parties to try to settle their disputes and sets out the costs consequences of offers to settle made in accordance with Part 36.  Where a Claimant obtains a judgment that is at least as advantageous as the [Part 36 offer](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/#:~:text=Part%2036%20is%20a%20provision,in%20accordance%20with%20Part%2036.), the court must award it the costs consequences set out in [CPR 36.17(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17). If a party fails to accept a realistic offer made from the other side there is a risk of penalised costs and interest at the end of the case, therefore a legitimate offer is advised which puts the other side under pressure to settle.  Our specialist [litigation](https://lexlaw.co.uk/practice-areas/) and [ADR](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) lawyers can advise you in settlement negotiations. ## Claimant's part 36 offer to settle proceedings On 4 May 2020, Rawbank issued their claim for the sum of $60,072,000 equivalent to £48,311,860 sterling plus interest and on the same day, it made a part 36 offer for the sum of £48,290,000. On 18 May 2020, the Claimant applied for [summary judgment](https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/) against the Defendant. The Defendant indicated it would be defending the claim when filing an Acknowledgment of Service however failed to serve a Defence. As at 25 May 2020 (the end of the ['relevant period' of 21 days](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.5) after the Part 36 offer was made), the amount of the claim including interest was £48,448,059 therefore the discount offered under the [part 36 offer](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) was approximately £158,059 which represented 0.3% of the claim. On 15 June 2020, the Defendant agreed to [summary judgment ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part24)and accepted liability for the Claimant's costs of the claim and the summary judgment application, however argued against the application of the costs consequences in [CPR 36.17(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17) because the offer was not a 'genuine offer to settle'. ## What happens if the Defendant accepts the Claimant’s  Part 36 offer ? When a Claimant makes a [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) and the Defendant accepts the offer within the 'relevant period' (21 days), the Defendant will then have to pay the settlement sum (usually within 14 days of acceptance) and the Claimant's legal costs to be agreed or assessed on a standard basis up to the date of acceptance. This means that the court will resolve any doubt which it may have as to the costs whether or not they are reasonable or proportionate. If the Defendant accepts the offer after the expiry of the relevant period and if the parties cannot agree on liability for costs, then the court will make an order for costs.  A usual costs order will be for the Defendant to pay the Claimant’s legal costs up to the date of the acceptance.  ## What happens if the Defendant rejects the Claimant’s Part 36 offer? If the Defendant rejects the Claimant's offer and the claim proceeds to trial, the offer will not be disclosed to the Judge until the case has been decided. If the Claimant obtains a judgment that is not as advantageous than the Part 36 offer, then the Court will make a costs order. If the Claimant obtains a judgment that is equal to or better than the Part 36 offer unless it is unjust to do so, the court may [order](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17) the Defendant to pay the following: -  interest of up to 10% above base rate on the whole or a part of any reward from the date on which the relevant period expired. - the Claimant's legal costs on a “indemnity basis”  which is the assessment of the costs incurred after the expiry of the relevant period.- An additional amount of 10% of the damages awarded for awards up to £500,000.  but for awards above £500,000 then the additional amount would be 10% of the first £500,000 and then a 5% of any damages awarded above the figure up to an overall limit of £75,000. The additional amount payable by the Defendant serves as a penalty for the Defendant not accepting a Part 36 offer which would have settled the claim earlier and on more generous terms. ## Costs consequences of acceptance of Bank's "genuine" part 36 It has been a longstanding principle that in considering any costs order, the Court will take into account whether the offer was a "genuine attempt to settle the proceedings" ([CPR 36.17(5)(e)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17)) i.e. there should be a genuine element of concession. In this case, the Defendant submitted that the part 36 offer was not a genuine offer to settle but a "tactical move designed solely to engage the part 36 enhanced payments". The Judge held that: - There was no issue as to the quantum of the claim, so that there were only two possible outcomes: success (in which case the sum of $60,072,000 would be payable) or failure (in which case nothing would be payable).- Based on the witness evidence filed by the Defendant (as no Defence was filed), there was clearly no defence to the claim. From Rawbank's perspective, therefore, there was no realistic possibility of failure. > Where a claimant has near-certain chances of success, "an offer to settle on the basis that the claimant foregoes an amount equal to interest or costs is still capable of being characterised as a genuine offer of settlement”. Following this conclusion, the Judge however did not apply all of the usual consequences that follow from beating an offer, set out in CPR 36.17(4), due to the financial difficulties faced by the Defendant and its inability to pay therefore it would be unjust to do so. The Judge determined it was not unreasonable to order indemnity costs from the expiry of the relevant period of the part 36 offer and interest on the principal sum (and not on costs). Read the full judgment for [Rawbank S.A. v Travelex Banknotes Ltd [2020] EWHC 1619 (Ch).](https://lexlaw.co.uk/wp-content/uploads/Rawbank-SA-v-Travelex-Banknotes-Ltd-2020-EWHC-1619-Ch-23-June-2020.pdf) ## When can a Part 36 offer be made? [Part 36 offers](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) can be made before court proceedings are issued. However Part 36 do not apply to claims that are small claims track (claims that are less than £10,000).  The aforementioned costs consequences to not apply to offers made less than 21 days before trial unless the Court permits for the relevant period to be shortened. If you are commencing or engaged in current litigation and require advice on settlement or making a part 36 offer, our specialist litigation and costs lawyers can assist. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyers'](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Judgment in FCA’s BI Insurance test case: Policyholders entitled to compensation Source: https://lexlaw.co.uk/solicitors-london/fca-bi-business-interruption-insurance-test-case-coronavirus-policyholders-compensation-claims-advice/ *The High Court handed down [judgment](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) in the [FCA](https://www.fca.org.uk/)'s test case of business interruption insurance claims on 15 September 2020. The good news for policyholders is that the Court found in favour of the arguments advanced for policyholders by the FCA on the majority of the key issues. The ruling is a significant step in resolving the uncertainty being faced by policyholders. An appeal is open to the insurers, which will likely be heard at the [Supreme Court](https://www.supremecourt.uk/). * *[The test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) has come about as a large number of disputed insurance claims have been made by SMEs under policies covering business interruption (“BI”) losses, particularly – and relevantly in this action – under extensions or other coverage clauses that do not require property damage, instead being focused entirely on events causing an impact to the insured business.* ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Why is the FCA’s BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate would be. It is against that background that the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, thus seeks legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your [Business Interruption Insurance claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). ## The High Court Judgment The High Court ruled in favour of the FCA on most of the key issues, in particular regarding coverage triggers under most disease and ‘hybrid’ clauses, certain denial of access/public authority clauses, as well as causation. The policies wording share provisions which, in broad terms, provide coverage in respect of business interruption in consequence of or following or arising from the occurrence of a notifiable disease within a specified radius of the insured premises. In relation to each, there arises the question of whether there is cover in respect of a pandemic where it cannot be said that the key matters which led to business interruption, and in particular the governmental measures, would not have happened even without the occurrence of COVID-19 within the specified radius, as a result of its occurrence or feared occurrence elsewhere. The FCA’s case is that there was cover. The FCA's position was that there was a "Notifiable Disease" in all parts of the UK by 6 March 2020. There was interruption of or interference with the business from 16 March 2020 as a result of the government’s instructions and/or announcements as to social distancing, self-isolation, lockdown and restricted travel and activities, or alternatively, in cases where businesses were ordered to close, from 23 March 2020. Any losses as insured were sufficiently causally connected with the interruption or interference and the interruption or interference “followed” the occurrence of COVID-19 if they would not have occurred had there been no COVID-19 outbreak or intervention by the government. The High Court broadly agreed with the FCA’s submission and concluded that the proximate cause of the business interruption was the "Notifiable Disease" of which the individual outbreaks form indivisible parts. ## What does the judgment mean for BI insurance policyholders? The FCA commented on the judgment, and notably confrimed that policyholders with claims would hear from their insurers within a week: > Although the judgment will bring welcome news for many policyholders, the judgment did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the Court. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer within the next 7 days. > > [The Financial Conduct Authority's statement](https://www.fca.org.uk/news/press-releases/result-fca-business-interruption-test-case) ## Download the Business Interruption Insurance Claims Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-13.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. The High Court in the [FCA's test case](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) now confirm that the majority of the FCA's submissions on behalf of policyholders have been accepted. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why instruct a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Claimant’s Part 36 offer containing error for relevant period held to be compliant Source: https://lexlaw.co.uk/solicitors-london/claimant-part-36-offer-rejected-by-defendant-before-trial-held-to-be-valid-adr-costs-indemnity-interest/ *In the High Court case of [Essex County Council v UBB Waste (Essex) Ltd (No 3) [2020] EWHC 2387 (TCC)](https://lexlaw.co.uk/wp-content/uploads/Essex-County-Council-v-UBB-Waste-Essex-Ltd-No.-3-2020-EWHC-2387-TCC-11-September-2020.pdf), it was held that a Claimant's Part 36 offer which failed to correctly set out the relevant period was still deemed compliant with Part 36 of the Civil Procedure Rules.* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## Part 36 offer in £9 million case disputed on basis of service In the underlying case, the Claimant was awarded damages of around £9 million for the Defendant's breach of an agreement to construct a waste treatment plant. On the issue of costs, there were several matters in dispute including whether the Claimant had made a compliant part 36 offer in March 2019. The Claimant had sent a part 36 offer by email at 16:54 on 7 March 2019. The offer stated that the relevant period was within 21 days of the date of that letter. Under the deemed service rules under the CPR, where an email is sent after 16:30, it is deemed served on the following business day. This therefore meant that the Claimant's offer was made on 8 March 2019. The Defendant sought to argue that due to receiving the offer on 8 March 2019, the relevant period would expire 20 days from the date the offer was made and therefore the Claimant's offer did not comply with CPR 36. ## Part 36 offer held to be valid The High Court held that the Claimant's Part 36 offer was valid and that the offer could be construed as compliant in its proper context and taking into account the Claimant's intention for the offer to be a Part 36 offer. > “Any ambiguity in an offer purporting to be a Part 36 offer should be construed so far as reasonably possible as complying with Part 36” ## What is a Part 36 offer? A [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.5) offer pursuant to the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36), made on a "without prejudice, save as to costs" basis, is a provision which aims to encourage parties to try to settle their disputes and avoid, where possible, going to trial. The offer will setting out the costs consequences of a party's failure to accept which may include costs on the indemnity basis and interest. ## What is the relevant period for a Part 36 offer? CPR [36.5(1)(c](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.5)) states that a Part 36 offer "*must specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule [36.13](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.13) or [36.20](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.20) if the offer is accepted*". This is referred to as the "relevant period". ## What happens if I beat my Part 36 offer? If the Defendant rejects a Claimant's offer and the Claimant obtains a judgement which is equal to or more significant then the offer made at the trial then the Defendant will have to pay whatever the amount the court awards you unless if the court considers it unjust. In addition to this, the court will order the Defendant to pay the following: -  up to 10% interest on the whole or a part of any reward from the date on which the relevant period expired. -  your legal costs on a “indemnity basis”  which is the assessment of the costs incurred after the expiry of the relevant period.- An additional amount up to a maximum of £75,000 : | Amount awarded by the court | Prescribed percentage | | --------------------------- | --------------------- | | Up to £500,000 | 10% of the amount awarded | | Above £500,000 | 10% of the first £500,000 and (subject to the limit of £75,000) 5% of any amount above that figure. | [CPR 36.17](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17) In this case, as the Claimant had obtained a judgment which was as advantageous as the terms of its Part 36 offer held to be valid, the Claimant was awarded indemnity costs, interest at 10% on the damages and costs and an additional amount of £75,000. ## Can a Part 36 offer be withdrawn or varied before the end of the relevant period? If you want to withdraw or vary a [Part 36 offer](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) before the end of the relevant period you need to serve a notice of withdrawal or variation on the other side, this will affect the end of the relevant period unless the other party serves a notice of acceptance in the meantime. In these circumstances the other side’s acceptance will take effect unless you successfully apply to court within 7 days of the acceptance so that permission is granted to withdraw the offer or change its terms.  ## Should I make a Part 36 offer? There are advantages to making a Part 36 offer at different stages in your claim including costs protection and to reach an early resolution in your dispute. Our specialist litigation lawyers with understanding and experience of the Civil Procedure Rules can advise on a case-by-case basis on the value and timing of a protective part 36 offer or other types of without prejudice offers and discussions. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Residential Possession cases resume on 20 September 2020 Source: https://lexlaw.co.uk/solicitors-london/residential-possession-county-court-hearings-cases-start-unpaid-rent-enforcement-new-guidance-advice/ The Master of Rolls, Sir Terence Etherton [announced on 17 September 2020](https://www.judiciary.uk/announcements/resumption-of-possession-cases/) that the [stay of residential possession proceedings](https://lexlaw.co.uk/solicitors-london/practice-direction-51z-automatic-stay-of-possession-hearings-and-appeals/) comes to an end on 20 September 2020. The stay was brought about in response to the COVID-19 pandemic as a means to protect tenants who had been adversely affected by the pandemic and who could not keep up with rental payments. There have been no evictions (except against trespassers) since 27 March 2020. The Master of the Rolls introduced new guidance on 17 September 2020 on how possession proceedings between residential landlords and tenants will resume. It is important to seek legal advice early from [Property Disputes Solicitors](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/) on the new procedures because parties will need to ensure full compliance with the new requirements. It is likely that there will be delays in getting possession hearings listed expeditiously given the backlog of cases and the reduced capacity of the courts. ## Guidance on Case Priority The Master of Rolls has issued guidance on case priority. The decision about as to whether or not a case is a priority is a matter for the judge (with priority given to cases issued before the stay commenced in March 2020). Listing is a judicial function. These cases would generally be considered a priority: - Cases with allegations of anti-social behaviour, including Ground 7A of Schedule 2 to the Housing Act 1988 and Section 84A of the Housing Act 1985.- Cases with extreme alleged rent arrears accrued, that is, arrears equal to at least (i) 12 months’ rent, or (ii) 9 months’ rent where that amounts to more than 25% of a private landlord’s total annual income from any source.- Cases involving alleged squatters, illegal occupiers or persons unknown.- Cases involving an allegation of domestic violence where possession of the property is alleged to be important for particular reasons which are set out in the claim form (and with domestic violence agencies alerted).- Cases with allegations of fraud or deception.- Cases with allegations of unlawful subletting.- Cases with allegations of abandonment of the property, non-occupation or death of defendant.- Cases concerning what was allocated by an authority as ‘temporary accommodation’ and is specifically needed by the authority for reallocation as ‘temporary accommodation’. ## What does this mean for landlords with unpaid rent? The stay on possession proceedings ends on 20 September 2020. This means landlords can start to issue proceedings to regain possession of residential properties from defaulting tenants. However, the guidance in [Practice Direction 55C- Coronavirus: Temporary Provision](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/practice-direction-55c-coronavirus-temporary-provision-in-relation-to-possession-proceedings#no) in relation to possession proceedings states that no stayed claim is to listed or re-listed until landlords file and serve a written "reactivation notice" confirming that they wish the case to be listed (or re-listed). ## Can commercial landlords commence evictions proceedings against tenants yet? No, not until the end of 2020. Commercial tenants will be protected from the risk of eviction until the end of 2020 helping businesses to protect jobs. Businesses will be protected from the threat of eviction until the end of the year, providing commercial tenants with greater security and protecting vital jobs, Communities Secretary Robert Jenrick has announced (16 September 2020). This extension will protect businesses that are struggling to pay their rent due to the impact of COVID-19 from being evicted and help the thousands of people working in these sectors feel more secure about their jobs. The government will also extend the restriction on landlords using Commercial Rents Arrears Recovery to enforce unpaid rent on commercial leases, until the end of the year. The guidance is clear both landlords and tenants should continue to work together to agree rent payment options if businesses are struggling. In June, the government published a [Code of Practice](https://www.gov.uk/government/publications/code-of-practice-for-the-commercial-property-sector) to support these discussions. ## Download Possession Proceeding Listing Priorities in the County Court [![](https://lexlaw.co.uk/wp-content/uploads/image-14.png)](https://lexlaw.co.uk/wp-content/uploads/20200917-Guidance-note-MR-to-Civil-Judges-Possession-priorities-Housing-1.pdf) ## Download Overall Arrangements for Possession Proceedings in England and Wales [![](https://lexlaw.co.uk/wp-content/uploads/image-15.png)](https://lexlaw.co.uk/wp-content/uploads/Possession-Proceedings-Overall-Arrangements-Version-1.0-17.09.20.pdf) ## Seeking possession: Section 21 and Section 8 Notices A landlord can [evict tenants](https://lexlaw.co.uk/practice-areas/landlord-and-tenant-solicitors-london/evictions/) who have an assured shorthold tenancy using a [Section 21](http://www.legislation.gov.uk/ukpga/1988/50/section/21) or [Section 8](http://www.legislation.gov.uk/ukpga/1988/50/section/8) notice, or both. In most cases where it is available (and you should seek advice on the same), a [Section 21](http://www.legislation.gov.uk/ukpga/1988/50/section/21) notice will be the preferred method of eviction, as it allows for accelerated possession proceedings. The court will be able to grant an order for possession ‘on the papers’, unless the tenant files a defence. It should be noted that the accelerated possession procedure does not allow for the recovery of rent arrears and a separate action should be brought for these if necessary. A [section 8](http://www.legislation.gov.uk/ukpga/1988/50/section/8) notice can be used if the tenant has broken the terms of the tenancy. Possession under [section 8](http://www.legislation.gov.uk/ukpga/1988/50/section/8) can only be sought on one or more of the grounds set out in Schedule 2, i.e. possession cannot be obtained simply because the stated term of the tenancy has expired and the landlord would like the property back. There are 18 grounds, of which 8 are mandatory and 10 are discretionary.  If one of the mandatory grounds is made out, the court must grant the order. If the application is made on one or more of the discretionary grounds, then the court has a discretion as to whether or not to grant the order.  ## Instruct Property Disputes Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on possession, interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. --- # Professional Negligence: Solicitors duty to warn of obvious risks Source: https://lexlaw.co.uk/solicitors-london/professional-negligence-solicitors-under-duty-to-warn-of-obvious-risks-property-lawyer-claims-advice/ Although a solicitor is not under a general duty to warn clients about risks relating to matters which fall outside the scope of the client retainer; a potential professional negligence claim exists where there is a failure to warn as to risks which are material to the retainer. A recent judgment of the SDT proves the point that in some cases a solicitor is expected to travel outside his instructions to warn inexperienced clients of obvious and significant risks. An experienced solicitor who specialises in residential and commercial property law has been[ reprimanded by the Solicitors Disciplinary Tribunal (SDT) ](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/SRA-v-Hayhurst_compressed.pdf)for failing to advise on the “obvious risks” of four off-plan property development schemes. ## What is the Solicitor's Duty of Care? A solicitor's duty of care is generally to act with professional skill and due care; like any other reasonable solicitor. The duty is owed to the solicitor's client alone. It includes behaving in accordance with the SRA's professional code of conduct. As an officer of the Court the solicitor also must act within duties owed to the Court. Specific duties may be set out in the contractual solicitor-client retainer letter and terms. ### The 3 Key Factors in a Negligence Claim: If a solicitor does not act with reasonable care in skill in exercising their duty of care then a professional negligence claim is possible dependant on 3 key factors: - The solicitor owed a duty of care- The professional breached that duty of care, and- That you suffered financial loss as a result of the breach. Have you suffered financial loss at the hands of a professional who has failed to act within professional standards? If you think you have a case, get in touch with our [team of professional negligence lawyers](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/). We can assist you to understand the merits of your claim and advise you on the best way to obtain fair compensation. ## The Facts The lawyer was an experienced solicitor who specialised in residential and commercial property law, including property developments. He had generally acted for developer clients, but also for buyers in off-plan schemes. The allegations involved his role when acting for buyers in relation to four “fractional” property development schemes. The solicitor accepted that he had not provided adequate advice to his clients but the Tribunal noted that at the time he considered he had complied with his obligations. Nevertheless, whilst not intended, the harm was foreseeable given the Respondent’s level of experience. ## The SDT Judgment: advice so inadequate “as to be incompetent” The solicitor failed to adequately advise clients investing in property development schemes about the high risks inherent in the schemes. Although a solicitor is not obliged to travel outside his instructions and make investigations that are not expressly or impliedly requested by the client, the risks of the schemes were precisely the types of risks that the solicitor ought to advised his client. The SRA regarded the property schemes as inherently risky and even though the client care letter stated that independent advice should be sought on the schemes, an inexperienced client will need and will be entitled to expect that solicitor to take a much broader view of the scope of the retainer and of his duties than will be the case with an experienced client. Advice as to risks was at the very least capable of having a material bearing upon the decisions that these clients made. In the event, clients did not receive that advice and so were unable to make such informed decisions. Where some clients might have decided that it was not in their best interests to invest, they have been deprived of that opportunity and instead faced the risk of losing the whole of their capital. > The advice provided and representations given were so inadequate as to be incompetent. Moreover, the Respondent wrongly considered that because (in his view) some of his clients were sophisticated, therefore they did not require relevant advice > > [SRA v David Hayhurst (Case no. 12072-2020)](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/SRA-v-Hayhurst_compressed.pdf) ## Do solicitors have a duty to warn clients of risks? This is heavily dependent on the factual matrix of the particular case, but recent judicial authority is clear that [solicitors have a duty to warn](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/professional-negligence-claim-against-lawyers-barristers/) clients of risks which are material to their retainer. The leading authority is expounded by the Court of Appeal in*[Barker v Baxendale Walker Solicitors](https://lexlaw.co.uk/wp-content/uploads/2019/12/Barker-v-Baxendale.pdf)* were asked to consider whether solicitors were under a duty to give specific warning to the client prior to entering into a tax scheme that there was a significant risk that their interpretation of the legislation might be wrong. By way of background, the client wished to mitigate capital gains tax on the sale of his company and was instructed to the solicitors as specialists in [employee benefit trusts (EBTs)](https://taxdisputes.co.uk/hmrc-tax-investigations/) as a means of [tax avoidance](https://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/). The solicitors suggested that the client could technically transfer his shares to the trustee of an EBT which was resident in a jurisdiction that did not levy CGT on transfer and then the shares could purportedly be sold tax free. The solicitors told the client that although he had to be an excluded person under the trust, members of his family and descendants could purportedly benefit instead after his death (through a purposive- but incorrect- interpretation of the[ Inheritance Tax Act 1984](http://www.legislation.gov.uk/ukpga/1984/51/contents)). Crucially, the solicitors did not warn the client that there was a risk that the legislation could be construed differently by [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) and that his family and descendants would have to be excluded persons throughout the trust’s lifetime. HMRC did indeed later assess the client for tax in respect of the sale of his company and specifically stated that the post-death exclusion construction was the correct one and as such the EBT scheme had failed. As a result of the incorrect interpretation of the legislation, and given that the scheme had failed, the client was advised to settle for a substantial sum. Although at first instance the client’s [negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-faqs/) was dismissed on the basis that the post-death exclusion construction was doubtful and the solicitors were not negligent in their failure to warn of that significant risk. However, the Court of Appeal construed the relevant legislation and found that given the proper construction of the legislation, the amounts at stake, the legal fees paid to the solicitors and the nature of the transaction (tax avoidance where the other side is HMRC who are well-resourced), then there was a duty to give a specific warning about the significant risk the scheme entailed. > When determining whether a reasonably competent adviser would have advised that there was a significant risk that a contrary view would be taken in relation to section 28(4) and that the post-death exclusion construction might well be correct, the relevant facts included the fact that this was a very aggressive tax avoidance scheme which was marketed to Mr Barker on the very basis that his family would be able to benefit from the property within the EBT at the date of his death free of Capital Gains Tax and Inheritance Tax, an outcome which might appear on the face of it to be too good to be true. It was for that reason that the sub-trust was established at the outset and section 28(4) and paragraph (d) in particular, were the focus of the drafting and ought to have been at the centre of the advice. It is also relevant that the potential charge to tax was very large and the Respondents’ fee was in the region of £2.4m. > > Lady Justice Asplin in *[Barker v Baxendale Walker Solicitors](https://lexlaw.co.uk/wp-content/uploads/2019/12/Barker-v-Baxendale.pdf)* [2017] ## Duty to warn of any substantial risks *[Credit Lyonnais SA v Russell Jones & Walker ](https://lexlaw.co.uk/wp-content/uploads/2019/12/Credit-Lyonnais-v-Russell-Jones.pdf)*[[2002] EWHC 1310 (Ch)](https://lexlaw.co.uk/wp-content/uploads/2019/12/Credit-Lyonnais-v-Russell-Jones.pdf) sets the bar high for solicitors in that it was held that solicitors are under a duty to warn a client of any substantial risks that would be apparent to a competent [property lawyer](https://professionalnegligenceclaimsolicitors.co.uk/property-professional-negligence-claims/). A firm of solicitors had been negligent in failing to draw a client’s attention to the fact that time was of the essence in the case of a condition precedent concerned with the early termination of a lease. Although a solicitor was not to be taken as a general insurer against his client’s problems but rather his duties were determined by the scope of his agreed retainer. If, in the course of his work on the matters in respect of which he had been retained, a solicitor became aware of a risk or potential risk to his client, it would be his duty to inform the client of that risk. In so doing the solicitor would not be going beyond the scope of his instructions nor could he be deemed to be doing any extra work for which he was not to be paid.  ## Solicitors are under an implied duty to carry out work (including risk warnings) that are reasonably incidental to the retainer In *[Minkin v Landsberg](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf)*[ [2015] EWCA Civ 1152](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf), the client had settled divorce proceedings with her ex-husband by negotiating a financial settlement. The client was warned by her solicitors that the financial settlement did not seem satisfactory. The solicitors advised of alternatives, including negotiation, mediation and litigation with full disclosure. However, the client decided to adhere to the agreed settlement. She changed solicitors and instructed the new firm to put the agreement into a form that the court could approve. The client subsequently regretted signing the consent order and claimed damages for professional negligence on the basis that the new firm had failed to advise or warn her against entering into the agreement. However, there was no duty to warn given that the new firm were acting under a very limited retainer and there would be very serious consequences for both the courts and litigants in person generally if solicitors felt unable to accept instructions to act on a limited retainer basis for fear that what they anticipated to be a modest and relatively inexpensive drafting exercise, albeit complex to a lay person, might lead to a far broader duty of care being imposed on them. Nevertheless, Lord Justice Jackson in *[Minkin](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf)* summarises the relevant principles of when a solicitor is under a duty to warn based on the scope of the retainer as follows: > i) A solicitor’s contractual duty is to carry out the tasks which the client has instructed and the solicitor has agreed to undertake. > ii) It is implicit in the solicitor’s retainer that he/she will proffer advice which is reasonably incidental to the work that he/she is carrying out. > iii) In determining what advice is reasonably incidental, it is necessary to have regard to all the circumstances of the case, including the character and experience of the client. > iv) In relation to (iii), it is not possible to give definitive guidance, but one can give fairly bland illustrations. An experienced businessman will not wish to pay for being told that which he/she already knows. An impoverished client will not wish to pay for advice which he/she cannot afford. An inexperienced client will expect to be warned of risks which are (or should be) apparent to the solicitor but not to the client. > v) The solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor’s retainer. As a matter of good practice the solicitor should confirm such agreement in writing. If the solicitor does not do so, the court may not accept that any such restriction was agreed. > > Lord Justice Jackson, *[Sharon Minkin v Lesley Landsberg (Practising As Barnet Family Law)](https://lexlaw.co.uk/wp-content/uploads/2019/12/Minkin-Landsberg-2015.pdf)*[2015] EWCA Civ 1152 ## Download the SDT Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-16.png)](https://professionalnegligenceclaimsolicitors.co.uk/wp-content/uploads/SRA-v-Hayhurst_compressed.pdf) ## City of London Specialist Professional Negligence Lawyers We [specialise in professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) claims and have years of experience in handling and resolving negligence claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a [leading law firm](https://professionalnegligenceclaimsolicitors.co.uk/) regularly featured in the news and media and with a track record of success, you can be assured your negligence claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. *Clients hire us because of our extensive experience in litigation disputes – when necessary, we know when to go to court and we know how to litigate.* Our [City of London Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) regularly manage professional negligence litigation before all Courts of England & Wales. Our team provides [results-focused](https://professionalnegligenceclaimsolicitors.co.uk/case-studies) legal advice and court representation, often on a no win no fee basis after an initial meeting. Our [experience](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/) will give you the best legal strategy to obtain redress. ## Book a Meeting with our Professional Negligence Lawyers If you have a claim against a professional and want expert legal advice, [get in touch](https://professionalnegligenceclaimsolicitors.co.uk/contact-us/) so we can assess the legal merit of your case. We can often take on such claims on a no win no fee basis (such as a CFA or DBA) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action. Our expert legal team of [leading Professional Negligence Solicitors & Barristers](https://professionalnegligenceclaimsolicitors.co.uk/) can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # Expert Witnesses: Guidance on giving remote evidence Source: https://lexlaw.co.uk/solicitors-london/expert-witnesses-guidance-on-giving-remote-evidence-virtual-hearings-advice/ *Given the increased use of remote hearings as a result of the COVID-19 pandemic, the [Academy of Experts](https://academyofexperts.org/) has recently published [guidance for expert witnesses.](https://lexlaw.co.uk/wp-content/uploads/Guidelines-on-Remote-Evidence.pdf) The guidance is useful not only to expert witnesses but all parties in litigation.* *Most [expert witnesses](https://lexlaw.co.uk/expert-evidence-witness-cpr-35-compliant-single-joint-report-exchange-legal-advice/) will have had the experience of giving remote evidence via a videolink where they are the only person who is not in the hearing room (a remote hearing). Few will have had the experience of doing so in circumstances where some or all of the other participants are also communicating via video conferencing software at a virtual hearing. * *[Expert evidence](https://lexlaw.co.uk/expert-evidence-witness-cpr-35-compliant-single-joint-report-exchange-legal-advice/) is important and can help prove a claim or disprove allegations, especially where the case involves matters on which the court does not have the requisite technical or academic knowledge, or the case involves issues of foreign law. Unlike witnesses of fact, a qualified expert is permitted to give opinion evidence on any relevant matter.* A selection of the [guidance](https://lexlaw.co.uk/wp-content/uploads/Guidelines-on-Remote-Evidence.pdf) is provided below. ## Preliminary stages - Check if it is intended that your evidence is to be given remotely.- This should also be confirmed prior to the Hearing.- In practice the final decision is often taken very close to the actual Hearing.- Therefore, check when you are instructed and again 3 months before the Hearings and finally say, 1 week before the Hearing. ## Report preparation - Write the report with screen display in mind- If you have been provided with confidential information (whether covered by GDPR or other confidentiality), do you need to repeat it in your report?- Will it need to be redacted? ## Technology - Which platform is being used?- The range of different software applications is growing, and they can vary significantly in how they work.- Check which platform is being used, ensure it works on your technology and familiarise yourself with how it works.- Remember different Courts and Tribunals use different platforms.- Are you comfortable with using that platform? ## Trial session - A trial session should take place two days in advance of the hearing to test the software and hardware and check familiarity with the use of the programmes.- If a pre-Hearing trial has not been arranged 1 week before the Hearing, ask for it.- A trial session will also help to understand what can and cannot be seen.- Ideally there should also be a person available to host the hearing.- The host should:Have an email and phone number for every participant;- Make sure that everyone can be seen and heard and can see and hear at least 15 mins before the hearing starts;- Ensure that all “active” participants are visible for the start of the hearing and mute their sound when not speaking;- Ensure that all “passive” participants have their video and sound muted;- Notice if your microphone malfunctions or the transmission is lost- Notice if transcribers lose their connection;- Notice if an “active” participant drops out. ## Availability of bundle - Ensure you have your own electronic bundle which is identical to that which will be provided to the judge and used by the lawyers. Ideally you should be provided with access to a bundle on the Cloud (such as Caselines where you are provided with an account and password) which will be updated by the parties and you will automatically have access to the updated bundle when you sign onto the cloud application.- When will the bundle be sent to you?- Will someone eg the instructing solicitor, do a trial run with you to check that the bundle will be easy to access at the hearing?- Will you be able to access pages that are not on screen, during the hearing? ## Protocol for the hearing Does the court/tribunal/ other body have a remote hearings protocol? If so, familiarise yourself with it. At the beginning of your evidence you may be asked to confirm various matters such as: - That you are alone in the room from where you are giving evidence.- If you are not alone, you will be asked to state who is present in the room when you start and, if any other person comes into the room, to notify the tribunal.- That you have not and will not apply a virtual background while giving evidence. That you have access to the hard copy and/or electronic bundle and to the evidence display and/or live transcript and that they are all operating.- That you have no other papers in front of you, save for a clean copy of your expert reports, appendices and errata (if applicable) plus possibly a clean copy of the other side’s expert’s report and that you are using an unmarked copy of the electronic hearing bundle;- That your phone is switched off and that any messaging systems are disabled so that you cannot receive or transmit messages; That you understand that while you are giving evidence, including during any break or overnight, you should not communicate with any person about the case (except in relation to any administrative or technical matters concerning the hearing). If there is no protocol: - The Judge or Tribunal may ask you to show them the room so as to confirm that you are alone (or only accompanied by a solicitor).- Some may ask you to position your screen so that the door is behind you – so that it would become apparent if anyone entered the room.- If this is not possible because of the positioning of your desk and screens be prepared to say so. ## Problems at the hearing - If any aspect of the link drops out (eg the video drops out but the sound doesn’t), mention it immediately. Don’t just soldier on – it could affect the quality of your evidence.- If your connection fails ensure you have a contact point details handy to notify the organiser of the difficulty.- Experience suggests that 5 to 15 minutes a day may be taken up with technology problems.- If this occurs during your evidence ask to go back to make sure you have given a complete answer at the point where there was a failure.- If there is any distraction at the other location(s) e.g. someone clattering papers; whispering etc, don’t be afraid to mention it and ask if it can stop. This is often because a person has inadvertently left their microphone unmuted. Overall, the judge will want to maintain the decorum of the court/tribunal and due solemnity where appropriate. Do what you can to help with that. ## Download the Guidance on Giving Remote Evidence [![](https://lexlaw.co.uk/wp-content/uploads/image-17.png)](https://lexlaw.co.uk/wp-content/uploads/Guidelines-on-Remote-Evidence.pdf) ## What evidence is required in litigation? To succeed in litigation, the claimant will need to prove his case on a balance of probabilities. To do this, the claimant must adduce evidence to support all the essential ingredients of the claim. The defendant will also need to adduce evidence to support his defence to some or all of the essential ingredients of the claim. The evidence is usually comprised of: - Contemporaneous documents (hard copy or electronic versions or both) intended to prove the issues in dispute.- The evidence of factual witnesses, to tell the story behind the dispute and to fill in any gaps that the documents leave.- Expert evidence (where appropriate and permitted by the court which has a duty to restrict expert evidence to that which is necessary to determine the dispute), to assist the court when the case involves complex technical, academic or foreign law issues. ## Expert Evidence The rules governing expert evidence are found in [CPR 35](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35): > Experts – overriding duty to the court > > (1) It is the duty of experts to help the court on matters within their expertise. > > (2) This duty overrides any obligation to the person from whom experts have received instructions or by whom they are paid. > > [CPR 35(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) An expert witness may give evidence on, for example, technical or scientific matters, or specialist practice or procedure. They may give their opinion on specific matters in the dispute within their expertise. However, it is not the function of an expert witness to give their opinion on issues of law or fact which the judge or jury has to decide. ## Do I need the court’s permission to call expert evidence? Yes. The court’s permission to call expert evidence is always required as the court has a duty to restrict expert evidence to that which is necessary to resolve issues in the proceedings. When applying for expert evidence to be allowed, the parties must apply early in proceedings (otherwise the court may later refuse due to timetabling issues), identify the expert by name or by field of expertise, specify the issues that he will address and estimate the cost of the expert evidence. If it grants permission, the court will limit the evidence to the named expert or field ordered, and may specify the issues that the expert should address. Oral expert evidence at trial may only be given with the court’s permission. > Court’s power to restrict expert evidence > > (1) No party may call an expert or put in evidence an expert’s report without the court’s permission. > > (2) When parties apply for permission they must provide an estimate of the costs of the proposed expert evidence and identify – > > (a) the field in which expert evidence is required and the issues which the expert evidence will address; and > > (b) where practicable, the name of the proposed expert. > > (3) If permission is granted it shall be in relation only to the expert named or the field identified under paragraph (2). The order granting permission may specify the issues which the expert evidence should address. > > [CPR 35(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) ## What is an expert witness? An expert witness is someone who has professionally recognised specialist experience, skill and know-how in a specific field that is an issue in court litigation. The expert witness is instructed to give an authoritative opinion based on their expertise. The overriding duty of any expert witness is owed to the court to provide unbiased evidence. Expert evidence can be used only with the court’s permission. ## What is a single joint expert? The court may order that expert evidence is to be given by a single joint expert, namely an expert who is instructed on behalf of both parties. However, this is not common in multi-track cases. Parties may instruct another expert to assist them, but any evidence from that expert will not be admissible and the costs of instructing that expert will not be recoverable from the other side. ## Must expert evidence be relevant to the issues? It is self evident that expert evidence must be relevant to the issues to be decided by the court. For an example of the application of this principle to the question of expert medical evidence in a [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/) action by a deceased miner’s estate against solicitors for the loss of a chance of pursuing a services claim in the context of the Department for Trade and Industry’s tariff-based compensation scheme for vibration white finger, see [*Edwards v Hugh James Ford Simey (A Firm) [2019] UKSC 54*](https://professionalnegligenceclaimsolicitors.co.uk/). ## What is an expert report? Expert evidence is usually given in the form of a written report, which must be the independent product of the expert. The expert’s overriding duty is to the court and not to the party that instructed him. Expert reports are often exchanged simultaneously. However, in some cases, expert reports may be exchanged sequentially. > Contents of report > > (1) An expert’s report must comply with the requirements set out in Practice Direction 35. > > (2) At the end of an expert’s report there must be a statement that the expert understands and has complied with their duty to the court. > > (3) The expert’s report must state the substance of all material instructions, whether written or oral, on the basis of which the report was written. > > [CPR 35.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # BBRS expects complaints over COVID-19 UK Business Loans Source: https://lexlaw.co.uk/solicitors-london/bbrs-business-banking-resolution-service-expects-complaints-over-covid-19-uk-business-loans-cbils-advice/ *HM Treasury have notified the newly formed [Business Banking Resolution Service (BBRS)](https://thebbrs.org/) to brace for complaints from SMEs regarding government backed loans sold under the coronavirus business interruption loan scheme (CBILS). * *Such complaints could include for example the fact that a company has not been given a loan and they think they should have, or that the conditions changed, the regulations changed and they wanted to change the loan into a different one.* *On 1 November 2019 the [BBRS](https://thebbrs.org/) launched [the dispute resolution pilot](https://thebbrs.org/live-pilot/) for [selected complainants](https://thebbrs.org/eligibility/) in preparation for the full implementation of the dispute resolution service in 2020. The BBRS have released its eligibility criteria (with eligible complaints being businesses that have a turnover of between £6.5 million and £10 million), with the intention being that the BBRS will accept SMEs that would otherwise not be eligible to present their complaints to the Financial Ombudsman Service (the “FOS”).* ## What is the Business Banking Resolution Service? The [Business Banking Resolution Service](https://lexlaw.co.uk/solicitors-london/banking-dispute-resolution-service-bdrs-for-smes-will-it-work/) is an alternative redress service for businesses that have been victim to banking misconduct. Seven leading UK banks have voluntarily accepted the proposals outlined in the [UK Finance-](https://www.ukfinance.org.uk/) commissioned [Walker Review](https://www.icaew.com/technical/corporate-governance/codes-and-reports/walker-report), creating an alternative to legal action, the [Financial Ombudsman Service](https://www.financial-ombudsman.org.uk/) and bank-run compensation schemes for SMEs mis-sold complex derivative products. ## What is the Coronavirus Business Interruption Loan Scheme (CBILS)? The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to UK SMEs that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak. The scheme is a part of a wider package of government support for UK businesses and employees. More information can be found on the Government’s [**Business Support website**](https://www.businesssupport.gov.uk/coronavirus-business-support/). ## Which banks are participating in the BBRS? The BBRS accepts complaints made against the following banks: - [Barclays Bank](https://www.barclays.co.uk/);- [Clydesdale Bank](https://secure.cbonline.co.uk/) (including Yorkshire Bank and Virgin Money);- [Danske Bank](https://danskebank.co.uk/personal);- [HSBC](https://danskebank.co.uk/personal);- [Lloyds Banking Group](https://www.lloydsbank.com/) (including Lloyds Bank and Bank of Scotland);- [RBS Group](https://personal.rbs.co.uk/personal.html) (including Royal Bank of Scotland, NatWest and Ulster Bank Northern Ireland); and- [Santander UK plc](https://www.santander.co.uk/). **Borrowers who took out Covid loans with one of the other 90-plus accredited CBILS lenders will not have access to the BBRS**. ## What is the BBRS live pilot? The [live pilot](https://thebbrs.org/live-pilot/) has been launched prior to the roll out of the full service which is expected to be available in autumn 2020. It is anticipated that a limited number of complaints will be considered for the live pilot. ## Which businesses are eligible to use the BBRS? An SME must first have submitted a complaint to its bank in line with the bank’s own internal complaints handling procedure. Complaints with only be accepted from businesses registered in England, Wales, Scotland or Northern Ireland. In terms of eligibility, the criteria for a company must meet the following turnover and assets criteria in order to be eligible for the BBRS: For the period from 1 April 2019 onwards: - Turnover up to £10m per annum; and- Total assets up to £7.5m. For the period from 1 December 2001 to 31 March 2019: - Maximum turnover up to £6.5m per annum; and- Total assets up to £5m. ## How does eligibility for the BBRS differ from the FOS? [The FOS](https://www.financial-ombudsman.org.uk/) only accepts [complaints from a “micro-enterprise” or a “small business”](https://sme.financial-ombudsman.org.uk/complain/can-help). The Financial Ombudsman Service is of limited utility to SMEs attempting to settle disputes with banks because it is only able to deal with cases for losses of up to £150,000 and does not either punish wrongdoer banks or monitor banks to ensure that they comply with the applicable rules and regulations. Further, a large number of SMEs do not qualify as micro-enterprises and the banks are adept at raising technical arguments on jurisdiction to prevent the FOS from acting. By way of example, we have seen a case where the FOS accepted a complaint for an SME assessed as a micro-enterprise and then reached a provisional decision against Lloyds Bank PLC, awarding over £100,000 for the mis-selling of a fixed rate loan. However, Lloyds then argued (belatedly) that the FOS should not adjudicate the dispute as the complainant was allegedly not a micro-enterprise and therefore not eligible to bring a complaint. Remarkably, the FOS seems set to accept this as a basis not to reach a final decision, demonstrating the skill and persistence with which banks and their legal teams seek to elude any regulatory accountability for their actions. ## Will the Business Banking Resolution Service (BBRS) work? SMEs are too often drawn into complex disputes with banks and other financial institutions, which are beyond the remit of the [FOS](https://www.financial-ombudsman.org.uk/) to address due to FOS’s maximum threshold of £150,000 ([now £350,000 from 1 April 2019 against regulated firms](https://lexlaw.co.uk/solicitors-london/financial-ombudsman-increases-award-limit-to-350000/)). Furthermore, the court system can be costly and risky for SMEs (who do not have the financial and legal sophistication of the banks). The [FCA](https://www.fca.org.uk/) is not equipped to be an arbiter of disputes, and so regulatory review schemes are fatally undermined by the FCA’s reliance on the wrongdoer banks to conduct such review schemes into their own alleged wrongdoing. It is clear that the current avenues for redress are not working for SMEs; if justice is to be delivered and maintained in the future, a new avenue for redress needs to be created. However, it remains to be seen whether another redress apparatus with voluntary compliance by major banks (the BDRS) will be able to provide a platform for justice for SME customers and instill confidence in the banking sector by operating as a safeguard against past and future financial misconduct. In particular, safeguards need to be put in place to ensure that banks do not simply repeat their previous tactics (used in litigation and in regulatory review schemes) of withholding potentially damaging information. A big step towards creating a functional BBRS that can exercise appropriate control over the financial services industry and fill the lacuna that currently exists in practice for SMEs is for the BBRS to have the power to control the disclosure process and to sanction non-compliance publicly. ## LEXLAW Banking Litigation & Dispute Resolution It is an absolute must that victims of  [RBS,](https://personal.rbs.co.uk/personal.html)[Clydesdale Bank](https://lexlaw.co.uk/solicitors-london/potential-claims-against-hm-treasury-government-department-allegedly-controlled-rbs-grgs-mis-treatment-of-smes/), Yorkshire Bank or other banks protect their legal rights. This is the only sensible course of action when a business is facing a high value dispute with a major bank, such as the Lloyds or RBS. Otherwise, if there is no redress scheme, or if the bank refuses to offer reasonable redress, customers may well find they are time-barred from commencing legal action and their high value claim is now worthless. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors to issue a protective claim form or by instructing us to prepare and agree a carefully written standstill agreement. Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in banking litigation and specialise in representing SMEs in banking disputes. Our high profile and high value cases regularly appear in the national and international media. Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks and have widespread experience in managing claims through redress schemes (which are similar to the Business Banking Resolution Service (BBRS)). Call us on 02071830529 or complete our online contact form. --- # Update on the Operation of the Disclosure Pilot Scheme Source: https://lexlaw.co.uk/solicitors-london/update-on-the-operation-of-the-disclosure-pilot-scheme/ *A change in professional attitudes and a cultural shift was thought necessary to address the perceived defects in the disclosure process under [Part 31 of the Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31). A new set of rules governing disclosure was introduced on 1 January 2019, known as the Disclosure Pilot Scheme (the DPS), which is being implemented through [Practice Direction (PD) 51U](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/practice-direction-51u-disclosure-pilot-for-the-business-and-property-courts). * ## What is the Disclosure Pilot Scheme? The DPS is a pilot scheme dealing with disclosure of ‘documents’ in civil proceedings. In litigation, the purpose of disclosure is to make available evidence which either supports or undermines the respective parties’ cases. Disclosure is a crucial stage in litigation which enables both parties to assess the strengths and weaknesses of the other party’s case and consequently the potential commercial risks going forward. Further details of a party's disclosure duties can be found [here](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) in our website. The DPS implemented a complex set of rules and requires disclosure to start much earlier; it represented a significant shift in the approach to disclosure. ## Application of the Pilot Scheme The pilot applies to new and existing proceedings in the Business and Property Courts across England and Wales, including the Commercial Court but with notable exceptions, such as the Admiralty Court. The scope of its application to cases commenced before 1 January 2019 has recently been clarified in the case of *[UTB LLC v Sheffield United](https://www.bailii.org/ew/cases/EWHC/Ch/2019/2322.html) *which confirms that the pilot will apply to all subsisting proceedings in the Business and Property Courts even where the claim was issued and an order for standard disclosure was made prior to 1 January 2019 under the old CPR rules. ## What were the changes? The DPS introduced codified disclosure duties and sanctions for failing to discharge them. **The disclosure duties** The disclosure duties extend to both parties and their legal representatives. They must: - Take reasonable steps to preserve documents that may be relevant to any issue in the proceedings.- Take reasonable steps to avoid disclosing irrelevant documents.- Disclose known adverse documents, other than privileged documents.- Comply with any disclosure order.- Search for documents in a responsible manner and act honestly when reviewing the documents **Known adverse documents. ** The parties must disclosure adverse documents, which may be documents that: - A party is actually aware of its existence; - Any adverse documents; and- Are within its control. **Irrelevant documents.** The duty to use reasonable efforts to avoid disclosing irrelevant documents. **Preserving documents. **The duty to preserve documents applies as soon as a person knows that it is, or may become, party to proceedings that have commenced or may be commenced. Accordingly, a person must take reasonable steps to: - Preserve relevant documents;- Suspend deletion and destruction processes; and- Give employees and former employees written notice identifying documents to be preserved. ## Judicial Update on Operation of the DPS An [Update on the operation of the Disclosure Pilot Scheme](https://www.judiciary.uk/announcements/update-on-the-operation-of-the-disclosure-pilot-scheme-disclosure-pilot/) was published on 22 September 2020 by the Judiciary. The DPS is set to continue until the end of 2021 following a recent extension. The update includes publication of the [Third Interim Report on the pilot](https://www.qmul.ac.uk/law/research/impact/discmon/) by Professor Rachael Mulheron of QMUL. Practitioners were asked to complete questionnaires at the end of 2019 and the [Third Interim Report on the](https://www.qmul.ac.uk/law/research/impact/discmon/) analyses the 71 responses received. Upon an analysis of the report, the respondents’ views on the overall outcomes under the pilot seem to be mostly negative: - 85% say the pilot has not saved costs overall (4% say it has, 10% can’t say/too early)- 42% say it has made disclosure less accurate (16% say more accurate, 42% can’t say/too early)- 71% say it has increased burdens on the courts (2% say decreased burdens, 27% can’t say/too early)- 78% say it has not brought about a culture change (6% say it has, 16% can’t say/too early) ## What are the proposed changes? A sub-group of the DWG has carefully considered the drafting points that arise from feedback in the Third Report and elsewhere and has prepared revised versions of PD51U for consideration by the Civil Procedure Rules Committee. Some of the main proposals are as follows: - Modifying the requirements of and exemptions to Initial Disclosure;- Clarifying when the default obligation to disclose known adverse documents arises;- Modifying the obligation to serve document preservation notices on current and former employees;- Conforming the Disclosure Review Document (“**DRD**”) with the PD in relation to Model C disclosure;- Clarify issues relating to the use of Disclosure Guidance Hearings;- Confining the obligation to complete the DRD to only those cases where the parties agree that search-based Extended Disclosure Models are required (i.e. Models C, D and/or E);- Removing the obligation to produce a List of Issues for Disclosure and the DRD if both parties have agreed that Extended Disclosure is to be restricted to non-search based models A and/or B. ## What next? The Civil Procedure Rules Committee (CPRC) has recently been asked to approve a one-year extension of the pilot until the end of 2021 and will be asked to consider the revisions proposed by the sub-group. It should be noted that until these revisions are approved by the CPRC, they have no formal status. ## Instructing our disclosure specialist litigation lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We can advise you from the outset and throughout the disclosure process to include pre-action [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) from parties to the proceedings in addition to [non parties](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/). Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Case Note: Winding-up Petition restrained when debt governed by arbitration agreement Source: https://lexlaw.co.uk/solicitors-london/case-note-winding-up-petition-restrained-when-debt-governed-by-arbitration-agreement-high-court-judgment-advice/ *On 29 July 2020, the High Court handed down its much anticipated judgment in the case of [Telnic Ltd v Knipp Medien Und Kommunikation GmbH [2020] EWHC 2075 (Ch)](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2020/09/Telnic-v-Knipp-Medien.pdf) and confirmed that the court has discretion to restrain a winding-up petition against debtor's when the debt is governed by an arbitration agreement.* *Our [specialist commercial arbitration lawyers](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) have market-leading experience of handling multi-million pound arbitration and bringing complex claims to settlement. We understand the potential benefits of arbitration and our clients are confident that their case receives high-level personal care and supervision and all of our commercial arbitration cases are conducted by small, partner-led teams.* ## Background On 1 December 2009, Knipp Medien Und Kommunikation GmbH ("the Petitioner") entered into a Services Agreement (the "Agreement") for the provision of those services. Clauses 12.1 and 12.2 provided for a service fee to be paid by Telnic Ltd ("the Debtor") to the Petitioner within 30 days of receiving monthly invoices. Clause 23.1 provided that "*any dispute, controversy or claim arising out of or relating to this agreement … or the breach, termination or validity thereof*" shall be referred to arbitration upon the written request of either party. On 19 March 2019, the Petitioner demanded £263,777.28 from the Debtor in respect of various invoices rendered (the "petition debt"). On 25 October 2019, the Petitioner presented a petition to wind up the Debtor in respect of the petition debt on the grounds that the Debtor was unable to pay its debts. Deputy ICC Judge Schaffer made an order on 19 December 2019, whereby he restrained the Petitioner from proceeding with its winding-up petition against the Debtor and stayed the petition on the basis that the debt was not admitted and subject to an arbitration clause. It is interesting to note that the Judge ordered the Petitioner to pay the Debtor's costs assessed at £25,000 into an escrow account held by the solicitors. The Debtor was subsequently granted permission to appeal. ## What issues did the appeal and the cross-appeal raise? As noted in paragraph 4 of the Judgment, the appeal and cross-appeal raised 5 main issues to be considered: > 1. Was *the judge right to decide that he was bound by [Salford Estates (No. 2) Limited v. Altomart Limited (No. 2) [2015] Ch 589](https://www.bailii.org/ew/cases/EWCA/Civ/2014/1575.html) to consider whether there were wholly exceptional circumstances before moving to ask whether the debt was disputed in good faith on substantial grounds?* > > > > > > 2. *Was the judge right, in effect, to decide that there were, in this case, no such wholly exceptional circumstances?* > > > > > > 3. *Should the judge have dismissed the petition, stayed the petition, or allowed the petition to proceed?* > > > > > > 4. *Was the judge wrong to have ordered the Petitioner to pay the Debtor's costs on the standard basis?* > > > > > > 5. *Was the judge wrong to order the Petitioner to pay the costs into an escrow account, rather than directly to the Debtor?* > > > Paragraph 4 of the Judgment #### Issue 1: Was the judge right to decide that he was bound by Salford Estates to consider whether there were wholly exceptional circumstances before moving to ask whether the debt was disputed in good faith on substantial grounds? The Judge addressed this issue in paragraph 27 of his Judgment and noted that Sir Terence Etherton C made clear in *Salford Estates*, in a case where the debt is covered by an arbitration agreement, the judge sitting in the Insolvency and Companies List of the Business and Property Courts should not "*conduct a summary judgment type analysis of liability*". It is not, therefore, appropriate, save in wholly exceptional circumstances, for that judge to inquire whether the debt is disputed in good faith on substantial grounds. #### Issue 2: Was the judge right, in effect, to decide that there were, in this case, no such wholly exceptional circumstances? The Judge examined the circumstances raised by the Petitioner in paragraph and reached the clear conclusion that the very rare and wholly exceptional circumstances did not exist in this instant case and that would justify the court in departing from its usual practice which is to dismiss or stay the petition. #### Issue 3: Should the judge have dismissed the petition, stayed the petition, or allowed the petition to proceed? The Court noted that Deputy ICC Judge's stayed the petition rather than dismissing it for various reasons, namely because he wanted to make it clear that the Debtor should cooperate in the arbitration process, and to protect the Petitioner by allowing it to lift the stay if it succeeded in the arbitration. The Judge also noted that he wanted to protect creditors by preventing Debtor disposing of its assets and preserving a Liquidator's rights of action in respect of the period up to presentation. Naturally, he considered prejudice to Debtor, but ultimately decided that a stay was appropriate because Debtor was not an active trading company and as such, it was not prejudicial to the Debtor. #### Issue 4: Was the judge wrong to have ordered the Petitioner to pay the Debtor's costs on the standard basis? The Judge noted in paragraph 47 of his Judgment that the award of standard costs was entirely appropriate. #### Issue 5: Was the judge wrong to order the Petitioner to pay the costs into an escrow account, rather than directly to the Debtor? The Judge was skeptical about the Debtor's willingness to engage in the arbitration and as such, required the costs to be deposited in escrow in the event that it was later shown that the Debtor had indeed been contesting the petition debt in bad faith or on insubstantial grounds. ## What did the Judge conclude? The Judge concluded that the appeal and the cross appeal should be dismissed and in essence, confirmed that the court has discretion to restrain a winding-up petition against debtor's when the debt is governed by an arbitration agreement. ## What are the implications of this Judgment? This is another decision from the Chancellor of the High Court, which demonstrates that Court's are likely to prioritise arbitration when it comes to disputed debts. The instant case makes it clear that order to uphold the policy of the [Arbitration Act 1961](https://www.legislation.gov.uk/ukpga/1996/23/contents), judges should only take into account whether the debt is disputed in good faith on substantial grounds in *wholly exceptional circumstances*. As it can be seen from the judgment, even past admissions of the debt would not constitute such circumstances.  It is very important for the contracting parties to be aware of the scope of any arbitration clauses within the agreements and the implication of these arbitration clauses when a debt arises. The winding-up process may not be a suitable one if an extant binding arbitration agreement is in place and the parties may need to go through the arbitration process in order to determine the disputed debt. ## Read the full Judgment here: [![](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2020/09/image-1.png)](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2020/09/Telnic-v-Knipp-Medien.pdf) --- # High Court holds Lloyds does not have to comply with repetitive subject access requests Source: https://lexlaw.co.uk/solicitors-london/high-court-decides-in-banks-favour-despite-failure-to-comply-with-data-subject-access-request-gdpr/ *The High Court has dismissed a [claim against Lloyds Bank](https://lexlaw.co.uk/wp-content/uploads/Lees-v-Lloyds-Bank-Plc-2020-EWHC-2249-Ch-24-August-2020.pdf) alleging the bank's failure to respond to an individual's data subject access requests ("DSAR") following possession proceedings.* *Our specialist financial services litigation lawyers can advise you in claims against financial institutions and obtaining disclosure of relevant documents. * ## Lloyds obtains possession order against Claimant Between 2010 and 2015, the Claimant, Silas Lees, entered into buy to let mortgages with [Lloyds Bank Plc](http://Lloyds Bank Plc) in respect of three properties. In 2019, Lloyds issued claims for possession against the Claimant and on 31 May 2019, Lloyds obtained an order for possession of each of the three properties. On 25 June 2019, the Claimant applied for an order to stay execution of the possession order pending disclosure by Lloyds of a deed of assignment relating to the mortgages. The application was dismissed on 14 August 2019 by the Court as being without merit. ## Bank's alleged failure to respond to Claimant's Data Subject Access Request (DSAR) The Claimant issued a part 8 claim on 23 August 2019 against [Lloyds Bank Plc](https://www.lloydsbank.com/) for failing to provide an adequate response to various Data Subject Access Requests in breach of the [Data Protection Act 2018](https://www.legislation.gov.uk/ukpga/2018/12/contents/enacted) and [General Data Protection Regulation](https://gdpr-info.eu/). In fact, the [Data Protection Act 1998](https://www.legislation.gov.uk/ukpga/1998/29/contents) was in force at the time the Claimant made the requests. The Court found that Lloyds had adequately responded to all of the Claimant's requests and found against the Claimant stating that: - the DSARs issued were numerous and repetitive;- the data sought would be of no real benefit to the Claimant; and- the real purpose of the DSARs was to obtain documents rather than personal data to use in litigation against the bank and therefore the DSARs were abusive. The Judge commented that even if the bank could be shown to have failed to respond to the DSARs, the Court still had a discretion as to whether to make an order and in this case there were good reasons for declining to exercise that discretion. The Court dismissed the Claimant's claim holding that it was "*totally without merit*". Read the full judgment: [*Lees v Lloyds Bank Plc* [2020] EWHC 2249 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Lees-v-Lloyds-Bank-Plc-2020-EWHC-2249-Ch-24-August-2020.pdf) [![](https://lexlaw.co.uk/wp-content/uploads/Lees-v-Lloyds-Bank-image.png)](https://lexlaw.co.uk/wp-content/uploads/Lees-v-Lloyds-Bank-Plc-2020-EWHC-2249-Ch-24-August-2020.pdf) ## What is a Data Subject Access Request (DSAR)? A data subject access request is a request made by or on behalf of an individual, usually in writing, for the personal data to which he or she is entitled under [Article 15 of the General Data Protection Regulation](https://gdpr-info.eu/art-15-gdpr/) (GDPR). In litigation, a DSAR can be a way to obtain documents from an organisation such as a financial institution in contemplation or in advance of commencing proceedings against that organisation. ## What is the ICO? The [ICO](https://ico.org.uk/) is the UK's independent regulatory body set up to uphold information rights. The [ICO](https://ico.org.uk/) deals with complaints about organisation's handling and processing of individuals' personal data. The [ICO](https://ico.org.uk/) also has a [public register](https://ico.org.uk/ESDWebPages/Search) to find data controllers and organisations registered with the ICO under the Data Protection Act and Regulation. ## How do I make a Subject Access Request? [Article 15 of the GDPR](https://gdpr-info.eu/art-15-gdpr/) does not provide for a specified form of request. It is beneficial to make any request in writing so there is a clear record. An organisation may specify certain requirements for a subject access request. There is no longer a fee to make a subject access request. The ICO has also published [guidance](https://ico.org.uk/for-organisations/guide-to-data-protection/guide-to-the-general-data-protection-regulation-gdpr/individual-rights/right-of-access/#3) on the right of access. ## How can I obtain disclosure of information relevant to my claim? If you have made a subject access request and an organisation has failed to comply, we can assist you in complaining to the [ICO](https://ico.org.uk/). We can also advise on making an application for pre-action [disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) or specific disclosure in litigation, whether the data controller is party or [non-party](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/) in the litigation. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Contempt of Court: Updated Part 81 of the Civil Procedure Rules Source: https://lexlaw.co.uk/solicitors-london/contempt-of-court-committal-proceedings-updated-part-81-of-the-civil-procedure-rules/ *[Part 81 of the Civil Procedure Rules](http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court), which came into force on 1 October 2020, sets out the practices and procedures for contempt applications. The previous Part 81 has been referred to as poorly drafted, complicated and repetitive.* *The updated Part 81 of the CPR is much more condensed in comparison to the old Part 81 and easier to operate.* *Our specialist litigation lawyers can advise you in relation to any contempt of Court applications you may wish to issue or defend. * ## What is contempt of Court? Contempt of court refers to actions which either cast disrespect on a Court, impede the ability of the Court to perform its function or defy a Court's authority. Contempt of Court may either be considered a criminal contempt or civil contempt. ## Are there different types of contempt of court? There are predominately two types of contempt of court: - **Contempt by disobedience** – for example, disobeying or breaching a court order or judgment.- **Contempt by interference **-for example, disrupting any court proceedings or the court process itself. ## What is a civil contempt of Court? Civil contempt of Court is when either an individual or an entity fails to adhere to an order of the Court, with usually results injury to a private party's rights. By way of an example, failure to pay court ordered payment to your opponent in litigation can lead to punishment for civil contempt. ## Is civil contempt a crime? Civil contempt is conduct that is not itself a crime but is conduct which is punishable by the Court to ensure that Court orders are adhered to. Failing to adhere to or disobeying a Court order in the course of litigation are some of the common examples of conduct that constitutes a civil contempt. In the circumstances where the opponent is able to prove an allegation of contempt beyond reasonable doubt, the Court has the power to punish a civil contempt by making an order for committal to prison, a financial penalty or confiscation of assets. ## What are the consequences of a false statement of truth? Signing a statement of truth or allowing a solicitor to sign where you know that a document contains a false statement may lead to you being contempt of court ([CPR 32.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.14)). [Part VI of Part 81 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court#IDAABTBB)of the Civil Procedural Rules contains rules about committal applications in relation to making or causing to be made a false statement in a document verified by a statement of truth without an honest belief in its truth. ## What are committal proceedings? A committal application or proceedings are made in response to a contempt of court or a writ of sequestration. The Court must give permission to a party who seeks to make a committal application as per PD 81.11 which usually will be commenced via a Part 8 claim form or an application under CPR 23. ## What are the changes to the contempt of court rules? The new Part 81 has been reduced in size significantly to simply 10 brief rules, which focus on the procedural aspect of the CPR. We note the main changes below: - **The new Part 81.2 -** The parties will be referred to as ‘claimant’ or ‘defendant’ in respect of civil contempt applications. The parties were previously referred to as 'applicant' or 'respondent'. - **The new Part 81.3** – In comparison to the old Part 81, the new Part 81.3 clearly sets out the process via which claimants are able to make a contempt application and if they require the Court's permission to do so.- **The new Part 81.4** – sets out the requirements of a contempt application in a clear and succinct manner. It has been described as *‘… the cornerstone of the new … Part 81. It is intended to stand as the guarantor of procedural fairness and incorporates the requirements of procedural fairness to the defendant. If the rule is complied with, procedural fairness is likely to be observed.’*- **The new Part 81.5 **– the new Part 81.5 of the rules provide clarity in relation to the service of contempt applications. Given the serious nature of the contempt applications, every contempt application must be supported by a witness statement and served personally on the defendant (unless the Defendant is represented by solicitors who are instructed to accept service of the contempt application).- **The new Part 81.8** – the requirement for judges and advocates to be robed in all hearings of contempt proceedings, both in public and in private are now set out in the rules rather than appearing in a Practice Direction or Practice Guidance. In addition to this, the new Part 81.8 sets out the process by which the Court will decide whether and if so to what extent the hearing should be in private. - **Amended Part 32.14** - this rule covering false statements has been updated to clarify that contempt proceedings may be brought against a person who makes a false statement in a document (either prepared in anticipation of or during proceedings), and which is verified by a statement of truth, without an honest belief in the truth of such statement. ## How do you apply to discharge committal orders? - A defendant against whom a committal order has been made may apply to discharge it.- Any such application shall be made by an application notice under Part 23 in the contempt proceedings.- The court hearing such an application shall consider all the circumstances and make such order under the law as it thinks fit. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # FCA’s Business Interruption Insurance test case heading to the Supreme Court Source: https://lexlaw.co.uk/solicitors-london/fca-bi-business-interruption-insurance-test-case-heading-to-the-supreme-court-coronavirus-insurance-claims-advice/ *The High Court handed down [judgment](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) in the [FCA](https://www.fca.org.uk/)‘s test case of business interruption insurance claims on 15 September 2020. The good news for policyholders is that the Court found in favour of the arguments advanced for policyholders by the FCA on the majority of the key issues. The ruling is a significant step in resolving the uncertainty being faced by policyholders. * *The deadline for parties to file a 'leapfrog' application to appeal to the [Supreme Court](https://www.supremecourt.uk/)* any aspects of the High Court’s Judgment was on 28 September 2020, and both the FCA and the insurers have done so. It may be the case that an appeal to the Supreme Court will be the quickest route to get legal clarity as quickly as possible for all parties. *[The test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) has come about as a large number of disputed insurance claims have been made by SMEs under policies covering business interruption (“BI”) losses, particularly – and relevantly in this action – under extensions or other coverage clauses that do not require property damage, instead being focused entirely on events causing an impact to the insured business.* ## Why have precautionary applications been filed at the Supreme Court? The FCA are in discussions with the eight insurers and two intervenors that participated in the test case to reach an agreement in principle on a range of issues which would mean an appeal process would not be required, and payments would be made on eligible claims as soon as possible. The FCA state that *"positive discussions continue with all parties."* Both the FCA's and the insurer's 'leapfrog' applications have been filed on a precautionary basis in the event that this agreement is not reached. ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Why is the FCA’s BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate would be. It is against that background that the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, thus seeks legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your [Business Interruption Insurance claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). ## The High Court Judgment The High Court ruled in favour of the FCA on most of the key issues, in particular regarding coverage triggers under most disease and ‘hybrid’ clauses, certain denial of access/public authority clauses, as well as causation. The policies wording share provisions which, in broad terms, provide coverage in respect of business interruption in consequence of or following or arising from the occurrence of a notifiable disease within a specified radius of the insured premises. In relation to each, there arises the question of whether there is cover in respect of a pandemic where it cannot be said that the key matters which led to business interruption, and in particular the governmental measures, would not have happened even without the occurrence of COVID-19 within the specified radius, as a result of its occurrence or feared occurrence elsewhere. The FCA’s case is that there was cover. The FCA’s position was that there was a “Notifiable Disease” in all parts of the UK by 6 March 2020. There was interruption of or interference with the business from 16 March 2020 as a result of the government’s instructions and/or announcements as to social distancing, self-isolation, lockdown and restricted travel and activities, or alternatively, in cases where businesses were ordered to close, from 23 March 2020. Any losses as insured were sufficiently causally connected with the interruption or interference and the interruption or interference “followed” the occurrence of COVID-19 if they would not have occurred had there been no COVID-19 outbreak or intervention by the government. The High Court broadly agreed with the FCA’s submission and concluded that the proximate cause of the business interruption was the “Notifiable Disease” of which the individual outbreaks form indivisible parts. ## What does the judgment mean for BI insurance policyholders? The FCA commented on the judgment, and notably confrimed that policyholders with claims would hear from their insurers within a week: > Although the judgment will bring welcome news for many policyholders, the judgment did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the Court. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer within the next 7 days. > > [The Financial Conduct Authority’s statement](https://www.fca.org.uk/news/press-releases/result-fca-business-interruption-test-case) ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. The High Court in the [FCA’s test case](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) now confirm that the majority of the FCA’s submissions on behalf of policyholders have been accepted. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why instruct a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the [Ministry of Justice](https://www.gov.uk/government/organisations/ministry-of-justice) and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # FCA bans sale of cryptocurrency derivatives to retail customers Source: https://lexlaw.co.uk/solicitors-london/fca-bans-sale-of-cryptocurrency-derivatives-to-retail-customers/ *Following its investigations, the [FCA has banned](https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers) the sale of cryptocurrency investments to retail investors in the UK after concluding that they are ill-suited for such customers. The FCA estimates that retail consumers will save around £53m from the ban on these complex financial derivatives which commences in January 2021.* ## What is cryptocurrency? [Cryptocurrency](https://www.fca.org.uk/news/statements/cryptocurrency-derivatives) is a peer-to-peer version of electronic cash which allows online payments to be sent directly from one party to another without the need to go through a financial institution. A cryptocurrency such as [Bitcoin](https://bitcoin.org/en/) or [Ethererum](https://ethereum.org/en/eth/) is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.  ## Is the sale of cryptoassets regulated? Specified investments are types of investment which are specified in legislation. Firms that carry out particular types of regulated activity in relation to those investments must be authorised by the FCA. Unregulated transferable cryptoassets are tokens that are not ‘specified investments’ or e-money, and can be traded, which includes well-known tokens such as [Bitcoin](https://bitcoin.org/en/), [Ethereum](https://ethereum.org/en/eth/) or [Ripple](https://ripple.com/xrp/). Due to the increasing use and trading of cryptoassets, the FCA commenced investigations into the sale of these products to retail customers. ## Why is the sale of cryptoasset derivatives being banned by the FCA? [The FCA considers these products to be ill-suited](https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers) for retail consumers due to the harm they pose. The FCA considers that retail customers cannot reliably assess the value and risks of derivatives that reference certain cryptoassets due to the:  - inherent nature of the underlying assets, which means they have no reliable basis for valuation - prevalence of market abuse and financial crime in the secondary market (eg cyber theft) - extreme volatility in cryptoasset price movements - inadequate understanding of cryptoassets by retail consumers - lack of legitimate investment need for retail consumers to invest in these products   This means that retail customers may suffer harm from sudden and unexpected losses if they invest in these types of cryptocurrency products.  The ban will come into effect on 6 January 2021. ## I have been mis-sold a crypto-asset investment Due to the complex nature of the financial product, a retail customer should be properly advised on the investment and the implications of entering into the same however this is not always the case. Often unregulated firms offering such services will operate online including on social media and outside the UK. They approach retail customers with limited knowledge and experience of the area and encourage them to make investments using cryptocurrency. As the sale of these derivatives that reference certain types of cryptoassets to retail customers is now banned, any companies offering these services is likely to be operating in breach of the FCA rules or a scam. The FCA has published [guidance](https://www.fca.org.uk/scamsmart/cryptoasset-investment-scams) on crypto-asset investment scams. You should seek financial and/or legal advice before entering into cryptocurrency arrangements. ## What is cryptocurrency price manipulation? The cryptocurrency market by its very nature as an illiquid market, is an easy target for manipulation given the inherent price volatility, lack of regulation at present and dearth of significant price anchors that comes with institutional capital investments. There have been claims made in the US that [Tether](https://tether.to/) and Bitcoin has been involved in cryptocurrency manipulation. Tether is essentially a “stablecoin” pegged to the US dollar, that aspires to serve as a bridge between crypto-currency exchanges and conventional currencies. [Tether](https://tether.to/) is the central authority over the cryptoassset known as Tether or “USDT”. Whilst most cryptocurrencies are not backed by a tangible asset, stablecoins such as USDT are attractive to investors because it pegs itself to a tangible asset held in reserve (i.e. the US Dollar). Bitcoin prices can be manipulated by Tether coins being created without adequate reserves of U.S. dollars. In theory, the new Tether coins are then used to buy Bitcoin, which results in the overall Bitcoin value increasing. > Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created. From 2017 through 2018, Tether printed 2.8 billion USDT and used it to flood the Bitfinex exchange and purchase other crypotcurrencies. This artificially inflated demand for cryptocurrencies and caused prices to spike. > > > [US Class Action Litigation case: Leibowitz et al v Ifinex at al (2019)](https://www.courtlistener.com/recap/gov.uscourts.nysd.524076/gov.uscourts.nysd.524076.1.0.pdf) ## I have traded through Bitfinex and Tether. Do I have a claim? The evidence suggests that Bitfinex and Tether individually and collectively had the ability to cause artificial prices. US Regulators are expected to confirm this conclusion soon. This is likely to lead to a raft of claims both in the US and the UK. Anyone who used [Bitfinex](https://www.bitfinex.com/) and [Tether](https://tether.to/) from 2017 potentially has a claim. US prosecutors allege that Tether’s mass issuance of USDT* “created the largest bubble in human history”* with over $450 billion of value disappearing in less than 1 month. In order to build a case it must be demonstrated that Bitfinex and Tether communicated false information about USDT being backed 1:1 and you have suffered loss and damages due to artificial pricing which you would not have suffered but for the unlawful conduct of the market manipulators. ## City of London Cryptocurrency Manipulation and Litigation Lawyers Our [Financial Services Litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) team of Solicitors and Barristers in London are highly experienced in this area of banking litigation and have acted on manipulation and mis-selling claims against major financial instituions. The cryptocurrency market is highly unregulated, however, it is a misapprehension to believe that you no recoruce to litigation when things go wrong and you have been mis-sold a volatile asset. Our high profile and high value cases regularly appear in the [national and international media](https://lexlaw.co.uk/media-interest/). Our banking litigators advise on the protection of borrower legal rights in the face of predatory bank practices. We have successfully managed and settled court litigation against all major UK banks.  --- # COVID-19: Suspension of liability for wrongful trading ended on 30 September 2020 Source: https://lexlaw.co.uk/solicitors-london/covid-19-suspension-of-liability-for-wrongful-trading-ended-on-30-september-2020/ *The [Corporate Insolvency and Governance Act](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2020/05/Coroporate-Insolvency-and-Governance-Bill.pdf) ("CIGA") came into force on 26 June 2020 introducing a number of reforms aimed at providing protection to directors and companies in financial distress, particularly as a result of the COVID-19 pandemic. * *The fact that the provisions relating to suspension of liability for wrongful trading ended on 30 September 2020 (and it has not been extended), presents a number of potential problems to directors during this unprecedented financial climate. Directors will again be at risk of personal liability for any wrongful trading claims for the worsening of the company or creditors' financial position from 1 October 2020*. *Directors should not delay in seeking legal advice, especially in light of the changes brought by [Corporate Insolvency and Governance Act](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2020/05/Coroporate-Insolvency-and-Governance-Bill.pdf). * ## What is wrongful trading? Under current legislation, a director can be liable for wrongful trading if they are found to have continued trading a business and failed to minimise losses to creditors at a time when they knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation or administration. ## Can directors be personally liable for wrongful trading? Imposing personal liability on directors of insolvent companies that continued trading beyond a time at which there was no reasonable prospect of the company avoiding insolvency provides creditors with a certain degree of protection. ## Has the suspension of liability on wrongful trading ended? The recent suspension of wrongful trading was designed to ease the pressure on directors running their businesses by removing the spectre of personal liability for continuing to trade whilst the business may technically be insolvent. From 1 October 2020, Directors are again at risk of personal liability for any wrongful trading claims for the worsening of the company or creditors' financial position. ## What are Directors' duties? [Chapter 2 of the Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/2) sets out duties owed by directors to a company including: - a duty to act in accordance with the constitution of the company and to use powers only for the purposes for which they were conferred;- a duty to promote the success of the company for the benefit of the members;- a duty to exercise reasonable care, skill and diligence;- a duty to exercise independent judgment;- a duty to avoid conflicts of interest;- a duty not to accept benefits from third parties; and- a duty to declare to the other directors any interest that a director has in any proposed transaction or arrangement with the company. ## What happens if a director breaches duties? There is always a risk that if a Director fails to meet their duties, they may be subject to director's disqualification, more details of which can be found [here](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/). ## What are directors' duties during insolvency? When a company is insolvent or likely to become insolvent the directors’ duties change and they will be required to act in the best interests of the company’s creditors. These duties include avoiding preferential treatment towards a particular creditor (for example repaying a director’s loan), transferring the company’s assets at an undervalue and giving a connected party security over company assets due to historic reasons. ## Do the insolvency law reforms change directors' duties? Directors duties are likely to remain unchanged by the proposed insolvency law reforms and it is important to note that the suspension of wrongful trading will not suspend other claims which can render directors personally liable such as: - Fraudulent Trading: if a company continues to trade with the intent to defraud its creditors, the directors (or any other person knowingly party to the carrying on of the business in such manner) can be made personally liable to contribute to the company's assets;- Misfeasance: a director may be subject to proceedings brought by a liquidator for breach of fiduciary misapplication of company property;- Director Disqualification: A director may find himself [disqualified](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/) if proceedings are brought by the [Secretary of State for Business, Innovation & Skills](https://www.gov.uk/government/ministers/secretary-of-state-for-business-innovation-and-skills) or, usually in compulsory winding-up cases, by the Official Receiver at the direction of the Secretary of State; and- Breach of duties set out in the [Companies Act 2006](http://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/2). ## What should directors do during COVID-19? - Stay up to date with [government guidance on COVID-19](https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19) and any measures introduced for companies.- All directors of the company should have access to the relevant financial information to be able to make collaborative, informed decisions.- It may be helpful for directors to meet regularly (via teleconferencing or video conferencing) to discuss the status of the business.- Look out for and effectively manage contractual, operational and insolvency risks in the business.- Directors should ensure their decisions and the factors considered in their decision making are well documented i.e. board minutes and resolutions even where meetings have been held over video conferencing due to present circumstances.- It is important to also seek legal advice from professionals to assist you throughout this time and in any decisions concerning the company.- Seek advice from accountants, [legal advisers](https://lexlaw.co.uk/solicitors-london/covid-19-advice-for-directors-in-financial-distress/) and insurers in light of the present circumstances. ## City of London Commercial Solicitors Our[ ](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)leading Commercial Solicitors and Barristers provide bespoke legal advice including on directors duties, [director disputes](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/), [corporate insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/). We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading commercial lawyers. We regularly advise companies on a range of legal and commercial matters. Call or email us to start the process of instructing us. Please note we do not offer any financial or tax planning advice. --- # High Court: Accountant’s report can be disclosed in litigation Source: https://lexlaw.co.uk/solicitors-london/high-court-accountants-report-can-be-disclosed-in-litigation/ *Lord Justice Nugee* *in [Financial Reporting Council v Frasers Group plc [2020] EWHC 2607 (Ch)](https://taxdisputes.co.uk/wp-content/uploads/2020/10/FRC-v-Sports-Direct.pdf) has re-confirmed the principle that accountants reports are not subject to litigation privilege and could be subject to third party disclosure orders from tax authorities such as HMRC. The reports prepared by the accountants were not for the sole or dominant purpose of litigation and as such are not protected from disclosure by litigation privilege.* *[Our London Tax Solicitors and Barristers](https://taxdisputes.co.uk/expert-advice/) have vast experience of tax laws and first hand commercial, litigation and advocacy experience. We have a proven track record of successfully contesting disputed tax assessments and penalties with HMRC. The tax authorities have lost many cases that are appealed through negotiation, internal review or through the Tax Tribunal.* ## The Background Frasers Group (formerly Sports Direct) received enquiries from the French tax authorities regarding its online sales in France. Frasers Group assumed that the French authorities were likely to challenge its VAT treatment in relation to those sales. It therefore instructed tax consultants who had devised its existing VAT structure to report on how it could defend such a challenge. The consultants/accountants reverted with written reports in response. The application raised the question whether 3 documents in the hands of the Respondent were privileged from production to the Applicant on the grounds of litigation privilege. The Applicant is the Financial Reporting Council Ltd (“the FRC”). The Respondent is now called Frasers Group plc, but until December last year it was called Sports Direct International plc. The judgment is concerned with three of these reports. ## Lord Justice Nugee's Decision Lord Justice Nugee asked the question whether the reports were written for the sole or dominant purpose of litigation and stated at paragraph 36: > To my mind the answer is obviously “No”. A taxpayer who takes advice as to how to structure his affairs does not do so for litigation purposes. He does so because he wants to achieve a particular result for tax purposes – in this case the result that the transport by Barlin would not be “by or on behalf of” SDR (or other Sports Direct company) for the purpose of Art 33, and hence that VAT would be payable on the sale of goods in the UK and not in France, Ireland, Finland or other Member States. Even if it is contemplated that the particular structure will be likely to be attacked by the relevant tax authorities and that there will be litigation, the advice as to how to implement the new structure – or, if this is preferred, how to revise or enhance an existing structure – is not primarily advice as to the conduct of the future possible litigation. It is primarily advice as to how to pay less tax – or, as the case may be, how to avoid the administrative inconvenience of having to register in every Member State. > > [Financial Reporting Council v Frasers Group plc [2020] EWHC 2607 (Ch)](https://taxdisputes.co.uk/wp-content/uploads/2020/10/FRC-v-Sports-Direct.pdf), Lord Justice Nugee ## What does legal advice privilege mean? Legal advice privilege covers confidential communications (written or oral) between a lawyer and their client for the purpose of giving or receiving legal advice. It applies to all advice in relation to a client’s legal rights and obligations. It does not apply to strategic or commercial advice. As originally formulated by the courts, the privilege covered only confidential communications made between a lawyer and his client, or a lawyer or client and a third party, which came into existence for the purposes of litigation (“[litigation privilege](https://lexlaw.co.uk/solicitors-london/confidential-communications-legal-litigation-professional-advice-privilege/)”). ## Can correspondence with my accountants be disclosed to HMRC? Yes. For [privilege](https://lexlaw.co.uk/solicitors-london/confidential-communications-legal-litigation-professional-advice-privilege/) to apply, there must be a lawyer (i.e. a solicitor or barrister) in the communication for legal advice privilege to apply. Legal advice privilege does NOT extend to other professionals such as accountants. Therefore, in [disputes with HMRC](https://taxdisputes.co.uk/) for example, (potentially incriminating) communications with an accountant can be disclosed and are not privileged. Therefore, in order to ensure confidentiality, a lawyer must be involved in the communications. ## Are communications with my solicitor priveleged? Yes. Communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated[ litigation](https://lexlaw.co.uk/practice-areas/) are privileged, but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the sole or dominant purpose of conducting that litigation; (c) the litigation must be adversarial, not investigative or inquisitorial. ## Download the decision [![](https://taxdisputes.co.uk/wp-content/uploads/2020/10/image.png)](https://taxdisputes.co.uk/wp-content/uploads/2020/10/FRC-v-Sports-Direct.pdf) ## Need legal advice or help solving a HMRC Tax Dispute? Your search ends here. Our tax team made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) can assist by providing you with a bespoke tax solution to your tax dispute. We can guide you through the minefield of ever-increasingly complex tax legislation, littered with compliance and due diligence traps. Our tax team has experience in negotiating with HMRC and managing appeals against their decisions at all levels. Members of the team include qualified [Tax Solicitors](https://taxdisputes.co.uk/tax-solicitors/) and [Tax Barristers](https://taxdisputes.co.uk/tax-barristers/) whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience. We have a team of established tax and duties specialist lawyers with a proven track record of delivering authoritative solutions. ## Discounted fixed fee initial consultation If you need Taxation advice our highly experienced solicitors and barristers are able to assist. Our specialist tax team regularly provide market leading advice to directors of companies and limited liability partnerships. We invite you to contact us so we can assess your claim. We can subsequently provide urgent help, advice or representation to clients from our [expert legal team of leading Taxation solicitors and barristers](http://taxdisputes.co.uk/expert-advice/). Just call or email us now for a heavily discounted initial consultation; our legal team are waiting to help. --- # High Court considers legal privilege in case concerning fraudulent trading and dishonest assistance Source: https://lexlaw.co.uk/solicitors-london/supreme-court-legal-privilege-fraudulent-trading-dishonest-assistance-litigation-banks-rbs-hmrc-tax-fraud/ *The High Court held RBS and Natwest vicariously liable for traders assisting in fraud, despite lacking actual knowledge of the fraud. Read the full judgment for [Bilta (UK) Ltd & Ors v Natwest Markets Plc & Anor [2020] EWHC 546 (Ch)](https://lexlaw.co.uk/wp-content/uploads/2020/03/Bilta-UK-Ltd-Ors-v-Natwest-Markets-Plc-Anor-2020-EWHC-546-Ch-10-March-2020.pdf), which case concerned legal privilege amongst allegations of fraudulent trading and dishonest assistance.* This claim was brought by Bilta (UK) Limited (in liquidation) ("Bilta") against the Royal Bank of Scotland plc & Anor. The case concerned an alleged carbon credit trading fraud which included [a failure to declare VAT](https://taxdisputes.co.uk/repayment-fraud/) to HMRC leaving the companies with significant tax liabilities. The liquidators alleged that two traders of the Banks had dishonestly assisted Bilta's directors' breaches of their fiduciary duty. Bilta sought disclosure from RBS to support their case, however RBS did not consent to the application and resisted on the basis that the requested documents were protected by litigation privilege. ## Background On 29 March 2012, HMRC commenced investigations and wrote to RBS indicating that there may be grounds to deny a VAT reclaim in respect of relevant trades carried out worth approximately £86 million. Upon receipt of this letter, RBS' litigation counsel were involved and instructed a firm of specialist tax litigators who carried out the investigation which included conducting interviews of various employees which led to interview transcripts being produced. RBS's external counsel produced a report which was provided to HMRC without waiving legal privilege. The report stated that HMRC's assessment was time barred and that RBS did not know nor should have known that the transactions were fraudulent i.e. the Axel Kittel test. Bilta accepted that litigation was contemplated from 29 March 2012 (when HMRC approached RBS). The issue to be determined was whether the documents prepared by RBS' external investigation as part of the investigation which included the reports and transcripts of employee interviews were created solely for the purpose of conducting litigation and therefore attracted litigation privilege. ## Reports attracting litigation privilege RBS argued that as upon receipt of HMRC's letter on 29 March 2012, they instructed specialist tax litigation lawyers, the sole purpose of producing the reports and transcripts were to defend HMRC's claims and potential assessment. Bilta argued that the purpose of the investigation was to build a clearer picture of the facts and that RBS had not established whether any litigation purpose was in fact the dominant purpose to therefore attract litigation privilege. The Chancellor held that whilst it is necessary to establish the dominant purpose behind the creation of a document, where a communication has been created for two or more purposes, the Court may conclude that "*these two apparent purposes are inseparable parts of a single purpose, whereupon it is necessary only to examine that overarching purpose*". Bilta relied on the case of *Serious Fraud Office -V- ENRC* [2017] 1 WLR 4205, in which Andrews J. held that documents created with the specific purpose of showing them to a potential adversary in litigation, whether to persuade them to settle or not to bring proceedings in the first place, did not attract litigation privilege. In this case, it was very likely that an assessment from HMRC (that could be challenged) would follow its investigations, and RBS contemplated and expected the same.  RBS had, therefore, taken steps to protect its position, which were only consistent with its overarching purpose of preparation for the litigation.  The difficult issue was to determine whether litigation was the sole or dominant purpose of the activities by RBS following receipt of the letter from HMRC.  The Chancellor indicated that it did not matter whether it was the sole or merely the dominant purpose. Contemplating and taking steps to defend HMRC's assessment was just part of the route to litigation which RBS considered almost inevitable and with which the Chancellor agreed. ## What is litigation privilege? Litigation privilege subsists in documents, including communications, which are confidential and which have been produced in circumstances where litigation is either in progress or where there is a reasonable prospect that it will happen, provided that the litigation is the dominant purpose for which the document was created. It ensures that a party in litigation is able to seek advice on the merits of their case and prepare its case but will not be required to disclose those details to their opponent. ## What is dishonest assistance? Dishonest assistance can arise in several ways and involves (1) existence of a trust i.e. a fiduciary duty; (2) breach of that trust; (3) assistance by a third party; and (4) dishonesty on the part of that assistant.  ## Dishonest assistance and fraudulent trading The Claimants alleged that RBS and Natwest had participated in the commission of missing trader intracommunity VAT fraud during 2009 through their trading with an intermediary called CarbonDesk Limited (“CarbonDesk”). It was found that the VAT fraud had in fact been perpetrated by the directors of the Claimants. It was held that you need dishonesty, assistance and breach of trust or fiduciary duty. The test for dishonest was said to be objective and that the "assister" may not know all of the relevant facts. The burden of proof was held to rest with the Claimants on the balance of probabilities. > Where a chain of transactions can be established linking the actions of the Traders and RBS with the misappropriation or misapplication of the VAT monies by the directors of the Claimant companies then the necessary assistance would have been given. ## Bank held vicariously liable for dishonest assistance RBS and RBS SEEL were both held to be vicariously liable for dishonest assistance and knowingly being a party to fraudulent trading by the Claimant companies by reason of RBS's trading with CarbonDesk from 26 June 2009 to 6 July 2009. The remainder of the claims were dismissed. ## Instruct specialist litigation lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # London Creperie’s arguments tossed aside as summary judgment awarded in business interruption insurance claim Source: https://lexlaw.co.uk/solicitors-london/london-sme-loses-business-interruption-insurance-claim-summary-judgment-cpr-24-commercial-court-financial-losses/ *In [TKC London Ltd v Allianz Insurance plc  [2020] EWHC 2710](https://lexlaw.co.uk/wp-content/uploads/TKC-London-Ltd-v-Allianz-Insurance-PLC-2020-EWHC-2710-Comm-15-October-2020.pdf), the [Commercial Court](https://www.gov.uk/courts-tribunals/commercial-court) considered a company and its insurer's arguments on policy wording relating to business interruption following losses arising from COVID-19 closures, awarding summary judgment in favour of the insurer.* Due to the [government mandated lockdowns in March 2020](https://www.gov.uk/government/speeches/pm-address-to-the-nation-on-coronavirus-23-march-2020), the Kensington Creperie operated by TKC London Ltd was required to close and cease sale of food and drink consumed on the premises. The forced closure of business led to significant losses for TKC. ## Definition of loss in insurance policy TKC was insured by Allianz and the insurance policy contained a section entitled ‘Business Interruption’ which read: > *Loss resulting from interruption or interference with the business carried on by the Insured at the Premises in consequence of an event to property used by the Insured.”* Event was defined as: > *“Accidental loss or destruction of or damage to property used by the Insured at the Premises for the purpose of the Business.”* The wording is different to those considered in *The Financial Conduct Authority v Arch Insurance (UK) Ltd and others*. TKZ argued that this section covered losses sustained as a result of the forced closures due to the pandemic which would fall under *"Event*" and that "*accidental*" should mean more than something which was "unlooked for or unintended" and that "*loss of property*" should include a loss of the use of the property. When Allianz disputed this, contending that the loss of property should refer to the physical loss and that this type of loss was not covered by the policy, TKC issued proceedings against Allianz. Allianz applied to the Court for summary judgment against TKC on the basis that TKZ’s interpretation of the policy was incorrect and misconceived and the claim was bound to fail. In making submissions on the interpretation of "loss", Allianz referred to the reasoning applied in *Tektrol Ltd v International Ins Co of Hanover Ltd*1 > *“Loss” is a word whose meaning varies widely with the context in which it is used. If a man said to you: “I have lost my wife”, you would understand him to mean one thing outside the maze at Hampton Court and another outside an undertakers in the high street.”* > > Tektrol Ltd v International Ins Co of Hanover Ltd [2005] EWCA Civ 845 Allianz in its skeleton argument stated: > *Allianz is acutely conscious of the fact that the coronavirus pandemic has had a severe impact on many of its policyholders, including those such as TKC which operate in the hospitality sector. It has every sympathy with those affected .. Allianz also understands that policyholders with [Business Indemnity] cover will naturally wish to explore the question of whether or not it responds to the losses that they have suffered. Equally, however, it is vital for the functioning of such insurance and for the benefit of policyholders with valid claims that Allianz should only pay claims in cases where the policy requirements are satisfied, and not otherwise.* ## What is summary judgment? The court may give [summary judgment](https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/#:~:text=What%20is%20summary%20judgment%3F,on%20the%20claim%20or%20defence.) under [CPR 24](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part24) against a claimant or a defendant, either on the whole of the claim or on a particular issue, if it considers that there is: - No real prospect of that party succeeding on the claim or defence.- No other compelling reason why the claim or issue should be disposed of at a trial. ## What is the basis of an application for summary judgment? An application for [summary judgment](https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/#:~:text=What%20is%20summary%20judgment%3F,on%20the%20claim%20or%20defence.) can be based on: - A point of law (including a question of a point of construction of a document such as a contract);- The evidence which can reasonably be expected to be available at trial (or the lack of it); or- A combination of both. ## Summary judgment awarded following Court's interpretation of "loss" The judgment details the factors that must be taken into account when considering summary judgment. It was difficult to articulate any evidence relevant to interpretation which was likely to exist and although not available on the hearing of the application, could be expected to be available at trial. In addition to this, the Judge's decision included the arguability of the Claimant's submissions on interpretation. The High Court agreed with Allianz in holding that "loss" must necessitate some physical loss and it could not be said that it included temporary loss of use of property. The Court granted summary judgment in favour of Allianz and the claim was struck out. Read the full judgment here: *[TKC London Ltd v Allianz Insurance plc  [2020] EWHC 2710](https://lexlaw.co.uk/wp-content/uploads/TKC-London-Ltd-v-Allianz-Insurance-PLC-2020-EWHC-2710-Comm-15-October-2020.pdf)*. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Witness Statements: New Rules Upcoming in the Business and Property Courts Source: https://lexlaw.co.uk/solicitors-london/witness-statements-new-rules-in-the-business-and-property-courts-chancery-civil-evidence-advice/ *From April 2021 new rules on factual [witness statements](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) will likely be implemented which all practitioners in the [Commercial Court](https://www.gov.uk/courts-tribunals/commercial-court), [Chancery Division](https://www.gov.uk/courts-tribunals/chancery-division-of-the-high-court) and [Technology and Construction Court](https://www.gov.uk/courts-tribunals/technology-and-construction-court) should pay heed to. The [Witness Evidence Working Group](https://www.judiciary.uk/announcements/the-witness-evidence-working-group/)'s [report on factual witness evidence](https://www.judiciary.uk/wp-content/uploads/2020/10/Working-Group-Implementation-Report.pdf) has put forward a number of recommendations for improving the use of witness statements in the [Business and Property Courts](https://www.gov.uk/courts-tribunals/the-business-and-property-courts). * *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. We explain below the importance of witness statements in litigation and the steps to be taken to prepare witness evidence.* ## What is a witness statement? A [witness statement](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) is a formal document that contains a witness’s account of the facts relating to a particular dispute. The purpose of a witness statement is to provide to the Court (and opponent) written evidence to support a particular party’s case. Usually, all parties in litigation will be required to produce a witness statement. A [witness statement](https://professionalnegligenceclaimsolicitors.co.uk/preparing-witness-evidence-professional-negligence-claim-specialist-solicitors/) is a crucial piece of evidence that will be referred to and relied upon at trial. Therefore, it is important to ensure that your witness statement is both accurate and comprehensive. ## What is the purpose of a trial witness statement? To set out in writing the evidence in chief that a witness of fact would be allowed to give if they were called to give oral evidence at trial without having provided the statement. ## New requirements for the content of witness statements Practice Direction 57AC has new requirements regarding the content of factual [witness statements](https://professionalnegligenceclaimsolicitors.co.uk/preparing-witness-evidence-professional-negligence-claim-specialist-solicitors/), namely: > A trial witness statement must state only that which the witness claims personally to recollect about matters addressed in the statement, and must identify what documents, if any, the witness has referred to or been referred to for the purpose of providing the evidence set out in their trial witness statement. The requirement to identify documents the witness has referred to or been referred to does not affect any privilege that may exist in relation to any of those documents. > > Practice Direction 57AC 3.2 (Witness Evidence at Trial) ## New certificate of compliance required for witness statements A trial [witness statement](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) must be endorsed with a certificate of compliance in the following form, signed by the relevant legal representative unless the statement is signed when the relevant party is a litigant in person or the court orders otherwise: > “I hereby certify that: > > 1. I am the relevant legal representative within the meaning of Practice Direction 57AC. > > 2. I am satisfied that the purpose and proper content of trial witness statements, and proper practice in relation to their preparation, have been have discussed with and explained to **[name of witness]**. > > 3. I believe this trial witness statement complies with CPR Practice Direction57AC and paragraphs 18.1 and 18.2 of Practice Direction 32, and that it has been prepared in accordance with the Statement of Best Practice contained in the Appendix to CPR Practice Direction 57AC." > > Practice Direction 57AC 5.1 (Witness Evidence at Trial) ## Download Draft Practice Direction 57AC (Witness Evidence at Trial) [![](https://lexlaw.co.uk/wp-content/uploads/image-23.png)](https://www.judiciary.uk/wp-content/uploads/2020/10/CPR-PD57AC-Final-Draft-Updated-002.pdf) ## How do I refer to documents in my witness statement? If you refer to any documents in your witness statement, these should be collated in a supporting [exhibit](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32#exhibits), pursuant to paragraphs [11.1 to 15.4 of Practice Direction 32](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32/pd_part32#exhibits), clearly ordered and paginated for the Court. ## What is a statement of truth? In litigation, any statement of case or witness statement must be verified by a statement of truth. [Part 22 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22) sets out provisions for statements of truth. The purpose of the [statement of truth](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22/pd_part22) is to confirm that you believe that the facts stated in the entire witness statement are true. If a witness statement is not verified by a statement of truth, then it may not be admissible as evidence. There are also penalties for verifying false statements with a statement of truth. ## Consequences of inaccurate evidence verified by a statement of truth Signing a statement of truth or allowing a solicitor to sign where you know that a document contains a false statement may lead to you being contempt of court ([CPR 32.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part32#32.14)). [Part VI of Part 81 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-81-applications-and-proceedings-in-relation-to-contempt-of-court#IDAABTBB)of the Civil Procedural Rules contains rules about committal applications in relation to making, or causing to be made a false statement in a document verified by a statement of truth without an honest belief in its truth. ## Can I sign a witness statement electronically? This issue has been considered in detail however [CPR 5.3](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part05#5.3) provides that an electronic signature is sufficient. ## Exchange of witness statements The Court usually orders the simultaneous exchange of witness statements with the other party or parties in the proceedings in addition to both parties’ evidence being filed at Court. You should consider your opponent’s witness evidence carefully, as if there are any factual inaccuracies in your opponent’s evidence, it may be necessary to prepare a supplemental witness statement in order to deal with these points earlier than the trial. ## Consequences of failure to serve witness statement If a [witness statement](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) for use at trial is not served within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission. If you fail to comply with a court deadline or court requirement, you will need to apply to the Court for permission for relief from sanctions. ## Preparing for and attending the hearing As trial approaches, the Court will require determine a timetable which will set out how long you are likely to be needed in Court, the layout of the Court and how to address the Judge. Where a witness is called to give evidence at trial, he may be cross examined on his witness statement. You will need to prepare for giving evidence at the trial by carefully reviewing your statement and any relevant documents referred to in it. ## Instruct Expert Litigation Solicitors We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We are extremely experienced and capable at navigating our clients through the litigation process. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). --- # High Court issues costs penalty for failure to resolve issues with ADR Source: https://lexlaw.co.uk/solicitors-london/high-court-costs-penalty-for-failure-to-resolve-issues-with-adr-mediation-second-opinion-advice/ *In [JB v DB [2020] EWHC 2301 (Fam)](https://lexlaw.co.uk/wp-content/uploads/JB-v-DB.pdf), Mr Justice Mostyn penalised a party in costs for failing to comply with the prior order to use their best endeavours to resolve the dispute "if necessary through mediation or another form of non-court dispute resolution". * *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## The Facts In this family law judgment, Mostyn J penalised the husband by way of a costs order for failing to comply with his previous direction that the parties should endeavour to resolve the issues through alternative dispute resolution (ADR). Mostyn J previously directed the parties in the following terms: > "The parties are directed in the meantime to use their best endeavours to resolve the issues, if necessary through mediation or another form of non-court dispute resolution. The court will require at the hearing a full explanation of what efforts have been made to resolve the issues and will want to know why, without breaching privilege, the case has not been capable of settlement." > > Mostyn J, [JB v DB [2020] EWHC 2301 (Fam)](https://lexlaw.co.uk/wp-content/uploads/JB-v-DB.pdf) At the subsequent hearing the husband argued that it was "essentially impossible" to resolve the issue by discussion and mediation. The Judge did not agree with this, and stated that in fact the issue was: > "squarely in the centre of the arena, it would have been possible for the parties in discussions to have a worked out a way to solve the problem, of which an obvious one was to have agreed a figure which properly represented the interests of the children in remainder, to have carved that out and to have provided for it, leading to consensus as to the extent of the residue of the trust, so that that residue could be dealt with in the terms of the order of 15 June 2018." > > Mostyn J, [JB v DB [2020] EWHC 2301 (Fam)](https://lexlaw.co.uk/wp-content/uploads/JB-v-DB.pdf) Mostyn J ordered that there should be some sanction to reflect the court's disapproval that the husband has paid such cavalier regard to his obligations as incorporated in the previous order. Certainly the obligation to engage properly in negotiations to see if there was a way round what had now emerged as a very significant impediment should have been taken very seriously indeed, and that in the circumstances where the husband has wilfully refused to do so, Mostyn J ordered a sanction in costs which he assessed in the sum of £15,000. ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-21.png)](https://lexlaw.co.uk/wp-content/uploads/JB-v-DB.pdf) ## What is mediation? [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) provides a private forum in which the disputing parties can better understand each other’s position and then work together (with the assistance of the mediator) to explore options for settling the dispute. ## Can the court force litigants to mediate? No. It remains the case that a court cannot compel parties to resolve their disputes through mediation ([Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)). The Court concluded that it had no jurisdiction to force the parties to mediate. To oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.  The hallmark of ADR procedures, and perhaps the key to their effectiveness in individual cases, is that they are processes voluntarily entered into by the parties in dispute with outcomes, if the parties so wish, which are non-binding. Consequently the court cannot direct that such methods be used but may merely encourage and facilitate. If the court were to compel parties to enter into a mediation to which they objected, that would achieve nothing except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process. ## A successful litigant can be deprived of costs following refusal to mediate In *[Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)*, the court considered whether a refusal to mediate should give rise to costs sanctions. [CPR 44.3(2)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) provides that “if the court decides to make an order about costs (a) the general rule is that the unsuccessful party will be ordered to pay the cost of the successful party; but (b) the court may make a different order”. [CPR 44.3(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs) provides that “in deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including-(a) the conduct of the parties”. [Rule ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs)[44.3(5)](https://uk.practicallaw.thomsonreuters.com/Document/I11189031E45011DA8D70A0E70A78ED65/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.DocLink)) provides that the conduct of the parties includes “(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol.”  In deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to mediate, it must be borne in mind that such an order is an exception to the general rule that costs should follow the event. **The burden is on the unsuccessful party to show why there should be a departure from the general rule.** The fundamental principle is that such departure is not justified unless it is shown (the burden being on the unsuccessful party) that the successful party acted unreasonably in refusing to agree to mediate. ## When does an unreasonable refusal to mediate lead to costs sanctions? In [Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf), the court accepted the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following: - **the nature of the dispute**: in the Court’s view, most cases are not by their very nature unsuitable for ADR;- **the merits of the case**: the fact that a party reasonably believes that he has a strong case is relevant to the question whether he has acted reasonably in refusing ADR. If the position were otherwise, there would be considerable scope for a claimant to use the threat of costs sanctions to extract a settlement from the defendant even where the claim is without merit;- **the extent to which other settlement methods have been attempted:** the fact that settlement offers have already been made, but rejected, is a relevant factor. It may show that one party is making efforts to settle, and that the other party has unrealistic views of the merits of the case;- **whether the costs of the ADR would be disproportionately high: **This is a factor of particular importance where, on a realistic assessment, the sums at stake in the litigation are comparatively small;- **whether any delay in setting up and attending the ADR would have been prejudicial**; and- **whether the ADR had a reasonable prospect of success**.  In *[Halsey](https://lexlaw.co.uk/wp-content/uploads/Halsey-case.pdf)* itself, the refusal to mediate was considered to not be unreasonable. The claimant had lost the case, but had asked to be released from paying some, or all, of the costs of the successful party on account of that party’s refusal to mediate. The defendant had a strong defence, the costs of mediation would have been disproportionate and the claimant had not satisfied the burden of showing that mediation would have had a reasonable prospect of success. ## Case law: when is it unreasonable to refuse to mediate? - In *[Burchell v Bullard & Others [2005] EWCA Civ 358](https://lexlaw.co.uk/wp-content/uploads/Bullard-case.pdf)* the court considered that the nature of the case (a small building dispute) lent itself to mediation; and the cost of mediating was small (“a drop in the ocean” the court said) when compared to the cost of litigation in a case of this kind.- In *[Garritt-Critchley and others v Ronnan and another [2014] EWHC 1774 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Ronan-case.pdf)*, the defendants were ordered to pay the claimant’s costs on an indemnity basis because their position of consistently refusing to mediate due to confidence in their position and a belief that the parties were too far apart, was wrong.- In *[DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB) (20 March 2020)](https://lexlaw.co.uk/wp-content/uploads/Blackpool-case.pdf)*, the judge considered that indemnity costs should apply because of the defendant’s refusal to engage in mediation. This was conduct “out of the norm” as the court did not accept the defendant’s justification that it believed it had a strong defence. No defence by itself justified a failure to engage in any kind of ADR. ## Book an Initial Consultation with Our Expert Alternative Dispute Resolution Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # German company commences High Court litigation over unpaid Letter of Credit Source: https://lexlaw.co.uk/solicitors-london/german-company-commences-high-court-litigation-over-unpaid-dishonoured-letter-of-credit-advice/ *A German company (H Stoll AG and Co KG) has commenced proceedings in the [High Court](https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/) (Business and Property) against Unity Trade Capital Limited (which is in the business of financial intermediation including the provision of letters of credit). The company claims the Defendant issued a deferred payment letter of credit in its favour in the sum of over $500,000 which the defendant has failed to honour. The Acknowledgement of Service was filed on 8 October 2020 and the claim is ongoing. * *Although a [letter of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) on its face is an irrevocable written obligation from a Bank to fulfil an obligation, it is a misconception to assume that a Bank issuing a Letter of Credit is giving you an ironclad guarantee of payment as although the whole function of a Letter of Credit is to honour an underlying contractual agreement, there are many potential pitfalls for those entering into a letter of credit with a financial institution which requires legal advice, for example where the Bank refuses to honour the agreement.* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## The facts The Claimant company carries on a business concerned in the manufacturing of flat knitting machines. The Defendant issued a deferred payment letter of credit in favour of the Claimant in the sum of $540,500. The Letter of Credit was issued by the Defendant at the request of a Bangladeshi company to whom the Claimant had agreed to sell and deliver knitting machinery. The Defendant was the issuing bank and Commerbank AG (based in Frankfurt) was the advising bank. The goods which formed the subject of the contract between the Claimant and the Bangladeshi company were shipped. Upon delivery of the goods shipped by the Claimant to the Bangladeshi company the Defendant issued acceptance documents by SWIFT. The Bill of Lading was issued and consequently payment under the Letter of Credit later became due. ## The High Court proceedings Despite demands that had been made by and on behalf of the Claimant, the Defendant failed to pay the sum of $540,500 due under the terms of the Letter of Credit. The Claim Form was therefore issued on 14 February 2020 and the Acknowledgement of Service filed on 8 October 2020. The claim is noted as ongoing. ## The Claim Form for Failure to Honour the Letter of Credit ![](https://lexlaw.co.uk/wp-content/uploads/image-18.png) ## What is a Letter of Credit? [Letters of Credit](https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters) are a commonly used trade financial instrument provided by a third party, usually a financial institution such as a bank to ensure that the payment of the goods and services will be fulfilled between a buyer and a seller. A standard Letter of Credit is an irrevocable written commitment by a Bank to make payment to the seller, in connection with the export of specific goods, against the presentation of specified documents identified in the Letter of Credit and relating to those goods. Our [expert Letter of Credit litigation solicitors](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) can assist you if you are a party to such a dispute. ## Why are Letters of Credit important? Letters of credit are a necessary part of the documentary credit system, especially in international commodities trading at costs of circa $100 billion USD per annum. Although letters of credit have traditionally been used in trade transactions, they have proven to be very adaptable and are increasingly being used in non-traditional roles. Today, they are one of the most important tools of international finance. ## Why is a Letter of Credit used? Letters of credits are typically utilised when the parties involved in the financial transaction are based in different countries. In international trade, given the large distances and differing laws, a letter of credit has become an important mechanism for a bank to guarantee a buyer’s payment to a seller will be received on time and for the correct quantum. The [Letter of Credit ](https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters)is an important mechanism to assure a seller that a buyer has guaranteed payment and that the contractual provisions will be honoured. ## What are the types of Letters of Credit? There are a number of labels used to describe the different types of Letters of Credit. What type is used will depend on the relative negotiating positions of the parties and the surrounding commercial circumstances: - **Revocable credits: **A revocable credit is one which may be amended or revoked by the issuing bank at any time without notice to the seller.- **Irrevocable credits**: An irrevocable credit, on the other hand, can only be amended or revoked with the consent of all parties (the buyer, issuing bank, seller and any confirming bank).- **Confirmed**: A Confirmed Letter of Credit adds more security for the seller. This addition stipulates that if the issuing bank from the buyer does not pay the requested amount of money, the seller’s bank guarantees payment.- **Letter of Credit at Sight**: This article of the Letter of Credit specifies that all payments will be fulfilled as soon as there is documentation verifying that the goods or services have been received by the buyer.- **Red Clause**: A Red Clause Letter of Credit provides an obligation towards the buyer’s issuing bank to provide partial payment to the seller prior to the shipping of the goods in question or providing the service. ## What are the Regulations over Letters of Credit? Most letters of credit are governed by rules promulgated by the [International Chamber of Commerce (“ICP”)](https://www.ibanet.org/Forum/Detail.aspx?ForumUid=FB4A347E-6AF5-4138-BC97-5786FE7E925E), who has produced a standard set of guidelines known as [Uniform Customs and Practice for Documentary Credits](http://static.elmercurio.cl/Documentos/Campo/2011/09/06/2011090611422.pdf), used by producers and traders worldwide. The current version, [UCP 600](http://static.elmercurio.cl/Documentos/Campo/2011/09/06/2011090611422.pdf), became effective July 1, 2007. ## What are my options if a Bank does not honour or delays payment of a Letter of Credit? In the event that the buyer [Bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) is unable to make payment on the purchase, the seller is able to make a demand for payment on the [Bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/). The [Bank ](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/)will examine the beneficiary’s demand and if it complies with the terms of the letter of credit, is required to honour the demand. The obligation of both the issuing bank and confirming bank to pay is irrespective of disputes under the underlying contract for sale. The banks pay strictly in accordance with the terms of the Letter of Credit and should not need to concern themselves with whether or not the buyer and seller have met their contractual obligations to each other. ## In what circumstances will a Bank not honour a Letter of Credit? There are two significant exceptions to the principle that a confirming bank or issuing[ bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) is obliged to pay under a Letter of Credit even when the documents presented appear to be satisfactory. - **Illegality: **It is a defence (if proven) for the Bank not make payment pursuant to the Letter of Credit if making such payment would be illegal in accordance with the operating jurisdiction of the said bank.- **Fraud**: A bank is not obliged to pay under a Letter of Credit if the documents presented by the beneficiary are found to be fraudulent (for example if they have been forged) or, in the case of a standby Letter of Credit, if the beneficiary had no honest belief in the validity of its demand. # Case Study: Letters of Credit Our client was in the business of international maritime exporting of goods and commodities on a large scale basis. We received instructions on an urgent basis after a major London Bank dishonoured irrevocable Letters of Credit and refused to pay a £multimillion sum after our client exported goods from a European port to a north African trade hub and following valid documentary presentation by our client. Despite our client adhering to the terms of the irrevocable documentary credit, the Bank refused to honour the Letters of Credit. The Bank alleged this was due to purported links to a country which at the time was under imposed trade sanctions. The use of embargo or sanctions clauses in financial instruments subject to [rules drafted by the ICC Banking Commission](https://iccwbo.org/publication/guidance-paper-on-the-use-of-sanctions-clauses-2014/) have become more common in documentary credit agreements. The effect of which is that even with an irrevocable and complying Letter of Credit, if the agreement contains a sanctions clause, an issuing or confirming Bank may be prohibited from dealing with certain embargoed countries, persons or assets. We submitted on behalf of our client that the Letters of Credits had no such sanctions clauses which would ordinarily have allowed the Bank to refuse to pay (if links to an embargoed country could be proven) despite a complying presentation under the Letters of Credit.  Our experienced financial services solicitors and barristers can often assist in cases involving breaches of the documentary credit system in international commodities trading. Our expert lawyers: - thoroughly reviewed the underlying transaction, the letters of credit and the documentary evidence provided by the client;- prepared and issued a protective Claim Form and Particulars of Claim at the High Court within 24 hours of being instructed (we advised our client to issue a claim immediately to protect its’ legal rights and to strengthen its’ bargaining position with the Bank); and- successfully presented our client’s case and held without prejudice negotiations with the Bank and its’ legal representatives. Given that the client was owed significant funds and was suffering loss to the business and livelihood as a result of the Bank’s refusal to honour the Letters of Credit, we achieved a highly successfully outcome within just 10 days of being instructed: - the Bank agreed to honour its’ Letters of Credit and paid the entire sum it owed our client;- we secured our client tens of thousands in interest;- we negotiated that the Bank waived the entire commissions and fees it would have been due under the Letters of Credit; and- we achieved the fantastic result of getting the Bank to agree to pay 100% of our client’s legal costs (including disbursements i.e. the cost of issuing the Claim Form). Our client was delighted with this outstanding result and the astute tactical nouse and negotiation skills exhibited by our [expert Letter of Credit litigators](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/). ## Instruct Specialist Letter of Credit Solicitors We [specialise in banking litigation](https://lexlaw.co.uk/) and [Letter of Credit claims](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) and have years of [experience](https://lexlaw.co.uk/our-people/) in handling and resolving financial services claims. Our lawyers have market-leading experience of providing bespoke legal advice and bringing complex claims to settlement.  As a leading law firm regularly featured in the [news and media](https://lexlaw.co.uk/legal-news/) and with a track record of success, you can be assured your litigation claim will proceed with precision and care. We ensure that we provide the best possible outcome for our clients by conducting an in depth investigation and research into the realistic prospects of a case before advising on the appropriate course of action in order to reduce time and expense. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our negotiation skills are first-class. If required, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Damages Based Agreements: Court of Appeal upholds enforceability of DBAs in the event of termination Source: https://lexlaw.co.uk/solicitors-london/damages-based-agreements-court-of-appeal-upholds-enforceability-of-dba-lexlaw-vs-shaista-zuberi-comments-analysis/ *The Court of Appeal (before Lord Justice Lewison, Lord Justice Newey and Lord Justice Coulson) has today handed down a [landmark judgment on appeal](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf) from [HHJ’s Parfitt’s High Court ruling](https://lexlaw.co.uk/wp-content/uploads/High-Court-Lexlaw-v-Zuberi-2020-Damages-Based-Agreement-DBA-Judgment.pdf) in the trial of a preliminary issue and unanimously agreed with Lexlaw dismissing the appeal. [The judgment ](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf)(and the reasoning of the Lordships) will be of interest to the legal profession as it has been concerned that DBAs are not working effectively for either litigants or their representatives and in particular, the inconsistency in the legislation has caused considerable uncertainty and a fear that should a client terminate a retainer, the lawyer will end up not being paid anything for months or years of work.* *This is the first material case dealing with the Damages Based Agreements Regulations 2013 to reach the Court of Appeal since the scope of DBAs was extended to civil litigation in April 2013. The ruling provides much-needed clarity to the legal profession on one of the key uncertainties preventing the wider use of DBAs and the unanimous judgment paves the way for DBAs to flourish and enhance access to justice as intended.* This case has now [settled](https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/). ## Summary The litigation ([now settled](https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/)) was brought by Lexlaw Ltd (“Lexlaw”) based in Middle Temple, London against a former client, Shaista Zuberi in respect of payment legal fees pursuant to a DBA made in April 2014. The Defendant sought to terminate the DBA with her solicitors after Lexlaw, through its extensive work, had obtained a significant financial benefit of over £1 million for her in respect of litigation against two major banks for the mis-selling of a complex interest rate hedging product. The Defendant argued that the DBA with Lexlaw was unenforceable under section 58AA of the Courts and Legal Services Act 1990 because the DBA included within it an obligation on the Defendant to pay legal costs and expenses to Lexlaw on its hourly rates in the event of termination (and thus argued that Lexlaw was not entitled to any payment whatsoever). This question is of paramount importance to the legal profession as a whole, because the effectiveness of the arrangements by which litigants and their lawyers are able to fund litigation are an important component of securing access to justice on terms that are fair to litigants and to practitioners. Should a DBA be unenforceable for reasons that it includes an obligation on a client to pay a solicitor’s time costs and expenses on termination it would effectively end the use of DBAs. As a consequence, cunning and commercially savvy clients would be granted a judicial imprimatur to exploit the defects of the DBA Regulations by terminating the retainer with their legal representatives on the eve of successful litigation or settlement. For example, if the opposing party offers to settle a case, there would be nothing to stop the client disinstructing their legal professionals, representing themselves and terminating the DBA just before accepting the settlement offer in order to avoid liability to pay for work that the solicitor had carried out on the client’s behalf. This is clearly not what was envisaged or intended by Parliament. ## The Background In 2008, the Defendant borrowed over £2 million from Natwest/RBS, and as part of the transaction she entered into a 10-year interest hedging product. By Spring 2012, receivers were appointed against the Defendant. In May 2012, the Defendant appointed [Lexlaw](https://lexlaw.co.uk/) to act for her in respect of claims against the banks. In April 2014, the parties agreed to a DBA at the Defendant’s own request, as the Defendant could not otherwise afford to pursue her claim against the banks. [Lexlaw](https://lexlaw.co.uk/) carried out a substantial amount of work on the claim and challenged the outcome of a redress review on behalf of the Defendant. In April 2015, a meeting was held with the banks and they indicated to the Claimant and Defendants that an improved redress offer would be provided. In July 2015, the banks made an improved final offer which was acceptable to the Defendant which involved a less costly alternative derivative product and meant the Defendant received £389,168.39 in cash redress from the banks plus avoided significant break costs of £640,000, resulting in a financial benefit to the Defendant of well over £1 million. [Lexlaw](https://lexlaw.co.uk/) sought payment under the DBA from the Defendant in the sum of £125,123.14. However, despite Lexlaw having achieved a successful resolution of the claim against the banks, the Defendant refused to pay any sums and argued that the DBA was unenforceable under section 58AA of the Courts and Legal Services Act 1990 as the DBA included within it an obligation on the Defendant to pay Lexlaw’s costs and expenses on termination. 26 May 2022 Update: The case has now settled and a public statement has been issued by the parties which is available to read at: [https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/](https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/) ## What is a Damages Based Agreement (DBA)? Damages-based agreements were first introduced as a form of funding for civil cases on 19 January 2013 when [section 45 of the* Legal Aid, Sentencing and Punishment of Offenders Act 2012* ](http://www.legislation.gov.uk/ukpga/2012/10/section/45)(“**LASPO**”) came into force. The effect of [s45 LASPO](http://www.legislation.gov.uk/ukpga/2012/10/section/45) was to introduce an amendment to [section 58AA of the *Courts and Legal Services Act 1990*](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA)**(damages-based agreements). The 2013 Regulations were made pursuant to an amended[ section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) (“Section 58AA” and “the CLSA”). The relevant section is found in Section 58AA: > 58AA **Damages-based agreements** > > (1) A damages-based agreement which satisfies the conditions in subsection (4) is not unenforceable by reason only of its being a damages-based agreement. > > (2) But (subject to subsection (9)) a damages-based agreement which does not satisfy those conditions is unenforceable. > > (3) For the purposes of this section— > > (a) a damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that— > > (i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and > > (ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained; > > (4) The agreement— > > (a) must be in writing; > > (aa) must not relate to proceedings which by virtue of section 58A(1) and (2) cannot be the subject of an enforceable conditional fee agreement or to proceedings of a description prescribed by the Lord Chancellor; > > (b) if regulations so provide, must not provide for a payment above a prescribed amount or for a payment above an amount calculated in a prescribed manner; > > (c) must comply with such other requirements as to its terms and conditions as are prescribed; and > > (d) must be made only after the person providing services under the agreement has complied with such requirements (if any) as may be prescribed as to the provision of information. > > [section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) ## Trial of a Preliminary Issue In spite of obtaining compensation exceeding £1 million the Defendant refused to pay arguing instead that the DBA was unenforceable under section 58AA of the Courts and Legal Services Act 1990 as the DBA included within it an obligation on the Defendant to pay Lexlaw’s costs and expenses on termination. By judgment dated 26 June 2018, Master Clark ordered the trial of a preliminary issue in the claim as follows:  > “*Whether the DBA is enforceable by virtue of section 58AA(2) of the CLSA 1990, by reason of failing to satisfy the conditions in section 58AA(4) CLSA 1990, as pleaded in paragraph 64 to 71 of the Amended Defence dated 22 June 2016*”. > > Lexlaw Ltd v Zuberi [2017] EWHC 1350 (Ch) (09 June 2017) ## The High Court Judgment At first instance, [HHJ Parfitt sitting in the High Court](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-dba-high-court-judgment-lexlaw-vs-shaista-zuberi-comments-analysis-legal-advice/) ruled that the existence of such a termination clause did not invalidate the whole contract. HHJ Parfitt found that in effect what the Defendant was trying to do was contrary to what Parliament was trying to achieve in respect of DBAs and therefore contrived to create a satellite litigation cost war in order to seek to avoid her payment liability to the Lexlaw. HHJ Parfitt held that the DBA between the Lexlaw and the Defendant was not unenforceable as as it would be wholly inconsistent with Parliament’s intent, the structure of the CLSA and the 2013 Regulations and would produce a result that would be *“irrational and unjustifiable”* - that is, such a construction would prevent a solicitor recovering time costs in respect of work that it reasonably carried out in the event of termination.  The judge gave a number of “interlocking” reasons for his view, including an interference with freedom of contract; the lack of justification for a stark difference between the position of a lawyer in an employment matter and a lawyer in any other case; and the deterrent effect on the adoption of DBAs with the consequence that there would be fewer choices of funding methods for litigants.   ## The Court of Appeal Judgment [This appeal](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf) raises a short, yet important, point of statutory interpretation concerning s5AA of the Courts and Legal Services Act 1990 (“CLSA”) and the delegated legislation made pursuant to the powers conferred by ss58AA(4) and (5) CLSA, namely the Damages Based Agreements Regulations 2013 SI 2013/609. Lord Justice Lewison considered that at common law the contract as a whole is enforceable as the inconsistent clause fulfilled the criteria justifying severance from the remainder of the contract. His Lordship, in line with his previous jurisprudence, took a purposive approach to the interpretation of the 2013 Regulations and gave the term “damages based agreement” a narrow meaning. It is the agreement between the parties relating to the payment as defined in the Regulations, namely that “part of the sum recovered in respect of the claim or damages awarded that the client agrees to pay the representative” that are part of the DBA: > *“if a contract of retainer contains a provision which entitles a lawyer to a charge of recoveries; but also contains other provisions which provide for payment on a different basis, or other terms which do not deal with payment at all, only those provisions in the contract of retainer which deal with payment out of recoveries amount to the DBA”* Other elements of the agreement between the solicitor and the client, such as at which of the solicitors’ offices the work will be done, or the level of expenses incurred (which is expressly excluded from the payment as defined) or, as in this case, the termination provisions, have nothing to do with the payment as defined in the Regulations, and are therefore not part of the DBA itself. As a result of this interpretation, LJ Lewison dismissed the appeal on the basis therefore that *“clause 6.2 of the contract of retainer was outside the scope of the Regulations, and that its presence in the contract of the retainer did not invalidate the contract”*. Lord Justice Newey agreed that the appeal should be dismissed, but reached the conclusion by a different route. His Lordship parted company from LJ Lewison’s purposive interpretation of what a DBA is and instead reached his conclusion by finding that section 58AA of the Act and Regulation 4 do not affect the operation of an early termination provision and in fact do not address termination (or were to intended to regulate fees payable to legal representatives in the event of early termination of the DBA) at all: > *“i) As I read the 2010 Regulations, regulation 6 shows that regulation 5 was not intended to apply where a DBA was terminated early. It is apparent from regulation 6(2), limiting the amount that a representative could charge on termination to “costs and expenses for the work undertaken”, that, regulation 5 notwithstanding, it was proper for a DBA to provide for a representative to charge time costs on termination regardless of what, if anything, the client might ultimately recover from the claim;* > > *ii) Regulations 5 and 6 of the 2010 Regulations have now been replaced by regulations 7 and 8 of the 2013 Regulations, but the latter provisions must operate in the same way as the former formerly did. Just as regulation 5 of the 2010 Regulations cannot have been meant to extend to early termination, nor can regulation 7 of the 2013 Regulations have been intended so to extend;* > > *iii) Regulations 4 and 7 of the 2013 Regulations perform similar functions in relation to, respectively, “employment matters” and “claims or proceedings other than an employment matter”. In particular, regulation 4(3), capping payment at an amount equal to 50% of recoveries, mirrors regulation 7, save that regulation 7 fixes the cap at 35% of recoveries rather than 50%. That suggests that, like regulation 7, regulation 4 should be seen as having no application to termination provisions;iv) That that is the correct interpretation is confirmed by what was said about the 2013 Regulations. Lord McNally explained to the House of Lords on 26 February 2013 that the detailed provisions found in, among others, regulation 8 of the 2013 Regulations were* > > *“necessary because employment matters may be undertaken by non-lawyers”, whereas “civil litigation can be undertaken only by qualified legal representatives, who are subject to regulation by their professional bodies and whose conduct may be subject to challenge through those bodies” so that it “was considered that further regulation at this stage is not required”. Lord McNally said, too, that “DBA regulations do not contain requirements on termination for civil litigation, as in employment cases” because “employment cases … can be taken forward by non-lawyers”, while “Civil litigation can be conducted only by lawyers, who are subject to their own professional regulations”.....”* Lord Justice Coulson concurred and dismissed the appeal. His Lordship agreed with LJ Lewison that the term “damages-based agreement” should be given a narrow meaning and further agreed with LJ Newey that even if this were too narrow an interpretation that “*neither section 58AA of the Act, nor Regulation 4, affect the operation of an early termination provision such as clause 6*.” Further: > *“The fact that the Regulations do not prohibit or limit termination provisions for general civil litigation is not an inadvertent omission. On the contrary, as can be seen from the Explanatory Memorandum, it is the result of a deliberate decision. Parliament shied away from imposing any restrictions on termination provisions generally because it acknowledged that, in such cases, lawyers would be involved and therefore would be subjected to the regulatory provisions of their own professional bodies.”* ## Comments Mr[ M. Ali Akram](http://lexlaw.co.uk/our-people/m-ali-akram/), a dual qualified barrister and solicitor practising at City of London law firm[ LEXLAW Solicitors & Barristers](http://lexlaw.co.uk/), stated: > *“The client in this case sought a DBA and pressed us to fund her claim. The client had previously instructed us on a mis-selling claim for a complex derivative however the client was low on funds and her own attempts to seek compensation through the regulator’s review scheme were unsuccessful. Although the DBA Regulations entitled us to ask for a contingency fee of up to 50%, we agreed to conduct this multimillion litigation at a low DBA percentage level of only 10% plus VAT (so 12% in total). Our case against the Bank lasted 2 years and after a considerable amount of work from us resulted in a financial benefit to the client of over £1 million. The Court of Appeal’s judgment- reached by three different routes- provides welcome guidance to practitioners because of the lacuna in DBA Regulations as it relates to termination in litigation proceedings and whether on termination a client would be liable for solicitor fees on an hourly rate basis. This is a major problem because the DBA Regulations do not provide protection for legal professionals who use DBAs to promote access to justice.”* Mr M. Ali Akram further stated: > *“The DBA enabled the Defendant to access litigation services without having to pay for them until the conclusion of her claim. She was enabled to do this on terms where her liability was always a known percentage of whatever financial benefit she obtained. She had the benefit of those terms and the Court of Appeal has determined that it is unjust to argue that an entire agreement can be voided without payment at all. This is a welcome and important judgment for lawyers and clients equally as it provides some much needed judicial clarity on the effect of termination in respect of DBAs in litigation matters.”* > > [M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), Senior Partner at LEXLAW Mr[ Karim Oualnan](https://lexlaw.co.uk/our-people/karim-oualnan/), a solicitor and partner at City of London law firm[ LEXLAW Solicitors & Barristers](http://lexlaw.co.uk/) with conduct of the proceedings stated: > *“It is common knowledge within the profession that the DBA regs put in place by the Ministry of Justice have a number of gaps and are not user friendly. However, it is wholly disingenuous for a client to terminate a funding agreement with a solicitor (after that solicitor has taken the risk of funding the claim to conclusion and obtained a successful outcome) and expect no liability to the solicitor; that is clearly not Parliament's intention when it enacted the DBA regs. The Court of Appeal has clarified some of these uncertainties and provides the opportunity for DBAs to flourish and enhance access to justice as intended. I hope that this judgment will go some way in putting DBAs (and the amendments of the DBA regs) back on the agenda and provide a means of promoting and furthering access to justice particularly during these unprecedented economic times”.* > > [Karim Oualnan](https://lexlaw.co.uk/our-people/karim-oualnan/), Solicitor at LEXLAW ## Statement by Lexlaw https://issuu.com/lexlawlawyers/docs/damages_based_agreements_zuberi_v_lexlaw_press_rel ## Download the Court of Appeal Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-24.png)](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf) ## Contact Details [LEXLAW Solicitors & Barristers](http://lexlaw.co.uk/) is a unique law firm that partners solicitors and barristers and is the only law firm based in the Middle Temple (an Inn of Court). The City of London Law Firm specialises in Financial Services Litigation and is regularly instructed in high-profile high-value litigation disputes. The senior partner, [Mr M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), can be contacted via email on [maa@lexlaw.co.uk](mailto:maa@lexlaw.co.uk) or by telephone on 020 7183 0529. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # FCA’s Business Interruption Insurance Appeal to be heard at Supreme Court Source: https://lexlaw.co.uk/solicitors-london/fca-business-interruption-insurance-appeal-to-be-heard-at-supreme-court-bi-claims-advice/ *[The FCA has confirmed](https://www.fca.org.uk/firms/business-interruption-insurance) that the Supreme Court has granted permission to appeal the [business interruption insurance test case](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). The appeal is to focus on the “prevention of access” and “disease” clauses in the sample wording clauses from the 8 insurers.* *The [Supreme Court](https://www.supremecourt.uk/) appeal will be heard from 16 November 2020 before LJ Robert Reed, LJ Patrick Hodge, LJ David Kitchin, LJ Nicholas Hamblen and LJ George Leggatt. The appeal is listed for 4 days.* *[The test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) has come about as a large number of disputed insurance claims have been made by SMEs under policies covering business interruption (“BI”) losses, particularly – and relevantly in this action – under extensions or other coverage clauses that do not require property damage, instead being focused entirely on events causing an impact to the insured business.* ## Why did the FCA appeal the High Court Judgment? The appeal raises several important points of principle on which many thousands of COVID19-related business interruption insurance claims depend. The challenge will examine the “disease” clauses and the “prevention of access” clauses wording of the sample insurance policies (and “hybrid” wording which includes both clauses). The Supreme Court will also examine the precedent set out in Orient-Express Hotels Ltd v Assicurazioni Generali SpA [2010] EWHC 1186 (Comm); [2010] Lloyd’s Rep IR 531 (which the High Court disproved of). The Supreme Court’s analysis of this case could have major ramifications for arguments related to insurance litigation. ## Download the FCA’s application to the Supreme Court [![](https://lexlaw.co.uk/wp-content/uploads/image-19.png)](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-fca-application-permission-appeal.pdf) [](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-fca-application-permission-appeal.pdf) ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Why is the FCA’s BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate would be. It is against that background that the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, thus seeks legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your [Business Interruption Insurance claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). ## The High Court Judgment The High Court ruled in favour of the FCA on most of the key issues, in particular regarding coverage triggers under most disease and ‘hybrid’ clauses, certain denial of access/public authority clauses, as well as causation. The policies wording share provisions which, in broad terms, provide coverage in respect of business interruption in consequence of or following or arising from the occurrence of a notifiable disease within a specified radius of the insured premises. In relation to each, there arises the question of whether there is cover in respect of a pandemic where it cannot be said that the key matters which led to business interruption, and in particular the governmental measures, would not have happened even without the occurrence of COVID-19 within the specified radius, as a result of its occurrence or feared occurrence elsewhere. The FCA’s case is that there was cover. The FCA’s position was that there was a “Notifiable Disease” in all parts of the UK by 6 March 2020. There was interruption of or interference with the business from 16 March 2020 as a result of the government’s instructions and/or announcements as to social distancing, self-isolation, lockdown and restricted travel and activities, or alternatively, in cases where businesses were ordered to close, from 23 March 2020. Any losses as insured were sufficiently causally connected with the interruption or interference and the interruption or interference “followed” the occurrence of COVID-19 if they would not have occurred had there been no COVID-19 outbreak or intervention by the government. The High Court broadly agreed with the FCA’s submission and concluded that the proximate cause of the business interruption was the “Notifiable Disease” of which the individual outbreaks form indivisible parts. ## What does the judgment mean for BI insurance policyholders? The FCA commented on the judgment, and notably confrimed that policyholders with claims would hear from their insurers within a week: > Although the judgment will bring welcome news for many policyholders, the judgment did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the Court. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer within the next 7 days. > > [The Financial Conduct Authority’s statement](https://www.fca.org.uk/news/press-releases/result-fca-business-interruption-test-case) ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. The High Court in the [FCA’s test case](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) now confirm that the majority of the FCA’s submissions on behalf of policyholders have been accepted. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why instruct a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # High Court holds Ed Sheeran’s lawyers gave inadequate responses to Part 18 requests in copyright infringement case Source: https://lexlaw.co.uk/solicitors-london/high-court-holds-ed-sheerans-lawyers-gave-inadequate-responses-to-part-18-requests-in-copyright-infringement-case/ *The High Court has [held ](https://lexlaw.co.uk/wp-content/uploads/Sheeran-Ors-v-Chokri-Ors-2020-EWHC-2806-Ch-28-October-2020-1.pdf)that the well known singer Ed Sheeran, ignored Part 18 Requests for Information from the Defendants in a copyright infringement case, which was an inadequate response. [CPR Part 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18) governs rules around Requests for Information and as in this case, the Court will take breaches of the rules seriously. If you require legal advice in making or responding to a [Part 18 Request](https://lexlaw.co.uk/request-for-information-cpr-18-litigation/) for Information, get in touch with our litigation team. * ## Part 18 Request for information in copyright infringement case The litigation, which is anticipated to cost the parties £3 million between them, concerns Ed Sheeran's song Shape of You released in 2017. Following allegations of copyright infringement, the Claimants are seeking declaratory relief that they have not infringed the Defendants' copyright. The Defendants have issued a counterclaim for copyright infringement and damages for the same. Prior to the the [Case and Costs Management Conference](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/), the Defendants served a [CPR Part 18 Request](https://lexlaw.co.uk/request-for-information-cpr-18-litigation/) for Information consisting of 22 requests and they sought a response within 2 weeks. The Claimants ignored the Part 18 Request claiming that the requests were disproportionate and not necessary for the Defendants to prepare their case. The Defendants applied to the Court for a decision and on 27 April 2020, the Court ordered for the Claimants to respond to the Part 18 Request by 15 May 2020 however the Claimants failed to do so. The Court found no good reason for the Claimants' breach of court orders in failing to (i) provide a sufficient and complete response to the Defendants' Part 18 Request; and (ii) apply to set aside or vary the terms of the 27 April Order, however in taking into account that the Claimants' lawyers were unwell with Covid-19, allowed the Claimants a further seven days to vary the Order dated 27 April 2020. Read the judgment here: [*Sheeran & Ors v Chokri & Ors* [2020] EWHC 2806 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Sheeran-Ors-v-Chokri-Ors-2020-EWHC-2806-Ch-28-October-2020-1.pdf). ## What is a CPR Part 18 Request for Information (“RFI”)? [Part 18 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18)is a rule that helps litigants understand the opponent’s case. The rule is set out under England & Wales’ Civil Procedure Rules 1998. If a request for further information is not adequately replied to then the Claimant/Defendant can apply for a Court Order order under Part 18 demanding the information. The purpose of the rule is ensure understanding of the case and earlier cooperation and resolution. Upon receipt of a [statement of case](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/) or at any time in the proceedings, a party to proceedings may consider that the statement of case does not provide sufficient information about the claim. A formal request can be made under [CPR 18.1(1)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18) for the other party to clarify or provide additional information in relation to any such issue. An[ "RFI" or a ‘Part 18 Request’](https://lexlaw.co.uk/request-for-information-cpr-18-litigation/) can be used to: - clarify a specific issue in the case- narrow the issues in dispute between the parties- give additional information in relation to a matter in the proceedings which has not been done otherwise by [witness evidence](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/)- reveal weaknesses in the other party’s case by highlighting a specific issue which is not clear in the party’s [statement of case](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/)- obtain an admission on a specific issue in the proceedings The matter to which a Request for Information relates does not need to be contained or referred to in a statemrent of case i.e. a pleaded issue, however it should be relevant to the proceedings. ## How to respond to a Part 18 Request A response to a Part 18 Request for Information must be in writing, dated and signed by the second party or his legal representative ([paragraph 2.1 of CPR Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#2.1)). The receiving party is allowed ‘a reasonable time to respond’ ([paragraph 1.1 of CPR Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#1.1)). Like other statements of case in the proceedings, a response should be verified by a statement of truth (as set out in [Part 22](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part22)). ## Can I object to a Part 18 Request? Often the receiving party may consider a Part 18 Request to be disproportionate, irrelevant to the proceedings or a “fishing expedition”. If the receiving party objects to complying with the Part 18 Request or is unable to do so in the time allocated, he must inform the requesting party promptly. If the receiving party considers that a Part 18 Request can only be complied with at disproportionate expense and objects to comply for that reason he should say so in his reply and explain briefly why he has taken that view ([paragraph 4.2 of CPR Practice Direction 18](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part18/pd_part18#4.1)). There is no requirement to notify the Court but if an application is made, the receiving party must be prepared to clearly set out its objections. ## Failure to comply with order for a Part 18 Request If you fail to comply with a court order to provide further information that are final orders, this can result in unless orders which can eventually lead to your case being struck out. A receiving or objecting party must be prepared to give valid, cogent reasons as to why it failed to comply with a court order and respond adequately to a Part 18 Request. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Business Interruption Insurance: FCA guidance on how policyholders can prove the presence of COVID-19 Source: https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-bi-fca-guidance-on-how-policyholders-can-prove-the-presence-of-covid-19-advice/ *[The FCA](https://www.fca.org.uk/) has recently published [draft guidance](https://lexlaw.co.uk/wp-content/uploads/draft-guidance-business-interruption-insurance-test-case.pdf) explaining the types of evidence and methodologies which policyholders may use when proving the presence of coronavirus in a particular area around their premises. * *It is hoped that the [FCA's draft guidance](https://lexlaw.co.uk/wp-content/uploads/draft-guidance-business-interruption-insurance-test-case.pdf) will provide clarity and ensure that the process of proving the presence of coronavirus is made as simple as possible for policyholders. This will help enable policyholders to receive claim payments as early as possible should the Supreme Court uphold the High Court’s decision that relevant policies potentially provide cover in response to the pandemic.* *[The test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) has come about as a large number of disputed insurance claims have been made by SMEs under policies covering business interruption (“BI”) losses, particularly – and relevantly in this action – under extensions or other coverage clauses that do not require property damage, instead being focused entirely on events causing an impact to the insured business.* ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Why is the FCA’s BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate would be. It is against that background that the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, thus seeks legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your [Business Interruption Insurance claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). ## What does the FCA's draft guidance say? The FCA consults on [draft guidance](https://lexlaw.co.uk/wp-content/uploads/draft-guidance-business-interruption-insurance-test-case.pdf) for policyholders, insurers (including managing agents at Lloyd’s) and insurance intermediaries on how the presence of Covid-19 in a particular area may be proved, based on the High Court’s judgment and declarations and in the context of insurers’ obligations under our rules to handle claims fairly. The FCA also explain types of evidence and methodologies which policyholders may use, together with links to further useful information for policyholders. ## When does the draft guidance have effect? If the FCA proceeds to issue guidance following this consultation, it would potentially come into effect as soon as it is issued and cease to have effect on 31 December 2021. ## Who does the FCA's draft guidance apply to? The FCA's [draft guidance](https://lexlaw.co.uk/wp-content/uploads/draft-guidance-business-interruption-insurance-test-case.pdf) is for policyholders, insurers (including managing agents at Lloyd’s) and insurance intermediaries. ## Download the FCA's draft guidance on the Business interruption insurance test case- proving the presence of coronavirus (Covid-19) [![](https://lexlaw.co.uk/wp-content/uploads/image-22.png)](https://lexlaw.co.uk/wp-content/uploads/draft-guidance-business-interruption-insurance-test-case.pdf) ## The High Court Judgment The High Court ruled in favour of the FCA on most of the key issues, in particular regarding coverage triggers under most disease and ‘hybrid’ clauses, certain denial of access/public authority clauses, as well as causation. The policies wording share provisions which, in broad terms, provide coverage in respect of business interruption in consequence of or following or arising from the occurrence of a notifiable disease within a specified radius of the insured premises. In relation to each, there arises the question of whether there is cover in respect of a pandemic where it cannot be said that the key matters which led to business interruption, and in particular the governmental measures, would not have happened even without the occurrence of COVID-19 within the specified radius, as a result of its occurrence or feared occurrence elsewhere. The FCA’s case is that there was cover. The FCA’s position was that there was a “Notifiable Disease” in all parts of the UK by 6 March 2020. There was interruption of or interference with the business from 16 March 2020 as a result of the government’s instructions and/or announcements as to social distancing, self-isolation, lockdown and restricted travel and activities, or alternatively, in cases where businesses were ordered to close, from 23 March 2020. Any losses as insured were sufficiently causally connected with the interruption or interference and the interruption or interference “followed” the occurrence of COVID-19 if they would not have occurred had there been no COVID-19 outbreak or intervention by the government. The High Court broadly agreed with the FCA’s submission and concluded that the proximate cause of the business interruption was the “Notifiable Disease” of which the individual outbreaks form indivisible parts. ## What does the judgment mean for BI insurance policyholders? The FCA commented on the judgment, and notably confrimed that policyholders with claims would hear from their insurers within a week: > Although the judgment will bring welcome news for many policyholders, the judgment did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the Court. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer within the next 7 days. [The Financial Conduct Authority’s statement](https://www.fca.org.uk/news/press-releases/result-fca-business-interruption-test-case) ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. The High Court in the [FCA’s test case](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) now confirm that the majority of the FCA’s submissions on behalf of policyholders have been accepted. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Why instruct a Specialist Business Interruption Insurance Claim Solicitor? [We work to achieve our client’s interests](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) by attempting to negotiate with the insurers wherever proper and commercially sensible to do so. When the time comes to issue legal proceedings we know how best to do so. If a without prejudice settlement approach is unsuccessful we seek on behalf of our client both litigation funding and after the event insurance policies and prepare and issue a claim without delay. Members of [our legal team](https://lexlaw.co.uk/our-people/) are also [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [winding up petition](https://windinguppetitionsolicitors.co.uk/) experts so if our clients face winding up proceedings or appointment of receivers as a result of a invalid denial of insurance coverage we can quickly assist and advise in these areas. ## Our Business Interruption Insurance Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give [specialist litigation advice ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)and support in litigation cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the insurance claim;- Assisting you in preparation of evidence to support your Business Interruption insurance claim case;- Appointing the right insurance experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the [Financial Ombudsmen Service](https://www.financial-ombudsman.org.uk/);- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Case Study: Mis-sold bridging loan to obtain bankruptcy annulment Source: https://lexlaw.co.uk/solicitors-london/https-lexlaw-co-uk-case-study-annulled-bankrupt-dispute-bridge-lender-broker-annulment-funding-mis-selling-unregulated/ *You can apply to annul your bankruptcy on the basis that all of your debts and expenses have been repaid in full or to the satisfaction of the Court. Third parties such as claims management companies commonly assist desperate bankrupts in obtaining a bridging loan or other short term finance. Due to the nature of these complex, high interest rate loans, you should seek legal advice in relation to the same, which loans are commonly mis-sold and can result in the individual finding themselves in further financial difficulty e.g. facing possession. * *We specialise in bankruptcy annulments and bridging loan finance disputes and can advise you on a potential claim against a broker, lender or solicitor. * In [*Annulment Funding Company Ltd v Cowey and Cowlam* [2010] EWCA Civ 711](https://lexlaw.co.uk/wp-content/uploads/Annulment-Funding-Company-Ltd-v-Cowey-Anor-2010-EWCA-Civ-711-23-June-2010.pdf), the Court of Appeal upheld a County Court Judge's finding that a bridging loan agreement and legal charge were affected by undue influence on the joint owner of a bankrupt's property and set aside the affected agreement. ## Bankrupt seeking to annul bankruptcy order Mr Cowey and Ms Cowlam were co-habitees and joint owners of the property, 11 South Croxton Road ("the Property"), over which [Cheltenham & Gloucester Plc](https://www.cheltglos.co.uk/) had a first legal charge. The value of the house had been assessed at £800,000 and the sum due to the first chargee was approximately £370,000 and therefore the equity in the house was £430,000 split equally between Mr Cowey and Ms Cowlam. On 5 May 2006, Mr Cowey was made bankrupt following a [bankruptcy petition by HMRC](https://windinguppetitionsolicitors.co.uk/oppose-a-bankruptcy-petition/) for the sum of £120,000 for unpaid tax and costs of the Petitioner. A trustee was appointed in Mr Cowey's bankruptcy and all of Mr Cowey's property including his half share in the house (£215,000) was vested in his trustee pursuant to [section 306 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/306#:~:text=306%20Vesting%20of%20bankrupt). The trustee was entitled to seek to realise Mr Cowey's half share in the house for the benefit of the creditors. Mr Cowey received some advice on seeking an annulment of his bankruptcy from an [accountant](https://professionalnegligenceclaimsolicitors.co.uk/compensation-negligent-accountants-financial-tax-advisors/) and a [solicitor](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). ## Can I annul a bankruptcy order? You can apply to have your bankruptcy annulled on the following grounds: - The bankruptcy order should not have been made;- The bankruptcy debts and expense of the bankruptcy have all been paid or secured to the satisfaction of the court; or- You have entered into an Individual Voluntary Arrangement since the bankruptcy order was made. ## How do I annul a bankruptcy order? To annul your bankruptcy you must submit an application to the court, which will include a witness statement and evidence. You will also be required to pay a [court fee](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/728133/ex50-eng.pdf).The court will then list your application for a hearing. It is important you get legal advice throughout the process and a legal representative to represent you at any hearing in order to get the best possible outcome and your bankruptcy successfully annulled. ## Bridging loan assistance with bankruptcy annulment A bridging loan is a temporary short term financing option normally with a maturity of less than 18 months and which is usually secured against a property. Bridging finance provides quick access to, what can be, large sums of money ordinarily used by a borrower purchasing a property or repay debts e.g. debts in a bankruptcy. The Claimant, [Annulment Funding Company Ltd ](https://find-and-update.company-information.service.gov.uk/company/04268760)was a company specialising in providing finance to people who had either been made bankrupt or held valuable interests in land. Annulment Funding Company Ltd approached Mr Cowey to assist in obtaining funds to secure an annulment of his bankruptcy. > The basic idea is that the Claimant provides to a bankrupt the funds which are needed to obtain the annulment(and to pay further fees) and, following annulment, the former bankrupt will be able to obtain a mortgage from another lender who will advance monies to pay the debt due to the Claimant and, normally, pay off any prior charge on the property. > > The property can then be the subject of a first charge to the new mortgage lender. The funds advanced by the Claimant will be short term funds and will beat a level of interest which reflects that fact and the further fact that the borrower is not in a position to borrow elsewhere.  " After obtaining a bridging loan and repaying his creditors, Mr Cowey's bankruptcy was annulled on 22 November 2007 on the grounds that the bankruptcy debts and expenses had been paid or secured for. ## Undisclosed links between brokers and bridging loan lenders and broker's commission Mr Cowey and Ms Cowlam signed a document appointing [Insol Financing Sourcing Limited](https://find-and-update.company-information.service.gov.uk/company/04268760) to act as a mortgage broker and that they would charge a significant fee of £10,000 plus VAT for arranging the bridging finance. On Companies House it can be seen that the two companies, Insol and Annulment Funding Company Limited are the same. There are situations where an dishonest broker will recommend a borrower get the bridging loan from a sister company which will provide the loan financing. Often bankruptcy annulment advisers will refer the bankrupt to a connected bridging finance company to obtain funds and will benefit from a hefty commission. In this case, borrowers may have a claim against the broker for a breach of the common law duty to advise. Moreover, particulars of claim would also include a claim for misrepresentation as the lender is really acting as the borrower’s agent when the true agency was between the lender and the broker. ## Bridging loans provided to inexperienced bankrupt borrowers On 3 July 2007, Mr Cowey and Ms Cowlam entered into an agreement for the lender to offer an advance sum of £138,000 to be secured by a second charge over their house. The interest rate would be 1.5%. On 7 September 2007, a sum of approximately £124,000 was advanced to Mr Cowey's solicitors to pay his creditors and obtain the annulment of his bankruptcy. An inexperienced borrower can include for example a borrower who is inexperienced with financial services, has poor management of money or a history of bad debts or a borrower with limited grasp of English. In that case, undue influence or unconscionable bargain provides an equitable remedy to protect those from abuse from stronger parties under contract law. ## Bankrupt borrower unable to redeem bridging loans Mr Cowey was unable to find a mortgage lender to provide the funds needed to repay the Annulment Funding Company, one reason for which was Mr Cowey's credit rating as a previous bankrupt, and Mr Cowey was subsequently unable to repay the bridging loan. Borrowers in loan agreements which have onerous redemption clauses potentially have the equitable right to argue that a court should not enforce the terms of a contract that make it difficult to repay. This equitable doctrine is known as *“clogs on the equity of redemption”*, Lindley M.R. in *[Santley v Wilde](https://swarb.co.uk/santley-v-wilde-ca-1899/)*[ (1899) 2 Ch 474](https://swarb.co.uk/santley-v-wilde-ca-1899/) provided the first expounding of this equitable principle: > “Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that ‘once a mortgage always a mortgage” What may be considered to amount to a clog includes onerous penalty clauses or unconscionable repayment provisions (such as redemption only permitted if one lump sum payment is made), may be considered to be caught by the equitable doctrine. If you have been recommended or encouraged to enter into into a bridging loan which makes it difficult to redeem, then [seek legal advice as soon as possible](https://lexlaw.co.uk/) as you may have a claim once the loan agreement has been analysed, the circumstances surrounding the parties entering into the loan have been ascertained, the amount advanced quantified and the nature of the transaction understood. ## Possession proceedings by Annulment Funding Company On 17 April 2008, Annulment Funding Company Ltd brought possession proceedings against Mr Cowey and Ms Cowlam and demanded the full amount of the loan plus interest. Mr Cowley and Ms Cowlam argued that the transaction with the Annulment Funding Company was not readily explicable and was manifestly disadvantageous to Ms Cowlam; the charge had been entered into as a result of undue influence and that Ms Cowlam had not been independently advised. It was argued that that even if the charge were set aside, Ms Cowlam was nonetheless liable, as a joint debtor with Mr Cowey to repay the loan to Annulment Funding company however the Lambeth County Court Judge held Ms Cowlam was not liable in that way and that she had entered into the charge as a result of undue influence of Mr Cowey. The Judge gave the Annulment Funding Company permission to appeal on that point. The County Court Judge accepted Mr Cowey's evidence that he did not want a bridging loan and held that Mr Cowey and Ms Cowlam did not understand the the nature of the transaction they were entering into with the Annulment Funding Company and thought following the annulment of Mr Cowey's bankruptcy they would enter into a conventional long term first mortgage on the house. They did not think they were granting a second charge over the house to the Annulment Funding Company. ## Bridging loan entered into under undue influence The Judge also referred to the pressure of the situation which affected Ms Cowlam however the Judge considered whether Ms Cowlam had been placed under any pressure by Mr Cowley. The Judge held that the Annulment Funding Company had notice of the potential undue influence over Ms Cowlam. The Annulment Funding Company argued that even if the charge was induced by undue influence or misrepresentation, so that it must be set aside against Ms Cowlam, the loan was not so induced and should be allowed to stand.A finding that Ms Cowlam was liable to repay the loan would open the door to the Annulment Funding Company obtaining a charging order in relation to her beneficial interest in the house. The Judge held that there was no distinction to be drawn between the loan and the charge and both were disadvantageous to Ms Cowlam. She entered into both in the mistaken belief that she was entering into a short term loan which would be replaced at an early point by a conventional mortgage, at interest rates which were much less than the interest rates being charged by the Annulment Funding Company. The Judge held that both the loan and the charge were affected by the misrepresentation and the loan. ## Why should you use specialist lawyers instead of a claims management company? Claims Management Companies (CMCs) are only regulated by the Ministry of Justice and are not law firms made up legally qualified solicitors and barristers. CMCs can only complain to the Financial Ombudsman Service (FOS). They cannot issue legal claims nor represent their clients at Court and may [lack expertise](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/) in this area. You do not need a CMC to assist you and they do not have the required specialist knowledge and understanding of the insolvency rules when making applications relating to bankruptcy. ## I received negligent legal advice on a bridging loan A borrower may approach a solicitor to seek advice before entering into a bridging loan agreement or the lender or broker will refer the borrower to a [solicitor](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). If you believe you were not properly advised on a bankruptcy annulment or a bridging loan or the advice you received was incorrect or inadequate, you may have a potential claim for [negligence against the solicitor](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). ## Why you should use specialist bankruptcy lawyers We are leading experts specialising in Bankruptcy Petitions. We regularly assist with issuing petitions or setting aside statutory demands or defending petitions. We also specialise in making bankruptcy annulment applications. We can guide you through the minefield of complex [bankruptcy rules and procedure](http://www.legislation.gov.uk/uksi/2016/1024/part/10/made) and help your company to manage the entire process. We have years of experience in negotiating with creditors and their solicitors (in particular HMRC). We regularly represent our clients in the High Court/Bankruptcy Court and successfully obtain adjournments (e.g. to allow time to negotiate and settle or to defend a bankruptcy petition) or apply for annulment. ## I was mis-sold a bridging loan Bridging loans often have very high interest rates and even higher default rates. Failure to repay a bridge loan will likely lead to repossession and very significant adverse costs consequences. Bridging agreements can be complex financial agreements and it is important to seek legal advice before entering into such an arrangement. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in high value bridging finance mis-selling disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers. --- # Damages Based Agreements: Permission to appeal to Supreme Court refused in landmark DBAs case Source: https://lexlaw.co.uk/solicitors-london/damages-based-agreements-permission-to-appeal-to-supreme-court-refused-in-zuberi-dba-case-commentary-analysis/ *Following the hand down of the judgment in [Shaista Zuberi v Lexlaw Limited [2021] EWCA Civ 16](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf),* *the Court of Appeal (before Lord Justice Lewison, Lord Justice Newey and Lord Justice Coulson) has today refused the losing party permission to appeal to the Supreme Court*. * [The judgment ](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf)(and the reasoning of the Lordships)* *along with permission to appeal being refused,* *provides much-needed clarity to the legal profession on one of the key uncertainties preventing the wider use of DBAs and the unanimous judgment paves the way for DBAs to flourish and enhance access to justice as intended.* *The inconsistency in the legislation has caused considerable uncertainty and a fear that should a client terminate a retainer, the lawyer will end up not being paid anything for months or years of work.* *It is hoped that the unanimous Court of Appeal judgment and refusal of permission to appeal will go some way to assuaging the concerns of lawyers and clients alike. *This case has now [settled](https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/). ## Summary This is the first material case dealing with the Damages Based Agreements Regulations 2013 to reach the Court of Appeal since the scope of DBAs was extended to civil litigation in April 2013. The litigation was brought by Lexlaw Ltd (“Lexlaw”) based in Middle Temple, London against a former client, Shaista Zuberi in respect of payment legal fees pursuant to a DBA made in April 2014. The Defendant sought to terminate the DBA with her solicitors after Lexlaw, through its extensive work, had obtained a significant financial benefit of over £1 million for her in respect of litigation against two major banks for the mis-selling of a complex interest rate hedging product. The Defendant argued that the DBA with Lexlaw was unenforceable under section 58AA of the Courts and Legal Services Act 1990 because the DBA included within it an obligation on the Defendant to pay legal costs and expenses to Lexlaw on its hourly rates in the event of termination (and thus argued that Lexlaw was not entitled to any payment whatsoever). This question is of paramount importance to the legal profession as a whole, because the effectiveness of the arrangements by which litigants and their lawyers are able to fund litigation are an important component of securing access to justice on terms that are fair to litigants and to practitioners. Should a DBA be unenforceable for reasons that it includes an obligation on a client to pay a solicitor’s time costs and expenses on termination it would effectively end the use of DBAs. As a consequence, cunning and commercially savvy clients would be granted a judicial imprimatur to exploit the defects of the DBA Regulations by terminating the retainer with their legal representatives on the eve of successful litigation or settlement. For example, if the opposing party offers to settle a case, there would be nothing to stop the client disinstructing their legal professionals, representing themselves and terminating the DBA just before accepting the settlement offer in order to avoid liability to pay for work that the solicitor had carried out on the client’s behalf. This is clearly not what was envisaged or intended by Parliament. ## The Background Facts In 2008, the Defendant borrowed over £2 million from Natwest/RBS, and as part of the transaction she entered into a 10-year interest hedging product. By Spring 2012, receivers were appointed against the Defendant. In May 2012, the Defendant appointed [Lexlaw](https://lexlaw.co.uk/) to act for her in respect of claims against the banks. In April 2014, the parties agreed to a DBA at the Defendant’s own request, as the Defendant could not otherwise afford to pursue her claim against the banks. [Lexlaw](https://lexlaw.co.uk/) carried out a substantial amount of work on the claim and challenged the outcome of a redress review on behalf of the Defendant. In April 2015, a meeting was held with the banks and they indicated to the Claimant and Defendants that an improved redress offer would be provided. In July 2015, the banks made an improved final offer which was acceptable to the Defendant which involved a less costly alternative derivative product and meant the Defendant received £389,168.39 in cash redress from the banks plus avoided significant break costs of £640,000, resulting in a financial benefit to the Defendant of well over £1 million. [Lexlaw](https://lexlaw.co.uk/) sought payment under the DBA from the Defendant in the sum of £125,123.14. However, despite Lexlaw having achieved a successful resolution of the claim against the banks, the Defendant refused to pay any sums and argued that the DBA was unenforceable under section 58AA of the Courts and Legal Services Act 1990 as the DBA included within it an obligation on the Defendant to pay Lexlaw’s costs and expenses on termination. The High Court litigation case has now [settled](https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/). ## What is a Damages Based Agreement (DBA)? Damages-based agreements were first introduced as a form of funding for civil cases on 19 January 2013 when [section 45 of the* Legal Aid, Sentencing and Punishment of Offenders Act 2012* ](http://www.legislation.gov.uk/ukpga/2012/10/section/45)(“**LASPO**”) came into force. The effect of [s45 LASPO](http://www.legislation.gov.uk/ukpga/2012/10/section/45) was to introduce an amendment to [section 58AA of the *Courts and Legal Services Act 1990*](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA)(damages-based agreements). The 2013 Regulations were made pursuant to an amended[ section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) (“Section 58AA” and “the CLSA”). The relevant section is found in Section 58AA: > 58AA **Damages-based agreements** > > (1) A damages-based agreement which satisfies the conditions in subsection (4) is not unenforceable by reason only of its being a damages-based agreement. > > (2) But (subject to subsection (9)) a damages-based agreement which does not satisfy those conditions is unenforceable. > > (3) For the purposes of this section— > > (a) a damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that— > > (i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and > > (ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained; > > (4) The agreement— > > (a) must be in writing; > > (aa) must not relate to proceedings which by virtue of section 58A(1) and (2) cannot be the subject of an enforceable conditional fee agreement or to proceedings of a description prescribed by the Lord Chancellor; > > (b) if regulations so provide, must not provide for a payment above a prescribed amount or for a payment above an amount calculated in a prescribed manner; > > (c) must comply with such other requirements as to its terms and conditions as are prescribed; and > > (d) must be made only after the person providing services under the agreement has complied with such requirements (if any) as may be prescribed as to the provision of information. > > [section 58AA of the Courts and Legal Services Act 1990](http://www.legislation.gov.uk/ukpga/1990/41/section/58AA) ## The High Court Judgment [HHJ Parfitt sitting in the High Court](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-dba-high-court-judgment-lexlaw-vs-shaista-zuberi-comments-analysis-legal-advice/) ruled that the existence of such a termination clause did not invalidate the whole contract. HHJ Parfitt found that in effect what the Defendant was trying to do was contrary to what Parliament was trying to achieve in respect of DBAs and therefore contrived to create a satellite litigation cost war in order to seek to avoid her payment liability to the Lexlaw. Full commentary on the High Court judgment can be found [here](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-dba-high-court-judgment-lexlaw-vs-shaista-zuberi-comments-analysis-legal-advice/). ## The Court of Appeal Judgment [The appeal](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf) raises a short, yet important, point of statutory interpretation concerning s5AA of the Courts and Legal Services Act 1990 (“CLSA”) and the delegated legislation made pursuant to the powers conferred by ss58AA(4) and (5) CLSA, namely the Damages Based Agreements Regulations 2013 SI 2013/609. Full commentary of the Court of Appeal judgment can be found [here](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-court-of-appeal-upholds-enforceability-of-dba-lexlaw-vs-shaista-zuberi-comments-analysis/). ## Download the Court of Appeal Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-24.png)](https://lexlaw.co.uk/wp-content/uploads/Zuberi-v-Lexlaw-2021-Court-of-Appeal-Judgment.pdf) ## Contact Details [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) is a unique law firm that partners solicitors and barristers and is the only law firm based in the Middle Temple (an Inn of Court). The City of London Law Firm specialises in Financial Services Litigation and is regularly instructed in high-profile high-value litigation disputes. The senior partner, [Mr M. Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), can be contacted via email on [maa@lexlaw.co.uk](mailto:maa@lexlaw.co.uk) or by telephone on 020 7183 0529. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Claimant wins battle over Defendant’s late acceptance of Part 36 offer in phone hacking claim Source: https://lexlaw.co.uk/solicitors-london/claimant-wins-battle-over-defendants-late-acceptance-of-part-36-offer-in-phone-hacking-claim/ *In [Pallett v MGN Ltd](https://lexlaw.co.uk/wp-content/uploads/Pallett-v-MGN-Ltd-2021-EWHC-76-Ch-19-January-2021.pdf), a case concerning the newspaper phone hacking scandal, the High Court orders the Defendant, owner of the Mirror newspaper, to pay all of the Claimant's costs of the proceedings, despite arguments that they had accepted the settlement offer outside of the 21 day relevant period under [CPR Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36). * The Claimant, [Roxanne Pallett](https://en.wikipedia.org/wiki/Roxanne_Pallett), an actress, issued proceedings over two years ago against Mirror Group Newspapers Limited, owner of [the Mirror](https://www.mirror.co.uk/) newspaper for infringement of privacy by interception of her mobile phone and other unlawful information gathering techniques. The matter was set for trial to take place in this month. ## What was the phone hacking scandal? In 2007 investigations were commenced into many journalists including those at the [News of the World](https://en.wikipedia.org/wiki/News_of_the_World) and [the Mirror](https://www.mirror.co.uk/) following concerns they had engaged in illegal and improper activity such as phone hacking, police bribery, and exercising improper influence in the pursuit of stories and information gathering. Allegations led to the closure of the 168-year-old [News of the World](https://en.wikipedia.org/wiki/News_of_the_World) tabloid in 2011 and a trial costing [reportedly up to £100m](http://www.telegraph.co.uk/news/uknews/phone-hacking/10924109/Rebekah-Brooks-walks-free-as-100m-phone-hacking-trial-ends.html). ## The parties have settled, now what about costs? In this case, after both parties had made various settlement offers, the Claimant made a [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) offer on 20 October 2020 to accept £99,500 from the Defendant to settle her claim. The offer specified that if it was to be accepted within 21 days, the Defendant would be liable for her costs. The Defendant accepted the offer on the 22nd day on the expressed basis that it was entitled to invite the Court to consider its liability for costs and was not bound to pay the Claimant's costs. The following questions arose: - Is the Defendant entitled to accept the part 36 offer on the basis upon which it did?- If so, did the Defendant's conduct amount to an acceptance of the Part 36 offer?- If so, does that acceptance have the effect as contended by the Defendant?- If so, should the Court exercise its discretion on costs as proposed by the Defendant? ## Parties' arguments on costs following acceptance of Part 36 The Defendant argued that the Claimant had failed to engage with the settlement process and had she had engaged years earlier, the claim would have been concluded at an earlier stage. The Claimant argued that none of the Defendant's offers were adequate and that he had quite reasonably wanted to wait for disclosure to take place prior to making an offer or accepting one. ## Court upholds costs liability upon Defendant's late acceptance of Part 36 offer Mr Justice Mann in the High Court agreed that the Claimant was not refusing to engage but could not sensible engage until she had more information and that her conduct could not be deemed unreasonable. He expressed that this case turned on the facts and should not be a precedent for all claimants to refuse to enter into negotiations before disclosure however he held that the normal consequences should follow and that the Claimant was entitled to receive "all the costs of the proceedings". > This case has turned on its own facts, and to a large extent on the justification of the claimant in pressing on for disclosure before valuing her claim. It involves a determination in which the burden is on the defendant under Part 36... it should not be taken as a green light for all claimants to decline to enter into negotiations before disclosure is complete. Such a posture would not be correct in every case. Each case must turn on its own facts. There may be other cases in which a non-engagement will be unreasonable. Read the full judgment for [*Pallett v MGN Ltd* [2021] EWHC 76 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Pallett-v-MGN-Ltd-2021-EWHC-76-Ch-19-January-2021.pdf). ## What is a Part 36 offer? [Part 36 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36)of the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) aims to encourage parties to try to settle their disputes and sets out the costs consequences of offers to settle made in accordance with Part 36.  Where a Claimant obtains a judgment that is at least as advantageous as the [Part 36 offer](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/#:~:text=Part%2036%20is%20a%20provision,in%20accordance%20with%20Part%2036.), the court must award it the costs consequences set out in [CPR 36.17(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17). If a party fails to accept a realistic offer made from the other side there is a risk of penalised costs and interest at the end of the case, therefore a legitimate offer is advised which puts the other side under pressure to settle.  Our specialist [litigation](https://lexlaw.co.uk/practice-areas/) and [ADR](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) lawyers can advise you in settlement negotiations. ## Why is a Part 36 offer important? If you are engaged in litigation, you should consider offers to settle (whether [Part 36](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/) or Calderbank offers) in order to achieve the best costs and interest on costs scenario if the matter has to proceed to trial. Parties in proceedings are encouraged to engage in settlement discussions, focus parties' minds to think commercially and attempt to resolve disputes before going to trial. We can be instructed to advise on options for settlement or provide you with a [second opinion](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) on your case. ## When can a Part 36 offer be made? [Part 36 offers](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) can be made before court proceedings are issued. However Part 36 do not apply to claims that are small claims track (claims that are less than £10,000).  The aforementioned costs consequences to not apply to offers made less than 21 days before trial unless the Court permits for the relevant period to be shortened. Part 36 offers are not applicable to the small claims track. If you are commencing or engaged in current litigation and require advice on settlement or making a part 36 offer, our specialist litigation and costs lawyers can assist. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyers’](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Insurance industry’s reaction to Supreme Court BII test case positive for businesses Source: https://lexlaw.co.uk/solicitors-london/insurance-industry-reaction-to-supreme-court-business-interruption-insurance-test-case-outcome-for-smes-businesses-fos-litigation-london-solicitors/ *Since the Supreme Court handed down its judgment in the [Business Interruption Insurance (BII) test case](https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-bi-fca-guidance-on-how-policyholders-can-prove-the-presence-of-covid-19-advice/), confirming that businesses affected by the first national COVID lockdown are entitled to payments from their business interruption insurance policies, clarity has been given to policyholders who have been affected by COVID-19 and have previously been denied BII cover by their insurers. This is causing insurers to reassess policyholders' disputes on a case by case basis. * *If you have been affected by your insurer's refusal to pay out for business interruption insurance, you should seek legal advice as soon as possible and our specialist financial services litigation team can be instructed to assist. * ## How are insurers responding to the business interruption insurance finding? In the Supreme Court [test case](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/), insurers who had sold business interruption insurance products ([Arch](https://insurance.archcapgroup.com/covid-19-update-broker-faqs/), [Argenta](http://www.argentagroup.com/policyholders), [Hiscox](https://www.hiscox.co.uk/fca-test-case), [MS Amlin](https://www.msamlin.com/en/about-us/MSAmlin-and-Covid-19.html), [QBE](https://qbeeurope.com/about-us/covid-19/) and [RSA](https://www.rsagroup.com/the-thread/information-about-the-fca-business-interruption-test-case/)) unsuccessfully argued that their policies did not cover COVID-19 because it was a global pandemic rather than a local event.  Various insurers and representative bodies have highlighted the complexity of business interruption insurance matters but the clarity that the [Supreme Court judgment ](https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-supreme-court-judgment-means-relief-for-covid-hit-businesses/)brings and how each case will now need to be assessed individually. This is positive news for many SMEs and businesses affected by insurers' refusal to pay out under policies and policyholders with affected claims can expect to hear from their insurer soon. Businesses should therefore seek legal advice on their case now. We expect to see the number of disputes increasing and many businesses pursuing action through complaints, the Financial Ombudsman and litigation, with all of which our [BII team ](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/)can assist. > *"The insurance industry expects to pay out over £1.8bn in Covid-19 related claims across a range of products, including business interruption policies. Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim. All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun. Some payments have already been made where valid business interruption claims have not been impacted by the test case ruling"* > > Huw Evans, Director General, [Association of British Insurers (ABI)](https://www.abi.org.uk/news/news-articles/2021/01/supreme-court-verdict-on-business-interruption-insurance-test-case/) > *"The application of COVID-19 as a peril in relation to business interruption insurance is a highly complex matter which is why, from the outset, we welcomed the FCA intervention in bringing this test case and the ultimate clarity the judgement now brings...What is needed now is for insurers to act swiftly to settle claims fairly and to clearly communicate the next steps in the process with brokers to allow them to help and advise their customers"* > > Steve White, CEO, [**British Insurance Brokers’ Association** (BIBA)](https://www.biba.org.uk/latest-news/supreme-court-judgment/) > *"ASML will proceed to determine all outstanding claims and complaints, applying the Supreme Court’s judgment in so far as possible and will write to policyholders individually with its decision"* > > [Argenta Syndicate Management Limited](http://www.argentagroup.com/fca-test-case) > *"We welcome the clarity that the Judgment provides and the processing of claims has begun. Any issues not addressed by the Judgment will be assessed on a case-by-case basis as part of the normal insurance loss adjustment process for claims. This will apply to all government restrictions, whether national or local, provided that a relevant policy was in force at the start of the relevant lockdown period"* > > [Hiscox Limited](https://www.hiscox.co.uk/fca-test-case) > *"We take our responsibility to support our policyholders extremely seriously and understand the challenges and uncertainties they face during these extraordinary times. We remain committed to providing an outcome for all affected policyholders as quickly as possible, by assessing all eligible claims in light of this judgment"* > > [MS Amlin](https://www.msamlin.com/en/about-us/MSAmlin-and-Covid-19.html) > *"We are acutely aware that many of our customers have and continue to face an extremely concerning time and will be concerned to know the impact of the Supreme Court’s findings on their claim or complaint. With this in mind, we are working to consider the findings of the Supreme Court and will contact all policyholders regarding its impact on your claim or complaint as quickly as possible"* > > [QBE](https://qbeeurope.com/about-us/covid-19/) > *"We recognise the adverse impact that Covid-19 is having on businesses, and that customers with Business Interruption insurance are keen to understand if their insurance policy will respond"* > > [RSA](https://www.rsagroup.com/the-thread/information-about-the-fca-business-interruption-test-case/) ## Why is the FCA’s BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate may be. It is with that in mind, the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, sought legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your [Business Interruption Insurance claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). We have specialist knowledge and experience in working with SMEs, assisting them in litigation against banks (such as the [GRG complaints scheme](https://lexlaw.co.uk/grg-rbs-natwest-claim-compensation-litigation-fca-review-westregister/)), large financial institutions and insurers. ## Why use a solicitor instead of a broker to submit your BII Claim? Our [Business Interruption Insurance Claim Solicitors](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse. If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. [Our litigation lawyers](https://lexlaw.co.uk/our-people/) are experienced in settlement negotiations to get an optimum award for our clients. *Following our fixed fee review (done by a solicitor and a barrister in conference, we may offer to take on your case on a **no win no fee** basis such as a [Damages Based Agreement (DBA)](https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/).* *We factor in your risk-appetite, costs sensitivity and determination and depending on the merits of your case, we are open to considering contingency fee agreements with you (such as DBAs) if your case is of high value.* ## Instruct our Business Interruption Insurance Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Business Interruption Insurance: Supreme Court judgment means relief for COVID-hit businesses Source: https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-supreme-court-judgment-means-relief-for-covid-hit-businesses/ *[The Supreme Court](https://lexlaw.co.uk/wp-content/uploads/uksc-2020-0177-judgment.pdf) has today handed down its judgment in the [Business Interruption Insurance (BII) test case](https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-bi-fca-guidance-on-how-policyholders-can-prove-the-presence-of-covid-19-advice/), confirming that businesses affected by the first national COVID lockdown are entitled to payments from their business interruption insurance policies*. *This landmark decision provides considerable clarity to policyholders who have been affected by COVID-19 and have previously been denied BII cover by their insurers.* *[The test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/) has come about as a large number of disputed insurance claims have been made by SMEs under policies covering business interruption (“BI”) losses, particularly – and relevantly in this action – under extensions or other coverage clauses that do not require property damage, instead being focused entirely on events causing an impact to the insured business.* ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## Why is the FCA’s BI Insurance test case important? Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate would be. It is against that background that the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, thus seeks legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not. Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your [Business Interruption Insurance claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/). ## What does the Supreme Court's judgment say? [The Supreme Court](https://lexlaw.co.uk/wp-content/uploads/uksc-2020-0177-judgment.pdf) primarily considered whether policyholders were entitled to receive payouts under 'disease clauses' and 'prevention of access clauses' in business interruption insurance policies for losses caused by COVID-19. The Supreme Court accepted in its judgment that COVID-19 became a 'notifiable disease' on 5 March 2020, and therefore ruled that it is sufficient for policyholders to prove that: - the business interruption resulted from government action (for example, the first national lockdown relating to COVID-19 in March 2020);- the government action was taken in response to cases of COVID-19; and- there was at least one case of COVID-19 within the geographical area covered by the disease clause in the business interruption insurance policy (which is usually, but not always, a radius of 25 miles from the policyholder's business premises). The Supreme Court also ruled that business interruption insurance cover may also be applicable under prevention of access clauses in relation to: - partial closures of business premises due to COVID-19;- full closures of business premises due to COVID-19; and- mandatory closure orders due to COVID-19 that were not legally binding. ## Download the Supreme Court Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-25.png)](https://lexlaw.co.uk/wp-content/uploads/uksc-2020-0177-judgment.pdf) ## Is my company entitled to Business Interruption insurance? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, the FCA believe that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. The High Court in the [FCA’s test case](https://lexlaw.co.uk/wp-content/uploads/bi-insurance-test-case-judgment.pdf) now confirm that the majority of the FCA’s submissions on behalf of policyholders have been accepted. Most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic.  However, for the remainder of policies that could be argued to include cover. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## 10 reasons why our Business Interruption Insurance team can help you obtain optimal compensation We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. - The Supreme Court did not resolve all possible business interruption insurance disputes between insurers and policyholders, but only dealt with some contractual issues relating to some insurers' policies. Our specialist business interruption insurance solicitors will consider the facts of your case, including your specific business interruption insurance policy, and provide you with strategic advice for your situation.- The Supreme Court's judgment did not offer any guidance on how much is payable by business interruption insurance insurers under individual policies to specific policyholders. Our expert business interruption insurance lawyers can help assess your case and advise on the optimal redress to seek from your insurer.- You may be unhappy with how your insurer has handled your BII claim and want to complain to the Financial Ombudsman Service, via whom it may be possible to obtain compensation of up to £355,000 (for complaints made after 1 April 2020). Our team can assist in making well-presented and fully-prepared complaints on our clients' behalf and can advise if litigation is a better option for redress, which in these cases it often is.- Due to losses caused by COVID-19 and exacerbated by your insurer, your business may be confronted with substantial and stress-inducing financial problems, which may have left you facing the threats of winding up and/or LPA receivership. Members of our legal team are also insolvency and winding up experts so we can quickly assist and advise in these areas.- Your business may have suffered consequential losses due to your insurers' failure to pay out under your business interruption insurance cover either promptly or at all, thereby causing irreparable harm to your business. Our specialist lawyers have experience of preparing, evidencing, advising, negotiating, and if necessary litigating consequential loss claims against large financial corporates such as insurers.- As a result of COVID-19 losses and your insurer's refusal to honour your business interruption insurance, your business may have been left to fend for itself against HMRC. As HMRC can be vehement about enforcing tax debts, our tax team works closely with our business interruption insurance team to provide you with a bespoke solution to your individual circumstances.- With business interruption insurers expecting a deluge of policy claims following the Supreme Court's decision, you will need to ensure that you are at the front of the queue for business interruption insurance pay-outs. Our business interruption insurance lawyers can work with you to ensure the best chance of success for you in negotiation or if necessary litigation.- Many businesses will already have been rejected for business interruption insurance claims by their insurers in advance of this Supreme Court decision. Our business interruption insurance specialists can assess your claim and your insurer's rejection, and assist you in recovering optimal compensation.- If negotiation is not possible to resolve your dispute with your insurer, then litigation can be considered. Our expert business interruption insurance lawyers can help assess your case and position, and using their specialist knowledge and experience will strategise the best way to commence legal proceedings against your insurer for optimal compensation.- If legal proceedings against your business interruption insurer have already begun and you are worried about the prospects of success, we can provide a second legal opinion by analysing the legal merits of your case and advising on legal risk factors so that we can deliver strategic legal advice at your first meeting with us. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Business Interruption Insurance Guide: Do I have a Claim? Source: https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-step-by-step-guide-do-i-have-a-claim-faqs/ *Does your insurance policy provide coverage for business interruption as a result of the pandemic? The quickest way to find out is to send our[ Business Interruption Insurance solicitors](https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/) your policy and we will let you know whether you have a claim. If you have a claim, we will offer you a no win no fee agreement. * *If you are a policyholder and your insurer is refusing to pay out for a business interruption claim, seek legal advice from our[ specialist BII claim solicitors](https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/) immediately as you may have a litigation claim to seek financial redress.* ## Is my company entitled to Business Interruption insurance? Following the Supreme Court ruling, policyholders can expect to hear from their insurers. Each policy will need to be considered against the judgment and[ specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can be provided by this firm once we have been instructed to review your policy documents and we can be instructed on a [damages based agreement](https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/). The FCA believes and the Supreme Court has held that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## Business Interruption Insurance Step-by-Step Guide To assess whether you have a claim, follow our 6 steps below: ### 1. Does your policy include business interruption insurance? Check your policy schedule. Read this in conjunction with the policy booklet provided by your insurer. It will state whether you have cover, the limit of indemnity. It is also important to check the period of coverage. Usually the statement will contain wording like: > 'The insurance covers loss resulting from interruption of or interference with the business carried on by you at the premises…' If you are unsure, send your policy documents to our BI claim solicitors and we will tell you whether you are covered. ### 2. Check your policy period You need to ensure that the insurance policy was in force when the financial loss as a result of the pandemic i.e. for example the lockdown occurred. The policy period (usually covering the period of 1 year and renewed annually) will likely be in the schedule or in a document called Insurance Product Information Document (IPID). ### 3. Does your policy cover non-damage losses? Policies that are only limited to losses in relation to physical damage (such as fire) will not respond to a business interruption claims brought about as a result of the pandemic. Check your policy wording for a clause entitled "non-damage". This clause will usually contain wording like "disease" and "prevention of access". Your policy may have a number of clauses for "non-damage", and depending on the agreement, you would need one to respond in order to have a legitimate business interruption claim. An example of a disease clause is: > 'We shall indemnify You in respect of interruption or interference with the Business during the Indemnity Period following any … occurrence of a Notifiable Disease (defined as illness sustained by any person resulting from any human infectious or human contagious disease an outbreak of which the competent local authority has stipulated shall be notified to them) within a radius of 25 miles of the Premises.' An example of a prevention of access clause is: > 'loss … resulting from … Prevention of access to the Premises due to the actions or advice of a government or local authority due to an emergency which is likely to endanger life or property.' An example of a hybrid clause is: > 'loss as a result of closure or restrictions placed on the Premises as a result of a notifiable human disease manifesting itself within a radius of 1 mile of the Premises.' ### 4. Is your insurer a party to the FCA's test case? Check your policy schedule to find the name of your insurer or underwriter. This may differ from the broker involved in the sale of the policy. The following insurers were party to the test case and the ruling is binding upon them: - [Arch Insurance (UK) Limited](https://www.archcapgroup.com/Insurance/Regions/UK-Europe);- [Argenta Syndicate Management Limited](http://www.argentagroup.com/);- [Ecclesiastical Insurance Office Plc](https://www.ecclesiastical.com/);- [Hiscox Insurance Company Limited](https://www.hiscox.co.uk/);- [MS Amlin Underwriting Limited](https://www.msamlin.com/en/index.html);- [QBE UK Limited](https://www.qbe.com/);- [Royal & Sun Alliance Insurance Plc](https://www.rsagroup.com/); and- [Zurich Insurance Plc](https://www.zurich.com/en/zip). ### 5. Is your policy affected by the test case sample? Your insurer may have written to you stating whether it considers your policy may be affected by the outcome of the test case. The FCA has provided a [list of business interruption insurance policies](https://www.fca.org.uk/publication/corporate/bi-insurance-test-case-list-affected-insurers-policies-15-july.pdf) for which claims may be affected by the test case. ### 6. Send your policy to our solicitors for a free review Even if your insurer has written to you stating that they believe your policy does not provide you coverage, send us your policy for review by a barrister and a solicitor (fixed fee charges apply). If you think you have a case, get in touch with our team of business interruption lawyers. We can assist you to understand the merits of your insurance claim and advise you on the best way to obtain fair compensation. Following our review, we may offer to take on your case on a **no win no fee** basis such as a [Damages Based Agreement (DBA)](https://lexlaw.co.uk/litigation-solicitor-funding-second-opinion-damages-based-agreements-dba-legal-representation-costs-advice/). ## Have you received a business interruption full and final settlement offer from your insurer? The FCA has stated that for affected claims where full and final settlements have been agreed, insurers should review the information provided to customers, to ensure that it was clear, fair and not misleading. Insurers should have informed policyholders about the test case and its implications when an offer to settle a potentially affected claim was made. Insurers are being invited to contact affected customers and ensure that all valid claims are identified and that any necessary adjustments are made to any settlement offers (including full and final offers) that were made but not accepted by customers prior to 15 January 2021. Any residual payments should be made to customers accordingly. If you require advice on your rights in respect of a [business interruption claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) with your insurers, or on a settlement offer, get in contact with our team for legal advice or a [second opinion](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/). ## Why use a solicitor instead of a broker to submit your BII Claim? Our [Business Interruption Insurance Claim Solicitors](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse. If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. [Our litigation lawyers](https://lexlaw.co.uk/our-people/) are experienced in settlement negotiations to get an optimum award for our clients. ## Instruct our Business Interruption Litigation Lawyers on a DBA ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # FCA’s comment on business interruption insurance test case encouraging for policyholders Source: https://lexlaw.co.uk/solicitors-london/fcas-comment-on-business-interruption-insurance-test-case-encouraging-for-policyholders/ *On 15 January 2021, the [Supreme Court](https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-supreme-court-judgment-means-relief-for-covid-hit-businesses/) handed down its ruling in the [FCA test case ](https://www.fca.org.uk/news/press-releases/result-fca-business-interruption-test-case)on [business interruption insurance](https://www.fca.org.uk/firms/business-interruption-insurance) against six [insurers](https://lexlaw.co.uk/solicitors-london/insurance-industry-reaction-to-supreme-court-business-interruption-insurance-test-case-outcome-for-smes-businesses-fos-litigation-london-solicitors/) . Many businesses will now be considering the next steps whilst waiting for their insurers to assess their case. The FCA has issued a letter setting out the next steps encouraging insurers to reassess, progress and settle claims quickly in light of the ruling. * *If you are a policyholder and your insurer is refusing to paying out for a business interruption claim, seek legal advice from our specialist BII claim solicitors immediately as you may have a litigation claim to seek financial redress.* ## FCA sets out next steps in business interruption cases positive for SMEs [The FCA ](https://www.fca.org.uk/firms/business-interruption-insurance)has [commented](https://www.fca.org.uk/news/press-releases/supreme-court-judgment-business-interruption-insurance-test-case) that whilst property damage may not be likely to result in pay outs, some policies providing cover for business interruption from other causes, in particular infectious or notifiable diseases and non-damage denial of access and public authority closures or restrictions, do provide cover for these events. The wording of each policy needs to be carefully considered and we can be instructed to assist and review the same. [Sheldon Mills](https://lexlaw.co.uk/wp-content/uploads/220121-Letter-from-the-FCA-Stephen-Mills.pdf), executive director at the FCA has published a [letter](https://lexlaw.co.uk/wp-content/uploads/220121-Letter-from-the-FCA-Stephen-Mills.pdf) on the FCA website. > *It is essential that insurers **reassess and settle claims quickly** in the light of the > [Supreme Court judgment](https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-supreme-court-judgment-means-relief-for-covid-hit-businesses/), including making interim payments on policies where the claim has been accepted (either in full or in part) but elements of the calculation or agreement on the final settlement remain outstanding. This is consistent with the wider objectives of the FCA to support business and consumers during the current coronavirus situation.* > > *The Supreme Court judgment means that:* > > *1. cover may be available for partial closure of premises (as well as full closure) and for mandatory closure orders that were not legally binding* > > *2. valid claims should not be reduced because the loss would have resulted in any event from the pandemic* > > *This will mean that more policyholders will have valid claims and some pay-outs will be higher. All insurers should promptly reassess all BI claims affected by the test case in the light of the Supreme Court’s judgment, including those previously rejected or not fully paid, in accordance with Chapter 7 of our [Guidance](https://www.fca.org.uk/publication/finalised-guidance/finalised-guidance-bi-test-case.pdf).* Read Stephen Mills letter here: [![business interruption insurance insured ABI BIBA FCA supreme court test case covid-19 coronavirus turnover loss FOS litigation](https://lexlaw.co.uk/wp-content/uploads/FCAs-letter-dated-22-January-2021-re-business-interruption.png)](https://lexlaw.co.uk/wp-content/uploads/220121-Letter-from-the-FCA-Stephen-Mills.pdf)Letter from Sheldon Mills, Executive Director (The FCA), 22 January 2021 Read the FCA's guidance for firms on the business interruption test case here [![business interruption insurance insured ABI BIBA FCA supreme court test case covid-19 coronavirus turnover loss FOS litigation](https://lexlaw.co.uk/wp-content/uploads/FCA-Guidance-business-interruption.png)](https://lexlaw.co.uk/wp-content/uploads/finalised-guidance-bi-test-case-the-FCA-June-2020.pdf) ## Is my company entitled to Business Interruption insurance? Following the Supreme Court ruling, policyholders can expect to hear from their insurers. Each policy will need to be considered against the judgment and[ specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can be provided by this firm once we have been instructed to review your policy documents and we can be instructed on a [damages based agreement](https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/). The FCA believes and the Supreme Court has held that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses. There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible. ## I have received my insurer's response to my business interruption complaint The FCA has encouraged insurers to reassess all potentially affected complaints in light of the ruling, including those that they did not fully uphold, unless the complaint has been properly settled on a full and final settlement basis. If a complaint has been referred to the Financial Ombudsman Service (FOS), the insurer should keep the Ombudsman fully informed. ## Have you received a business interruption full and final settlement offer from your insurer? The FCA has stated that for affected claims where full and final settlements have been agreed, insurers should review the information provided to customers, to ensure that it was clear, fair and not misleading. Insurers should have informed policyholders about the test case and its implications when an offer to settle a potentially affected claim was made. Insurers are being invited to contact affected customers and ensure that all valid claims are identified and that any necessary adjustments are made to any settlement offers (including full and final offers) that were made but not accepted by customers prior to 15 January 2021. Any residual payments should be made to customers accordingly. If you require advice on your rights in respect of a [business interruption claim](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) with your insurers, or on a settlement offer, get in contact with our team for legal advice or a [second opinion](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/). ## Has your insurer denied your business interruption insurance claim during COVID-19? There are policies where it is clear that the insurer has an obligation to pay out on a policy (i.e. policies that are not solely related to property damage). The main grounds of refusal may include the following: - unless a business was ordered to and did close completely there was no inability to use the premises within the meaning of the insurance wording, and unless it ceased to trade completely, its activities were not interrupted and so cover is not triggered.- guidance issued by the government advising a nationwide lockdown was according to some insurers not defined as a “restriction” “imposed by” a public authority.- Some insurers argue that their policy wordings do not provide cover in the case of pandemics.- Business loss did not “result from” the necessary local disease occurrence or danger but instead were caused by the wide-area pandemic and so cover is not triggered.- As to causation and quantum of any claim, insurers may state in their denial that most losses would have been suffered anyway, even but for the insured peril/business closure, for example because of the broader Covid-19 pandemic, self-isolation and social distancing. > Where there are further disputes that are the subject of legal proceedings... firms should seek to narrow the issues in dispute to ensure that the litigation can proceed in the cheapest and quickest way possible, reflecting the firm’s obligation to act fairly, honestly and professionally in the best interests of its customers. ## Why use a solicitor instead of a broker to submit your BII Claim? Our [Business Interruption Insurance Claim Solicitors](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse. If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. [Our litigation lawyers](https://lexlaw.co.uk/our-people/) are experienced in settlement negotiations to get an optimum award for our clients. ## Instruct our Business Interruption Litigation Lawyers on a DBA ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. A damages-based agreement is a contingency fee agreement agreed by a solicitor and a client which provides that a client will make a payment to the representative if the client obtains “a specified financial benefit” (usually damages paid by the losing side or via a settlement sum extracted). The amount of the payment will be determined as a percentage of the compensation received by the client (which will be set out in the DBA and agreed with the client in advance). If the client is unsuccessful in their litigation case, the solicitor will not be paid for the work done under the DBA. --- # Business Interruption Insurance: Proving Presence of Coronavirus (COVID-19) Source: https://lexlaw.co.uk/solicitors-london/business-interruption-insurance-proving-presence-of-coronavirus-covid-19-advice/ *Following [the Supreme Court's judgment](https://lexlaw.co.uk/wp-content/uploads/uksc-2020-0177-judgment.pdf) in [the Business Interruption Insurance (BII) test case](https://lexlaw.co.uk/solicitors-london/fca-test-case-covid-19-coronavirus-business-interruption-insurance-claim-against-insurer-litigation-advice/), which came about as a result of a large number of disputed insurance claims from SMEs under business interruption insurance policies, insurers have been resisting calls for pay-outs, with one of the main challenges facing affected businesses being proving the presence of coronavirus (COVID-19).* *If you are a policyholder and your insurer is refusing to pay out for a business interruption claim, seek legal advice from our[ specialist BII claim solicitors](https://lexlaw.co.uk/damages-based-agreements-dbas-for-business-interruption-insurance-claims-bii-compensation-no-win-no-fee/) immediately as you may have a litigation claim to seek financial redress.* ## What is Business Interruption insurance? [Business interruption insurance](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) covers businesses for loss of income during periods when the business cannot trade as usual due to an unexpected event. The aim of BI insurance is to put a business back in the same trading position it was in before the unexpected event occurred. ## What does my Business Interruption Insurance (BII) policy say? [Specific advice](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) can only be provided by this firm once we have been instructed to review your insurance coverage and other supporting documents. However, some BII policy clauses include wording that requires the presence of diseases such as COVID-19 within an area where events occur that would be reasonably expected to have an impact on your business. Other BII policy clauses include wording that require diseases such as COVID-19 to occur within a particular distance of or radius from your business premises (often, but not always, 25 or 50 miles from your business premises). For most policy types, you will need to show that a case of coronavirus (COVID-19) occurred at any time before the interruption of your business in order to make a successful claim under your BII policy. Our specialist business interruption insurance solicitors can assist you to understand the merits of your insurance claim and advise you on the best way to obtain fair compensation. ## How can I prove the presence of coronavirus (COVID-19) near my premises? In order to prove the presence of coronavirus (COVID-19) near your business premises, you can use the following types of evidence: - Your personal knowledge of someone near to your premises (e.g. within the required distance or radius specifically stated in your BII policy) who tested positive for coronavirus (together with accompanying evidence to corroborate the positive COVID-19 test);- Well-established media reports of COVID-19 cases at any care home, hospital, restaurant, school or other business near to your business premises;- Daily data published by NHS England recording the number of deaths after positive COVID-19 tests (i.e. where an NHS Hospital Trust has recorded a coronavirus death on a particular date, and all hospitals within that Trust are within any required distance or radius specifically stated in your BII policy);- Weekly data published by the Office of National Statistics recording the number of COVID-19 deaths per week by local authority or health board (where the local authority or health board falls entirely within any required distance or radius specifically stated in your BII policy); or- Data published by the UK Government recording the number of daily lab-confirmed positive COVID-19 tests in a particular nation, region, or local authority (where the local authority falls entirely within any required distance or radius specifically stated in your BII policy). ## Why use a solicitor instead of a broker to submit your BII Claim? Our [Business Interruption Insurance Claim Solicitors](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse. If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. [Our litigation lawyers](https://lexlaw.co.uk/our-people/) are experienced in settlement negotiations to get an optimum award for our clients. ## Instruct our Business Interruption Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Client Case Study: Moskalev wins against Yanishevskiy for improper Statutory Demand Source: https://lexlaw.co.uk/solicitors-london/client-case-study-moskalev-wins-against-yanishevskiy-for-improper-statutory-demand/ *In the case of Moskalev v Yanishevskiy [2021] EWHC 1575 (Ch), Insolvency and Companies Court Judge Barber found for the Applicant, Mr Maxim Moskalev, determining him to be the innocent and successful party and awarding costs in his favour. * ## Background - Application to Set Aside Defective Statutory Demand Mr Moskalev, an EU Cypriot National, had been served a statutory demand by Mr Dmitry Yanishevskiy in England for a High Court of Hong Kong default judgment (argued obtained by fraud in Hong Kong). A statutory demand is a prelude to issuing a bankruptcy petition and can have serious consequences. Therefore, once the improper Statutory Demand was served, Mr Moskalev instructed us to represent him in England and Wales and apply to set aside the statutory demand. The application was made on the basis his centre of main interests (COMI) was not in England and Wales (it was Cyprus) and that the Hong Kong judgment was obtained based on a fraudulent document. In essence there were substantial grounds for disputing the debt claimed in the statutory demand such that the Statutory Demand was improper and must be set aside. ## Refusal to Pay Costs of Improper Statutory Demand Mr Yanishevskiy, via his legal advisers Ontier LLP, unwisely refused to withdraw the demand and offered extensions of time, which we rejected. Eventually, the penny dropped for the other side and after the application was issued and served but before the hearing they finally withdrew the demand, but maintained and wasted a great deal of time and money arguing wrongly that there should be no order as to costs. We successfully argued that Mr Yanishevskiy's refusal to withdraw the demand warranted a costs order against him. ## Judgment in Moskalev v Yanishevskiy ICC Judge Barber held that Mr Moskalev had acted properly and raised his reasons for dispute in a timely manner and Mr Yanishevskiy had failed to withdraw the demand in a timely manner, entirely at his own risk of costs. The judge made an order for costs in favour of our client, Mr Moskalev, as he had raised substantial and meritorious grounds for disputing the debt and Mr Yanishevskiy subsequently withdrew the demand for those very reasons. The Judge determined that > *"Numerous reasoned grounds for disputing the statutory demand were raised in the Applicant’s solicitor’s letter of 18 November 2020. This letter should have told the Respondent, at a glance, that the matter was not suitable for disposal by way of statutory demand and bankruptcy proceedings. The Respondent was given a fair opportunity to withdraw the statutory demand (the application to set aside was not issued until 27 November 2020, some 9 days after the letter of 18 November). His failure timeously to do so was at his own risk as to costs."* > > > ICC Judge Barber Therefore, **Mr Moskalev was deemed the successful party in this case and indeed costs in the sum of £47,400 were ultimately paid by Mr Yanishevskiy to our client.** The lesson to be learned here is for parties to litigation to understand that if they behave abusively and issue improper statutory demands (or bankruptcy or winding-up petitions) they will be punished by the Courts by way of a costs order. In this case the Court held it was clearly appropriate to make an order for costs. -- Case Title: Mr MAXIM MOSKALEV v Mr DMITRY YANISHEVSKIY; Court: Chancery Division (THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES, INSOLVENCY AND COMPANIES LIST (ChD)); Judgment Date: 17 June 2021; Reported: [2021] EWHC 1575 (Ch); [2021] 6 WLUK 712; [2021] BPIR 1568; Court Ref: BR-2020-000554 --- --- # High Court rules COVID-19 self-isolation counts as force majeure not breach of contract Source: https://lexlaw.co.uk/solicitors-london/high-court-rules-covid-19-self-isolation-counts-as-force-majeure-not-breach-of-contract/ In *[Dwyer (UK) Franchising Ltd v. Fredbar Ltd & Bartlett [2021] EWHC 1218 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Dwyer-UK-Franchising-Ltd-v-Fredbar-Ltd-Bartlett-2021-EWHC-1218-Ch-11-May-2021.pdf)*, the High Court ruled that self-isolating due to [coronavirus](https://lexlaw.co.uk/solicitors-london/category/coronavirus/) (COVID-19) counted as 'force majeure', i.e. a valid unforeseen reason for a party to be unable to perform its contractual obligations without being liable for breach of contract. This recent High Court [judgment](https://lexlaw.co.uk/wp-content/uploads/Dwyer-UK-Franchising-Ltd-v-Fredbar-Ltd-Bartlett-2021-EWHC-1218-Ch-11-May-2021.pdf) provides helpful guidance to businesses whose ability to fulfil their contracts may have been affected by the [COVID-19](https://lexlaw.co.uk/solicitors-london/category/covid-19/) pandemic and the rules and regulations that have emerged as a result. ## What is 'force majeure'? If a party fails to fulfil its responsibilities under a contract, that party can be sued by the other contracting party (and found liable by the Court) for breach of contract. However, many commercial contracts include clauses that set out what happens if a party is unable to fulfil its contractual responsibilities because of an unforeseen event outside of its control (such as war, natural disasters, or pandemics such as COVID-19). Those clauses are called 'force majeure' clauses. Depending on the specific wording used in the relevant contract, 'force majeure' clauses can: - excuse the affected party from performing all of its contractual responsibilities;- excuse the affected party from performing some of its contractual responsibilities;- excuse the affected party from delay in performing its contractual responsibilities; or- entitle the affected party to extend or suspend the timeframe for performing its contractual responsibilities. ## The Facts Under a franchise agreement between the parties, the franchisor gave the franchisee an exclusive 10-year licence to provide plumbing and drainage repair work under the 'Drain Doctor' name within nine specific Cardiff postcode areas. The franchise agreement included a 'force majeure' clause, which stated that: > This Agreement will be suspended during any period that either of the parties is prevented or hindered from complying with their respective obligations under any part of this Agreement by any cause which the Franchisor designates as force majeure including strikes, disruption to the supply chain, political unrest, financial distress, terrorism, fuel shortages, war, civil disorder, and natural disasters. The franchisee's director, Mr Bartlett, was notified by the Chief Medical Officer of NHS Wales in March 2020 that his young son was vulnerable and that the best way to avoid COVID-19 was to stay at home for the following twelve weeks. Mr Bartlett then provided a copy of that notification to the franchisor, explained that he would need to self-isolate (and would be unable to provide plumbing or drainage repair services) in order to avoid the coronavirus and suggested the possibility of suspending the franchise agreement under the 'force majeure' clause. While the franchisor responded by claiming that the 'force majeure' clause did not apply as plumbing and drainage works were a key worker service that could be provided differently, Mr Bartlett nevertheless self-isolated in order to avoid exposure to the coronavirus. The franchisor subsequently brought a claim against the franchisee for alleged breach of contract. ## The Decision While the 'force majeure' clause did require the franchisor to decide whether a particular event counted as 'force majeure', there was an implied requirement on the franchisor under the [Braganza](https://lexlaw.co.uk/wp-content/uploads/Braganza-v-BP-Shipping-Limited-and-another-2015-UKSC-17-18-March-2015.pdf) principles to act honestly, in good faith, and genuinely when deciding whether or not an event counted as 'force majeure'. The Judge held that the requirement to self-isolate to avoid COVID-19 counted as 'force majeure' and so did not breach the franchise agreement; the Judge also added in his judgment that the franchisor's conduct: > represented a failure to treat a franchisee compassionately in the context of exceptional circumstances which required all companies to adopt a reasonable approach rather than apply strict legal rights. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyers'](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Litigation Lessons: “Weak and speculative” £3.7m professional negligence claimants awarded just £2K Source: https://lexlaw.co.uk/solicitors-london/litigation-lessons-professional-negligence-claimants-awarded-low-value-sum-second-opinion/ *The recent case of [Beattie Passive Norse Ltd and another v Canham Consulting Ltd [2021] EWHC 1116 (TCC)](https://lexlaw.co.uk/wp-content/uploads/1116.pdf) concerned a claimant in a building dispute who sought £3.7m in damages only to be awarded £2,000 at trial and hit with a costs bill of at least £500,000. * *Have you suffered financial loss at the hands of a professional who has failed to act within professional standards? If you think you have a case, get in touch with our [team of professional negligence lawyers](https://professionalnegligenceclaimsolicitors.co.uk/expert-uk-negligence-legal-advice/). We can assist you to understand the merits of your claim and advise you on the best way to obtain fair compensation.* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## The Facts The claimant, Beattie (“BPN”) and their shareholder, NPS Property Consulting Ltd (“NPS”) brought a construction claim for professional negligence and breach of contract against structural engineers Canham Consulting in respect of alleged defective designs of two blocks of terraced housing in Sussex. BPN and NPS sought to recover the costs of demolishing and rebuilding the two blocks along with other consequential losses, arguing that this led to a total loss of £3.7milllion. During the construction works, Canham employed Foxdown Engineering Ltd as a groundworks subcontractor and were given the outdated revision (Revision A) of the foundation designs from BNP rather than the update construction drawings (Revision B) issued by Canham, which contained a more robust design for the foundation of the blocks. Instead of remediating the defects underlined in Canham’s design, both building blocks were subsequently demolished, which in turn occurred to further expenditure on the construction project, incurring millions of pounds. Although Canham acknowledged certain aspects of the design was flawed and had fallen below the expectations of a reasonable competent engineer, Canham argued that structure of the blocks contained defects so significant that it would have had to be demolished notwithstanding any negligent defects outlined in their design. In addition, these defects in Canham’s design could have been remediated without demolishing the blocks. In supporting this latter positon, Canham even cited that remediation works were underway prior to BPN’s decision to demolish the entire block. The court later heard that Canham made two Part 36 offers, to which both were declined. The first offer proposed in December 2020 had offered a remedy of £50,000 including other costs, with the latter offer proposed a month later of £110,000. Following the award of damages, the defendant would typically have been entitled to be paid its costs directly from the part 36 offer acceptance date. However, Canham argued further that the claim had been pursued and ignored a key causation issue, on expert evidence that would have been criticised in the substantive judgment and resulted in a ‘*derisory’* damages award. ## The Judgment The court further heard that the defendant had received a ‘completely factually inaccurate’ response to a request for information, stating that the claim from this point on was advanced through a *‘plainly untruthful case’* on a key point in the litigation. During the costs hearing, Beattie had sought to argue that Canham’s refusal to engage in mediation during last year was deemed unreasonable. However, the court rejected this on the grounds that the claimants were continuing to advance an untruthful case.   On that basis, the judge, Justice Fraser described BPN and NPS’s claim as “*weak and speculative*” and ruled that the causation between Canham’s designs and the costs incurred to demolish both blocks could therefore not be linked. Mr Justice Fraser found that BPN’s structural expert had exaggerated the evidence in support of the claimant’s allegations. The judge also held that it was ‘plainly unreasonable’ for the claimants not to have accepted the first part 36 offer. In concluding his judgement, the Judge emphasised an alternative adjudication scheme should have been used, given the costs incurred for what was a “weak” claim with only £2,000 recovery from a £3.7m claim. It was held that the claimants were not entitled to recover the loss of demolishing and rebuilding both blocks from Canham, but instead, was able to recover £2,000 related to the cost of remedial works to the second block which were commenced but never finished. ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-27.png)](https://lexlaw.co.uk/wp-content/uploads/1116.pdf) ## What Does This Case Highlight? The judgment from this case serves a clear reminder of the importance of presenting factual evidence in demonstrating causation, even when there is an admission in respect of breach of contract and professional negligence. In a similar judgment in *County Ltd v Girozentrale Securities *[1996] 3 All ER 834**, **the judge considered whether various unforeseeable events combined with the breach ultimately caused the loss. Therefore, it is important to note that if the claim does not arise directly from the defendant’s wrongdoing but instead had occurred through another event, the claimant is unable to recover in respect to that independent event. In this case, the parties should have followed adjudication based on the view that such a process would have been deemed a more suitable method for the parties to resolve the dispute of the claim, primarily concerning issues of factual causation. For claims where the dispute is clear and relates to a discreet issue, this case outlines to claimants to consider adjudication as an option. ## Do I have a claim against a professional? [Professional negligence](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) occurs where a property professional fails to perform his responsibilities to the required standard. A [professional negligence claim](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) brought by the professional’s client may be based on one or more of the following: - Breach of a contractual term (express or implied).- Breach of duty of care owed in the tort of negligence.- Breach of fiduciary duty.- Breach of statutory duty. Where a duty is owed in contract or tort, you must establish that there has been a breach of that duty. You must show that the professional did not comply with the requisite standard owed. Broadly speaking, negligence is established if the professional has made an error which no reasonable member of his profession, operating in similar circumstances, would have made. Where such errors cause a financial loss, claims can be pursued against the relevant financial adviser. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Court of Appeal holds negligent surveyor liable for house’s full diminution of value Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-holds-negligent-surveyor-liable-for-houses-full-diminution-of-value/ *[Our lawyers](http://lexlaw.co.uk/our-people/(opens in a new tab)) specialise in [litigation](http://lexlaw.co.uk/practice-areas/(opens in a new tab)) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/) in relation to [property & conveyancing negligence](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/). We will guide you through any stage in your litigation or settlement process whether you are a litigant in person seeking [legal advice](http://lexlaw.co.uk/contact-us/(opens in a new tab)) or you have instructed solicitors and want a [second opinion](http://lexlaw.co.uk/time-to-get-a-second-opinion/(opens in a new tab)) on strategy. * ## The Facts After extensive rebuilding works between 2009 and 2011, a cliffside property in Devon was offered for sale, following which the eventual purchasers instructed a surveyor to survey the property and prepare a RICS HomeBuyer's report. The surveyor was concerned about the general quality of the rebuilding works, in which circumstances a 'Professional Consultancy Certificate' (PCC) was the best form of 'insurance' in relation to concerns about the standard and quality of the rebuilding works. However, the surveyor failed to refer to the need for a PCC in his report. When he was asked about this by the eventual purchasers, he said that "it would not be unreasonable to ask for this" and that the purchasers should seek advice from their solicitors. Following the completion of the purchase for £1.2 million, the purchasers received advice (not from the surveyor) that the rebuilding works had been done so badly that the property would need to be demolished and rebuilt. ## The Court's decision The High Court held that the surveyor was negligent for failing to draw the purchasers' attention to the defects prior to completion and for failing to advise the purchasers to obtain a PCC (even though the prior rebuilding works at the property had been completed under the supervision of architects and not with the benefit of an NHBC scheme). Roger Ter Haar QC, sitting as a Deputy High Court Judge, held that if the surveyor had given different advice, the purchasers would not have gone through with the purchase. On the issue of damages, the surveyor attempted to argue that he should only be liable for the reduction in the value of the property that arose from the defects that he should have reported on (but did not). However, the purchasers argued that the amount of damages should be determined by the difference between the value of the property as reported and the value of the property with the defects that in fact existed (rather than simply those defects the surveyor should have noticed and reported). The High Court agreed with the purchasers, and calculated the diminution in value of the property as being £750,000; with £376,000 having already been paid by the purchasers' solicitors and the architects who had supervised the defective rebuilding works, the surveyor was left to pay £374,000 in damages. The surveyor obtained permission to appeal the High Court's measure of the purchasers' loss before the Court of Appeal. However, the Court of Appeal held that the surveyor had a duty of care to the purchasers "not only to inspect and report properly on the condition of the property; he was also obliged to make appropriate recommendations as to any further investigations which he thought necessary". As a result, the Court of Appeal held that the measure of loss applied by the High Court against the surveyor was appropriate because no other measure of loss would have adequately compensated the purchasers for the consequences of the surveyor's negligence. ## Book an Initial Consultation with Our Expert Property & Conveyancing Negligence Lawyers Our [London Property & Conveyancing Negligence](https://lexlaw.co.uk/property-conveyancing-professional-negligence-lawyer/) Solicitors and Barristers provide bespoke professional advice. We invite you to contact us so one of our legal team can assess your dispute and see how we can best assist you. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading property & conveyancing negligence lawyers. Call or email us to start the process of instructing us; our property & conveyancing negligence team are waiting to help. --- # Commercial leases not frustrated by COVID-19 restrictions, High Court rules Source: https://lexlaw.co.uk/solicitors-london/commercial-leases-not-frustrated-by-covid-19-restrictions-high-court-rules/ [The High Court has ruled](https://lexlaw.co.uk/wp-content/uploads/Bank-of-New-York-Mellon-International-ltd-v-Cine-UK-Ltd-2021-EWHC-1013-QB.pdf) that commercial leases were not "temporarily frustrated" by the [coronavirus](https://lexlaw.co.uk/solicitors-london/category/coronavirus/) ([COVID-19](https://lexlaw.co.uk/solicitors-london/category/covid-19/)) pandemic and therefore the tenants were still obliged to pay rents to their landlord despite their premises being closed. This decision will have considerable implications for landlords and tenants navigating the COVID-19 landscape. ## What is frustration? Frustration is a legal doctrine that it is unjust for a contract to continue when performing obligations under that contract becomes either impossible or radically different from what was originally intended by the parties. ## The Facts Three commercial tenants (who were in turn a multiplex cinema, a bingo hall, and a sporting goods retailer) stopped paying their rent from 25 March 2020 onwards when their respective premises were closed as a result of the COVID-19 restrictions. Their landlord subsequently claimed that the rents nevertheless remained due and sought summary judgment on that issue from the High Court. The tenants attempted to argue in response that the rents were not due because: - Clauses in their respective leases meant that rents ceased to be payable while their premises were closed because of the COVID-19 restrictions;- The landlord was able to recover the unpaid rent amounts from its insurer and so was therefore not entitled to claim those sums from the tenants; and- The leases had been "temporarily frustrated" by the coronavirus pandemic and the subsequent COVID-19 restrictions. ## The Decision The High Court rejected the tenants' arguments and decided that the rents from 25 March 2020 onwards were still due; in particular, the High Court held that it was impossible for the leases to have been "temporarily frustrated" since the effect of frustration would have been to end the leases early. The High Court also concluded that the leases had not been frustrated by the COVID-19 closures because there would still be more than a year left on each of the leases after those closures had ended. This decision demonstrates that the courts remain as strict as ever in their interpretation and application of the legal doctrine of frustration, even in these COVID-stricken times. However, it is possible for parties to agree 'force majeure' clauses to deal with unforeseen events that affect contractual performance, which can lead to [entirely different outcomes](https://lexlaw.co.uk/solicitors-london/high-court-rules-covid-19-self-isolation-counts-as-force-majeure-not-breach-of-contract/). ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyers'](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Court of Appeal assesses swap mis-selling complaint under FCA DISP Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-assesses-mis-selling-complaint-under-disp/ *The Court of Appeal recently analysed a swap mis-selling complaint submitted by the Claimant under the [FCA Dispute Resolution scheme ("DISP")](https://www.handbook.fca.org.uk/handbook/DISP/), which complaint would stop time running for the purposes of a making a complaint to the Financial Ombudsman Service ("FOS").* *In holding that the Claimant had not made a valid complaint, the claim against Lloyds for breach of statutory duty was dismissed.* This case [Clive Davis v Lloyds Bank [2021] EWCA Civ 557](https://lexlaw.co.uk/wp-content/uploads/Davis-v-Lloyds-Bank-plc-judgment.pdf), concerned redress arrangements put in place by banks to compensate customers who were victims of mis-selling. The Claimant bought two interest rate swaps in 2002 and 2005 from [Lloyds Bank PLC](https://www.lloydsbank.com/). After participating in the bank's [review process](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/), the Bank offered him compensation. The Claimant accepted the redress offer in relation to the 2002 swap but not the 2005 swap and rejected this offer. The 2005 swap became the subject of the Claimant's litigation against Lloyds. The Claimant argued that he had made a complaint under [DISP](https://www.handbook.fca.org.uk/handbook/DISP/) and secondly that the bank owed him a statutory duty to consider the complaint in accordance with the terms of the [review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) and as agreed between the bank and [the FCA](https://www.fca.org.uk/). DISP 1.4.1R of the FCA Handbook provides for complaints to be assessed fairly, consistently and promptly and the Claimant argued that the bank failed to comply with the terms of the review process and that failure was a breach of their statutory duty. The Court considered the following issues: > 1. “Did the Claimant make a complaint under DISP in relation to the sale of the interest rate hedging products which are the subject matter of the proceedings?” > > 2. “If so, was the Bank bound by the statutory duties under DISP 1.4.1R to assess the Claimant's purported complaint in accordance with the terms of what had been agreed between the Defendant and the Financial Conduct Authority regarding the Defendant's review process into interest rate hedging products?” The Court of Appeal agreed that issue 2 would only be considered if the Claimant had made a complaint to DISP. The High Court had found that, with reference to the FCA rules on what would constitute a complaint under DISP, no complaint had been made by the Claimant in respect of the 2005 swap. The Claimant contended that his participation in the review scheme was a result of his complaints in respect of both swaps. The Court of Appeal held that acceptance of an invitation to participate in the review and subsequent conduct cannot be treated as a complaint. The Court of Appeal analysed the communications in the review process between the Bank and the Claimant and held that the Claimant had not expressed dissatisfaction for the product he was sold and DISP in the FCA Handbook is defined as "any oral or written expression of dissatisfaction". The Claimant referred to being better off without the product but this did not constitute dissatisfaction. Issue two did not need to be considered in light of the conclusion and the claim was dismissed. This case highlights instances where it is not so straightforward to identify when a complaint satisfies the DISP definition and triggers the complaint handling rules. ## What is DISP? The FCA's dispute resolution complaints scheme is referred to as DISP and outlines how complaints should be dealt with by firms, payment service providers, electric money issuers, and the Financial Ombudsman Service. ## What are the DISP complaint rules? > Investigating, assessing and resolving complaints > > Once a [complaint](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) has been received by a [respondent](https://www.handbook.fca.org.uk/handbook/glossary/G2497.html), it must: > > (1) investigate the [complaint](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) competently, diligently and impartially, obtaining additional information as necessary; > > (2) assess fairly, consistently and promptly: > > taking into account all relevant factors; > > (3) offer redress or remedial action when it decides this is appropriate; > > (4) explain to the complainant promptly and, in a way that is fair, clear and not misleading, its assessment of the [complaint](https://www.handbook.fca.org.uk/handbook/glossary/G197.html), its decision on it, and any offer of remedial action or redress; and > > (5) comply promptly with any offer of remedial action or redress accepted by the complainant. > > Factors that may be relevant in the assessment of a [complaint](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) under [DISP 1.4.1R (2)](https://www.handbook.fca.org.uk/handbook/DISP/1/4.html#DES276) include the following: > > (1) all the evidence available and the particular circumstances of the [complaint](https://www.handbook.fca.org.uk/handbook/glossary/G197.html); > > (2) similarities with other [complaints](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) received by the [respondent](https://www.handbook.fca.org.uk/handbook/glossary/G2497.html); > > (3) relevant guidance published by the [FCA](https://www.handbook.fca.org.uk/handbook/glossary/G2974.html) , other relevant regulators, the [Financial Ombudsman Service](https://www.handbook.fca.org.uk/handbook/glossary/G419.html) or [former schemes](https://www.handbook.fca.org.uk/handbook/glossary/G438.html); and > > (4) appropriate analysis of decisions by the [Financial Ombudsman Service](https://www.handbook.fca.org.uk/handbook/glossary/G419.html) concerning similar [complaints](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) received by the [respondent](https://www.handbook.fca.org.uk/handbook/glossary/G2497.html) (procedures for which are described in [DISP 1.3.2A G](https://www.handbook.fca.org.uk/handbook/DISP/1/3.html#DES447)). > > The [respondent](https://www.handbook.fca.org.uk/handbook/glossary/G2497.html) should aim to resolve [complaints](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) at the earliest possible opportunity, minimising the number of unresolved [complaints](https://www.handbook.fca.org.uk/handbook/glossary/G197.html) which need to be referred to the [Financial Ombudsman Service](https://www.handbook.fca.org.uk/handbook/glossary/G419.html) ## How does DISP affect FOS? Customers have six months from businesses sending a final response to a complaint to escalate the complaint to FOS and six years from the event being complained about. Knowing when a complaint is made under DISP is important for the purposes of time limits when complaining to the Financial Ombudsman Service. A business can consent to waive the time limits (DISP 2.8.2). ## Our Mis-sold Swap Lawyers get the best results We endeavour to make the process as stress-free as possible for our clients and seek to eliminate the possibility of business or litigation failure. We know that each client’s case and business is unique, therefore we adopt a bespoke approach tailored to suit the client’s circumstances. We provide specialist senior legal advice from solicitors and barristers (including at QC level) at the outset when it absolutely matters in choosing the best strategy to follow. We are regularly instructed by regional solicitors’ firms to give specialist litigation advice and support in swaps mis-selling cases. We assist by: - Issuing legal proceedings & drafting documents/pleadings to support the mis-selling claim;- Assisting you in preparation of evidence to support your mis-sold interest rates swap case;- Appointing the right derivatives and hedging experts to ensure the best chance of success in litigation;- Appointing forensic accountants to assess and report on the refunds and consequential losses due;- Liaising with the bank and the Court and/or the Financial Ombudsmen Service;- Providing first class Court representation and advocacy; and- Developing (and aiding implementation of) strategies that allow the business to continue. Please note: Claims Management Companies are regulated by the Ministry of Justice and are not law firms made up of solicitors and barristers. In these cases, they can only complain to the FOS. They cannot issue legal claims nor represent their clients at Court and may lack expertise in this area. You do not need a CMC to assist you and typically they will simply refer your case to a lawyer for a fee (from the lawyer). We do not accept referrals from CMCs. --- # Court refuses to amend developers’ £1.5 million cost budget Source: https://lexlaw.co.uk/solicitors-london/court-refusal-cost-budget-variation-ccmc-litigation-costs-proceedings-disclosure-significant-development/ *The High Court has refused permission* for *two property developers to amend their initial agreed cost budget of approximately £1.5 million after an attempt to request almost double the sums allowed.* ## What is a cost budget? A cost budget is a document that gives an estimate of the proportionate and reasonable costs that in your litigation matter you have incurred and intend to incur. The costs budget should also include all assumptions as an estimate and state any contingency events that might occur e.g. mediation or any likely applications. ## Claimants' application to amend cost budget [Persimmon Homes Ltd & Anor v Osborne Clark LLP](https://lexlaw.co.uk/wp-content/uploads/Persimmon-Homes-Ltd-Anor-v-Osborne-Clark-LLP-Anor-2021-EWHC-831-Ch-12-April-2021.pdf) concerned a £10 million professional negligence claim commenced by Persimmon Homes and Taylor Wimpey Homes UK against Osborne Clarke. The commercial property developers applied to amend their cost budget. Earlier in the case, the Court had approved the developers’ costs budget of £1,455,000, which included just over £1 million of estimated costs. The developers subsequently sought to increase their budget to £2.8 million arguing that it had not been anticipated that Osborne Clarke would have made a request for disclosure. Master Kaye emphasised that not every development justifies a revision on the initial approved cost budget even if cost consequences are involved through the duration of the development. In considering the actual significance of the development, which would deliberate the need for a revised budget, the Court determined that no real significance was made and as a result dismissed the developers' application. Master Kaye held that the development for the disclosure request should have been preempted without needing a revision. ## When should I file a cost budget? Unless otherwise directed, parties are required to file their Costs Budgets not later than 21 days before the first Case Management Conference (CMC) ([CPR 3.13 (i)(a)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.13)).  ## The importance of filing a cost budget A party who fails to file a budget will, unless the Court otherwise orders, be treated as having filed a budget only comprising of the applicable Court fees ([CPR 3.14](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.14)). This means that, even if it is successful in the litigation, that party will be unable to recover the costs of its lawyers, experts and other costs incurred.   ## My solicitor failed to serve a cost budget Failure to file and serve a costs budget can result in the loss of ability to recover costs. Where clients suffer a loss as a result of a solicitor’s error, then there are grounds for a professional negligence claim against the lawyer. Our professional negligence team have expertise in advising on claims for compensation against professionals that have fallen below the standard expected, which causes clients financial or personal loss. ## ​Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. ### Check Your UK Litigation Case ✔ We analyse your case prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. *Want a first or second opinion on your case? *Click below or call our lawyers in London on ☎ [02071830529](tel:+442071830529) [Check your case ✔](https://lexlaw.co.uk/legal-case-assessment/) --- # County Court Judgments and Enforcement after COVID-19 Source: https://lexlaw.co.uk/solicitors-london/county-court-judgments-and-enforcement-after-covid-19/ *Following lifting of government lockdowns during the pandemic, enforcement action including bailiffs attending properties can now resume. There may also be changes to debt recovery legislation which protective measures were brought in during the pandemic to prevent aggressive debt recovery action from debtors affected by coronavirus. If you have received a county court judgment against you or your company, get in touch with our litigation team as soon as possible.* Running a business is never easy, finding a direction and achieving success, as well as the pressure is on you as a director, if there is failure to do so for any reason. During the pandemic, there was a suspension of bailiffs attending properties during lockdown but now that lockdown is lifted this could result in seeing bailiffs back in action to enforce [County Court Judgments](https://www.gov.uk/county-court-judgments-ccj-for-debt). If your company receives a CCJ there may be some cause for concern. to the extent where even the Prime Minister had been found to have received a CCJ against him for non-payment of a £535 debt. This could mean that bailiffs could potentially be in front of 10 Downing street to recover the debt. ## How to prevent bailiffs from visiting your company There is a limited period of time for you to respond to a CCJ and a limited time for you to effectively prevent it from being registered against you. This meaning that if a CCJ is granted the court will agree on a legally owed stated amount. Consequently, the CCJ is published in the [London Gazette](https://www.thegazette.co.uk/) so it is in the public register. Following to which there is a chance of further enforcement action if the amount isn't repaid in full. ## The Effects of a CCJ Any business receiving a CCJ will have it recorded on their credit file leading to difficulties in borrowing extensive amounts. this can be worsened if you are operating as a sole trader could have personal consequences to you, meaning it would affect your personal credit record. ## How to challenge a CCJ If the creditor will have made several efforts to reach out and get payment before even going to court and once judgment is passed, it will be publicly advertised so even if you weren’t aware, your lenders and suppliers (i.e. creditors) probably will be. There are some indications on which a CCJ can be challenged but these are mainly procedural. In addition, would require a fair share of financial backing to have a defence for a CCJ .they don’t query the fact that you owe them money and you either need to pay it or consider another solution because a CCJ is usually a reliable indicator of financial difficulties. ## Is the judgment debt enforceable? The [judgment debtor ](https://windinguppetitionsolicitors.co.uk/recovering-a-debt-judgment-debt/)must have been provided the opportunity to pay the sum ordered by the Court and payment should be overdue before enforcement proceedings are commenced. Therefore, it is important to calculate when the debt has become overdue. Guidance is found in [CPR 40.11](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part40#40.11) which states that if the order does not specify a time to pay then the debtor has 14 days from the date of the judgment. It is essential (pursuant to [CPR 40.4](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part40#40.4)) that a judgment creditor serves the debtor with the judgment (either themselves or via the Court). ## Is the judgment debt too old to enforce? Unlike with other court claims (see our article on limitation [here](https://lexlaw.co.uk/solicitors-london/limitation-in-litigation-know-your-limits/)), judgment debts are not subject to limitation issues. Although section 24(1) of the [Limitation Act 1980](http://www.legislation.gov.uk/ukpga/1980/58) states that an action cannot be brought 6 years after a judgment has been handed down, the House of Lords in *[Lowsley v Forbes](https://swarb.co.uk/lowsley-and-another-v-forbes-trading-as-i-e-design-services-hl-29-jul-1998/)*[ [1998] 3 WLR 501](https://swarb.co.uk/lowsley-and-another-v-forbes-trading-as-i-e-design-services-hl-29-jul-1998/) held that an action is defined as a fresh action therefore enforcement proceedings are not time limited. However, any delay is not advisable and provides the debtor with the opportunity to liquidate their assets without paying the debt that is due. If you are owed sums by a [judgment debtor](https://windinguppetitionsolicitors.co.uk/recovering-a-debt-judgment-debt/), you should seek advice from [specialist debt recovery lawyers](https://windinguppetitionsolicitors.co.uk/debt-recovery/) as soon as possible to maximise the chances of recovery. ## How our CCJ litigation team can help you We know that each client’s case and business are unique, therefore we adopt a specialist approach tailored to suit the client’s circumstances and needs. With [advice ](https://lexlaw.co.uk/)being provided by the firm once we have been instructed to review your CCJ matter and other supporting documents. If you have received a CCJ for a sum of over £10,000 and require legal advice and assistance in defending the same, get in touch with our litigation team. --- # Government announces 15 year limitation period for “shoddy workmanship” claims Source: https://lexlaw.co.uk/solicitors-london/government-announces-15-year-limitation-period-for-shoddy-workmanship-claims/ *Housing Secretary Robert Jendrick announced that Homeowners in the UK will have a total of 15 years to challenge property developers and builders who carry out "shoddy workmanship" on their properties. The retrospective extension of the 6 year limitation period gives homeowners more time to take legal action against rogue developers. * *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## Why is the limitation period being extended? [The Housing Secretary](https://www.gov.uk/government/ministers/secretary-of-state-for-housing-communities-and-local-government#:~:text=Current%20role%20holder-,The%20Rt%20Hon%20Robert%20Jenrick%20MP,for%20Newark%20in%20June%202014.), Robert Jenrick said that the change has "put new cards in the hands of lease holders". The [Housing Secretary](https://www.gov.uk/government/ministers/secretary-of-state-for-housing-communities-and-local-government#:~:text=Current%20role%20holder-,The%20Rt%20Hon%20Robert%20Jenrick%20MP,for%20Newark%20in%20June%202014.) commented "it is not right that either the leaseholder or the taxpayer should pay for fire safety changes." The change in policy has been brought about for calls to replace Grenfell-style cladding from buildings following the tragedy. ## Building Safety Bill The extension of the limitation period through the Building Safety Bill means homeowners and residents of buildings that are unsafe to live in, for example due to unsafe cladding installed in a building when constructed, have more time in which to issue proceedings against a developer or ## What is a limitation period? The law sets out deadlines for bringing legal claims, which are referred to as limitation periods. The purpose of limitation periods is to prevent legal claims from being brought too long after the cause of action accrued. The length of the limitation period varies with different types of legal claim. ## Why is limitation in litigation important? Limitation is not something that should be ignored. Where a party has a strong case, but the limitation period has expired, the claim will be likely to fail. Even in unusual circumstances, where a party is prevented from issuing its claim in time for reasons beyond its control, the court has no discretion to extend the limitation period in this type of claim. It is, therefore, crucial that limitation issues are considered at the outset of any potential claims. ## When does time start running on a claim? Once the cause of action has accrued, the time for bringing a legal claim will start to run and the limitation period will begin. In order to stop time running before the expiration of the limitation period in relation to a particular cause of action, you would need to either issue a claim form at Court or enter into a standstill agreement with your opponent. ## What happens after the limitation period expires in litigation? If the limitation period expires before you have issued a claim form or entered into a standstill agreement, then your claim will be time-barred. This means that if you begin your legal claim after the limitation period has expired, the defendant will be able to raise limitation as a complete defence to your claim (regardless of how strong a claim it may otherwise be). ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Breaches of court rules on expert advice not tolerated Source: https://lexlaw.co.uk/solicitors-london/high-court-breach-of-rules-when-it-comes-to-expert-advice-litigation-advice/ *In the recent case of [Dana UK AXLE Ltd v Freudenberg FST GmbH (2021) EWHC 1413 (TCC)](https://lexlaw.co.uk/wp-content/uploads/1413.pdf), the High Court rejected expert evidence during the trial because of serious breaches of the terms of a court order and the principles of [CPR 35](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35/pd_part35).* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. We explain below the importance of witness statements in litigation and the steps to be taken to prepare witness evidence.* ## The Facts The claim arose out of the alleged premature failure of pinion seals manufactured by the defendant (FST) and supplied to the claimant (Dana) during the period between September 2013 to February 2016. The seals were fitted by Dana, a manufacturer and supplier of automotive parts, onto vehicle rear axles which Dana then supplied to Jaguar Land Rover for installation into 9 different vehicle models. The trial started on 5 May 2021 and the court heard from the parties' witnesses of fact and from Dana's three technical experts. Dana applied to exclude FST's technical expert evidence. In this matter, the two parties were allowed to serve expert evidence in Engineering. However, FST gave its expert evidence 8 days after the deadline and eventually applied for relief from sanctions. The other party did not object to FST being granted relief, but the court held that FST would be able to rely on their reports, provided that they come forward with a new version of the reports where the problems outlined by Dana in those reports, had been corrected and hence fully compliant with [CPR 35](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35/pd_part35). ## The Judgment Dana's application was granted and hence excluded FST's reports on the basis that there were several 'serious and unexplained' breaches of the PTR order. The High Court also found that it was 'entirely unacceptable' that FST's experts did site visits without informing Dana's experts and did not even keep records. From the trial, it could easily de deduced that several site visits were made and they were not disclosed in the reports. According to the court, the expert's opinion seemed to have been directly influenced by FST. Hence, this called into question the independence of the reports and the extent to which they gave unbiased views and opinions. ## The importance of expert evidence The decision serves as a reminder that the admission of expert evidence is a matter for the court's discretion. The rules put in place in regards to expert evidence are there to make sure that both sides are on the same level playing field. The decision taken in this case re-iterates that breaches of procedural rules will not be tolerated. ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-29.png)](https://lexlaw.co.uk/wp-content/uploads/1413.pdf) ## Expert Evidence Expert evidence is provided by an expert witness who has well recognised and authoritative experience, skill and knowledge in a specific field. The expert witness may be instructed, with the court’s permission, to give an authoritative opinion based on their expertise. The overriding duty of any expert witness is owed to the court or tribunal and not to the party instructing the expert. The expert’s duty is to provide unbiased and impartial independent evidence. The rules governing expert evidence are found in [CPR 35](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35): > Experts – overriding duty to the court > > > > > > (1) It is the duty of experts to help the court on matters within their expertise. > > > > > > (2) This duty overrides any obligation to the person from whom experts have received instructions or by whom they are paid. > > > [CPR 35(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) An expert witness may give evidence on, for example, technical or scientific matters, or specialist practice or procedure. They may give their opinion on specific matters in the dispute within their expertise. However, it is not the function of an expert witness to give their opinion on issues of law or fact which the judge or jury has to decide. ## Do I need the court’s permission to call expert evidence? Yes. The court’s permission to call expert evidence is always required as the court has a duty to restrict expert evidence to that which is necessary to resolve issues in the proceedings. When applying for expert evidence to be allowed, the parties must apply early in proceedings (otherwise the court may later refuse due to timetabling issues), identify the expert by name or by field of expertise, specify the issues that he will address and estimate the cost of the expert evidence. If it grants permission, the court will limit the evidence to the named expert or field ordered, and may specify the issues that the expert should address. Oral expert evidence at trial may only be given with the court’s permission. > Court’s power to restrict expert evidence > > > > > > (1) No party may call an expert or put in evidence an expert’s report without the court’s permission. > > > > > > (2) When parties apply for permission they must provide an estimate of the costs of the proposed expert evidence and identify – > > > > > > (a) the field in which expert evidence is required and the issues which the expert evidence will address; and > > > > > > (b) where practicable, the name of the proposed expert. > > > > > > (3) If permission is granted it shall be in relation only to the expert named or the field identified under paragraph (2). The order granting permission may specify the issues which the expert evidence should address. > > > [CPR 35(4)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) ## What is a single joint expert? The court may order that expert evidence is to be given by a single joint expert, namely an expert who is instructed on behalf of both parties. However, this is not common in multi-track cases. Parties may instruct another expert to assist them, but any evidence from that expert will not be admissible and the costs of instructing that expert will not be recoverable from the other side. ## What is an expert report? Expert evidence is usually given in the form of a written report, which must be the independent product of the expert. The expert’s overriding duty is to the court and not to the party that instructed him. Expert reports are often exchanged simultaneously. However, in some cases, expert reports may be exchanged sequentially. > Contents of report > > > > > > (1) An expert’s report must comply with the requirements set out in Practice Direction 35. > > > > > > (2) At the end of an expert’s report there must be a statement that the expert understands and has complied with their duty to the court. > > > > > > (3) The expert’s report must state the substance of all material instructions, whether written or oral, on the basis of which the report was written. > > > [CPR 35.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part35) ## Instruct Expert Litigation Solicitors We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. We are extremely experienced and capable at navigating our clients through the litigation process. The information published on this website is: (a) for reference purposes only; (b) does not create a contractual relationship; (c) does not constitute legal advice and should not be relied upon as such; and (d) is not a complete or authoritative statement of the law. [Specific legal advice about your circumstances should always be sought](https://lexlaw.co.uk/legal-case-assessment/). # Optimal Legal Results. *Our litigators deliver advanced legal strategies.* We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the litigation rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best possible result. You’ll receive strategic legal advice at your first meeting. [Check My Case](https://lexlaw.co.uk/?page_id=356) **LIMITATION ACT 1980 - WARNING** The Limitation Act 1980 sets out [strict statutory deadlines](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should [seek specific legal advice about your legal dispute](https://lexlaw.co.uk/legal-case-assessment/) at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success. --- # High Court provides reminder of the strict rules on valid service of the Claim Form Source: https://lexlaw.co.uk/solicitors-london/high-court-provides-reminder-of-the-strict-rules-on-service-of-the-claim-form-second-opinion-advice/ In *[R (Good Law Project) v Secretary of State for Health and Social Care [2021] EWHC 1782 (TCC) ](https://lexlaw.co.uk/wp-content/uploads/1782.pdf) the High Court held that serving an unsealed claim form did not constitute valid service and emphasised the significance of sending a sealed claim form to correct service address within the time limit set out in [Part 7.5 of the Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07#7.5).* *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/). We will guide you through any stage in your litigation process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## What is Service of a Claim Form in litigation? Service is critical as it is the method by which documents used in court proceedings are brought to a party’s attention. The claim form is the form that commences litigation proceedings and as a result is an important legal document. [Part 6 of the Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06) sets out guidance on service. ## How should a claim form be served? Service can be in person or by first class post, document exchange, fax or email along with other methods. [CPR Rule 6.7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.7) allows service in a solicitor instructed by a defendant but only if the solicitor has indicated it is instructed to accept service at its business address. In the instant case that never happened and no attempt to serve was made directly on the defendant. ## The Facts Good Law Project (the Claimant) sought to challenge the lawfulness of the UK government’s decision to award Pharmaceuticals Direct (the interested party) certain contracts for the supply of personal protective equipment (PPE).  The grounds of challenge were breach of the duties of equal treatment and transparency contrary to the Public Contracts Regulations (“PCR 2015”) and breach of the common law duty to act without apparent bias.    The claimant's solicitors sent a copy of the unsealed copy of the claim form to the Defendant before it was issued by the court on 28 April 2021.  They then sent the sealed claim form via email to three individuals of the Government Legal Department (GLD).  However, the claim form was meant to be served on the treasury solicitor of GLD at a different email address by the deadline of 5 May 2021.  This prompted the GDL to raise the issue of validity of service of the claim form on 6 May 2021. The claimant then attempted to rectify its error by serving the sealed claim form to the treasury solicitor via the correct email address on 6 May 2021 and by serving the sealed claim form and bundle to Pharmaceuticals Direct via recorded delivery on 13 May 2021.         The claimant then sought an application pursuant to [Part 6.15 of the CPR](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.15) to show that the steps taken to alert the defendant and interested party of the service of claim form constituted good service and an application for an extension of time to serve the claim form. ## The Judgment Mrs Justice O’Farrell ruled, *“…there was no valid service of the claim form on the defendant within the prescribed time limit”* and that this failure was “serious and significant” as the claimant did not adhere to [CPR 54.7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54#54.7). Therefore, service of the unsealed claim form on 27 April 2021 did not constitute a step in the proceedings and the court did not have the discretion to rectify this procedural irregularity under [CPR 3.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.10).  Furthermore, it was held that the claimant did not establish a valid reason for the court to exercise its power under[ CPR 6.15](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06#6.15), as serving sealed copies of the claim form to the incorrect email addresses did not constitute valid service either. The ruling of this case highlights the strict judicial approach to the rules governing service of the claim form.  Thus, although it has become more common to accept service of a claim form via email rather than in person, it is crucial for the document to be sent to the correct email address, or the service will be deemed invalid. ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/image-28.png)](https://lexlaw.co.uk/wp-content/uploads/1782.pdf) ## What is the time limit for serving a claim form? Under[ CPR 7.5](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07#7.5), a claim form must be served before midnight on the calendar day four months after the date of issue of the claim form. ## Why is limitation in litigation important? Limitation is not something that should be ignored. Where a party has a strong case, but the limitation period has expired, the claim will be likely to fail. Even in unusual circumstances, where a party is prevented from issuing its claim in time for reasons beyond its control, the court has no discretion to extend the limitation period in this type of claim. It is, therefore, crucial that limitation issues are considered at the outset of any potential claims. ## The implications of leaving service of a claim form until the last minute This judgment serves as a stark reminder, to both litigants in person and solicitors alike, that strict adherence to the CPR is vital and the consequences of failing to do so can be fatal to any litigation, which is why you should instruct [specialist litigation solicitors.](https://lexlaw.co.uk/contact-us/) There are strong grounds for a [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/start-issue-professional-negligence-court-claim-case-legal-advice/) case which would enable the claimant to seek [damages from them](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/). ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # The APPG to Challenge the Swift Review: Redressal of Mis-sold IHRPs Source: https://lexlaw.co.uk/solicitors-london/the-appg-to-challenge-the-swift-review-redressal-of-mis-sold-ihrps/ ## The Facts The APPG, a group comprising MPs and Peers, has stated its intent to bring a judicial review against the Financial Conduct Authority (FCA). This decision follows an FCA-commissioned review (led by John Swift QC) of a scheme established by the FSA (the FCA’s predecessor). The scheme was an agreement with nine banks, which resulted in over £2.2 billion in compensation being distributed to customers who had been mis-sold interest rate hedging products (IRHPs) between 2001 and 2011. Potential beneficiaries of this scheme were assessed on the basis of a ‘sophistication test’, something which excluded approximately one-third of the potential beneficiary pool. ## The Review’s Findings The Swift Review concluded, at a cost of over £7 million, that the FSA had acted unlawfully by excluding nearly one-third of the beneficiary pool. The FCA issued a response, stating that “it does not consider that the FSA was wrong to limit the scope of the redress scheme to less sophisticated customers and has concluded that it would not be appropriate or proportionate to take further action. Accordingly, the FCA will not seek to use its powers to require any further redress to be paid to IRHP customers”. The APPG has viewed this response as entirely at odds with the Review’s conclusion, noting that the statement is both flawed and unlawful. In minutes published from an FCA board meeting in March 2022, the regulator has confirmed that it intends to defend the application for permission for judicial review, and indeed defend the review itself if permission is to be granted. In February 2022, Hausfeld (APPGs legal representatives), sent a letter before claim to the FCA as per the Pre-Action Protocol for Judicial Review. ## The Implications The APPG's decision is significant as it represents a political challenge to a UK regulator. Those still seeking redress from banks for mis-sold IRHPs will no doubt follow the outcome of this review very closely. ## City of London Specialist Mis-selling of Swaps Lawyers If your business is a party to an interest rate swap which you feel was mis-sold we, as specialist interest rate swaps lawyers, are able to assist. Our highly qualified financial services mis-selling litigation team provides the very best swaps mis-selling representation and uses it banking and financial services litigation expertise to ensure we obtain the best possible results and refunds for our clients.  We’ve advised hundreds of businesses seeking redress via both litigation and via the FCA/FSA Review process for the mis-selling of IRHPs ([lexlaw.co.uk/fsareview](https://lexlaw.co.uk/fsareview)) as well as those with ‘Hidden Swaps’ or fixed rate loans with embedded derivatives. Just call us on  [☎ 02071830529](tel://+442071830529) or complete our online [contact form](https://lexlaw.co.uk/legal-case-assessment/); our legal team are waiting to help. --- # How are the Courts dealing with COVID-related rental arrears? Source: https://lexlaw.co.uk/solicitors-london/how-are-the-courts-dealing-with-covid-related-rental-arrears/ *With the Covid-19 pandemic, different kinds of regulations have been passed that have led to multiple business restrictions, mainly affecting retail as well as services in large commercial enterprises and the hospitality sector as well. This has resulted in pandemic-related revenue shortages and subsequent problems in meeting obligations, including the payment of rents and ancillary costs. * *This raises the question of whether and to what extent tenants can claim a rent reduction from their landlords. In the UK, tenants have no legal backing on which tenants can rely on to force landlords to reduce rents or write-off COVID-19 arrears. * *However, there is some support and protection against landlord enforcement action for non-payment of rent and the government is also considering legislation to “ring-fence” COVID-19 arrears.* ## How are tenants being protected from rental enforcement action? In the United Kingdom, there are a number of on-going measures to support and protect tenants from landlord enforcement action for non-payment of rent. These are broadly as follows: - There is a moratorium until 25 March 2022 on landlords evicting commercial tenants.- The [Commercial Rent Arrears Recovery](https://www.gov.uk/government/publications/resolving-commercial-rent-arrears-accumulated-due-to-covid-19/supporting-businesses-with-commercial-rent-debts-policy-statement) (CRAR) process (a statutory procedure which allows landlords of commercial premises to recover rent arrears by taking control of the tenant's goods and selling them) can only be used if tenants owe at least 544 days of principal rent.- There is ban until 31 March 2022 on landlords issuing [statutory demands](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/) and [winding up petitions](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) based on a tenant’s inability to pay commercial rent (unless the landlord has reasonable grounds for believing that either COVID-19 has not had a financial effect on the tenant or that the circumstances forming the basis of the winding up petition would have occurred even if COVID-19 had not had a financial effect on the company). However, despite the above there is no legal help for tenants to legally compel a landlord to reduce or write-off COVID-19 arrears that have built up while premises have been closed. ## What are the government doing to protect tenants? The Government is clearly concerned about the raft of potential insolvencies (and subsequent job losses) that may result if the restrictions mentioned above are simply left to expire. It is therefore currently consulting on the options available to deal with COVID-19 arrears and one of the proposals under consideration is binding adjudication in circumstances where the landlord and the tenant cannot reach a mutually acceptable settlement. ## Problems with the government's legislative plans on Covid-19 rental arrears Whilst the consultation is on-going the Government’s legislative plans on COVID-19 arrears remain unclear and commercial landlords and tenants have a number of unanswered questions. For example, which arrears are “ring-fenced” and subject to arbitration if not agreed? What about tenants that have chosen, perhaps for commercial reasons, to remain closed? Will the legislation unravel any concessionary deals that have already been reached, including if the tenant insists that it still cannot pay? Will tenants that have already paid in full be entitled to refunds? Will the legislation be restricted to rent or will it include, for example, service charges? The Government has said that the ring-fencing will only apply to tenants that have been “impacted” or “affected” by COVID-19 “business closures” for the period from March 2020 until restrictions for their sector were removed. Commercial landlords can take some comfort from the fact that this at least suggests that rent will not be ring-fenced where it relates to periods where tenants elected to close during the pandemic. Tensions between landlords and tenants over built up arrears are, therefore, set to continue and parties will have to await further details as the legislation is published before at least some of their questions are answered. ## Instructing our Litigation Lawyers ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Post-COVID: Restrictions on Winding-up Petitions Lifted Source: https://lexlaw.co.uk/solicitors-london/post-pandemic-winding-up-petitions-return-to-normality/ ## Restrictions on Winding-Up Petitions During the pandemic, certain restrictions were put into place that made it harder for a creditor to issue a [winding-up petition](https://www.gov.uk/wind-up-a-company-that-owes-you-money). This included an increase in the debt threshold required to bring a winding-up petition- from £750 to £10,000- as well as an additional requirement to provide a debtor with notice twenty-one days before the petition was presented. Whilst these restrictions were introduced to ensure that small businesses did not bear the brunt of the instability the pandemic brought, the easing of conditions has meant that that winding-up petitions are now back to normal. ## Debt Recovery: No More Restrictions The changes restore parity. **As of the 1st of April 2022, the initial debt threshold of £750 threshold has been brought back. The twenty-one day notice period requirement has also been done away with. ** These measures will now allow creditors to approach the courts in a bit to recover monies owed to them. This is the case even if the sum you are owed is not exceptionally large. The removal of the notice requirement also allows you to preserve an element of surprise in any proceedings you choose to initiate. These policy changes are a welcome return for creditors who have been unable to recover debt owed to them. Our highly-qualified team of debt recovery barristers and solicitors ensure that the transition to normality is a smooth one. To date, we have a 100% success rate and all of the petitions we have issued have been resolved in our client’s favour. This has also meant that the petitioned company or individual has paid our fees. Luckily for our clients, this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs. ## Instruct Specialist Debt Recovery Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Section 8 Notices Source: https://lexlaw.co.uk/solicitors-london/section-8-notices/ *As a landlord, you may initiate proceedings to gain possession of a property let on an assured shorthold tenancy **before** the end of the fixed tenancy’s term. Our highly-qualified team of expert Property Litigation solicitors and barristers are regularly consulted by clients looking to serve [Section 8 and Section 21 notices](https://www.gov.uk/evicting-tenants/section-21-and-section-8-notices) onto tenants. * ## Requirements Under a Section 8 Notice Any possession sought under Section 8 must necessarily be based upon the grounds mentioned in [Schedule 2 of the Housing Act 1988](https://www.legislation.gov.uk/ukpga/1988/50/schedule/2?view=plain). To proceed with a Section 8 Notice, you must successfully be able to make out a claim under one or more of the 18 grounds set out in the Schedule. To issue a Section 8 Notice, you must use the prescribed form issued by the government and clearly mention the Schedule 2 grounds you intend to rely upon. You must also give the tenant a reasonable amount of notice which varies, depending on the Schedule 2 grounds you intend to rely upon. ## Can I Undertake a Section 8 Notice on My Own? A Section 8 Notice is a tricky form. It is of the utmost importance to note that a Section 8 Notice is only valid if it is filled and served in the correct way. If you do not correctly use the prescribed form or mention the grounds you intend to rely upon, **you may be left with no other choice but to file the notice again**. This means that you will have to wait for a renewed period of reasonable notice to lapse before you can go to court to enforce your rights. Reasons as simple as providing incorrect names or dates on the notice may invalidate your claim. Our specialist team of Property Litigation Barristers and Solicitors never miss the details and save you the hassle. We walk you through the complex rules and regulations, and assist you with all proceedings, from start to finish, so that you get it right the first time. ## Is the Court bound to grant Eviction Orders Under Schedule 2? Out of the 18 grounds mentioned in Schedule 2, only 8 are mandatory. If you can successfully make out your case based on any of these, the court will be bound to grant the order. If your case falls within any of the remaining 10 grounds, however, the matter of granting the order will lie at the court’s discretion. Our expert Property Litigation team assists you on the individual merits of your case and, after conducting in-depth research, advises you on the actionable routes open to you. We are able to accurately discern where your case falls under Schedule 2 and if you might be better off pursuing other options. ## Successful Section 8 Notices We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice. Our expert Property Litigation legal team deliver expert technical knowledge; the utmost expertise; strong negotiation skills and respected advice on the interpretation of leases, tenant insolvency, evictions, forfeiture, lease renewals and exercising break clauses which can make a pronounced difference in Landlord and Tenant and Real Estate disputes. Our expert legal team can provide urgent help, advice or representation to you. Call us on ☎ 02071830529 or [email us now](https://lexlaw.co.uk/legal-case-assessment/). --- # RBS v JP SPC 4 & Another: The Privy Council Restricts Banks’ Quincecare Duty Source: https://lexlaw.co.uk/solicitors-london/rbs-v-jp-spc-4-another-the-privy-council-restricts-banks-quincecare-duty/ ## The Background The Claimants (“JP SPC 4”) provided litigation finance to UK law firms via loans. A company incorporated in the Isle of Man (“Synergy [IOM] Ltd”) handled these loans and held an account at the Bank (“Royal Bank of Scotland International Limited”) to do so. Allegedly, two individuals within Synergy fraudulently withdrew around £45 million by writing cheques on the account. These were honoured by the Bank in the standard manner. ## The Claim The Claimants asserted that the Bank had breached its duty of care “in tort to exercise reasonable care and skill”. This, they argued, was caused due to the Bank’s failure to protect the Claimants’ funds from losses caused by fraudulent misappropriation of funds by a customer of the Bank. The Claimants contended that by virtue of their status as beneficial owners of the monies held in the Bank’s account, the Bank owed them this duty of care. Initially, the Bank applied to strike out the claim before trial and denied the allegations put forward by the Claimants. Whilst the Isle of Man Court dismissed the application at first instance, the decision was reversed on appeal to the Staff of Government Division, who disagreed that the Bank owed third parties the stated duty of care. On appeal to the Privy Council, the Claimants argued that a bank’s *Quincecare* duty extends to a duty of care in tort beyond that which is owed to the bank’s customer. ## The Judgement The Privy Council rejected the Claimants’ argument and upheld the Bank’s application to have the claim struck out. ## The Implications This judgement is a seminal decision that has drawn boundaries in a hitherto highly-contested area of banking law. It confirms the legal position regarding the duties a bank owes to the beneficiary of an account held by one of its customers acting as a fiduciary or trustee. This will no doubt be seen as good news for banks concerned about recent attempts to extend their Quincecare duties beyond their own customers. ## View the Judgement [![](https://lexlaw.co.uk/wp-content/uploads/jc.png)](https://www.jcpc.uk/cases/docs/jcpc-2020-0044-judgment.pdf) ## LEXLAW Banking Litigation & Dispute Resolution It is absolutely necessary that defrauded third parties protect their legal rights and act in their best interest, especially when looking to settle a high-value dispute with a major bank such as the Royal Bank of Scotland. Legal rights can be protected by taking urgent legal advice and by instructing specialist financial services litigation solicitors Our Financial Services Litigation team of Solicitors and Barristers in London is highly experienced in banking litigation and specialises in representing clients in banking disputes. Our litigators carefully assess case prospects and can then issue or defend legal claims in all manner of contentious issues, ranging from financial services litigation against major banks and their ‘magic circle’ or other lesser legal teams (all of whom we regularly succeed against), injunctions (such as obtaining emergency Mareva freezing orders or restraining orders), winding-up petitions and other company court disputes and injunction or validation applications. Our London litigation solicitors and barristers advise our clients on disputes relating to claims involving fraud and deceit, commercial contracts, buildings and property, sale of goods, banking and mortgage fraud, directors’ disqualification, judicial review and insolvency. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled court litigation against all major UK banks. Call us on  [☎ 02071830529](tel://+442071830529) or complete our online [contact form](https://lexlaw.co.uk/legal-case-assessment/). --- # Ulster Bank DAC and Ors v McDonagh and Ors: CA Holds That Civil Liability Act 1961 Inapplicable To Debt Recovery Cases Source: https://lexlaw.co.uk/solicitors-london/ulster-bank-dac-and-ors-v-mcdonagh-and-ors-ca-holds-that-civil-liability-act-1961-inapplicable-to-debt-recovery-cases/ ## The Background The defendants were provided with a loan of over €21 million in 2008 by Ulster Bank Ireland Limited (“the Bank”). The loan was provided in order for the defendants to purchase a site, however the plans did not go ahead and the defendants were left unable to repay the loan. Prior to this, the Bank had settled a claim, receiving €5 million, against CBRE for their alleged negligent valuation of the site the defendants had planned to purchase. ## The Claim The compromise reached between the parties was allegedly breached and the Bank sought summary judgement (totalling €22,090,302.64) against the defaulting defendants. The defendants argued that, alongside CBRE, they were concurrent wrongdoers and thus no further money was owed to the Bank by virtue of sections 17(2) and 35(1)(h) of the CLA. ## The Judgment At first instance, the High Court found that the defendants and CBRE were concurrent wrongdoers. However, Section 17(1) was not applicable in this instance as the settlement reached between the Bank and CBRE did not refer to the defendants, nor did CBRE admit any liability. In spite of this, the Judge did note that the amount paid in the CBRE settlement should be taken into account and could reduce the settlement owed by the Defendants. The judgement was awarded to the Bank and the Defendants appealed. The Court of Appeal ultimately dismissed all three of the Defendant’s appeals. The Court confirmed that the claim was not an action seeking to recover damages, but a claim seeking to recover debt. As such, the claim **did not fall within the remit of the CLA**. ## The Implications This case is significant as it highlights the inherent issues with parties attempting to rely on the CLA in debt recovery cases. In this instance, CBRE and the Defendants could not be seen as concurrent wrongdoers as they were never attempting to recover the same type of damage. Further, the Court noted that if the Defendants wished to include CBRE in their wrongdoing, expert evidence should have been adduced at trial in support of this. In spite of this, the case makes clear that for a debt recovery claim, the CLA is the wrong vehicle when trying to establish a concurrent wrongdoer. ## Instruct Specialist Debt Recovery Lawyers We are a specialist [City of London](http://www.appgbanking.org.uk/) law firm made up of Solicitors & Barristers and based in the [Middle Temple Inns of Court](https://www.middletemple.org.uk/) adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. Call us on  [☎ 02071830529](tel://+442071830529) or complete our online [contact form](https://lexlaw.co.uk/legal-case-assessment/). --- # Lexlaw v Zuberi – Agreed Public Statement on Settlement of Landmark DBA Litigation Source: https://lexlaw.co.uk/solicitors-london/lexlaw-v-zuberi-agreed-public-statement-on-settlement-of-landmark-dba-litigation/ *Lexlaw Ltd v Shaista Zuberi – Claim No. H10CL314 – Reported at[ [2017] EWHC 1350 (Ch)](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2017/1350.html&query=(zuberi)) (09 June 2017); [[2020] EWHC 1855 (Ch)](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2020/1855.html&query=(zuberi)) (10 July 2020); and as [Zuberi v Lexlaw Ltd [2021] EWCA Civ 16](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2021/16.html&query=(zuberi)) (15 January 2021). * The above long-running litigation dispute has now settled. In a landmark decision it was determined by the Court of Appeal that a damages-based agreement (the “DBA”) was enforceable and compliant with the relevant legislation. The decision of the Court did not determine the litigation, however the Zuberi family now finally and fully accept liability in respect of the DBA and withdraw all allegations of impropriety set out in their pleadings and acknowledge these were made purely in an attempt to escape payment. For the avoidance of any doubt, it is confirmed by Mrs Zuberi that: (1) the DBA was not procured by any actual or presumed undue influence; (2) she was not induced to sign the DBA by misrepresentations (and there were none); and (3) that Lexlaw and its officers correctly advised her of the true nature and consequences of the DBA. Further background details can be viewed at: [https://lexlaw.co.uk/solicitors-london/damages-based-agreements-court-of-appeal-upholds-enforceability-of-dba-lexlaw-vs-shaista-zuberi-comments-analysis/](https://lexlaw.co.uk/solicitors-london/damages-based-agreements-court-of-appeal-upholds-enforceability-of-dba-lexlaw-vs-shaista-zuberi-comments-analysis/) --- # Recovering Unfair and Unreasonable Solicitor Fees Source: https://lexlaw.co.uk/solicitors-london/recovering-unfair-and-unreasonable-solicitor-fees/ An agreement for fees with a Solicitor must be fair and reasonable per s.61(1) and s.57 [Solicitors Act 1974](https://www.legislation.gov.uk/ukpga/1974/47/contents). There is little recent judicial guidance however in [Bolt Burdon Solicitors v Tariq [2016] EWHC 811 (QB)](https://www.bailii.org/ew/cases/EWHC/QB/2016/811.html) the learned judge referred to the decision of the Court of Appeal in re Stuart, ex parte Cathcart [1893] 2 QB 201 (concerned with a similar provision in the Attorneys' and Solicitors' Act 1870) and which gave the following guidance on the proper approach under those statutory provisions: *"By s.9 the Court may enforce an agreement if it appears that it is in all respects fair and reasonable. With regard to the **fairness **of such an agreement, it appears to me that this refers to the mode of obtaining the agreement, and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness. But the agreement must also be **reasonable**, and in determining whether it is so the matters covered by the expression "fair" cannot be re-introduced. As to this part of the requirements of the statute, I am of opinion that the meaning is that **when an agreement is challenged the solicitor must not only satisfy the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the Court that the terms of that agreement are reasonable**." * "*If in the opinion of the Court they are not reasonable having regard to the kind of work the solicitor has to do under the agreement, the Court are bound to say that the solicitor, and an officer of the Court, has no right to an unreasonable payment for the work he has done and ought not to have made an agreement for remuneration in such a manner. On this question it is quite clear to me that we cannot arrive at any other conclusion than that arrived at by the Divisional Court. It is impossible to say that work which according to information given by the taxing master to the Divisional Court would be properly remunerated by a sum of £20 can be reasonably charged at £100. The decision of the Court below must be affirmed, and the appeal dismissed."* ## How is Unfairness & Unreasonableness Determined by the Court? The Court will likely consider the issues of fairness and reasonableness separately. Fairness relates principally to the manner in which the agreement came to be made. Reasonableness relates principally to the terms of the agreement. So you can understand how this works - here is an example decision from a Judge in the case of [Vilvarajah v West London Law Ltd](https://www.bailii.org/ew/cases/EWHC/Costs/2017/B23.html) [2017] EWHC B23 (Costs) (19 May 2017): ## Unfairness - I was told in the course of the hearing that the business that the Claimant runs is a Londis shop and that it was that business which had given rise to the partnership dispute. There is no evidence that, at the time the conditional fee agreement was entered into, the Claimant was particularly sophisticated in legal matters or in the construction of documents, although he had been involved in litigation previously. Without hearing any evidence from him, it is difficult to reach a conclusion as to his level of understanding of English. However it is not in issue that English is not his first language and Miss Yarranton accepted that he required particular care when explaining things to him (2nd witness statement, para 23).- For present purposes therefore I take the Claimant to be of average sophistication in relation to legal matters but requiring particular care when matters are explained to him in English. On that basis were the circumstances such that it can be said that the Defendant made an agreement with a client who fully understood and appreciated that agreement?- The answer to that must be "no". There is no correspondence between the Defendant and the Claimant about the conditional fee agreement. I would expect to see a letter from the Defendant to the Claimant in advance of the meeting on 7th January 2013 explaining the options clearly. I would expect that letter or a subsequent letter, still in advance of the meeting, to enclose a draft of the proposed conditional fee agreement and to explain its terms so that the Claimant would have an opportunity to consider it before the meeting and think about whether there was anything which required explanation. I would expect the solicitor to be able to produce an attendance note of the meeting at which the agreement was signed recording precisely what explanation she gave of it to the Claimant. I would then expect to see a letter sent to the Claimant after the agreement was signed enclosing a copy of the agreement and explaining the key points.- I see many conditional fee agreements and by comparison with most this is a complicated agreement. On my first reading of it I did not pick up the distinction between success (when no success fee would be payable) and success plus an award of costs (when a success fee would be payable). Mr Mallalieu had to point that out to me.- There is no suggestion that any risk assessment was carried out before the agreement was entered into and nothing to suggest that the Claimant was given any advice as to the prospects of success and thereby the likelihood that he would be liable to pay a substantial success fee on top of the primary rate.- I cannot conclude that an explanation given in a 30 minute appointment, with no attempt at communication before or after, enabled the Claimant fully to understand and appreciate the terms of the agreement and in particular the liabilities that he was assuming.- Accordingly in my opinion the agreement is unfair and should be set aside. ## Unreasonable - I have absolutely no hesitation in concluding that the agreement was unreasonable.- The Hodders Law claim was a straightforward action in the County Court concerning, at most, about £65,000 (£20,000 claimed by Hodders Law and £45,000 already paid by the Claimant). The path it took, a transfer to the Senior Courts Costs Office for assessment of the bills (with or without a stay of the County Court proceedings), was also straightforward. The hourly rates agreed in September 2012 (£350, £200 and £135) were not unreasonable as between solicitor and client; although the Grade A rate was high for Outer London. Given the straightforward nature of the case, one would expect most of the work to be done by the Grade B fee earner (as indeed it was).- £420 is an unreasonable rate for any of the fee earners involved in this case, whether as between solicitor and client or as between the parties. That is the sort of rate I would expect to see for a Grade A fee earner based in the City or Central London doing complex, high value work. Obviously it is even more unreasonable for the junior fee earners. The guideline hourly rates for Grade B and D fee earners respectively in Outer London are £172-£229 and £121.- Nor can the primary rate be justified by reference to the discounted rate payable in the event that success is not achieved. In my experience it is very rare for no sum to be disallowed on a solicitor and own client assessment, whether the assessment is under the 1974 Act or not. A failure to achieve "success" (as defined in the agreement) in the Hodders Law Claim would be highly unlikely. It was therefore highly unlikely that the discounted rate would ever be payable. Further, given that most of the work in this sort of case would be done by the junior fee earners, the discount represented by the discounted rate for the Grade B was modest (25% less than the originally agreed rate). For the Grade D fee earners the discounted rate was actually higher than the originally agreed rate.- The calculation of the success fee, which would increase the Claimant's liability for the work done by all fee earners to £690, is peculiar. It is based not on any assessment of risk, but on the proportion of the discounted rate to the primary rate. As these are arbitrary figures, neither of them reflecting the market rate, so the success fee is also arbitrary.- Crucially there is nothing to suggest that the Defendant gave the Claimant any advice that the primary rate was unusual or that there was no prospect at all that he would recover these rates from his opponent in the Hodders Law claim in the event that he was awarded costs in that claim. There would have been no prospect at all that the Claimant would recover £420 for any of the three grades of fee earners. Given the nature of the case it is unlikely that, between the parties, the solicitors would be allowed rates much higher than the guideline rates for summary assessment.- In my opinion the conditional fee agreement was unreasonable and should be set aside. ## Challenging an Unfair/Unreasonable Solicitor's Invoice Our team of highly qualified Solicitors, Barristers and Costs Lawyers can help assess the fairness and unreasonableness of a solicitors invoice. We charge a fixed fee to review your invoices and papers and give initial advice in a video conference as to the merits and prospects and litigation strategy to get you the best outcome. We are masters of dispute resolution and know the very best strategies to get you optimal redress. If, after our initial fixed fee review, we advise that you have a high value case that we feel is strong enough we can act on a no win no fee basis where we only get paid a percentage of what we recover. --- # Case Study: Lender Default Charge of £150k+ Completely Defeated Source: https://lexlaw.co.uk/solicitors-london/case-study-lender-default-charge-of-150k-completely-defeated/ Our client was ready, able and willing to redeem a bridging loan except that the Bridging Lender was unlawfully seeking payment of well over £150k as a purported contractually agreed default fee (the Purported Default Fee). ## Was the Bridging Lender acting Lawfully? Our view was that in fact the Bridging Lender was not contractually entitled to the Purported Default Fee under the Loan Agreement, and even if they were so entitled (which they were not) it would be deemed unlawful under the laws of England & Wales (for operating as a penalty and clog fettering our clients equitable right of redemption). Our view after our initial fixed fee case review was that no such default fee was due whatsoever. Our advice was not to pay anything at all towards the Purported Default Fee as the contract contained unenforceable penal clauses. ## Defeating the Bridging Lender's Demands and Possession Threats Our client instructed us on an emergency basis to seek (a) mandatory injunctive relief to permit redemption per the Agreement; (b) injunctive relief to restrain the lender from anticipatory breach of the Agreement; and (c) put the Bridging Lender on notice of an intention to commence legal proceedings to recover very substantial damages should the Lender breach the Agreement. Our interaction with the Bridging Lender set out in detail their misconduct in attempting to prematurely impose (i) Default Rates, (ii) Default Fees, (iii) LPA Receivers, and (iv) prematurely commence Possession proceedings. Our very robust approach against the Bridging Lender and their legal team worked and forced the Bridging Lender to back down such that our client saved the entirety of the Purported Default Fee. ## Our Borrower Protection Solicitors & Barristers Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in high value bridging finance mis-selling disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK lenders. Read more about Bridging Disputes: [https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) --- # Candey Ltd v Tonstate Group Ltd & Ors: CA finds non-counterclaiming defendants to be beyond the scope of Damage Based Agreements  Source: https://lexlaw.co.uk/solicitors-london/candey-ltd-v-tonstate-group-ltd-ors-ca-finds-non-counterclaiming-defendants-to-be-beyond-the-scope-of-damage-based-agreements/ *In the recent case of Candey Ltd v Tonstate Group Ltd & Ors [2022] EWCA Civ 936, the Court of Appeal clarified the scope of damages-based agreements (DBAs) by holding that such agreements could not be used between a solicitor and a defendant when the latter did not have a counterclaim. In essence, the Court laid bare the underlying premise of DBAs: a party must be able to obtain a financial benefit from the litigation to rely on the same.* ## The Case The solicitors acting for the defendant had been engaged, on the basis of a 'DBA', regarding a complex share ownership dispute. Upon the defendant’s bankruptcy, the solicitor claimed that, under the DBA, they were entitled to a certain percentage of the contested shares that had been retained subsequent to the litigation. The issue before the court was to ascertain whether it was lawful for a DBA to essentially allow a solicitor to retain a percentage of contested assets that had been successfully retained on behalf of the defendant subsequent to litigation; in cases where the defendant did not have to transfer those assets to the other party.  ## The Judgment On appeal, it was found that a defendant could not enter into a DBA on the premise of assets that they already held. Noting that there was nothing in the relevant reports or Parliamentary debates to suggest Parliament’s intention to permit such kinds of agreements, the Court of Appeal stressed that DBAs essentially operated in a *recovery*-centric realm, as opposed to one of retention. For the Court, however, the pivotal line of reasoning was found in the definition of DBAs as found in [Section 58AA(3) of Courts and Legal Services Act 1990](https://www.legislation.gov.uk/uksi/2013/609/made/data.pdf): “the agreement must provide for payment by the recipient of the services if he or she *‘obtains *a specified financial benefit’ from the litigation.” As the Court of Appeal stated, the implication of the word ‘obtains’ envisaged that the litigant acquired something they did not already have. In light of this, as well as the fact that a successful defendant who had purportedly contracted on such terms of a DBA would be “financially no better off than they were at the start of the litigation” and may indeed find themselves worse off, the Court of Appeal found that such an agreement between a defendant and a solicitor was not neither a case of ‘obtaining’ under the 1990 Act nor a case of ‘recovery’ under the [Damages-Based Agreements Regulations 2013, SI 2013 No. 609 (“the 2013 Regulations”)](https://www.legislation.gov.uk/uksi/2013/609/made/data.pdf); such an agreement was not a DBA.  As to whether the solicitors were entitled to a percentage of the retained shares under such an agreement, the Court held that the solicitors had no entitlement to be paid such a percentage. The Court of Appeal stressed that references in the agreement to ‘proceeds’ to be paid to the solicitors did not cover retained assets and that, additionally, the defendant merely avoided an ‘additional detriment’ by not having to transfer all of their shares; retaining a fraction of their shares could not reasonably be construed as ‘deriving a benefit’ for the purposes of the solicitors and pursuant to the agreement. ## The Implications Candey sets clear precedent for the grounds that it is not possible for a defendant to enter into an enforceable agreement with their legal representatives if it entails having to pay a percentage of any assets retained as opposed to being actively obtained or recovered. In such circumstances, the agreement is beyond the remit of a DBA.  The case also delineates the scope of DBAs as applicable to counterclaiming and non-counterclaiming defendants. As explained by Males LJ, whilst a non-counterclaiming defendant and his solicitors is not capable of executing a lawful DBA, a counterclaiming defendant may be able to do so where they obtain “a financial benefit by making a recovery from the claimant.”  Perhaps most importantly, Candey strikes down a case of what Males LJ aptly terms “heads I win, tails you lose.” Essentially, the case bars any circumstance that pins a client to a bad outcome regardless of the outcome of the case. If such a mechanism had been allowed, a defendant who had been successful in retaining assets would have to pay a portion to their solicitors, whereas a defendant who was unsuccessful in doing so would still have to pay, albeit to the claimants.   ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/Tonstate-Group-Ltd-Ors-Damage-Based-Agreements-Litigation-Lawyers-1-2.jpg)](https://lexlaw.co.uk/wp-content/uploads/Candey-Ltd-v-Tonstate-and-Ors-Court-of-Appeal-Damages-Based-Agreements-Litigation-1.pdf) ## Instructing our Litigation Lawyers We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Hunt v. Balfour-Lynn: No Breach of Duty for Directors entering into a Tax Avoidance Scheme Source: https://lexlaw.co.uk/solicitors-london/hunt-v-balfour-lynn-no-breach-of-duty-for-directors-entering-into-a-tax-avoidance-scheme/ *The recent High Court case of Hunt v. Balfour-Lynn and others [2022] EWHC 784 (Ch) establishes that directors of a company may not necessarily breach their fiduciary duties by participation in a tax avoidance scheme where they can point to reasonable reliance on professional advice; in this case from an auditor and counsel. The liquidator lost the claim - the court held that payments made under the scheme were not made with the intention to defraud creditors.* ## Alleged breach of Directors Duties The claim was brought in the High Court by Mr. Stephen Hunt, the official liquidator of Marylebone Warwick Balfour Management Limited (“Company”) based on a tax avoidance scheme entered by the Respondents between September 2002 and August 2010 whereby £27,706,849 of PAYE and NICs due to HMRC in respect of the Respondents’ remuneration was paid to the Respondents. The claimant asserted that the commencement of the avoidance scheme and its continuation constituted a breach of the respondents’ fiduciary duties and such payments fell within the ambit of “transactions defrauding creditors” under [section 423 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/data.pdf). Mr. Hunt’s breach of duty claim was based on the contention that the Respondents failed to consider the Company’s interests and acted out of selfish motives as they entered into and continued an aggressive tax avoidance scheme which was likely to be challenged by HMRC as they were aware of inquiries made by HMRC into the scheme, and thus likely to cause the Company loss, committing a breach of their duties under [section 172 of the Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/data.pdf) whereby the directors of a Company are required to act in good faith and promote the success of the Company. The Respondents denied the claims of any breaches and maintained that they had reasonable and responsibly relied on the advice of BDO (an accounting firm) before and during its participation in the scheme. ## Defence against Breach of Directors Duties With reference to the breach of duty claim, the purpose of the scheme was brought into question. The Defence refuted claims of such breach by asserting that the Scheme worked to incentivise the Company’s employees to continue their employment and promote the success of the Company. The Respondents were advised by BDO and leading tax counsel that the Company could legitimately avoid paying NICs and PAYE to HMRC. The Respondents had reasonably expected to be advised by BDO in case there was any real risk of liability to HMRC. The Court observed that the Scheme was put into place for genuine commercial reasons, and it was unrealistic to believe that the Respondents when sitting in on consultations, should have set aside the advice they were hearing as it was not formally addressed to them. Additionally, BDO had no vested interest in the continuation of the Scheme as there was no evidence to suggest that the fees paid to BDO were intended to influence the advice dispensed by them. In taking advice on their duty to ensure the Company’s payments of PAYE and NICs from BDO which was not contradicted by the Company’s auditors, the Respondents had fulfilled the same. The Court also observed that under [section 172 of the Companies Act](https://www.legislation.gov.uk/ukpga/2006/46/data.pdf), the directors’ duty to consider the interests of the creditor will only arise when they know or should know that the Company is likely to become insolvent. In the case at hand, the Company’s status was consistently being overseen by its auditor and BDO and thus the Respondents could not have reasonably been privy to the probability of the insolvency of the Company. The second claim dealing with [Section 423](https://www.legislation.gov.uk/ukpga/1986/45/data.pdf) was also dismissed by the Court as reliance was placed on JSC v Ablyasov which distinguishes “purpose” as a precondition for liability under the Section from “consequence”. The Company’s failure to pay NICs and PAYE to HMRC was a consequence of the Scheme and not the purpose. There was sufficient evidence to suggest that the Respondents would not have avoided payment to HMRC if they had believed the same to be an illegitimate course of action. ## The Implications This judgement illustrates that directors of a Company cannot easily be held liable for breach of their duties in making certain decisions when those decisions are based on reasonable professional advice obtained from a competent authority and thus, reduces the probability of future litigation against directors/officers of a company based on similar claims of breach of duty. The case is of utility to Directors defending a successful claim brought under [section 212 or 423 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/data.pdf), primarily in situations where the directors have relied on professional advice.  ## Download the Judgment [![](https://lexlaw.co.uk/wp-content/uploads/High-Court-Judgment-Template_page-0001-725x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Hunt-v.-Balfour-Lynn-and-others-2022-EWHC-784-Ch.pdf) ## Instructing our Company Dispute Lawyers We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # High Court: Unreasonable refusal to ADR does not attract an order for costs on an indemnity basis Source: https://lexlaw.co.uk/solicitors-london/high-court-unreasonable-refusal-to-adr-does-not-attract-an-order-for-costs-on-an-indemnity-basis/ *In the case of [Richards & Anor v Speechly Bircham LLP & Anor (Consequential Maters) [2002] EWCH 1512 (Comm) HHJ Russen QC](https://www.bailii.org/ew/cases/EWHC/Comm/2022/935.html) (sitting as a judge of the High Court) considered the most appropriate costs order to be imposed on the unsuccessful defendant law firm for refusing to consider and engage in mediation. He concluded that a failure to mediate did not justify an order for costs on an indemnity basis.* *Our multi-disciplinary practice is made up of *[*specialist lawyers*](https://lexlaw.co.uk/our-people/)* that have market-leading experience in handling *[*multi-million pound litigation cases *](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/)*and bringing complex claims to settlement through alternative forms of dispute resolution (“ADR”), where necessary.* ## Facts of the case The creators of the company, i.e., the claimants had commenced proceedings against the defendant for providing them with negligent advice. At trial, the defendants lost the case and in consequence, were ordered to pay approximately £1.5m in damages. An application was made by the claimants for[ costs on an indemnity basis](https://lexlaw.co.uk/solicitors-london/indemnity-costs-losing-party-unreasonable-conduct-proportionality-reasonable-standard-assessment-court-order-legal-advice/) on the grounds that the defendants had rejected four offers in regards to mediate the dispute. Three of these offers were made before the commencement of the proceedings i.e., at the[ pre-action stage](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct). In response to the first offer, the defendant did not consider that a mediation would be productive or even cost effective at that stage. In the subsequent letter, the defendants considered keeping the merits of some form of ADR under review after full disclosure has been given. In addition, the defendant rejected the second offer of mediation as well. They argued that mediation or any form of ADR at that stage would be pointless as they were certain that the claimants would fail. A similar response was made when considering the third offer as the claim was entirely without merit. Subsequently, the defendant rejected the fourth offer on the grounds that mediation over an unmeritorious claim would have little to no benefit. The defendant also referred to the expense of a mediation indicating that they would be prepared to have a short without prejudice call between solicitors to explain why a Part 36 offer of £500,000 made by them would not be increased. ## Argument put forth by the Parties The claimants relied upon the decision of [HHJ Waksman QC in Garritt-Critchley v Ronnan [2014] EWCH 1774 (Ch) ](https://lexlaw.co.uk/wp-content/uploads/Garritt-Critchley-v-Ronnan.pdf)in support of their submissions. In this case, the claimants’ application was granted by the judge for indemnity costs based principally upon the defendants’ failure to engage in mediation by resisting it and claiming that the positions of the parties far apart by simply not considering any realistic prospect of the claimant’s succeeding. The judge concluded that it was unreasonable and their reasons for not considering ADR did not ‘stack up’. In particular, the binary nature of the issue on liability, being one of fact, was one where both parties needed to engage in an analysis of the risk of their case not being accepted. The wide range of possible quantum scenarios was also considered to be an aspect rendering the case suitable for mediation, as did a mediator’s ability to defuse the emotion in the case and any feelings of distrust between the parties. The defendants in Speechly Bircham, resisted an order for costs on the indemnity basis by arguing that their approach to mediation was not unreasonable, and that, following the Court of Appeal’s decision in *Gore v Naheed* [2017] EWCA Civ 369, an unreasonable refusal to mediate is only one factor of a party’s conduct to be taken into account when the costs are determined. They also relied on their Part 36 offer and the without prejudice discussions before trial between the parties’ respective lawyers. ## Decision HHJ Russen QC rejected the defendants’ argument that their approach to mediation was not unreasonable. He was persuaded by the claimants’ arguments that the defendants’ concern about the need for some disclosure to shed light on certain aspects of the case could have been explored in preparation for mediation or explored at a mediation. However, the judge concluded that failure to engage in ADR was only one aspect of the conduct to be considered in the exercise of the discretion under [CPR 44.2](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.2). He further explained that refusal to mediate does not carry the defined costs consequences of an accepted but effective [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) offer. The judge ordered that the defendants pay the claimant's costs on a standard basis, considering it to be the most appropriate sanction. ## Why instruct our Expert Litigation Lawyers? Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. Our multi-disciplinary practice consists of [dispute resolution specialist solicitors and barristers ](https://lexlaw.co.uk/our-people/)who have market-leading experience in handling [multi-million pound litigation cases](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) and have a proven track record of bringing complex claims to settlement though [alternative forms of dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (“ADR”), when necessary. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. --- # Court of Appeal strikes out class action over Fundao Dam collapse Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-overturns-decisions-striking-out-class-action-arising-from-2015-collapse-of-fundao-dam-in-brazil/ *UK judges opened a path for a group of more than 200,000 plaintiffs to bring a suit against BHP Group Ltd over its role in the collapse of a mining dam in Brazil.* *BHP faces a $6 billion lawsuit due to the collapsing of the infrastructure, triggering Brazil’s worst environmental disaster and making it the largest group claim in English legal history.* ## What are class action claims? Class actions or collective actions are where multiple claimants with claims sharing common characteristics seek a remedy against the same defendant or multiple defendants. The English courts have various types of procedures for collective litigation, and recent reforms have added to these with new procedures available for collective consumer and competition claims. However, this type of action can raise several additional difficulties for the defendant as it did for BHP, and it can be extraordinarily hard to estimate the costs likely to be incurred or the duration of the case.  Even if the substantive issues of fact and law are clear cut, there are a few procedural and other preliminary points that can arise. ## Court of Appeal granted permission to appeal BHP ruled out that the case is pointless and wasteful, stating it duplicates legal proceedings and reparation and repair programs in Brazil, which will already cost $5.6 billion by year-end. Initially, the High Court granted the Defendants' application to strike out/stay the claim against them as an abuse of process, as trying to manage the claim would be like ‘*trying to build a house of cards in a wind tunnel*’.  The Court of Appeal denied permission to appeal the High Court judgment, thus the claimants applied to reopen the refusal under the infrequent use of [reopening of final appeals](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part52). The Court of Appeal reopened the refusal to grant permission and went on to grant permission to appeal. Brazilian federal prosecutor Jose Adercio Sampaio spoke to *The Age* and *The Sydney Morning Herald** *quoting: “The accusation is that they knew the risks. They knew it could burst*,” *he said. “They should have taken steps to avoid the crime; instead, they increased production.” BHP spokesperson responds that the company had "no reason to believe BHP people knew the dam was at risk of failing". The spokesperson stated, "We reject outright criminal charges against the company and its employees and will continue in our defence and support of affected individuals". He further states that monitoring and the alarm systems at all sites had been reviewed and "all significant tailings storage facilities have emergency response plans in place”. ## Practical Implications of the case The Court of Appeal decides on whether the claim being struck out or stayed for the purposes of abuse of process is helpful for class actions. As per the Court of Appeal’s guidance, certain factors need to be considered: - A 'properly advanced' claim, which may be 'unmanageable' for the court does not make it an abuse of the court's process- Forum non conveniense factors is not inclusive of the court's analysis on abuse of process- A 'properly arguable' claim could be abusive if it is clearly and obviously 'pointless and wasteful'- The 'manageability' of the litigation should not influence the court's assessment of whether a properly arguable claim is pointless or wasteful- in group litigation, the assessment of whether a claim is 'pointless and wasteful' must be made in relation to each individual claimant or group of claimants, not the claimants as an 'indivisible group' ## Court of Appeal's decision The Court of Appeal stated that the claims were not to be deemed pointless or wasteful and should not be struck out. The courts emphasized that the English proceedings are not oppressive and the burden on the English courts by the proceedings are not disproportionate as the claims were arguable with significant sums included. The Court of Appeal held that the said compensation being paid in Brazil did not seem adequate hence, proceedings in the English Courts were appropriate. In conclusion the court of appeal released a 107-page judgment that BHP, which had its headquarters in England at the time of the dam’s collapse, would have to account for its role in the disaster. The decision, on striking out class claims, was overturned by the Court. ## BHP’S next steps A BHP spokesperson said: “We will review the judgment and consider our next steps, which may include an application for permission to appeal to the supreme court. We will continue to defend the action, which we believe remains unnecessary as it duplicates matters already covered by the existing and ongoing work of the Renovo Foundation under the supervision of the Brazilian courts and legal proceedings in Brazil.” ## Instructing our expert lawyers We provide a no cost initial case review to establish whether or not we can help you. We are a specialist [City of London law firm](https://lexlaw.co.uk/) made up of Solicitors & Barristers and based in the [Middle Temple Inn of Court](https://www.middletemple.org.uk/) adjacent to the [Royal Courts of Justice](https://www.find-court-tribunal.service.gov.uk/courts/royal-courts-of-justice). Our team is well equipped with the skill-set and nerves required to handle a case of this scale. We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Based on our extensive legal work we provide our clients with as much strategic, practical as well as carefully considered legal advice. We are extremely experienced and capable at navigating our clients in such matters. --- # Court’s power to serve Disclosure Application on Third Party outside the jurisdiction Source: https://lexlaw.co.uk/solicitors-london/courts-power-to-serve-disclosure-application-on-third-party-outside-the-jurisdiction/ In[ Gorbachev v Guriev & Ors [2022] EWHC 1907 (Comm)](https://www.bailii.org/ew/cases/EWCA/Civ/2022/1270.html), the Court of Appeal held that it had jurisdiction to permit service of a third-party disclosure application outside the jurisdiction of England and Wales, and that in appropriate cases, the Court will be inclined to exercise its discretion to grant such permission. Notably, this decision is at odds with the recent judgment in[ Nix v Emerdata Ltd & Anor [2022] EWHC 718 (Comm) (“Nix”)](https://www.bailii.org/ew/cases/EWHC/Comm/2022/718.html), where the Court held that it did not have the power to grant permission to serve a third-party disclosure application outside the jurisdiction. ## Background of the Case This application arises out of a dispute between Alexander Gorbachev (the “Claimant”) and Andrey Guriev (the “Defendant”), in respect of their interests in a valuable Russian fertiliser business, PJSC PhosAgro. One of the key issues in dispute is how, and why, the Claimant was financially supported by two Cyprus trusts of which T.U. Reflections Limited and First Link Management Services Limited (the “Trustees”) are the trustees. In furtherance of the primary dispute, the Claimant sought to obtain, pursuant to [Civil Procedure Rules (CPR 31.17)](https://www.legislation.gov.uk/uksi/1998/3132/rule/31.17/made#:~:text=31.17%E2%80%94(1)%20This%20rule,must%20be%20supported%20by%20evidence.&text=(b)disclosure%20is%20necessary%20in,claim%20or%20to%20save%20costs.) and [section 34 of the Senior Courts Act 1981](https://www.legislation.gov.uk/ukpga/1981/54/section/34#:~:text=%5BF134%20Power%20of%20High,for%20personal%20injuries%20or%20death.), an order or third party disclosure of certain documents held by Forsters LLP, the English law firm advising the Trustees. ## Judgement The principal issue to be determined was whether an application under s. 34 SCA (Power of High Court to order disclosure of documents) and CPR 31.17 falls within Gateway 20(a) (i.e. if the Court has the power to permit service of third-party disclosure applications outside the jurisdiction). If Gateway 20(a) was available, then the Court would need to decide if this was an appropriate case to exercise its discretion to serve out of the jurisdiction. Jacobs J found that Gateway 20(a) gives the Court jurisdiction to order service out in respect of a s. 34 SCA/CPR 31.17 application. Jacobs J considered that as Cockerill J had held in Nix, disclosure applications against overseas third parties should generally be made using the letter of request regime. However, in the present case, there were good reasons not to use that procedure, as (i) the relevant documents were held pursuant to English transactions by English solicitors (Forsters) in England, which meant the Trustees would not be required to do anything in Cyprus, and (ii) there would be a significant delay in carrying out the letter of request process in Cyprus (i.e. 12 months), which would be well after the trial had concluded. Thus, Jacobs J held that this was an appropriate case for the Court to exercise its discretion in favour of permitting service out. ## What does this case highlight? The Court has found that it has the power to permit service of non-party disclosure applications (under CPR 31.17 and section 34 SCA) outside the jurisdiction, but will only utilise its discretion to do so where the letter of request regime is unsuitable on the facts. While the decision in Gorbachev v Guriev includes a more thorough analysis of [CPR Part 6 ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06)and Gateway (20) than was the case in Nix, it is a novel decision based on particular facts. Importantly, this decision highlights the English Court’s increasing willingness to permit service out of England and Wales in a progressively more interconnected global economy. ## Why instruct our expert litigation team? Our[ competent litigation team](https://lexlaw.co.uk/) ensures that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Making a Strategic Part 36 Offer in Litigation Source: https://lexlaw.co.uk/solicitors-london/the-importance-of-making-a-strategic-part-36-offer/ ## What is a CPR Part 36 offer? A CPR Part 36 offer is a formal settlement offer made in civil litigation in England & Wales. [Part 36](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36) of the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil) aims to encourage parties to try to settle their disputes by setting out the costs consequences of offers to settle if they are made in accordance with the rule. If a party fails to accept a realistic offer made from the other side there is a risk of penalised costs and interest at the end of the case. Therefore, a *genuine offer* to settle (ie not a vey high Part 36 Offer) should be made which puts the other side under pressure to settle. Part 36 should be used as a strategic litigation tool to encourage early resolution of a dispute. If an offer is accepted, the case ends on the agreed terms. However, if not accepted and the offering party ultimately achieves a better outcome at trial, they can recover increased costs contribution, interest, and potentially an uplifted percentage of damages from the other side. In summary, it's a tool to incentivise settlement and manage the financial risks of litigation by increasing pressure on the opponent. If you are involved in litigation in England & Wales but your solicitor has not explained Civil Procedure Rule Part 36 to you then you can book a case review and get a second opinion on your case from our elite litigation solicitors and counsel. ## When can a Part 36 offer be made? A Part 36 offer can be made at any time, even before court proceedings have started. This flexibility allows parties to explore settlement options early on in a dispute, which can often lead to significant cost savings. By making a Part 36 offer, you demonstrate a willingness to compromise and can significantly improve your position if the case proceeds to trial and you achieve a more favourable outcome. However, Part 36 does not apply to claims that are small claims track (claims that are less than £10,000). Generally we do not undertake work on small claim cases unless there is a debt of more than £750 which is not disputed and is owed by a company (see our successes in such cases [here](https://windinguppetitionsolicitors.co.uk/business-commercial-debt-recovery-unpaid-overdue-invoices-bills-legal-action-uk-advice/)). ## What are the requirements of a Part 36 offer? A Part 36 offer must be in writing which states the consequences of the Part 36 and state the offer that is made to settle the whole claim or only part of it and whether it takes into account any counterclaim. A Part 36 offer must comply with specific requirements as outlined in the Civil Procedure Rules (CPR) Part 36. ### Essential Elements of a Part 36 Offer - **Written Communication:** The offer must be made in writing (CPR 36.5(1)(a)). - **Clear Identification:** The offer must explicitly state that it is made pursuant to Part 36 of the CPR (CPR 36.5(1)(b)). - **Offer Period:** The offer must specify a "relevant period" of at least 21 days within which the other party will be liable for the offering party's costs if the offer is accepted (CPR 36.5(1)(c)). - **Scope of Offer:** The offer must clearly state whether it applies to the whole claim or only part of it (CPR 36.5(1)(d)). - **Counterclaims:** The offer must indicate whether it takes into account any counterclaims (CPR 36.5(1)(e)). ### Additional Considerations - **Clarity and Specificity:** The offer should be clear and unambiguous to avoid any potential disputes. - **Calculation of Amounts:** If the offer includes a sum of money, it should be calculated accurately and clearly stated. - **Interest:** The offer may include interest, but this should be clearly specified. - **Costs:** The offer can include provisions for costs, but this is not mandatory. By adhering to these requirements, parties can ensure that their Part 36 offers are valid and enforceable. Failure to adhere to them means the judge is not bound by CPR Part 36. ## How long does a Part 36 offer last? Relevant Period explained. A Part 36 offer *must *be open for acceptance for a minimum of 21 days in order to comply with the rule. This period is known as the 'relevant period'. It's important to note that while the minimum 'relevant period' is 21 days, you can offer a longer period if you wish. However, in practice, it's uncommon to see periods significantly longer than 21 days. The 'relevant period' is the timeframe specified in a Part 36 offer during which the other party can accept the offer and incur liability for the offering party's costs. Essentially, it's the deadline for the other party to accept the settlement terms without facing additional cost implications. It is important to note that the Part 36 offer must remain open for acceptance even after the 'relevant period' in order to take advantage of CPR Part 36. Ideally it should be open for acceptance even during the trial. It is important to bear in mind throughout the litigation that unless withdrawn a part 36 offer is treated as open for acceptance. ## What happens if the Defendant fails to beat the Claimant’s Part 36 offer, and what is considered a genuine attempt to settle? In the event that a defendant in **unable to beat** the Part 36 made by the claimant - the Court must order that: said claimant reserves the right to interest payments at a *larger rate *(not above the 10% of the base rate); costs on the basis of indemnity (security or protection against a loss); an interest on said costs at a *larger rate*; and moreover, a further percentage of the amount awarded in damages to the claimant in total.**** According to the Civil Procedure Rules, [Part 36.17](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36#36.17), the Court must consider the following factors while considering whether it would be unjust to make a normal order. - The terms of the Part 36 offer; - The stage of litigation at which the offer was made, particularly how long before the proceedings had started that the offer was made; - The information the parties were privy to at the time of the offer; - The conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; - If the offer was a **genuine settlement a**ttempt. ## Consequences of Accepting or Rejecting a Part 36 Offer The decision to accept or reject a Part 36 offer can have significant financial implications. Understanding the potential consequences is crucial for making informed decisions during litigation. ### Accepting a Part 36 Offer If a party accepts a Part 36 offer, the case is resolved according to the terms outlined in the offer. Typically, the accepting party will be responsible for the offering party's costs incurred up to the date of acceptance. ### Rejecting a Part 36 Offer Rejecting a Part 36 offer involves risks. If the offering party ultimately secures a more favorable judgment than the rejected offer, the rejecting party may face the following consequences: - **Increased Costs:** The court may order the rejecting party to pay the offering party's costs on an indemnity basis, which is generally higher than standard costs. - **Interest:** The rejecting party might be liable for increased interest on the judgment amount. - **Additional Damages:** In certain cases, the court has the discretion to award the offering party a percentage of the difference between the rejected offer and the final judgment. Given these potential consequences, carefully considering the merits of a Part 36 offer is essential before making a decision. ## Case Study: Small Part 36 Discount Doesn't Equal Lack of Genuine Intent In *Omya UK Ltd v Andrews Excavations Ltd & Anor* [2022] EWHC 1882 (TCC) (19 July 2022), the primary point of objection taken by the defendant was that the offer made by the claimant was not a genuine attempt to settle the proceedings. The claimant, Omya, made a Part 36 offer to settle the dispute for £756,287.05. The defendant rejected this offer. The court ultimately awarded Omya £765,094.40. Thus, in this case damages exceeded the offer by a margin of just 1.15% i.e a discount of £8,806.95. The court in *Omya UK Ltd v Andrews Excavations Ltd* considered several key factors when determining whether the claimant's Part 36 offer was a genuine attempt to settle: - **Magnitude of the Discount:** While the relatively small discount offered by the claimant was a factor, it was not determinative. - **Timing of the Offer:** The court considered that the offer was made at a relatively early stage of the proceedings, which supported the argument for a genuine attempt to settle. - **Complexity of the Case:** The court noted that the quantum of damages was not significantly in dispute, suggesting a higher likelihood of settlement. - **Overall Conduct of the Parties:** The defendant's conduct in the case was deemed unreasonable, which influenced the court's view on the claimant's offer. Ultimately, the court found that the claimant's offer was a genuine attempt to settle, despite the small discount, due to the combination of these factors. A key issue was whether Omya's offer constituted a "genuine attempt to settle" as required for enhanced costs recovery under Part 36. The defendant argued that the small difference between the offer and the final judgment indicated a lack of genuine intent to settle. The court disagreed, finding that while the discount offered was small, it was made at an early stage of proceedings and in a case where quantum was not significantly disputed. Therefore, the offer was deemed a genuine attempt to settle. The case provides valuable guidance on the factors a court will consider when determining whether a Part 36 offer is genuine. It emphasizes that while the magnitude of the discount is relevant, it is not the sole determinant. Other factors, such as the timing of the offer and the overall context of the case, are also crucial. Mr Sissons, for the defendant, argued the following: > In the circumstances of this case, C's offer ought not to be regarded as a genuine attempt at settlement because: (a) The offer was to accept a discount of just £8,806.95 (1.15%) against the amount claimed; (b) Even if interest is taken into account the offer was still derisory. At the date offer was made the accrued interest assuming a (generous) commercial rate of 2.5% was £33,957.23. On this basis the offer was to accept 95% of the total amount claimed inclusive of interest; (c) Accordingly, in the context of the total value of the claim, the concession offered cannot realistically be regarded as having any significant value; (d) There was no explanation as to how the offer was calculated. It did not involve any assessment of litigation risk but merely discounted a very small and apparently arbitrary amount from the total claim. This suggests a tactical attempt to catch Ds on the hook of Part 36 rather than a genuine effort at settlement; (e) This case was always a binary one; C would either recover the whole of the sum claimed or nothing at all. The offer did not reflect a possible outcome of the litigation. Accordingly, the amount offered created no real inducement or incentive for acceptance. Deputy High Court Judge Ter Haar QC determined: > "whilst the mathematical proportion of the offer to the amount claimed is a potentially relevant factor, it is not in and of itself the only determinant of whether the offer is a genuine attempt to settle the proceedings." The Judge determined that whilst 1.15% or £8,806.95 was an admittedly small discount, this was a case in which there was never likely to be any significant debate as to quantum (value of the claim). It was also relevant that if interest accrued is considered, the discount rose to a margin of 5%. Also, the offer was also made at a relatively early stage of the proceedings, which was consistent with a genuine attempt to settle. Judge Ter Haar QC declared that the offer was in all the circumstances: > “a genuine attempt to settle – an entirely sensible course for a commercial enterprise such as the Claimant which had no interest in the proceedings being dragged out and faced risks that important witnesses might not appear at trial. These matters indicate to me that the Claimant had every incentive to try to achieve a settlement and that this was not, as in some cases posited in the authorities, a cynical attempt to manipulate a scheme designed to encourage settlement.” As the Court found the Defendant’s general conduct to be highly unreasonable including some aspects of its defence, it awarded indemnity costs both before and after expiry of the offer. Due to the narrow margin, however, it restricted interest to 5% above base (not the full 10%). ## Need legal advice regarding a Part 36 Offer and its Cost Consequences? Your search ends here. Our [costs team](https://lexlaw.co.uk/practice-areas/) made up of specialist cost lawyers can assist by providing you with a bespoke cost solution to your cost dispute. We can guide you through the minefield of ever-increasingly complex legislation, littered with compliance and due diligence traps. We have a team of established cost specialist lawyers with a proven track record of delivering authoritative solutions. ## Not based in London? We provide Cost Related Services Nationwide. That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through our contact form, by email or by phone, one of our [litigation team members ](https://lexlaw.co.uk/our-people/)will contact you by phone to discuss your matter and assess whether we can help you regarding **Part 36 **or any other **Cost** related questions you may have. --- # Wyatt Paul v HMRC: Permission Needed to Raise New Points During an Appeal Source: https://lexlaw.co.uk/solicitors-london/wyatt-paul-v-hmrc-permission-needed-to-raise-new-points-during-an-appeal/ ![Wyatt Paul v HMRC](https://lexlaw.co.uk/wp-content/uploads/charles-postiaux-Q6UehpkBSnQ-unsplash-1-1024x683.jpg) > *The recent case of *[*Wyatt Paul v HMRC [2022] UKUT 116 (TCC)*](https://assets.publishing.service.gov.uk/media/626a7207e90e0746cb4aff69/Wyatt_Paul_v_HMRC_UT-2021-000069.pdf)* confirmed: permission by a party must be sought from the Upper Tribunal (UT) to argue a new point which was not argued before the First-Tier Tribunal (FTT).* *The UT refused HMRC permission to argue a point on estoppel by convention on the basis that it was a new argument of a fact-sensitive nature.* ### Case Background Wyatt Paul (the Appellant) appealed against the decision made by the FTT in [Wyatt Paul v HMRC [2020] UKFTT 415 (TC)](https://assets.publishing.service.gov.uk/media/626a7207e90e0746cb4aff69/Wyatt_Paul_v_HMRC_UT-2021-000069.pdf). The decision related to the availability and timing of US tax relief to Lloyd’s underwriters, including whether HMRC’s enquiry process was invalid because several provisions within the Tax Management Act 1970 had not been complied with. The appeal was dismissed by the FTT. The Appellant then appealed to the UT. The Appellant’s ground of appeal concerned whether a notice of enquiry which had not been posted to the Appellant's address in accordance with [s115 TMA 1970](https://www.legislation.gov.uk/ukpga/1970/9/section/115) was properly served and whether that notice was ‘received’. HMRC pursued a new argument that the Appellant was estopped by convention from denying that a valid enquiry had been opened, following the Supreme Court's decision in [*Tinkler v HMRC*](https://www.bailii.org/ew/cases/EWCA/Civ/2019/1392.html)[ [2021] UKSC 39](https://www.bailii.org/ew/cases/EWCA/Civ/2019/1392.html). ### Decision The UT denied [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) permission to raise a point on the issue of estoppel due to the fact that no specific evidence, nor findings of facts were made on the issue before the FTT. Relevant principles in *Singh v Dass* [2019] EWCA Civ 360 regarding the admission of new points in appeal were relied upon by the Appellant. The UT agreed and confirmed any party, whether it be the Appellant or Respondent, must seek the UT’s permission to argue a new point which was not brought before the FTT. ### The Purpose of Appeals The appeal system exists to enable parties to appeal against a decision in a higher court. On appeal, the same facts and findings are reviewed and it is not common for new points of fact to be raised. The case of [*Sivier v Riley*](https://vlex.co.uk/vid/michael-sivier-v-rachel-867178810)[ [2021] EWCA Civ 713](https://vlex.co.uk/vid/michael-sivier-v-rachel-867178810) confirms the need to keep new points out of appeals stating that it is often procedurally unfair to raise fresh arguments and the purpose of appeals are to review cases, not to re-hear them. Arguments should be presented at the court of first instance and in the case of Wyatt Paul v HMRC, the UT noted HMRC had the opportunity to argue the point of estoppel before the FTT but failed to do so. If HMRC had done so at the first instance, the hearing would have been conducted differently (with regards to the evidence). ### Case highlights The decision in this case highlights the importance, to parties in [litigation](https://lexlaw.co.uk/), of raising all relevant arguments at the court of first instance and the first appeal stage. The UT, along with higher appeal courts, will not easily allow new arguments to be presented, especially those involving findings of facts. ### Instruct Expert Litigation Solicitors [Lexlaw](https://lexlaw.co.uk/) ensures that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. We are extremely experienced and capable at navigating our clients through the litigation process. The information published on this website is: **(a)** for reference purposes only;**(b)** does not create a contractual relationship; **(c) **does not constitute legal advice and should not be relied upon as such; and **(d)** is not a complete or authoritative statement of the law. Specific legal advice about your circumstances should always be sought. --- # Challenging Validity of Discovery Assessments; Robert Don Hunter Dougan v HMRC Source: https://lexlaw.co.uk/solicitors-london/challenging-validity-of-discovery-assessments-robert-don-hunter-dougan-v-hmrc/ In the case of *[Robert Don Hunter Dougan v HMRC [2022] TC8471](https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12421/TC%2008471%20AMENDED.pdf)*, the First Tier Tribunal (“FTT”) ruled the taxpayer had not deliberately intended to cause a loss of tax despite failing to file tax returns on time. As a result of this failure, some discovery assessments had not been validly issued. The remaining discovery assessment was upheld. ## Discovery Assessments - The Result of Late Tax Filings Mr. Dougan lived and worked as a Music Producer in the UK under a valid visa. During this period, he worked in the Music Industry as a successful music producer having produced part of the soundtrack to the film [The Matrix](https://www.whatisthematrix.com/). The music production business was conducted as a sole trade which accounted for his royalty income. He then started a wine production and marketing business in partnership after purchasing a vineyard in France due to concerns regarding the viability of his music. Mr Dougan had a history of filing late [tax returns](https://taxdisputes.co.uk/) and no tax returns were filed between July 2004 and May 2013. This led to Discovery Assessments, determinations and penalties being raised by [HMRC](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) for 2004/05 through to 2006/07. Tax returns from 2004/05 to 2009/10 were filed by his accountants on 21 June 2013 and these claimed a share of Partnership Trading Losses from the wine business against sole trade income. [HMRC](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) resisted applying the loss claims to reduce the amounts charged in the discovery assessments therefore Mr Dougan appealed against the Discovery Assessments. ## Burden of Proof on HMRC The FTT held the burden of proof to be [HMRC](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) to prove all Discovery Assessments had been validly issued. Due to the dates on which the discovery assessments were issued, this depended on the taxpayer's behavior. If Mr Dougan had acted deliberately, all the discovery assessments would have been issued in time. If he had acted carelessly, only the discovery assessment for 2006/07 would have been validly issued. HMRC failed to prove that the taxpayer deliberately intended to cause about a loss of tax. The facts did not support that argument because it was not enough to establish that a late filing [taxpayer](https://taxdisputes.co.uk/) prevented HMRC from raising assessments. Although Mr Dougan did not address his tax responsibilities, due to his focus being on his wine business, young children and [litigation](https://lexlaw.co.uk/), it was his intention to catch up with his tax return obligations at a later date, which was something he had done in the past. However, this behavior was careless and the 2006/07 discovery assessment had been validly issued as a result. It was up to the taxpayer to show that the amounts charged by the assessment were excessive. Having established that the Discovery Assessment for 2006/07 was validly issued, the FTT considered the quantum of Mr Dougan’s liability for that year. As Mr Dougan had claimed his share of Partnership Lindfield’s losses against his personal income in the tax years that were the subject of the Discovery Assessments, it was necessary to address the tax position of Partnership Lindfield and in particular to determine when it commenced trading, and whether the fees that it paid to SCEA Robert Dougan were tax deductible, such that it had tax losses available for Mr Dougan to set against his personal income using sideways loss relief. Taking account of the evidence available, the FTT considered that, on the balance of probabilities, Partnership Lindfield commenced trading after 5 April 2007. The basis period for its first year of trading was 2007/08. As the FTT had found that Partnership Lindfield had not commenced trading in the relevant tax years, the FTT concluded that the fees paid to SCEA Robert Dougan could not have been for the purposes of the trade. The FTT stated that, if it were wrong in its finding about the date of commencement of trading, the evidence supported identifying a proportion of the consultancy fees for each year that were incurred wholly and exclusively for the purposes of the trade. ## Case Highlights This decision provides a stimulating discussion of the important issue of when a taxpayer's behavior is careless or deliberate, for the purposes of [*section 36 Tax Management Act 1970*](https://www.legislation.gov.uk/ukpga/1970/9/section/36) (“TMA”) and the issuing discovery assessments under [*section 29, TMA*](https://www.legislation.gov.uk/ukpga/1970/9/section/29). The decision is also prominent for its discussion of what establishes valid service of a penalty notice. Both these issues are of universal significance to many taxpayers. ## How We Can Help You [Lexlaw](https://lexlaw.co.uk/) specialist [Tax Solicitors](https://taxdisputes.co.uk/) and Barristers deliver expert technical knowledge which ensures best results for our clients. Our team of Solicitors and Barristers represent your interests at all times. We start off with a customized strategy for each client. We can provide you with the best representation in negotiations with HMRC and defend all forms of HMRC enquiries and investigations. [Lexlaw Solicitors and Barristers](https://lexlaw.co.uk/) are based in the legal epicenter of London, just across the road from the Royal Courts of Justice in order to ensure we get the best results for our clients. Lexlaw Solicitors and Barristers are just minutes away from the Tax Tribunal, the Royal Courts of Justice and other central London courts. Preparation is the key to a successful Tax Application/Appeal or for defending an HRMC Investigation. Our UK immigration and visa solicitors are here to guide you through the complex Tax rules and requirements. If you wish to meet one of our lawyers, please call our Tax Team so we can assess your case and arrange your legal consultation. --- # Indemnity Costs in Litigation Source: https://lexlaw.co.uk/solicitors-london/indemnity-costs-in-litigation/ An award of indemnity costs might give a party in a lawsuit a major advantage, due to the fact that the paying party will be responsible for the legal expenses and the proportionality criterion will not be applied. Since costs on the standard basis are the norm, the indemnity costs principle (included in [Civil Procedure Rules 44.3(3)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs)) can be considered punitive in nature. You will be assisted throughout every phase of your case process by our [specialist litigation team](https://lexlaw.co.uk/our-people/). Whether you are an individual seeking legal counsel or you have hired solicitors and want a second opinion on your course of action. ## What are Indemnity Costs? All fees, charges, disbursements, expenditures, and compensation expended by a party to litigation in carrying out proceedings are considered indemnity costs, provided they have not been incurred in an inappropriate manner or for an unreasonable amount. An indemnity costs order is intended to compensate a party as fully as feasible for the expense and inconvenience of litigation. One of the two bases on which expenses between parties in a lawsuit can be calculated is indemnity costs. Two bases are: standard basis and indemnity basis. When issuing an order for costs to be paid, the court shall specify the indemnity basis of assessment or the standard basis of assessment. The language of Civil Procedure Rule 44.3(4) makes it appear that the costs will be assessed on the standard basis if no indication of the basis is supplied. Most cost orders are on the standard basis. ## Civil Procedure Rules on Indemnity Costs The following Civil Procedure Rules (“**CPR**”) are relevant to indemnity costs: - ***CPR 44.2(1)**** The court has discretion as to –* - *whether costs are payable by one party to another;* *(b) the amount of those costs; and* *(c) when they are to be paid.* *(2) If the court decides to make an order about costs –* *(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but* - *the court may make a different order*. This rule entails the discretion of the court when calculating costs - ***CPR 44.3(3)**** Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.* If costs are calculated on an indemnity basis, proportionality is not a factor to be taken into consideration because there is a presumption of proportionality in favour of the receiving party - ***CPR 44.4(1)**** The court will have regard to all the circumstances in deciding whether costs were–* ***(b)**** If it is assessing costs on indemnity basis –* ***(i)**** Unreasonably incurred; or* ***(ii)**** Unreasonable in amount.* ## When are Indemnity Costs Awarded? CPR 44.2 makes it clear that the courts have a lot of discretion when it comes to ordering indemnity costs, and when deciding whether to use that discretion, the court will consider all the circumstances of the case and consider the objections made in support of such an order for costs in the context of the overall litigation. The Court of Appeal declined to define the precise situations in which indemnity costs may be ordered in *Munkenbeck & Marshall v. McAlpine [1995] E.G. 24 (C.S.)*, stating that it was a matter in each case of the judge using his judgement on the facts at hand. According to case law, indemnity costs are frequently issued when there is some fault or abuse of the legal system on the part of the party that must pay the expenses. It is also true that the court is primarily concerned with the losing party when deciding whether to grant costs on an indemnity basis rather than the actual merits of that party's argument, while both of these can occasionally be found deficient, the party's handling of the matter should be considered. **“Outside of the norm” Cases** Indemnity costs are awarded in a circumstance which takes the case “out of the norm”. Lord Woolf CJ in *Excelsior Commercial and Industrial Holdings Ltd v. Salisbury Hammer Aspden and Johnson (A Firm) [2002] EWCA Civ 879, *said "an indemnity order may be justified not only because of the conduct of the parties but also because of other particular circumstances of the case." Lord Woolf CJ provided two instances when factors other than conduct supported a request for indemnity costs: - A situation where a party is drawn into expensive litigation despite having no other interest than the issue that arises in that case and is involved in the proceedings as a test case;  - a situation where the nature of the litigation prevents the parties from conducting the litigation in a proportionate manner. In *Three Rivers v Bank of England [2006] EWHC 816, *according to Tomlinson J., the following facts took the case out of the norm and prompted the award of indemnity costs: - Despite the absence of any support in the documented evidence for the charges, the claimant persistently and aggressively pursued significant and extensive accusations of dishonesty or impropriety over an extended period of time, continuing the accusations without remorse. - Both before and throughout the trial, the claimant vigorously pursued publicity for its serious charges. - By pursuing an unfounded claim, the claimant's actions transformed the case into an unusual factual investigation. - The claimant pursued a claim that was incongruous with the contemporaneous documents and, to put it mildly, weak and unrealistic in certain ways. - The claimant filed and pursued a costly and extensive lawsuit in a way intended to put the defendant under commercial pressure, and during the trial, in an effort to support the claims, resorted to presenting a constantly-evolving case, only to be soundly defeated. Gloster J ordered indemnity costs in *P Morgan Chase Bank (formerly known as The Chase Manhattan Bank) (a body corporate) and Others v Springwell Navigation Corporation (a body corporate) [2008] EWHC 2848 (Comm), *because she was of the view that the scope of litigation was “massive” and unnecessary, and must have been narrower. Serious allegations of dishonesty, improper behaviour, and deceit were brought up and pursued by Springwell. Some of these claims were abandoned right before trial, while others were pursued but abandoned following the cross-examination of Chase witnesses. Cases like *Three Rivers* and *Springwell* show us that Bringing claims of fraud or dishonesty without any supporting evidence puts one at danger of losing the case, being ordered to pay indemnity costs, and receiving negative judicial and professional feedback. Cases alleging fraud that are lost (or withdrawn) may also result in an indemnity-based order for costs, in addition to an unfavourable order for costs. **Unreasonable conduct is sufficient for indemnity costs, no need for conduct deserving of moral condemnation** In *Kiam v MGN (No2) [2002] EWCA Civ 66*, Simon Brown LJ said “... conduct, albeit falling short of misconduct deserving of moral condemnation, can be so unreasonable as to justify an order for indemnity costs ..." and, he added, "To my mind, however, such conduct would need to be unreasonable to a high degree; unreasonable in this context does not mean merely wrong or misguided in hindsight ..." In Re Continental Assurance Co of London, liquidators who had pursued a protracted action with large costs were required to pay costs on an indemnity basis. **Failure to comply with pre-action protocol** Norris J stated that he would not grant indemnity costs in the case *of Forstater and others v. Python (Monty) Pictures Ltd and others [2013] EWHC 3759 (Ch)* solely because a pre-action process had been disregarded. However, there was a strong argument for indemnity costs when a minor claim was initiated without prior notice and taken to trial for the purpose of recovering costs despite a proposal to settle the claim and have the costs decided by a costs judge. **Delaying Procedural timetable** Courts can show strong case management and are no longer tolerant of delays. One method to convey this is by ordering indemnity costs. **Retracting a summary judgement application that shouldn't have been made** In *The Libyan Investment Authority v. Goldman Sachs International [2014] EWHC 3364 (Ch)*, the High Court made an interim judgement of £200,000 on account of the defendant's costs of its withdrawn summary judgement application and ordered the defendant to pay those costs on an indemnity basis. The application was deemed to be sufficiently "out of the norm" by the court. Indemnity costs were granted to the claimant in *Simmons & Simmons v. Hickox [2013] EWHC 2141 (QB)* after the defendant's move for summary judgement was rejected. The judge believed that it was improper to submit the application, which claimed that a contingency fee arrangement was unenforceable under Anguillan law. **On Discontinuance** Instead of only allowing costs to be paid on the usual basis, the court might find it appropriate to order that discontinued proceedings' expenses, pursuant to CPR 38.6, be paid on the indemnity basis. The High Court ordered the claimant to pay the defendants' costs on an indemnity basis in *PJSC Aeroflot - Russian Airlines v. Leeds and another (Trustees of the estate of Berezovsky) and others [2018] EWHC 1735 (Ch)*, after the claimant's fraud claim was abandoned without justification just before trial. **Part 36 Offers** Indemnity costs flow automatically (as of the date the relevant period expired) as one of the repercussions of a claimant's Part 36 offer not being accepted by a defendant and the claimant subsequently receiving a judgement at trial that is equal to or more advantageous than the offer (CPR 36.17), unless the court finds it to be unjust. No indication of wrongdoing is required. Therefore, there are different factors to examine here than there are when indemnity costs orders are involved. Although automatic, the indemnification order imposed by that regulation is still up to the court's discretion and is not required to cover the full course of the litigation. Only the current procedures are covered by Part 36 protection. A new Part 36 offer must be made in the event of a later appeal in order to obtain an order for indemnity costs (CPR 36.4). The defendants in *KR v. Bryn Alyn [2003] EWCA Civ 85 and [2003] 1 FCR 385* refused Part 36 offers before the issuance of proceedings but lost at trial. According to CPR 36, the trial court granted the claimant indemnity expenses. The defendants appealed, and their appeal was likewise rejected; but, because there had been no additional Part 36 offers to settle the appeal, the claimant did not win an order for indemnity costs of the appeal, merely costs on a regular basis. **CPR automatically resulting in indemnity costs** - Assessment of costs payable to a trustee or personal representative out of a fund (*CPR 46.3*). - Assessment of costs payable to a solicitor by their client (*CPR 46.9*). ## When are Indemnity Costs rejected? In *[Crypto Open Patent Alliance v Wright [2022] EWHC 242 (Ch) ](https://www.bailii.org/ew/cases/EWHC/Ch/2022/242.html)*Judge Paul Matthews did not order costs on an indemnity basis because he thought both parties counsel were acting like schoolchildren in the playground. He found *"all this mud-slinging (on both sides) not only unedifying, but also somewhat underwhelming". *Both sides were behaving* in “an ultra-aggressive and uncooperative way towards each other". *To order indemnity costs,* "would be to encourage similar behaviour in future".* **No indemnity costs order where no conduct deserving of moral condemnation or any unreasonable conduct** It is typically insufficient on its own to support indemnity costs when a party raised and prosecuted a tenuous claim or turned down a reasonable settlement proposal outside of Part 36. According to *[McPhilemy v. Times Newspapers No. 2 [2001] EWCA Civ 933](https://lexlaw.co.uk/wp-content/uploads/2020/05/McPhilemy_v_Times_Newspapers_Ltd_and_others_.pdf)*, the litigant's actions must amount to misconduct that is morally reprehensible or be extremely illogical in order to support an indemnity order. They cannot just be wrong or mistaken in retrospect. **Weak Case** In *Fitzpatrick Contractors Limited v Tyco Fire and Integrated Solutions (UK) Limited [2008] EWHC 1391*, Coulson J rejected an order for indemnity costs against Tyco. Tyco's case was weak and had been significantly damaged by the unsatisfactory character of a witness's testimony. He decided that this was a form of risk common to all civil litigation and could not, by itself, justify an award for indemnity costs. It was decided in *Noble v. Owens [2011] EWHC 1409 (Ch)* that the fact that a fraud claim had caused stress and anxiety was insufficient justification for an indemnity costs order. The claim had been carefully thought out and wasn't speculative or reckless. **Refusal to mediate** It was decided that the defendants' inability to participate meaningfully in mediation proposals did not warrant an order for costs against them on the indemnity basis in *[Richards and another v. Speechly Bircham LLP and another [2022] EWHC 1512 (Comm)](https://www.bailii.org/ew/cases/EWHC/Comm/2022/1512.html).* Making such an order would entail prioritising that element over other favourable ones, such as the fact that they had successfully disputed a major portion of the claim and outperformed both of the claimants' Part 36 offers. An order requiring the defendants to cover the claimants' costs up to and including trial on the standard basis was issued due to their unreasonable behaviour. ## Conclusion The discussion above shows that there is a reluctance to award indemnity costs where an innocent party won at trial, unless the situation clearly called for such an award. Why should a party who has won in court—and frequently has been pursued without their consent—have to pay a significant financial penalty because 15% to 30% of their expense bill may not be recovered? This can result in a fine of tens of thousands of pounds or more for the innocent party in cases when the action has been protracted, expensive, or both. Indemnity costs is not a penal order or one that carries a negative connotation. Instead, it only makes sure that a party who was unduly subjected to the expenditure of legal proceedings recovers a bigger portion of their entire costs. The paying party is not subject to a fine or other arbitrary financial punishment for having the audacity to initiate or oppose proceedings. Such an award is nonetheless effectively capped by the indemnity concept as well as by an evaluation that incorporates a reasonableness factor. However, the above case law makes it quite obvious that an award of indemnity costs would remain elusive, except in the most severe circumstances. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in [litigation](https://lexlaw.co.uk/practice-areas/) and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Arbitration Claim Application in the Courts of United Kingdom Source: https://lexlaw.co.uk/solicitors-london/arbitration-claim-application-in-the-courts-of-united-kingdom/ ## A Claim or Application for Arbitration A claim or an application made to the English court with the subject being or the outcome affecting an existing or proposed agreement to arbitrate or to challenge its award, is termed as an ‘application for arbitration’ or an ‘arbitration claim’. The Civil Procedure Rules which statutorily govern the rules and procedures to be adopted by the English Courts in all civil cases brought before it, in Part 62*.*2 define an ‘arbitration claim’ as an application or a claim before the English courts which seeks determination of the validity of; an arbitration agreement, the jurisdiction of arbitration tribunal, or the matters submitted before such tribunal during the course of arbitration proceedings or any matter related thereto. Furthermore, an "arbitration claim" can relate to an arbitration that is not yet fully effective. For example, a claim for urgent interim relief brought before the arbitral tribunal has been fully constituted would fall within the scope of CPR 62. If you are faced with a dispute that is subject to an arbitration clause, our team of alternative dispute solicitors and barristers have extensive experience in overseeing all manner of arbitration. We provide authoritative advice on single issue disputes to high value, complex cross-border disputes for individuals, SMEs and companies. Arbitration is, at its essence, a mutually agreed, binding, and neutral process for alternate dispute resolution before a third party. Arbitration takes this character from its earliest appearance in English common law, and it has not changed substantially since. Similar to other principles of law in the United Kingdom, the rules and provisions which provide for the framework are found scattered over in different sources; these are the Arbitration Act 1966, the Civil Procedure Rules Part 62, Practice Direction 62; the relevant court guide (the Commercial Court Guide or the Technology and Construction Court Guide) and in precedents set by the court. For arbitration claims in the Commercial Court, reference to CPR Part 58 needs to be made as it applies to such claims in the Commercial Court; for Technology and Construction Court, reference to CPR Part 60, which applies to arbitration claims in that court insofar as no specific provision is made by CPR Part 62. Notes for the Claimant and the Notes for the Defendant, which accompany the arbitration claim form (which is called "N8 Claim Form (arbitration)") helpful guidance should be also be considered. ## Who can apply to the court? The rules and provisions under Arbitration Act 1996 specify three main categories of potential claimant in an arbitration claim. These are; - **Either of the parties to an arbitration agreement** AA 1996 permits any party to the arbitration agreement or arbitration proceedings to make a claim or application to court. - **The Arbitrator** Second, there are rules that permit only the arbitrator to apply to the court (for example, where an arbitrator resigns, he or she is entitled to apply for relief from any liability and to obtain an order for payment of his or her fees under section 25(3) of the AA 1996). - **The Parties and the Arbitrator** There are also rules under which both the parties and the arbitrator(s) are entitled to apply to the court, both the tribunal and the parties are entitled to apply for an order enforcing a tribunal's peremptory order under section 42 of the AA 1996. Similarly, both the tribunal and the parties are entitled to apply for an extension of time for the making of an award under section 50 of the AA 1996. In certain circumstances non-parties may be heard by the court under S 24 of the AA 1996 which entitles the arbitrator to be heard at an application made to remove him ## Notice for application to arbitration Some rules specify certain applications which need to be followed up by a notice to other party; - S 12 empowers the court to extend contractual time limits for commencing arbitration, but such application, made by a party to the arbitration agreement, must be made "upon notice to the other parties. - S 24 empowers the court to remove an arbitrator, but such an application, made by a party to the proceedings, must be made "upon notice to the other parties, to the arbitrator concerned and to any other arbitrator". - S 67 to 69 of the AA 1996 which sets rules for applications to challenge award by an arbitration tribunal also require a notice to the other party to the proceedings and the tribunal. However, in an urgent case, S 44(3) explicitly permits a party to apply without notice for orders that are "necessary for the purpose of preserving evidence or assets", this provision is most commonly invoked to obtain freezing injunctions from the court. Where an application has to be made on notice to the parties to the arbitration under any of the above-mentioned rules, you must make them a defendant in the court proceedings (see CPR 62.6(3)). If an application is required to be made on notice to the tribunal, a notice must be given to each arbitrator or (if the tribunal is not yet fully constituted) to each arbitrator that has been appointed (see section 80(3), AA 1996). It is not sufficient simply to give notice to the chairman of the tribunal. The method for giving notice to an arbitrator is, in most cases, to send a copy of the claim form and the written evidence which supports it (CPR 62.6(2)(a)). It should be noted that in certain application made to the court, the tribunal is given "notice" by making each of them a defendant in the court proceedings for applications for removal of arbitrator, order adjusting arbitrator's fees and expenses and order for delivery of award on payment of fees into court. ## Other relevant Parts of CPR: Some other provisions of particular relevance to arbitration claims and applications as found in the CPR are as follows: - Part 6 (service of documents); - Part 32 (evidence); - Part 58 (Commercial Court); - Part 59 (Circuit Commercial Court); and - Part 60 (Technology and Construction Court claims). Practice Direction 57AC sets out requirements relating to the use of trial witness statements in the Business and Property Courts. These requirements have direct application to arbitration claims and should be considered before witness evidence is taken or witness statements are prepared. ## Commencing an application for arbitration The basic rule is that arbitration claims must be issued in the High Court *Practice Direction 62.2.3 *states that court in which the claimant must issue the arbitration claim form. This could be the following specialist divisions of the Business and Property Courts of England and Wales or the Business and Property Courts of Birmingham, Bristol, Cardiff, Leeds or Manchester. An arbitration claim under the 1996 Act (other than under section 9) must be started in accordance with the High Court and County Courts (Allocation of Arbitration Proceedings) Order 1996 by the issue of an arbitration claim form. Form N8 - the Arbitration Claim form (or an application substantially in the form set out in Appendix A to practice direction 62), may be used to start proceedings and to make an application in ongoing proceedings. Where proceedings have already commenced, the requirement for acknowledgement of service form ceases to apply and any references to an acknowledgement of service form may be deleted. If you are applying for a stay of proceedings under S 9 of the AA 1996, then your application is being made in an existing court proceedings. You must issue an application notice in those proceedings, using Form N244, and *see CPR 62.3(2)*. In the Commercial Court, use the slightly modified application notice N244 (CC). ## Evidence in support of your claim/application to arbitration You are entitled to rely on the facts set out in your claim form as evidence if they are verified by a statement of truth (see CPR 8.5(7)). However, it is generally more convenient to set out the evidence you wish to rely on in an accompanying witness statement (for example, evidence that you have complied with statutory requirements). If possible, the claim form should be issued and any necessary evidence in support of the application should be provided before the judge hears your application. However, in very urgent cases time available might not allow for this, in which case the judge will usually require you to issue your claim form immediately after the hearing. Your evidence in support of your application should state your intention to issue proceedings. ## Case Management Practice Direction 62 sets out the case management directions which apply to arbitration claims unless the court orders otherwise, see CPR 62.7. There is no allocation questionnaire, and all arbitration claims are allocated to the multi-track (CPR 62.7(1)-(2)). ## Applications to the court The court acts with discretion to extend or vary any automatic directions and as such, any applications for time extensions should be made post haste, by issuing an application notice supported by evidence. On the other hand, in case of an arbitration claim or application made to the Commercial Court, you are entitled to make minor procedural applications concerned with case management by way of correspondence, rather than incurring the expense of issuing an application notice. ## Hearings You should (as a Claimant) apply for a hearing date as soon as possible after issuing the claim form or, in the case of an appeal against an award, obtaining permission to appeal, see paragraph O6.3 of the Commercial Court Guide. In some cases, the court may decide issues without a hearing, for instance decisions on whether the requirements of S 32(2)(b) or S 45(2)(b) of the AA 1996 are satisfied are often taken without a hearing (see PD 62.7). Applications for permission to appeal against an arbitration award are also decided without a hearing.  The court will generally deal with applications for time-extension S 70(3) of the AA 1996 without a hearing. If an extension is granted, the defendant must file his or her written evidence within 21 days of the order extending time, see PD 62.7, paragraph 10.2. ## Judgements As general principle in relation to the publication of judgments following a private hearing of an arbitration claim: - The starting point in relation to a hearing is not determinative, and there is a clear distinction to be maintained between considerations governing a hearing and those governing the resulting judgment; - The judgment should be given in public; - The desirability of a public judgment is particularly present where a judgment involves points of law or practice which may offer future guidance to lawyers or where the judgment concerns a claim under S 68 of the Arbitration Act 1996 (AA 1996) largely because of the public interest engaged in such cases of maintaining appropriate standards of fairness in the conduct of arbitrations. ## Orders In practice, orders are generally drawn up by the parties and not the court under the rules given in the Civil Procedure Rules and relevant Practice Directions (CPR 58.15(1), CPR 59.12, CPR 60.7 and PD 59.11.1) ## Costs The usual rule which also applies to legal proceedings brought before the UK courts, applies to arbitration claims when assessing costs as well; at the conclusion of a claim the unsuccessful party is ordered to pay the successful party's costs (CPR 44.2(2)(a)). The court may make a different order (CPR 44.2(2)(b)), but only where the needs of justice and the circumstances of the case require it. Where the hearing lasts for less than one day, the court may assess costs summarily. Ensure that you have prepared a schedule of costs and are prepared to deal with this. For further guidance, you can contact our London Alternative Dispute Resolution (ADR) Solicitors and Barristers who provide bespoke ADR and litigation advice. We invite you to reach out to us so a member of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. ## City Of London Expert Commercial Arbitration Lawyers Our [London Alternative Dispute Resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london) (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help. **To [contact us](https://lexlaw.co.uk/contact-us/) about your case please call us on: 02071830529** --- # Court of Appeal: Context is King When it comes to Contractual Good Faith Duties Source: https://lexlaw.co.uk/solicitors-london/the-court-of-appeal-confirms-that-context-is-king-when-it-comes-to-contractual-duties-of-good-faith/ *The Court of Appeal case of [Re Compound Photonics Group Ltd; Faulkner v Vollin Holdings Ltd [2022] EWCA Civ 1371](https://www.bailii.org/ew/cases/EWCA/Civ/2022/1371.html), in the context of an unfair prejudice petition filed according to Section.994 of the Companies Act of 2006, the Court of Appeal has clarified the meaning of the contractual responsibility of good faith. The decision offers crucial clarification regarding the scope and construction of contractual provisions obliging the parties to act in good faith is under appeal from a ruling that majority shareholders of a company engaged in unfairly prejudicial conduct by ousting two directors with minority interests.* You will be assisted throughout every phase of your case process by our [specialist litigation team](https://lexlaw.co.uk/our-people/). Whether you are an individual seeking legal counsel or you have hired solicitors and want a second opinion on your course of action. ## History between Compound Photonics Group Limited and the Claimants A group of minority shareholders in Compound Photonics Group Limited brought a claim against the majority shareholders, alleging that they had been unfairly prejudiced by the decisions of majority shareholders in forcing the CEO to resign and removing the chair of the company from office. Both were among minority shareholder claimants The claimants' status as directors were not expressly stated in the Company's articles or the shareholders' agreement. Instead, the claimants cited the shareholder agreement's express obligation of good faith which stated: “Each Shareholder undertakes to the other Shareholders and the Company that it will at all times act in good faith in all dealings with the other Shareholders and with the Company in relation to the matters contained in this Agreement.” The claimants argued that this clause required the majority shareholders to abide by the inherent "bargain" outlined in the SHA and the Company's articles, which stated that the CEO and chair of the company should be indefinitely appointed as directors and that the majority shareholders should not have the final say in how the Company will conduct business. On the other hand, the majority shareholders contended that by behaving honestly and within the bounds of business reason, they had complied with the good faith requirement. ## What was the High Court’s View? In Faulkner v. Vollin Holdings Ltd [2021] EWHC 787(Ch). The High Court determined that the dismissal of the CEO and the Chair as directors had violated the contractual good faith commitment and adversely harmed the minority shareholders. The High Court followed Unwin v. Bond [2020] EWHC 1768 (Comm) in interpreting the good faith clause and came to the following minimum criteria for parties who are subject to a duty of good faith: They must act honestly, refrain from abusing their authority, deal fairly and openly with the other party, and have regard for both that party's interests as well as their own. The trial judge referred to this as "fidelity to the bargain." They must also act honestly and faithfully to the parties' agreed-upon common purpose as derived from their agreement. The trial court described the parties' agreement as a "constitutional settlement" in which the CEO and Chair would hold the balance of power as the board of directors' essential members, free from shareholder oversight in the company's operation. The clauses of the shareholder agreement and articles that did not directly address the matter but, in the judge's opinion, anticipated that the CEO and Chair would continue to hold directorships served as the foundation for this decision. Therefore, by removing the CEO and Chair from their roles, the majority shareholders had broken their contractual obligation of good faith by being unfaithful to the agreement. The majority shareholder defendants filed an appeal with the Court of Appeal. ## What did the Court of Appeal decide? The Court of Appeal allowed the appeal after finding that the judge had interpreted the good faith requirement too broadly. In his opening remarks, Snowden LJ addressed the English case law since Yam Seng as well as its antecedents in Australian and North American case law. The Court of Appeal reversed the judgement of the High Court, finding that the defendants had not violated the shareholder agreement’s good faith provision and had not unfairly harmed the minority shareholders. The lead decision was made by Snowden LJ, and Newey LJ and Carr LJ concurred. The Court of Appeal emphasised that the language in a contract demanding good faith behaviour by a party may only be understood in light of the context in which it appears. Such provisions cannot be constructed in a generic manner, and authorities looking at clauses comparable to them in other legal or commercial contexts should be cautious. The High Court's conclusion that any good faith clause must be interpreted to require compliance with the basic requirements outlined in Unwin was rejected by Snowden LJ, who accepted that a duty of good faith must, at the very least, have the core meaning of a need to act honestly. The ruling is likely to have far-reaching implications for the viability of claims based on express or implicit duties of good faith. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in [litigation](https://lexlaw.co.uk/practice-areas/) and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of[ alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Crypto Exchange Held to be a Constructive Trustee for its Users Source: https://lexlaw.co.uk/solicitors-london/crypto-exchange-held-to-be-a-constructive-trustee-for-its-users/ *The recent decision in **Jones v Persons Unknown **[2022] EWHC 2543 (Comm) has elated users of Crypto Exchanges operating in the UK as the Court held that the defendant Crypto Exchange should be taken as a constructive trustee in relation to the Wallet holders.* You will be assisted throughout every phase of your case process by our [specialist litigation team](https://lexlaw.co.uk/our-people/). Whether you are an individual seeking legal counsel or you have hired solicitors and want a second opinion on your course of action. ## Rising cases of Cyber Fraud The claimant was a victim of cyber fraud which has become a rising problem in the UK. The National Office of Statistics has reported that NFIB fraud increased by 17% in the year ending March 2022 compared with the year ending March 2021. The claimant had filed for a summary judgement against the crypto exchange controlling the wallet in which his stolen bitcoin was transferred into, operating it as a fraudulent crypto-investment company registered in Seychelles. ## Is Cryptocurrency an asset? The Court stated that Cryptocurrency was recognised as property under the English Common Law after (including *AA v Persons Unknown *[2019] EWHC 3556 (Comm) which was considered quite extensively). The claimant was able to prove that he was the owner of the property in the bitcoin obtained by fraud and as such was traceable in equity and hence was liable to be enforced on the exchange by a constructive trust. ## Can the UK courts enforce order against a Crypto-exchange In the past, the UK courts have issued freezing orders in respect of digital assets such as NFTs, Cryptocurrencies, and other crypto-assets which had been fraudulently acquired or misappropriated through misuse of computers. The problem arises in enforcement of these orders on assets stored on block-chains and the victim has been restricted to enforcement through such exchanges. ## How can we help you? The honest folk of the working class have been duped into investing in crypto assets by fraudsters on the pretext of earning a quick buck only to find that their hard earned monies have been funnelled into untraceable wallets, the anonymity and Decentralised –Finance aspects have proved to be more beneficial to cyber fraudsters rather than actual users/ investors. The crypto landscape is still largely unregulated, however, our experienced team at [Lexlaw](https://lexlaw.co.uk/) has kept itself abreast with the latest changes in the Crypto-landscape to provide our clients with the best possible advice and representation in order to help them get their hard-earned money back. As most of such fraudulent investment companies and exchanges are registered overseas, a victim, such as yourself, may find it quite onerous and almost impossible to identify the fraudster let alone retrieve their lost monies.[ Our Barristers and Solicitors](https://lexlaw.co.uk/our-people/) have decades of experience in dealing with fraudsters to get the victims the help that they need. If you have fallen prey to cyber fraud, please do not hesitate to contact us, so we can provide you with the best possible advice and help that you may need. --- # Judgement Embargo Breach: High Court Initiates Contempt Proceedings Source: https://lexlaw.co.uk/solicitors-london/contempt-proceedings-to-be-initiated-due-to-breaches-of-embargo-on-draft-judgement/ In the case [Wright v McCormack [2022] EWHC 3343 (KB)](https://caselaw.nationalarchives.gov.uk/ewhc/kb/2022/3343/data.pdf), the High Court has taken it upon themselves to begin contempt proceedings against certain individuals who may have revealed the content of a judgment while it was still under embargo. When a court is set to release a judgment, they typically provide a copy to the parties involved and their legal representatives a few days beforehand, but this copy is given on the condition that it is kept confidential until the official release of the judgment. Lately, courts have become concerned about the increase in violations of this embargo, and in the case of R (on the application of Counsel General for Wales) v Secretary of State for Business, Energy and Industrial Strategy [2022] EWCA Civ 181, it was made clear that those who break the embargo in the future could face contempt proceedings. This situation emphasizes the importance of being careful about any communication that could be perceived as relating to a draft judgment before it is officially released, even if the case and judgment are not explicitly mentioned. You will be assisted throughout every phase of your case process by our [specialist litigation team](https://lexlaw.co.uk/our-people/). Whether you are an individual seeking legal counsel or you have hired solicitors and want a second opinion on your course of action. ## History between Wright & McCormack Dr. Wright brought a libel case against Mr. McCormack, alleging that Mr. McCormack's statements that Dr. Wright was not the inventor of Bitcoin and that his claims to be the inventor were fraudulent had damaged Dr Wright's reputation. At trial, the court found that some of Mr McCormack's statements were defamatory and caused serious harm to Dr Wright's reputation. However, Mr. McCormack initially claimed that his statements were true, but later abandoned that defence due to the cost of a trial on the issue. In a typical case, the claimant (Dr Wright) would be entitled to significant damages, but in this case, the judge awarded Dr. Wright only nominal damages of £1 because the judge believed that Dr. Wright had advanced a deliberately false case until shortly before the trial, and then changed his story, claiming that the errors were unintentional. The judge did not find this explanation to be truthful. ## The Embargo On July 26, 2022, Chamberlain J provided a draft of the judgment in a libel case to counsel under embargo, meaning that it was given to them in confidence and was not to be made public until its official release on August 1, 2022 at 12:00 PM. The usual terms of the embargo stated that the draft was to be kept confidential by the parties and their legal representatives and could not be disclosed to or used by anyone else. The parties were required to take all reasonable steps to maintain the confidentiality of the draft and were not allowed to take any external action in response to it before the official release of the judgment. Breaking these terms could be considered contempt of court. ## Slack Posts On the evening of July 26, 2022, Dr Wright made three posts on the "#bitcoin-general" channel of a Slack workspace called MetaNet. Slack is a communication platform used for business purposes that allows users to create "workspaces" and have conversations on particular topics within "channels" dedicated to those topics. The MetaNet workspace was created by a company that promotes education in the Bitcoin Satoshi Vision industry, and Dr Wright and his business partner promote this product. The "#bitcoin-general" channel has 290 members. Dr Wright's posts read: "If a person would spend 4 million to receive a dollar plus and 2 million costs...So the other side is bankrupt...What would you think? (edited)," "Ie. The only thing that matters is crushing other side," and "Well. I would spend 4 million to make an enemy pay 1." Dr Wright claimed that these posts were meant to stimulate discussion among the members of the Slack channel and demonstrate his determined attitude towards his opponents, and he stated that he did not remember telling the members of the channel about the practice of providing parties with a draft judgment before it is made public and did not think that this practice would be widely known to them. ## Emails Dr Wright was sent an email by a member of his legal team on July 28th, which contained a summary of the judgment as a reply to an email about other litigation. He replied to the email, copying in 5 other people who were not allowed to know the details of the judgment. Dr Wright claimed that he was unaware that there was a summary of the judgment at the end of the email chain when he included the others. ## What did the High Court Decide? Judge Chamberlain decided that contempt proceedings should be initiated against Dr Wright on the court's own accord and scheduled to be heard by another judge for further instructions and a hearing. The court was not satisfied with Dr. Wright's explanation that the purpose of his Slack posts was simply to "promote debate" and not reveal the outcome of the draft judgment, as there was a possibility that a court might determine that by posting those messages, Dr. Wright intended to disclose the substance of the judgment in violation of the embargo, which he had been informed about. The court considered three factors in coming to this conclusion: - Dr. Wright's estimated costs were almost 4 million pounds, so anyone closely involved in the litigation would likely be aware of it; - The case had received significant attention from those interested in cryptocurrency; - The 290 members of the Slack channel were all individuals with an interest in cryptocurrency and specifically BSV, and anyone with basic knowledge of how High Court litigation operates would know that parties are typically provided with an embargoed copy of the judgment prior to it being issued, regardless of whether Dr. Wright had informed them of this. The email Dr. Wright forwarded to other recipients may also be considered a breach of the embargo and potentially an additional contempt of court, depending on the court's understanding of Dr. Wright's intentions when he sent it. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in [litigation](https://lexlaw.co.uk/practice-areas/) and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Defending a HMRC Security Notice of Requirement Source: https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/ As a result of UK [tax law](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/795523/HMRC_Policy_and_Legal_Framework_11-03-19.pdf), HMRC can require a taxable person to give an amount of monies to be deposited as security against tax (such as unpaid PAYE, NIC or VAT) which has or will become due in the future. HMRC does this by sending a [Notice of Requirement to give Security (NORS)](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100). The Notice of Requirement is the formal written notice to a person informing them of the monies owed to HMRC as direct or indirect tax which has not been paid or in some cases may be due in the future and there is a risk that it will not be paid then. In such cases, HMRC requires a taxable person to pay a security deposit by a date specified in the security notice. The security notice can be issued if HMRC has reasonable grounds to believe that a company or person may not pay their future tax liabilities, for example, if they have a history of non-payment or have committed tax fraud in the past. The notice requires the recipient to provide security, such as a cash deposit or a guarantee from a bank or other financial institution, to cover potential future tax liabilities. ## HMRC Enforcement & CPS Prosecution If the recipient fails to provide the requested security, HMRC can take enforcement action against them, such as seizing their assets or taking legal action to recover the outstanding tax. HMRC can also instruct the Crown Prosecution Service (CPS) to commence a Prosecution over a strict liability offence which results in a criminal record for Directors and a fine of up to £20,000 for each taxable supply made without giving the security. The recipient can appeal against the imposition of a Security Notice, which is where legal representation is sensibly required to challenge HMRC's decision (which can otherwise lead to prosecution). The CPS will charge a director or company or other recipient of an unpaid security notice for non-payment when requested to do so by HMRC. The typical criminal charges that the HMRC will bring before the Magistrates Court are: > [NAME] on [DATE] at [LOCATION] having been required by an officer of Revenue and Customs, failed to give security in respect of 'Pay As You Earn' under a Notice of Requirement dated [DATE] for the payment of amounts for which you were accountable to HM Revenue and Customs in accordance with Part 4A of the Income Tax (Pay As You Earn) Regulations 2003. Contrary to section 684(4A) Income Tax (Earnings and Pensions) Act 2003. (IT03001) > > > CPS SECURITY NOTICE - PAYE CHARGES > [NAME] on [DATE] at [LOCATION] having been required by an officer of Revenue and Customs, failed to give security, or further security in respect of National Insurance Contributions, for the payment of amounts for which you were accountable to HM Revenue and Customs in accordance with Part 3B of Schedule 4 of the Social Security (Contributions) Regulations 2001 Contrary to section 684(4A) Income Tax (Earnings and Pensions) Act 2003. (IT03001) > > > CPS SECURITY NOTICE - NICS CHARGES Our tax team made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) can assist by providing you with a bespoke tax solution to your tax dispute. We can guide you through the complex NORs process. We have experience in negotiating with HMRC to drop Security Notices and of managing appeals against their decisions at all levels (including the leading appeal before the Upper-Tier Tax Tribunal). Members of the team include qualified [Tax Solicitors](https://taxdisputes.co.uk/tax-solicitors/) and [Tax Barristers](https://taxdisputes.co.uk/tax-barristers/) whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience. ## Who can be sent a notice of requirement by HMRC? A Notice of Requirement to give security can be issued to any qualifying taxable person as defined by the law. A taxable person has been defined in the *[VAT Act, 1994](https://www.legislation.gov.uk/ukpga/1994/23/contents)*; as any person or business that is registered or is required to be registered for Value-Added Tax (VAT) under the law. This means that you may be sent a Notice of Requirement to give security either in your individual capacity or as a director of the company under your control. ## Why does HMRC send a notice of requirement? HMRC officers after investigating the case only send [a notice of requirement](https://www.legislation.gov.uk/uksi/2012/822/part/3/made/data.xht?view=snippet&wrap=true) to a person if it is reasonable to hold the apprehension that: - The person in control of the business has a history of non-compliance with tax obligations in their previous business or, they have failed to comply with their Tax obligations in relation to their current business. - If there is a reason to believe that they might fail to comply with their Tax obligations. In usual circumstances, HMRC officers first send a letter of warning to the person which informs them that security may be required and the reasons for such security. However, if they believe that a prior warning letter will elevate the risk of non-compliance, HMRC may send or give a notice of requirement to give security directly, without having sent a letter of warning. ## How is security under the notice of requirement calculated? HMRC when calculating the security deposit required for a future revenue risk considers the latest returns on file with HMRC and the risk in 3 months (for quarterly returns). Please see the below example; *Example - Quarterly filer* VAT returns     Net tax due      Outcome 05/10   £10,000           - 08/10   £15,000           - Total    £25,000           6 months’ tax month (for monthly returns). The amount of security required if the person makes quarterly returns is [£25,000](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg32200) before HMRC officers add any debt that you may have accrued. HMRC must always allow a person who makes quarterly returns to pay the lower amount of security and make monthly returns - £25,000 x 4 = £16,667 = 4 months’ tax, which is significantly lower. If the person’s most recent returns are not indicative of their usual trading pattern they may use older returns in your calculation. It should be noted that HMRC must be able to defend their calculation at tribunal if the [person appeals](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg70200). ![Expert legal review of HMRC Security Notice: Navigating tax compliance and risk assessment](https://lexlaw.co.uk/wp-content/uploads/vat-paye-nic-hmrc-security-notice-LEXLAW-SOLICITORS-BARRISTERS-LONDON-UK-LITIGATION-TAX-1024x559.png) ## What are the consequences of receiving a notice of requirement? The consequences of receiving a notice of requirement carry the same theme of penalising the taxable person by a way of fine but the fines may vary by their categories. [PAYE](https://www.gov.uk/paye-for-employers#:~:text=PAYE%20is%20HM%20Revenue%20and,you%20must%20keep%20payroll%20records.) is HMRC system to collect Income Tax and National Insurance from employment & Class 1 National Insurance contributions (paid by the employer) on benefits and expenses to their employees and qualifies them for other state benefits; it is a criminal offence not to give the security in full. In this instance, HMRC can take you to Court and they may fine you up to £5,000. For [VAT](https://www.gov.uk/browse/tax/vat), Landfill Tax, Aggregates Levy, Insurance Premium Tax & Climate Change Levy; It is a criminal offence not to give the security in full. HMRC can take you to Court and they may fine you up to £5,000 for each taxable supply made. In case of an NOR sent for [Machine Games Duty](https://www.gov.uk/machine-game-duty), HMRC have the ability to take away your registration and if you are not yet registered anyone in a business contract with you may become liable to pay your duty If you have received a notice of requirement and you continue to make taxable supplies without giving the security in full, you may be prosecuted. In the event of a successful prosecution, you may have to pay a fine of up to [£20,000](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/#:~:text=If%20you%20have%20received%20a,make%20without%20giving%20the%20security.) for each taxable supply you make without giving the security. This means that time is of the essence and you must act now to seek legal advice. *Our [Taxation practice](http://taxdisputes.co.uk/) is at the core of the firm.* *Got a dispute with HMRC?* *Our tax team is made up of specialist [tax lawyers](http://taxdisputes.co.uk/expert-advice/) who can assist you to resolve your tax dispute. Our ex-HMRC lawyers will guide you on complex tax legislation to get you the best possible result.* ## Phoenix Company Security Notices? Notice of security requirement may also be sent to a business suspected of being a ‘Phoenix company’. This means that a company is simply a new company rising from the ashes of the old one; which could be the case where the new business is essentially connected to the previous business by being under control of the same individuals who have failed to meet their tax obligations in the past. If the notice is ignored, HMRC has the right to fine and prevent the supply of taxable goods until the security is paid. ## Can I challenge or appeal a notice of requirement? The notice of requirement (NOR) will also advise you of your right to appeal. The person has 31 days from the date the notice was given to appeal. You must appeal to the HMRC, in writing, specifying clearly the grounds of appeal for the decision. Once the appeal is submitted, the decision making officer of HMRC may continue to have further discussions with you to try to resolve the dispute. Agreement may be reached as a result of these discussions and the appeal settled. Alternatively, you could also ask the decision to be [reviewed, and/or, ask for the appeal to be heard by the tribunal](https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2010). ## How can I pay the security under the notice of requirement? HMRC only accepts the following forms of security: - an electronic payment to a specified HM Revenue and Customs (HMRC) bank account - a cheque or banker’s draft - a guarantee in the form of a performance bond authorised and approved by a financial institution HMRC does not, under any circumstances accept property or items such as high value motor vehicles or boats as security. ## Security Notice Solicitors Advice We have years of experience [negotiating with HMRC](http://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/) and handling tax appeals at the [Tax Tribunals](http://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) and in the High Court dealing with contentious tax disputes. We also work extensively with Accountants, Tax Investigation practices and former HMRC Officers to ensure your matter is handled correctly. We have a dedicated team of [barristers and solicitors defending HMRC Security Notices](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/) including representation at the Magistrates Courts and at the First-tier and Upper-tier Tax Tribunals. The depth of our combined capabilities allows us to represent clients in a variety of situations, whether advising private or corporate clients during tax audits, pursuing administrative appeals, or litigating tax matters at the Tax Tribunal, Court or in tax appeals. Clients hire us because of our [extensive experience in all areas](http://taxdisputes.co.uk/success/), and especially because of our litigation experience – when necessary, we know when to go to the Tax Tribunal and we know how to litigate. ## Case Law on Security Notices ### Boship Lions Farm Hotel Ltd & Ors v Revenue & Customs [2018] UKFTT 411 (TC) The case considered the appeal against the Notice of Requirement to give security against the appellants PAYEand NIC liabilities. At the time the decision to issue the notices of requirement to give security was taken Sheikh Abid Gulzar t/a Albany Lions Hotel owed £47,626.49 PAYE and NIC as well as having a VAT liability of £16,582.74, Sheikh Abid Gulzar t/a Boship Lions Hotel owed £79,825.08 PAYE and NIC and Lions Hotels Ltd had become insolvent on 13 January 2017 with a PAYE and NIC debt of £260,013.05. The notices were issued on 1 March 2017 and were sent by post to the registered office and the principal places of business of the three companies.  Notices were also issued to Mr Gulzar, the director and 100% shareholder of the companies, in his personal capacity, under Reg 97P(1) of the Income Tax (Pay As You Earn) Regulations 2003, as set out below.  Other businesses in the ownership or under the control or influence of Mr Gulzar also owed monies to HMRC. A review of the decisions to give a notice of security requirement was requested by Mr Gulzar on 30 March 2017, although no further information was provided by him at that time.  HMRC sought further clarification of the reasons for requesting a review on 12 May 2017 and Mr Gulzar replied saying that he had problems in his previous businesses due to issues with his bank and that although there had been problems in the past all the debts had eventually been paid.  He did not therefore consider that the new businesses represented a risk to HMRC. The Tribunal however, considering the previous history of the businesses concerned, and the previous history of the director, Mr Gulzar, was satisfied that the decision which HMRC took that the giving of security was necessary in these cases was not unreasonable. The appellant’s application was therefore dismissed.  ### UBI Ltd v Revenue & Customs (INCOME TAX/CORPORATION TAX: [2018] UKFTT 620 (TC) (17 October 2018) This appeal was made against a Notice of Requirement, that the Appellant provide security to the Respondents in respect of its liability to PAYE and NICs. The issue to consider before the Tribunal was whether it was reasonable of the Respondents to consider it necessary for the protection of the Revenue to require the Appellant to provide security.  The security sought was: £43,667.90 in respect of PAYE, and £67,496.68 in respect of NICs. The appellant had to persuade the Tribunal that the decision to require security was, at the time it was taken, either a decision which no reasonable decision-maker could have reached or that it was flawed in the sense that irrelevant matters were taken into account or relevant matters were not taken into account. The outcome was that the Appellant failed to satisfy the tribunal that the Respondents’ decision to require security contained an error of law or was so unreasonable that no commissioners, properly directed, could have reached those decisions. ## HMRC Security Notice Solicitors We have a proven track record of successfully defending our clients against [Notices of Security from HM Revenue and Customs (HMRC)](https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100) and can challenge these notices by submitting written representations against their imposition. Our legal team is highly experienced and knowledgeable in every aspect of the HMRC appeal process, including defending against Crown Prosecution Service ([CPS](https://www.cps.gov.uk/)) prosecutions. We have firsthand experience dealing with HMRC at all levels, including the [First-Tier](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax) and [Upper-Tier Tax Tribunals](https://www.gov.uk/courts-tribunals/upper-tribunal-tax-and-chancery-chamber), as well as the [Magistrates Court](https://www.gov.uk/courts), with appeals to the Crown Court. We possess a thorough understanding of the legal process pertaining to Security Notices. ### Check Your Litigation Case ✔ We analyse your case prospects. We deliver strategic legal advice at your first fixed fee meeting. We get optimal legal results. Want our opinion on your case? Click below or call our lawyers in London on [☎ 02071830529](tel:+442071830529) [Check My Case ✔](https://lexlaw.co.uk/legal-case-assessment/) We provide the highest quality legal representation in negotiating with HMRC, defending against allegations in tax enquiries, tax fraud investigations, criminal tax evasion cases or similar investigations, including those pertaining to the imposition of a Security and CPS prosecutions for failure to pay such Security Notices. We base our defence on grounds of reasonableness or ongoing Tax Tribunal appeals, and can often make appeals out of time. **HMRC SECURITY NOTICES - ACT PROMPTLY ** There is a limited time to respond to a HMRC Security Notice once it has been served which may be as short as 30 days from the date on the Notice letter. The options for defending against the criminal sanctions for non-compliance become more limited thereafter. You should take therefore obtain specific legal advice on your circumstances quickly. --- # When will the Solicitors’ Equitable Lien be Waived? Source: https://lexlaw.co.uk/solicitors-london/when-will-solicitors-have-waived-or-be-presumed-to-have-waived-their-equitable-lien/ In Supreme Court case of *[Candey Ltd v Crumpler and another (as Joint Liquidators of Peak Hotels and Resorts Ltd (In Liquidation))[2022] UKSC 35](https://www.supremecourt.uk/cases/docs/uksc-2020-0039-judgment.pdf) *the question in issue was that under what circumstances will solicitors have waived (or be inferred to have waived) their equitable lien when a solicitor enters into a security arrangement with a client? Peak Hotels & Resorts Ltd. ("**PHRL**"), a business founded in 2014 in the British Virgin Islands ("**BVI**"), hired the appellant to serve as its attorney. In significant litigation in England and other countries, the appellant represented PHRL. The BVI court appointed the Respondents to serve as joint liquidators for PHRL after it was wound up in insolvency proceedings there. The Appellant claimed that PHRL owed it unpaid legal expenses, and this led to a dispute between the Appellant and Respondents concerning this claim. Some of the Appellant's legal fees were ordered to be paid by the Respondents. You will be assisted throughout every phase of your case process by our [specialist litigation team](https://lexlaw.co.uk/our-people/). Whether you are an individual seeking legal counsel or you have hired solicitors and want a second opinion on your course of action. ## History between Candey & PHRL Between April 2014 and March 2016, Candey Ltd ("**Candey**") served as counsel for PHRL in connection with international litigation and other matters. One such case was an action in the London High Court (“**The London Litigation**”). On October 21, 2015, Candey and PHRL signed a fixed fee agreement ("**FFA**") in which Candey promised to continue representing PHRL in exchange for a set amount ("**Fixed Fee**").  Payment of the Fixed Fee was postponed until a liability ruling was rendered or the London Litigation was settled. PHRL started the insolvency procedure, or PHRL received money. On the same day as the FFA, a deed of charge (the "Deed of Charge") was signed, granting a floating charge (a type of security) over the assets of PHRL. On February 8, 2016, the British Virgin Islands ("BVI") declared PHRL to be under liquidation. The BVI court designated the Respondents (the "Liquidators") as the PHRL's liquidators. As soon as the Fixed Fee became due, Candey lodged a proof of debt. PHRL settled the London litigation just before trial, and on March 3, 2016, Candey was no longer instructed by the liquidators. The "**Settlement Proceeds**" are the total amount of funds that PHRL received as part of the settlement. Candey asserted an equitable lien over any funds collected or preserved during the London Litigation, arguing that its overdue fees should be paid ahead to those due to other creditors in PHRL's liquidation. This lien is a type of security that develops via the operation of equity for the payment of solicitors' fees for the proper management of a lawsuit out of the money the client recovers or saves during that lawsuit (or its settlement). In addition, Candey asserted that under section 73 of the Solicitors Act of 1974 (the "**1974 Act**"), the lien should be changed to a charge over that sum of money. The deputy judge determined that, Candey had relinquished its right to an equitable lien by revising its retainer agreement and accepting more security for its payments in October 2015. On this issue, the Court of Appeal concurred with the deputy judge.  Candey appealed to the Supreme Court. ## What did the Supreme Court decide? The Supreme Court dismissed the appeal with unanimous approval. Lord Reed, Lord Briggs, Lord Hamblen, and Lord Stephens agreed with Lord Kitchin's decision. ## Reasons for the Decision Whether an equitable lien held by a solicitor has been waived depends on the parties' intentions. The key question is whether it can be assumed that the parties intended for the lien to be eliminated. Given all the facts, the aim must be evaluated objectively. How far the new security is inconsistent with the lien will be a crucial issue in cases when solicitors take additional security. Another important consideration is whether the clients were informed that the solicitors were reserving their rights to an equitable lien, taking into account the professional connection between the solicitors and their clients. The authorities show that it is likely reasonable to assume that a lien has been released if solicitors take additional security that conflicts with the lien and fail to specify that the lien is being kept. This is especially true when the solicitors acquire new security over the same piece of real estate to which the lien would apply. When these principles are applied to the particular situation, the FFA and the Deed of Charge create a package of rights and obligations as well as new security arrangements that are incompatible with the equitable lien. This is due to two factors. First, the Deed of Charge creates a new security interest that covers the same property as an equitable lien would (being the Settlement Proceeds). Despite the fact that other property is covered by the Deed of Charge, this is the case. Second, unlike an equitable lien, which would come first, the FFA and the Deed of Charge expressly grant priority to one of PHRL's backers in the case of insolvency. This results in a different set of priorities. However, an equitable lien is not in conflict with the FFA's provisions for generating and securing interest on the Fixed Fee. The client seeking independent legal counsel does not relieve the solicitors' professional need to give specific notification if they intend to keep an equitable lien when the new security conflicts with the lien. Therefore, the court's judgement is unaffected by Candey's requirement that PHRL obtain independent legal counsel about the FFA and the Deed of Charge. The FFA and the Deed of Charge make no explicit or implied claims that Candey reserved its lien, and conversations between Candey and PHRL provide no more support for this claim. Since the parties to the FFA and the Deed of Charge agreed to relinquish Candey's equitable lien, the Court of Appeal was correct to reach that conclusion. Therefore, **the appeal was dismissed**. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in [litigation](https://lexlaw.co.uk/practice-areas/) and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Limitation Period for Payment of Services Source: https://lexlaw.co.uk/solicitors-london/understanding-limitation-period-for-payment-of-debt-regarding-services/ *A recent Court of Appeal case, [Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia) [2022] EWCA Civ 1699](https://lexlaw.co.uk/wp-content/uploads/Consulting-Concepts-International-Inc-v-Consumer-Protection-Association-Saudi-Arabia-2022-EWCA-Civ-1699.pdf), has highlighted the importance of understanding when time begins to run for limitation purposes in claims for [payment of a debt](https://windinguppetitionsolicitors.co.uk/business-commercial-debt-recovery-unpaid-overdue-invoices-bills-legal-action-uk-advice/) in respect of the provision of services. The Court ruled that time starts to run from the date the work was done, rather than from the contractually agreed deadline for payment. This means that time may start to run for limitation purposes as soon as the relevant services are provided and not merely when an invoice is issued or payment is due*. *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## When does the Right to Payment Arise? This case serves as a reminder for service providers to ensure that their contract terms are clear as to when the right to payment arises and when time begins to run for limitation purposes. It is important for service providers to keep in mind that if there is any doubt as to when they need to bring a claim for payment, they should assume that the clock started as soon as the work was done. ## What did the Court of Appeal Decide? In the case, the claimants (“**CCI**”) and the defendant (“**CPA**”) entered into an agreement for CCI to provide services to CPA for asthma research. The agreement provided that all invoices submitted by CCI were to be paid within 90 days by CPA. However, when CCI sought payment for multiple invoices, CPA argued that the claim was time-barred as it was issued more than six years after the work was done. The Court of Appeal agreed with CPA and upheld the order, striking out the claim. ## Download the Judgement Here [![](https://lexlaw.co.uk/wp-content/uploads/Consulting-Concepts-International-Inc-v-Consumer-Protection-Association-Saudi-Arabia-2022-EWCA-Civ-1699-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Consulting-Concepts-International-Inc-v-Consumer-Protection-Association-Saudi-Arabia-2022-EWCA-Civ-1699.pdf) ## What should the Service Providers do? The case provides insight for service providers to understand the limitation period for claims and ensure that their contract terms are clear about when the right to payment arises. It is critical for service providers to review their contracts and ensure they are aware of when the limitation period starts to run, in order to avoid any potential claims being time-barred. ## Instructing our Litigation Lawyers ​It is best to instruct solicitors in the early stages of a dispute. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # A Guide to Fixed Rate / Bridging Loan Unfair Relationship Claims Source: https://lexlaw.co.uk/solicitors-london/guide-unfair-relationship-claims-fixed-rate-bridging-business-loans/ *What aspects of a loan agreement may be unfair? The unfair relationships provisions of the Consumer Credit Act 1974 (ss 140A to 140D), apply to lending agreements whenever made. Borrowers are increasingly bringing unfair relationship claims before the County Courts of England & Wales often resulting in multi-million pound confidential lender settlements. The Court has a wide discretion to alter unfair agreements to make them fair. If successful, such claims can result in the lender repaying parts of the loan, compensating the borrower, or being ordered to vary the terms of the loan agreement.* The claims that we are litigating often involve [repayment of multi-million pound swaps break costs risks](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/) that were routinely and unfairly passed on to the customer under the loan agreement, by major UK banks and building societies. ## What is an Unfair Relationship Claim? Under Section 140A of the Consumer Credit Act 1974, an unfair relationship claim refers to a situation where a consumer (borrower) alleges that the relationship between themselves and their lender has become unfair. The section outlines the circumstances under which a court may determine that a relationship is unfair, including if the lender has taken advantage of the borrower's lack of understanding or experience, if the lender's conduct was oppressive, if the lender has used an excessive rate of interest, or if the terms of the agreement were so onerous that they left the borrower with no reasonable chance of paying back the debt. In such cases, the court may declare that the relationship is unfair, and the lender may be required to take specific actions to remedy the situation, such as reducing the interest rate, waiving charges, or returning the borrower's property that was taken as security for the debt. It is important to note that a successful claim under Section 140A requires the borrower to demonstrate that the lender's actions were both unfair and that the relationship between the lender and the borrower has become unfair as a result. Our experienced team can provide guidance and assistance in whether you can pursue an unfair relationship claim under the Consumer Credit Act 1974. ## What is an Oppressive Loan Agreement? An oppressive loan agreement is one where the loan terms are not balanced and put the borrower in a disadvantageous position. This can include high-interest rates, short loan terms, or unsuitable security arrangements. To be considered oppressive, the loan must also have caused the borrower undue hardship. ## What is Undue Hardship? Undue hardship refers to the impact of the loan agreement on the borrower. For a loan agreement to be considered oppressive, the borrower must demonstrate that the loan caused them undue hardship. This may include financial difficulties, loss of business, or loss of property. The court will assess the unique circumstances of each case when determining if the loan caused undue hardship. ## Examples of Potentially Unfair Terms: Interest rates being excessive is the most common pleaded unfair term especially when it comes to default rates of interest and the effect of compounding. However, any term can be scrutinised for potential unfairness. For instance, we have taken [legal action against several major UK lenders for imposing massive break costs liabilities for financial derivatives (swaps) onto borrowers without fully disclosing the risks](https://lexlaw.co.uk/individuals-mis-sold-fixed-rate-loans-with-swap-break-costs/) involved. The borrowers may have thought these costs would only amount to a few thousand pounds, but in reality, they could reach several million or more depending on the underlying derivative, which the borrower may not understand but the lender is aware of and has attached to the borrower's internal credit profile. When determining if a term in a lending agreement is unfair, it is crucial to consider if the term is widely used and if it serves a valid commercial purpose. It is also essential to examine whether the term protects the reasonable interest of the creditor, and if it favours the creditor over the debtor. Factors such as the lending value, the borrower's commercial experience, and their bargaining power should also be taken into account. Other considerations include any pressure put on the borrower by the creditor, their prior lending experience, access to professional advice, the borrower's education and background known to the lender, and any objections the borrower raised about the terms. ## Case Study: Pontearso v Greenlands Trading (2008) In this case, the lender brought a repossession claim under a short term unregulated second charge bridging loan that contained a monthly interest rate of 1.45%, increasing to 3% on default together with a Default Administration Fee of £1,995. The claimant argued the loan agreement included a high rate of interest and unreasonable charges. He argued that the lender had taken advantage of his financial difficulties and lack of understanding of loan terms to impose oppressive terms on him. The court declared the relationship between Mr. Pontearso and Greenlands Trading to be unfair under Section 140A of the Consumer Credit Act 1974, and ordered the lender to reduce return some of the charges. This case highlights the importance of carefully reviewing loan terms before entering into an agreement, and the ways in which a court may declare a relationship to be unfair if the lender takes advantage of the borrower's financial difficulties or lack of understanding, particularly with regards to default rates of interest and default administration fees. ## Case Study: Pilgrim Rock v Iwaniuk (2011) In this case, the claimant, Pilgrim Rock, took assignment of a loan agreement between Brooke Investments and Mr. Iwaniuk with regards to a £1.2m JV property renovation deal. The loan agreement included several unreasonable terms, including a high rate of interest and oppressive charges. The loan was repayable after 4 years and carried a rate of interest of 6% per annum up to the end of the term and a default rate of interest of 9%. Interest was compounded quarterly. When repayment was demanded 4 years after maturity, £2.74m was claimed by Pilgrim. The borrower argued that the lender had taken advantage of their lack of experience and understanding of loan terms to impose unfair terms on them. The court declared the relationship between Pilgrim Rock and Mr. Iwaniuk to be unfair under Section 140A of the Consumer Credit Act 1974, particularly due to the cost of compound interest and lack of action by the lender allowing the debt to increase. The court exercised its wide discretion and ordered the lender to waive some of the charges by reducing the rate of interest to 1.25% per annum over Bank of England base rate compounding annually. This case demonstrates that the acts and omissions of third parties can be relevant matters in respect of which which a court may declare a relationship to be unfair if the borrower's rights are violated under the Consumer Credit Act 1974. ## Case Study: Thomas Nelmes v NRAM Plc (2016) This was a case involving a consumer (Mr. Nelmes) who owned a residential property portfolio and took out a loan from Northern Rock Asset Management Plc (NRAM). Mr Nelmes refinanced with NRAM in 2007 and entered into loan and security arrangements. In 2013, NRAM sought to enforce security over the portfolio and Mr Nelmes brought a case alleging the relationship was unfair under s.140A of the Consumer Credit Act (CCA). Nelmes claimed the relationship was unfair based on contract terms, NRAM's exercise of rights, and other things done by or on behalf of NRAM. The Court rejected all but one of Nelmes' allegations, finding that the terms were standard for this type of product and Nelmes was experienced in the buy-to-let field. However, the Court found that two instances of unfairness existed: NRAM's appointment of receivers was precipitous, but Nelmes failed to make any payment proposals, so the unfairness did not lead to relief; and, the undisclosed procurement fee paid to the broker by the lender, breaching the broker's duty of undivided loyalty to Nelmes, made the relationship unfair. The Court ordered the secret commission plus interest be returned to Nelmes to rectify the unfairness. ## What Happens if Your Unfair Relationship Claim is Successful? If your unfair relationship claim is successful, the court may order the lender to repay all or part of the loan, compensate you, or change the terms of the loan agreement. The specific outcome will depend on the facts of your case and the circumstances surrounding the loan. It's crucial to note that unfair relationship claims in tailored business loans are complex and a specialised area of law. Before making a claim, it's advisable to seek legal advice to increase your chances of success. In summary, unfair relationship claims offer a crucial legal remedy for borrowers feeling that their loan agreement is unbalanced and puts them at a disadvantage. With the help of legal advice, a successful claim can result in the lender being ordered to remedy the unfairness thereby compensating the borrower. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in unfair relationship claims. Our high profile and high value cases regularly appear in the national and international media and our team have successfully managed and settled litigation against all major UK banks. --- # Court Judgment Highlights Rules Regarding Claim Form Service Source: https://lexlaw.co.uk/solicitors-london/court-judgment-highlights-rules-regarding-claim-form-service/ *The case of Dr Markus Boettcher v (Xio (UK) LLP & Ors [2023] EWHC 801 (Comm) (05 April 2023) recently had an interim judgment decided by the Commercial Court. The case involves allegations of fraudulent misrepresentation made to the claimant, Dr. Boettcher, by a private equity firm called XIO (UK) LLP (in liquidation) and others as a result of which Dr. Boettcher claimed to suffer substantial loss. Service and forum issues were recently decided by the Commercial Court highlighting the importance of complying with the Civil Procedure Rules (CPR) when serving a Claim form to initiate proceedings.* Are you thinking about bringing a claim against a person or a company? If so, get in touch with our [expert litigation team](https://lexlaw.co.uk/our-people/) to assist you in complying with all relevant rules and regulations from the very start of your claim. Our lawyers specialise in litigation and alternative dispute resolution. We will guide you through any stage in your litigation or settlement process whether you are a litigant in person seeking legal advice or you have instructed solicitors and are seeking a second opinion on strategy. ## Service Issues Highlighted in the Judgment One of the issues that arose in this case was whether the Claim form had been properly served on the defendants. The CPR provides detailed rules on how the Claim form must be served on the defendant in order to properly initiate legal proceedings. Complying with all relevant Civil Procedure Rules can be an overwhelming task for many, which is why assistance of expert solicitors is recommended. In this case, the claimant had initially attempted to serve the Claim form on the defendants by email, but the defendants argued that the email had not been received. The claimant subsequently served the Claim form by post, but the defendants argued that the Claim form had been improperly served because it had been sent to an old address where he no longer resided. One of the most important rules in the CPR is the rule on service of the Claim form, which are set out in CPR Part 7.  Service of the claim form is a critical component of the legal process in the UK as it is essential for ensuring that the defendant has proper notice of the legal proceedings and an opportunity to defend themselves. The court ultimately found that the Claim form had been properly served on the defendants and that the claimant had complied with the relevant CPR rules 6.5. ## What Should I Consider When Effecting Service on the Defendant’s Usual/ Last Known Address If you are bringing a claim against a defendant & are uncertain about their correct address, you need to consider the following: - Is there an alternative address where you could serve the Claim Form? - Is there an alternative method which you could use to effect service? - If you are unable to find an alternative address or method, you may serve on the defendant’s last known or usual residence. Additionally, you should consider all evidence available before to ascertain the defendant’s usual/last known address. It could be that the defendant has multiple addresses in which they reside from time to time, any of these could be sufficient for purposes of effecting service. However, you should bear in mind that you cannot use an address for service of the claim form where the defendant has never resided as an exercise of reasonable diligence is expected by the courts and honest/reasonable belief would not be sufficient if the defendant never resided at your chosen address. You may require professional services of expert solicitors to assist you with effecting service of the claim form as ascertaining the right address may be more daunting than it appears. ## What Rules Should I Follow For Service of Claim Form? If you are considering starting a legal claim, it is important to know the CPR rules on service of the Claim form. Here is a summary of the key points: The Claim form must be served on the defendant within four months of the date it is issued by the court, as set out in CPR 7.5. Failure to serve the Claim form within this time can result in your claim being dismissed. The CPR provides for different methods of service that can be used, such as personal service, first-class post, or email, as outlined in CPR 6.7. The method of service will depend on the circumstances of your case. You must ensure that the defendant receives the Claim form. If the defendant is a company, you should serve the Claim form on its registered office. If the defendant is an individual, you should serve the Claim form on their home address or their solicitor's address (if they have one), as stated in CPR 6.9. If you are serving the Claim form by post, you should use recorded delivery or another form of tracked delivery to ensure that you can prove that the defendant received it. If you are having difficulty serving the Claim form, you can apply to the court for an order allowing you to serve it by an alternative method, such as by email or by publication in a newspaper. This is provided for in CPR 6.8 or you could apply to the court to dispense with service under CPR rule 6.9. In summary, knowing the CPR rules on service of the Claim form is important if you are considering starting a legal claim. By following these rules, you can ensure that your claim is properly served on the defendant and can proceed through the court system. ## How can we help you? Our expert solicitors can be of great assistance in ensuring compliance with the Civil Procedure Rules (CPR) for service of a claim form as this could make all the difference in the outcome of your case. Our Team can help you get the results you want in several ways, including: - Advising on the CPR requirements: The solicitor can provide guidance on the CPR rules and advise on the specific requirements for serving the claim form, including the applicable time limits, methods of service, and documentation required. - Identifying the appropriate method of service: The solicitor can assist in selecting the most appropriate method of service for the particular case, based on factors such as the location of the defendant, the urgency of the matter, and the value of the claim - Preparing the necessary documents: The solicitor can help in preparing the necessary documents for service, including the claim form, particulars of claim, and any other relevant documents required by the CPR. - Ensuring compliance with deadlines: The solicitor can monitor the deadlines for service of the claim form and take appropriate action to ensure compliance. This can include setting reminders, tracking delivery, and making follow-up calls. - Dealing with any disputes or challenges: If there are any disputes or challenges regarding the service of the claim form, the solicitor can provide advice and representation to resolve the matter. This can involve making applications to the court for alternative service methods, such as by email or social media, or challenging any objections raised by the defendant. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in [litigation](https://lexlaw.co.uk/practice-areas/) and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Success: Director Win against Manolete’s Additional Sales Insolvency Claim Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-successfully-defends-849k-additional-sales-claim-evidential-burden-in-insolvency-claims/ *The judgment in [Manolete Partners Plc v Dalal [2023] EWCA Civ 269](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Dalal2023-EWCA-Civ-269.pdf) is a significant authority on the evidential threshold required in director misfeasance and additional sales receipt claims, especially where the claim is based on [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) assessments and business economics exercises. For directors facing similar claims, this ruling demonstrates the importance of robustly contesting the factual basis of liquidator and funder-driven claims, as detailed in our [legal guide to defending Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). * *The case, funded by Manolete Partners, highlights the difficulties in proving unreported sales where company records are incomplete and HMRC’s methodology is open to challenge. The judgment also provides guidance on the application of the civil standard of proof in insolvency litigation, reinforcing principles from the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) and recent case law on directors’ duties and misfeasance actions. * *For further context on directors’ duties and [insolvency claims](https://lexlaw.co.uk/solicitors-london/tag/insolvency/), see our [directors’ duties claims resource ](https://lexlaw.co.uk/solicitors-london/category/directors-duties/)and our analysis of [winding-up petition defences](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/).* We are the leading UK firm defending directors against Manolete Partners’ claims due to our [expertise in insolvency litigation](https://windinguppetitionsolicitors.co.uk/post-insolvency-claims-against-directors/) and [strategic defence](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/) tactics. Our dual-qualified and experienced solicitors & barristers, based near London's Royal Courts of Justice, [specialise in countering Manolete’s aggressive pursuit](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) of transactions-at-undervalue claims e.g. by challenging evidence validity, leveraging limitation periods, and demonstrating good faith per the Insolvency Act 1986. We have a track record of [protecting directors’ assets](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/), including family homes, while navigating complex financial and regulatory risks. Our insolvency law focus and experience with litigation funders ensures tailored, robust defence in high-stakes claims. [Get in touch about your Director's Duties case](https://lexlaw.co.uk/legal-case-assessment/). ## Manolete Partners Plc v Dalal The claim arose from the insolvency of a poultry processing company, with Manolete Partners taking assignment of the liquidator’s cause of action against Mr Ebrahim Dalal, the company’s former director. The liquidator, relying on [HMRC’s tax assessments](https://taxdisputes.co.uk/2024/02/hmrcs-assessment-powers/#:~:text=the%20assessment) and a Business Economics Exercise (BEE), alleged that the company had systematically underreported sales between incorporation and 30 September 2014, resulting in an alleged shortfall of £849,278 in turnover and £61,249 in gross profit. The claim was that these missing receipts were explained by withdrawals from Mr Dalal’s director’s loan account. Mr Dalal, aged 84 and residing in India, gave evidence via interpreter, explaining his limited English literacy and reliance on accountants for company filings. The company’s record-keeping was acknowledged to be imperfect, with both HMRC and independent accountants noting deficiencies. However, the physical company records for much of the relevant period had been destroyed by HMRC, and the trial bundle contained only a small sample of sales documents. The High Court, and subsequently the Court of Appeal, were tasked with determining whether the evidence-largely reconstructed from HMRC’s BEE and a handful of invoices-was sufficient to prove, on the balance of probabilities, that there had been significant unreported sales justifying recovery from Mr. Dalal. ## Court’s Findings in Manolete Partners Plc v Dalal ### Evidential Burden and Assessment The Court of Appeal emphasised that the civil standard of proof requires the claimant to show that their case is more likely than not, applying a rational and objective assessment of all evidence. Lord Justice Arnold noted: “The judge accepted that the Company’s record keeping had been less than perfect, and that it was therefore possible that sales had been underdeclared. He went on to make findings based on the evidence that was available” (para 22). The judge’s approach was to analyse available data, including quantities of chickens slaughtered, sale prices, and wastage, to estimate total sales for 2009 at around £2.6 million-slightly less than reported in the accounts (para 23). The court rejected Manolete’s argument that even a 1% discrepancy would prove additional sales, describing this as “obviously wrong” (para 24). The evidence was “very thin” and the sampling of invoices represented only 0.25% of sales, limiting reliability (para 21). The judge’s conclusion that Manolete had not proved additional sales was therefore upheld. ### Director’s Reliance on Accountants Mr Dalal’s evidence that he relied on professional accountants for tax and record-keeping was accepted as plausible and consistent with the realities of company management (para 20). There was no suggestion of deliberate concealment or failure to disclose relevant documents. ### Record-Keeping Deficiencies While acknowledging poor record-keeping, the court held that this alone did not establish misappropriation or additional sales receipts (para 22). The claim failed on the strength of the evidence, not merely on documentary gaps. ## Critique of HMRC’s Methodology The judge was particularly critical of the reliance on a small sample of invoices: > *“If HMRC's method 2 was the only evidence as to average selling price, he would have regarded it as too unreliable to base any conclusions on. It was based on a sample of 0.25% of the Company's sales in that year, which could not be taken to be a reliable method for determining the average sale price.” (para 170)* Instead, the judge used the “best evidence available”-a larger sample of invoices from later years-but still found the discrepancy between estimated and reported sales (12%) was within the margin of error and insufficient to justify a finding of unreported sales. ## Implications of Manolete Partners Plc v Dalal This case is a landmark for directors facing claims funded by Manolete or other litigation funders, particularly where the claim is constructed on reconstructed accounts or HMRC assessments rather than primary evidence. The courts have made clear that: - Technical deficiencies in record-keeping, while problematic, do not automatically translate into liability for unreported sales unless the evidence is cogent and the discrepancy is significant. - The burden remains on claimants (liquidators or their assignees) to prove their case on the balance of probabilities, with courts unwilling to infer wrongdoing from weak or speculative evidence. - The decision confirms that courts will scrutinise the methodology behind HMRC assessments and will not simply accept their conclusions if based on small or unrepresentative samples. - For directors, especially those with limited involvement in company administration or language barriers, the courts will consider the practicalities of their role and reliance on professional advisers. - The judgment provides a robust precedent for resisting claims where the evidence is “thin” or where the margin of error in reconstructed accounts is substantial. For more detailed guidance on defending such claims, see our [legal guide to defending Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). ## Download The Judgment here: [![](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Dalal2023-EWCA-Civ-269.png)](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Dalal2023-EWCA-Civ-269.pdf) ## Defending Manolete Director Claims Directors facing claims from liquidators or Manolete Partners should take a strategic, evidence-led approach. Early forensic review of the claimant’s methodology is vital-challenging the reliability of reconstructed sales figures and the representativeness of any sample used. Where company records are incomplete, directors should document the reasons (e.g., reliance on accountants, records lost or destroyed) and seek to obtain alternative evidence (such as customer or supplier records) to corroborate reported figures. Expert forensic accountants can be instrumental in exposing flaws in the claimant’s calculations, particularly where HMRC’s methods are based on assumptions or limited data. Directors should also ensure that any allegations regarding director’s loan accounts or personal withdrawals are properly contextualized and supported by contemporaneous evidence. Engaging [experienced insolvency dispute solicitors ](https://lexlaw.co.uk/contact-us/)early can help manage disclosure obligations and avoid adverse inferences. As demonstrated in this case, courts will not penalize directors solely for imperfect record-keeping if the claimant cannot prove its case to the required standard. For further tactical advice, o[ur team](https://lexlaw.co.uk/our-people/) can assist with robust, evidence-based defences to Manolete-funded claims. ## Expert Legal Representation against Claims Brought By Manolete Partners [Our expert team](https://lexlaw.co.uk/our-people/m-ali-akram/) is highly [experienced](https://lexlaw.co.uk/legal-case-assessment/) in defending claims brought by litigation funders such as [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874). With a deep understanding of the complex nature of litigation funding, we offer strategic, robust legal support to protect your interests. [Our solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) have a proven track record of successfully challenging claims in insolvency and other contentious matters, providing you with tailored solutions to navigate the pressures and complexities of litigation. Whether you are facing legal action from Manolete or another litigation funder, we will work closely with you to develop a strong defence and achieve the best possible outcome for your case. ### FAQs on Director's Duties and Insolvency Claims **Can a director be liable for unreported sales if company records are incomplete?** Not automatically. As shown in [Manolete Partners Plc v Dalal](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Dalal2023-EWCA-Civ-269.pdf), the claimant must still prove, on the balance of probabilities, that sales were actually unreported, not merely that records were deficient. Courts require cogent evidence, not speculation. **What is the burden of proof in director misfeasance or additional sales claims?** The claimant must prove its case on the civil balance of probabilities. The court will only decide on the burden of proof where the evidence is so unsatisfactory that no other conclusion is possible, as explained in *[Re A (Children) ](https://www.casemine.com/judgement/uk/5b5b0b842c94e01f9ebe66d9)*and applied in this case. **Does reliance on accountants protect directors from liability?** It can be a significant factor. The court accepted Mr Dalal’s evidence that he relied on his accountant due to language barriers and lack of administrative expertise, finding this plausible and relevant to the assessment of his conduct. For more on director reliance defences, see [our directors’ duties resource](https://lexlaw.co.uk/solicitors-london/category/directors-duties/). **Can Manolete pursue claims based solely on HMRC assessments?** They can, but as this case demonstrates, such claims may fail if the underlying evidence is weak or the methodology is flawed. Directors should instruct solicitors familiar with [defending Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) to challenge the evidential basis robustly. **Are directors personally at risk for company tax understatements?** Only if it can be shown that they deliberately or negligently caused the understatement and personally benefited. The evidential burden remains with the claimant, as discussed in our [tax disputes insolvency guide](https://lexlaw.co.uk/solicitors-london/category/tax-law/). **How does Manolete’s funding model affect settlement negotiations?** Manolete’s commercial approach may lead to aggressive settlement tactics, but as this case shows, weak claims can be successfully defended if the evidence is challenged effectively. For negotiation strategies, see our [guide to defending Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). Why is this case significant for insolvency law? This case clarifies the evidential standards required to prove director liability, particularly where claims depend on economic modelling and partial records. It reinforces the courts’ insistence on robust, reliable evidence and proper application of the civil standard of proof. --- # Recovering the Costs of Civil Litigation Source: https://lexlaw.co.uk/solicitors-london/recovering-the-costs-of-civil-litigation/ The recent case of *[Coram v D R Dunthorn & Son Ltd](https://www.lawgazette.co.uk/news/court-disallows-25000-claimed-for-instructing-leading-counsel/5116181.article)* [2023] EWHC 731 ([SCCO](https://www.gov.uk/courts-tribunals/senior-courts-costs-office)) exemplifies the challenges and limits faced by winning party litigants seeking to recover substantial costs from the losing / paying party after judgment. In this case, Deputy Costs Judge Joseph determined that the costs incurred for engaging leading counsel to attend a three-day trial were not recoverable from the defendant who was responsible for payment. The case had settled before reaching trial, resulting in the brief fee being reduced. When evaluating whether the decision to engage leading counsel was reasonable and proportionate, the judge found it to be unreasonable. The primary contributing factor to this conclusion was the absence of any explanation for the perceived necessity of leading counsel in a case with a maximum value of £115,000 (which settled for £75,000). *[Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy.* ## Significance of Costs in Civil Litigation Costs play a pivotal role in civil litigation. Costs refers to the legal fees and court costs and other expenses incurred by litigants throughout the legal process. Having a comprehensive understanding of cost implications is crucial for any party involved in the litigation process. Failing to consider the range of costs outcome aspects can have significant consequences for the overall outcome of a case. [For example a Part 36 offer can place significant costs pressure on a litigation opponent.](https://lexlaw.co.uk/solicitors-london/the-importance-of-making-a-strategic-part-36-offer/) If you feel that your costs position is not being adequately explained in your litigation we offer a fixed fee conference for a second opinion on your litigation matter: ## Case Study: Costs Recovery in a £115k Claim In *[Coram v D R Dunthorn & Son Ltd [2023] EWHC 731 (SCCO)](https://lexlaw.co.uk/wp-content/uploads/Coram-v-D-R-Dunthorn-Son-Ltd-2023-EWHC-731-SCCO.pdf)* (a £115,000 claim), the winning litigant encountered difficulties in recovering the costs they suffered associated with instructing leading counsel. The court ruled that the litigant could not deploy unlimited resources to fight the case and expect to recover those costs from the opposing party. This decision serves as a stark reminder of the limitations imposed on litigants seeking to recover substantial costs. The Claimant's mother had died from mesothelioma related to asbestos exposure while washing her husband's overalls. The lawsuit was settled for £75,000 before reaching trial . As the costs were below £75,000, the bill underwent a provisional assessment. The defendant argued that engaging Leading Counsel was unnecessary and that the fees charged by counsel were excessive. The claimant, in this case, had sought to instruct leading counsel to present their claim before the court. However, the court emphasised that while litigants have the right to choose their own legal representation, the recoverable costs incurred must be proportionate and reasonable in relation to the complexity and value of the claim. In this instance, the court deemed that the costs associated with engaging leading counsel were excessive and could not be recovered from the defendant paying party. The judge ruled that the claimant failed to demonstrate the reasonableness and proportionality of instructing leading counsel. ## Costs Danger of Deploying Unlimited Resources It is crucial for litigants to recognise that deploying unlimited financial resources in a legal dispute does not automatically guarantee either success and certainly not full costs recovery. Courts apply the principle of proportionality to ensure that costs incurred are reasonable and necessary. Excessive or disproportionate spending on legal representation and other expenses may not be recoverable. This principle prevents litigants from deploying unlimited resources to gain an advantage and promotes a level playing field. ## Understanding Recoverable and Non-recoverable Costs To effectively manage costs, it is vital to distinguish between recoverable and non-recoverable expenses. Recoverable costs typically include solicitor's fees, court fees, expert witness fees, and certain other disbursements directly related to the litigation process. These costs must usually be reasonable and proportionate. Non-recoverable costs may encompass expenses that the court deems excessive, unreasonable, disproportionate or not directly linked to the litigation process. Understanding these distinctions is critical to avoid unnecessary financial burdens during the course of litigation. ## Standard Costs vs Indemnity Costs Standard costs and indemnity costs are two different types of costs that can be awarded by a court in legal proceedings. In England and Wales, the distinction between standard costs and indemnity costs is governed by the Civil Procedure Rules (CPR). Standard costs, as outlined in CPR Part 44, represent the reasonable and proportionate costs that a successful party can recover. These costs are typically assessed based on a predetermined scale or guideline, taking into consideration factors such as the complexity and value of the case. [Indemnity costs, as specified in CPR Part 44.3, are awarded in exceptional circumstances.](https://lexlaw.co.uk/indemnity-costs-versus-standard-costs-guide-litigation-court-cpr-44-assessment-unreasonable-conduct-legal-advice/) These circumstances may include cases where the [losing party has acted unreasonably, improperly,](https://lexlaw.co.uk/solicitors-london/indemnity-costs-losing-party-unreasonable-conduct-proportionality-reasonable-standard-assessment-court-order-legal-advice/) or has made a significant offer of settlement that was unreasonably refused. Indemnity costs, which are generally higher than standard costs, aim to provide full compensation to the successful party for their legal expenses. It is important to note that the court has discretion in determining whether to award standard costs or indemnity costs based on the particular facts and circumstances of each case, as outlined in CPR Part 44.2. In summary, standard costs are the usual measure of costs awarded to the successful party, while indemnity costs are exceptional and tend to punish some misconduct - they generally result in a higher costs award in specific circumstances (e.g. where the losing party's behaviour warrants it). ## Strategies for Managing Costs in Civil Litigation Strategic cost management is key for litigants aiming to mitigate financial risks. Here are some essential strategies to consider: **Early cost assessment: **Conduct a comprehensive analysis of potential costs at the outset of a case. This evaluation enables the development of a realistic budget and cost management plan. **Alternative dispute resolution (ADR): **Explore alternative methods such as mediation or arbitration, which can be more cost-effective and time-efficient than traditional litigation. [In fact a refusal to engage in mediation can result in a costs penalty such as costs being awarded on the indemnity basis for the litigant that refuses in this form of ADR.](https://lexlaw.co.uk/solicitors-london/high-court-costs-penalty-for-failure-to-resolve-issues-with-adr-mediation-second-opinion-advice/) **Budgeting and cost control:** Implement a robust budgeting system that includes regular monitoring and control mechanisms. This approach promotes transparency and helps prevent unnecessary expenditure. **Expert advice: **Seek guidance from experienced litigation cost lawyers such as ourselves as we can offer valuable insights into cost-saving measures and negotiation strategies. ## Download Coram v Dunthorn Judgement: [![](https://lexlaw.co.uk/wp-content/uploads/Extracted-pages-from-Coram-v-D-R-Dunthorn-Son-Ltd-2023-EWHC-731-SCCO-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Coram-v-D-R-Dunthorn-Son-Ltd-2023-EWHC-731-SCCO.pdf) ## Instructing our Litigation Lawyers ​It is best to instruct solicitors in the early stages of a dispute. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Using Unless Orders to force payment of Unpaid Costs Orders Source: https://lexlaw.co.uk/solicitors-london/using-unless-orders-to-force-payment-of-unpaid-costs-orders/ In English civil litigation, parties involved in legal disputes may be awarded costs by the court. The costs are intended to cover the expenses incurred during some part of the legal proceedings, such as legal fees, court fees, and other related costs. Ensuring that the awarded costs are promptly and fully paid can sometimes be challenging. To address this issue, the court be asked to issue an Unless Order in respect of outstanding costs order(s). Unless Orders are judicial directives that come into effect when a party fails to comply with a previous court order. Specifically, in the context of outstanding costs orders, Unless Orders are employed to ensure the liable party fulfils their financial obligations within a specified timeframe. These orders serve as a mechanism to encourage compliance and guarantee costs payment for the successful party. If the paying party fails to meet the payment requirements outlined in the Unless Order, severe consequences may follow, for example striking out of a pleading such as a defence. ## What are Costs Orders? When a court makes a costs order, it typically requires the losing party to pay a portion or all of the legal costs incurred by the winning party. These costs may include legal fees, court fees, expert witness fees, and other expenses reasonably incurred in pursuing or defending a case. Costs orders are governed by the Civil Procedure Rules (CPR) in the UK. The court has broad discretion in making cost orders, taking into account various factors, including: - **Conduct of the parties: **The court may consider whether any party has behaved unreasonably, caused unnecessary costs, or failed to comply with court directions or protocols. - **Success of the parties:** The court may assess the overall success of each party's claims or defence when determining cost orders. The party who substantially succeeds in their case is more likely to be awarded costs. - **Offers to settle: **If one party makes a settlement offer, and the other party rejects it but fails to achieve a better outcome at trial, the court may penalize the rejecting party by making a cost order against them. - **Proportionality: **The court will consider whether the costs incurred by the winning party are proportionate to the issues in dispute and the overall value of the case. ## The Court's Wide Discretion on Costs It's important to note that costs orders are usually but not always made in favour of the winning party. The Court has a wide discretion on costs including the discretion to make different types of cost orders, such as: - **Standard Costs order: **The losing party pays the reasonable and proportionate costs of the winning party. - **[Indemnity Costs order](https://lexlaw.co.uk/solicitors-london/indemnity-costs-in-litigation/#:~:text=Indemnity%20costs%3A%20Paying%20for%20unreasonable,the%20winner%20than%20is%20standard.):** The losing party pays the reasonable costs of the winning party. Usually higher than the standard order. Indemnity orders are often made when one party has acted unreasonably or conducted the litigation improperly. - **Costs in a fixed sum: **In certain cases, the court may set a fixed amount that the losing party must pay as costs. It's essential to consult the Civil Procedure Rules and seek legal advice specific to your case to understand the detailed provisions and considerations regarding cost orders in the UK. ## Costs Order Case Study A: Michael Wilson & Partners Ltd v Sinclair In the case of [Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (QB)](https://lexlaw.co.uk/wp-content/uploads/Michael-Wilson-Partners-Ltd-v-Sinclair-2017-EWHC-2424-QB.pdf), the court examined the implications of non-payment of outstanding costs orders and the enforcement mechanisms available to ensure compliance. This case is highly relevant to our discussion on Unless Orders in respect of outstanding costs orders. In this case, Michael Wilson & Partners Ltd (the claimant) had been awarded costs by the court, but the defendant, Mr. Sinclair, failed to make the required payment within the specified timeframe. As a result, the claimant sought the enforcement of the outstanding costs order through an Unless Order. The court recognised the importance of prompt and full compliance with costs orders and emphasised that failure to honour financial obligations could have severe consequences. In response to the defendant's non-payment, the court issued an Unless Order, warning that if the outstanding costs were not paid by a specific date, the defendant's defence would be struck out. The court stressed the seriousness of the matter and the need for parties to adhere to their financial obligations. The case of *Michael Wilson & Partners Ltd v Sinclair* illustrates the practical application of Unless Orders as a mechanism to enforce compliance with outstanding costs orders. It serves as a significant precedent, underscoring the court's commitment to ensuring fair compensation and the potential repercussions for non-compliance. This case emphasises the gravity of non-payment and the potential sanctions that can follow, such as striking out the defence; this demonstrates the seriousness with which the courts approach outstanding costs orders and the use of Unless Orders to secure compliance. The case serves as a reminder to individuals and businesses involved in legal disputes that prompt and full payment of outstanding costs is crucial. ## Costs Order Case Study B: Northern Powerhouse Developments Ltd & Ors V Woodhouse The recent case of [Northern Powerhouse Developments Ltd & Ors v Woodhouse [2023] EWHC 1331 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Northern-Powerhouse-Developments-Ltd-Ors-v-Woodhouse.pdf) further reinforces the relevance of Unless Orders in respect of outstanding costs orders. In this case, Northern Powerhouse Developments Ltd (the claimant) sought the enforcement of outstanding costs orders against Mr. Woodhouse (the defendant) for his failure to comply with the payment obligations. The court recognised the importance of prompt payment and the serious consequences of non-compliance with costs orders. To address the defendant's non-payment, the court issued an Unless Order, which warned that unless the outstanding costs were paid within a specified timeframe, the defendant's defence would be struck out. This Unless Order served as a powerful tool forcing the defendant to fulfil his court-ordered financial payment obligations promptly. The case of *Northern Powerhouse Developments Ltd & Ors v Woodhouse* highlights the practical application of Unless Orders as a means to enforce compliance with outstanding costs orders. ## Legal Representation to Enforce Costs Orders Our experienced team of lawyers can provide you with the guidance and support necessary to navigate litigation matters effectively. We will ensure that your rights are protected, and we will employ strategic approaches, drawing insights from our decades of experience, to help you secure the optimal litigation outcome. Our team will provide you with comprehensive guidance on outstanding costs orders, explaining the legal implications and the potential consequences of non-compliance. We will help you navigate the intricacies of Unless Orders and develop strategies to protect your rights and secure the compensation you deserve. We have extensive experience in negotiating with opposing parties to facilitate the prompt payment of outstanding costs. If negotiation proves unsuccessful, we are prepared to take decisive enforcement actions, leveraging our expertise in asset tracing, garnishment, and charging orders to recover the awarded costs on your behalf. We understand that each case is unique, and we take a personalised approach to ensure your specific needs are met. Our team will work closely with you, explaining your options, formulating effective legal strategies, and advocating for your best interests throughout the process. --- # Glaser KC v Atay: Consumer Rights over Unfair Terms in Direct Access Counsel Contracts Source: https://lexlaw.co.uk/solicitors-london/consumer-rights-act-unfair-terms-glaser-v-atay/ *The [Consumer Rights Act 2015](https://lexlaw.co.uk/wp-content/uploads/Consumer-Rights-Act-2015.pdf) applies to legal services provided by directly by counsel to their clients. In a recent judgment, the engagement of barristers on a direct access basis was deemed to fall under the purview of the Consumer Rights Act 2015. The case affirms that if the Court perceives a term in an agreement between two individuals (in this case a legal [retainer](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/)) to be unfair it can refuse to enforce it (and even block equitable compensation).* [Our lawyers](https://lexlaw.co.uk/our-people/) specialise in [litigation](https://lexlaw.co.uk/practice-areas/) and [alternative dispute resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). We will guide you through any stage in your litigation or settlement process. Whether you are a litigant in person seeking [legal advice](https://lexlaw.co.uk/contact-us/) or you have instructed solicitors and are seeking a [second opinion](https://lexlaw.co.uk/time-to-get-a-second-opinion/) on strategy. ## What is the Consumer Rights Act 2015? The [Consumer Rights Act 2015](https://lexlaw.co.uk/wp-content/uploads/Consumer-Rights-Act-2015.pdf) sets out a framework that consolidates in one place key consumer rights covering contracts for goods, services, digital content and the law relating to unfair terms in consumer contracts. The Act mainly applies to consumer contracts for goods, digital content and services and unfair terms in agreements of a transactional nature. The case of [Glaser & Anor v Atay [2023] EWHC 2539 (KB)](https://lexlaw.co.uk/wp-content/uploads/Glaser-Anor-v-Atay-2023-EWHC-2539-KB.pdf) bears substantial importance in understanding the implications of the Consumer Rights Act 2015 within the legal framework of a contractual retainer dispute between barristers and their client. In this case, Ms. Katharine Jane Atay directly contracted the legal services of Mr. Michael Glaser KC and Ms. Victoria Miller, public access barristers at 14 Grays Inn Square chambers. She engaged their services in family law financial remedy proceedings against her former husband. The barristers both agreed to provide legal representation in a direct access arrangement and later sued Ms Atay for unpaid legal fees. ## What was the fee arrangement between Counsel and Client? The arrangement stipulated that Mr. Glaser's fees for preparing for an attending the pre-trial review hearing in July 2020 and the 10-day final hearing in September 2020 would amount to £108,000, including VAT. The fee was to be paid in four instalments, with the first two payments totaling £25,100 due before the pre-trial review, a bulk payment of £79,200 due on 31 August (three weeks before the trial), and the final instalment of £3,700 payable within 28 days of the final order. Any additional work would be charged at a rate of £500 per hour. A critical term of the agreement, referred to as the "payment term," specified that regardless of the trial's outcome, including if it concluded early, was adjourned to another date, or did not proceed for any reason beyond the barristers' control, the full fee would still be payable, and an additional fee would be payable for any adjourned hearing. The first two payments were made as scheduled. However, the husband successfully applied to adjourn the trial, and on 31 August 2020, Ms. Atay withdrew her instructions, dis-instructing the barristers. This action by Ms. Atay led to legal proceedings initiated by the barristers to recover the balance of their fees, amounting to £124,350, as well as unpaid fees under further, unspecified contracts reached on 25 August 2020. Ms. Atay argued that under the Consumer Rights Act 2015 the barristers were not entitled to their fees as the payment term of the agreement was unfair. She explained that, in the event of the trial not going ahead, the term was unfair as it had the effect of entitling the claimants to claim a very large sum of money for doing very little to nothing. At first instance, His Honour Judge Berkley ruled that the "payment term" violated the Consumer Rights Act 2015 but held that Ms. Atay should pay 70% of what would otherwise be the contractual sum due by way of [quantum meruit](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/) (an equitable remedy seeking to recover a reasonable sum in respect of services supplied equivalent to the amount deserved). As expected, Ms. Atay appealed this decision and it was presented before The Honourable Mr. Justice Turner. ## What is an Unfair Term in a contract? An [unfair term](https://assets.publishing.service.gov.uk/media/5a7c7f43ed915d48c241023b/oft311.pdf) in a contract is a provision that, when included in an agreement, significantly disadvantages one party, often to the benefit of the other. In the context of contract law in England and Wales, an unfair term in a contract, often referred to as an unfair contract term, is a provision within a contractual agreement that is deemed to be unjust or unreasonable because it significantly favours one party (typically the party drafting the contract) over the other party. These terms can create an imbalance of power and rights between the parties involved in the contract. Unfair contract terms can take various forms and may include provisions that: - **Lack transparency**: Terms that are hidden in the contract or written in complex language, making it difficult for the other party to understand their implications. - **Disproportionately benefit one party**: Terms that give one party excessive rights or benefits at the expense of the other party, without reasonable justification. - **Limit or exclude liability**: Clauses that attempt to exempt one party from liability for its own negligent or wrongful actions in a way that is unreasonable or unexpected. - **Impose penalties or excessive fees**: Terms that impose penalties or fees on one party for minor breaches of the contract, which are not a genuine reflection of the other party's losses. - **Are one-sided or unilateral**: Provisions that grant one party the authority to make unilateral changes to the contract terms, without the consent or input of the other party. - **Lack the opportunity for negotiation**: Terms that are presented on a "take it or leave it" basis, without allowing the other party to negotiate or make reasonable changes. In the legal system of England and Wales, unfair contract terms may be considered unenforceable or void. Courts and regulatory authorities may declare such terms null and void, or they may amend the contract to make it fair and balanced. It's important for parties entering into contracts in England and Wales to carefully review and understand the terms and conditions and seek legal advice if necessary to identify and address any unfair or potentially problematic terms before entering into an agreement. ## What was the High Court’s View? Mr. Justice Turner considered the appeal, focusing on the fairness of the "payment term" and its compliance with the Consumer Rights Act 2015. He addressed the following issues: - **Unfair Payment Term:** Turner J. concluded that the "payment term" created a significant imbalance in the rights and obligations of the parties under the contract. The financial risk of the trial not proceeding was entirely borne by Ms. Atay. Even if no work was performed, the barristers would still be entitled to their full fee. This term was considered unfair, as it allowed barristers to take on other remunerative work during the relevant period without reducing their liability to the client. Turner J. noted that it may be challenging for counsel to find work at short notice, but it is not impossible. The imbalance was clearly to the detriment of the consumer (Ms. Atay). - **Lack of Fair Dealing:** The terms of the agreement were found to be presented as a fait accompli, and Ms. Atay, as a lay client, was not separately legally advised. The risk of a trial being rendered ineffective was more familiar to lawyers than to lay clients. While the barristers may have considered Ms. Atay a demanding client, it did not redress the imbalance in the professional-client relationship. - **Ruling on Quantum Meruit:** Turner J. overturned HHJ Berkley's ruling on quantum meruit, as allowing it would disincentivise traders (barristers) from ensuring the fairness of their contracts. He noted that barristers could incorporate unfair terms with the hope that they would not be challenged, knowing that there would be a safety net providing for the payment of a reasonable sum if challenged. ## Download the Judgment Here [![](https://lexlaw.co.uk/wp-content/uploads/Glaser-Anor-v-Atay-2023-EWHC-2539-KB-Cover-page-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Glaser-Anor-v-Atay-2023-EWHC-2539-KB.pdf) ## Unfair Contract Terms and Application of the Consumer Rights Act The [Glaser v Atay case](https://lexlaw.co.uk/wp-content/uploads/Glaser-Anor-v-Atay-2023-EWHC-2539-KB.pdf) serves as a compelling illustration of the far-reaching influence of the Consumer Rights Act on contractual fairness. In this legal dispute, the two barristers initiated legal proceedings against their former client, seeking payment under a contract that included a contentious payment provision. The court found the term unfair, rendering it unenforceable, and overturned the previous quantum meruit ruling. The court's decision to declare this term unfair and unenforceable underscores the profound impact of the Consumer Rights Act in challenging unfair contractual terms. Unfair contract terms and the Consumer Rights Act are critical components of the legal framework in England. These provisions serve to protect consumers from unfair treatment in contracts and ensure that businesses engage in fair and transparent commercial practices. In this discussion, we will delve into the concept of unfair contract terms, explore their implications for consumers, and examine how the Consumer Rights Act 2015 reinforces these protections. ## Unfair Contract Terms: Unfair contract terms refer to clauses in a contract that create an imbalance in the rights and obligations of the parties involved, where one party, typically the business, gains a significant advantage at the expense of the other, the consumer. The Unfair Contract Terms Act 1977 (UCTA) and [the Consumer Rights Act 2015](https://lexlaw.co.uk/wp-content/uploads/Consumer-Rights-Act-2015.pdf) provide the legal framework for addressing such terms in the UK. Key provisions of the Unfair Contract Terms Act 1977 include: - **Exclusion Clauses**: Businesses cannot exclude or limit liability for death or personal injury caused by their negligence. This ensures that essential protections are in place for consumers in cases of serious harm. - **Reasonableness Test**: UCTA applies a reasonableness test to assess the fairness of contract terms. If a term is found to be unfair, it can be declared void. - **Notice and Transparency**: Contract terms that are written in small print or hidden within lengthy agreements may not be binding on the consumer. Transparency and clarity are essential to ensure consumers can fully understand the terms to which they are agreeing. ## Consumer Rights Act 2015: The [Consumer Rights Act 2015](https://lexlaw.co.uk/wp-content/uploads/Consumer-Rights-Act-2015.pdf) is a comprehensive piece of legislation that consolidates and enhances various aspects of consumer protection in England & Wales, including those related to unfair contract terms. The Act places significant emphasis on the rights of consumers when dealing with businesses and aims to simplify the law in this area. Key features of the [Consumer Rights Act 2015](https://lexlaw.co.uk/wp-content/uploads/Consumer-Rights-Act-2015.pdf) pertaining to unfair contract terms include: - **Unfair Terms**: This Act continues the protection against unfair terms, as outlined in the UCTA. It provides consumers with the right to challenge terms that are considered unfair or unclear. - **Implied Terms**: The Consumer Rights Act introduces new provisions regarding implied terms. It sets out certain terms that are automatically implied into consumer contracts, such as the requirement for goods to be of satisfactory quality and services to be performed with reasonable care and skill. - **Remedies and Compensation**: The Act grants consumers the right to remedies, including the right to request a repair, replacement, or refund, depending on the nature of the consumer's complaint. In cases of unfair terms, consumers may also be entitled to compensation for losses suffered. - **Transparency and Information**: The Act reinforces the importance of transparency and information provision by businesses to consumers. This includes the duty to provide clear and comprehensible terms and conditions before the consumer enters into a contract. In conclusion, unfair contract terms and the application of the Consumer Rights Act play a pivotal role in safeguarding the interests of consumers in England & Wales. These legal provisions work together to ensure that consumers are not subjected to unfair or exploitative contract terms, and they promote fairness and transparency in commercial dealings. Businesses are expected to comply with these regulations to protect consumer rights and maintain ethical business practices. ## Claims against Direct Access Counsel In the circumstances, any direct access barrister client who: - Is a consumer for the purposes of the Act - has fallen foul of such direct access fixed fee provisions - suffered such events in the past six years, ​May wish to consider legal action against direct access counsel to recover those fees. In order to consider such action, it is best to instruct us in the early stages of a dispute when we can give advice when it matters the most on setting up the right strategy. Using our [extensive litigation experience](https://lexlaw.co.uk/how-do-i-start-court-proceedings-litigation-step-by-step-guide-second-opinion/) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk and optimal compensation. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. [Get in touch to have your case assessed](https://lexlaw.co.uk/legal-case-assessment/). We don’t offer free advice. Instead, for a heavily discounted fixed fee we offer you high quality partner and counsel-led advice in our first meeting. Two minds are better than one. This way our best solicitors and barristers can review your litigation case and give you the correct advice at the outset, when it matters the most. --- # Bridging Loan Case Study: McDonald v London Credit – Default Interest Rate – Unenforceable Penalty Source: https://lexlaw.co.uk/solicitors-london/bridging-loan-case-study-mcdonald-v-london-credit-default-interest-rate-unenforceable-penalty/ We have [again successfully represented](https://lexlaw.co.uk/solicitors-london/case-study-lender-default-charge-of-150k-completely-defeated/) a bridging customer in a significant settlement win against another bridging lender. This time, London Credit Limited (an unregulated tertiary bridging lender) was forced to agree to our client's settlement terms which were for payment of a fraction of the amount sought by the bridging lender for which they already had judgment for. This is not the first time that London Credit Limited's lending practices have come under scrutiny from the High Court and we discuss below the case of *Houssein v London Credit* (2023) *PT-2021-000393* alongside *McDonald v London Credit (2023) KB-2023-001086*. Bridging lenders operating in unregulated lending waters are often denigrated by borrowers who label them *'loan sharks'*. Frequently, that nomenclature arises as a result of the very high rates of default interest and other lending tactics and fees which are applied by unregulated bridging finance providers upon an event of default. Unfair treatment and fees can and should be challenged - for more information see our guide "[Bridging Loans: When are interest rates & charges unfair?](https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/)" ## Houssein v "London Credit Limited" [2023] In this recently reported decision: [Houssein v London Credit Limited [2023] EWHC 1428 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Houssein-v-London-Credit.pdf), it was found by the High Court that a broker and the lender's business development manager used photos to falsely claim that the secured house was empty when in reality they knew it was the borrower's home and was occupied by the borrower. One has to wonder if and on how many occasions they had got away with this sort of tactical misconduct before? If those circumstances were not bad enough, the High Court also went on to consider "London Credit" Limited's default interest rate. The default interest rate that the lender applied on an event of default in the Houssein case, and in this case study, was 4% per month, which quadruple the "standard", non-default, interest rate of 1% per month. Richard Farnhill, sitting as a Deputy Judge of the High Court, found that the 4% per month default interest rate was penal, and therefore unenforceable, since it did not protect a legitimate interest of London Credit Limited. Consequently, the Court found that London Credit Limited's default interest rate was an unenforceable penalty. *UPDATE - Houssein v London Credit Limited:* By Appellant’s Notice filed on 10 October 2023, the appellants appealed the 19 September 2023 order of Richard Farnhill sitting as a Deputy High Court Judge in the Business and Property Courts, following trial, in which he made a declaration regarding contractual interest payable and made costs orders on an issue by issue basis [[Court of Appeal](https://www.judiciary.uk/live-hearings/houssein-ors-claimants-appellants-v-london-credit-limited-ors-defendants-respondents/) [Judgment](https://www.bailii.org/ew/cases/EWCA/Civ/2024/721.html)]. ## London Credit's 4% Default Interest Rate held to be an Unenforceable Penalty In concluding that the 4% interest rate was an unenforceable penalty, the Court took into account the following factors: - Firstly, the same default interest rate applied no matter what the breach of the agreement was. For instance, a breach of a residency requirement would trigger the same rate of default interest as a breach of a payment term. In those circumstances, it could not sensibly be argued that the default interest rate protected London Credit Limited's legitimate interest in ensuring that it was paid on time in the event of a payment default. - Secondly, the borrower's credit risk had already been priced into the loan when the standard interest rate was set at 1% per month. An increase of 3% per month on default could not, therefore, be justified. - Thirdly, the default interest rate was set centrally by London Credit Limited, without reference to the particular loan or the particular borrower's circumstances. - Finally, the expert evidence in the case led to the conclusion that a default interest rate of 3% per month was more the norm; as opposed to the 4% per month charged in this case. ## McDonald v "London Credit": Applications to Set Aside Default Judgment and Statutory Demand Lexlaw was instructed by another client of London Credit Limited, Mr McDonald, who had entered into a bridging loan facility with London Credit secured on property in his buy to let portfolio. At the time of our instruction, London Credit had obtained a default judgment against Mr McDonald for some £157,663.47. The majority sum of the default judgment comprised default interest and default charges which had been added to the loan by London Credit Limited. Having obtained default judgment, London Credit Limited had instructed its legal team, led by [Chris Jones of Gunnercooke LLP](https://gunnercooke.com/people/chris-jones/), to take aggressive enforcement action against Mr McDonald. This included serving a statutory demand based on the default judgment for a sum over £161,000.00; and, incongruously, applying for three charging orders over other buy to let properties which formed a part of Mr McDonald's buy to let portfolio. Lexlaw, acting on Mr McDonald's behalf, applied to set aside the default judgment obtained by London Credit on the discretionary ground that Mr McDonald had a reasonable prospect of defending the claim. A detailed draft defence was served which identified three key grounds upon which the London Credit Limited claim was subject to challenge: - That the sum sought ought to be significantly reduced as the majority of it was made up of default interest charges, which were unenforceable penalties. - That the loan was, on a proper analysis, a regulated mortgage contract within the meaning set out in the Financial Services and Markets Act (Regulated Activities) Order 2001. Consequently, the loan was unenforceable against Mr McDonald absent an order from the Court to the contrary. - That the lending relationship between Mr McDonald and London Credit Limited was unfair pursuant to the terms of the Consumer Credit Act 1974. We prepared detailed evidence and detailed legal argument to support the above assertions. The application to set aside the default judgment came on for hearing before a learned silk, Sarah Clarke KC, sitting as a Deputy Judge of the High Court. London Credit Limited resisted the application to set aside the default judgment on all grounds. ## Court Decision in McDonald v London Credit - Judgment Set Aside The Court determined that it was compelled to conclude that Mr McDonald had a real prospect of defending the claim, not least given the existing authority, *Houssein v London Credit Limited*, which tended to show that the default interest provisions applied by London Credit Limited were penal. The Court also accepted that there was a real prospect of Mr McDonald defending the claim on the other grounds pleaded in the draft defence. Consequently, the Court set aside the default judgment in the sum of £157,663.47 and gave directions for the rest of the matter to be determined. Costs were ordered to be *"in the case"*; which is unusual given that the default judgment was set aside on the discretionary grounds, perhaps signalling the Court's lack of approval for the lending and aggressive enforcement tactic's deployed by London Credit Limited. As a result of the default judgment having been set aside, Lexlaw were also successful in ensuring that the statutory demand was set aside with no order as to costs; and the three interim charging orders obtained by London Credit Limited were also set aside on the same terms. ## McDonald v London Credit - Forcing the Bridging Lender into Settlement After the default judgment had been set aside, Lexlaw's team of Financial Services Litigation in-house solicitors and barristers carefully considered the best strategy to bring the claim to a conclusion on the most advantageous terms for Mr McDonald. Recognising that the Court's usual approach to unlawful loans and penalties still requires the capital sum to be repaid together with interest at the standard contractual rate, a [CPR Part 36](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/) offer to settle the claim was made early at the most opportune time to create opponent litigation pressure. A Part 36 Offer is an offer to settle all or part of a claim which complies with the requirements in Part 36 of the Civil Procedure Rules (CPR). Making a Part 36 offer provides a means of putting pressure on the other side to settle a case and protects a party’s position on costs. The offer made was in essence to pay interest at the standard rate, as opposed to the default rate, from the date of default until the date of payment under the Part 36 offer. This offer was ultimately accepted by London Credit Limited who no doubt felt under immense pressure having just lost their default judgment, being forced to withdraw their statutory demand and their three charging orders as well as the previous Hussein case. Consequently, Mr McDonald paid just £68,577.23 to settle the claim, which represented unpaid simple (not compound) interest on the standard rate as opposed to the default rate, a saving of £89,086.24 on the default judgment sum obtained by London Credit Limited. This outcome represents a very significant win for our client, and demonstrates how unfairly high, default, penalty charges imposed by tertiary lenders and bridging lenders can be successfully challenged. ## Lexlaw Bridging Client Review > *"After failing to meet the repayment deadline for my bridging loan with 'London Credit', they sought to impose excessive interest rates. Furthermore, they engaged solicitors to exert pressure, compelling me to relinquish control of all my assets under the threat of bankruptcy and subsequent underselling at auctions.*" > > > > > > "*Concerned about London Credit's coercive tactics, I engaged LEXLAW to scrutinize my case and ensure that I incurred only reasonable charges. LEXLAW conducted a thorough examination, promptly determining that 'London Credit' was overly zealous in their pursuit of the debt. They explained my defense options and the corresponding legal frameworks efficiently, successfully defending against London Credit's attempts to levy charges on my assets and pursue bankruptcy in court. Consequently, 'London Credit' had little recourse but to settle the claim out of court for a significantly reduced, mutually agreeable amount.*" > > > > > > *"Thank you for all that you have done for me I cannot thank you enough for the stress you removed from my life the moment you took control."* > > > Mr McDonald - Bridging Loan Customer ## Examples of Potentially Unfair Terms Default interest rates are not the only example of penalty charges which can be challenged. The leading case on contractual penalties is *Cavendish Square Holdings BV v Makdesi* [2015] UKSC 67. There, Lord Neuberger put the test for whether a contractual term amounts to a penalty in the following terms: > *"The true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance."* > > > Lord Neuberger in Cavendish Square Holdings BV v Makdesi [2015] UKSC 67 Other common terms in bridging loans or finance agreements which are potentially unfair include; (a) administrative charges which are applied in the event of a default; (b) increased exit fees which only apply where there is a default; (c) "renewal" charges which are levied when there is a failure to repay the loan by primary repayment date; (d) cross-default clauses which have the effect of defaulting other loans provided by the same borrower, but secured over different assets, despite there being no separate event of default in that lending; and (e) accelerated payment clauses which apply in the event of default. We have experience in successfully challenging many different types of default clauses; resulting in the sum sought by lenders being significantly reduced or, in some instances, extinguished all together. If you have been sold a bridging loan by London Credit Limited, or any other bridging lender, and would like a review of your specific case, please contact us to book a consultation with our expert bridging finance lawyers. ## Book an Advice Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in unfair relationship claims. Our high profile and high value cases regularly appear in the national and international media and our team have successfully managed and settled litigation against all major UK banks. --- # British Post Office Horizon IT Scandal: HMRC’s ancillary attack on UK Postmasters Source: https://lexlaw.co.uk/solicitors-london/british-post-office-horizon-it-scandal-hmrcs-ancillary-attack-on-uk-postmasters/ Last week, following the airing of [Mr Bates vs the Post Office](https://en.wikipedia.org/wiki/Mr_Bates_vs_The_Post_Office), another 50 sub-postmasters came forward adding to the 700 or so previously known victims of the Post Office miscarriage of justice. The Post Office wrongly claimed sub-postmasters had taken money when in fact the computerised accounting system was faulty. The sub-postmasters, some of whom were prosecuted were told that they were the only one asserting the accounting system was faulty when this was completely untrue and the Post Office knew they were covering up issues with their [Fujitsu](https://www.fujitsu.com/uk/) [Horizon IT systems](https://corporate.postoffice.co.uk/en/horizon-scandal-pages/faqs). What might not be known and seems widely unreported on is that the [Post Office](https://www.postoffice.co.uk/) shared their flawed information with HMRC ([Her Majesty's Revenue and Customs](https://www.gov.uk/government/organisations/hm-revenue-customs)) and have been doing so for several years. This data sharing allowed HMRC to impose significant tax penalties and tax assessments on innocent sub-postmasters. Even where the sub-postmasters asserted the data was flawed and in spite of the scandal, HMRC maintained pressure and did not withdraw their tax assessments and penalties for several years. ## HMRC mis-use of Post Office Horizon Data and Wrongful Maintenance of Tax Penalties and Assessments In spite of the fact that the scandal came to light a decade ago and prosecutions were abandoned in 2015, and in spite of the High Court made a group litigation order on 22 March 2017 on behalf of hundreds of sub-postmasters, HMRC maintained assessments and penalties against innocent sub-postmasters leaving them to [fight it out in the First Tier Tax Tribunal](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) for several years. HMRC employs a team of solicitors and barristers and has access to external tax counsel, in essence HMRC has unlimited legal resources and is a very experienced and sophisticated litigant compared to the humble postmaster who is not legally or financially sophisticated and will not have an army of lawyers at his or her disposal. Ordinarily, if a taxpayers wins at the Tribunal, they are not allowed to recover their costs which often exceed the tax and penalties that are being challenged. ## HMRC vs Harston Post Office (Tax Appeal) Fortunately for our client, the Harston Post Office, the injustice came to the attention of M Ali Akram, the senior partner of Lexlaw Solicitors of Middle Temple, City of London. M Ali Akram, a dual-qualified solicitor-advocate and barrister said: > “I practise in the area of [HMRC tax litigation](https://taxdisputes.co.uk/tax-solicitors/) and work with ex-HMRC colleagues. We learned that the sub-postmaster at Harston Post office had been accused pocketing over £56,000 from the Post Office sales based upon information from The Post Office. Their accountant had [appealed the penalties and tax assessments to the Tax Tribunal](https://taxdisputes.co.uk/hmrc-tax-appeals/), but HMRC would not give way. So, I agreed to take over the appeal and we instructed[ ex-HMRC counsel Andrew Young an experienced tax Barrister.](https://taxdisputes.co.uk/expert-advice/)" > > > > > > "We asked HMRC to reconsider their stance given what had come to light about the Post Office scandal. But HMRC simply refused. We were concerned that our client would have to pay a very large sum for expert evidence to prove what we already knew about Post Office accounts and that our client would probably never get that cost back. Therefore, we strategically applied to the Tribunal to reclassify the appeal to the complex category meaning that the loser would pay the winners costs." > > > > > > "Not surprisingly HMRC strongly opposed this and came to the hearing with their legal army including counsel and fought our application tooth and nail. Fortunately, following the hearing of arguments on both sides, [Judge Chapman KC](https://www.18sjs.com/people/richard-chapman/) agreed and classified the case as one in which the loser would pay costs to the winner." > > > > > > "Now HMRC faced paying our client’s costs. Faced with this pressure HMRC finally agreed that the [penalties](https://taxdisputes.co.uk/hmrc-penalties/) and tax assessments would be completely withdrawn.” > > > M Ali Akram, Lexlaw Senior Partner The [tax appeal battle with HMRC](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/) continues however as our client Sub-postmaster faces financial ruin if he cannot fully recover the costs of his now six year battle with HMRC. The level of recoverable costs will soon be determined on 15 January 2024 at a hearing of the First-tier Tax Tribunal. Remarkably, given the circumstances, HMRC are threatening to seek some costs from the Sub-postmaster victim. ## HMRC Lose Postmaster Appeal but refuse to pay Indemnity Costs & Threaten Victim There is still an ongoing argument over costs. HMRC have accepted that they should meet the Sub-postmaster’s costs but want to pay on a standard basis not the [indemnity basis](https://lexlaw.co.uk/solicitors-london/indemnity-costs-losing-party-unreasonable-conduct-proportionality-reasonable-standard-assessment-court-order-legal-advice/) meaning that not all of the costs will be paid. LexLaw say that costs should be paid on an indemnity basis which means more of the costs will be recoverable. Indemnity costs are given where something in litigation is out of the ordinary. Our senior partner, M Ali Akram said: > “I find it a source of utmost dismay that HMRC don’t see accusing hardworking sub-postmasters of dishonestly taking money based on known and established flawed evidence as being out of the ordinary. That HMRC maintained their flawed assessments for six years is a matter of severe concern and MPs and the HM Treasury should be asking critical questions of the Commissioners for HM Revenue and Customs especially since this case is not an isolated example. HMRC engaged in poor litigation conduct in this case by not withdrawing their penalties and assessments at a much earlier stage than six years. They caused considerable distress to our client Sub-postmaster who is a victim of a miscarriage of justice by the Post Office which miscarriage of justice HMRC cruelly exacerbated over an unacceptably long period of time by pursuing flawed assessments based on Post Office data. HMRC's behaviour is a clear extension of [the Post Office scandal](https://en.wikipedia.org/wiki/British_Post_Office_scandal) which needs to be exposed." > > > M Ali Akram, Lexlaw Senior Partner ## First-tier Tax Tribunal Hearing: Harston Post Office vs HMRC (15 January 2024) The Tribunal will hear the sub-postmaster’s [application for indemnity costs](https://lexlaw.co.uk/solicitors-london/indemnity-costs-in-litigation/) on 15 January 2024. HMRC are in effect sore losers and say that if the application fails, they will want their costs for the temerity of the Sub-Postmaster victim for asking for indemnity costs. We and our [ex-HMRC counsel](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/), will be raising our concerns to the First-tier Tax Tribunal over the poor litigation conduct of HMRC. Their tax allegations, wielded with the authority of the state and supported by substantial resources, were of serious effect and consequence on our Sub-postmaster client. HMRC's handling of the matter was poor in the extreme and they took a blinkered approach to utilising Post Office date in spite of the known scandal. In spite of the miscarriage of justice becoming publicly known via developments in the civil courts and amid a decade-long growing scandal, HMRC persisted in its tax demands and it took six years before HMRC deigned to withdraw their improper tax demands. In fact, only after the appeal (via our contested application), was re-categorised by the tax tribunal as complex, with associated risks of meeting the Appellant's costs, did HMRC reassess its position and withdraw its improper tax demands. It seems HMRC acted on financial as opposed to moral reasons. > HMRC used Post Office data to claim dishonesty and raise tax demands against an innocent sub-postmaster, who is in fact an hardworking and honest man. HMRC must bear responsibility for turning a blind eye to the poor quality of data they obtained from the Post Office and for maintaining their improper and unreasonable tax demands for 6 years in the face of an increasing scandal. > > > M Ali Akram, Senior Partner, LEXLAW ## Media Interest: HMRC & Post Office Scandal The judgment from the contested hearing on 26 May 2022 is available online under appeal number TC/2018/00981 and can be found on the British and Irish Legal Information website. The full title of the appeal is: > IN THE FIRST TIER TRIBUNAL TAX CHAMBER > > > > > > Appeal No: TC.2018.00981 & TC.2018.00982 > BETWEEN: > > > > > > [1] HARSTON CONVENIENT STORE LIMITED > [2] HARSTON POST OFFICE AND VILLAGE STORES > > > > > > vs > > > > > > THE COMMISSIONERS OF HIS MAJESTY’S REVENUE AND CUSTOMS Any request, media or otherwise, to watch the cost hearing listed on 15 January should be directed to the First Tier Tax Tribunal. Email taxappeals@justice.gov.uk or telephone: 0300 123 1024. Any media request for further comment from us can be made via email to HMRCPostOfficeScandal@lexlaw.co.uk - we will reply immediately. You can also call us on 02071830529. ## Other Postmasters facing HMRC Tax Demands based on Horizon Data We urge any sub-postmasters who have been issued with penalties and tax assessments to take legal advice. There are normally strict time limits for challenging tax demands but there are possible ways of having time limits extended in appropriate circumstances. **15/01/2024 - HMRC COSTS SETTLEMENT UPDATE ** Following publication of this article and media interest, in particular interest expressed by [Dan Neidle of UK think tank Tax Policy Associates](https://www.taxpolicy.org.uk/about/), HMRC did a complete U-turn and agreed to pay indemnity costs and applied to the Tribunal to delist the hearing. HMRC *consented *to an award of indemnity costs which is usually only awarded to punish serious litigation misconduct by a party. The level of indemnity costs agreed to be paid by HMRC is a record level of 97% of costs claimed. Our senior partner, [M Ali Akram](https://lexlaw.co.uk/our-people/m-ali-akram/), commented: *"It is abundantly clear to me that HMRC at the very highest levels did not want this hearing to go ahead and therefore they paid almost the entire amount claimed which is unheard of in my litigation experience of over 20 years as a barrister and solicitor. I have no doubt that HMRC wished to escape exposure of their misconduct of relying on data obtained from the Post Office to raise tax demands against Sub-postmasters. That this issue was known to them for the last 6 years having repeatedly been raised by us and our ex-HMRC tax counsel is remarkable. We can only assume that many other postmasters without strong legal representation have suffered a very different fate at the hands of HMRC relying on flawed Post Office data. The total of improper HMRC tax penalties and assessments against Post Office victims could be several million pounds and amount to a further unexposed injustice."* --- # Court of Appeal Decides s.994 Petitions Subject to Statutory Limitation Period Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-decides-s994-petitions-subject-to-statutory-limitation-period/ In a landmark decision, the Court of Appeal overturned decades of legal precedent regarding the limitation period for unfair prejudice petitions. The ruling in *[THG Plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158](https://lexlaw.co.uk/wp-content/uploads/Judgment-THG-Others-v-Zedra-Trust-Company-Jersey-Limited-CA-2023-000326.pdf)* casts aside the long-held rule that such petitions were exempt from statutory limitation. ## Limitation Period for Section 994 Petitions For 40 years, the legal consensus held that unfair prejudice petitions, governed by [section 994 of the Companies Act 2006](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf), were not subject to any statutory limitation period. This belief was reinforced by judicial decisions, academic commentary, and even two Law Commission Reports. However, the recent decision by the Court of Appeal has upended established legal principles. ## What is an unfair prejudice claim (a s.994 petition)? An unfair prejudice claim is a legal recourse granted to shareholders under the Companies Act 2006, specifically outlined in sections 994 to 999. These claims, commonly known as [section 994 petitions](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf), are initiated through a court petition process; a petition is a legal document formally requesting a court order and setting out the petitioner's version of the facts at issue. The section 994 petition is the main procedural avenue for minority shareholders to seek redress from the court in cases of perceived 'unfairly prejudicial' behaviour by the majority shareholders. Unfair prejudice occurs when the conduct in question violates the reasonable expectations of the petitioner. This may involve breaches of the petitioner's legitimate expectations, contractual rights, or established practices within the company. ## Court of Appeal's Ruling The Court of Appeal's decision in *[THG Plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158](https://lexlaw.co.uk/wp-content/uploads/Judgment-THG-Others-v-Zedra-Trust-Company-Jersey-Limited-CA-2023-000326.pdf)* rested on the interpretation of statutory law and precedent. Contrary to previous assumptions, the court held that unfair prejudice petitions fall within the scope of statutory limitation. Citing section 8 of the Limitation Act 1980, the court determined that such petitions are considered "an action upon a specialty," thereby subjecting them to a limitation period of 12 years. ## Limitation Periods A [limitation period](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) is the period of time within which a party to a contract or a party who has suffered damages as a result of another party’s conduct, must bring a claim. The Limitation Act 1980 sets out the applicable time limits depending on the type of claim being made. It is important to be aware of these time limits if you are bringing or defending a claim. ## Implications of Court of Appeal’s Decision The implications of this ruling are significant for practitioners in this area of law. It necessitates a reassessment of how unfair prejudice petitions are pursued and the relief sought by petitioners. Additionally, the decision introduces several anomalies, such as the classification of certain claims under section 9 of the Limitation Act and the applicability of section 32 to postpone the running of time. ## Download the Judgment Here [![](https://lexlaw.co.uk/wp-content/uploads/THG-and-Others-v-Zedra-Trust-Company-Jersey-Limited-CA-2023-000326-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Judgment-THG-Others-v-Zedra-Trust-Company-Jersey-Limited-CA-2023-000326.pdf) ## Section 996 Companies Act 2006 [Section 996 of the Companies Act 2006](https://lexlaw.co.uk/wp-content/uploads/S.996-CA-2006.pdf) grants the court broad discretionary powers to remedy unfair prejudice. Remedies may include the alteration of the company's constitution, the regulation of the company's affairs, or even the purchase of shares by the company or its shareholders. The court's discretion is exercised judiciously, considering the specific circumstances of each case. The law relating to the ability of a member to bring proceedings on behalf of the company is not written down in statute. The general principle – commonly known as the rule in *Foss v Harbottle* – is that it is for the company itself to bring proceedings where a wrong has been done to the company. However, where there has been conduct amounting to a “fraud on the minority”, an exception may be made to the rule, so that a minority shareholder may bring an action to enforce the company’s rights. ## Identifying Petitioners and Members Unfair prejudice claims can be initiated by members of the company, but clarity is essential on who qualifies as a "member" for this purpose. A member may include shareholders, subscribers to the memorandum, and those who have agreed to become members. Distinguishing between registered members and beneficial owners is critical. ## Decoding "Prejudice" and "Unfairness" To comprehend the essence of unfair prejudice, it's crucial to dissect the terms "prejudice" and "unfairness." Prejudice refers to harm, injury, or detriment suffered by a shareholder, often linked to their economic interests. Unfairness, in this context, denotes conduct that goes against the principles of justice and equity. ## When can Shareholders start a claim for Unfair Prejudice: Shareholders have the legal right to bring unfair prejudice claims before the court. This typically occurs in the following scenarios: - Breach of Fiduciary Duty: Shareholders can sue when majority shareholders or directors breach their fiduciary duties, prioritising personal interests over those of the company and minority shareholders. - Exclusion from Decision-Making: If minority shareholders are systematically excluded from participating in crucial decisions that significantly impact the company, they may have grounds for an unfair prejudice claim. - Unjust Financial Dealings: Unfair financial dealings, such as diverting profits to the detriment of minority shareholders, can be a basis for legal action. ## How Section 994 Petitions Empower Minority Shareholders Section 994 petitions represent a crucial avenue for minority shareholders to seek redress in cases of perceived unfair treatment within a company. By understanding the nuances of this legal mechanism and adhering to procedural requirements, aggrieved shareholders can effectively address instances of unfair prejudice and uphold their rights within the corporate realm. ## Expert UK Shareholder Dispute Lawyers LEXLAW specialise in navigating the intricate landscape of shareholder disputes and unfair prejudice claims. With a deep understanding of company law and extensive experience in handling complex legal matters, our team is dedicated to advocating for the rights of minority shareholders who have been subjected to unjust treatment. From meticulously analysing the circumstances surrounding unfair financial dealings to crafting compelling section 994 petitions, we are committed to providing comprehensive legal assistance tailored to each client's unique situation. Our goal is to empower our clients with the knowledge and resources needed to pursue effective legal remedies and secure favourable outcomes in their shareholder disputes. Trust our expertise to guide you through the complexities of the legal process and fight for the justice you deserve. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in [litigation](https://lexlaw.co.uk/practice-areas/) and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of[ alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # Court Dismisses Force Majeure & Trade Sanctions Control Defences Source: https://lexlaw.co.uk/solicitors-london/court-dismisses-force-majeure-trade-sanctions-control-defences/ *The High Court granted a summary judgment application in a breach of contract claim, and delivered a clear signal regarding reliance on contractual force majeure and trade sanctions provisions. The case in question is [Litasco SA v Der Mond Oil and Gas Africa SA & Anor (Rev1) [2023] EWHC 2866 (Comm)](https://www.bailii.org/ew/cases/EWHC/Comm/2023/2866.html).* *The central question was whether payments to a Russian Oil Company were prohibited as sanctioned?* *The High Court rejected the various defences and considered the interpretation of “control” under UK sanctions law, following the recent Court of Appeal Judgment in [PJSC National Bank Trust and another v Mints and others [2023] EWCA Civ 1132.](https://www.judiciary.uk/wp-content/uploads/2023/10/Mints-v-PJSC-judgment-061023.pdf)* The decision in Litasco therefore clarifies two key points: - **Force Majeure for Debts:** Facing difficulties isn't enough to avoid paying existing debts. The court sets a high bar, requiring almost impossible circumstances to trigger "force majeure" for these situations. - **Sanctions and Control:** To be blocked under sanctions for "ownership and control," a sanctioned person needs real, provable control over the company's business decisions, not just a theoretical possibility of influence. ## Force Majeure Distinctions The key issue was how broadly "force majeure" applies to debt payments. The court ruled that companies cannot simply use temporary difficulties to avoid paying existing debts. Even when "hindered" by events, a significant challenge, close to but not quite impossible performance, is required to trigger force majeure for debt. ## Implications for Debt Obligations This court case makes it harder for companies to use "force majeure" as an excuse to skip out on debts. The ruling clarifies that financial difficulties alone aren't enough. There needs to be a very serious problem, almost impossible to perform the contract, before a company can avoid debt obligations using force majeure. ## Ownership and Control Test under UK Sanctions Regime The ruling also provides crucial insight into the application of the "ownership and control" test within the UK sanctions regime, offering clarification on recent obiter comments made by the Court of Appeal in [Mints v PJSC National Bank Trust [2023] EWCA Civ 1132](https://www.bailii.org/ew/cases/EWCA/Civ/2023/1132.html). The court clarified the "ownership and control" test for sanctions. It's not enough that someone sanctioned could maybe influence a company. The judge says there needs to be real, provable control over the company's business decisions, not just a theoretical possibility. ## Concluding Remarks and Lessons: This landmark decision by the High Court in [Litasco SA v Der Mond Oil and Gas Africa SA & Anor (Rev1) [2023] EWHC 2866 (Comm)](https://www.bailii.org/ew/cases/EWHC/Comm/2023/2866.html) provides a robust legal framework for the interpretation of force majeure clauses and the application of the "ownership and control" test in the context of UK sanctions. This ruling helps businesses navigate contracts by highlighting two key points: 1) a significant difficulty is needed to claim force majeure, and 2) a practical approach is used to assess "control" under UK sanctions. ### Here's what businesses need to know: - **Read the fine print:** Carefully review the wording of your force majeure clause. Does it excuse performance only when completely impossible, or also when significantly hindered? - **Consider the situation:** Courts will look at the specific obligation and if alternative ways to fulfill it exist before accepting a force majeure claim. - **Genuine hardship matters:** The judge distinguished companies truly impacted by force majeure from those simply unable to pay. ### Sanctions and control: - The court ruled that even if a company was somehow linked to a sanctioned person, it wouldn't prevent a judgment for them. - This case sets a precedent for a practical approach to "control" in sanctions defenses. - However, there's still a call for clearer guidelines on this issue. ## Avoiding costly litigation disputes We understand disputes can be stressful and expensive. That's why we prioritise efficiency. Our in-depth outset investigation and case analysis ensure we choose the best course of action for you, saving you time and money. **Early intervention is key.** The sooner you involve our solicitors and barristers, the better. We advise on strategic options to minimize legal costs. Our extensive litigation experience allows us to provide practical and clear legal advice, reducing your financial risk. **Explore all options before court.** We believe in exploring alternative dispute resolution (ADR) whenever possible. Our skilled negotiators excel at mediation and confidential negotiations, aiming for an advantageous early settlement. If a fair settlement isn't achievable, our experienced litigators will expertly guide you through the court process. We are there for you, every step of the way. --- # Short Guide: ‘Hidden’ or ‘Embedded’ Swaps Source: https://lexlaw.co.uk/solicitors-london/short-guide-hidden-or-embedded-swaps/ Financial Institutions in the UK promoted interest rate swaps and fixed-rate loans as protective measures against potential increases in interest rates for customers. However, more often than not, such financial institutions [neglected](https://lexlaw.co.uk/aviva-gp-loan-mis-selling-hidden-swaps-and-break-costs-in-fixed-rate-loans/) to adequately inform and advise customers about the substantial contingent liability risks associated with these swaps. We have successfully obtained redress via [High Court swaps mis-selling litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) and via the [FCA agreed IRHP Review](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) on behalf of SMEs ranging from [family run businesses](https://web.archive.org/web/20140916060007/http:/invezz.com/news/equities/6046-lloyds-share-price-details-of-swap-mis-selling-settlement-made-public) or [local retail companies](https://youtu.be/v_JHfC82N-I) to [listed PLCs](https://web.archive.org/web/20140731123938/http:/www.bloomberg.com/article/2014-05-29/aTG0DdTNe1E4.html) and offshore companies.  We specialise in hidden derivatives litigation and have issued more court claims than any other law firm. Many hidden swaps cases settle via out of court settlements with banks and insurers doing this in order to prevent the setting of a case precedent which would cost much more. ## Hidden or Embedded Swaps Hidden swaps or embedded swaps refer to derivative instruments embedded within financial contracts, such as loans or bonds, where the presence and nature of the swap may not be immediately apparent. These swaps are embedded as additional features within the financial instrument and can expose the unwary customer to fluctuations in interest rates or other financial variables. For example, in a loan agreement, there might be a [hidden interest rate swap](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/) where the borrower agrees to pay a variable interest rate but has the option to convert to a fixed rate at a later date. Similarly, embedded swaps can be found in bonds, leases, or other financial contracts, impacting the cash flows and risks associated with these instruments. The challenge with hidden swaps is that their complexity and potential impact on financial outcomes may not be fully understood by the average customer with limited to no experience of complex financial instruments. Transparent disclosure and thorough understanding of contractual terms are crucial to identifying and managing hidden or embedded swaps to avoid unexpected financial consequences such as massive break costs and creditworthiness and credit limit utilisation which lenders ought to have fully explained. ## A Step-by-Step Guide If you believe you have been mis-sold a fixed rate loan by a bank, there are several steps you can take to address the situation and seek redress. Keep in mind that it's essential to act promptly, as there may be time limits for making a claim. Here's a guide to the steps you can take: ### Step 1 - Gather Documentation: Collect all relevant documentation related to your loan, including the loan agreement, correspondence with the bank, and any records of conversations or advice provided. This will serve as crucial evidence in your case. It is important to retain a copy of all correspondence with the Lender as this evidence may tip the scales of justice in your favour. ### Step 2 - Understand the Terms of the Loan: The next step is to thoroughly review the terms and conditions of your loan. Pay close attention to any hidden or undisclosed terms, such as [breakage costs](https://lexlaw.co.uk/individuals-mis-sold-fixed-rate-loans-with-swap-break-costs/) (redemption/exit fees) and assess whether the lender provided clear and accurate information about these terms. Examine the agreement for language related to hedging or risk management. Phrases like "interest rate protection" or "hedging against market fluctuations" may suggest the presence of hidden swaps. ### Step 3 - Examine Interest Rate Provisions: Scrutinise the sections related to interest rates. Look for terms that allow for changes in interest rates, conversion options, or any complex provisions that could indicate the presence of an embedded swap. Determine whether there are options within the agreement that allow the lender to convert from a variable [interest rate to a fixed rate or vice versa](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/). Such options may indicate the existence of an embedded swap. ### Step 4 - Contact the Lender: Reach out to the Lender to express your concerns and formally make a complaint. Provide a clear and detailed explanation of why you believe you were sold a hidden or embedded swap. Request a response in writing. Most lenders have a formal complaints procedure that you can follow for raising and escalating complaints. ### Step 5 - Seek Financial Ombudsman Service (FOS) Assistance: If the response is unsatisfactory or if they do not respond within a reasonable time frame, you can escalate the matter by [lodging a complaint](https://www.financial-ombudsman.org.uk/consumers/complaints-can-help) to the [Financial Ombudsman Service (FOS).](https://www.financial-ombudsman.org.uk/) The FOS is an independent body that helps resolve disputes between financial institutions and consumers. ### Step 6 - Seek Legal Advice: If you are concerned or harbour suspicions about the presence of hidden swaps, consider seeking expert legal advice. Legal professionals specialising in financial law can assist in interpreting complex contractual terms and assessing potential liabilities. If you suspect a 'Hidden' or 'Embedded' Swap, [our Expert Solicitors](https://lexlaw.co.uk/) will be able to help you determine if you have fallen prey to such derivative products. We can assess the merits of your case and guide you on potential legal action. ### Step 7 - Initiate Legal Action: If you have been advised that you have a strong case, you may choose to pursue legal action against the lender. Remember that seeking professional legal advice early in the process is crucial. At Lexlaw, we can assess the specifics of your case, guide you on the best course of action, and help you navigate the complexities of hidden or embedded swap claims. We know how to [litigate](https://lexlaw.co.uk/practice-areas/) and we know how to win. We litigate with authority and [our reputation](https://lexlaw.co.uk/about/) is well-known within UK legal circles. Time is of the essence, as strict [time limits](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) apply for making a claim or complaint. The typical time limit for bringing a mis-selling claim is six years from the date of the alleged misconduct or, alternatively, three years from the date the claimant became aware (or should have become aware) of the issue. Lexlaw Solicitors can provide timely legal advice to safeguard your rights and prevent your claim from becoming 'time-barred.' Contact us today for a comprehensive review of your situation and let us guide you through the complexities of mis-sold fixed rate loans, uncovering the tactics banks may employ to hide potential risks. ## Book an Initial Consultation with Our Financial Services Litigation Lawyers  Our [Financial Services Litigation team](https://lexlaw.co.uk/) of Solicitors and Barristers in London are highly experienced in mis-selling litigation and specialise in representing SMEs, high net worth individuals and companies in high value bridging finance mis-selling disputes. Our high profile and high value cases regularly appear in the national and international media. We have successfully managed and settled mis-selling court litigation against all major UK banks and regulated financial advisers. --- # Challenging Possession of Property by Fixed Charge LPA Receivers Source: https://lexlaw.co.uk/solicitors-london/challenging-possession-of-property-by-fixed-charge-lpa-receivers/ Fixed charge receivership is an important [debt recovery](https://windinguppetitionsolicitors.co.uk/) tool for creditors in England & Wales, offering a legal avenue to reclaim outstanding debts secured against specific assets. The appointment of LPA Receivers often sparks debate surrounding property rights and debtor protections. In this article, we look at the legal landscape of fixed charge receivership in the UK, exploring its statutory underpinnings, conditions for receivership, and the potential recourse available to debtors, with a focus on real-life scenarios. Understanding insolvency rules and laws can be complex, especially for those who are not experts. Fixed charge receivership and dealing with insolvency in general, is a specialised area of law. Most regular solicitors do not have much experience with the [UK Insolvency Rules](https://www.legislation.gov.uk/ukpga/1986/45/contents). It is important to realise that making mistakes with matters relating to default and fixed charge receivership, can have serious consequences. That is why it is crucial to get advice from  lawyers who know [insolvency law](https://windinguppetitionsolicitors.co.uk/) well. ## Legal Framework of Fixed Charge Receivership The legal foundation of fixed charge receivership in the UK is firmly established within the provisions of the [Law of Property Act 1925](https://www.legislation.gov.uk/ukpga/Geo5/15-16/20) and the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents). These statutes empower creditors holding fixed charges over assets to appoint receivers, granting them the authority to manage and, if necessary, liquidate the assets to recover outstanding debts. Typically, fixed charges are attached to tangible assets such as land, buildings, or machinery. ## Property Possession by Receivers In cases of default by the debtor, receivers have the legal right to take possession of assets secured under a fixed charge. This enables creditors to safeguard their interests and facilitate the recovery of outstanding debts. Property possession by receivers typically occurs when debtors fail to meet the terms of loan or mortgage agreements, triggering the creditor's enforcement of security. ## LPA Receivership Process The receivership process involves the appointment of receivers by creditors to manage or take possession of assets subject to a fixed charge. Receivers may be licensed insolvency practitioners or professionals with relevant expertise in property management. Their primary duty is to act in the best interests of the creditor and maximise debt recovery through diligent asset management or disposal. ## When Can Receivers Take Possession Receivers are empowered to take possession of assets when debtors default on the terms of their loan or mortgage agreements. This default triggers the creditor's right to enforce security, thereby enabling them to appoint receivers to protect their interests. Notably, court intervention is generally not mandated for fixed charge receivership unless disputes arise. ## Appointment of LPA Receivers Creditors may appoint receivers when there is a fixed charge over the property in question. A fixed charge is a specific type of security interest that is attached to specific assets, giving the creditor a priority claim over those assets in case of default. The appointment of receivers is typically made by the creditor, often with the consent of the court, although in some cases, the power to appoint receivers may be contained within the terms of the loan agreement. ## Legal Rights of Debtors and Creditors Both debtors and creditors possess certain legal rights within the framework of fixed charge receivership. Debtors have the right to challenge the appointment of receivers and dispute the validity of fixed charges through legal avenues. Conversely, creditors retain the right to enforce security and recover debts owed to them within the bounds of applicable laws and regulations. ## Secured Creditors' Rights Secured creditors hold priority claims over specific assets pledged as security for debts owed to them. In fixed charge receivership, secured creditors have the right to enforce security interests and recover debts by appointing receivers to manage or take possession of assets secured under fixed charges. ## Remedies Available to Debtors Debtors facing the appointment of receivers and potential possession of their property have several remedies available to challenge or mitigate the consequences: ### Injunction Against Receivers Debtors facing the prospect of property possession by receivers may seek [injunctions from the court](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) to halt the receivership proceedings temporarily. To obtain an injunction, debtors must demonstrate substantial grounds, including disputes over the default or irreparable harm if possession is taken, and establish that granting an injunction is in the balance of convenience. ### Challenging Fixed Charge Appointments Debtors have the option to challenge the appointment of receivers or the validity of fixed charges through legal proceedings. This may involve alleging errors in creditor's calculations, disputing loan agreement terms, or contesting the creditor's legal right to enforce security. Challenging fixed charge appointments requires thorough legal analysis and presentation of compelling evidence. ### Dispute Resolution in Receivership Cases Disputes may arise during fixed charge receivership proceedings, necessitating effective dispute resolution mechanisms. Parties involved in receivership cases may seek [resolution through negotiation, mediation,](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) or litigation to address issues related to the appointment of receivers, property possession, debt recovery, or other matters arising from receivership proceedings. ## Insolvency Practitioners For Fixed Charge Receivers [Insolvency practitioners](https://windinguppetitionsolicitors.co.uk/) play a pivotal role in fixed charge receivership cases, often being appointed as receivers to manage or take possession of assets on behalf of creditors. These professionals possess expertise in insolvency and asset management, ensuring effective administration of receivership proceedings and maximising debt recovery for creditors. ## Specialist Insolvency Practitioners It is very important that you seek legal advice as soon as a fixed charge receivers are appointed. To reduce failure risk, it is advised that you instruct [specialist insolvency lawyers](https://windinguppetitionsolicitors.co.uk/). Generally many solicitors are unfamiliar with the Insolvency Rules and the minutiae of the mortgage default process, we are experts in dealing with such matters. We are a specialist [City of London](https://web.archive.org/web/20200622210953/https:/www.cityoflondon.gov.uk/Pages/default.aspx) law firm made up of Solicitors & Barristers operating from the only law firm based in the [Middle Temple Inns of Court ](https://www.middletemple.org.uk/)adjacent to the Royal Courts of Justice.  Our team have unparalleled experience in fixed charge receivership matters and mortgage defaults, liaising with the appointed receivers, providing a solicitor’s undertaking, representing you in receivership hearings at the Bankruptcy Court, at the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. --- # Are Payoneer De-Banking and Appropriating Funds to Reduce Humanitarian Aid for Gaza? Source: https://lexlaw.co.uk/solicitors-london/are-payoneer-de-banking-and-appropriating-funds-to-reduce-humanitarian-aid-for-gaza/ Novara Media reported in January of this year that *"[Palestinians Are Having Their Bank Accounts Frozen. Their Banks Won’t Explain Why.](https://novaramedia.com/2024/01/03/palestinians-are-having-their-bank-accounts-frozen-their-banks-wont-explain-why/)" *They went on to state in respect of [Payoneer](https://www.payoneer.com/) ([Nasdaq: PAYO](https://www.nasdaq.com/market-activity/stocks/payo)) that* "such actions expose an international system of financial regulation that has collectively punished Palestinian people for years – and is now going into overdrive.*" The punishment overdrive suggested in the above media report is alarming and may provide an explanation for account de-banking and frozen funds in the context of a recent litigation instruction received by Lexlaw Solicitors & Barristers, a law firm in London. Lexlaw's Financial Services Litigation team have been retained by a social media advertising agency that made the (now potentially fatal) decision in 2020 of selecting and using [Payoneer Payment Services (UK) Limited](https://find-and-update.company-information.service.gov.uk/company/12029160) (controlled by [Payoneer Global Inc](https://en.wikipedia.org/wiki/Payoneer)) as its online payment platform. Payoneer promised that it would make bank transfers easy but that promise seems to have morphed into making transfers impossible with many hundreds of thousand of dollars arbitrarily, or perhaps politically or ideologically frozen for months without a termination explanation. Our client digital marketing agency is not a bad actor; all it does is place online adverts on major social media platforms for and on behalf of well-renowned, well-established and well-regulated charities to help them raise tens of millions in charity funds. This account activity was considered acceptable and unproblematic for Payoneer for years until recently - perhaps the change is because some of the funds raised may go toward humanitarian aid into Gaza? Our client certainly believes that is the case. ## Payoneer's Limited UK "Regulation" What our client, an otherwise successful digital business advertising agency, did not know when it selected the payment platform is how limited the rules protecting UK customers actually are. Payoneer, is not in fact regulated like a mainstream bank operating in the UK, but instead has light-touch FCA authorisation as an Authorised Electronic Money Institution. This means the FCA has given permission for Payoneer to issue electronic money (e-money) and provide payment services but that permission is restricted and there is ***no statutory compensation scheme*** available if Payoneer does anything wrong or goes out of business. > **FCA ALERTS ABOUT PAYONEER: ** > > > > > > "**Some activities by this firm may not be protected > **This firm is shown on the Register because it is now, or was previously, approved by the FCA (or relevant regulatory body). As a result, you may be able to complain about this firm to the Financial Ombudsman Service. If this firm goes out of business owing you money you will not be able to claim compensationfrom the Financial Services Compensation Scheme (FSCS). " > > > > > > "**Restrictions / suspensions ** > This firm has requirements or restrictions placed on the financial services activities that it can operate. Requirements or restrictions can include suspensions." > > > > > > > > > [UK Financial conduct Authority Register - Payoneer Payment Services (UK) Limited > ](https://register.fca.org.uk/s/firm?id=0014G00002tE8t6QAC) ## Is Payoneer a UK or American Company? Our client also thought, due to representations made by Payoneer, that Payoneer was an American entity operating in the UK not realising that Payoneer was in fact founded in 2005 in Israel by [Yuval Tal](https://en.wikipedia.org/wiki/Yuval_Tal) and [Yaniv Chechik](https://www.linkedin.com/in/benyanivchechik/details/experience/). Payoneer has most of its workforce based in Israel at its corporate offices at [Ha-Yetsira St 13, Petah Tikva](https://www.google.com/maps/place/Payoneer/@32.0959957,34.8474398,17z/data=!3m1!4b1!4m6!3m5!1s0x151d361d94d5717f:0x85daac51cd5abd3d!8m2!3d32.0959912!4d34.8500147!16s%2Fg%2F1th84g_3?entry=ttu), near Tel Aviv just 40 miles from Gaza. Payoneer is cited online to have [Israeli government](https://investor.payoneer.com/governance/board-of-directors/person-details/default.aspx?ItemId=1f9c0615-95ab-4171-87cc-b27b118e6cee) and [IDF connections](https://www.calcalistech.com/ctech/articles/0,7340,L-3865575,00.html) at the highest levels via it's founders and owners. > "Leaked US Treasury documents reveal that [Payoneer] the soon-to-go-public company, where the new prime minister [Naftali Bennett] was an early investor, did business with bottom feeders of the internet" > > > "**[Behind Bennett’s Payoneer payday, a firm that profited off smut and alleged cons](https://www.timesofisrael.com/behind-bennetts-payoneer-payday-a-firm-that-profited-off-smut-and-alleged-cons/)" > - **The Times of Israel, 27 June 2021 > "Police in Dubai say that Payoneer Inc. distributed some of the prepaid cash cards that have been traced to suspects sought in the [alleged Israeli intelligence service Mossad] killing of Mahmoud al-Mabhouh. The case has attracted heightened international attention since the U.K. last month accused Israel of forging British passports used by the alleged assassins." > > > "[Hamas Killing Shines Light on Payoneer, Prepaid Cards](https://www.wsj.com/articles/SB10001424052702304172404575168182734517668)" - Wall Street Journal, 7 *April 2010* The UK Registered office is [37 Broadhurst Gardens, South Hampstead, London NW6 3QT](https://www.google.com/maps/place/Gan+Yeladim/@51.5467378,-0.1815206,19.57z/data=!4m15!1m8!3m7!1s0x48761a84ce1fcecb:0xf83936fefc84a269!2s37+Broadhurst+Gardens,+South+Hampstead,+London+NW6+3QT!3b1!8m2!3d51.5468182!4d-0.1801619!16s%2Fg%2F11rg5zbw5n!3m5!1s0x48761bb2378a329b:0xff7205b0ea9a1a03!8m2!3d51.5465985!4d-0.1816527!16s%2Fg%2F11khkr6_xw?entry=ttu). There seems to be little if any visible sign of Payoneer at this suburban North London address. This is in fact the trading address of [Gan Yeldim](https://ganyeladim.co.uk/), a pre-school nursery and [Shir Hayim](https://register-of-charities.charitycommission.gov.uk/charity-search/-/charity-details/3982876/charity-overview), a Reform Synagogue. Payoneer unilaterally froze (without providing any lawful reason) the funds of our client marketing agency - which places online adverts on behalf UK charities helping them to raise tens of millions in charitable funds. At the present time some proportion of the funds raised could well go to support Humanitarian Aid Relief efforts in Gaza. In the absence of any valid lawful explanation at the relevant time from Payoneer for its conduct, our client believes this de-banking and appropriation of funds is a possible explanation for Payoneer's conduct. Our client simply cannot understand Payoneer's conduct and believes that Payoneer is acting improperly and prejudicially against it perhaps for politically motivated or ideological reasons. ## Payoneer's Account Freeze - causing £multimillion loss to charities Online financial product comparison site, Nerdwallet's latest review of Payoneer states that *"Customers report account freezes and terminations, resulting in the loss of funds."* Payoneer's account freeze and termination all happened without notice to their micro enterprise customer - arguably in breach of Payoneer's own terms to give two months notice. > *"Customers report account freezes and terminations, resulting in the loss of funds."* > > > [Nerdwallet: Payoneer Review 2024](https://www.nerdwallet.com/reviews/small-business/payoneer#:~:text=Limited%20functionality%3B%20can) On 7 February 2024, shortly before Ramadan 2024 (the period in which Muslims donate most of their obligated and voluntary charity), Payoneer froze our client's account and locked them out of their funds having asked them for the details of their fundraising and charity work. On 26 February Payoneer informed our client that it had taken a decision to terminate its account services without providing any justification nor cause and failing to this day, to allow any release of funds in apparent breach of its own terms and conditions to give notice and return funds (which terms it went on to swiftly change after Lexlaw recently pointed out their own breach). Months later, our client's complaints were meaninglessly responded to and instructions to return funds were not complied with seeming to prove the accuracy of Nerdwallet's negative comments about Payoneer quoted above. ## Payoneer's Appropriation of Customer Funds Ramadan is a Muslim holy month in which there is a strong focus on helping others and hence this is when Muslims give the vast majority of their charitable donations for the year. Payoneer de-banked our client and blocked access and thereby appropriated hundreds of thousands of dollars in advertising funds that were paid over by leading well-established and world-renowned registered charities. These funds were set to be used to raise tens of million of dollars in charitable funds. This de-banking and account freeze was, perhaps as believed by our client, timed by Payoneer to coincide with the month of Ramadan 2024 (which began on Monday 11th March 2024). Given the lack of explanation for termination at the relevant time, our client suspects that Payoneer's account freeze may be politically motivated to reduce humanitarian aid to Palestinian refugees via millions of dollars in charitable donations. Is Payoneer using its payment platform to engage in de-banking and appropriation of clients funds to limit charitable aid to Palestinian refugees? This is the question that our client asks itself. Despite repeated customer requests over several months, Payoneer has refused to return the funds held in the account. Payoneer never provided any justification when terminating access to the accounts and withholding the money. Months on, Payoneer still refuses to return funds thereby forcing our client to take legal action, the determination of which will be in the public domain. ## Payoneer: Fit and proper for UK Authorisation? Payoneer's actions against a loyal customer that it had banked since 2020 and that had always acted compliantly are perverse and defy logic such that a question of prejudice is legitimately raised. Payoneer have provided no contemporaneous termination justification for their prejudicial conduct which our client suspects may be driven by political or ideological bias prompting our client to question Payoneer's suitability for regulatory approval by the FCA. **PAYONEER - CALL FOR WHISTLEBLOWER INFORMATION ** Have you worked for Payoneer and have information about their practices and procedures that may be unlawful, amount to a miscarriage of justice, or covering up wrongdoing? Or do you know of other victims of de-banking and account freezes of this nature? You [may be protected by law for making such whistleblowing disclosures](https://www.gov.uk/whistleblowing) and we welcome hearing from you. Further, a fit and proper person when faced with correspondence highlighting breaches of its own terms and conditions would wish to correct its conduct not double down by quickly changing its terms and conditions to seek to permit its past breaches of its own terms and conditions in future. Customers and regulators across the globe should be made aware of this pattern of conduct. ## Payoneer's Evolving Terms and Conditions After we wrote to Payoneer they slyly changed their terms (see below), giving them more power over client funds. Micro Enterprise accounts can now be terminated anytime without notice, and clients may not get their full balance back. This raises concerns about transparency and fair treatment for customers. It is unequivocally stated in Payoneer's terms and conditions that funds held by the platform belong to the account holder. Furthermore it is, or rather was, stated both that a Micro Enterprise will be given two months notice or termination (which did not happen in the case of our Micro Enterprise client) and that upon termination Payoneer **will **transfer any available Payoneer Balance provided that: (i) you have not acted fraudulently or with gross negligence or in such a way as to give rise to reasonable suspicion of fraud or gross negligence; and (ii) we are not required to withhold your funds by law or regulation, or at the request of the police, a court or any regulatory authority. In the circumstances, Payoneer had and has no right to withhold our client's funds but, Svetlana Vrubel, a Business Operations Leader at Payoneer in Israel informed our client on 17 March 2024 that: > *“Payoneer has the right, to suspend access to funds in line with clause 24 of our terms and conditions. We are not able to make these funds available to you at this date. You will receive notification from us in the event that this changes.”* > > > [Svetlana Vrubel, Business Operations Leader at Payoneer in Israel](https://www.linkedin.com/in/svetlana-vrubel-428b7071/?originalSubdomain=il) The above reference to clause 24 of the terms and conditions appears to be erroneous, since the Payoneer terms and conditions deal with termination and suspension of an account in clause 25. Or perhaps it was a template based on a previous version of Payoneer's terms and conditions - contractual agreements that seem to change with alarming speed. Remarkably after receiving our letter notifying Payoneer of its own breach of its own contractual terms and conditions, and citing those terms in our correspondence, it silently and quickly changed those terms and conditions: - Firstly, Payoneer removed the requirement of giving two months notice to Micro Enterprises. This means Payoneer may terminate or suspend any of it's present customer's accounts at any time without notice. - Secondly, it changed the terms to allow it to terminate unilaterally for any unlimited reason rather than the previous list of reasons. - Thirdly, Payoneer rowed back from promising to transfer any available Payoneer Balance (we ***will ***transfer any available Payoneer Balance to you) except where there was fraud or a requirement to withhold funds by law or regulation or police or court or regulatory request. Now Payoneer simply says that at the time of a termination notice or at any time thereafter we ***may ***give you instructions on how to withdraw remaining funds. It is clear that [Nerdwallet's review of Payoneer "*Customers report account freezes and terminations, resulting in the loss of funds.*"](https://www.nerdwallet.com/reviews/small-business/payoneer) is becoming more and more accurate. Now, account freezes and terminations can now happen at any time without any notice and can last for any period of time and you *may (*or may not) get instructed on getting your funds back. You can consider the changes in detail below with now missing terms highlighted in red and new terms in turquoise. These terms and conditions seem completely unfair to all Payoneer customers. Perhaps Payoneer customers such as our client would not even realise these amendments have even taken place? ## Payoneer's Scramble to Change its Terms > ** [MARCH 2024]** > > > > > > **25. TERMINATION AND SUSPENSION > **25.1 We may terminate or suspend your engagement with us under these Terms and Conditions and your use of the Payoneer Services hereunder at any time on immediate notice or in the case of a Micro Enterprise, by giving not less than two months' notice. You may terminate your use of the Payoneer Services with us at any time in accordance with the Closing Your Payoneer Account provisions above. We may terminate or suspend your use of the Payoneer Services with immediate effect, including access to funds, if or upon, as applicable: (a) your violation of these Terms and Conditions, (b) your provision of any false, incomplete, inaccurate, fraudulent or misleading information, (c) you are engaged in fraudulent, money laundering, terrorism financing or illegal activity or we reasonably suspect the same, (d) we reasonably believe that your Payoneer Account has been compromised or for other security reasons, (e) we are required to do so under any applicable law or regulation, or at the direction of any regulatory, law enforcement or other competent authority, or (f) continuing to provide the Payoneer Services would be in breach of our obligations under applicable law or regulation. We shall notify you either prior to the suspension or termination or, if prior notification is not possible under the circumstances, promptly after the suspension or termination, unless we are prohibited by law to notify you. > > > > > > 25.2 Upon termination, following receipt of all necessary information from you and all transactions and applicable and/or outstanding fees and charges have been processed and deducted, we will transfer any available Payoneer Balance to you provided that: (i) you have not acted fraudulently or with gross negligence or in such a way as to give rise to reasonable suspicion of fraud or gross negligence; and (ii) we are not required to withhold your funds by law or regulation, or at the request of the police, a court or any regulatory authority. > > > Payoneer Terms and Conditions - March 2024 -- > **[APRIL 2024]** > > > > > > **25. TERMINATION AND SUSPENSION > **25.1 We may terminate or suspend your use of the Payoneer Services at any time. You may terminate your use of the Payoneer Services with us at any time in accordance with the Closing Your Payoneer Account provisions above. Grounds for termination or suspension, including access to funds, include but are not limited to, (a) your violation of these Terms and Conditions, (b) your provision of any false, incomplete, inaccurate, or misleading information, (c) you are engaged in fraudulent, money laundering, terrorism financing or illegal activity or we reasonably suspect the same, (d) we reasonably believe that your Payoneer Account has been compromised or for other security reasons, or (f) if we are required to do so under any applicable law or regulation, or at the direction of any regulatory, law enforcement or other competent authority. We shall notify you either prior to the suspension or termination or, if prior notification is not possible under the circumstances, promptly after the suspension or termination, unless we are prohibited by law to notify you. > > > > > > 25.2 Together with a termination notice or at any time thereafter we may give you instructions on how to withdraw remaining funds. > > > > > > 25.3 Termination of your use of the Payoneer Services will not affect our right to make deductions for any outstanding or unpaid fees. > > > Payoneer Terms and Conditions - April 2024 This highlights Payoneer's recent changes to their terms and conditions, specifically regarding account termination and fund access for Micro Enterprises. Here are the key points: - **Previously, Payoneer guaranteed a two-month notice period for Micro Enterprise account termination.** This clause has been removed, allowing Payoneer to terminate accounts at any time without notice. - **Previously, Payoneer promised to transfer any remaining balance upon termination** unless fraud or legal restrictions applied. Now, they only say they may provide instructions on how to withdraw funds at some point after termination. - **Previously, termination reasons were limited.** Now, Payoneer can terminate for any reason. - **These changes were made after our client's account was frozen, raising concerns about retrospective changes.** - **Payoneer's terms and conditions seem to be changing frequently and unfavourably for customers.** Overall, the new terms and conditions give Payoneer significantly more power over client accounts and funds, raising concerns about transparency and fair treatment for Micro Enterprises. ## Expert Financial Services Dispute Lawyers We specialise in assisting clients facing financial services litigation disputes, providing expert advice from experienced solicitors and barristers from the outset. With our legal expertise in financial law and regulatory matters, we assess cases, advise and then empower businesses to assert their rights and seek redress. We have an excellent and proven track record of fighting misconduct by Financial Services institutions including each and every one of the four major banks in the UK. If you have a high value litigation dispute [get in touch for a second opinion](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/). --- # Quick Guide: s.994 Companies Act Unfair Prejudice Petitions Source: https://lexlaw.co.uk/solicitors-london/quick-guide-s-994-companies-act-unfair-prejudice-petitions/ This succinct guide provides essential insights into unfair prejudice petitions within the framework of English law. According to [Section 122(1)(g) of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/1221g-Insolvency-Act-1986.pdf), if a minority within a company perceives oppression by the majority, they have the right to petition for the [company's winding-up](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) on the grounds of justness and equity. However, if the minority prefers not to pursue this course of action, they have an alternative option available: to file an unfair prejudice petition under [Section 994(1) of the Companies Act 2006](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf) (the “[Companies Act](https://lexlaw.co.uk/wp-content/uploads/Companies-Act-2006.pdf)”). ## What is Unfair Prejudice? Unfair prejudice typically refers to actions or circumstances that unfairly disadvantage a member of a company, especially concerning the management of the company's affairs and business. This disadvantage may arise from the actions or inactions of another member of the company. For unfair prejudice to be established, it is essential that the member's interests have been harmed in a manner deemed unfair. Unfair prejudice comprises two main elements: "unfairness" and "prejudice". However, it falls to the courts to determine what qualifies as "unfair" and "prejudicial". Nonetheless, the member must demonstrate that they have suffered a loss due to unfair prejudice. ## Expert UK Shareholder Dispute Lawyers [LEXLAW](https://lexlaw.co.uk/) specialise in navigating the intricate landscape of [shareholder disputes](https://lexlaw.co.uk/partnership-llp-members-dispute-resolution-solicitors/) and unfair prejudice claims. With a deep understanding of company law and extensive experience in handling complex legal matters, [our team](https://lexlaw.co.uk/our-people/) is dedicated to advocating for the rights of minority shareholders who have been subjected to unjust treatment. From meticulously analysing the circumstances surrounding unfair financial dealings to crafting compelling [Section 994](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf) petitions, we are committed to providing comprehensive legal assistance tailored to each client’s unique situation. Our goal is to empower our clients with the knowledge and resources needed to pursue effective legal remedies and secure favourable outcomes in their shareholder disputes. Trust [our expertise](https://lexlaw.co.uk/practice-areas/) to guide you through the complexities of the legal process and fight for the justice you deserve. ## Test for Unfair Prejudice The assessment of unfair prejudice follows an objective standard, not a subjective one. Instead of focusing on whether the majority was aware that their actions would harm a member of the company, the key enquiry is whether a reasonable person would view the majority's actions as unfairly detrimental to the interests of the minority. It's crucial to understand that a remedy is less probable when there's been no violation of the terms agreed upon by the member regarding the conduct of the company's affairs. ## What is an Unfair Prejudice Petition? An unfair prejudice petition is typically seen as a recourse for addressing minority oppression, but it's important to note that the remedy provided by [Section 994 of the Companies Act](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf) is not only specifically applicable to minority shareholders. In cases where the minority holds a controlling stake, the majority can also initiate such a petition to protect their interests. However, if the majority shareholders have the means to rectify the situation through their controlling stake, a petition filed by them in court may not be granted. ## Grounds for bringing an Unfair Prejudice Petition: Sections [994(1)](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf) and [995(2) of the Companies Act](https://lexlaw.co.uk/wp-content/uploads/S995-companies-act-2006.pdf) provide that the grounds for bringing an unfair prejudice petition are: *“the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of members generally or some part of its members (including at least himself) or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial”* This implies that a member cannot file a petition unless their own interests have been adversely impacted by unfairly prejudicial conduct. Based on the aforementioned provision, two grounds for an unfair prejudice petition can be identified: - Conducting the affairs of the company in an unfairly prejudicial manner; and - An act or omission that is or would be unfairly prejudicial. While both of these grounds are often present concurrently, either one is sufficient for a petition. Additionally, the provision includes proposed actions, but mere concerns about how a company's affairs may be conducted are insufficient for the purpose of filing a petition. ## Which companies are subject to Sections 994 and 995? Petitions under [Sections 994](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf) and [995 of the Companies Act](https://lexlaw.co.uk/wp-content/uploads/S995-companies-act-2006.pdf) can be filed for all companies defined within the definition in the said [Act](https://lexlaw.co.uk/wp-content/uploads/Companies-Act-2006.pdf). Legal precedent has established that petitions can also be initiated concerning quasi-partnerships. ## Who can bring an Unfair Prejudice Petition? An unfair prejudice petition can be initiated by a member of a company. According to [Section 112 of the Companies Act](https://lexlaw.co.uk/wp-content/uploads/s112-Companies-Act-2006.pdf), a member is defined as a subscriber to the memorandum and any other individual who agrees to become a member of the company and is listed on the register of members. This includes shareholders or non-members who have obtained shares but have not been recorded on the shareholder register, or who have acquired shares through legal means, such as being a personal representative of a deceased individual's estate. The individual initiating this action, is formally known as 'the petitioner'. Although the [Companies Act](https://lexlaw.co.uk/wp-content/uploads/Companies-Act-2006.pdf) technically permits majority shareholders to file a claim for unfair prejudice, in practice, such petitions are rarely successful, except in rare cases where the majority shareholder lacks voting control. Typically, majority shareholders possess the authority to influence the company's decisions and affairs, unlike minority shareholders. Hence, most unfair prejudice petitions are initiated by minority shareholders. ## How to bring an Unfair Prejudice Petition? The [Civil Procedure Rules](https://lexlaw.co.uk/wp-content/uploads/CPR-1998.pdf) (the “[CPR](https://lexlaw.co.uk/wp-content/uploads/CPR-1998.pdf)”), particularly as outlined in [CPR Practice Direction 49A](https://lexlaw.co.uk/wp-content/uploads/CPR-Practice-Direction-49A.pdf), generally governs unfair prejudice petitions. However, specific rules outlined in the [Companies (Unfair Prejudice Applications) Proceedings Rules 2009](https://lexlaw.co.uk/wp-content/uploads/Companies-Unfair-Prejudice-Applications-Proceedings-Rules-2009.pdf), detail requirements for such petitions and their service. Under [Section 994 of the Companies Act](https://lexlaw.co.uk/wp-content/uploads/S.994-CA-2006.pdf), a petition is necessary, and any other approach would be deemed a procedural flaw. The petition must clearly outline the grounds for its submission and the desired relief. [Contact us](mailto:contact@lexlaw.co.uk) today to book a consultation conference with [expert shareholder dispute lawyers](https://lexlaw.co.uk/our-people/). The court is required to schedule a hearing, known as the "return day", during which both the petitioner and any respondents, including the company, must appear before the registrar or district judge. At this hearing, directions will be provided regarding the procedure for the petition. Upon setting the return day, the court will provide the petitioner with sealed copies of the petition for service, each marked with the return day and the time of the hearing. The petitioner is required to serve a sealed copy of the petition on the company at least 14 days before the return day. Additionally, if the petition is brought by a member of the company, the petitioner must also serve a sealed copy of the petition on every respondent named in the petition at least 14 days before the return day. On the return day or thereafter, the court will provide suitable directions as deemed necessary. Interlocutory relief may also be attainable to safeguard both the Company's and the Petitioner's interests until the petition is heard. However, the court will not grant relief assuming unfair prejudice will be established during the trial. ## Respondents to Unfair Prejudice Petitions Typically, the respondent to a petition is the majority shareholder accused of oppressing the minority shareholder. However, the scope of potential respondents is wider. A past member of the company could also be a respondent. Furthermore, it's possible to seek relief against an individual who isn't or has never been a member or director of the company in question, provided that individual has knowingly received or aided in the improper diversion of the company's assets. The company itself is often included as a respondent. This is because there might be instances where the company is obligated to buy assets or shares. ## Principles of a Reasonable Offer in Unfair Prejudice Cases In the landmark case of *[O’Neill v Phillips](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd990520/neill01.htm)*, heard in the House of Lords, it was established that a reasonable offer made by the majority to buy out the shares of the minority could prevent the alleged unfair prejudice against the petitioner's interests. Following the guidance set forth in this case, a reasonable offer aligning with these principles could serve as a robust defence against any claims of unfair prejudice and reduce the risk of a significant adverse costs award. These principles of a reasonable offer can be outlined as follows: - **Price: **The offered price should accurately reflect the true value of the minority shareholder's stake in the company. - **Expert Opinion:** If there's disagreement on the valuation, a professional should swiftly determine the fair value. - **Information Equality:** Both parties should have access to the same company information to facilitate fair price negotiations. - **Costs:** Typically, if the majority shareholder loses, they bear the costs, but offering a fair deal early on could mitigate these expenses. In *[O’Neill v Phillips](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd990520/neill01.htm)*, Lord Hoffman outlined the characteristics of a reasonable offer as follows: *“In the first place, the offer must be to purchase the shares at a fair value. This will ordinarily be a value representing an equivalent proportion of the total issued share capital, that is, without a discount for its being a minority holding. The Law Commission (paras 3.57 to 3.62) has recommended a statutory presumption that in cases to which the presumption of unfairly prejudicial conduct applies, the fair value of the shares should be determined on a pro rata basis. This too reflects the existing practice. This is not to say that there may not be cases in which it will be fair to take a discounted value. But such cases will be based upon special circumstances and it will seldom be possible for the court to say that an offer to buy on a discounted basis is plainly reasonable, so that the petition should be struck out."* *"Secondly, the value, if not agreed, should be determined by a competent expert. The offer in this case to appoint an accountant agreed by the parties or in default nominated by the President of the Institute of Chartered Accountants satisfied this requirement. One would ordinarily expect the costs of the expert to be shared but he should have the power to decide that they should be borne in some different way."* *"Thirdly, the offer should be to have the value determined by the expert as an expert. I do not think that the offer should provide for the full machinery of arbitration or the half-way house of an expert who gives reasons. The objective should be economy and expedition, even if this carries the possibility of a rough edge for one side or the other (and both parties in this respect take the same risk) compared with a more elaborate procedure. This is in accordance with the terms of the draft regulation recommended by the Law Commission: see App C to the report."* *"Fourthly, the offer should, as in this case, provide for equality of arms between the parties. Both should have the same right of access to information about the company which bears upon the value of the shares and both should have the right to make submissions to the expert, though the form (written or oral) which these submissions may take should be left to the discretion of the expert himself."* "*Fifthly, there is the question of costs. In the present case, when the offer was made after nearly three years of litigation, it could not serve as an independent ground for dismissing the petition, on the assumption that it was otherwise well founded, without an offer of costs. But this does not mean that payment of costs need always be offered. If there is a breakdown in relations between the parties, the majority shareholder should be given a reasonable opportunity to make an offer (which may include time to explore the question of how to raise finance) before he becomes obliged to pay costs. As I have said, the unfairness does not usually consist merely in the fact of the breakdown but in failure to make a suitable offer. And the majority shareholder should have a reasonable time to make the offer before his conduct is treated as unfair. The mere fact that the petitioner has presented his petition before the offer does not mean that the respondent must offer to pay the costs if he was not given a reasonable time.”* ## Preliminary Hearings The initial hearings in an unfair prejudice petition typically involve directives or rulings concerning disclosure and expert valuation evidence. [Disclosure](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) is crucial because the majority often controls the physical documents and/or electronic data relevant to the case. Consequently, disputes over what should or shouldn't be disclosed are common, requiring the court's guidance on disclosure matters. As previously mentioned, expert valuation evidence plays a pivotal role in assessing the value of the minority's shares, which is the most frequent remedy in a successful petition. Consequently, the order typically includes provisions for one or more experts to offer valuations of the company and its shares. ## Example High Court Case Management Directions Typically, once an unfair prejudice petition is sealed by the Court, the Court will order, of its own motion that: - [Practice Direction 57AD](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-57a-business-and-property-courts/practice-direction-57ad-disclosure-in-the-business-and-property-courts) on Disclosure in the [Business and Property Courts](https://www.gov.uk/courts-tribunals/the-business-and-property-courts) applies to the petition (and that the points of claim, points of defence and points of reply directed below shall be treated as particulars of claim, defence and reply respectively for the purposes of that practice direction). - The Petitioner(s) serve the petition by 4pm on [date]; - The petition shall stand as points of claim; - The Respondent(s) (save for the company) shall file and serve points of defence by [date]; - The Petitioner(s) file and serve points of reply (if so advised) by 4pm on [date]; - The petition be listed for case management and (where appropriate) costs management on [date] with a time estimate of 1.5 hours *[The parties are directed to [CPR 3.12](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.12). If the parties seek an order dispensing with cost budgets they should inform the court in advance of the hearing, and in any event notify the court as soon as possible if the 1.5 hour time estimate is too long or too short or the date cannot be kept].* - Where there is to be costs management: (a) the parties file and exchange costs budgets by 4pm on [date]; (b) the parties shall consider each other’s costs budget(s) and by 4pm on [date] identify to each other which phases in the other party’s/parties’ budget(s) are agreed and which are not agreed, in the latter case giving brief reasons and suggested alternative figures; (c) the solicitors for the Petitioner(s) shall file and serve by 4pm on [date]: (i) confirmation that all phases in the budgets are agreed; or (ii) a one page summary in tabular form setting out the figures for the phases in the budgets indicating which phases have been agreed and which have not been agreed together with a summary of the reasons for disagreement and suggested alternative figures; (d) the parties file and serve in the form below a non-binding indication of what they believe to be the approximate value of the shares in issue in the petition by 4.00 pm [date]; - The parties shall file and serve in the form at the end of this order a non-binding indication of what they believe to be the approximate value of the shares in issue in the petition by 4pm on [date]. - The parties be permitted to vary the above orders by consent so as to extend any period provided for by no more than 28 days. In the event that the hearing listed pursuant to paragraph 6 above needs to be vacated the parties are to notify the court as soon as reasonably practicable so the hearing may be vacated and re-listed. - The Petitioner(s) shall file and serve a hearing bundle (agreed if possible) complying with Appendix X of the Chancery Guide not more than 7 and not less than 3 days before the hearing. - Skeleton arguments complying with Appendix Y of the Chancery Guide shall be filed and served 2 days before the hearing. - Costs be in the petition. - The Petitioner(s) shall serve this order on the other parties at the same time as serving the petition. **Estimate of value** For the purpose of the hearing mentioned in paragraph 6 of the order dated [ ] I/ we put the following non-binding estimate on the value of the shares in issue in this petition on [insert date(s) ]: £[value]. Petitioner/petitioner’s solicitors/Respondent/respondent’s solicitors --- ## Remedies for Unfair Prejudice The court possesses broad discretion to issue any order it deems fair and equitable to address the unfair prejudice experienced – just as it does when it determines what constitutes “unfair” and “prejudicial” behaviour. This evaluation considers the interests of other shareholders and creditors. The court, however, does not oversee the company's management moving forward. Nonetheless, certain remedies are commonly employed by the court: - An order for the majority shareholder(s) to purchase the petitioner’s shares at a fair value and according to terms set by the court. - An order for directors to transfer property to the company that was obtained in breach of their fiduciary duties. - An order compelling or prohibiting the company from taking a specific action – this could involve changes to the Articles of Association. - An order for the minority shareholder to acquire the majority shareholder’s shares. - An order for the company to be wound up (liquidated). ## Limitations on Remedies in Unfair Prejudice Proceedings Several factors may act as barriers to obtaining relief in unfair prejudice proceedings, which are instances where the court refrains from granting a remedy. Some examples include: - Refusal of Fair Offer: If the petitioner declines a reasonable offer to purchase their shares. - Existence of Exit Routes: If there are clear provisions in the company's Articles of Association or a Shareholder Agreement outlining alternative resolutions for such disputes. - Petitioner Misconduct: The court typically avoids rectifying situations where both parties have engaged in improper behaviour. - Delay in Petition: If there's a significant delay in bringing forth the petition, or if the petitioner has seemingly accepted the unfair treatment without objection. In a notable change, the [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) has established that unfair prejudice petitions governed by section 994 of the Companies Act 2006 are subject to a [statutory limitation period of 12 years](https://lexlaw.co.uk/solicitors-london/court-of-appeal-decides-s994-petitions-subject-to-statutory-limitation-period/). This decision marks a departure from previous interpretations and will influence the handling of similar claims in the future. ## Instructing our Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) provides the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on [our extensive litigation experience](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of [alternative dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) (such as [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/#:~:text=Mediation%20makes%20use%20of%20a,simply%20to%20facilitate%20an%20agreement.) and [without prejudice negotiation](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#:~:text=Dispute%20Review%20Board-,Negotiation,negotiation%20as%20evidence%20at%20court.)) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. For personalised guidance and representation in unfair prejudice matters, please reach out to us at [contact@lexlaw.co.uk](contact@lexlaw.co.uk%20) or give us a call at [☎ 02071830529](02071830529). --- # UK Bridging Loans: Fast Cash for Significant Risk? Source: https://lexlaw.co.uk/solicitors-london/uk-bridging-loans-fast-cash-for-significant-risk/ Bridging loans can be helpful for short-term financial needs, but they ome with significant risks. A bridge may be a tempting solution for quick access to cash in the UK property market. However, these loans come with higher interest rates and short repayment terms which can quickly turn a lifeline into a financial burden. What will happen on your specific bridge agreement? Do you understand the risks of repayment pressure and exit strategy? We explore below the importance of seeking professional legal advice before taking out a bridging loan. A solicitor can: - Help you understand the complex terms and conditions of the loan agreement. - Identify potential risks and pitfalls associated with the specific loan offer. - Develop a sound exit strategy for repaying the loan. - Represent you in case of disputes with the lender. - Taking a bridging loan can be a risky business. Protect your interests by seeking expert legal guidance. # Six Key Dangers in UK Bridging Finance ## 1. High Interest Rates Bridging loans typically have much higher interest rates than traditional mortgages or loans. This can make them very expensive, especially if you need the loan for an extended period of if you go into default. ## 2 .Quick Repayment These loans are designed to be short-term solutions, often with repayment periods of just a few months. If you're unable to repay the loan or find long-term financing within that timeframe, you could face serious financial difficulties. ## 3. Exit Strategy Risk A crucial element of bridging loans is having a clear "exit strategy" for repaying the loan. This could involve selling a property, securing long-term financing, or some other method. If your exit strategy falls through, you could default on the loan. ## 4. Loss of Assets Bridging loans are often secured against an asset, such as a property. If you can't repay the loan, the lender may repossess the asset to recoup their losses. ## 5. Negative Equity Risk Property values can fluctuate. If the value of your property falls below the amount you owe on the loan (negative equity), it can be difficult to find alternative financing and you could lose your property. ## 6. Limited Protection Unlike some other types of loans, bridging loans may not be subject to the same regulations and protections for borrowers. ## Checklist of Points to Consider - Carefully assess your financial situation before taking out a bridging loan. - Ensure you have a realistic exit strategy in place. - Shop around for the best possible interest rate and terms. - Seek professional financial and legal advice before proceeding, especially if you are unsure about the risks involved. ## Case Study: Bridging to Avoid Repossession Imagine you own a property valued at £300,000, but you’re struggling with a mortgage debt of £150,000, including £15,000 in arrears. Feeling overwhelmed and desperate to avoid losing your home, you seek advice from financial experts. Bridge loans are presented as a possible remedy, offering to repay the £150,000 to your mortgage lender and providing temporary relief from the threat of repossession. ## Appeal vs Risk of Bridge Loans At first glance, bridge loans seem like a lifeline. They promise quick access to funds, allowing you to pay off your existing mortgage and buy time to resolve your financial situation. However, the devil is in the details, and those details can lead to dire consequences. ## Typical Bridging Costs - ***Compound Interest Upfront:*** Bridge loans typically come with compound interest upfront. Imagine a 1% monthly interest rate compounded over 12 months. Within a year, your initial loan amount of £150,000 balloons to approximately £182,000. Suddenly, your monthly payments increase significantly compared to your original mortgage. - ***Administration Fees and Broker Fees:*** On top of interest, bridge loans often involve administration fees and broker fees. These costs add up quickly, further increasing the total loan amount. - ***Default Fees and Default Interest:*** If you miss a payment or fail to repay the loan on time, default fees usually kick in. Lets say a 3% default fee followed by a steep 3% per month default interest rate - these can quickly escalate your outstanding balance. ## Importance of Independent Legal Advice By the 18-month mark, your outstanding balance could reach an overwhelming £208,815. Refinancing the property becomes nearly impossible, and selling it becomes the only viable option. However, the process of selling takes time, and with each passing month, the costs continue to escalate. Your equity dwindles, and the financial nightmare intensifies. It's important to recognise that this is a known risk from the outset that you must understand and is specific to your case. It is critical to get independent legal advice to understand the range of possible loan exits. While bridge loans may offer temporary relief, homeowners must weigh the risks carefully. Hidden costs can turn what seems like a solution into a financial trap. Before considering a bridge loan, explore alternative options, seek professional advice, and understand the long-term implications. Our [experienced legal team](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) is well-versed in banking and securities law, with practical knowledge of unregulated bridging loans. We advocate for our clients by negotiating with banks, mortgage brokers, or advisors as needed to protect their interests. If legal action becomes essential, we’re prepared to implement effective strategies. Don’t allow a bridging loan to jeopardise your most valuable asset without understanding the risks properly. ## What Are Bridging Loans? [Bridging loans](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) are short-term financing solutions, typically lasting less than 18 months. They are secured against a property and offer quick access to cash. Property buyers often use bridging loans to bridge the financial gap between selling their current property and purchasing a new one.  However, these loans are generally considered a last-resort option due to their higher interest rates compared to traditional mortgages.  Specialised finance companies, advisors, and mortgage brokers usually provide bridging loans, rather than mainstream banks. It’s important to note that failure to repay a bridging loan can result in repossession of the property and significant financial consequences.  ## What is the difference between closed and open bridging loans? Closed and open bridging loans have distinct repayment terms. A closed bridging loan has a predetermined repayment date, typically within a few months, making it suitable for borrowers with specific plans, such as waiting for property sale. Conversely, an open bridging loan lacks a fixed repayment date, offering flexibility for repayment once long-term financing is secured or the property is sold. Open bridging loans are preferred by borrowers anticipating delays in funding or finalising property transactions. Usually in the UK only closed bridging is made readily available. ## Who Faces Risks with Bridging Loans? Homebuyers and property developers often turn to bridging loans to facilitate property purchases or development projects. However, borrowers may encounter difficulties if their plans do not proceed as expected: - ***Homebuyers***: Those using bridging loans to purchase a new property before selling their existing one may face challenges if the sale does not occur promptly. Delayed sales can result in high interest rates on the bridging loan, posing financial strain. - ***Property Developers***: While bridging loans are commonly used for development projects, delays or complications in the project can increase the risk associated with the short-term nature of the loan. - ***Business Owners***: Seeking bridging loans for working capital or expansion purposes, business owners may encounter obstacles if their business fails to generate anticipated revenue within the loan term. Many bridging loans end up in default because borrowers underestimate the high interest costs. It’s crucial to carefully consider your options before choosing bridging finance. We strongly recommend seeking [professional advice ](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/)to avoid putting your finances and home at risk.  Our London-based[ Financial Services Litigation team](https://lexlaw.co.uk/) includes experienced Solicitors and Barristers who specialise in mis-selling cases. We represent SMEs, high net worth individuals, and companies in significant bridging finance mis-selling disputes. Our successful cases, often featured in the media, reflect our expertise. We have effectively handled mis-selling court litigation against major UK banks and regulated financial advisers.  ## Why are bridge loans risky? While personal bridging loans are regulated by the [Financial Conduct Authority (FCA)](https://www.fca.org.uk/), commercial loans secured against investment properties are not. As a result, commercial bridging loans function in an unregulated setting. Certain lenders may request the incorporation of a company as a condition for securing a bridging loan, hinting at possible hidden fees within the unregulated lending process.  The primary issue with a bridge loan lies in its short-term nature. Unlike mortgage arrears, where eviction is not immediate, with a bridge loan, eviction occurs because the loan term has expired, and the entire debt must be repaid—failure to do so puts borrowers in a unstable situation.  The difference between an expired bridge loan and a typical mortgage lies in regulation which includes as to repossession actions. While a regular mortgage provider is forced to allow time for resolution proposals, bridging loan companies can act swiftly to recover their loans. In some cases, they escalate matters to the high court to expedite the eviction process.  Timely consultation with [specialised bridging loan lawyers](https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/) is essential. Delaying could lead to the lender seizing your equity through default interest and legal expenses. Our legal team comprises [experts in insolvency and winding up petitions](https://windinguppetitionsolicitors.co.uk/). If our clients face[ winding up proceedings](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) or the appointment of receivers due to a mis-sold bridging loan, we can promptly offer assistance and guidance.  ## What are the risks of UK Bridging Loans? Bridging loans can be risky. They come with fees on top of the loan amount, which can add up quickly, especially if you can't repay the loan on time. The interest rates are also high, and they can increase even more if you don't repay on time. This can make it difficult to repay the loan in the long run. If you're already having financial trouble, a bridging loan could make things worse. You might end up losing your property, which is the opposite of what you wanted to achieve with the loan. In many cases, people don't take into account all the costs and how they will repay the loan before taking out a bridging loan. It's important to consider all your options before deciding on this type of loan, and it's wise to talk to a professional for advice. ## What happens if you default on a bridge loan? - Repossession of Valuable Asset: Bridge loans are secured by valuable assets, such as real estate. If you default on the loan, the lender may repossess the property or asset used as security. While repossession is typically a last resort, it remains a significant risk. - Adverse Costs: Defaulting can lead to additional costs. Lenders may charge fees, penalties, and interest for missed payments. These costs can quickly escalate, making it even more challenging to repay the loan. - Legal Actions: Creditors have legal options to compel repayment. These may include county court judgments, [statutory demand letters](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/case-study-challenging-a-statutory-demand/#:~:text=Statutory%20demands%20are%20a%20legal,a%20company%20winding%2Dup%20petition.), and, in extreme cases, [winding-up petitions ](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/)that could force your company into liquidation. - Risk of Losing Your Home: If your bridge loan is secured against your home, defaulting could result in the loss of your property. It’s crucial to communicate with your lender if you’re facing difficulties to explore alternative repayment options. We are experienced [Statutory Demand solicitors](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/) with expertise in both issuing and defending statutory demands. Our specialised [winding-up petition lawyers](https://lexlaw.co.uk/winding-up-petition-lawyers/) excel in defending winding-up petitions. We provide advice on the specific merits and drawbacks of your case and offer assistance in opposing winding-up petitions or defending against statutory demands.  ## Legal protection against eviction and Bankruptcy When borrowers face eviction due to bridge loans, it’s essential to understand their legal rights and seek professional advice. If you've [experienced bankruptcy](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/) and received help from a claims management company, or if you've obtained bridging finance to settle debts during bankruptcy and pursue an annulment, you may be struggling to repay the loan due to its steep interest rates. As [specialised bridging loan lawyers](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/), we can support you in resolving disputes with the lender, broker, or adviser.  You can check out our guide on [**Bankrupt disputes against bridge lenders and annulment advisers.**](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/) ## Understanding Bridging Loan Risks Understanding the terms and potential pitfalls of bridging loans is essential for informed decision-making. Here are some essential considerations before engaging with bridge loans. ### Consult with a Bridging Loan Solicitor: Engage a specialist bridging loan solicitor who can guide you through the complexities of the loan process. Ensure all necessary legal documentation is in order to minimise the risk of legal issues arising. Our team of [Mis-sold Bridging Loan Lawyers](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) consistently achieves favourable outcomes. We provide expert senior legal counsel from solicitors and barristers, ensuring strategic decision-making from the outset. Regional solicitors’ firms often seek our specialised litigation advice and support for mis-selling cases. ### Borrower Protection: Read the terms and conditions associated with any bridge loan offer carefully. Remember that bridge loans are secured with your existing property, and a lender can foreclose on that property if payments aren’t met. Unfair treatment and fees can and should be challenged – for more information see our guide [“Bridging Loans: When are interest rates & charges unfair?“](https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/) ### Take Action Swiftly: Bridge loan companies may escalate cases to expedite eviction. Consult with legal professionals promptly to protect your interests and explore potential solutions.  Explore our [successful case studies](https://lexlaw.co.uk/solicitors-london/case-study-lender-default-charge-of-150k-completely-defeated/) and discover how we provide prompt guidance and best practices on bridging loans. As a leading legal team, we strive for excellence. Read more about our [Bridging Dispute Litigation](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/). --- # Game, Set, Match: Boris Becker’s Bankruptcy Battle Ends in Discharge Source: https://lexlaw.co.uk/solicitors-london/game-set-match-boris-beckers-bankruptcy-battle-ends-in-discharge/ *The case of Boris Becker, the former tennis champion and Wimbledon legend, stands as a cautionary tale within the area of bankruptcy law. Becker's trajectory from sports stardom to financial turmoil culminated in a prominent bankruptcy case that garnered extensive attention from both the legal community and the public. This case study explores the complexities of Becker's bankruptcy, the legal obstacles he encountered, and the broader implications for bankruptcy proceedings in the UK.* Declared [bankrupt](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) in June 2017, Becker was obligated to disclose all his assets to the appointed trustees. However, he was later found guilty of concealing significant assets, leading to his conviction under the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents). The bankruptcy application was initially made by private bankers [Arbuthnot Latham & Co](https://www.arbuthnotlatham.co.uk/) in connection with a judgment debt owed to them by Becker dating back to 2015. ## What did Becker Conceal? Becker was [legally required](https://www.gov.uk/government/news/boris-becker-convicted-of-bankruptcy-offences) as per [s. 333](https://www.legislation.gov.uk/ukpga/1986/45/section/333) and [s.251J](https://www.legislation.gov.uk/ukpga/1986/45/section/251J) of the Insolvency Act to disclose all his assets to the trustees for the [benefit of his creditors](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/). He was accused of hiding several assets during his [bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) proceedings as per ss. [353](https://www.legislation.gov.uk/ukpga/1986/45/section/353) and [354](https://www.legislation.gov.uk/ukpga/1986/45/section/354) of the 1986 Act, which included: - A property in his hometown of Leimen, Germany, valued at approximately £1 million; - A bank loan of about £700,000 on the property in Leimen; - 75,000 shares in a technology firm, Breaking Data Corp., valued at approximately £66,000; - Additionally, he was found to have transferred €426,930.90 to various third parties. These actions were part of the reasons why Becker was convicted under the [Insolvency Act, 1986](https://lexlaw.co.uk/wp-content/uploads/Insolvency-Act-1986-Lexlaw-Solicitors-and-Advocates-London-UK.pdf) and was thereafter imprisoned in 2022. The concealment of these assets was considered a serious offense as it hindered the ability of the trustees to distribute funds to his creditors accordingly. ## Becker’s Conviction and Sentencing In April 2022, Becker was found [guilty of four charges under the Insolvency Act, 1986](https://www.gov.uk/government/news/boris-becker-convicted-of-bankruptcy-offences). The charges included the removal of property, two counts of failing to disclose [estate](https://lexlaw.co.uk/practice-areas/probate-solicitor-london/), and concealing debt. As a consequence Becker was sentenced to two and a half years in prison. The severity of the sentence underscored UK’s stringent approach to [bankruptcy fraud](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/). UK’s legal framework for [bankruptcy](https://windinguppetitionsolicitors.co.uk/) is designed to be rigorous and fair, ensuring that individuals who are unable to pay their debts can have a fresh start, while also protecting the rights of creditors. The [Insolvency Act of 1986](https://lexlaw.co.uk/wp-content/uploads/Insolvency-Act-1986-Lexlaw-Solicitors-and-Advocates-London-UK.pdf) and the [Insolvency Rules of 2016](https://www.legislation.gov.uk/uksi/2016/1024/contents/made) are key pieces of legislation that outline the responsibilities and restrictions placed on individuals who declare [bankruptcy](https://lexlaw.co.uk/bankrupt-disputes-against-bridge-lenders-and-annulment-advisers-mis-selling-unregulated/), and the overall scheme of law that govern the matter. ## Becker’s Appeal against the Conviction Becker did [appeal](https://lexlaw.co.uk/legal-case-assessment/) the court’s decision regarding his bankruptcy. In May 2024, the appeal was successful, and he was [officially discharged ](https://lexlaw.co.uk/wp-content/uploads/Judgment-Boris-Franz-Becker-01.05.24.pdf)from bankruptcy after the insolvency court found that he had done *“all that he reasonably could do”* to repay his creditors. The court acknowledged his efforts to settle his debts, which included a substantial sum into the bankruptcy estate. The grounds of appeal in Becker’s case were centered around the suspension of his automatic discharge from bankruptcy, and included: - **Suspension of Discharge**: Becker’s legal team argued against the Bankruptcy Order passed in 2018 that suspended the running of time for his discharge from bankruptcy. The suspension was initially put in place because Becker had not complied with his obligations under the Insolvency Act; - **Settlement Deed**: Becker’s appeal included a request for an order compliant with the rules, discharging the 2018 Order based on a Settlement Deed dated November 15, 2023. This deed was entered into between Becker, the joint trustees of his bankruptcy estate, and another party; - **Privacy of Settlement**: The appeal also sought an order under the rules that the Settlement Deed must not be made available for inspection without the permission of the court, which the joint trustees agreed to; and - **Fulfillment of Obligations**: The appeal highlighted that Becker had done “all that he reasonably could do” to fulfill his financial obligations, which included providing a substantial sum into the bankruptcy estate. Throughout the proceedings, Becker’s financial struggles were also highlighted, with his barrister stating that his career and prospects of earning an income were destroyed, leaving his reputation “in tatters” and him with "literally nothing". This discharge marked the end of a significant legal and financial ordeal for the former tennis star. **Download the Judgment here: ****** [![](https://lexlaw.co.uk/wp-content/uploads/Judgment-Download.png)](https://lexlaw.co.uk/wp-content/uploads/Judgment-Download.png) ## What was the Role of Trustees in Becker’s case? In Becker’s bankruptcy case, the [role of the joint trustees](https://www.thegazette.co.uk/insolvency/content/103573), who derive authority from [s.314](https://www.legislation.gov.uk/ukpga/1986/45/section/314) of the Insolvency Act, was crucial. They were responsible for managing Becker’s bankruptcy estate and ensuring that his assets were properly accounted for and distributed to creditors. Key responsibilities they had included: - **Asset Management**: The trustees would oversee the identification and valuation of Becker’s assets, ensuring that all non-exempt assets were available for distribution to creditors. - **Financial Investigation**: Trustees would conduct a thorough investigation into Becker’s financial affairs to uncover any undisclosed assets or transactions. - **Asset Recovery**: In cases where assets were hidden or transferred to avoid repayment, the trustees would work to [recover these assets](https://lexlaw.co.uk/debt-recovery-insolvency-county-court-proceedings-petitions-fixed-fee-lawyers-london/) for the benefit of the creditors. - **Legal Proceedings**: The trustees would initiate [legal proceedings](https://lexlaw.co.uk/how-do-i-start-court-proceedings-litigation-step-by-step-guide-second-opinion/) if necessary, to challenge any improper transactions or preferences given to certain creditors. - **Distribution of Assets**: Once all assets were accounted for and any legal challenges resolved, the trustees would distribute the proceeds from the sale of assets to the creditors according to the priority established by bankruptcy laws. - **Communication with Creditors**: They would maintain communication with the creditors, informing them of the progress and outcomes of the bankruptcy proceedings. - **Settlement Agreement**: The trustees played a vital role in negotiating the [Settlement](https://lexlaw.co.uk/solicitors-london/the-importance-of-making-a-strategic-part-36-offer/) Deed, which was a key part of his appeal and subsequent discharge from bankruptcy. The joint trustees’ actions are governed by [bankruptcy laws and regulations](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/), and they act as intermediaries between the debtor and the creditors to ensure a fair and legal resolution of the bankruptcy case. By not disclosing all of his assets, Becker hindered the bankruptcy trustees’ ability to distribute funds to his creditors, which is a fundamental requirement in bankruptcy proceedings, as stipulated under . ## How did Becker’s case impact Bankruptcy laws in the UK? Becker’s case has had a notable impact on the perception and enforcement of bankruptcy laws and regulations in the UK. While the case itself may not have directly resulted in new legislation, it has certainly highlighted the importance of compliance with bankruptcy procedures and the consequences of failing to do so. Here are some ways in which the case has influenced the bankruptcy landscape: - **Increased Scrutiny**: The high-profile nature of the case has led to increased scrutiny of bankruptcy proceedings, especially involving celebrities and public figures. The case showed that no one is above the law and even prominent individuals must adhere to the [rules](https://www.legislation.gov.uk/uksi/2016/1024/part/10/made) and regulations. - **Public Awareness**: The case has raised public awareness about the seriousness of bankruptcy fraud and the legal obligation to declare all assets. It has emphasised the need for transparency in financial disclosures during bankruptcy. - **Enforcement of Bankruptcy Restrictions**: Becker’s case has underscored the enforcement of bankruptcy restrictions and the potential for extended restrictions in cases of non-compliance. His 12-year Bankruptcy Restriction Undertaking serves as a warning to others about the long-term consequences of hiding assets. - **Legal Precedent**: The case sets a [legal precedent](https://lexlaw.co.uk/solicitors-london/the-doctrine-of-legal-precedent-when-is-a-court-decision-binding/#:~:text=What%20is%20the%20doctrine%20of,Appeal%20on%20the%20same%20point.) for future bankruptcy cases, where individuals might attempt to conceal assets. It provides a reference point for courts in determining the severity of penalties for similar offenses. - **Trustee Vigilance**: Trustees may now be more vigilant in investigating the affairs of bankrupt individuals, ensuring that all assets are accounted for and properly distributed to creditors. To summarise, while the Becker case may not have changed the laws themselves, it has certainly impacted their application, [enforcement](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/) and the general approach to bankruptcy proceedings in the UK. It serves as a reminder of the importance of fulfilling legal obligations during bankruptcy and the potential repercussions of failing to do so. ## What are the consequences of Bankruptcy Fraud in the UK? Becker’s case illustrates the severe consequences of bankruptcy fraud, including legal penalties, imprisonment, financial repercussions and [reputational damage](https://lexlaw.co.uk/defamation-libel-slander-publication-take-down-letter-notice-solicitors-london-legal-advice/). It serves as a stark reminder of the importance of transparency in financial [disclosures](https://lexlaw.co.uk/duty-disclosure-litigation-court-documents-confidentiality-privilege-cpr-legal-advice/) during bankruptcy. The consequences of bankruptcy fraud in the UK are quite severe, as demonstrated by the Boris Becker case. An overview of the potential repercussions is detailed hereunder: - **Prison Sentence**: Individuals found guilty of bankruptcy fraud can face imprisonment. - **Financial Penalties**: The court may impose fines in addition to or instead of imprisonment. - **Bankruptcy Restrictions**: A person convicted of bankruptcy fraud may be subject to bankruptcy restrictions for a longer period than usual. These restrictions can include limitations on borrowing money, acting as a company director, or managing a business. - **Loss of Professional Reputation**: The stigma associated with a fraud conviction can lead to a loss of professional standing and opportunities. - **Asset Forfeiture**: Assets that were hidden or not disclosed during the bankruptcy process can be seized and sold to pay off creditors. - **Extended Bankruptcy Discharge**: The period before an individual is discharged from bankruptcy can be extended, delaying their financial fresh start. - **Public Record**: A bankruptcy fraud conviction becomes a matter of public record, which can have long-term negative implications for an individual’s credit rating and ability to secure loans or mortgages. - **Bankruptcy Restriction Undertaking (BRU)**: In some cases, an individual may voluntarily agree to a BRU, which imposes similar restrictions to a Bankruptcy Restrictions Order (BRO), but without the need for court proceedings. The UK’s Insolvency Service and the courts take a strong stance against bankruptcy fraud to maintain the integrity of the financial system and protect the rights of creditors. Becker's case serves as a reminder of the serious legal consequences that can result from attempting to deceive creditors or the court in bankruptcy proceedings. The Becker bankruptcy case is a testament to the rigorous enforcement of bankruptcy laws in the UK. It demonstrates the potential consequences of non-compliance and the critical role of trustees in safeguarding the bankruptcy process. As Becker moves forward from his legal challenges, the case remains a significant point of reference for legal professionals as well as individuals navigating the complexities of bankruptcy. ## Book an initial consultation with expert Bankruptcy Solicitors and Barristers We are a specialist City of London law firm made up of Solicitors & Barristers and are [based in the legal heart of London](https://lexlaw.co.uk/contact-us/) in [Middle Temple](https://www.middletemple.org.uk/) (one of the four prestigious barristers’ Inns of Court) adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding bankruptcy including defending bankruptcy petitions; managing bankruptcy applications (including annulments); advising on bankruptcy petitions and offences; and liaising with the Official Receiver. Whilst we are based in London we provide national coverage across all Courts in England & Wales.  --- # Account Freezing Order Guide Source: https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/ An Account Freezing Order (AFO) is a type of a [freezing order](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) used by enforcement agencies in the UK to freeze monies held in accounts that are subject of an investigation into suspected criminal activity. This article explains the purpose, application process, legal implications, and consequences for you or your business that has been made subject to an AFO. Our expert team of [AFO Solicitors and Barristers](https://lexlaw.co.uk/our-people/) have the skills and experience needed to defend our client's interests. ## What is an Account Freezing Order? An Account Freezing Order (AFO) is a judicial order issued by the [Magistrates’ Court](https://www.judiciary.uk/courts-and-tribunals/magistrates-courts/) to prevent the access or movement of funds, held in an account with a bank or a building society. These orders are typically sought by an application to the court by law enforcement agencies investigating suspected criminal conduct or illicit financial activities including [money laundering and terror-financing](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/money-laundering-poca-solicitors-london/). AFOs serve to preserve assets pending an investigation and the resolution of legal proceedings and prevent their dissipation or misuse. ## Who Can Obtain an Account Freezing Order? A senior officer of an authorised law enforcement agency, including the [Police](https://www.police.uk/), [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs), [Serious Fraud Office (SFO),](https://www.sfo.gov.uk/) and [Accredited Financial Investigators](https://www.gov.uk/government/consultations/proceeds-of-crime-act-2002-changes-to-bodies-granted-accredited-financial-investigatory-powers/afi-order-consultation-accessible-version#annex-a-list-of-the-current-accredited-financial-investigation-agencies) (AFI) may apply to the court for an Account Freezing Order. These agencies have the mandate to freeze assets suspected to be linked to criminal activity or intended for unlawful use. [The Proceeds of Crime Act 2002](https://www.legislation.gov.uk/ukpga/2002/29/contents) (POCA) outlines the detailed provisions for obtaining AFOs, specifying the criteria and procedures involved. ## How is an Account Freezing Order Obtained? To obtain an Account Freezing Order, the applicant agency must demonstrate reasonable grounds to suspect that the funds in the account are either recoverable property under the POCA, and has been [obtained through unlawful conduct](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/4/crossheading/recoverable-property) or intended for use in unlawful activities. Each account subject to an AFO must contain funds exceeding £1,000, and the application must be made to a magistrates' court. The court may grant the order without notice if disclosure would prejudice subsequent forfeiture proceedings. The application for an AFO is typically made by a senior officer or an authorised officer to a magistrates' court. The court considers the application and grants the order if satisfied with the grounds presented. The duration of an AFO is specified by the court, not exceeding two years. Once granted, the AFO prohibits the account holder from making withdrawals or payments unless authorised by the court. ## How is an Account Freezing Order Granted? AFOs are granted by a Magistrates’ Court on application by the enforcement agency, and the judge needs only be persuaded that the applicant has reasonable grounds for suspecting that money held in the account in question is either recoverable property under POCA or is intended for use in unlawful conduct. Importantly, it is the money in the account that is the focus of the AFO application. The account holder does not need to be under suspicion or investigation. Nor does any criminal offence have to have been proved at the time of the application. The AFO applicant needs only to show reasonable grounds to suspect the money may have resulted from criminal behaviour, or that it may – in the future – be used in such behaviour. ## What are the Consequences of an Account Freezing Order? Asset freezing procedures are straightforward, but an AFO can have far-reaching consequences. Upon the issuance of an AFO, the account holder is prohibited from making withdrawals or payments from the frozen account without court authorisation until the expiration date specified in the order. Exclusions may be granted by the court in exceptional circumstances, such as meeting living expenses or legal fees. You may be found in contempt of the court if you fail to comply with an AFO otherwise. ## Can I Challenge an Account Freezing Order? If you are a respondent in an application for an AFO, you have the right to challenge the order by making an application to the Magistrates' Court for its discharge or variation. You should seek legal advice and representation from solicitors who specialise in Injunction applications to discharge or vary an AFO. The court has wide discretion to vary or make exclusions from [a freezing order](https://lexlaw.co.uk/solicitors-london/category/freezing-order/), which may include the following reason: 1. to enable the carrying on of a trade or business. 2. to meet reasonable living expenses. 3. for payment of legal expenses. It is important to note, that such an application is likely to require full disclosure of financial circumstances by the applicant. Equally, a respondent may seek to negotiate directly with the enforcement agency for a variation of an Account Freezing Order by agreement. It is also possible to persuade a court to set the AFO aside altogether. However, given these applications’ relatively low evidential bar, an AFO recipient may be better advised to treat their account’s freezing as inevitable and focus resources on preparing to resist any later forfeiture application. Robust legal representation is essential in challenging an AFO effectively and safeguarding your interests. ## Can you stop the Enforcement Agency from Keeping your Frozen Funds? If an enforcement agency takes the next step after an[ Account Freezing Order (AFO)](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/), they may apply to permanently confiscate your money through a Forfeiture Order. You don’t have long to act, in most cases, you have just 30 days to challenge the order. The burden of proof is on the Appellant to show why the funds should be returned. Without strong, targeted legal arguments, the court is likely to side with the enforcement agency. A successful appeal can lead to: 1. The full release of your funds; 2. Partial recovery for essential living or business needs; 3. In some cases, compensation for losses caused by the freeze. We know this process moves quickly, and mistakes at this stage are costly. Our [specialist](https://lexlaw.co.uk/our-people/) solicitors have successfully overturned forfeiture orders by exposing flaws in evidence and building compelling defences. [Contact ](https://lexlaw.co.uk/legal-case-assessment/)us now to safeguard your money before the deadline expires. ## How long does an AFO last? Once an Account Freezing Order is granted, the applying authority has the duration of the order, which is usually between 6 to 24 months to pursue its investigation. At the end of this period (or earlier if it wishes), the authority can either accept that the test for forfeiture is not made out and apply to set aside the Account Freezing Order, or it can seek forfeiture. ## Is the money in the Frozen Account forfeited automatically? There are two ways that your funds in the frozen bank/building society account may be forfeited. The first route is the simplest, the enforcement authority gives at least 30 days’ notice to the subject of the freezing order (and anyone else identified as being affected by the order) of its intention to enforce forfeiture. Then, if no objection is made, the money in the account is forfeited. If there is an objection, an application can made to the Magistrates’ Court for a Forfeiture Order. The second route is to apply directly to the Magistrates’ Court. To successfully make a forfeiture order the court must be satisfied (to the civil ‘on the balance of probabilities’ standard) that the money is either recoverable property obtained through unlawful conduct or is intended for use in unlawful conduct. ## Exceptions and Considerations AFOs do not prevent funds from being paid into the frozen account but restrict withdrawals and payments by the account holder. The court may grant exclusions for specific purposes, such as reasonable living expenses, payment of legal fees, and in the case of a business, to allow it to continue trading providing some flexibility within the constraints of the order. Our specialist lawyers can provide you with expert advice and representation to ensure the protection of your rights and assets. Our [Specialist London Lawyers](https://lexlaw.co.uk/private-prosecutions-lawyers-london/) are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firm's location adjacent to the [Royal Courts of Justice](https://courttribunalfinder.service.gov.uk/courts/royal-courts-of-justice) in Central London. We ensure that we provide the [best possible outcome](https://privateprosecutionservice.co.uk/private-prosecution-cases/) for our clients by conducting in-depth investigations and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. ## Expert Account Freezing Order Solicitors Account Freezing Orders play a vital role in the investigation and prevention of financial crime. However, they can have significant implications for individuals and businesses subjected to them. Understanding the legal processes involved, exercising your rights, and seeking expert legal assistance are essential steps in defending against AFOs and safeguarding your assets. If you find yourself in need of legal representation for frozen accounts, don't hesitate to contact our experienced team of Expert Injunction Solicitors. We provide the robust support and representation you need to regain access to your frozen account and provide the best account seizure defense in the UK. ## FAQS ### Account Freezing Order - FAQs **Who can apply for an Account Freezing Order (AFO)?** Authorised law enforcement agencies, including: Police Officers, National Crime Agency (NCA) officers, HMRC officers, Serious Fraud Office (SFO) officers, Accredited Financial Investigators (AFI) who have been authorised by a senior officer. **What assets can be subject to an AFO?** Assets subject to an AFO can include personal or business accounts held in a bank or a building society. **How long does an AFO last?** An AFO can last up to two years from the date of issuance, as specified by the court. However, the duration can be shorter, depending on the circumstances of the case. **What is the minimum amount required for an account to be subject to an AFO?** The account subject to an AFO must contain funds exceeding £1,000. This minimum amount requirement ensures that AFOs are applied to significant financial assets. **Can multiple accounts be aggregated to meet the minimum amount requirement?** No, the provisions do not permit aggregation of accounts to meet the minimum amount required for an AFO. Each account must individually exceed the £1,000 threshold. **What are the requirements for an Application for an AFO to be granted?** The applicant agency must demonstrate reasonable grounds to suspect that the funds in the account are either recoverable property under the POCA, and have been obtained through unlawful conduct or intended for use in unlawful activities. **Can HMRC obtain an AFO against me or my business?** Yes, HMRC can obtain an AFO against individuals or businesses if an [investigating officer of HMRC](https://lexlaw.co.uk/hmrc-tax-investigation-penalty-advice-solicitors/) believes that tax may be at risk or is flagged in a tax evasion investigation. HMRC takes tax enforcement very seriously and may apply for an account freezing order immediately upon suspicion of tax evasion and without notice to the account holder. Rest assured that our team of expert solicitors and barristers can help you in challenging HMRC actions and apply to the Court to vary or set aside a HMRC account freezing order. **Which Court grants an AFO?** Previously a tool specific to the High Court, AFOs are now obtained through an application made by authorised officers to a magistrates' court. The court considers the application and grants the order if satisfied with the grounds presented by the applicant. **What happens once an AFO is granted?** Once granted, the AFO prohibits the account holder from making withdrawals or payments from the frozen account without court authorisation. The enforcement agency may use the prohibition period to conduct further investigations. **Can an AFO be challenged or appealed?** Yes, recipients of AFOs have the right to challenge the order by applying for its discharge or variation. Appeals against forfeiture orders can also be lodged within 30 days. **Are there any exceptions to the restrictions imposed by an AFO?** Yes, the court may grant exclusions for specific purposes even though legal options for frozen assets are limited, the court has the discretion to allow payments from the frozen account for meeting reasonable living expenses, legal fees, or carrying on a trade or business, subject to conditions set out in the Act. **What happens if an objection is made to an Account Forfeiture Notice (AFN)?** If an objection is made to an AFN, the money in the frozen account will be forfeited unless the objection is successful or the court sets aside the AFN. **How can legal expenses be paid if funds are frozen due to an AFO?** The account holder can apply to the court for exclusions to be applied to the AFO, allowing for the payment of reasonable legal expenses. **Which courts have the authority to order an AFO?** Magistrates' courts have the authority to order an AFO, with applications made by authorised officers from law enforcement agencies, typically the NCA, SFO or HMRC. **Can the account holder receive compensation if the funds are not forfeited?** Yes, if the funds in the frozen account are not forfeited, the account holder can apply to the court for compensation if they have suffered loss as a result of the AFO, and the circumstances are exceptional. **How can an individual or business regain control of their assets after an AFO is lifted or expires?** An individual or business can regain control of their assets by applying to the court for the AFO to be discharged or varied, or by engaging in negotiations with the enforcement agency for variation of the order. **Do I need to prove a change in circumstances for making an application to set aside the AFO?** There is no requirement to prove a change in circumstances for setting aside an AFO. **    ** ## CASE STUDIES ## Case Study: National Crime Agency v Westminster Magistrates Court (2022 EWHC 2631 Admin) This High Court decision offers hope to those contesting account freezes. In the case of *National Crime Agency v Westminster Magistrates Court (2022)*, Justice Rowena Collins Rice ruled in favor of Ingliston Management Ltd (IML) and Lodge Security Team Ltd (LST), who challenged the freezing of assets belonging to Russian oligarch Petr Olegovich Aven. He was reportedly close to President Putin and had his UK finances frozen in February 2022 on application of the NCA. ### Facts in Petr Aven AFO Challenge In March of 2023, Petr Aven found himself sanctioned by both the European Union and the UK in the wake of escalating tensions surrounding the Russo-Ukraine conflict. On 6 May 2023, the National Crime Agency (NCA) took decisive action by obtaining ex parte account freezing orders (AFOs) against nine UK bank accounts associated with six individuals and companies linked to Aven, despite his absence from holding any UK bank accounts under his own name. This legal maneuver followed a notable transfer of £3.7 million from an Austrian bank account, held by a trust of which Aven was the sole beneficiary, to one of his UK-based companies. The suspicious nature of various transactions, including payments to accounts connected to Aven and his spouse, prompted HSBC, his bank, to flag them. Subsequent to these developments, Aven's properties underwent scrutiny, resulting in the seizure of cash. The total sum of £327,800 belonging to Aven was found in the frozen bank accounts. Two of his companies, IML and LST, pursued legal recourse by petitioning the court to set aside or amend the AFOs. In response, the NCA contested this move, contending that altering the AFOs would risk complete asset dissipation, rendering the funds ineligible for forfeiture under the Proceeds of Crime Act 2002 (POCA). Additionally, the NCA argued that Aven possessed alternative means to cover his living expenses beyond the contested accounts. While the district judge declined to revoke the AFOs, they did grant a modification allowing for the utilisation of the accounts to support Aven and his family. Discontent with this outcome, IML and LST embarked on a judicial review challenge, asserting that the district judge had unlawfully upheld the AFOs. They alleged deficiencies in the NCA's initial application, citing it as "muddled, misleading, and inadequate," and accused the agency of failing in its duty of candor. Moreover, they contended that the district judge erred in requiring a change in circumstances as a prerequisite to setting aside an AFO, contrary to the provisions of s.303Z4 POCA. ### Judgment: AFO dismissed The High Court, in its deliberations, refrained from passing judgment on the allegations concerning the NCA's lack of candour. However, it determined that the requirement for a change in circumstances before setting aside a POCA AFO constituted a legal misinterpretation by the district judge. Mrs. Justice Collins Rice deemed this to be a "clear error of law," noting the absence of findings and reasons in the application of the test. Thus, the court ruled in favour of IML and LST, highlighting the necessity for strict adherence to legal standards in matters of asset-freezing orders. ## Case Study: Hussain & Anor v Secretary of State for the Home Department (2021 EWCA Civ 2781) Malik Riaz Hussain, a prominent Pakistani property tycoon and owner of Bahria Town, found himself entangled in a legal battle with the National Crime Agency (NCA) after the NCA obtained nine freezing orders under the Proceeds of Crime Act 2002. ### Facts in Malik Riaz Hussain AFO Case On 14 December 2018, an Account Freezing Order (AFO) was granted by the District Judge at Westminster Magistrate's Court, targeting £19,999,984.27 transferred by Mubashra Ali Malik, wife of Mr. Ali, from her personal account in the UAE to Premier Investments Global Ltd, a BVI registered company owned by Mr. Ali and his wife. Subsequently, on 12 August 2019, the NCA obtained eight additional AFOs related to the accounts of Mr. Ali, his family members, and associated companies, bringing the total frozen sum to approximately £140 million. ### Settlement Agreement and Outcome In response to the NCA's investigation, Malik Riaz Hussain reached a settlement agreement with the NCA valued at £190 million. This agreement, underpinned by a "Framework Agreement" dated 6 November 2019, stipulated that the frozen funds, including the £50 million mansion, would be returned to the State of Pakistan. The settlement was not an admission of guilt but rather a resolution to the legal dispute. As a result of the settlement agreement, the AFOs were set aside by mutual agreement between Hussain and the NCA.         ## Facing an Account Freeze? We Can Help. Account Freezing Orders (AFOs) are a critical tool for law enforcement, but they can be disruptive for individuals and businesses. Our London law firm combines expertise in both injunctions and litigation to provide the robust support you need. **We understand the complexities of AFOs.** Whether you're under investigation or facing a frozen account, our team of experienced solicitors and barristers can help. We'll explain the process, consequences, and your rights. **We fight for you.** Our skilled team will challenge the AFO, seek its discharge or variation, negotiate with authorities, and advocate on your behalf. We guide you through every step, ensuring your interests are protected. *Don't face this alone. Contact us today to navigate this challenging situation and secure the best possible outcome.* --- # Litigation Funding in England & Wales (Legal Services Board Report) Source: https://lexlaw.co.uk/solicitors-london/litigation-funding-in-england-wales-legal-services-board-report/ A recent report submitted by [QMW Professor Rachael Mulheron KC (Hon)](https://www.qmul.ac.uk/law/people/academic-staff/items/mulheron.html) to the [Legal Services Board (LSB)](https://legalservicesboard.org.uk/) comprehensively examines litigation funding in England & Wales. The report titled "[*A REVIEW OF LITIGATION FUNDING IN ENGLAND AND WALES*, A LEGAL LITERATURE AND EMPIRICAL STUDY](https://legalservicesboard.org.uk/wp-content/uploads/2024/05/A-review-of-litigation-funding.pdf)" examines the (limited) impact of litigation funding on access to justice, the public interest, and consumer protection. The report explores the role of litigation funding through the lens of the LSB's regulatory objectives enshrined in the [Legal Services Act 2007](https://www.legislation.gov.uk/ukpga/2007/29/contents). Researchers conducted a multifaceted study, including a literature review, analysis of court cases involving litigation funding, and surveys of participants in the industry, such as funders, insurers, law firms, and clients. It is important to note that litigation funding is very niche and applies to a tiny fraction of [litigation cases in England](https://lexlaw.co.uk/practice-areas/) & Wales and more cases are funded by solicitor and counsel provided CFA and [DBA no win no fee agreements](https://lexlaw.co.uk/litigation-solicitor-funding-second-opinion-damages-based-agreements-dba-legal-representation-costs-advice/). ### Key Findings of the Litigation Funding Report The report's key findings highlight both the potential benefits and limitations of litigation funding which is offered in very few cases: - **Access to Justice:** While litigation funding offers a valuable tool for some individuals, small and medium-sized enterprises (SMEs), and even corporations, allowing them to pursue legal claims that would otherwise be financially prohibitive, the report acknowledges its selective nature. Funders typically choose only a small percentage of cases (between 3% and 5%), limiting its ability to be a widespread solution for access to justice issues. - **Compensation and Costs:** The report underscores the potential tension between claimants' pursuit of justice and funders' financial objectives. While litigation funding allows claimants their "day in court," the ultimate compensation received after accounting for costs and the funder's return may not adequately address the damages suffered, particularly in cases involving rectification costs. However, the report also recognises the role of litigation funding in facilitating legal actions that would otherwise be financially impossible. - **Consumer Interest Cases:** The report finds that litigation funding is often used in cases with broader implications for consumer interests, affecting a significant segment of the population. These cases can influence consumer markets, legal developments, and the enforcement of the rule of law. Between 2019 and 2024, 54 documented cases involved litigation funding, with many being high-profile collective actions like the "diesel-gate" emissions case and the successful claim by sub-postmasters against the [Post Office in the Horizon IT scandal](https://lexlaw.co.uk/solicitors-london/british-post-office-horizon-it-scandal-hmrcs-ancillary-attack-on-uk-postmasters/). Additionally, litigation funding has been instrumental in challenging alleged anti-competitive practices in areas like train fares and mobile phone contracts. - **Regulation and Self-Regulation:** The report acknowledges the potential impact of the [Litigation Funding Agreements (Enforceability) Bill 2024](https://www.parliament.uk/business/news/2024/april/lords-consider-litigation-funding-agreements-enforceability-bill-at-committee-stage/), suggesting that if successful in reversing the [UK Supreme Court decision in Paccar](https://www.supremecourt.uk/cases/uksc-2021-0078.html), it could contribute to the continued growth of litigation funding as a niche but significant aspect of legal services. The research also examines the role of the [Association of Litigation Funders](https://associationoflitigationfunders.com/) (ALF) in providing a self-regulatory framework through its Code of Conduct, including capital adequacy requirements and sanctions for non-compliance. However, the report notes that for some law firms, the funder's track record holds more weight than their membership in the ALF. - **Anti-Money Laundering (AML) and Know-Your-Client (KYC) Concerns:** The report acknowledges a potential risk of using litigation funding for economic crime, particularly where law firms may struggle to ascertain the ultimate source of funds used by the funder. However, the research also highlights the seriousness with which law firms and litigation funding brokers approach AML and KYC checks, mitigating this risk. ### Impact on LSB's Regulatory Objectives The report explores how litigation funding interacts with the LSB's regulatory objectives outlined in the [Legal Services Act 2007.](https://www.legislation.gov.uk/ukpga/2007/29/contents) The LSB's regulatory objectives provide a framework for evaluating litigation funding. The report finds that litigation funding aligns with several of these objectives. Firstly, by enabling financially challenging cases to proceed, it serves the public interest by facilitating legal challenges against corporations and ensuring the proper application of law. Secondly, while not a universal solution, litigation funding undeniably improves access to justice for those who receive funding, allowing them to pursue claims that would otherwise be financially impossible. It also benefits consumers by empowering them to fight against anti-competitive practices and seek compensation. Additionally, the report highlights the role of litigation funding as a filter, ensuring that only meritorious cases are funded. Competition within the legal services market appears healthy, with no evidence of restricted competition between funders and law firms. However, the report acknowledges a debate regarding the balance between encouraging new entrants to the market and implementing consumer protection measures. Litigation funding also contributes to a strong and effective legal profession by ensuring cash flow for law firms' legal fees and disbursements, while helping them manage risks associated with costs awards. Finally, high-profile litigation funded cases can raise public awareness of legal rights and responsibilities. However, the report acknowledges the potential risk of money laundering through litigation funding and emphasizes the importance of robust anti-money laundering (AML) and know-your-client (KYC) checks to mitigate this risk. ### Litigation Funding Report Conclusions The LSB report paints a nuanced picture of litigation funding's impact on the legal landscape. While it offers undeniable benefits, challenges remain. **Access to Justice:** Litigation funding unquestionably broadens access to justice for some, enabling meritorious cases that might otherwise be financially untenable. However, the report acknowledges the selective nature of funding, with only a small percentage of cases receiving support. This raises questions about its ability to be a large-scale solution for access to justice. **Consumer Protection:** The report highlights potential benefits for consumers. Litigation funding allows them to challenge unfair practices and seek compensation for financial losses. It also acts as a filter, ensuring funded cases have a good chance of success. However, concerns remain regarding potential cost overruns by law firms, which could ultimately impact the compensation received by consumers. **Regulation and Competition:** The research found no evidence of restricted competition between funders and law firms. However, there's a debate regarding balancing the need for new entrants to the market with consumer protection measures like minimum capital requirements. The report also acknowledges the tension between funders and law firms regarding legal fees. Some funders feel law firms do not control costs effectively. The LSB's report offers a thorough analysis of litigation funding in England and Wales. It highlights its niche potential to address access to justice issues, its role in consumer protection, and the importance of a robust regulatory framework. While highlighting its limitations, the report acknowledges the limited significance of litigation funding as a niche market that supports a specific and small segment of legal claims. These insights will undoubtedly inform policy discussions and shape the future of litigation funding in England and Wales. --- # Case Study: £0.5m HMRC Winding-up Petition Defeated Source: https://lexlaw.co.uk/solicitors-london/case-study-abusive-hmrc-winding-up-petition-defeated/ HMRC have been forced to consent to the [dismissal of a winding-up petition](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) for a debt of over £0.5m and to pay substantial costs due to [poor litigation conduct](https://lexlaw.co.uk/solicitors-london/indemnity-costs-losing-party-unreasonable-conduct-proportionality-reasonable-standard-assessment-court-order-legal-advice/), after [freezing](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/#:~:text=A%20freezing%20order%20or%20freezing,amount%20due%20to%20the%20creditor.) our client company’s funds and presenting a [winding-up petition](https://windinguppetitionsolicitors.co.uk/). The company’s application included restraining HMRC from further advertisement and seeking dismissal of the petition. HMRC accepted defeat as the petition was legally untenable. This decision not only underscores the importance of [solid experienced legal representation](https://windinguppetitionsolicitors.co.uk/our-success-case-studies-successful-insolvency-law-firm-london/) but also highlights the significant financial and reputational repercussions for government agencies when they engage in unjustified actions. ## Background: HMRC Injunction Application Our client (the Applicant) faced a [winding-up petition brought by HMRC](https://taxdisputes.co.uk/hmrc-winding-up-petitions/) in respect of an alleged unpaid tax sum of over £0.5m. However, the Applicant argued that HMRC's actions amounted to [an abuse of process of the Insolvency and Companies Court](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/urgent-uk-injunctions-corporate-insolvency-company-court-proceedings-lawyer-legal-advice/) because: - **[HMRC Account Freezing Order](https://lexlaw.co.uk/solicitors-london/tag/frozen-bank-account/):** HMRC had already frozen the company's accounts, preventing them from accessing funds sufficient to pay the outstanding tax. Despite this, HMRC proceeded with the winding-up petition. - **Refusal to Release Funds:** The Applicant had long since requested a modification of the [freezing order](https://lexlaw.co.uk/solicitors-london/category/freezing-order/) to allow payment of the tax, but HMRC refused. - **HMRC Misrepresentation:** During the account freezing process, HMRC assured the company that enforcement action would be delayed until their investigation concluded. This promise was broken when the petition was presented and meant enforcement was in fact never stayed by HMRC in breach of their promise. - **Account Unfreezing:** Notably, one of the frozen accounts was later unfrozen after the investigation was completed without further action by HMRC. ## Application to Restrain Advertisement and Dismiss HMRC Petition The Applicant sought an injunction from the Insolvency and Companies Court to: - **[Restrain Advertisement](https://windinguppetitionsolicitors.co.uk/restraining-injunctions-against-winding-up-petitions-and-advertisements/):** Prevent HMRC from advertising or taking further steps to publicise the winding-up petition. - **[Petition Dismissal](https://lexlaw.co.uk/winding-up-petition-lawyers/):** Have the petition struck out due to it being an abuse of court process. - **[Costs Recovery](https://lexlaw.co.uk/solicitors-london/recovering-the-costs-of-civil-litigation/):** Recover legal costs from HMRC on an indemnity basis (meaning fuller reimbursement). ## Successful Outcome of Application to Restrain & Dismiss HMRC's Petition HMRC argued that the Court couldn't grant the specific injunction requested (restraining a government department). They contended that only a declaration recognising the abuse of process was possible, citing relevant sections 17 and 21 of the [Crown Proceedings Act 1947](https://www.gov.uk/government/publications/serve-the-treasury-solicitor-with-legal-proceedings) and *[Quest v the Secretary of State for Education](https://www.judiciary.uk/judgments/x-v-secretary-of-state-for-education-anonymity-order/)* [2023]. However, the case of *[JT Development Solutions Limited v Secretary of State for Education](https://www.casemine.com/judgement/uk/6192a858b50db9a0d4cba596) [2022]* suggests alternative approaches might be available. HMRC however ultimately conceded the point, effectively acknowledging the impropriety of their conduct without admitting the same; they agreed to: - **Dismissal of HMRC Petition:** Accepting the dismissal of the winding-up petition. - **HMRC Cost Reimbursement:** HMRC were forced to agree to pay a significant portion of the company's legal costs arising from the petition and the application for an injunction. ![HMRC](https://lexlaw.co.uk/wp-content/uploads/HMRCs-Wagging-Finger-Hector-the-Inspector-Taxman-Loses-Winding-up-Petition-Injunction-1024x684.jpg) ## Key Takeaway: Get Prompt Legal Advice This case demonstrates the potential consequences for HMRC if their actions are deemed an abuse of the court's proper process. [Companies facing similar oppressive and abusive winding-up petitions should seek legal advice to explore available options.](https://lexlaw.co.uk/winding-up-petition-lawyers/) We provide solid legal advice and representation tailored to your case from the outset. --- # Cryptocurrency Litigation Success: Compensatory Damages in Lieu of Ethereum Source: https://lexlaw.co.uk/solicitors-london/cryptocurrency-litigation-success-assessing-compensatory-damages-in-lieu-of-an-injunction-for-specific-performance/ *London, UK – 2 July 2024 –* In a significant victory for our client, Mr. Southgate, the [Chancery Division of the High Court](https://www.gov.uk/courts-tribunals/chancery-division-of-the-high-court), has issued a favourable ruling in the crypto loan case of *[Oliver Southgate v Adam Graham](https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/1692)* [2024] EWHC 1692 (Ch). Our successful cryptocurrency loan agreement litigation case was pursued to judgment because Adam J Graham asserted he was practically penniless, on the verge of bankruptcy and thus unable to repay an Etheruem loan he had borrowed from our client. This is in stark contrast to his assertions of being a wealthy and successful entrepreneur - as littered all over his [https://www.adamjgraham.com/](https://www.adamjgraham.com/about/) website and elsewhere on the internet where he projects an image of financial success, sells ebooks such as: "*The Three Secrets to a Seven Figure Exit*", offers to coach others and suggests his Airtasker copycat app, [JustFix](https://play.google.com/store/apps/details?id=com.justfix.user), is groundbreaking and successful when it has hardly any comparative market penetration; e.g., see [this BBC article](https://www.bbc.co.uk/news/articles/cdxyr1qvkvqo). ![Scammer? False claims of success? Penniless? or Rich? "Adam J Graham" Justfix "The Three Secrets to a Seven Figure Exit" "The Three Secrets to Scaling your Company"](https://lexlaw.co.uk/wp-content/uploads/Adam-J-Graham-Justfix-Coaching-Books-CEO-Entrepreneur-BBC-UK-250m.jpg) ## Adam J Graham's Tales of Success & Wealth - True/False? > **Twice exited founder, Global Plc CEO, Growth Consultant and M&A Advisor** > *Adam is a serial entrepreneur with 25 years of experience in building, scaling and selling companies. With two successful exits and having run a global public company with a market cap of £250M at its peak, he currently leads JustFix – a groundbreaking new platform in the home maintenance sector. Adam also advises companies on mergers and acquisitions, leveraging his expertise to drive growth and and value creation.* > [https://www.adamjgraham.com/about/](https://www.adamjgraham.com/about/) ## Oliver Southgate v Adam J Graham [2024] EWHC 1692 (Ch) The initial court decision found [Adam J Graham](https://www.linkedin.com/in/adamgraham/?originalSubdomain=uk), the founder of Airtasker copycat app, [Justfix](https://www.justfix.app/), and a man who [claims to be a successful entrepreneur](https://www.adamjgraham.com/about/), in breach of the agreement but did not grant specific performance for the return of the ETH tokens and instead ruled it would award monetary damages. The original court's chosen valuation date for assessing damages was disputed. We argued it did not adequately compensate Mr. Southgate for the loss incurred due to the date selected by the learned Judge. Mr Justice Trower sitting in the Chancery Division of the High Court, has handed down judgment in *[Southgate v ](https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/1692)[Adam Graham](https://www.linkedin.com/in/adamgraham/?originalSubdomain=uk) *- an appeal against the date of valuation of damages determined in the judgment of HHJ Saggerson at the [County Court at Central London](https://www.find-court-tribunal.service.gov.uk/courts/central-london-county-court). Our appeal related to the date on which loss, impacted by the value of a cryptocurrency token, was to be determined in circumstances where the Court refused to order [injunctive specific performance](https://lexlaw.co.uk/injunctive-relief-interim-remedies-urgent-injunction-freezing-order-second-opinion-litigation-advice/) of a contractual token repayment obligation. The appeal court acknowledged the inadequacy of the initial valuation date which the court agreed did not accurately reflect Mr. Southgate's actual losses. They instructed the lower court to consider alternative dates, including the date of judgment, for a more accurate assessment. ## Key Points: - Southgate advanced 144 Ethereum tokens to Graham under an oral agreement. - The court had to determine the terms of the agreement and the appropriate relief for breach. - The court found in favour of Southgate on the primary issue but refused specific performance. - Damages were to be assessed at a later remedies hearing. - The original court's chosen valuation date for assessing damages was disputed. - Mr Justice Trower instructed the lower court to redetermine the correct valuation date. While the High Court affirmed the trial court's denial of specific performance, it overturned the decision regarding the damages assessment date. The timing of valuation can substantially influence the damages awarded in cryptocurrency disputes, given their market volatility. Southgate v Graham underscores that the assessment date is not fixed and may be adjusted depending on specific case circumstances and the litigation strategy adopted. ## Background to the ETH Litigation Case In the underlying litigation, our Claimant client sued to recover [Ethereum](https://ethereum.org/en/) ("ETH") tokens that he had loaned to the Defendant and the Defendant had failed to return. Given the rise in the value of ETH, the Defendant formulated a disingenuous and totally without merit defence argument that his obligation was to return the GBP equivalent of the value of the ETH loaned to him at the date of the loan; not to return the ETH (in spite of evidence of him clearly agreeing to return ETH) nor to return ETH at the later or current GBP value equivalent. HHJ Saggerson ruled in favour of our client on the critical question that the loan was to be repaid in ETH not GBP but declined to order injunctive relief instead opting for damages in lieu of specific performance. However the learned judge erred in determining the correct date for assessing loss, in this case the valuation of the ETH. The ETH had risen significantly in its price since the date of the loan. The trial Judge preferred our client's version of events, holding that the agreement required the return of the ETH as opposed to payment in GBP to the value of the ETH loaned (as at the date of the agreement). However, the trial Judge refused to order specific performance of the obligation to return the ETH and instead awarded damages in lieu of specific performance. The question then arose as to what date those damages in lieu of specific performance should be valued. Following what he described as the "date of breach rule" the Judge held that the damages fell to be valued at the date of the breach of the obligation to return to the ETH: a date in 2019. That meant that our client, the successful party, would be very significantly out of pocket since the value of the ETH was significantly less than it is worth now. Consequently, our client appealed against that finding. His appeal was successful. ## Ethereum Loan Dispute - County Court Claim Our client, the claimant in the case, loaned a specific amount of [Ethereum (ETH)](https://en.wikipedia.org/wiki/Ethereum) tokens to the defendant in 2018, with the expectation of receiving them back at a later date. However, a disagreement arose regarding the terms of the agreement. The borrower, defendant in the case, refused to return the ETH which led to a claim in the County Court. The court proceedings involved a claim initiated by our client on 6 January 2022, seeking the return of Ethereum Tokens from the Defendant. After hearing arguments from both parties, the court ruled that the Claimant was entitled to the return of the cryptocurrency tokens. However, the court decided to award damages in lieu of specific performance. The assessment of damages was to be based on the value of ETH as of midday on 1 October 2019. Our client was also entitled to recover any associated transaction fees incurred during the ETH token transfer. Our client argued that the appropriate date for assessing damages was the date of the judgment. However, the judge concluded that the damages should be quantified based on the date of the breach of the contractual obligation to return the cryptocurrency, which he determined to be in October 2019. LEXLAW lodged an appeal with the High Court, due to the rise in the value of ETH, using the breach date of 1 October 2019, for quantification would significantly disadvantage our client. We argued for a more appropriate valuation date, one that accurately reflected the true extent of the loss sustained by our client. ## Cryptocurrencies and Ethereum Explained Cryptocurrency is a digital payment system that does not rely on banks to verify transactions. Instead, it uses cryptography (complex math) to secure transactions and control the creation of new units of currency. Cryptocurrencies are decentralised, meaning they are not controlled by any single government or financial institution. Here are some key features of cryptocurrency: - **Digital**: Cryptocurrencies exist only electronically. There are no physical coins or bills. - **Decentralised**: Transactions are verified and recorded on a distributed public ledger called a blockchain, which is not controlled by any one entity. - **Secure**: Cryptography makes it very difficult to counterfeit or steal cryptocurrency. - **Pseudonymous**: Transactions are linked to unique digital addresses, but these addresses typically don't reveal the identity of the person behind them. [Ethereum](https://en.wikipedia.org/wiki/Ethereum) is a specific type of cryptocurrency, often referred to as a platform cryptocurrency. It not only functions as a digital currency (called Ether, or ETH), but also allows developers to build applications on its blockchain network. Here's what makes Ethereum different from other cryptocurrencies like Bitcoin: - **Smart Contracts**: Ethereum allows for the creation of self-executing contracts called smart contracts. These contracts can automate the execution of agreements according to predefined terms. - **Decentralised Applications (dApps)**: Developers can build applications on the Ethereum network, creating a platform for various decentralised services like finance (DeFi) and [non-fungible tokens (NFTs)](https://en.wikipedia.org/wiki/Non-fungible_token). ## Appeal to the High Court Recognising the inherent unfairness in the County Court’s decision, we lodged an appeal at the High Court. The High Court carried out a detailed analysis of the case law relating to the time at which the Court values loss. The Court found that the case law - identified by LEXLAW - made clear: (i) that the date of breach rule should not be rigidly applied when it does not adequately compensate the innocent party; and (ii) that the case law in relation to s50 of the Senior Courts Act 1981 also supported the conclusion that the starting point when valuing damages in lieu of specific performance is to take the date of judgment as the correct date of valuation. That is because the Court is awarding damages for the loss of the right to specific performance; and that such a loss ordinarily falls to be determined at the date of the refusal to provide specific performance. Instead, the Court found that the burden is on the Defendant to show that the Claimant failed to mitigate his loss by continuing to pursue the remedy of specific performance. ## Significance of the Case This case sets a valuable precedent for future disputes involving cryptocurrency transactions and breach of contract claims. It underscores the importance of a fair valuation date for damage calculations, particularly in volatile markets. Additionally, it clarifies the court's flexibility in awarding damages alongside or instead of specific performance, depending on the specifics of the case. ## Download the Judgment here [![Between: Oliver Southgate Appellant and Adam Graham Respondent [2024] EWHC 1692 (Ch) Before: THE HONOURABLE Mr Justice Trower Case No: CH-2023-000212 IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES CHANCERY APPEALS ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON ORDER OF HHJ SAGGERSON DATED 28 SEPTEMBER 2023 Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL Christopher Snell (instructed by Lexlaw Solicitors & Advocates) for the Appellant Rupert Beloff (instructed by Ashtons Legal) for the Respondent Hearing date: 21 June 2024 Approved Judgment This judgment was handed down remotely at 10.30am on Tuesday 2 nd July 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives. Mr Justice Trower Mr Justice Trower 1 This is an appeal against parts of an order made by HHJ Saggerson (the “Judge”) on 28 September 2023. The order was made at the conclusion of the trial of a dispute as to the terms of an oral agreement under which the Appellant advanced cryptocurrency to the Respondent in the form of 144 Ethereum tokens (“ETH”) sent to him in two tranches on 7 and 13 June 2018 and the consequences of its breach by the Respondent. 2 The advance was made in the context of what the Judge called the Respondent](https://lexlaw.co.uk/wp-content/uploads/Southgate-v-Graham-CH-2023-000212-Approved-judgment-02-07-2024-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Southgate-v-Graham-CH-2023-000212-Approved-judgment-02-07-2024.pdf) ## Expert Cryptocurrency Dispute Lawyers If you find yourself in a similar situation, where you have loaned cryptocurrency and the borrower fails to return it as agreed, [LEXLAW Solicitors and Barristers](https://lexlaw.co.uk/) can help. Our experienced team of legal professionals can guide you through the legal process, ensuring your rights are protected and you receive the compensation you deserve. ## Legal Precedent for Cryptocurrency Loan Disputes This case serves as a precedent for similar situations involving cryptocurrency and breach of contract. It emphasises the importance of carefully selecting the valuation date when calculating damages in lieu of specific performance, particularly in cases where the value of the cryptocurrency fluctuates significantly. [LEXLAW Solicitors and Barristers](https://lexlaw.co.uk/) are here to help you navigate the complexities of cryptocurrency litigation and ensure you receive fair compensation for your losses. ## How can we help you? Has someone like [Adam J Graham ripped you off in a scam](https://www.adamjgraham.com/about/)? The crypto landscape is still largely unregulated, however, our experienced team at [LEXLAW](https://lexlaw.co.uk/) has kept itself abreast with the latest changes in the Crypto-landscape to provide our clients with the best possible advice and representation in order to help people get their money back. [Our Barristers and Solicitors](https://lexlaw.co.uk/our-people/) have decades of experience in dealing with loan disputes. If you have fallen prey to cyber fraud or in a loan dispute, please do not hesitate to contact us, so we can provide you with the best possible advice and help that you may need. --- # When Stalled Litigation is an Abuse of the Proper Process of the Court Source: https://lexlaw.co.uk/solicitors-london/when-stalled-litigation-is-an-abuse-of-the-proper-process-of-the-court/ *The proper administration of justice hinges on the timely and efficient resolution of disputes. Hence, the problem of stalled litigation presents a challenge to this ideal. When litigation is deliberately delayed or prolonged, it not only clogs the judicial system but also undermines the principles of fairness and equity that courts strive to uphold. This Article explores the detrimental impact of such practices, examining how they can be strategically used to frustrate the course of justice, and proposing measures to curb this abuse to ensure that the legal process remains just, efficient and accessible for all.* In the recent case of [*Watford Control Instruments v. Brown* *[2024] EWHC 1125 (Ch)*](https://lexlaw.co.uk/wp-content/uploads/Watford-Control-Instruments-v.-Brown-2024-EWHC-1125-Ch.pdf), the court addressed the issue of abuse of process through "warehousing". The claimant, Watford Control Instruments (WCI), sought to sue the defendant, a former director of YZMA, for breach of fiduciary duty. The claim was dormant for nearly three years before WCI attempted to relist it. The defendant sought to strike out the claim, arguing it was an abuse of process due to the prolonged delay. At first instance, the court found an abuse of process but opted for a lesser sanction. On appeal, Mr Justice Richards ruled that such "warehoused" claims should be struck out unless ‘compelling reasons’ justify otherwise. He confirmed that the principle from *[Grovit v Doctor [1997] 1 WLR 640](https://publications.parliament.uk/pa/ld199697/ldjudgmt/jd970424/grovit.htm)* remains applicable under the current [Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil). Consequently, WCI's claim was struck out for abuse of process, setting a significant precedent for handling stalled litigation. An abuse of process is defined through case law as the use of the court process for purposes, or in a manner, that deviates significantly from its ordinary and proper use. This broad definition grants the court considerable discretion in determining whether a party's conduct constitutes an abuse. Under CPR 3.4(2)(b) and the court's inherent jurisdiction, the court has the authority to strike out a [claim form](https://lexlaw.co.uk/solicitors-london/court-judgment-highlights-rules-regarding-claim-form-service/) and particulars of claim on grounds of abuse of process. Grounds for such action include a complete disregard of procedural rules, bringing successive related actions against the same or different defendants in violation of the rule laid down in *Henderson v Henderson*, attempting to relitigate an issue that has already been decided, and deliberately delaying the prosecution of, or "warehousing" a claim. ## Civil Procedure Rules 1998 When the [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) were introduced in 1998, Lord Woolf, their creator, hoped they would eliminate outdated claims and motions to dismiss for lack of prosecution. A year earlier, in the case of *[Arbuthnot Latham Bank Ltd v Trafalgar Holdings [1997] EWCA Civ J1216-15](https://vlex.co.uk/vid/arbuthnot-latham-bank-ltd-794055525)*, Lord Woolf had first referred to warehousing in the context of legal proceedings: > *“Whereas hitherto it may have been arguable that for a party on its own initiative to, in effect, “warehouse” proceedings until it is convenient to pursue them does not constitute an abuse of process, where hereafter this happens this will no longer be the practice. It leads to stale proceedings which bring the litigation process into disrespect. As case flow management is introduced, it will involve the courts becoming involved in order to find out why the action is not being progressed …”.* Lord Woolf’s confidence in the courts' proactive role in managing case flow may have been overly optimistic, especially now, when a shortage of judges and court staff makes such unprompted judicial intervention improbable. As a result, claims can stagnate for extended periods without court involvement, leaving defendants in a difficult position. ## Understanding Stalled Litigation Stalled litigation refers to the deliberate or unintentional delay in the progress of a legal case. This can occur due to various reasons such as procedural inefficiencies, lack of evidence or strategic delays by one of the parties involved. While some delays are inevitable in the judicial process, prolonged stalling is considered as undermining the integrity of the legal system. The primary consequence of stalled litigation is the denial of timely justice. Prolonged delays can lead to increased [legal costs](https://lexlaw.co.uk/practice-areas/solicitors-act-1974-client-legal-costs-detailed-assessments-scco/), diminished quality of evidence and undue stress for the parties involved. Moreover, it is bound to clog the judicial system, leading to a backlog of cases and further delays in other proceedings, along with [increased costs](https://lexlaw.co.uk/solicitors-london/indemnity-costs-in-litigation/). ## Legal Framework for Addressing Stalled Litigation The legal framework addressing stalled litigation in the UK primarily revolves around the Civil Procedure Rules (CPR), which provides comprehensive guidelines designed to ensure the fair and efficient handling of cases. Key elements of this framework include: ### 1. CPR Part 1: The overriding objective of the CPR is to enable the court to deal with cases justly and at proportionate cost. This includes ensuring that the parties are on an equal footing, saving expenses, dealing with cases in ways that are proportionate to the complexity and importance of the issues, ensuring it is dealt expeditiously and fairly, and allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases. ### 2. Case Management Powers: Judges in the UK wield significant [case management powers](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/) under the CPR. These powers allow them to manage the progress of cases actively to prevent unnecessary delays. Judges can set strict timelines for the submission of evidence, limit the issues to be explored at trial, and control the length of hearings. These powers are vital in preventing stalled [litigation](https://lexlaw.co.uk/litigation-solicitors/) and ensuring that cases move forward efficiently. ### 3. Striking Out Applications (CPR Part 3): Under CPR 3.4(2)(b), the court has the power to strike out a [statement of case](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/) if it appears that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings. [CPR 3.4(2)(b)](https://www.justice.gov.uk/courts/procedure-rules/civil) states: > *3.4 (2) The court may strike out(GL) a statement of case if it appears to the court –* > *(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;* > *(b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings;* This can be applied in instances where there is prolonged stalling or "warehousing" of cases without a justifiable reason, effectively preventing misuse of the legal system by parties. ### 4. Sanctions for Non-Compliance: The courts have the authority to impose various sanctions on parties that fail to comply with rules, practice directions or court orders. These sanctions can range from fines and [cost penalties](https://lexlaw.co.uk/solicitors-london/high-court-costs-penalties-for-a-failure-to-mediate-successful-litigant-adr-second-opinion-advice/) to the striking out of claims or defenses. Such sanctions are a critical tool in discouraging delays and ensuring adherence to the procedural timeline. ### 5. Encouraging Alternative Dispute Resolution (ADR): The CPR and the courts encourage the use of [ADR](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/#:~:text=This%20is%20usually%20a%20contractual,award%2C%20to%20finalise%20the%20dispute.) methods such as mediation and arbitration to resolve disputes. ADR can often provide a quicker resolution to disputes without the need for protracted litigation, thereby helping to reduce the burden on the courts and the parties involved. ### 6. Procedural Rules to Prevent Abuse of Process: Specific rules within the CPR, like those preventing duplicative [litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/), as the principle stipulated in *‘*[Henderson v Henderson [1843-60] All E.R. Rep. 378*’*](https://uk.practicallaw.thomsonreuters.com/Document/I1E18AE11E57111DAB242AFEA6182DD7E/View/FullText.html?transitionType=Default&contextData=(sc.Default)&comp=pluk), are designed to avoid unnecessary re-litigation of issues already decided or litigation that aims to harass or pressure an opponent unduly. Henderson established the principle that parties must present their whole case, including all relevant issues, in one set of proceedings. Failure to do so without a valid reason can constitute an abuse of the court process. This framework forms the backbone of the system designed to address and mitigate stalled litigation, ensuring that the courts can deliver timely justice while maintaining fairness and efficiency in the administration of law. ## Identifying Abuse of the Court Process Abuse of the court process occurs when the legal proceedings are misused in a manner that undermines the administration of justice. The Courts apply a two-stage analysis for abuse, which includes: - **Determine Abuse:** The court shall first decide whether the claimant's conduct amounts to an abuse of process. [*‘Asturion Foundation v Alibrahim’ [2020] 1 WLR 1627* ](https://lexlaw.co.uk/wp-content/uploads/Asturion-Foundation-v-Alibrahim-2020-1-WLR-1627.pdf)clarified that a unilateral decision by a claimant to delay pursuing a claim for a substantial period could be an abuse of process. The court must consider the reason for the delay and the length of the period when deciding whether it constitutes an abuse. - **Sanction Decision:** If abuse is found, the court then decides the appropriate sanction. As highlighted in *Board of Governors of the National Heart and Chest Hospital v Chettle* (1998) 30 HLR 618, a claim will usually be struck out unless there are compelling reasons not to do so. Some examples of claims that can be regarded as abusing the process of court include: - **Frivolous or Vexatious Claims:** Bringing claims without a genuine legal basis, often to harass or pressure the opposing party; - **Deliberate Delays**: Employing tactics to intentionally delay the proceedings, such as repeatedly requesting adjournments or failing to comply with court orders; and - **Duplicative Litigation:** Initiating multiple proceedings on the same issue to frustrate the legal process. ## Legal Precedent  - ‘Abuse of Process’ Precedent has shaped the understanding of stalled litigation as an abuse of the court process in the UK. The principle of dismissing an action for want of prosecution was established in *‘Birkett v James’ [1978] AC 297*. However, for a claim to be struck out under this principle, there has to be an inordinate and inexcusable delay causing a substantial risk that a fair trial was not possible or serious prejudice to the defendant. *‘[Grovit v Doctor [1997] 1 WLR 640’](https://publications.parliament.uk/pa/ld199697/ldjudgmt/jd970424/grovit.htm)* further expanded this principle, recognising that delay by a claimant not only affects the defendant but also other court users. It established that a claimant’s unilateral decision not to progress a claim could constitute an abuse of process. In *Grovit*, it was held that the courts exist to resolve disputes, and any action not pursued with the intention of resolution constitutes an abuse of process. This abuse could justify striking out the claim even if no direct prejudice to the defendant could be demonstrated. The abuse of process includes cases where the claimant starts and continues [litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) without an intention to bring it to a conclusion. ## The Role of the Judiciary Judges play a crucial role in preventing and addressing stalled litigation specifically through active [case management](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/), which involves: - **Setting and Enforcing Timelines**: Ensuring that cases progress according to a set schedule; - **Imposing Sanctions**: Penalising parties that fail to comply with procedural requirements, such as fines or striking out claims; and - **Encouraging Alternative Dispute Resolution (ADR)**: Promoting the use of mediation and arbitration to resolve disputes efficiently. Recent judicial commentary has emphasised the importance of preventing stalled litigation. Judges have highlighted the need for strict adherence to procedural rules and have shown a willingness to impose sanctions to deter abusive practices. ## No intention to proceed to Trial: A New High Court Ruling on Grovit abuse. In a recent High Court case, [Lloyd v Hayward & Anor [2024] EWHC 2033 (Ch) (05 August 2024)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2033.html), the court looked again at the complex issue of whether excessive delays in litigation can constitute an abuse of process. The judgment of [HHJ Keyser KC](https://www.middletemple.org.uk/bencher-persons-view?cid=32152) provides a comprehensive analysis of the legal principles surrounding "*Grovit*" abuse, a term used to describe cases where a party deliberately prolongs proceedings with no genuine intention to proceed to trial. > *“I note that the defendants have counterclaimed in these proceedings and are to be regarded as claimants for the purpose of the counterclaim. Any points that can be taken against the claimant in respect of delay or warehousing can, as it seems to me, be taken equally against the defendants. Grovit abuse is not about stealing a march: it is about not wanting to march at all.”* - HHJ Keyser KC The case also highlights the particular challenges faced by defendants who raise counterclaims. The court affirmed that the duty to progress a counterclaim is essentially identical to the duty to progress the main claim, making it equally difficult for defendants to argue abuse of process in such circumstances. In Lloyd, the defendants applied to strike out the case and the basis of the application was that the claimant had been alleged to have no genuine intention of taking his claim to trial. It was said that this amounted to an abuse of process. The issue was whether litigation was being conducted with no real intention of taking the matter to trial, following the decision of the House of Lords in [*Grovit v Doctor* [1997] 1 WLR 640](https://publications.parliament.uk/pa/ld199697/ldjudgmt/jd970424/grovit.htm). The judge emphasised the gravity of *Grovit *abuse, highlighting its detrimental impact on both the overall justice system and individual cases. This type of misconduct, characterised by a deliberate intention to delay proceedings, directly contradicts the core principles of efficient and fair litigation. While the court possesses the power to strike out a claim for *Grovit *abuse, the judge cautioned against viewing this as a standard response. Instead, each case should be assessed on its own merits to determine the most appropriate remedy. In this particular case, the judge concluded that there was no evidence of *Grovit* abuse. Despite acknowledging significant delays, the court attributed some of these to its own administrative errors. Importantly, the judge also noted that the defendant, who had filed a counterclaim, shared responsibility for progressing the case and could not solely rely on the claimant's delays to justify an abuse of process argument. ## High Court Dismisses Solicitor's Counterclaim Due to Excessive Delay A solicitor's counterclaim was dismissed by the High Court due to a six-year delay in bringing proceedings, which the court deemed an abuse of process. Master Davison ruled that the defendants in *[Western Avenue Properties Ltd & Anor v Soni & Anor](https://assets.caselaw.nationalarchives.gov.uk/ewhc/kb/2024/2124/ewhc_kb_2024_2124.pdf)* had "seriously breached" the overriding objective of the court by warehousing the counterclaim. He characterised the delay as "inordinate, inexcusable, and tactical." The initial dispute involved a confidentiality claim against the solicitor, Sadhana Soni, who had previously worked as in-house counsel for Western Avenue Properties. The claimant sought an interim injunction to prevent Soni from representing a particular client, which was granted. Soni then counterclaimed for unpaid fees. After a significant delay of nearly five years, the defendants successfully applied to strike out the claimant's claim based upon the principle in *[Havering London Borough Council v Persons Unknown [2021] EWHC 2648 (QB)](https://www.iclr.co.uk/document/2021004472/casereport_68218842-1007-4434-b88f-507eb1bafbc6/html)* which is noted in the White Book as authority for the following proposition: “*A failure to progress a claim expeditiously following the grant of an interim injunction may well be found to be an abuse of process*.” The commentary at 3.4.16 of volume 1 of the White Book states: > “In *[Wearn v HNH International Holdings Limited [2014] EWHC 3542 (Ch)](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2014/3542.html)*, Barling J, the case was struck out under CPR rule 3.4(2)(b) and rule 3.4(2)(c) for delay and noncompliance with court orders. The claim had been ongoing for almost 14 years and the claimant was largely responsible for the delay. The court recognised that the guiding principle was the delay alone, even if it was inordinate and inexcusable, could not be an abuse of process. However, abuse of process might arise when delay was combined with some other relevant factor.” > > > > > > “In *[Alfozan v Quastel Midgen LLP [2022] EWHC 66 (Comm)](https://knyvet.bailii.org/ew/cases/EWHC/Comm/2022/66.html)*, HHJ Pearce, sitting as a High Court Judge, ruled that evidence or very long period of procedural inactivity by the claimant often gives rise to an inference that the claimant has no real intention of progressing the claim. However, that inference can be rebutted if there is a satisfactory explanation for the delay.” However, they subsequently sought to revive their counterclaim, arguing that it had been temporarily paused. The learned master, however, concluded that the more likely explanation was that the defendants had deliberately avoided pursuing the counterclaim to prevent provoking the claimants into action. > It seems to me there is also force in Mr Warwick’s point that the defendants are “approbating and reprobating”, that is to say they are castigating inaction on the part of the claimants but seeking to excuse exactly the same inaction on their own part. In general the law frowns upon such conduct and that has indeed the status of a legal principle - see [Express Newspapers Plc v News (UK) Limited [1990] 1 WLR 1320 (Ch)](https://swarb.co.uk/express-newspapers-v-news-uk-plc-1990/). [Master Davison](https://www.judiciary.uk/about-the-judiciary/who-are-the-judiciary/list-of-members-of-the-judiciary/hc-masters-list/) ruled that the defendants had engaged in "tactical maneuvering" by intentionally delaying their application for directions in the counterclaim until the claimant's case was struck out. He therefore dismissed the counterclaim. The learned Master ruled: > "The defendants are in serious breach of the overriding objective. It seems to me that there is, or should be, parity with the treatment of the claimants’ claim. The delay here is inordinate and inexcusable and (though not strictly relevant to the application) the claimants would be prejudiced by it. Prejudice is to be inferred from the scale of the delay and the nature of the counterclaim." - King’s Bench Master Davison > ## Practical Steps for Litigants Parties involved in litigation must ensure strict compliance with court orders and procedural rules. Non-compliance can lead to severe penalties and may result in a finding of abuse of the court process that directly results in the case being struck out. In addition to this, litigants should engage in proactive case management, including timely submission of documents, cooperation with the opposing party and adherence to court schedules. This helps in maintaining the integrity of the legal process and avoiding unnecessary delays. Stalled litigation, when used as a tactic to abuse the proper process of the court, undermines the administration of justice and burdens the judicial system. Our legal framework, through statutory provisions, rules and case law, provides mechanisms to address and prevent such abuses. It is imperative for litigants to adhere to procedural rules and for the judiciary to exercise active case management to ensure the timely and fair resolution of disputes. Through strict enforcement, the integrity of the legal process can be preserved, ensuring justice is served efficiently and effectively. --- # Manolete Case Study: Director Ordered to Repay £0.9m for Insolvency Duty Breach (Transactions at Undervalue) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-0-9m-for-insolvency-duty-breach-transactions-at-undervalue/ *This judgment (Manolete Partners PLC v Freed & Ors[2024] EWHC 2242 (Ch)) reinforces [directors' duties during insolvency](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) and highlights the risks for directors who transfer company assets to associated entities, as often seen in [transactions-at-undervalue disputes](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/). The ruling, pursued by litigation funder Manolete Partners, demonstrates how the courts view [asset transfers before administration](https://windinguppetitionsolicitors.co.uk/) and the personal liability directors may face under [section 172 of the Companies Act 2006](https://professionalnegligenceclaimsolicitors.co.uk/).* ## Case Background In 2020, Just Recruit Group Limited (JRGL), a recruitment services company, experienced significant financial difficulties. Norman Freed, who became a director in November 2018, claimed these troubles stemmed from both former directors breaching employment covenants and the impact of COVID-19 on the business. According to management accounts submitted to the administrator in December 2020, the company was trading at a loss and was balance sheet insolvent. Between October and December 2020, Mr. Freed caused JRGL to make substantial payments to two connected companies: Key People Limited (KPL) and Achieva Group Limited (AGL). These payments totalled £918,590, comprising £240,000 to KPL (made in two tranches of £120,000 on 9th October and 14th December 2020) and £678,590.18 to AGL (made between 17th and 24th December 2020)1. Notably, the payments to AGL were made immediately before and after a meeting with insolvency practitioners on 18th December 2020, when the company was confirmed to be insolvent. Mr. Freed maintained significant control over all three companies. He was the sole director of JRGL at the time of the payments, had beneficial ownership of 40% of KPL through a company called CMC Investments, and was the beneficial owner of AGL. Following these substantial payments, JRGL entered administration on 29th January 2021, with its business and assets being sold to AGL through a pre-pack administration for just £50,0001. Subsequently, the administrators assigned their claims against Mr. Freed, KPL and AGL to Manolete Partners plc, which then pursued litigation to recover the payments made when the company was insolvent. ## Key Findings in Manolete v Freed ### Breach of Director Duties ICC Judge Mullen found that Mr. Freed had breached his fiduciary duties to consider and act in the interests of creditors preserved by section 172(3) of the Companies Act 2006. In his judgment, he stated: > *"The payments had the effect of transferring substantial monies to KPL and AGL with no resulting benefit to the company or its creditors. Not only did this confer a benefit on KPL and AGL but also on Mr Freed by virtue of his interest in those companies. I am satisfied that there was no proper purpose for the transfers and they were made in breach of his duty to consider and act in the interests of creditors preserved by section 172(3) CA 2006."* The judge concluded that Mr. Freed deliberately sought to transfer assets from an insolvent company to entities with which he was associated, knowing that other creditors would not be paid. This finding was damning for the director, as it established clear personal liability for the full amount of the improper transfers. ### Rejection of Defendants' Evidence Judge Mullen systematically dismantled the defendants' case, describing their evidence as "unreliable," "inherently improbable," "implausible" and "contradictory". The judge was particularly critical of Mr. Freed's testimony, stating: > *"This, and other instances where there are flat-out contradictions between what he says now and what he has said in the past lead me to conclude that I cannot rely on his evidence. Where his evidence is not corroborated or otherwise inherently probable, I reject it."* The defendants had claimed that the payments to KPL were for management services and that the payments to AGL were made at the direction of KPL to pay creditors. However, the court found no evidence to support these claims-no service contracts, no invoices, and no evidence of an agency relationship between the companies. The judge concluded that the explanations were fabricated to justify the improper movement of funds. ## Transactions at Undervalue & Preference Claims The court determined that the payments constituted transactions at undervalue under section 238 of the Insolvency Act 1986 and/or preferences under section 239. Judge Mullen found that: > *"I am, again, satisfied that there was no consideration for these payments. They were made within the period provided for by section 238 IA 1986 to a connected company, JRGL's inability to pay its debts is presumed and the presumption has not been displaced."* The court also noted that even if the transactions were not at an undervalue, they would amount to preferences, having been made to connected persons during the statutory period when JRGL was clearly insolvent, with a presumed desire to prefer these companies over other creditors. ## Rejection of the "Shortfall" Limitation Argument Significantly, the court rejected the defendants' argument that their liability should be limited to the shortfall in the administration (approximately £350,000). The defendants had argued that any greater recovery would be "circular" since KPL was a creditor of JRGL. Judge Mullen followed and affirmed the decision in *Manolete Partners plc v Hope [2022] EWHC 1801 (Ch*), holding that recovery should not be limited to the administration shortfall. The judge noted that limiting recovery would *"discourage the pursuit of claims that the Small Business, Enterprise and Employment Act 2015 was intended to facilitate"* and that *"there is a public interest in wrongdoers being pursued and the standards of corporate governance being upheld"*. This reinforces the deterrent effect of insolvency litigation and supports the commercial model of litigation funders like Manolete. [Manolete Partners PLC v Freed & Ors (Re Just Recruit Group Ltd - Insolvency Act 1986) [2024] EWHC 2242 (Ch) (30 August 2024) Lexlaw Litigation Solicitors London](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-PLC-v-Freed-Ors-Re-Just-Recruit-Group-Ltd-Insolvency-Act-1986-2024-EWHC-2242-Ch-30-August-2024-Lexlaw-Litigation-Solicitors-London.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-PLC-v-Freed-Ors-Re-Just-Recruit-Group-Ltd-Insolvency-Act-1986-2024-EWHC-2242-Ch-30-August-2024-Lexlaw-Litigation-Solicitors-London.pdf) ## Implications of Manolete Partners v Freed This judgment carries significant implications for directors of companies facing financial difficulties. First, it confirms that courts will rigorously scrutinise transactions made by directors during periods of insolvency, particularly those involving connected parties. Directors cannot simply move money between associated entities when a company is struggling and expect these transactions to withstand legal challenge. The case also reinforces the principle that directors' duties shift decisively toward creditors when a company is insolvent or approaching insolvency. As clarified in *BTI v Sequana [2022] UKSC 25*, this duty is engaged when directors know or ought to know that insolvency is imminent or that it is probable the company will enter an insolvency process. Directors who fail to prioritise creditors' interests during this critical period face personal liability. For insolvency practitioners and litigation funders, the judgment provides confirmation that recoveries in assigned claims are not limited to the shortfall in the administration. This supports the commercial viability of the litigation funding model used by firms like Manolete Partners, which plays an important role in the insolvency regime by ensuring that claims are pursued even when the insolvent estate lacks resources. The case also highlights the court's unwillingness to accept technical defences where there is clear evidence of improper conduct. Judge Mullen was particularly dismissive of attempts to shift blame to others or to claim that the transactions were part of legitimate business arrangements without supporting evidence. This demonstrates the courts' focus on substance over form in insolvency litigation. ## Defending Manolete Director Claims If you are facing similar claims from Manolete Partners or another insolvency litigator, several defensive strategies should be considered. A comprehensive review of all transactions made during the period of financial distress is essential, with particular attention to payments made to connected parties. [Expert legal advice](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) should be sought immediately to assess potential exposure and develop a robust defence strategy. Thorough documentation of the commercial rationale behind all decisions is crucial when navigating potential insolvency. Directors should maintain detailed records of board discussions, including considerations of creditors' interests when financial difficulties arise. Where services are provided between group companies, formal agreements should be in place with market-rate consideration and proper invoicing processes. The Freed case illustrates how the absence of documentary evidence can be fatal to a defence. Forensic accounting expertise can be invaluable in defending transactions at undervalue claims. By demonstrating that adequate consideration was provided or that the transaction was entered into in good faith for the benefit of the company, directors may establish a statutory defence under section 238(5) of the Insolvency Act 1986[6](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/). Contemporaneous valuation evidence or independent business advice sought at the time can significantly strengthen such defences. Directors should also consider seeking indemnities or warranties from other stakeholders when implementing corporate restructuring during financial difficulties. Understanding the nuances of connected party transactions and the extended vulnerability periods they create under sections 238 and 239 of the Insolvency Act is essential for developing effective risk management strategies. These precautions can provide crucial protection if transactions are later challenged. ## Comparative Analysis: Types of Manolete Claims and Potential Defences Understanding the different types of claims Manolete typically pursues and their associated defences can help directors assess their risk profile and prepare appropriate defensive strategies: | Claim Type | Legal Basis | Defences | Notes | | ---------- | ----------- | -------- | ----- | | Transactions at Undervalue | Section 238, Insolvency Act 1986 | - Good faith + benefit to company (s.238(5)) - Market value consideration - Legitimate commercial purpose | - 2-year vulnerability period for connected parties - Presumption of insolvency for connected parties - Burden on director to prove defence | | Preferences | Section 239, Insolvency Act 1986 | - No desire to prefer - Payment in ordinary course of business - Commercial pressure from creditor | - 2-year vulnerability period for connected parties - Presumption of desire to prefer for connected parties - Subjective test for "desire" | | Breach of Directors' Duties | Companies Act 2006, ss.170-177 | - Business judgment rule - Relief under s.1157 CA 2006 - Ratification by shareholders (if solvent) | - Duty shifts to creditors near insolvency - Ratification not available in insolvency - Honest and reasonable conduct required | | Wrongful Trading | Section 214, Insolvency Act 1986 | - Every step taken to minimise loss - Reasonable prospect of avoiding insolvency - Professional advice obtained | - Knowledge-based test - Personal liability for contribution - Limitation to loss caused | | Misfeasance | Section 212, Insolvency Act 1986 | - Proper purpose - Acting in good faith - Reasonable care, skill and diligence | - Broad remedial provision - Covers breach of fiduciary duty - Court has discretion on remedy | This analytical framework demonstrates the complexity of defending Manolete claims and highlights the importance of obtaining [specialist legal representation from solicitors experienced in insolvency litigation](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) and directors' duties. ## ### FAQs on Directors Duties Cases What makes the Manolete Partners v Freed case significant for company directors? This case highlights the severe consequences directors face when transferring company assets during insolvency. The court ordered repayment of the full £918,590, rejecting arguments that recovery should be limited to the administration shortfall. The case demonstrates that directors cannot shield themselves by moving assets between connected companies when financial difficulties arise. Courts will scrutinise such transactions and may impose personal liability for the entire amount transferred, regardless of the company's deficiency10. Directors must understand their [statutory duties](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) shift towards creditors when insolvency looms, and technical defences are unlikely to succeed where there is evidence of improper conduct. Can a director be personally liable for pre-insolvency payments to connected companies? Yes, directors can be personally liable for payments made to connected companies before insolvency. As seen in the Freed case, where a director causes payments to be made to entities in which they have an interest when the company is insolvent, they risk personal liability for breach of their fiduciary duties under section 172(3) of the Companies Act 20061. This liability extends to the full amount transferred, potentially creating significant personal exposure. Our [litigation team](https://lexlaw.co.uk/solicitors-london/) regularly advises directors on implementing proper governance procedures for intercompany transactions, including obtaining independent valuations and documenting the commercial rationale for all decisions to help mitigate this risk. How does Manolete's funding model affect settlement negotiations? Manolete's funding model significantly influences settlement dynamics. As confirmed in this case, Manolete can pursue recovery of the full amount transferred, not just the deficiency in the administration10. This increases the potential damages and may strengthen their negotiating position. Unlike traditional litigation funders who simply finance cases, Manolete takes assignment of claims, becoming the actual claimant. This means they can directly control litigation strategy and settlement decisions. Our experience in defending [Manolete claims](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners-claims/) shows their commercial approach typically focuses on early settlement where possible, but they are prepared to litigate fully when necessary, often relying on the evidential advantages created by insolvency practitioners' investigations. What defences are available against transactions at undervalue claims? Several defences exist against transactions at undervalue claims. Section 238(5) of the Insolvency Act 1986 provides a statutory defence if the transaction was entered into in good faith for the purpose of carrying on the business, and there were reasonable grounds for believing it would benefit the company1. Directors can also challenge the assertion that the transaction was at an undervalue by demonstrating that adequate consideration was provided. For transactions with connected parties, the burden of proof is higher, as insolvency is presumed1. Our [insolvency specialists](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/) regularly assist directors in gathering contemporaneous evidence of commercial rationale, market valuations, and professional advice sought at the time to build robust defences to such claims. What steps should directors take when a company faces financial difficulties? When financial difficulties arise, directors should immediately take several protective steps. First, hold regular board meetings specifically addressing the company's financial position, documenting all discussions about creditors' interests. Second, seek professional insolvency advice early-courts look favourably on directors who obtain and follow appropriate guidance. Third, avoid preferential payments to connected parties or transactions at undervalue, as these are particularly vulnerable to challenge[5](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). Fourth, consider whether continued trading is appropriate, documenting the rationale for decisions. Finally, maintain comprehensive records of all financial decisions and transactions. Our [corporate advisors](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) provide directors with strategic guidance during financial distress, helping to navigate these complex duties while minimising personal exposure. How long after insolvency can Manolete bring claims against directors? Manolete can bring claims against directors for several years after insolvency. For breach of fiduciary duty claims, the limitation period is typically six years from the date of the breach. For transactions at undervalue or preferences involving connected parties, claims can be brought for transactions occurring up to two years before the onset of insolvency1. Manolete, as assignee, steps into the shoes of the insolvency practitioner and inherits the same limitation periods. These extended timeframes mean directors may face claims long after the company's insolvency. Our [litigation defence team](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) has extensive experience in challenging claims on limitation grounds and advising former directors when historic transactions are investigated. Can shareholders ratify breaches of directors' duties in insolvency situations? No, shareholders cannot ratify breaches of directors' duties once a company is insolvent or likely to become insolvent. As confirmed in BTI v Sequana[2022] UKSC 25 and referenced in the Freed judgment, the ratification principle does not apply to decisions made when a company is already insolvent or where implementation would render the company insolvent1. This is because when insolvency looms, directors' duties shift toward prioritising creditors' interests, and shareholders cannot authorise actions that prejudice creditors. In the Freed case, the court explicitly rejected the ratification defence, stating there was no evidence shareholders ever considered the breach and, more fundamentally, that ratification was not available given the company's insolvency1. How does the court determine if a company was insolvent at the time of challenged transactions? Courts apply both cash flow and balance sheet tests to determine insolvency. Cash flow insolvency occurs when a company cannot pay debts as they fall due, while balance sheet insolvency exists when liabilities exceed assets. In the Freed case, the court considered several factors: management accounts showing balance sheet insolvency, unpaid tax liabilities, trading losses, the timing of insolvency advice being sought, and confirmation from insolvency practitioners that the company was insolvent. For connected party transactions, the burden shifts to the director to prove the company was solvent1. Our [insolvency specialists](https://windinguppetitionsolicitors.co.uk/) regularly advise on insolvency indicators and help directors document the company's true financial position to defend against subsequent challenges. --- # Scam Warning for emails from: lexlaw-debt.info | 02032907833 Source: https://lexlaw.co.uk/solicitors-london/scam-warning-for-emails-from-lexlaw-debt-info-02032907833/ We are receiving a large number of calls from businesses asking if an email similar to the one below is genuine and if it is from our firm. **The email is not from our firm (lexlaw.co.uk) and is not genuine. **The scam email is part of an [invoice scam](https://www.actionfraud.police.uk/a-z-of-fraud/invoice-scams) which you should report to the Police via [Action Fraud](https://www.actionfraud.police.uk/reportscam) or via your [local Police Force online reporting system](https://www.met.police.uk/ro/report/ocr/af/how-to-report-a-crime/). ## Here are the scam red flags: - The real Lexlaw has no connection to the domain "lexlaw-debt.info"; - The real Lexlaw does not send emails from "@lexlaw-debt.info"; and - The real Lexlaw does not use the phone number 02032907833 which belongs to the scammer. Please report the attempt to scam you to [Action Fraud](https://www.actionfraud.police.uk/reporting-fraud-and-cyber-crime) or [your local Police Force](https://www.police.uk/pu/find-a-police-force/). This will help others who may get scammed and help the Police catch the scammer. ## What is the scam email? > **From: **Jenny Snell <> > **Date: **__________ > **To: **__________ > **Subject: **[EXTERNAL] Due 19/04/2024 > > > > > > Hi _________ > > I have been advised to contact you in regards to an unpaid invoice for professional services rendered by my client. The payment for the invoice was due on 19/04/2024, and it has come to our attention that the aforementioned invoice is still unsettled. > > We kindly remind you that prompt payment is required to avoid any legal action. Please note that failure to make payment for the services rendered is a breach of the contractual agreement between you and our client. > > Kind Regards, > > Jenny Snell [SCAMMERS FAKE NAME] > Lawyer / Debt Collection Litigation Counsel > Lexlaw Solicitors & Barristers LLP > 4 Middle Temple Ln, London EC4Y 9AA United Kingdom. > T: 02032907833 [SCAMMERS PHONE NUMBER] ## Here are some steps you can take to report a scam and help catch the scammer: ### Gather Information - **Collect all evidence:** Keep copies of emails, text messages, or any other communication related to the scam. You may wish where lawful to record scam telephone calls for the Police. - **Note down details:** Record the scammer's name, phone number, email address, and any account information they used. ### Report to Relevant Authorities - **Action Fraud:** This is the UK's national fraud and cybercrime reporting centre. Report the scam online at [Action Fraud's website](https://www.actionfraud.police.uk) or by calling 0300 123 2040. - **National Cyber Security Centre (NCSC):** If the scam involves a suspicious website or email, report it to the [NCSC](https://www.ncsc.gov.uk/). - **Your bank or credit card company:** If you've lost money, contact your bank or credit card company immediately to report the fraud. - **Your phone provider:** If you received a scam text message, forward it to 7726 (free of charge) to report it to your mobile provider. - **The company impersonated:** If the scam involves a company you know, report it to them directly. As we, here at the real Lexlaw, have had multiple reports we have published this webpage within 60 minutes of starting to receive a large volume of calls. ### Protect Yourself - **Be cautious of unsolicited contact:** Don't click on links or open attachments in suspicious emails or texts. - **Verify information:** Always double-check the authenticity of any request for personal or financial information. - **Use strong passwords:** Protect your online accounts with strong, unique passwords. - **Enable two-factor authentication:** Add an extra layer of security to your accounts. Reporting scams helps prevent others from falling victim. By taking action, you can help protect yourself and your community. ## Real Lexlaw Solicitors & Barristers are Elite Experts in Debt Recovery Litigation If you need first-class debt recovery litigation advice get in touch with us. We are a genuine SRA regulated law firm and our lawyers are experts at recovering unpaid debts and damages and have featured in the media on BBC, Sky, ITV, Times, Sunday Times, Financial Times and elsewhere. They have recovered many £hundreds of millions for clients since 2009. Call the real Lexlaw on 02071830529. --- # Compulsory Mediation for Small Claims in England and Wales Source: https://lexlaw.co.uk/solicitors-london/compulsory-mediation-for-small-claims-in-england-and-wales/ The introduction of [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) for small claims under £10,000 marks a landmark shift in the way disputes will be resolved in England and Wales. Effective from 22 May 2024, this new initiative aims to reduce court backlogs, provide quicker resolutions, and allow more efficient use of court resources. [Mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), which has long been encouraged but never previously compulsory in the [Small Claims Track](https://assets.publishing.service.gov.uk/media/5b4c7cffe5274a732fa15504/ex306-eng.pdf), will now be an essential and integrated step in the process. Our [experienced Alternative Dispute Resolution specialists](https://lexlaw.co.uk/our-people/) can guide you through this new [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) process. We offer comprehensive support to clients who are navigating [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) and can advise you on the most effective approach to resolving your dispute. [Our team](https://lexlaw.co.uk/our-people/) will ensure that you are fully prepared for [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), safeguarding your interests and ensuring that your position is clearly presented. ## What is mediation? [Mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) is a structured process for resolving disputes where an impartial third party, the mediator, facilitates communication between conflicting parties to help them reach a mutually acceptable compromise solution. It is characterised by its voluntary nature, confidentiality, and focus on the needs and interests of the parties involved. The process typically involves pre-mediation preparation, an opening session, private discussions with each party, negotiation, and potentially, a final agreement. Mediation offers several advantages over traditional litigation, including faster resolution, cost-effectiveness, greater control for the parties, and the potential to preserve relationships. It is widely used in various contexts, from small claims and family disputes to complex commercial conflicts, providing a flexible and collaborative approach to conflict resolution that encourages open dialogue and creative problem-solving. ## What Is Compulsory Mediation for Small Claims? With effect from 22 May 2024, all new claims valued at less than £10,000, filed in the [County Court](https://www.judiciary.uk/courts-and-tribunals/county-court/) and allocated to the [Small Claims Track](https://assets.publishing.service.gov.uk/media/5b4c7cffe5274a732fa15504/ex306-eng.pdf), have been subject to [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) as an initial step. This change has been implemented in two stages. From 22 May 2024, [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) became a mandatory requirement for claims initiated on paper through the [HM Courts and Tribunals Service’s (HMCTS)](https://www.gov.uk/government/organisations/hm-courts-and-tribunals-service) legacy systems, including: - [Money Claims Online (MCOL)](https://www.moneyclaim.gov.uk/web/mcol/welcome); and - for bulk users issuing claims via [Secure Data Transfer (SDT)](https://communities.lawsociety.org.uk/features-and-comment/what-is-hmcts-secure-data-transfer/5049884.article). The obligation to mediate in respect of claims submitted through the [Online Civil Money Claims (OCMC)](https://www.gov.uk/government/publications/hmcts-reform-civil-fact-sheets/fact-sheet-online-civil-money-claims) system came into effect on 5 November 2024. From this date, all new civil money claims under £10,000 filed through [OCMC](https://www.gov.uk/government/publications/hmcts-reform-civil-fact-sheets/fact-sheet-online-civil-money-claims) are required to participate in a [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) session in an effort to resolve the dispute prior to proceeding to a court hearing. Accordingly, all money claims allocated to the [Small Claims Track](https://assets.publishing.service.gov.uk/media/5b4c7cffe5274a732fa15504/ex306-eng.pdf) are now automatically referred to the [Small Claims Mediation Service (SCMS)](https://www.gov.uk/respond-to-court-claim-for-money/mediation). This includes [OCMC](https://www.gov.uk/government/publications/hmcts-reform-civil-fact-sheets/fact-sheet-online-civil-money-claims) claims submitted on or after 11:00 a.m. on 5 November 2024. Automatic referral to [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) has already been applicable to claims issued on paper or through [HMCTS](https://www.gov.uk/government/organisations/hm-courts-and-tribunals-service)’s legacy systems. This new process follows the landmark [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) decision in *[Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416](https://www.judiciary.uk/wp-content/uploads/2023/11/Churchill.APPROVED-JUDGMENTS-2.pdf)*, which granted English courts the authority to require [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) or [alternative dispute resolution (ADR)](https://lexlaw.co.uk/solicitors-london/alternative-dispute-resolution-adr-mediation-v-arbitration-pros-and-cons-second-opinion/) in civil proceedings, provided it does not infringe on the claimant’s right to a judicial hearing. The change represents a shift towards reducing litigation and promoting dispute resolution methods that are faster, cheaper, and more effective. Under [Practice Direction 51ZE](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part51/practice-direction-51ze-small-claims-track-automatic-referral-to-mediation-pilot-scheme), which came into force in tandem with this reform, all small claims cases will be referred to a court-appointed mediator for a free telephone session lasting up to one hour. The aim is to ensure that parties engage in [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) before the case proceeds to a trial. [Practice Direction 51ZE](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part51/practice-direction-51ze-small-claims-track-automatic-referral-to-mediation-pilot-scheme) requires both the claimant and defendant to engage in this [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) process, unless they can demonstrate a valid reason not to participate, such as the case being inappropriate for [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/). ## Why Is Compulsory Mediation Introduced? One of the key reasons behind this change is the growing concern over the length of time it takes for small claims to reach trial. On average, small claims in the [County Court](https://www.judiciary.uk/courts-and-tribunals/county-court/) take over a year from the filing of the claim to trial, largely due to the time spent on cases that could have been settled before reaching the court stage. By introducing [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf), the aim is to resolve disputes sooner, saving time for both the parties involved and the courts. The [government](https://www.gov.uk/) believes that by encouraging resolution through [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), cases can be dealt with more efficiently, with fewer cases needing judicial intervention. This reform is expected to free up to 5,000 sitting days per year, which will allow courts to focus more on complex cases that require in-depth legal examination. ## How Will Compulsory Mediation Work? - Once a claim has been issued and the defendant has filed a defence, the case will be allocated to the [Small Claims Track](https://assets.publishing.service.gov.uk/media/5b4c7cffe5274a732fa15504/ex306-eng.pdf). - Both parties will then be required to complete a [directions questionnaire](https://www.gov.uk/government/publications/form-n180-directions-questionnaire-small-claims-track), triggering an automatic referral to [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/). - A court-appointed mediator will contact both parties to arrange a one-hour telephone [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) session within 28 days of the referral. - The [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) session will be free of charge. - The mediator will work with the parties separately and facilitate settlement, but will not judge the merits of the case. - If the parties reach a settlement during [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), it will be formalised through a legally binding agreement. - Settlement during [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) remains voluntary; parties can refuse to settle and proceed to a full trial if necessary. For further information on what to expect from a [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) session, a short video has been prepared by HM Courts & Tribunal Service which can be viewed [here](https://www.youtube.com/watch?v=Fm4hjpA72vA). ## What Happens if Mediation Does Not Result in a Settlement? If [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) does not result in a settlement, the dispute will proceed to court for a full hearing. The parties can apply for judgment on the unresolved issues, or they may request that the case be restored for further hearing before a judge. Failure to attend [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) without a valid reason will lead to sanctions at the discretion of the court, which may include cost penalties or even a strike-out of the case. Under [Practice Direction 51ZE](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part51/practice-direction-51ze-small-claims-track-automatic-referral-to-mediation-pilot-scheme), failure to engage in the [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) process or unjustified refusal to mediate may result in the court imposing additional costs or striking out the claim. The court has the authority to decide whether there are sufficient grounds to continue without [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), based on the circumstances of the case. While sanctions can be imposed for non-compliance, it is important to note that [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) does not eliminate the option of going to trial. The new rules simply add a requirement that parties must attempt to mediate before their case can progress in the court system. ## What Are the Benefits of Mediation in Small Claims? [Mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) provides a low-cost, efficient alternative to lengthy court proceedings. It allows the parties to work with a neutral mediator to find mutually acceptable solutions, without the pressure and formalities of a courtroom. [Mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) is generally faster than litigation and often leads to settlements that save both time and money for all parties involved. It also allows the parties to maintain control over the outcome, rather than leaving it to a judge to decide. Importantly, [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) can often preserve relationships between the parties, which may be critical in disputes between businesses, landlords and tenants, or other ongoing professional relationships. ## How Can We Help You Navigate Compulsory Mediation? We understand the complexities of the new [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) requirement. Our Alternative Dispute Resolution specialists are well-versed in dispute resolution strategies and can assist you in preparing for [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), ensuring that you are fully informed and ready to make the best decisions for your case. We can provide you with expert advice on whether [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) is likely to be successful, how to approach negotiations, and how to manage expectations throughout the process. ## What Are the Potential Challenges of Compulsory Mediation? While [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) is designed to streamline the [dispute resolution process](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/), it presents certain challenges. Some critics, including the [Law Society of England and Wales](https://www.lawsociety.org.uk/en), have raised concerns about the fairness of mandating [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), particularly in cases where one party may be unwilling to settle. Additionally, there is a risk that enforcing [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) could lead to delays in resolving some disputes, especially where settlement is improbable. Furthermore, [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) may impose additional pressure on court resources if the demand exceeds the capacity of available mediators. However, the overarching aim of the [government](https://www.gov.uk/) is to reduce court backlogs and create a more accessible and efficient system for resolving disputes. If the scheme is successful, it could pave the way for mandatory [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) in more complex and higher-value cases, which would further ease the burden on the court system. ## Could Mandatory Mediation Expand Beyond Small Claims? The current initiative applies only to claims under £10,000, but the success of the pilot scheme will likely lead to the expansion of mandatory [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) in other areas. There is speculation that [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) could eventually become a compulsory step in higher-value cases, such as those in the fast-track (£10,000 to £25,000) and multi-track (£25,000+) categories. The government has already signalled its intention to expand [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) further, making it an integral part of the dispute resolution process for a wider range of cases. As the legal landscape evolves, the use of [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) is expected to become more prevalent, offering parties a more efficient, less adversarial route to resolving their disputes. ## How Can Our ADR Specialists Support Your Small Claims Case? If you are facing a small claims dispute, [our expert Alternative Dispute Resolution team](https://lexlaw.co.uk/our-people/) at [LEXLAW](https://lexlaw.co.uk/) is here to support you every step of the way. From preparing for [compulsory mediation](https://www.judiciary.uk/wp-content/uploads/2018/03/article-compulsory-mediation-response-adr.pdf) to handling any litigation that may arise from unsuccessful attempts at [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), we can ensure that you are fully prepared and positioned to achieve the best possible outcome. [Our team’s expertise](https://lexlaw.co.uk/practice-areas/) in the [Small Claims Track](https://assets.publishing.service.gov.uk/media/5b4c7cffe5274a732fa15504/ex306-eng.pdf) and dispute resolution means we can offer tailored advice and clear guidance throughout the [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/) process and beyond. We are committed to helping our clients navigate this new process with confidence. Our [experienced](https://lexlaw.co.uk/our-people/) Alternative Dispute Resolution Lawyers are here to offer practical advice, prepare you for [mediation](https://lexlaw.co.uk/mediation-settlement-alternative-dispute-resolution-adr-litigation-mediator-legal-advice/), and ensure that you achieve the best possible resolution to your dispute. If you are involved in a small claim or any legal dispute, don’t hesitate to contact us for expert legal guidance and representation. --- # How Judges in England Decide Civil Litigation Cases: Insights from Blower v GH Canfields Source: https://lexlaw.co.uk/solicitors-london/how-judges-in-england-decide-civil-litigation-cases-blower-canfields-claim/ The English legal system emphasises open justice, meaning the public can generally access court documents and attend hearings. This article explores how judges in England and Wales arrive at their decisions in civil litigation cases, using the real-life [professional negligence](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) case of [*Sandra Blower v GH Canfields LLP* [2024] EWHC 2763 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2763.html) as a practical illustration. This failed professional negligence case was pursued under a CFA by [McFaddens Law LLP's Howard Epstein](https://mcfaddenslaw.co.uk/team/howard-epstein) who is *not *noted as a professional negligence expert on his own law firm's profile. The importance of using [specialist professional negligence litigation solicitors and barristers](https://professionalnegligenceclaimsolicitors.co.uk/) cannot be understated especially since the insurance-backed opponents will invariably deploy such specialist legal advisers. ## Case: Sandra Blower v GH Canfields LLP This case involved a negligence claim against London law firm GH Canfields LLP by Sandra Blower, who alleged the firm provided inadequate advice regarding a settlement in her husband's [bankruptcy proceedings](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/). Her husband, John Blower, faced claims exceeding £2 million from the [trustee in bankruptcy](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/). During a lengthy [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/#:~:text=Mediation%20provides%20a%20forum%20for,between%20parties%2C%20utilising%20their%20expertise.) session, Mr. Blower, alongside solicitor Robert Whitehouse, negotiated a settlement of £1.5 million. However, six days later, Mr. Blower sought to withdraw from the agreement. The judge, HHJ Paul Matthews, ultimately ruled that Canfields had not acted negligently. He emphasised that Mr. Blower, a seasoned businessman, had his family’s trust to secure the best possible outcome, and the family did not set any limits or “red lines” for the settlement. Additionally, Mr. Whitehouse consulted with barrister Jonathan Crystal, who, after reviewing the proposed terms, found no cause for concern, stating it would likely save the family considerable trouble and expense. The judge noted the inherent weaknesses in the family's case, including the lack of documentary support and the potential harm Mr. Blower's testimony could cause. Even if negligence had been established, the claimant failed to demonstrate that it led to any specific loss i.e. causation. The judge also highlighted the significance of the claimant's failure to call Mr. Blower as a witness, allowing him to draw an adverse inference from his absence. The *Blower v GH Canfields LLP* case illustrates the principles judges consider when making decisions, such as evaluating evidence, applying relevant legal precedents, and considering the actions and arguments presented by both sides. ## Judicial Insights from Blower v GH Canfields LLP This article explores how judges in England and Wales decide civil litigation cases, using the *[Sandra Blower v GH Canfields LLP](https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/2763)* case as a practical example. ### How Judges Decide Cases English judges decide cases based on the arguments and evidence presented by the parties involved. England has an adversarial system of civil justice and therefore Judges do not conduct their own investigations, but may ask for clarification on certain points. This differs from inquisitorial systems of justice that exist in most civil code jurisdictions. While judges are bound to apply the law as created by Parliament and uphold past case precedent set by higher courts, they also use their judgment to apply relevant law to the facts of each case. The process involves: - **Applying the law:** Judges ensure the laws created by Parliament are followed, while considering precedents set by higher courts in similar cases. - **Finding the facts:** Judges hear evidence and legal arguments to determine the facts of the case. - **Providing a judgment:** Based on the facts and law, judges explain their decision and the resulting orders in a reasoned judgment. Throughout the process, judges play an active role, ensuring fairness and providing opportunities for all parties to present their cases. They carefully consider the evidence presented, including witness testimonies and documents. ## HHJ Paul Matthews on 'How Judges Decide Cases': The following is a direct quote from the judgment of [HHJ Paul Matthews](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/regional-business-and-property-courts/bristol/judges-of-the-business-and-property-courts-in-bristol/) in Blower v Canfields followed by our analysis and further explanation. > "4. For the benefit of the lay parties in this case I will say something about how English judges decide civil cases like this one. I borrow the following words largely from other judgments of mine in which I have made similar comments. First of all, judges do not possess supernatural powers that enable them to divine when someone is > mistaken, or not telling the truth. Instead, they take note of the witnesses giving live evidence before them, look carefully at all the material presented (witness statements and all the other documents), listen to the arguments made to them, and then make up their minds. But there are a number of important procedural rules which govern their decision-making, some of which I shall briefly mention here, because non-lawyer readers of this judgment may not be aware of them. > > > > > > 5. The first is the question of the burden of proof. Where there is an issue in dispute between the parties in a civil case (like this one), one party or the other will bear the burden of proving it. In general, the person who asserts something bears the burden of proving it. So, in the present case the claimant must prove that the advice given to the > claimant and to Kelly was negligent. Further on in this judgment, I deal with an argument that the defendant bears an evidential burden in relation to causation of loss. > > > > > > 6. The importance of the burden of proof is that, if the person who bears that burden satisfies the court, after considering the material that has been placed before the court, that something happened, then, for the purposes of deciding the case, it did happen. But if that person does not so satisfy the court, then for those purposes it did not happen. The decision is binary. Either something happened, or it did not, and there is no room for ‘maybe’. That may mean that, in some aspects of the case, the result depends on who has the burden of proof. > > > > > > *Standard of proof* > > > > > > 7. Secondly, the standard of proof in a civil case is very different from that in a criminal case. In a civil case like this, it is merely the balance of probabilities. This means that, if the judge considers that a thing is more likely to have happened than not, then for the purposes of the decision it did happen. If on the other hand the judge considers that the likelihood of a thing’s having happened does not exceed 50%, then for the purposes of the decision it did not happen. It is not necessary for the court to go further than this. There is certainly no need for any scientific certainty, such as (say) medical or scientific experts might be used to. However, the more serious the allegation, the more cogent must be the evidence needed to persuade the court that a thing is more likely than not to have happened. > > > > > > *Role of judges* > > > > > > 8. Thirdly, in our system, judges are not investigators. They do not go looking for evidence. Our system is not inquisitorial, but accusatorial. Judges decide cases on the basis of the material and arguments put before them by the parties. So, it is the responsibility of each party to find and put before the court the evidence and other material which each wishes to adduce, and formulate their legal arguments, in order to > convince the judge to find in that party’s favour. There are a few limited exceptions to this, but I need not deal with those here. > > > > > > *The fallibility of memory* > > > > > > 9. Fourthly, more is understood today than previously about the fallibility of memory. In commercial cases, at least, where there are many documents available, and witnesses give evidence as to what happened based on their memories, which may be faulty, civil judges nowadays often prefer to rely on the documents in the case, as being more objective: see Gestmin SGPS SPA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), [22], restated recently in Kinled Investments Ltd v Zopa Group Ltd [2022] EWHC 1194 (Comm), [131]-[134]. As the judge said in that case, “a trial judge should test a witness's assertions against the contemporaneous documents and probabilities and, when weighing all the evidence, should give real weight to those documents and probabilities”. In the present case, there are many documents available to the court. This is important in particular where, as here, the relevant facts occurred some years ago, one important participant in the events (John Blower) is not available to give evidence, and the memories of the witnesses that are available have necessarily been dimmed by the passage of time. > > > > > > 10. In deciding the facts of this case, I have therefore had regard to the contents of the documents in the case. In addition to this, and as usual, in the present case I have heard witnesses (who made witness statements in advance) give oral evidence while they were subject to cross-examination and re-examination. This process enables the > court to reach a decision on questions such as who is telling the truth, who is trying to tell the truth but is mistaken, and (in an appropriate case) who is deliberately not telling the truth. I will therefore give appropriate weight to both the documentary evidence and the witness evidence, both oral and written, bearing in mind both the fallibility of memory and the (relative) objectivity of the documentary evidence > available to me. > > > > > > *Reasons for judgment* > > > > > > 11. Fifthly, a court must give reasons for its decisions. That is what I am doing now. But judges are not obliged to deal in their judgments with every single point that is argued, or every piece of evidence tendered. They deal with the points which matter most. Moreover, it must be borne in mind that specific findings of fact by a judge are inherently an incomplete statement of the impression which was made upon that judge by the primary evidence. Expressed findings are always surrounded by a penumbra of imprecision which may still play an important part in the judge's overall evaluation. Put shortly, judgments do not explain all aspects of a judge’s reasoning, although they > should express the main points, and enable the parties to see how and why the judge reached the decision given. > > > > > > *Failure to call witnesses* > > > > > > 12. Lastly, there is the question whether the failure to call a witness has any effect on a party’s case. In Royal Mail Group Ltd v Efobi [2021] 1 WLR 3893, SC, this question arose. In his judgment, Lord Leggatt (with whom all the other members of the court agreed) said: > > > > > > “41. The question whether an adverse inference may be drawn from the absence of a witness is sometimes treated as a matter governed by legal criteria, for which the decision of the Court of Appeal in Wisniewski v Central Manchester Health Authority [1998] PIQR P324 is often cited as authority. Without intending to disparage the sensible statements made in that case, I think there is a risk of making overly legal and technical what really is or ought to be just a matter of > ordinary rationality. So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so. Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that > the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules.” ### The Sandra Blower v GH Canfields LLP Case In this case, Sandra Blower accused London law firm GH Canfields LLP of negligence in their advice regarding a mediation settlement related to her husband John Blower's bankruptcy. **Key details of the case:** - John Blower faced bankruptcy proceedings due to financial difficulties. - The trustee in bankruptcy brought claims against Blower and his family involving assets worth £2 million. - GH Canfields LLP represented the Blower family during a 12-hour mediation session. - John Blower and solicitor Robert Whitehouse attended the mediation and agreed to a settlement of £1.5 million. - Six days later, John Blower attempted to withdraw from the agreement, leading to the negligence claim. **Judge's Findings and Reasoning:** - **No Negligence in Settlement Advice:** HHJ Paul Matthews found that the settlement terms were negotiated by John Blower, who had his family's trust to secure the best possible outcome. The judge deemed Mr. Whitehouse's advice to Mr. Blower to not proceed if unsure about raising the finances as not negligent. - **Family's Trust and Authority:** The judge highlighted that the Blower family entrusted John Blower to negotiate the settlement and did not impose any limits or "red lines" on the agreement. This impliedly authorized both Mr. Blower and Mr. Whitehouse to act on their behalf. - **Counsel's Confirmation:** Mr. Whitehouse had read out the proposed settlement terms to barrister Jonathan Crystal, who raised no objections, stating that it would save the family trouble and expense. This reinforced Mr. Whitehouse's assessment of the situation. - **Weaknesses in the Family's Case:** The judge considered the weak pleadings, lack of documentation, and the risk of John Blower's testimony as factors that would lead a reasonably competent solicitor to advise settlement. **Causation of Loss:** Even if negligence had been established, the claimant failed to demonstrate how the alleged negligence caused any loss. The judge stated that there was no "coherent case on causation of loss". The claimant only pleaded that they wouldn't have agreed to the settlement, but the judge believed that they would not have defied John Blower and rejected the negotiated terms, even if advised differently. ## Why the Court Found in Favour of GH Canfields LLP The court found in favour of GH Canfields LLP because the claimant failed to demonstrate that the defendant's actions caused her any loss. Even if the defendant had been negligent, the judge stated that "as things stood on the pleadings, there was 'no coherent case on causation of loss'". The judge, HHJ Paul Matthews, stated that the claimant’s case "leaves open the question as to what would have happened next" if the defendant had acted differently. Specifically, the claimant did not demonstrate whether she would have settled on more favourable terms or chosen to go to trial, and what the outcome of a trial might have been. The claimant also did not plead “loss of a chance,” which is a legal concept that could have potentially helped her to prove causation. Loss of a chance is relevant when a professional's negligence results in the loss of a valuable opportunity or claim. For example, if a solicitor fails to advise a client about a claim they could make, the client may have suffered a loss of chance to recover damages. The judge also noted several factors that weakened the family's case and made settlement a more sensible option: - The family had entrusted Mr. Blower to handle the negotiations. They did not provide him with any specific instructions or “red lines”, and they did not attend the mediation themselves456. - The solicitor, Mr. Whitehouse, had consulted a barrister who had approved the terms of the settlement. The barrister believed the settlement would likely save the family "considerable trouble and expense". - The family’s case against the trustee in bankruptcy had several weaknesses, including a lack of documentary evidence. Furthermore, the judge stated that Mr. Blower would likely have been a poor witness if the case had gone to trial. The judge’s decision was further supported by his decision to draw an adverse inference from the claimant’s failure to call Mr. Blower as a witness. The judge reasoned that since Mr. Blower was intimately involved in the relevant events, his absence from the trial suggested that his testimony would not have supported the claimant’s case. This underscores the importance of ensuring that all key witnesses are available to testify and be cross-examined during legal proceedings. ## Conclusion and Key Takeaways: The *Blower v GH Canfields LLP* case provides valuable insights into the workings of the English legal system. It demonstrates the importance of evidence, the role of legal precedent, and the weight judges place on the actions and arguments of both parties. The case also serves as a reminder that establishing causation of loss is a critical element of any successful negligence claim. - **Judges prioritise evidence:** They rely heavily on the presented evidence and legal arguments when making decisions. - **Burden of Proof:** The claimant carries the burden of proving their claims, including negligence and causation of loss. - **Importance of Witness Testimony:** The absence of a key witness, such as John Blower in this case, can negatively impact a party's case, especially when the judge is entitled to draw an adverse inference from their absence. --- # Manolete Case Study: Costs Order against Manolete Upheld Despite Outstanding Judgment Debt (Section 194 LSA 2007) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-costs-order-against-manolete-upheld-despite-outstanding-judgment-debt-section-194-lsa-2007/ *The Court of Appeal ordered Manolete Partners PLC to pay £85,000 in costs to the Access to Justice Foundation following the debtor’s successful appeal, rejecting Manolete’s argument that the costs should be offset against the outstanding judgment debt.* *The [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/)’s judgment in [Manolete Partners PLC v White [2024] EWCA Civ 1558 ](https://lexlaw.co.uk/wp-content/uploads/Manolete-v-Mr-White.pdf)clarifies the application of[ section 194 of the Legal Services Act 2007 ](https://lexlaw.co.uk/wp-content/uploads/s.194-legal-services-act.pdf)concerning pro bono costs orders. The [Access to Justice Foundation](https://atjf.org.uk/) (AJF) was entitled to a sum of £85,000 by [Manolete Partners PLC](https://find-and-update.company-information.service.gov.uk/company/07660874) for the pro bono representation of Mr White, even where a substantial judgment debt remained unpaid. The judgment also touches on the limits of creditor enforcement rights under the [Pensions Act 1995](https://www.legislation.gov.uk/ukpga/1995/26/contents) and the broader context of litigation funding and access to justice.* We are the leading UK firm defending directors against Manolete Partners’ claims due to our [expertise in insolvency litigation](https://windinguppetitionsolicitors.co.uk/post-insolvency-claims-against-directors/) and [strategic defence](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/) tactics. Our dual-qualified and experienced solicitors & barristers, based near London's Royal Courts of Justice, [specialise in countering Manolete’s aggressive pursuit](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) of transactions-at-undervalue claims e.g. by challenging evidence validity, leveraging limitation periods, and demonstrating good faith per the Insolvency Act 1986. We have a track record of [protecting directors’ assets](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/), including family homes, while navigating complex financial and regulatory risks. Our insolvency law focus and experience with litigation funders ensures tailored, robust defence in high-stakes claims. [Get in touch about your Director's Duties case](https://lexlaw.co.uk/legal-case-assessment/). ## Manolete Partners PLC v White [Manolete Partners PLC](https://www.manolete-partners.com/) had secured judgment against Mr White exceeding £1 million, arising from a dispute over pension fund withdrawals. At first instance, the court ordered Mr. White to withdraw funds from his occupational pension to satisfy the judgment debt. However, Mr White successfully appealed this order, with the Court of Appeal holding that [section 91(2) of the Pensions Act 1995](https://www.legislation.gov.uk/ukpga/1995/26/section/91) protects pension rights from creditor claims, rendering the original enforcement order unlawful. During the appeal, Mr White was represented pro bono by legal teams coordinated through the Bar pro bono charity. Following his success, Mr. White applied for a costs order under section 194 of the Legal Services Act 2007, which allows courts to order payment to a prescribed charity-the Access to Justice Foundation (AJF)-to compensate pro bono legal representatives. Manolete Partners challenged the costs order, contending that any costs payable to the AJF should be offset against the substantial judgment debt Mr. White owed to Manolete or that the costs order should be conditional on Manolete recovering that debt. This raised the novel question of whether pro bono costs orders could be influenced by outstanding debts between the parties. ## Court of Appeal’s Findings in Manolete Partners PLC v White ### Are Pro Bono Costs Orders  Distinct from Conventional Costs Awards? [Lord Justice Snowden](https://www.judiciary.uk/guidance-and-resources/lord-justice-snowden/), while conducting an analysis on pro bono costs order under section 194 of the Legal Services Act 2007, it was noted that a pro bono costs order under section 194 differs from conventional costs order and the purpose of section 194 was to balance the litigation field for both parties. > *19. O**ften called a "pro bono costs order", an order under section 194 is not a conventional order for costs made under section 51 and CPR 44. It does not, for example, conform to the indemnity principle that underlies conventional costs orders**.** **As such, while section 194(4) in effect requires the court to have regard to the principles that apply to such costs orders, the power to make an order under section 194 must also be exercised having regard to the legislative purposes behind the enactment of that section.* > *20. The legislative purposes of section 194 are relatively easy to see. Before the introduction of section 194, a privately funded party who was litigating against a person who was represented pro bono had the tactical advantage that they were not exposed to the usual risks of an adverse costs order. The introduction of section 194 was designed to put the parties on a more equal litigation footing by exposing the privately funded party to a similar risk of adverse costs. In addition, the identification of a charity as the beneficiary of an order under section 194 and the designation of the AJF makes clear the intent that orders under the section should provide a source of funding to support organisations involved in the provision of free legal help to a wider cross-section of the public who might be in need.* This confirms that pro bono costs orders serve a different function from standard costs orders and are designed to support the sustainability of free legal services. ## Rejection of Set-Off or Conditional Costs Orders Lord Justice Snowden rejected Manolete’s argument that the costs order should be set off against the judgment debt or made conditional on Manolete’s recovery of that debt. It was noted that: > 21. *Parliament must have enacted section 194 in the knowledge that the majority of litigants who obtain pro bono representation do so because they do not have the financial means to pay for legal services. Parliament therefore could not have envisaged that an order for payment to the AJF should be made conditional upon such litigants finding the money to pay legal fees, because the practical result of imposing such a condition would be that in most cases, no payments would be required to be made to the AJF. This would defeat the statutory purposes which I have identified.* > *24. In those circumstances, agreeing with the submissions by Mr. White's legal team, I think that the conditional order proposed by Manolete gives rise to too much uncertainty and would not fulfil the legislative purposes behind section 194.* While agreeing with Lord Justice Snowden, [Lady Justice Asplin](https://www.judiciary.uk/guidance-and-resources/lady-justice-asplin/) stated that: > *29. I agree with Lord Justice Snowden for all the reasons he has given. As he points out, the underlying purpose of section 194 is not only to place parties on an equal footing by putting the privately funded party at risk of an adverse costs order but also to provide a source of funding for and to encourage the provision of free legal assistance to those in need of it. In my judgment, a conditional order of the kind which is now sought, would be contrary to that very important, albeit underlying purpose, for all the reasons which Lord Justice Snowden gives.* [Our team](https://lexlaw.co.uk/our-people/) possesses the in-depth expertise required to advise and represent you effectively on such specialist costs matters and complex commercial disputes, leveraging insights from important judgments, guiding you through the nuances of these challenging legal areas. [Instruct us](https://lexlaw.co.uk/legal-case-assessment/) for an initial consultation conference with our team of expert solicitors and barristers. ## Implications of Manolete Partners PLC v White This ruling confirms that pro bono costs orders under section 194 are independent of the underlying financial relationship between parties. It strengthens the position of pro bono legal providers by ensuring they receive costs awards regardless of outstanding debts owed by their clients. This has important consequences for litigation funders and parties involved in disputes where pro bono representation is common. The decision also highlights the judiciary’s commitment to access to justice, recognising that financial barriers should not prevent effective legal representation. It aligns with broader trends in civil procedure encouraging cost transparency and fairness. This case study demonstrates the evolving landscape of costs and litigation funding in UK civil justice. The *Manolete Partners PLC v White* judgment affirms the courts’ role in balancing access to justice with fair costs allocation, a critical consideration for litigators and funders alike. However, the ruling may raise concerns for parties like Manolete, who, despite being owed significant sums, must nonetheless satisfy costs orders benefiting third-party charities. This could prompt further debate on how access to justice funding is structured and whether state support should supplement or replace costs shifting in such contexts. ## Download the Judgment Here [![](https://lexlaw.co.uk/wp-content/uploads/Manolete-v-Mr-White-725x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Manolete-v-Mr-White.pdf) ## Defending Manolete Director Claims and Costs Orders When advising clients facing pro bono costs orders or defending claims funded by litigation financiers such as Manolete, it is critical to undertake a thorough review of the underlying debts and costs entitlements. Forensic accounting can assist in clarifying the financial interplay and challenging any inflated costs claims. Early engagement with experienced [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) solicitors and barristers, is vital to explore potential defences, including jurisdictional challenges or procedural irregularities. Where appropriate, negotiating payment terms or seeking conditional settlements can mitigate exposure. Understanding the statutory framework of section 194, and its distinction from conventional costs rules, enables more effective case strategy and client counselling. As seen in our successful defence of wrongful trading claims, timely legal advice is critical in navigating complex cost and funding issues. Contact [our team](https://lexlaw.co.uk/our-people/) of expert solicitors for an [initial conference](https://lexlaw.co.uk/legal-case-assessment/). ### FAQs on Pro Bono Costs Orders and Manolete Claims **Why is this case significant for costs law?** This case clarifies that pro bono costs orders under section 194 Legal Services Act 2007 are independent of outstanding judgment debts, reinforcing the statutory aim to support free legal representation through payments to charities like the Access to Justice Foundation. **Can costs orders under section 194 be set off against debts owed by the successful party?** No. The Court of Appeal confirmed that such costs orders are unconditional and cannot be offset or made conditional on recovery of debts owed by the party benefiting from pro bono representation. **How does this affect parties owed large judgments?** Parties owed substantial sums may still be required to pay pro bono costs orders, which could create practical difficulties but reflects the legislative intent to fund access to justice initiatives. **What defences are available against Manoete claims?** Defences include challenging the validity of the underlying claim, procedural objections, and scrutinising the quantum of costs. Early legal advice is essential to formulate effective responses. **Does Manolete’s litigation funding model affect settlement negotiations?** Yes. Funders like Manolete provide capital and expertise, which can increase pressure to settle. However, understanding the funding structure helps in negotiating realistic outcomes. **Can a pro bono costs order be appealed?** Yes, but appeals are typically limited to errors of law or procedural irregularities. The Court of Appeal’s ruling sets a strong precedent supporting such costs orders. **What is the role of the Access to Justice Foundation?** The AJF receives payments under section 194 to fund pro bono legal services, ensuring sustainability of free legal assistance to those unable to pay. **Where can I get legal advice on defending Manolete claims?** Our team provides specialist advice on defending claims funded by Manolete Partners. See our [legal guide to defending claims from Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) for comprehensive support. --- # HMRC Account Freezing Orders (AFOs): Legal Guide to Challenging Account Freezing Orders Source: https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/ *[HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)'s crackdown on suspected criminal and money laundering activity has led to a staggering 170% increase in [Account Freezing Orders (AFOs)](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/) over the last three years. If you've received notice that [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) has frozen your account, it’s crucial to understand the implications and your rights* *to challenge an unfair AFO.* *If HMRC has frozen your bank account, our expert team is here to provide you with the legal support you need to navigate this challenging situation and protect your assets.* ## What is an Account Freezing Order (AFO)? An [Account Freezing Order (AFO)](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/) is a [legal instrument](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) that allows law enforcement agencies, including [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs), to freeze funds in bank accounts suspected of being involved in criminal activity. This type of order was introduced under the Criminal Finances Act 2017, enabling authorities to freeze accounts for up to two years while investigations are conducted into the source of the funds. The Freezing Order can apply to accounts with balances exceeding £1,000 and is issued by the [Magistrates’ Court](https://www.judiciary.uk/courts-and-tribunals/magistrates-courts/). The threshold for obtaining an AFO is relatively low, requiring only reasonable grounds to suspect that the funds may be recoverable property or intended for unlawful use. This is a critical distinction from Forfeiture Orders (FO), which occur later in the process, only when the court is satisfied that the seized funds are indeed proceeds of crime. ## Why the Surge in AFOs? Data reveals that the number of AFOs has jumped from 125 in the 2021/2022 financial year to 341 in 2023/2024. The value of assets frozen has also increased from £43 million to £57 million during the same period. This significant rise indicates HMRC's intensified efforts to tackle suspected criminal behavior. In addition to AFOs, the number of Forfeiture Orders (FOs) has also increased, from 92 in 2021/2022 to 144 in 2023/2024, amounting to nearly £23 million in seized assets. This trend highlights a broader focus on financial crime, particularly in the wake of growing concerns over money laundering and terrorist financing. ## When HMRC Freezes Your Bank Account - What This Means for You If [HMRC ](https://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/)obtains an [Account Freezing Order (AFO)](https://taxdisputes.co.uk/2024/11/how-to-challenge-a-hmrc-account-freezing-orders/) against you, your funds will be locked, you cannot withdraw money, make payments, or transfer funds without specific court authorisation. For individuals, this can mean an immediate inability to cover basic essential expenses. For businesses, it can halt payroll, supplier payments, and day-to-day trading. While it is possible to have funds released or the freeze lifted if they are not linked to alleged unlawful conduct, the process is rarely straightforward and delays can cause severe hardship. The key is to act quickly, with skilled legal representation, you may be able to: - Secure urgent access to funds for essential living or business needs; - Challenge the legal and factual basis of the AFO; - Negotiate with [HMRC ](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/)to limit its scope. Our [specialist](https://lexlaw.co.uk/our-people/) solicitors have successfully overturned AFOs and recovered funds for clients facing exactly this situation, [contact us ](https://lexlaw.co.uk/legal-case-assessment/)today for urgent advice. ## What Is a Forfeiture Order? A Forfeiture Order (FO) is a legal decree that allows law enforcement agencies to permanently seize assets that have been determined to be proceeds of crime. This order is typically issued after a successful investigation and conviction related to criminal activity. Under the [Proceeds of Crime Act 2002 (POCA)](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B/crossheading/forfeiture-orders), a forfeiture order can be sought by authorities if they can demonstrate that the property in question is derived from unlawful conduct. Unlike Account Freezing Orders (AFOs), which temporarily freeze assets while investigations are ongoing, forfeiture orders represent a final decision regarding the ownership of the seized assets. Once a forfeiture order is granted, the individual or business loses any rights to the assets, which are then permanently confiscated by the state. Understanding the implications of a forfeiture order is crucial, especially if you are facing an AFO, as it may lead to irreversible loss of property if not adequately challenged. ## Can You Challenge an AFO? Yes, you can challenge an Account Freezing Order. If you are served with an AFO, it is imperative to act quickly. You have the right to apply to the [Magistrates’ Court](https://www.judiciary.uk/courts-and-tribunals/magistrates-courts/) to have the order discharged or varied. Our experienced legal team can help you navigate this process effectively, focusing on the following: - **Immediate Representation**: Acting quickly is crucial. The enforcement agency will likely seek a swift hearing after issuing the AFO. - **Challenging the Order**: We can assist you in demonstrating to the court that the funds in question are not proceeds of crime, thereby lifting the AFO. - **Negotiation with Authorities**: It is sometimes possible to negotiate directly with HMRC to vary the terms of the AFO, allowing for essential living expenses or business operations to continue. ## Case Study: Mileage Reclaim Ltd v HMRC – Procedural Failures and Business Impact of an AFO [Part 5 of the Proceeds of Crime Act 2002 (“POCA”)](https://lexlaw.co.uk/wp-content/uploads/Part-5-of-the-Proceeds-of-Crime-Act-2002-POCA.pdf) provides law enforcement with significant civil recovery powers, including the ability to freeze or forfeit assets without a criminal conviction. Under [Chapter 3B of Part 5](https://lexlaw.co.uk/wp-content/uploads/Chapter-3B-Part-5-of-the-Proceeds-of-Crime-Act-2002-POCA.pdf), which was introduced in January 2018, enforcement agencies can apply for [Account Freezing Orders (AFOs)](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/) to temporarily restrict access to bank accounts suspected to hold proceeds of unlawful conduct. These applications, typically heard ex parte in the [Magistrates’ Court](https://www.judiciary.uk/courts-and-tribunals/magistrates-courts/), are intended to prevent asset dissipation during investigations. However, they often create severe consequences for businesses, as illustrated by the case of *R (Mileage Reclaim Ltd) v North Somerset Magistrates’ Court, HMRC [2024] EWHC 1531 (Admin)*. ### Challenge to AFO obtained by HMRC Mileage Reclaim Ltd, trading as [Taxbuddi](https://taxbuddy.tequantic.com/), challenged an AFO obtained by HMRC against two of its bank accounts with Revolut and Wise Payments Ltd. The ex parte order, which froze the company’s working capital, left Taxbuddi unable to pay its 89 employees. HMRC alleged that the funds were proceeds of fraud, specifically misrepresented tax rebates for expenses incurred by payroll employees. However, the supporting evidence provided by HMRC was minimal, comprising a nine-page statement with no exhibits. The Magistrates’ Court failed to thoroughly scrutinise the merits or assess the business impact, granting the AFO in a hearing that lasted only five minutes. After realising the devastating impact of the order, Taxbuddi applied to set aside the AFO on 3 March 2024, disputing HMRC’s claims. Taxbuddi pointed out that PAYE employees could claim tax relief for certain expenses, contrary to HMRC’s statement. Four days later, HMRC conceded that its interpretation of the tax law was incorrect but argued that the AFO remained justified. Despite these admissions, the application to set aside was delayed for nearly four months, severely impacting the business. When Taxbuddi sought [judicial review](https://lexlaw.co.uk/judicial-review-court-lawyers-london-hmrc-tax-dispute-decision-advice-representation/) of the delays, the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) acknowledged that **“extraordinary failings”** had occurred in both HMRC’s application and the Magistrates’ Court’s handling of the matter. However, it held that the proper remedy was for the Magistrates’ Court to hear the set-aside application, not for the High Court to intervene via judicial review. ### Difficulties posed by AFOs This case demonstrates the significant challenges posed by AFOs, particularly when they are granted ex parte. Although designed as a temporary measure, AFOs can severely disrupt business operations, especially when delays in setting aside applications occur. In the Mileage Reclaim Ltd case, the failure to ensure full and frank disclosure and the Magistrates’ Court’s limited scrutiny raised questions about procedural fairness. While the High Court did not intervene directly, it criticised both the errors made by HMRC and the court’s inadequate handling, acknowledging the “serious damage” done to the business and its reputation. This case highlights the importance of swift access to remedies for those affected by AFOs and the need for careful judicial scrutiny in the granting of such orders, especially in complex cases involving significant sums of money. ## Case Study: Successful Opposition to HMRC’s AFO Application in FI Case In a separate case, FI, an alcohol wholesaler, successfully defended against an AFO application by HMRC at [Folkestone Magistrates’ Court](https://www.find-court-tribunal.service.gov.uk/courts/folkestone-magistrates-court). HMRC had alleged that FI was involved in alcohol diversion fraud, with over £8 million flowing through its accounts, raising suspicions of money laundering and “layering.” FI’s legal team assembled comprehensive documentation in a short timeframe, including due diligence records previously shared with HMRC. During the hearing, HMRC’s financial investigator was cross-examined, revealing significant investigative deficiencies, such as failing to verify the relevant companies through official registers. FI’s operator, GB, testified about his extensive compliance efforts, further undermining HMRC’s case. The Magistrates’ Court found no reasonable grounds to suspect that the funds in FI’s account were proceeds of crime and dismissed HMRC’s application. Moreover, the court awarded costs against HMRC, citing poor investigation that should have prevented the matter from reaching court. These case studies highlight the risks businesses face from AFOs and the importance of mounting a rigorous defence. With the right legal strategy, it is possible to challenge the grounds for such orders, mitigate business disruption, and even recover costs when the application is poorly handled. If you are facing an AFO, it is essential to act quickly, gather evidence, and seek expert legal advice to protect your interests. ## Expert Account Freezing Order Solicitors Account Freezing Orders (AFOs) are critical tools used in the investigation and prevention of financial crime. However, their implications can be profound for individuals and businesses subjected to such orders. It is essential to understand the legal processes involved, assert your rights, and seek expert legal assistance to effectively defend against AFOs and protect your assets. If you find yourself facing the challenges of a frozen account, don’t hesitate to reach out to our skilled team of Expert Account Freezing Order Solicitors. We offer comprehensive support and representation tailored to your specific needs, helping you regain access to your frozen assets. With our expertise, you can trust that you are receiving the best possible defense against account seizures in the UK. ## Facing an HMRC Account Freezing Order? Contact Us Today! HMRC Account Freezing Orders (AFOs) are powerful tools employed by the tax authorities, but they can create significant disruptions for individuals and businesses. Our London law firm brings together expertise in both injunctions and litigation to provide the comprehensive support you need. We understand the intricacies involved in HMRC AFOs. Whether you are under investigation or dealing with a frozen account, our team of experienced solicitors and barristers is here to assist you. We will clarify the process, outline the potential consequences, and inform you of your rights. We are committed to advocating for you. Our skilled team will challenge the AFO, pursue its discharge or variation, negotiate with HMRC, and represent you at every turn. We will guide you through each step, ensuring that your interests are safeguarded throughout the process. You don’t have to face this challenge alone. [Contact us](https://lexlaw.co.uk/contact-us/) today to navigate this complex situation and achieve the best possible outcome for your case. ### Account Freezing Order - FAQs **Who can apply for an Account Freezing Order (AFO)?** Authorised law enforcement agencies, including: Police Officers, National Crime Agency (NCA) officers, HMRC officers, Serious Fraud Office (SFO) officers, Accredited Financial Investigators (AFI) who have been authorised by a senior officer. **What assets can be subject to an AFO?** Assets subject to an AFO can include personal or business accounts held in a bank or a building society. **How long does an AFO last?** An AFO can last up to two years from the date of issuance, as specified by the court. However, the duration can be shorter, depending on the circumstances of the case. **What is the minimum amount required for an account to be subject to an AFO?** The account subject to an AFO must contain funds exceeding £1,000. This minimum amount requirement ensures that AFOs are applied to significant financial assets. **Can multiple accounts be aggregated to meet the minimum amount requirement?** No, the provisions do not permit aggregation of accounts to meet the minimum amount required for an AFO. Each account must individually exceed the £1,000 threshold. **What are the requirements for an Application for an AFO to be granted?** The applicant agency must demonstrate reasonable grounds to suspect that the funds in the account are either recoverable property under the POCA, and have been obtained through unlawful conduct or intended for use in unlawful activities. **Can HMRC obtain an AFO against me or my business?** Yes, HMRC can obtain an AFO against individuals or businesses if an [investigating officer of HMRC](https://lexlaw.co.uk/hmrc-tax-investigation-penalty-advice-solicitors/) believes that tax may be at risk or is flagged in a tax evasion investigation. HMRC takes tax enforcement very seriously and may apply for an account freezing order immediately upon suspicion of tax evasion and without notice to the account holder. Rest assured that our team of expert solicitors and barristers can help you in challenging HMRC actions and apply to the Court to vary or set aside a HMRC account freezing order. **Which Court grants an AFO?** Previously a tool specific to the High Court, AFOs are now obtained through an application made by authorised officers to a magistrates' court. The court considers the application and grants the order if satisfied with the grounds presented by the applicant. **What happens once an AFO is granted?** Once granted, the AFO prohibits the account holder from making withdrawals or payments from the frozen account without court authorisation. The enforcement agency may use the prohibition period to conduct further investigations. **Can an AFO be challenged or appealed?** Yes, recipients of AFOs have the right to challenge the order by applying for its discharge or variation. Appeals against forfeiture orders can also be lodged within 30 days. **Are there any exceptions to the restrictions imposed by an AFO?** Yes, the court may grant exclusions for specific purposes even though legal options for frozen assets are limited, the court has the discretion to allow payments from the frozen account for meeting reasonable living expenses, legal fees, or carrying on a trade or business, subject to conditions set out in the Act. **What happens if an objection is made to an Account Forfeiture Notice (AFN)?** If an objection is made to an AFN, the money in the frozen account will be forfeited unless the objection is successful or the court sets aside the AFN. **How can legal expenses be paid if funds are frozen due to an AFO?** The account holder can apply to the court for exclusions to be applied to the AFO, allowing for the payment of reasonable legal expenses. **Which courts have the authority to order an AFO?** Magistrates' courts have the authority to order an AFO, with applications made by authorised officers from law enforcement agencies, typically the NCA, SFO or HMRC. **Can the account holder receive compensation if the funds are not forfeited?** Yes, if the funds in the frozen account are not forfeited, the account holder can apply to the court for compensation if they have suffered loss as a result of the AFO, and the circumstances are exceptional. **How can an individual or business regain control of their assets after an AFO is lifted or expires?** An individual or business can regain control of their assets by applying to the court for the AFO to be discharged or varied, or by engaging in negotiations with the enforcement agency for variation of the order. **Do I need to prove a change in circumstances for making an application to set aside the AFO?** There is no requirement to prove a change in circumstances for setting aside an AFO. --- # Are Funding Circle’s Personal Guarantees Enforceable? Source: https://lexlaw.co.uk/solicitors-london/are-funding-circles-personal-guarantees-enforceable/ [Funding Circle](https://www.fundingcircle.com/uk), a London-based commercial lender, provides business loans by connecting SMEs with investors. Since its inception, it has facilitated over £10 billion in loans to approximately 90,000 businesses, positioning itself as an alternative to traditional bank lending. The High Court has confirmed that assignments of these debts to Azzurro Associates (a debt buyer owned by hedge fund Elliott management) may have the effect that personal guarantees may not be payable to Azzurro or to Funding Circle. If you have taken out a loan with Funding Circle, secured by way of personal guarantee, [contact our lawyers](https://lexlaw.co.uk/our-people/) to advise you on your options (and particularly whether you can challenge enforceability if debt enforcement proceedings are contemplated or underway). ## Funding Circle and Personal Guarantees In 2020, [Funding Circle](https://www.fundingcircle.com/uk) sold a significant number of small business loans—many secured by personal guarantees—to [Azzurro Associates](https://www.azzurroassociates.com/), a debt purchaser owned by Elliott Management. [Azzurro](https://www.azzurroassociates.com) has since acquired approximately 10,000 loans with a total face value of around £500 million and is actively enforcing these guarantees against business owners. This has led to growing scrutiny over the validity of personal guarantees issued through [Funding Circle’s](https://www.fundingcircle.com/uk) lending platform. ## Azzurro Associates' High Court Claim A High Court case (BL-2024-000645) is underway which examines whether [Azzurro](https://www.azzurroassociates.com) can enforce personal guarantees on loans originally arranged through [Funding Circle](https://www.fundingcircle.com/uk). The dispute centres on allegations that defects in [Funding Circle’s](https://www.fundingcircle.com/uk) documentation may invalidate these guarantees. [Azzurro](https://www.azzurroassociates.com) is pursuing two directors, Alan Smith and Anthony McNally, to test whether their liability extends to [Azzurro](https://www.azzurroassociates.com) despite its loan acquisitions. The case is proceeding to a full trial. The final ruling could set an important precedent for the enforcement and trading of small business debt in the UK. ## "More than arguable case" that Personal Guarantees are Unenforceable In an interim ruling, Judge Terrence Phillips found that two guarantors had a "*real prospect of success*" in arguing that their liabilities were unenforceable due to procedural deficiencies. The Judge also noted a "*more than arguable case*" that the assignments of rights were not valid legal transfers of debt. Additionally, the definition of "*lender*" in [Funding Circle’s](https://www.fundingcircle.com/uk) documentation may restrict enforcement to a limited group of creditors, potentially excluding [Azzurro](https://www.azzurroassociates.com). The ongoing case could have wider implications for personal guarantees transferred via [Funding Circle’s](https://www.fundingcircle.com/uk) platform. While both [Azzurro](https://www.azzurroassociates.com) and [Funding Circle](https://www.fundingcircle.com/uk) assert the guarantees remain valid, an adverse ruling could impact the secondary debt market. ## What is a Personal Guarantee? A personal guarantee is a legal commitment by a business owner to personally repay a company’s outstanding debt obligations. It is a security measure frequently required by lenders when providing unsecured business finance. By executing a personal guarantee, the guarantor assumes personal liability for the company’s debt in the event of default. If the business is unable to meet its repayment obligations, the lender may seek to recover the debt from the individual guarantor. ## Advantages of Providing a Personal Guarantee - Personal guarantees enable businesses, particularly start-ups and those with limited credit histories, to access funding that may otherwise be unavailable. - Such guarantees provide lenders with additional security, thereby facilitating investment in business growth and expansion. ## Disadvantages of Providing a Personal Guarantee - While initially signing a personal guarantee may not affect the guarantor’s credit rating, failure to meet repayment obligations due to business default can significantly impact their credit score. - Personal assets, including real property, vehicles, savings, and investments, may be at risk if the business defaults. - In the event that the business is unable to meet its financial obligations, and the guarantor’s personal assets are insufficient to cover the debt, the guarantor may face [personal bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/), with severe long-term financial consequences. - Personal guarantees are often immediately enforceable upon default, without the lender being required to exhaust alternative enforcement measures against the primary borrower before pursuing the guarantor. ## Key Considerations before Executing a Personal Guarantee Before executing a personal guarantee, it is imperative to obtain independent legal advice and fully comprehend its implications. Consider the following key points: - **Review the Loan Documentation:** Scrutinise the guarantee provisions carefully, paying particular attention to the definition of an "event of default", which triggers enforceability. - **Seek Legal Advice:** Many financial institutions mandate that business owners obtain legal advice prior to executing a personal guarantee. Ensure that a [qualified solicitor](https://lexlaw.co.uk/our-people/) explains the legal and financial ramifications before signing. - **Consider Personal Guarantee Insurance:** Such insurance policies may mitigate financial risk by covering a portion of the guaranteed debt should the business default. - **Explore Alternative Funding Options:** Evaluate other forms of financing that do not require a personal guarantee, such as secured business loans, invoice financing, asset-based lending, or government grants. - **Negotiate Terms Where Possible:** Attempt to negotiate a fixed term for the guarantee, rather than allowing it to remain enforceable for the entire duration of the loan. ## How We Can Assist [Our firm](https://lexlaw.co.uk/) has extensive [expertise](https://lexlaw.co.uk/practice-areas/) in advising business owners on the enforceability of personal guarantees. [Our team](https://lexlaw.co.uk/our-people/) of specialist [solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) and [barristers](https://lexlaw.co.uk/our-people/christopher-snell/) possesses substantial experience in both [corporate](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and [personal insolvency](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) matters. We provide a [comprehensive review](https://lexlaw.co.uk/legal-case-assessment/) and legal analysis of personal guarantees, assessing their enforceability and identifying any potential defects. If enforcement action has been initiated, we can negotiate with creditors on your behalf to secure a favourable [settlement](https://lexlaw.co.uk/solicitors-london/the-importance-of-making-a-strategic-part-36-offer/) and potentially avoid [bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/). Where procedural defects exist in the drafting or execution of a personal guarantee, we may be able to challenge its enforceability. If you are facing [personal bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/), we can advise on [alternative solutions](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/), including [Individual Voluntary Arrangements (IVAs)](https://lexlaw.co.uk/winding-up-petition-lawyers/). Should [litigation](https://lexlaw.co.uk/practice-areas/) arise, [our firm](https://lexlaw.co.uk/) is well-equipped to represent you in court proceedings to contest enforcement claims. Additionally, we assist with [debt recovery](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/) and [dispute resolution](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/), employing [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) and other legal strategies to achieve the best possible outcome for our clients. We are [highly experienced litigators](https://lexlaw.co.uk/our-people/) and are regularly instructed in complex, high-value disputes. Unlike other law firms, we focus exclusively on [litigation](https://lexlaw.co.uk/practice-areas/) and are adept at navigating cases against large financial institutions. We pride ourselves on our strategic, results-driven approach to legal disputes. ## Seek Expert Legal Advice The recent [litigation](https://lexlaw.co.uk/practice-areas/) concerning [Funding Circle](https://www.fundingcircle.com/uk) personal guarantees underscores the importance of fully understanding the legal consequences before executing such agreements. If you have signed a personal guarantee and are now facing enforcement action, it is essential to obtain [expert legal advice](https://lexlaw.co.uk/legal-case-assessment/) at the earliest opportunity. [Contact](https://lexlaw.co.uk/legal-case-assessment/) our firm today for a consultation to discuss your specific circumstances and explore your legal options. **Disclaimer:** This article is provided for general informational purposes only and does not constitute legal advice. You should always seek advice from a [qualified solicitor](https://lexlaw.co.uk/our-people/) regarding your specific legal situation. --- # Tax Avoidance vs. Asset Concealment: Purkiss v Kennedy Limits HMRC’s Insolvency Powers Source: https://lexlaw.co.uk/solicitors-london/tax-avoidance-vs-asset-concealment-purkiss-v-kennedy-limits-hmrcs-insolvency-powers/ In a setback for [HMRC's efforts to recover tax](https://www.gov.uk/guidance/what-will-happen-if-you-do-not-pay-your-tax-bill) via insolvency proceedings, the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) case [*Purkiss v Kennedy EWHC 1081 (Ch)* ](https://lexlaw.co.uk/wp-content/uploads/Purkiss-v-Kennedy-2024-EWHC-1081-Ch.pdf)saw a liquidator's attempt to claim funds from participants of a failed [tax avoidance scheme](https://www.gov.uk/government/collections/tax-avoidance-detailed-information) ultimately dismissed. The liquidator, acting for [Ethos Solutions Limited](https://find-and-update.company-information.service.gov.uk/company/06706741), sought to recover unpaid [PAYE](https://www.gov.uk/paye-for-employers) and [National Insurance Contributions (NICs)](https://www.gov.uk/national-insurance), arguing that the scheme was a transaction at an undervalue, designed to prejudice [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). However, the court ruled that while the scheme did result in unpaid taxes, it did not meet the threshold for a transaction defrauding creditors under [section 423 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf), as there was no evidence of an intention to deliberately put assets beyond HMRC's reach. This outcome underscores the challenges [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) faces when pursuing tax recovery through [insolvency law](https://windinguppetitionsolicitors.co.uk/) and highlights the importance of proving fraudulent intent, a crucial point for individuals and businesses involved in [tax disputes](https://taxdisputes.co.uk/). ## Tax Avoidance Schemes and HMRC Enforcement: Purkiss v Kennedy The ruling in *[Purkiss v Kennedy](https://lexlaw.co.uk/wp-content/uploads/Purkiss-v-Kennedy-2024-EWHC-1081-Ch.pdf)* clarifies the scope of [insolvency law](https://windinguppetitionsolicitors.co.uk/sources-of-law-on-winding-up-insolvency-rules/) in the context of [tax avoidance schemes](https://www.gov.uk/government/collections/tax-avoidance-detailed-information), presenting new challenges for [HMRC's enforcement strategy](https://taxdisputes.co.uk/hmrc-enforcement-action/). The case, concerning a liquidator's claim under [section 423 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf), examined transactions allegedly defrauding creditors in relation to an [umbrella tax avoidance scheme](https://www.gov.uk/guidance/working-through-an-umbrella-company). The High Court's decision offers crucial insights for [tax litigation](https://taxdisputes.co.uk/hmrc-tax-appeals/), [tax disputes](https://taxdisputes.co.uk/), and future tax avoidance cases. ## Ethos Solutions Limited and Tax Avoidance [Ethos Solutions Limited](https://find-and-update.company-information.service.gov.uk/company/06706741) operated a [tax avoidance scheme](https://www.gov.uk/government/collections/tax-avoidance-detailed-information) where self-employed individuals became employees of the company. Payments were channelled through an [offshore employee benefit trust (EBT)](https://www.gov.uk/government/consultations/taxation-of-employee-ownership-trusts-and-employee-benefit-trusts/taxation-of-employee-ownership-trusts-and-employee-benefit-trusts#employee-benefit-trusts) to avoid [Income Tax](https://www.gov.uk/browse/tax/income-tax) and [National Insurance Contributions (NICs)](https://www.gov.uk/national-insurance). The scheme worked by having individuals who provided services as consultants become employees of Ethos Solutions. The company then paid the bulk of their remuneration to an offshore EBT, from which the individuals received loans. The intention was to avoid income tax and NICs, but the Supreme Court later ruled such schemes ineffective in *[Rangers (RFC 2012 Plc v AG for Scotland UKSC 45)](https://supremecourt.uk/uploads/uksc_2016_0073_judgment_4cb0e021f7.pdf)*. Following this, [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) assessed the company for PAYE and NIC liabilities of £2.2 million in 2012, leading to its liquidation. The liquidator then sued 23 scheme participants under [section 423 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf), arguing that the scheme was a transaction at an undervalue intended to prejudice [HMRC](https://en.wikipedia.org/wiki/HM_Revenue_and_Customs) by avoiding tax. ## Tax Avoidance vs. Tax Evasion Tax avoidance refers to legally minimising tax liabilities by using available tax reliefs and planning strategies, such as contributing to pension schemes or claiming business expenses. Tax evasion, on the other hand, involves illegal actions, such as hiding income or falsifying documents, to evade tax obligations. The case of *Purkiss v Kennedy* falls under tax avoidance, where a scheme was used to reduce tax liabilities, though later deemed ineffective. ## What is Section 423 of the Insolvency Act 1986? [Section 423 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf) is designed to prevent individuals or companies from moving assets out of reach of creditors in a way that prejudices their ability to recover debts**.** It applies when a transaction is deemed to have been made with the intention of defeating creditors, including HMRC in cases involving unpaid tax liabilities. ## High Court's Decision The [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) addressed three main legal issues: - **Was the Scheme a Transaction at an Undervalue?** The court ruled that the scheme was indeed a transaction at an undervalue because the company incurred substantial tax liabilities exceeding the value received. A transaction at an undervalue, as defined by [Section 423 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf), occurs when a company provides consideration (payment, goods, or services) that is significantly more valuable than what it receives in return. In simpler terms, it's like selling a valuable asset for a fraction of its worth. For example, if a company sells a £100,000 property to a friend for £10,000 before going insolvent, creditors could challenge this transaction. In this case, Ethos Solutions was deemed to have entered into such transactions because the tax liabilities they incurred far outweighed the fees they collected. - **Did the Scheme Have a "Prohibited Purpose" to Defraud HMRC?** The court found no prohibited purpose, as the scheme aimed at tax avoidance, not asset concealment, and there was no evidence of deliberate intent to defraud HMRC. A prohibited purpose refers to the intention to put assets beyond the reach of creditors or to prejudice their interests. The court distinguished between tax avoidance (structuring finances to reduce tax legally) and fraudulent asset concealment (actively hiding assets to evade tax payments). Because Ethos Solutions genuinely believed their scheme was legal, even though it was later proven ineffective, the court determined there was no prohibited purpose. - **Was HMRC a “Victim” Under s.423?** The court rejected the claim that [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)'s interest in collecting tax equates to being a creditor prejudiced under [s.423](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf), clarifying that avoiding tax is not the same as prejudicing [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)'s claim. To be considered a victim under [Section 423](https://lexlaw.co.uk/wp-content/uploads/Section-423-of-the-Insolvency-Act-1986.pdf), [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) would have to demonstrate that the scheme directly prejudiced their ability to recover tax debts. The ruling clarified that while tax avoidance reduces a taxpayer's liabilities, it does not necessarily equate to actively obstructing HMRC's collection efforts. Ultimately, the claim was dismissed, clarifying that failed [tax avoidance schemes](https://www.gov.uk/government/collections/tax-avoidance-detailed-information) do not automatically trigger liability under [insolvency laws](https://windinguppetitionsolicitors.co.uk/sources-of-law-on-winding-up-insolvency-rules/). ## Download the Judgment Here [![](https://lexlaw.co.uk/wp-content/uploads/Purkiss-v-Kennedy-2024-EWHC-1081-Ch-1-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Purkiss-v-Kennedy-2024-EWHC-1081-Ch.pdf) ## Implications for Tax Avoidance Cases and HMRC's Enforcement Strategy This decision significantly impacts [insolvency-related tax disputes](https://taxdisputes.co.uk/hmrc-enforcement-action/) and HMRC's enforcement strategy against [tax avoidance schemes](https://www.gov.uk/government/collections/tax-avoidance-detailed-information). The key takeaway is that tax avoidance alone is insufficient to establish a fraudulent transaction under s.423. HMRC and liquidators must now prove that the transaction aimed to put assets beyond reach, rather than merely structuring payments to avoid tax. - **Challenges for Liquidators & HMRC:** Liquidators must provide clear evidence of intent to frustrate [HMRC](https://en.wikipedia.org/wiki/HM_Revenue_and_Customs)'s ability to recover tax, such as internal communications or financial structuring documents. - **Implications for EBT & Loan Charge Cases:** Schemes using offshore trusts and discretionary loans may face challenges on tax grounds, but not necessarily under insolvency law, unless asset shielding is evident. - **Impact on Defences in Tax Litigation & Tribunal Appeals:** Companies and individuals can argue reliance on tax advice to demonstrate the absence of fraudulent intent, reinforcing the need for [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) to prove intent. This ruling indicates that relying on professional advice from tax consultants or legal opinions might serve as a valid defense against allegations of dishonesty or fraudulent intent. It underscores the importance of demonstrating that the company genuinely believed the scheme to be lawful and was not intentionally trying to defraud [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). - **HMRC May Shift Towards Other Enforcement Tools:** Given the difficulty of using s.423 in failed tax schemes, [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) may focus on direct recovery powers, Personal Liability Notices (PLNs), and actions under the [Proceeds of Crime Act (POCA)](https://www.legislation.gov.uk/ukpga/2002/29/contents). Personal Liability Notices (PLNs) allow [HMRC](https://en.wikipedia.org/wiki/HM_Revenue_and_Customs) to shift the tax liability from a company to its directors under certain circumstances. This means directors can be held personally responsible for the company's unpaid taxes if there is evidence of wrongdoing or negligence. - The [Proceeds of Crime Act (POCA)](https://www.legislation.gov.uk/ukpga/2002/29/contents) is a powerful tool that [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) can use in extreme cases involving deliberate fraud. It allows them to confiscate assets that are believed to be the proceeds of criminal activity, including tax evasion. ## Tax Avoidance Defendants Businesses and individuals in [tax disputes](https://taxdisputes.co.uk/) should distinguish between tax avoidance and tax evasion, arguing that they acted on legal advice, the purpose was tax planning, and there was no intention to prejudice HMRC's ability to collect tax. Cases relying solely on tax avoidance, rather than asset dissipation, are less likely to succeed under s.423. - Defendants in similar cases should emphasise that they acted on legal advice, genuinely believing the scheme was lawful, and that their primary goal was tax planning, not concealing assets. - They should also demonstrate that there was no intention to undermine [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)'s ability to collect taxes. ## A Shift in HMRC's Approach to Tax Recovery *Purkiss v Kennedy* limits the use of [insolvency law for tax recovery](https://taxdisputes.co.uk/hmrc-enforcement-action/) from failed schemes, unless clear fraudulent intent to put assets beyond reach is established. [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) will likely adapt its litigation strategy, focusing more on direct [tax assessments](https://taxdisputes.co.uk/2024/02/hmrcs-assessment-powers/), personal liability notices, and [international asset recovery tools](https://www.gov.uk/government/publications/asset-recovery-action-plan/asset-recovery-action-plan). Defendants can challenge [HMRC](https://en.wikipedia.org/wiki/HM_Revenue_and_Customs)'s claims by demonstrating participation in [tax avoidance schemes](https://www.gov.uk/government/collections/tax-avoidance-detailed-information) without asset dissipation. ## Expert London Tax Litigation Lawyers Navigating [HMRC tax disputes](https://taxdisputes.co.uk/) can be incredibly complex and stressful. [Our team](https://lexlaw.co.uk/our-people/) of expert tax solicitors and barristers provides specialised advice and robust representation across all facets of [tax litigation](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/). Our services are designed to provide you with comprehensive support and peace of mind: - **Detailed Assessment:** We provide a thorough evaluation of your tax obligations, ensuring you understand your responsibilities and potential liabilities. Our initial assessment involves a comprehensive review of your tax affairs to identify any potential issues and provide you with a clear understanding of your position. This includes analysing your income, expenses, and any relevant transactions to determine your tax liabilities and obligations. - **Challenging HMRC Decisions:** Our experienced team is skilled at [challenging HMRC’s decisions](https://taxdisputes.co.uk/hmrc-tax-appeals/), using our in-depth knowledge of tax law to build a strong defence. If you disagree with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)'s assessment, we can help you navigate the appeals process and present a strong case on your behalf. This includes gathering evidence, preparing legal arguments, and [representing you at tax tribunals or in court](https://taxdisputes.co.uk/legal-representation/). - **Strategic Negotiation:** We excel in negotiating with [HMRC](https://en.wikipedia.org/wiki/HM_Revenue_and_Customs), aiming to achieve the most favourable outcome through skilled and persuasive advocacy. Our experienced tax lawyers can engage in negotiations with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) to explore potential settlements or compromises that minimise your tax liabilities. We will work to protect your interests and ensure that you are treated fairly throughout the negotiation process. - **Experienced Representation:** We offer seasoned [representation in courts and tribunals](https://taxdisputes.co.uk/legal-representation/), providing you with a confident and effective voice throughout the legal process. In the event that your case proceeds to court, our skilled barristers and solicitors will provide you with expert legal representation to ensure that your rights are protected and that your case is presented effectively. We have a proven track record of success in [challenging HMRC decisions](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/) and achieving favourable outcomes for our clients. With a [proven history](https://taxdisputes.co.uk/success/) of successfully [contesting HMRC decisions](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/) and securing optimal results for our clients, we recognise the complexities inherent in tax law and are committed to delivering strategic, reliable legal advice. [Contact us today for a consultation](https://lexlaw.co.uk/legal-case-assessment/) to discuss your unique situation and discover how we can expertly guide you through your [tax dispute](https://taxdisputes.co.uk/). --- # Case Study: Bankruptcy Order Annulment Victory Following HMRC’s Defective Service Source: https://lexlaw.co.uk/solicitors-london/case-study-bankruptcy-order-annulment-victory-following-hmrcs-defective-service/ We've achieved a significant victory for our client, by successfully [annulling a bankruptcy order](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) that was made against him. This was due to a critical failure by [His Majesty's Revenue and Customs](https://www.gov.uk/government/organisations/hm-revenue-customs) ([HMRC](https://en.wikipedia.org/wiki/HM_Revenue_and_Customs)) to properly serve notice of a hearing date. This triumph underscores our expertise in navigating complex [bankruptcy rules and procedures](https://lexlaw.co.uk/wp-content/uploads/The-Insolvency-England-and-Wales-Rules-2016-Part-10-Bankruptcy.pdf). It highlights our commitment to protecting our clients' interests against procedural irregularities. The case, detailed in the [judgment](https://lexlaw.co.uk/wp-content/uploads/Anthony-Lee-Gaster-v-HMRC-2025-EWHC-328-Ch.pdf) of [Insolvency and Companies Court Judge Burton](https://www.judiciary.uk/guidance-and-resources/insolvency-and-companies-court-judge-burton-2/), demonstrates the importance of due process and the potential for injustice when government agencies fail to adhere to established protocols. ## Background [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) initially presented a [bankruptcy petition](https://lexlaw.co.uk/bankruptcy-petition-insolvency-annulment-debt-lawyers-london/) against our client for £226,357.65, a debt that Mr. Gaster was actively reducing through consistent payments. The case saw multiple adjournments as Mr. Gaster made good progress in lowering his debt. However, a pivotal error occurred when HMRC failed to serve the order containing the date of an adjourned hearing. Only HMRC attended the hearing as a result of the failure to serve and a bankruptcy order was made. ## The Basis for Annulment We immediately took action to [set aside the bankruptcy order](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/), arguing that the failure to serve the notice of the hearing date constituted a significant procedural irregularity. Had we been aware of the hearing, we would have presented evidence demonstrating his ability to settle the outstanding debt and request a final adjournment. The application to annul the bankruptcy order was made under [rule 12.1(1) of the Insolvency Rules 2016](https://lexlaw.co.uk/wp-content/uploads/rule-12.11-of-the-Insolvency-Rules-2016.pdf), in conjunction with [CPR 3.1(7)](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03), and alternatively, under [section 282 of the Insolvency Act 1986](https://lexlaw.co.uk/wp-content/uploads/Section-282-of-the-Insolvency-Act-1986.pdf). ## Insolvency and Companies Court’s Decision The Court's decision to annul the [bankruptcy order](https://www.gov.uk/government/publications/guide-to-bankruptcy/guide-to-bankruptcy) hinged on several critical findings: **Failure of Service:** HMRC failed to provide sufficient evidence that notice of the adjourned hearing was properly delivered to Mr. Gaster. The judge noted that Mr. Gaster's evidence that he did not receive the notice was more credible than HMRC's. **Deprivation of Opportunity:** Due to the lack of proper notice, Mr. Gaster was deprived of his right to be heard in court, preventing him from presenting evidence of his ongoing debt reduction and ability to settle the remaining balance. **Solvency and Debt Reduction:** The court acknowledged that Mr. Gaster had already made substantial payments towards reducing the debt and appeared solvent on a balance sheet basis. **HMRC's Conduct**: The Court criticised various aspects of HMRC’s conduct, including marking key documents as "confidential" and failing to serve the adjournment order on the Respondent’s solicitors. ## Lack of Reliable Evidence from HMRC The judgment particularly emphasised the lack of reliable evidence from HMRC regarding the delivery of the adjournment order. As stated in the judgment at paragraph 77: > *Mr. Gaster's evidence was unequivocal: he did not receive the notice of the Adjournment Order.* > > > > > > *HMRC’s evidence that the notice was delivered to him lacks detail and should not be preferred to Mr Gaster’s evidence.* > > > > > > *There is insufficient evidence before the court to persuade me that notice of the Adjournment Order was delivered to Mr Gaster. These points were crucial in the court's decision to exercise its discretion to annul the bankruptcy order.* ## The Importance of Proper Notice This case highlights the critical importance of proper notice in bankruptcy proceedings. Rule 10.23 of the Insolvency (England and Wales) Rules 2016 requires the petitioner (HMRC) to deliver a "notice of the order of adjournment" to the debtor. The Court found that HMRC’s notice was deficient in several respects, and the judgment clarified the distinction between "delivery" and "service" of documents under these Rules. ## Implications of the Ruling The successful annulment of the bankruptcy order has several significant implications: **Restoration of Financial Standing:** Our client is no longer bankrupt, allowing him to regain control of his assets and financial affairs. **Opportunity to Settle Debt:** Our client will have the opportunity to settle the outstanding amount of the bankruptcy petition. **Cost Recovery:** We will seek to have HMRC pay our client’s costs related to the annulment application, as well as the Official Receiver's costs associated with the administration of the bankruptcy. ## Download the Judgment Here [![](https://lexlaw.co.uk/wp-content/uploads/Anthony-Lee-Gaster-v-HMRC-2025-EWHC-328-Ch-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Anthony-Lee-Gaster-v-HMRC-2025-EWHC-328-Ch.pdf) ## Our Expertise in Bankruptcy Annulments We are leading experts in bankruptcy petitions and annulment applications. Our experienced insolvency lawyers provide bespoke solutions for individuals facing debt or bankruptcy petitions. We regularly assist with: - Issuing and defending bankruptcy petitions. - Setting aside statutory demands. - Negotiating with creditors and HMRC. - Representing clients in the High Court and Bankruptcy Court. - Applying for bankruptcy annulments. ## Can My Bankruptcy be Cancelled or Annulled? Yes, it is possible for a bankruptcy to be cancelled or annulled in the UK. There are a number of reasons why a bankruptcy order may be cancelled, including: - **Payment of debts:** If the debts that led to the bankruptcy order have been paid in full, the bankruptcy can be cancelled. - **Errors in the bankruptcy process:** If there were errors in the bankruptcy process, such as a failure to properly notify all creditors or an incorrect valuation of assets, the bankruptcy can be cancelled. - **Agreement with creditors:** If an agreement can be reached with creditors, the bankruptcy can be cancelled. - **Change in circumstances:** If there has been a significant change in circumstances, such as a change in income or a windfall of funds, the bankruptcy can be cancelled. - **Application to court:** An application can be made to the court to cancel a bankruptcy order. ## Expert Bankruptcy Petition Solicitors If you are facing a bankruptcy petition or seeking to annul a bankruptcy order, we can provide expert legal assistance. We understand the complexities of insolvency law and are dedicated to achieving the best possible outcome for our clients. [Contact us](https://lexlaw.co.uk/legal-case-assessment/) today for an initial consultation. --- # Defending Manolete Partners’ Insolvency Legal Claims Source: https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/ ## Received a Manolete Pre-action Letter? If you have received a pre-action letter and are therefore facing legal action from liquidators funded by [Manolete Partners Plc](https://find-and-update.company-information.service.gov.uk/company/07660874) or another litigation funder, it is essential to seek [expert legal representation](https://lexlaw.co.uk/). We specialise in defending clients against such claims. [Our team](https://lexlaw.co.uk/our-people/) has in-depth knowledge of the tactics employed by these funders, offering you [unparalleled legal support](https://lexlaw.co.uk/legal-case-assessment/) in this highly specialised area of law. We understand the challenges of defending sophisticated and aggressive litigation strategies and [our experienced solicitors and barristers](https://lexlaw.co.uk/our-people/) committed to providing robust defence and [resolution strategies](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/) to protect your interests. Here's why LEXLAW is a strong choice to defend a claim from Manolete Partners Plc: - **[Expertise in Litigation](https://lexlaw.co.uk/practice-areas/):** LEXLAW specialises in high-value litigation and complex claims, with extensive experience in handling multi-million pound cases. - **[Track Record](https://lexlaw.co.uk/solicitors-london/category/case-study/):** The firm has a very high settlement rate before trial, as we are effective in resolving disputes efficiently. - **[Reputation](https://www.thisismoney.co.uk/money/smallbusiness/article-3997128/RBS-scandal-helps-fastest-growing-law-firm-LexLaw-hit-3m.html):** We have been recognised as one of the fastest-growing law firms in the UK and have appeared regularly in relation to our litigation matters in UK and International news and print media. - **[Experience Against Major Opponents](https://lexlaw.co.uk/media-interest/): **LEXLAW has regularly succeeded against 'magic circle' and other prominent legal teams, which is relevant as Manolete Partners Plc is a significant player in insolvency litigation. - **[Specialised Knowledge](https://lexlaw.co.uk/practice-areas/):** LEXLAW has expertise in areas relevant to potential Manolete claims, including insolvency, fraud, commercial contracts, and [directors' loans](https://lexlaw.co.uk/overdrawn-directors-loan-accounts-companies-act-insolvency/) and [disqualification](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/). - **[Client Satisfaction](https://lexlaw.co.uk/about/): **Multiple positive client testimonials highlight LEXLAW's ability to handle complex cases, including successfully dismissing HMRC winding-up petitions and helping companies survive difficult situations. - **[Strategic Approach](https://lexlaw.co.uk/legal-case-assessment/):** We undertake careful case analysis, risk assessment, and negotiation skills to achieve optimal outcomes for clients. - **[Dual-Qualified Team](https://lexlaw.co.uk/our-people/m-ali-akram/): **The firm employs both solicitors and barristers, providing a comprehensive legal perspective that is advantageous in complex litigation. We have extensive experience and expertise in defending insolvency claims brought by liquidators and litigation funders, setting us apart from many other solicitors. [Our team](https://lexlaw.co.uk/our-people/) has in-depth knowledge in handling complex, contested insolvency cases, particularly those involving litigation funders like [Manolete Partners](https://www.manolete-partners.com/). The firm's track record includes successfully challenging high-profile cases and the status quo. We offer a [strategic, partner-led approach](https://lexlaw.co.uk/legal-case-assessment/) to navigate the intricacies of these disputes, ensuring robust representation for clients facing litigation from well-funded adversaries. ## What is Litigation Funding? Litigation funding, also known as Third Party Funding or Litigation Finance, involves a third-party funder providing financial support for a legal dispute in exchange for a share of the proceeds if the case is successful. This arrangement allows liquidators who do not have the financial means to pursue legal action to access and fund litigation. In recent years, insolvency practitioners have increasingly been selling claims to litigation funders, including [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874). These funders acquire claims for relatively low sums from liquidators or administrators and then pursue litigation against the directors of insolvent companies, aiming to secure large financial returns. The complexities and pressures of defending such claims are significant, especially when facing well-resourced teams and sophisticated legal tactics. We provide advice and representation in proceedings against litigation funders like [Manolete](https://find-and-update.company-information.service.gov.uk/company/07660874), providing you with the [expert legal representation](https://lexlaw.co.uk/) you need to protect your rights and achieve the optimal outcome in your case. ## Who is Manolete Partners? [Manolete Partners PLC](https://markets.ft.com/data/equities/tearsheet/summary?s=MANO:LSE) is the UK’s leading insolvency litigation funding company, specialising in pursuing insolvency-related claims. Their model involves purchasing claims from liquidators or administrators—often at a minimal cost—and pursuing litigation against directors of insolvent businesses to extract substantial financial returns. While [Manolete](https://solicitors.lawsociety.org.uk/office/554954/manolete-partners-plc) positions itself as a supporter of corporate creditors, its aggressive legal strategies are designed to maximise its return on investment and this often place individual former directors under immense financial and legal strain. - **Business Model**: Manolete funds or purchases insolvency claims, working directly with Insolvency Practitioners (IPs) and their solicitors to maximize returns for creditors. - **Expertise**: The company has completed over 680 specialist insolvency cases and has over 350 live cases. - **Financial Strength**: Manolete floated on the London Stock Exchange (AIM) in 2018, providing financial backing for claims. - **Industry Recognition**: The firm has won the TRI award for 'Insolvency Litigation Funder of the Year' five times. With over 1,000 total claims and £152 million recovered as of 2024, [Manolete’s](https://uk.finance.yahoo.com/quote/MANO.L/) growing influence and scale pose increasing challenges for directors facing insolvency litigation. Their legal teams are adept at pursuing claims in ways that often leave defendants at a significant disadvantage—particularly if they lack the necessary legal expertise to mount an effective defence. ## What Types of Claims do Manolete Pursue? The Manolete method is a structured approach to insolvency litigation funding that involves several key steps. It begins with Insolvency Practitioners (IPs) or their lawyers contacting Manolete to discuss potential cases for funding or purchase. After reviewing the claim summary and key evidence, Manolete conducts an assessment and decides whether to finance the case. If approved, the parties sign a standard purchase or funding agreement, which includes full indemnity coverage for all costs. The legal process then commences, often starting with a pre-action letter to the opposing party. ## Common Manolete claim types: - [Overdrawn Directors' Loan Accounts](https://lexlaw.co.uk/overdrawn-directors-loan-accounts-companies-act-insolvency/) - Unlawful Dividends - [Breach of Contract](https://lexlaw.co.uk/?page_id=101618&preview=true&_thumbnail_id=101619) - Misfeasance/Breach of Duty - Wrongful Trading ([Section 214 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/214)) - [Transactions at Undervalue](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/) ([Section 238 of The Insolvency Act](https://www.legislation.gov.uk/ukpga/1986/45/section/238)) - Preferences ([Section 239 of The Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/239)) Throughout the litigation process, the IP remains involved, and their chosen lawyers handle the case. Those lawyers often routinely work on Manolete claims. The claims usually conclude with either a settlement or a judgment at trial. In terms of the financial aspects, Manolete usually provides full indemnity, covering all litigation costs including adverse litigation costs. They also offer upfront cash payments to IPs and finance further investigation work. The creditor estates typically receive at least 50% of final net returns. ## Defending Manolete Partners Claims As Manolete Partners Plc continues to aggressively pursue insolvency-related claims, it's crucial for directors and companies to understand effective defence strategies. Here are the key approaches to consider together with experienced legal advisers: | *Challenge the Claim’s Validity * | Thoroughly examine the basis of Manolete’s claim. Determine and exploit potential weaknesses or defences specific to the type of claim being pursued. | | ----------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | | *Engage in Alternative Dispute Resolution (ADR) * | Manolete engages in [ADR](https://lexlaw.co.uk/?s=adr), and the majority of their cases are resolved through methods like [mediation](https://lexlaw.co.uk/alternative-dispute-resolution-adr-london-lawyer-mediation-advice/). You should [instruct legal professionals to represent you in early resolution strategies](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/) in order to potentially reach a swift and [cost-effective resolution](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/). | | *Scrutinise Financial Evidence * | Pay close attention to financial records and challenge any assumptions about insolvency or the company’s financial state at the time of the alleged wrongdoing. This is particularly important in cases involving wrongful trading or transactions at undervalue. | | *Utilise Limitation Arguments * | Be aware of limitation periods and raise them where applicable. Manolete has faced challenges on this front in the past, and given the Limitation Act 1980, it’s a strategy worth considering. | | *Demonstrate Good Faith * | For claims like wrongful trading, show that you acted responsibly and in good faith, considering all available information at the time. This can be a strong defence against such allegations of misconduct. | | *Challenge the Assignment * | While recent court decisions have made this more difficult, and Manolete are well-versed in assignment validity in some cases it may still be worth challenging the validity of the claim assignment to Manolete. | | *Focus on the Merits of the Case * | Avoid getting side-tracked by challenging Manolete’s involvement. Instead, concentrate on building a robust defence against the substance of the claim. | | *Consider Security for Costs * | While Manolete boasts that no defendant has successfully obtained an order for security for costs against them, it may still be worth exploring this option in certain cases. | Remember, each case is unique, and the specific defence strategy should be tailored to the individual circumstances of the claim and the defendant's situation. Seeking experienced legal counsel with a track record of defending against Manolete claims is critical. By instructing solicitors that understand Manolete's tactics and preparing a strong defence pleading, directors and companies can better position themselves to challenge these claims and protect their interests. ## Need Representation to Defend Against Claims from Manolete Partners? We have [extensive experience](https://lexlaw.co.uk/legal-case-assessment/) in defending claims from litigation funders. [Our team](https://lexlaw.co.uk/our-people/) of expert solicitors understands the nuances of contested insolvency claims and the complex tactics often employed by funders in these cases. With [our assistance](https://lexlaw.co.uk/legal-case-assessment/), you can ensure your interests are protected and increase your chances of securing a favourable outcome. We are one of the few firms in the UK with the expertise to handle such complex cases. If you are facing litigation from [Manolete](https://find-and-update.company-information.service.gov.uk/company/07660874) or any other litigation funder, contact us today. [Our seasoned legal professionals](https://lexlaw.co.uk/our-people/) will provide you with strategic advice to help defend your position and mitigate any potential liabilities. ## Is Litigation Funding Legal in the UK? Yes, litigation funding is legal in the UK and has become an essential aspect of the legal landscape over the past 30 years. It is meant to provide access to justice for individuals and businesses who might otherwise be unable to afford the often-prohibitive costs of legal action. This form of funding has proven particularly valuable in class actions and large commercial disputes, offering an avenue for those without the means to pursue legal claims. However, litigation funding was once limited by common law doctrines such as maintenance and champerty, designed to prevent the exploitation of the legal system by wealthy individuals funding unmeritorious claims. While these restrictions have been largely relaxed, litigation funding is now regulated and lawful in the UK, allowing litigation funders such as [Manolete](https://find-and-update.company-information.service.gov.uk/company/07660874) to engage in the practice within certain parameters. ## The UK Litigation Funding Market The UK has one of the most established litigation funding markets globally, valued at between £1.5 billion and £4.5 billion in 2023. With projections indicating continued growth, the demand for litigation funding is driven by factors such as rising legal costs, increased awareness of funding options, and substantial institutional investment in the sector. While the market is thriving, it has given rise to increasing concerns over the aggressive tactics employed by litigation funders, such as [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874). These companies purchase claims at minimal cost and then pursue litigation with the aim of extracting significant financial returns. Although litigation funding itself is legal, the practices of these funders can place individuals and businesses under immense pressure, especially when they are faced with sophisticated legal strategies and well-resourced teams. ## Key Litigation Funding Legal Decisions Several landmark rulings have shaped the landscape of litigation funding in the UK. These decisions include: - **Liability for Costs:** In the seminal case of [*Arkin v Bochard Lines [2005] EWCA Civ 655*](https://lexlaw.co.uk/wp-content/uploads/Arkin-v-Bochard-Lines-2005-EWCA-Civ-655.pdf), the court held that a litigation funder who finances part of a litigant’s costs should be liable for the opposing party’s costs to the extent of the funding provided. This became known as the "Arkin cap”. However, in the more recent case of [*Davey v Money [2019] EWHC 997 (Ch)*](https://lexlaw.co.uk/wp-content/uploads/Davey-v-Money-2019-EWHC-997-Ch.pdf), the court decided not to apply the Arkin cap, awarding indemnity costs against the funder instead. This shift reflects the evolving nature of the litigation funding industry. - **Security for Costs:** In [*Rowe v Ingenious Media Holdings PLC [2020] EWHC 235 (Ch)*](https://lexlaw.co.uk/wp-content/uploads/Rowe-v-Ingenious-Media-Holdings-PLC-2020-EWHC-235-Ch.pdf) under certain circumstances, the courts have ordered litigation funders to provide security for costs, ensuring that the funded party can cover the costs of the litigation if they lose. - **Disclosure:** In [*Akhmedova v Akhmedova [2021] EWHC 545 (Fam)*](https://lexlaw.co.uk/wp-content/uploads/Akhmedova-v-Akhmedova-2021-EWHC-545-Fam.pdf), the court clarified that there is no obligation to disclose a litigation funding agreement (LFA) in High Court litigation. However, this differs in the Competition Appeal Tribunal (CAT), where LFAs are reviewed before certifying a representative to act on behalf of a class in opt-out collective actions. - **Damages-Based Agreements:** On 26 July 2023, the UK Supreme Court in [*R v Competition Appeal Tribunal and Others [2023] UKSC 28*](https://lexlaw.co.uk/wp-content/uploads/R-v-Competition-Appeal-Tribunal-and-Others-2023-UKSC-28.pdf) ruled that litigation funding agreements (LFAs), where funders are entitled to a share of damages recovered, qualify as Damages-Based Agreements (DBAs). This ruling has profound implications for the funding industry, particularly as DBAs are prohibited in opt-out collective actions under the Competition Act 1998. The decision has rendered many LFAs unlawful or unenforceable unless they comply with the 2013 DBA regulations. ## Expert Legal Representation against Claims Brought By Manolete Partners [Our expert team](https://lexlaw.co.uk/our-people/) is highly [experienced](https://lexlaw.co.uk/legal-case-assessment/) in defending claims brought by litigation funders such as [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874). With a deep understanding of the complex nature of litigation funding, [we offer](https://lexlaw.co.uk/legal-case-assessment/) strategic, robust legal support to protect your interests. [Our solicitors](https://lexlaw.co.uk/our-people/) have a proven track record of successfully challenging claims in insolvency and other contentious matters, providing you with [tailored solutions](https://lexlaw.co.uk/legal-case-assessment/) to navigate the pressures and complexities of litigation funding. Whether you are facing legal action from [Manolete](https://find-and-update.company-information.service.gov.uk/company/07660874) or another litigation funder, we will work closely with you to develop a strong defence and achieve the best possible outcome for your case. --- # Manolete Case Study: Directors to Repay Misappropriated £0.5m (Fiduciary Duty Breach) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-to-repay-misappropriated-0-5m-fiduciary-duty-breach/ *Manolete Partners PLC v Brown & Ors [2025] EWHC 522 (Ch) reinforces [directors' fiduciary obligations](https://lexlaw.co.uk/solicitors-london/directors-duties/) to prioritise creditor interests when a company is insolvent or facing insolvency. The ruling, pursued by litigation funder Manolete Partners, highlights the considerable legal and financial risks for directors who authorise payments for personal benefit, as frequently seen in [misfeasance claims](https://windinguppetitionsolicitors.co.uk/misfeasance-claims/). The judgment provides important clarification on how the court assesses breach of duty in the context of an [insolvent company](https://windinguppetitionsolicitors.co.uk/corporate-insolvency/), particularly where directors continue to extract value from a business after it has become apparent that creditors' interests are at risk under [section 172 of the Companies Act 2006](https://taxdisputes.co.uk/hmrc-tax-investigations/section-172-statement/).* ## Case Background [New Line Polymers Limited](https://find-and-update.company-information.service.gov.uk/company/07919076) was incorporated on 23 January 2012 with its registered office at Alpha House, 176a High Street, Barnet. The company operated in the waste management sector, specifically focusing on the "treatment and disposal of non-hazardous waste" and aimed to exploit emerging opportunities in recycling previously unrecyclable plastics. This potentially lucrative business attracted significant investment, with investors contributing over £3.1 million to the venture. The company's directors included Thomas Brown and Mrs. Marley (siblings), who received substantial guidance from their father, Mr. Brown. Mr. Brown senior had background experience in engineering and recycling but lacked financial expertise. Despite the considerable investment received, the company's financial management quickly became problematic. By December 2015, the company had failed to file its accounts on time, and by May 2017, its [confirmation statement was also overdue](https://find-and-update.company-information.service.gov.uk/company/07919076). The financial mismanagement eventually led to the company's collapse, with New Line Polymers entering creditors' voluntary liquidation on 5 July 2017. At this point, the entirety of the £3.1 million investment had been lost. Following standard insolvency procedure, the liquidator investigated the company's affairs and identified potential claims against the directors for breach of their fiduciary duties. These claims were subsequently assigned to [Manolete Partners PLC](https://www.londonstockexchange.com/stock/MANO/manolete-partners-plc/our-story), a specialist [insolvency litigation](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) financing company that pursues claims to recover funds for the benefit of creditors of insolvent estates. Notably, one of the company's directors, Paul Bennett, was not included in the proceedings as a bankruptcy order had been made against him on 6 December 2022, prior to the initiation of the case. This left the Browns as the primary focus of Manolete's claim, with allegations centring on misfeasance and breach of directors duty during a period when the company was allegedly insolvent throughout its operation. ## Key Findings: Manolete Partners v Brown [Manolete Partners PLC v Brown & Ors (Re New Line Polymers Ltd) [2025] EWHC 522 (Ch) (14 March 2025) Lexlaw Litigation Solicitors London](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-PLC-v-Brown-Ors-Re-New-Line-Polymers-Ltd-2025-EWHC-522-Ch-14-March-2025-Lexlaw-Litigation-Solicitors-London.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-PLC-v-Brown-Ors-Re-New-Line-Polymers-Ltd-2025-EWHC-522-Ch-14-March-2025-Lexlaw-Litigation-Solicitors-London.pdf) ### Breach of Director Duties In his judgment, the High Court judge found substantial evidence that the directors had breached their fiduciary duties to the company. The court was particularly critical of the fact that the directors had continued to extract value from the company despite clear signs of financial distress. The judgment emphasised that directors have an enhanced duty to consider creditors' interests when a company is insolvent or at risk of insolvency, in line with established case law and the [Companies Act 2006](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). The court found that the company was insolvent throughout much of its operation, a critical finding that triggered the directors' duty to prioritise creditors' interests. Despite this insolvency, the directors continued to authorise payments that benefited themselves or related parties rather than addressing the company's financial difficulties. ### Improper Financial Transactions The court's analysis of the financial transactions revealed a pattern of inappropriate payments. Thomas Brown was found to have received £126,425 from the company, while Mrs. Marley's financial involvement mirrored that of her brother. The court was particularly concerned with payments totalling £253,650 made directly to Mr. Brown and an additional £268,351 paid into unknown accounts. These transactions, occurring during a period of insolvency, were deemed to be in breach of the directors' duties to act in the best interests of the company and its creditors. The court rejected arguments that these payments were for legitimate business purposes, instead finding that they constituted improper extraction of value from an insolvent company. ### Rejection of Good Faith Defence While the full details of the directors' defences are not available in the public record, it appears the court rejected any claims that the directors had acted in good faith or with a reasonable belief that their actions were proper. The judgment highlighted the directors' lack of financial expertise, particularly noting Mr. Brown senior's background in engineering and recycling but absence of financial acumen. This finding reinforces the principle that ignorance of financial matters does not excuse directors from their fundamental fiduciary duties. Directors must seek appropriate advice when making financial decisions, particularly when a company faces potential insolvency. ## Implications of Manolete Partners v Brown This judgment has several significant implications. First, it reinforces the established principle that directors must prioritise creditors' interests when a company is insolvent or at risk of insolvency. This duty supersedes any obligation to shareholders and requires directors to take active steps to minimise potential losses to creditors. The case also highlights the risks for family-run businesses where directors may lack formal financial training or fail to maintain proper corporate governance. The court's willingness to hold directors liable despite their claimed lack of financial expertise serves as a warning that all directors, regardless of background, must meet the same legal standards of conduct. This aligns with recent trends in [directors' disqualification proceedings](https://lexlaw.co.uk/solicitors-london/directors-disqualification/), where courts have been increasingly strict in assessing directors' compliance with their statutory duties. Furthermore, the judgment demonstrates the effectiveness of the Manolete Partners business model in pursuing claims against directors of insolvent companies. For directors of struggling companies, this case serves as a timely reminder of the need for caution when authorising payments during periods of financial difficulty. Any transaction that could be seen as preferring certain creditors (particularly related parties) or extracting value from the company at creditors' expense could potentially lead to personal liability. ## Defending Manolete Director Claims Directors facing claims from Manolete Partners should consider several strategic approaches to defend themselves. Early engagement with specialist [insolvency solicitors](https://windinguppetitionsolicitors.co.uk/) is crucial, as these cases often involve complex legal and financial issues that require expert guidance. Defending directors should immediately secure all relevant financial records and documentation to establish the context of any challenged transactions. A comprehensive financial analysis is essential to challenge allegations of insolvency at the time of the disputed transactions. Directors should work with forensic accountants to review the company's financial position, applying both cash flow and balance sheet tests of insolvency. Even if insolvency is established, directors may still defend themselves by demonstrating that the challenged transactions were in the best interests of creditors at the time they were made. Directors should also consider whether they can rely on the statutory defence under section 1157 of the Companies Act 2006, which allows the court to grant relief if the director acted honestly and reasonably. However, the Brown case suggests that claims of financial naivety or lack of expertise may not be sufficient, particularly where directors have failed to seek appropriate professional advice. For connected party transactions, directors should be prepared to provide evidence of commercial justification and fair value. Any payments to directors or related parties should be documented with clear business rationales and, ideally, independent valuations or assessments. Directors should also explore whether [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/) against advisors might be appropriate if they received inadequate guidance during the relevant period. It's worth noting that Manolete's funding model means they typically undertake a thorough assessment of claims before proceeding, focusing on cases with strong merits. As such, early settlement discussions may be advisable in some circumstances, potentially through [alternative dispute resolution](https://lexlaw.co.uk/solicitors-london/mediation-and-adr/) processes such as mediation. ## ### FAQ on Directors Duties Cases What duties do directors owe when a company is approaching insolvency? When a company is approaching insolvency, directors' duties shift significantly. While directors normally must promote the success of the company for the benefit of its members, when insolvency looms, the interests of creditors become paramount. Directors must take every step to minimise potential losses to creditors, avoid preferences to certain creditors (especially connected parties), and consider whether continued trading is appropriate. This shift is sometimes called the "creditor duty" and is now codified in section 172(3) of the Companies Act 2006. Failure to make this shift in focus can lead to [personal liability for wrongful trading](https://lexlaw.co.uk/solicitors-london/wrongful-trading/) under section 214 of the [Insolvency Act 1986](https://windinguppetitionsolicitors.co.uk/insolvency-litigation/). How does Manolete's funding model affect litigation strategy and settlement negotiations? Manolete's funding model involves purchasing claims from insolvency practitioners or providing funding in exchange for a share of recoveries. This creates a different dynamic compared to traditionally funded litigation. As Manolete bears the financial risk of pursuing claims, they typically conduct rigorous due diligence before proceeding, focusing on cases with strong merits. This can make them formidable opponents in litigation but also potentially more open to commercial settlements that guarantee returns. Their in-house legal expertise and financial resources mean they can sustain litigation for extended periods, which might influence settlement strategies. Directors facing Manolete claims should consider early engagement with settlement discussions if liability appears clear, while robustly defending claims where they have strong grounds to do so. Can directors be personally liable for continuing to trade while insolvent? Yes, directors can be personally liable for continuing to trade while insolvent if they knew or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation. This is known as [wrongful trading](https://windinguppetitionsolicitors.co.uk/wrongful-trading/) under section 214 of the Insolvency Act 1986. The court can order directors to make personal contributions to the company's assets if their decision to continue trading worsened the position of creditors. The Brown case demonstrates that courts will scrutinise directors' decisions during periods of financial distress, and ignorance of the company's financial position is not a defence. Directors of struggling companies should regularly review financial information, document their decision-making processes, and seek professional advice to mitigate the risk of personal liability. What is the limitation period for bringing misfeasance claims against directors? Misfeasance claims against directors, including breach of fiduciary duty claims, generally have a six-year limitation period from the date of the breach. However, in cases involving fraud or deliberate concealment, this period can be extended. Additionally, the limitation period for wrongful trading claims normally runs from the date of liquidation, not the date of the trading activity. Directors should be aware that the assignment of claims to entities like Manolete does not reset the limitation clock – the assignee takes the claim subject to the same limitation constraints that would have applied to the liquidator. Nevertheless, as seen in cases like [Watford Control Instruments v. Brown[2024] EWHC 1125 (Ch)](https://lexlaw.co.uk/solicitors-london/when-stalled-litigation-is-an-abuse-of-the-proper-process-of-the-court/), courts frown upon "warehousing" of claims, and unreasonable delay in pursuing known claims may constitute an abuse of process. How are quantum of damages calculated in director misfeasance cases? Damages in director misfeasance cases are typically calculated based on the loss suffered by the company as a result of the breach of duty. For improper payments or asset transfers, this is usually the value of the assets improperly transferred or dissipated. In the Brown case, this amounted to the specific sums that had been improperly paid out (£253,650 and £268,351)[7](https://www.casemine.com/judgement/uk/67d7b977ba1fd11f94021847). The court may also award interest on these sums. For wrongful trading claims, the court assesses the difference between the company's position at the date the director should have ceased trading and the date when liquidation actually occurred. Directors should note that the court has broad discretion in determining the appropriate contribution and may consider factors such as the director's conduct, culpability, and personal circumstances. What defences are available to directors facing misfeasance claims? Directors have several potential defences against misfeasance claims. First, they may challenge the assertion that the company was insolvent at the relevant time. Second, they can argue that their actions were reasonable and in the best interests of the company (and its creditors, if the company was insolvent). Section 1157 of the Companies Act 2006 allows the court to grant relief if a director acted honestly and reasonably. Directors may also rely on proper purposes and good faith defences, particularly if they received and followed professional advice. The [business judgment rule](https://taxdisputes.co.uk/legal-advice/business-judgment-rule/), while not formally part of UK law, may influence courts' reluctance to second-guess commercial decisions made in good faith. However, as the Brown case demonstrates, these defences have limitations, particularly where there are clear financial improprieties. How does the court determine whether a company was insolvent at the time of alleged breaches? Courts apply two primary tests of insolvency: the cash flow test (whether the company can pay its debts as they fall due) and the balance sheet test (whether the company's liabilities exceed its assets). In practice, courts often consider both tests alongside other factors such as trading performance, creditor pressure, and director behaviour. Documentary evidence is crucial, including management accounts, aged creditor reports, bank statements, and communications with creditors. Courts may also consider events after the relevant date as evidence of the company's earlier financial position. In the Brown case, the court found that New Line Polymers was insolvent throughout much of its operation[7](https://www.casemine.com/judgement/uk/67d7b977ba1fd11f94021847), likely based on a combination of these factors. Directors defending insolvency allegations should work with financial experts to challenge these assessments and contextualise the company's financial position at the relevant time. What are the reputational implications for directors found liable in Manolete cases? Directors found liable in Manolete cases face significant reputational damage beyond the immediate financial penalties. Judgments are public records and likely to appear in internet searches of the director's name indefinitely. This can impact future employment prospects, particularly for roles requiring financial responsibility or trustee positions. Additionally, findings of breach of duty may trigger [director disqualification proceedings](https://lexlaw.co.uk/solicitors-london/directors-disqualification/) under the Company Directors Disqualification Act 1986, potentially barring individuals from acting as directors for up to 15 years. Financial institutions may also be reluctant to provide personal banking services or credit to directors with adverse judgments. Given these severe consequences, directors should consider reputational management strategies alongside their legal defence, including potential settlement agreements with non-disclosure provisions where appropriate. ## Conclusion The Manolete Partners PLC v Brown case provides important guidance on directors' duties during financial distress and the serious consequences of misappropriating company funds while insolvent. The High Court's decision to hold the Browns liable for £522,000 reinforces the strict standards to which directors are held when managing companies in financial difficulty. This case demonstrates that courts will not hesitate to impose personal liability on directors who fail to prioritise creditors' interests when their company is insolvent, even where those directors claim to lack financial expertise. It also highlights the effectiveness of the Manolete Partners business model in pursuing claims against directors of insolvent companies for the benefit of creditors. For directors of struggling companies, this judgment serves as a stark reminder of the need for caution, proper record-keeping, and appropriate professional advice when navigating periods of financial distress. The shift from shareholder-focused duties to creditor-focused duties upon insolvency is a critical transition that directors must recognise and respond to appropriately. Legal practitioners advising directors should emphasise the importance of early intervention when companies face financial difficulties, the need for clear documentation of decision-making processes, and the value of seeking independent financial and legal advice before authorising significant transactions. With proper guidance, directors can navigate these challenging situations while minimising their personal risk exposure. --- # Are WhatsApp Agreements Valid Contracts? High Court Rules in Jaevee Homes Limited v Fincham Source: https://lexlaw.co.uk/solicitors-london/are-whatsapp-agreements-valid-contracts-high-court-rules-in-jaevee-homes-limited-v-fincham/ In today's fast-paced commercial world, agreements are often reached quickly and informally through digital communication platforms like email and [WhatsApp](https://www.whatsapp.com/). But can a conversation on WhatsApp truly form a legally binding contract under [English law](https://en.wikipedia.org/wiki/English_law)? A recent [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) case, [Jaevee Homes Limited v Mr Steve Fincham (trading as Fincham Demolition)](https://lexlaw.co.uk/wp-content/uploads/Jaevee-Homes-v-Fincham-2025-EWHC-942-TCC.pdf), has provided important clarity on this question. ## What is a Contract? At its core, a [contract](https://en.wikipedia.org/wiki/Contract) is a legally binding agreement between two or more parties. This agreement gives rise to obligations that are enforced or recognised by [law](https://en.wikipedia.org/wiki/English_contract_law). Contracts are fundamental to almost all commercial activities. Under common law, there are several basic essentials required for the creation of a valid contract: - **Agreement**: The parties must have reached an agreement. This is generally achieved when one party makes an [offer](https://en.wikipedia.org/wiki/Offer_and_acceptance) which is accepted by another party. - **Contractual Intention**: The parties must intend their agreement to be legally binding. - **Consideration**: Generally, a promise is not binding as a contract unless it is supported by consideration. Consideration is "something of value" given for a promise, which is required to make that promise enforceable. It can be a promise to do something, not to do something, or to provide something of value. Both parties must provide consideration. An informal gratuitous promise does not amount to a contract. - **Capacity**: The parties must have the legal capacity to enter into a contract. This typically includes entities like companies and individuals aged 18 or over who can fully comprehend their obligations. Certain individuals, such as intoxicated people, may lack capacity. - **Legality**: The purpose of the contract must be lawful. Contracts involving illegal conduct or prohibited by statute may be void and unenforceable. Once these elements are present, a legally binding contract exists. ## Does a Contract Have to Be Written? A common misconception is that a contract must be in writing to be legally valid. However, this is generally not the case. Most contracts can be formed orally, by conduct, or through various forms of communication. An informal exchange of promises can be as binding and legally valid as a written contract. While written contracts provide a clear record, unwritten contracts do not require any formalities. Contracts can be made and varied through numerous methods, including face-to-face conversations, email, SMS messages, and WhatsApp messages. The form of communication is irrelevant, except where specific statutory requirements mandate writing, such as for leases over 3 years or contracts for the sale of land. ## Offer vs. Invitation to Treat In determining if an agreement has been reached, it is crucial to distinguish between an [offer and an invitation to treat](https://carlilandcarbolic.com/contract-law/formation-of-a-contract/offers-invitations-to-treat/). An offer is an expression of willingness to contract on specified terms, made with the intention that it is to be binding once accepted. An invitation to treat, conversely, is an express or implied request for someone to make an offer; it cannot be accepted to form a contract. Examples of invitations to treat include advertisements or displays of goods. Whether something is an offer depends on whether a reasonable person would understand the maker intended to be bound by an unequivocal acceptance. ## The Jaevee Homes v Fincham Case: WhatsApp Contract Under Scrutiny The question of whether a WhatsApp exchange could constitute a valid contract was directly addressed in the High Court case of [Jaevee Homes Ltd v Mr Steve Fincham (trading as Fincham Demolition)](https://lexlaw.co.uk/wp-content/uploads/Jaevee-Homes-v-Fincham-2025-EWHC-942-TCC.pdf). **Background:** [Jaevee Homes Ltd](https://find-and-update.company-information.service.gov.uk/company/09916053), a property developer based in Norwich, brought a claim against [Steve Fincham](https://find-and-update.company-information.service.gov.uk/company/10940158), a demolition contractor, concerning demolition works at the [former Mercy nightclub](https://www.eveningnews24.co.uk/news/24760630.former-mercy-nightclub-prince-wales-converted-flats/) in Norwich. Jaevee argued that a formal written agreement was required for the circa £248,000 + VAT project. Mr Fincham contended that his contract with Jaevee was based on an exchange of emails and WhatsApp messages. Prior to the High Court case, Mr Fincham had already won an adjudication against Jaevee for unpaid invoices. Jaevee had not paid the adjudicated sum, leading to further legal action. The primary issue in the adjudication was whether the invoices were valid payment applications, which depended on the terms of the contract formation. The adjudicator determined that the contract was formed by the WhatsApp messages on 17 May 2023. **The High Court Ruling:** In the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) claim, Jaevee sought declarations, including that the contract was subject to their standard written subcontract terms or, alternatively, a basic contract formed by email and WhatsApp requiring monthly payment applications. Mr Fincham maintained the contract was agreed via WhatsApp on 17 May 2023, with an entitlement to payment 28-30 days after invoice. Mr Justice Roger ter Haar KC, sitting as a Deputy High Court Judge in the [Technology and Construction Court](https://www.judiciary.uk/courts-and-tribunals/high-court/technology-and-construction-court/), was tasked with determining when and on what terms the parties entered into a contract. The judge ruled that the WhatsApp exchange on 17 May 2023 constituted a valid contractual agreement. **Key Exchange and Reasoning:** The relevant WhatsApp conversation occurred on 17 May 2023 between Ben James (CEO of Jaevee) and Steve Fincham. The exchange included Fincham asking if the job was his, James asking if he could start on Monday, Fincham confirming he could, and Fincham again asking if it was his job so he could get organised. James replied simply: "Yes". A few minutes later, the discussion moved to payment terms, with James saying "Monthly applications" and Fincham asking "Are you saying every 28 or 30 days from invoice that's a yes not on draw downs then good". James replied "Ok" and "Chat in the am". The judge held that this exchange, though informal, evidenced a concluded contract. He found that the parties had agreed the scope of works, a price of £248,000 plus VAT, and payment terms (monthly applications to be paid 28 to 30 days following the date of invoice submission). The judge rejected Jaevee's argument that essential terms were missing on 17 May 2023. He noted that the absence of detailed payment terms is not fatal to contract formation in construction contracts, as the relevant statutory scheme can fill such gaps. The High Court also addressed the validity of Mr Fincham's invoices as payment applications under construction legislation. The judge concluded that, based on the WhatsApp agreement allowing monthly applications paid 28-30 days after invoice, three of the four invoices were valid. One invoice was invalid because it was the second submitted within the same monthly period. Ultimately, the High Court ruled in favour of Mr Fincham, confirming that the contract was formed by the WhatsApp messages and that Jaevee was liable to pay a substantial portion of the sums claimed, subject to the ruling on the invoices. ## Download the Judgment Here [![](https://lexlaw.co.uk/wp-content/uploads/Jaevee-Homes-v-Fincham-2025-EWHC-942-TCC-724x1024.jpg)](https://lexlaw.co.uk/wp-content/uploads/Jaevee-Homes-v-Fincham-2025-EWHC-942-TCC.pdf) ## Implications The [Jaevee Homes v Fincham](https://lexlaw.co.uk/wp-content/uploads/Jaevee-Homes-v-Fincham-2025-EWHC-942-TCC.pdf) case serves as a crucial reminder that informal digital communications, including WhatsApp messages, can indeed form legally binding contracts in England, provided the essential elements of offer, acceptance, consideration, and intention are present. The court applied an objective test, looking at what a reasonable person would infer from the words and conduct, rather than the parties' subjective intentions. The ruling also underscores the importance of clearly defining key terms, particularly payment terms, even in seemingly informal exchanges. While the court took a common-sense, contextual approach, especially for smaller entities, lack of detail in the agreed terms may lead to the application of statutory default provisions. This case highlights that parties should be mindful of the contractual implications of their digital communications. ## Expert London Commercial Contract Dispute Lawyers Understanding the complexities of contract law, especially concerning modern forms of communication, is vital for businesses and individuals. Disputes arising from informal agreements, like those made via [WhatsApp](https://www.whatsapp.com/), can be challenging to navigate. [Our team](https://lexlaw.co.uk/our-people/) of expert solicitors and barristers has extensive experience in advising on contract formation, interpreting contractual terms, and resolving commercial contract disputes. Whether you are trying to determine if an informal agreement constitutes a valid contract, need assistance in drafting clear and enforceable contracts, or require representation in [contractual disputes and litigation](https://lexlaw.co.uk/practice-areas/), we can provide the strategic legal advice and robust representation you need. We can assist if you believe you have entered into a WhatsApp contract and require guidance on its terms or enforceability. To discuss your specific situation and understand your legal position, [instruct us](https://lexlaw.co.uk/legal-case-assessment/) for an initial consultation conference with our expert solicitors and barristers. Call us today on ☎ 02071830529 or email us at contact@lexlaw.co.uk. ### FAQs on Contracts What is a contract in the UK? A contract is defined as a legally binding agreement between two or more parties. This agreement gives rise to obligations that are enforced or recognised by law. Contracts are fundamental to almost all commercial activities, outlining the terms that define the rights and responsibilities of each party What are the 4 elements of a contract UK? In English common law, there are typically basic essentials or elements required for the creation of a contract. They generally include: - Capacity: The contracting parties must have the legal capacity to be bound, meaning they can fully comprehend their obligations. Examples include companies, LLPs, and individuals aged 18 or over. Certain persons, such as intoxicated people, may lack capacity. - Agreement: The parties must have reached an agreement, typically through an offer made by one party and accepted by another. Courts apply an objective test to decide if agreement was reached. - Intention to create legal relations: Both parties must intend the agreement to be legally binding upon them. In commercial negotiations, there is a presumption that parties intend to create a legal relationship. - Consideration: Something of value needs to pass in each direction between the parties, for example, a fee for a service. Consideration is the price for which a promise is bought. What is meant by a contract? A contract is a legally binding agreement between at least two parties. It creates obligations that are enforceable by law. Essentially, it is the framework for commercial activities, defining the terms, rights, and responsibilities of those involved Are WhatsApp messages legally binding in the UK? Yes, WhatsApp messages can be legally binding in the UK. A recent High Court case, Jaevee Homes Ltd v Mr Steve Fincham, provided important clarity on this. The High Court ruled that a WhatsApp exchange between a property developer and a demolition contractor constituted a valid contract. The form of communication used to make a contract is generally irrelevant in English law, unless specific statutory requirements mandate writing. The key is whether the essential elements of a contract – offer, acceptance, consideration, and intention to create legal relations – are present in the messages. The court will apply an objective test to determine if a contract was formed based on the words and conduct. This case highlights that informal digital communications can have contractual implications. Can contracts be made in the form of WhatsApp messages? Yes, contracts can be made in the form of WhatsApp messages. The form of communication is generally not a barrier to contract formation in the UK. As confirmed by the High Court case Jaevee Homes Ltd v Mr Steve Fincham, a WhatsApp exchange can indeed constitute a valid and legally binding contract if it contains the necessary elements such as offer, acceptance, consideration, and the intention to be legally bound. Can a text message be a legally binding contract in the UK? Yes, a text message can be a legally binding contract in the UK. Just like WhatsApp messages, SMS text messages are considered a form of communication through which contracts can be made and varied. The law does not state that a contract must take a specific form of communication. Therefore, provided the essential elements of a contract (offer, acceptance, consideration, intention to be legally bound, and capacity) are present in the text message or message chain, it is likely to be legally enforceable as a contract. Is an agreement on WhatsApp binding? Yes, an agreement reached on WhatsApp can be legally binding in the UK. As demonstrated in the Jaevee Homes v Fincham High Court case, a WhatsApp exchange was ruled to be a valid contractual agreement. The key factor is not the platform used, but whether the conversation objectively shows that the parties intended to create legal relations and agreed on essential terms like scope, price, and payment. While informal, these digital agreements can satisfy the requirements for a legally binding contract. Can agreements be formed via email? Yes, agreements can be formed via email and be legally binding contracts under English law. The law generally does not require a specific form of communication for a contract to be valid, unless specified by statute (like for land). For an email exchange to form a contract, it must contain the essential elements of a legally binding agreement: offer, unequivocal acceptance, consideration, and intention to create legal relations. Acceptance must be communicated to the offeror. A court will apply an objective test, looking at the language and conduct in the emails to determine if a contract was formed, even if the parties didn't subjectively intend the email exchange alone to be the final contract. However, relying on emails for contracts poses risks, such as unintended agreements or the absence of crucial legal protections found in formal documents. Using phrases like "subject to contract" can indicate that discussions are not yet legally binding. While emails can create contracts, properly drafted and managed formal contracts are generally more reliable. --- # Manolete Case Study: Court orders Director to Repay £0.92m (Director’s Insolvency Duty Breach) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-orders-director-to-repay-0-92m-directors-insolvency-duty-breach/ *The High Court ruled in the case of [Manolete Partners plc v Freed & Ors[2024] EWHC 2242 (Ch)](https://www2.bailii.org/ew/cases/EWHC/Ch/2024/2242.html) that Norman Freed, former director of [Just Recruit Group Ltd](https://find-and-update.company-information.service.gov.uk/company/07222010) (JRGL), must repay £918,590 after making preferential payments to connected companies while JRGL faced insolvency. Judge Mullen condemned the payments as “a cynical scheme to abstract funds”, rejecting defences that sought to limit liability.* *The judgment reinforced [directors’ fiduciary obligations to creditors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) during financial distress and clarifies limits on liability defences in assigned claims.* ## Case Background JRGL, a recruitment agency, [entered administration in January 2021](https://find-and-update.company-information.service.gov.uk/company/07222010/insolvency) with a £1.2m creditor deficit. Between October and December 2020, Freed authorised payments totalling £918,590 to Key People Ltd (KPL) and Achieva Group Ltd (AGL), both linked to him. Administrators assigned claims to [litigation funder Manolete Partners](https://www.manolete-partners.com/), which pursued breaches of duty under the Companies Act 2006 and Insolvency Act 1986. We are the leading UK firm defending directors against Manolete Partners’ claims due to our [expertise in insolvency litigation](https://windinguppetitionsolicitors.co.uk/post-insolvency-claims-against-directors/) and [strategic defence](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/) tactics. Our dual-qualified and experienced solicitors & barristers, based near London's Royal Courts of Justice, [specialise in countering Manolete’s aggressive pursuit](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) of transactions-at-undervalue claims e.g. by challenging evidence validity, leveraging limitation periods, and demonstrating good faith per the Insolvency Act 1986. We have a track record of [protecting directors’ assets](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/), including family homes, while navigating complex financial and regulatory risks. Our insolvency law focus and experience with litigation funders ensures tailored, robust defence in high-stakes claims. [Get in touch about your Director's Duties case](https://lexlaw.co.uk/legal-case-assessment/). --- [Manolete Partners PLC v Freed & Ors (Re Just Recruit Group Ltd - Insolvency Act 1986) [2024] EWHC 2242 (Ch) (30 August 2024) Lexlaw Litigation Solicitors London](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-PLC-v-Freed-Ors-Re-Just-Recruit-Group-Ltd-Insolvency-Act-1986-2024-EWHC-2242-Ch-30-August-2024-Lexlaw-Litigation-Solicitors-London.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-PLC-v-Freed-Ors-Re-Just-Recruit-Group-Ltd-Insolvency-Act-1986-2024-EWHC-2242-Ch-30-August-2024-Lexlaw-Litigation-Solicitors-London.pdf) ## Key Findings in Manolete v Freed ### Breach of Director Duties: ICC Judge Mullen found Freed prioritised connected creditors over JRGL’s obligations. The court rejected Freed’s claim that payments reflected legitimate intercompany arrangements, noting a lack of invoices or evidence for services rendered. > 118. The payments had the effect of transferring substantial monies to KPL and AGL with no resulting benefit to the company or its creditors. Not only did this confer a benefit on KPL and AGL but also on Mr Freed by virtue of his interest in those companies. I** am satisfied that there was no proper purpose for the transfers and they were made in breach of his duty to consider and act in the interests of creditors preserved by section 172(3) CA 2006. **The company was insolvent by October 2020, or at the very least it was probable that the company was about to go into an insolvency procedure shortly, and those interests were paramount. The **irresistible conclusion is that Mr Freed deliberately sought to transfer assets from a company that he knew to be an insolvent company or, at the very least, a company on the verge of insolvency, to others with which he was associated knowing that the result would be that other creditors would not be paid**. Were that not the case, and he gave no consideration to those interests in making the payments at a time when the company was insolvent or on the verge of insolvency, I am satisfied that he knew that there were creditors, at least in the form of Mr Neto who would be prejudiced by the payments. **The decision to make the payments cannot be justified, looked at objectively, given the insolvency of JRGL.** I am satisfied that Mr Needham did not give him any advice that he would make the payments in these circumstances. > 119. The ratification defence cannot succeed. There is no evidence that the shareholders of JRGL ever turned their mind to the breach. Moreover, the Company was insolvent at the time of the payments, and if not, undoubtedly became so as a result of the payments. It is not open to shareholders to ratify breaches in such circumstances. > 120. Nor is Mr Freed entitled to relief under section 1157 CA 2006. He has not satisfied me that he has behaved honestly or reasonably. On the contrary, he has shown, to put it at its lowest, a lack of candour both in his dealings with the joint administrators and his evidence in this court. **The only conclusion that can be formed from the evidence that I have seen is that the payments were, at best, made without proper consideration of the interests of creditors and, at worst, a cynical scheme to abstract funds from JRGL **and leave the debts of unconnected creditors in the company. ### Transactions at Undervalue and Preferences: The £240,000 paid to KPL and £678,590 to AGL were deemed transactions at undervalue (s.238 IA 1986) and preferences (s.239 IA 1986). The judge emphasised JRGL’s insolvency during the payments and the presumption of unfair preference for connected parties. ### Rejection of “Circularity” Defence: The court in *Manolete Partners plc v Freed* rejected the “circularity” defence-which argued liability should be capped at the administration’s shortfall to avoid funds cycling back to defendants-by distinguishing it from *Re Care Community*. Judge Mullen held that no “money-go-round” risk existed because the defendants (Freed and his associated companies) were not creditors of the insolvent firm, Just Recruit Group Ltd (JRGL). Only one entity, KPL, had a potential shareholder claim to surplus assets, but three unrelated shareholders diluted any circular benefit. Crucially, the judge emphasised that restoring misappropriated assets takes precedence over procedural limitations, stating: > *“The payments ought not to have been made…the starting point is that the Defendants should meet the loss caused in full…the aim is to restore the property wrongly paid away”*. This aligns with policy objectives under the *Insolvency Act 1986* to deter misconduct by ensuring full recovery, even when claims are monetised by third parties like litigation funders. The ruling reinforces that circularity defences require near-total identity between defendants and creditors, absent here, to avoid undermining creditor protections. ## Implications of Manolete v Freed - **Director Accountability**: The ruling underscores that creditors’ interests become paramount when insolvency is imminent (*BTI v Sequana*[2022] UKSC 25). Ratification by shareholders is invalid in such cases. - **Litigation Funding**: Assignees like Manolete can pursue full recovery, not limited to administration deficits, ensuring wrongdoers bear full liability. - **D&O Risk**: Directors face heightened exposure if asset transfers favour connected parties pre-insolvency. ## Defending Manolete Director Claims This ruling empowers litigation funders like Manolete to pursue directors with aggressively and with vigor. Courts demand real-time compliance with creditor duties, treating even temporary financial distress as a trigger for liability. For directors, this creates a perilous position: funders are financially well resourced and are legally sophisticated for example exploiting extended limitation periods, while personal assets such as homes, savings, futures-hang in the balance. Througg decades of succesful litigation experience** **we have developed litigation counterstrategies, dissecting claims for procedural flaws (e.g., missed deadlines, overstated valuations) and reframing directors’ decisions within commercial reality. Our team’s mastery of *Insolvency Law *defenses and direct experience negotiating with funders ensures swift de-escalation and optimal outcomes. Directors facing Manolete’s machinery should seek immediate, tactical advice from specialists not general solicitors and counsel in order to dismantle claims at their weakest link. LexLaw’s battle-tested playbook turns Manolete's aggressive monetisation into resolvable disputes. ### FAQ on Directors Duties Cases Why is this case significant for insolvency law? It clarifies that directors cannot shield themselves via “circularity” arguments when claims are assigned to third parties, such as [Manolete](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners/), ensuring accountability even where connected creditors dominate. What constitutes a transaction at undervalue? Under s.238 IA 1986, transfers for no consideration or significantly less value than received, made two years pre-insolvency if the company was already or became insolvent. How does this affect litigation funders? Assignees can recover the full loss caused by breaches, incentivising enforcement of directors’ duties and supporting insolvency processes. What defences are available to directors in similar cases? Proving payments served creditor interests or disputing insolvency timing. However, subjective beliefs must align with objective financial realities. Always obtain legal advice from [expert Director Defence Solicitors & Barristers](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/). Can shareholders ratify breaches during insolvency? - No. *Sequana* confirms ratification is invalid if the company is insolvent or nearing insolvency. If my company is dissolved, can Manolete still pursue me personally for historic transactions? Yes, dissolution does not shield directors from claims arising from pre-dissolution conduct. The *Insolvency Act 1986* allows funders to revive claims via restoration of the company to the register (s.1030), even years later. LexLaw counters this by challenging restoration applications on proportionality grounds and exploiting gaps in Manolete’s documentary trail. Does Manolete’s litigation funding model give them unfair leverage in negotiations? Funders like Manolete exploit asymmetric risk tolerance: they deploy pooled capital to pressure directors into settlements, knowing most lack resources for protracted trials. We help neutralise this, for example by: - Leveraging *CPR 31.16* to seek pre-action disclosure, weakening Manolete’s “ambush” tactics. - Filing strike-out applications for claims exceeding the 6-year limitation period (*IA 1986, s.240*). - Demanding transparency on funding terms to expose conflicts of interest. Can I argue that repaying a claim would indirectly benefit me as a shareholder, reducing my liability? Courts may reject “circularity” defences unless 100% identity exists between defendants and creditors. For example, if you own 60% of a creditor entity, 40% of the claim remains enforceable. LexLaw can help mitigate this via: - Forensic accounting to isolate “non-recoverable” portions of claims. - Applying Re HLC Environmental Projects Ltd to cap liabilities where third-party creditors are involved. - Negotiating phased settlements that account for diluted ownership structures. ### --- # Case Study: Bridging Lender Enforces £1.5m Bridging Loan Despite 3rd Party Challenge Source: https://lexlaw.co.uk/solicitors-london/case-study-bridging-lender-enforces-1-5m-bridging-loan-despite-3rd-party-challenge/ *The High Court ruled in favor of [HNW Lending Limited](https://www.hnwlending.co.uk/), confirming their right to enforce a £1.5 million bridging loan agreement against a property developer despite complex legal challenges regarding third-party rights and contract enforcement. The judgment confirmed HNW's standing as a security agent under the [Contracts (Rights of Third Parties) Act 1999](https://www.legislation.gov.uk/ukpga/1999/31/contents), emphasising lenders' rights in structured finance arrangements despite Lawrence's technical defences regarding solicitor authority and loan documentation.* *The case provides significant clarity on security agent status in modern lending arrangements.* For expert advice on defending against [bridging loan claims](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) or challenging unfair lending practices, contact our experienced financial disputes team who have successfully represented borrowers in complex loan enforcement disputes. ## Background to the Case [HNW Lending Limited v. Nicole Lawrence and Setfords Solicitors [2025] EWHC 908 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2025/908.html) highlights the complex legal issues surrounding bridging finance enforcement and the use of security agents in lending structures. The dispute centered on the enforceability of a bridging loan agreement when challenged on multiple grounds, including alleged lack of agreement to terms, duress, and questions over the lender's legal standing to enforce the security. The borrower, Ms. Lawrence, was an experienced property investor who secured a bridging loan of £1,520,000 from [HNW Lending Limited](https://find-and-update.company-information.service.gov.uk/company/08739427) for the purpose of refinancing existing lending and completing the development of a former social club property in Epsom. The loan was initially proposed at £900,000 but was increased to £1.52 million on the day of completion. The loan was secured by first and second charges on ten properties within her portfolio, including the development property. When the borrower failed to make interest payments and did not repay the loan after the nine-month term expired, HNW sought possession of the main property and payment of the outstanding amount, which had grown to over £3.5 million with interest. The case is particularly noteworthy because it addressed evolving lending structures where lenders operate through security agents-a model increasingly common in the [bridging finance sector](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) and peer-to-peer lending arrangements. It also demonstrates the court's approach when borrowers raise multiple technical defenses against enforcement. [HNW LENDING LIMITED v Nicole Lawrence and Setfords Solicitors bridging loan dispute lawyers london uk barristers](https://lexlaw.co.uk/wp-content/uploads/HNW-LENDING-LIMITED-v-Nicole-Lawrence-and-Setfords-Solicitors-bridging-loan-dispute-lawyers-london-uk-barristers.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/HNW-LENDING-LIMITED-v-Nicole-Lawrence-and-Setfords-Solicitors-bridging-loan-dispute-lawyers-london-uk-barristers.pdf) ## Key Legal Arguments ### Challenge to Agreement and Binding Terms A central argument raised by the borrower was that she never agreed to the terms of the increased loan amount. Ms. Lawrence claimed she had expressly rejected the proposed amendments during a telephone conversation before boarding a flight to Jamaica on the day of completion. She alleged that her solicitor, Mr. [Michael Gordon Kwatia](https://solicitors.lawsociety.org.uk/person/180238/michael-gordon-kwatia) then of Setfords, did not have authority to proceed with the amended loan agreement. The judge, [Andrew Lenon KC](https://www.barstandardsboard.org.uk/barristers-register/A0A5DDFAEBB535D75DAF40DDB9D6A280.html), analysed the contemporaneous documentary evidence and concluded: > *"Ms Lawrence's account of these conversations is fundamentally inconsistent with the contemporaneous documentation. There is no reference in that documentation to the alleged conversations with Mr Shaw rejecting the revised offer or to any agreement in principle to a loan of a smaller amount than was actually lent. The alleged conversations are inconsistent with the fact that HNW proceeded to make a loan of £1.6 million and the fact that Ms Lawrence, who was made aware of the amount of the loan after completion, even if she had not read the Loan Agreement on 30 November 2018, at no stage told HNW that she had not agreed to the loan."* The court determined that Ms. Lawrence had authorised her solicitor to proceed with the transaction, and even if she hadn't personally read the amended agreement, she had subsequently ratified it by accepting the funds and later arranging additional advances with reference to the original agreement. ### The Third Party Rights Challenge Perhaps the most significant legal point in the case concerned whether HNW had legal standing to bring the claim at all. Ms. Lawrence argued that HNW was merely acting as a security agent and was not the actual lender under the agreement, and therefore had no cause of action to enforce the loan or security. This argument was based on a previous County Court judgment (HNW v Mark). In this case HHJ Dight dismissed HNW's claim on the basis that HNW was not a contracting party and that it is prima facie the principal and not the agent who is entitled to enforce the contract, and at no point did HNW have its own cause of action against the defendant. [HHJ Dight CBE](https://www.thegazette.co.uk/notice/2804147) had ruled: > *"The claimant has no obligations under the contract. The claimant has purportedly limited rights.... At no point has the claimant had its own cause of action against the defendant. The cause of action on the proper construction of these documents has always been the lender's cause of action, and the lender's cause of action has to be brought through proceedings in the lender's name."* ### The Court's Analysis of Third-Party Rights Andrew Lenon KC disagreed with the previous judgment, providing an important clarification on the operation of the [Contracts (Rights of Third Parties) Act 1999](https://www.legislation.gov.uk/ukpga/1999/31/contents). He stated: > *"In my judgment, contrary to what Chitty's example might suggest, section 1(1)(a) is not limited to the enforcement by a third party of a term purporting to benefit the third party, since this type of term is specifically addressed in section 1(1)(b). It is sufficient that the contract expressly provides that the third party may enforce the term. That is what Clause 26.7 does in relation to all the express and implied terms of the Loan Agreement."* The judge determined that the specific clause in the loan agreement (26.7) effectively conferred enforcement rights on HNW, noting: > *"Construing Clause 26.7 as legally effective accords with the principle that the courts should endeavour, if possible to give effect to the parties' contractual provisions rather than treating any part of them as otiose."* ### Duress and Undue Influence Claims The borrower also alleged that the loan agreement and further advances should be set aside on grounds of duress and undue influence. Her argument centered on the claim that HNW knew she would be unable to complete the development and exit the loan within the nine-month term, thereby causing her to be unable to make the substantial interest payments of between £20,000 and £80,000 per month. The court dismissed these claims, finding: > *"These allegations do not, in my judgment, amount to a valid basis for a defence of either economic duress or undue influence. No facts are pleaded, or alleged in Ms Lawrence's witness statement, to support a case that HNW exerted illegitimate pressure on Ms Lawrence to enter the Loan Agreement or that there was no practical alternative to entering the Loan Agreement/the Further Advances or that there was a relationship of trust and confidence between Ms Lawrence and HNW which HNW abused."* ## Implications of the HNW Lending Case This judgment provides significant clarity on several aspects of [bridging finance lending structures](https://lexlaw.co.uk/solicitors-london/banking-and-financial-disputes/). First, it affirms that security agents can enforce rights under loan agreements through the Contracts (Rights of Third Parties) Act 1999 if the agreement expressly provides for this arrangement. This has wide-reaching implications for the growing peer-to-peer lending market and other modern lending structures where loans may be originated through an intermediary. The case also reinforces the importance of contemporaneous documentation in loan disputes. Despite the borrower's claims about verbal agreements and lack of consent, the court gave paramount importance to the documented communications and subsequent conduct of the parties. This highlights the necessity for both lenders and borrowers to ensure all material changes to agreements are properly documented. For property investors and developers using bridging finance, the case serves as a reminder that courts generally expect commercial borrowers to understand the agreements they enter into. The judge specifically noted it was "no part of Ms Lawrence's case that she was in the position of a consumer in her dealings with HNW and so entitled to protection under consumer credit legislation." Additionally, the ruling demonstrates the court's reluctance to accept technical defenses when a borrower has received and utilized loan funds, particularly when they are experienced in property investment and development. This approach aligns with previous cases in [commercial property finance](https://windinguppetitionsolicitors.co.uk/statutory-demand-service/property-development-finance-disputes/). ## Defending Bridging Lender Claims When faced with potential bridging loan enforcement actions, borrowers should consider several strategic approaches rather than relying on technical defenses alone. Early engagement with specialist [financial disputes solicitors](https://lexlaw.co.uk/solicitors-london/banking-and-financial-disputes/) is essential as soon as payment difficulties arise, rather than waiting until enforcement proceedings begin. This proactive approach may facilitate more favorable workout arrangements with lenders before positions harden. Thorough analysis of loan documentation with legal experts may reveal genuine regulatory or contractual issues that could form part of a valid defense or counterclaim. For example, while unsuccessful in this case, there are situations where misrepresentation, duress, or regulatory breaches may provide valid grounds for challenging enforcement. The specific wording of security documents requires careful examination, particularly regarding the authority of security agents and the precise obligations secured. Consider whether the lending was appropriate for your circumstances-cases where borrowers can demonstrate they were misclassified as commercial rather than consumer borrowers may benefit from additional protections under consumer credit legislation. The [Financial Conduct Authority's rules](https://professionalnegligenceclaimsolicitors.co.uk/financial-services-adviser-negligence/) on treating customers fairly can also apply even to commercial lending in certain circumstances. Mediation should also be considered as an alternative to court proceedings, as it often provides a more cost-effective route to resolution. Many bridging lenders would prefer a negotiated solution that avoids the costs and uncertainties of litigation, particularly if there is a viable exit strategy for the loan that can be presented. ## Comparison of HNW Bridging Loan Cases | Case | Key Issue | Outcome | Significance | | ---- | --------- | ------- | ------------ | | HNW Lending v Lawrence [2025] | Third party enforcement rights | Security agent could enforce | Clarified rights under 1999 Act | | HNW v Mark [2024] | Standing of security agent | Security agent could not enforce | Created uncertainty (now resolved) | ### FAQs on Bridging Loan Cases Can a security agent enforce a loan agreement if they're not the actual lender? Yes, following HNW Lending v Lawrence, security agents can enforce loan agreements if the contract expressly allows them to do so under the Contracts (Rights of Third Parties) Act 1999. This is common in peer-to-peer lending structures. What evidence is required to prove duress or undue influence in a bridging loan case? Courts require evidence of illegitimate pressure that left no practical alternative but to enter the agreement (for duress) or a relationship of trust and confidence that was abused (for undue influence). General commercial pressure or unfavorable terms alone are insufficient. Does a borrower need to personally sign an amended loan agreement for it to be binding? Not necessarily. As demonstrated in this case, if a borrower authorizes their solicitor to proceed with completion, or subsequently ratifies the agreement by accepting funds and making payments, courts may find the agreement binding despite the absence of a personal signature. Can bridging lenders change the loan amount on the day of completion? While legally possible if agreed by all parties, significant last-minute changes to loan amounts should be properly documented with clear consent. The HNW case shows courts will examine the contemporaneous evidence of agreement closely. What happens if a bridging loan borrower can't repay at the end of the term? Typically, the lender will seek possession and sale of the secured property. However, borrowers may negotiate extensions or refinancing if they can demonstrate a viable exit strategy. Early engagement with both the lender and legal advisors is crucial. How do courts view "technical" defenses against bridging loan enforcement? As seen in HNW v Lawrence, courts are reluctant to accept technical defenses when a borrower has received and utilized loan funds, particularly for experienced property investors. Substantive defenses based on misrepresentation or regulatory breaches carry more weight. Are bridging loans regulated by the FCA? It depends on the purpose and the borrower's status. Loans secured on a borrower's home are generally regulated, while loans solely for business purposes are typically unregulated. This distinction is critical as it determines available protections. What remedies might be available if a bridging lender has acted unfairly? Potential remedies include adjustment of interest rates, extension of loan terms, or in serious cases of misconduct, setting aside part or all of the loan agreement. Claims under Section 140A of the Consumer Credit Act may be available for regulated loans. Can a borrower claim against their solicitor if they failed to properly advise on a bridging loan? Yes, as Ms. Lawrence attempted by bringing a Part 20 claim against Setfords Solicitors. Solicitors have a duty to properly advise on the terms and risks of bridging finance, and [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/) may be viable if this duty was breached. How long do bridging loan enforcement proceedings typically take? Timeframes vary significantly, but contested possession proceedings can take 6-12 months or longer if complex defenses are raised. The HNW case demonstrates how technical challenges can extend proceedings considerably, with the initial possession order made in 2022 being set aside and the final judgment not delivered until 2025. --- # High Court Rules on £8 Million Spread Betting Claim: FSMA & FCA COBS Rules Compliance Examined Source: https://lexlaw.co.uk/solicitors-london/billionaire-bettor-loses-8m-legal-battle-over-client-categorisation-ig-index-ltd-v-tchenguiz/ [IG Index Limited v Tchenguiz ](https://www.bailii.org/ew/cases/EWHC/Comm/2024/1880.html)is a recent English High Court case determining a dispute between online spread betting provider [IG Index](https://find-and-update.company-information.service.gov.uk/company/04008957) and real estate mogul [Robert Tchenguiz](https://find-and-update.company-information.service.gov.uk/officers/lcVEGdlrxv8ilK-bnH1aRPpFBFc/appointments). The case centred on financial transactions and allegations of wrongdoing. The court's decision, in favour of the claimant, and issued on July 31, 2024, centred around the application of financial regulations and client categorisation rules as well as 'negative balance protection' (NBP). The court’s decision held in favour of IG Index was challenged by the defendant, Robert Tchenguiz, directing him to pay spread-betting debt of £6.5 million, plus the contractual interest on principal sum of over £1.5 million. IG Index Limited is an investment platform, where Tchenguiz opened a spread-betting account and later closed it. However, the claimant demanded the recovery of the balance due upon the closure of Tchenguiz account.  When the matter was presented before the court, defendant argued that IG has wrongfully recategorised him as an [Elective Professional Client (EPC).](https://www.handbook.fca.org.uk/handbook/glossary/G2456.html) Tchenguiz maintained that he should have been treated as a retail client, thus entitled to negative balance protection (NBP). The High Court heard the arguments and evidence presented by both sides, ultimately ruling in favour of IG Index Ltd. It was found that the claimant acted suitably by recategorising the defendant as an EPC. Additionally, the NBP defence extended under the rules of the [Financial Conduct Authority (FCA)](https://www.gov.uk/government/organisations/financial-conduct-authority) had no merit. The outcome of this case is important for providing clear insight on reinforcing proper client categorisation in financial services and the application of financial regulations. ## “Recategorisation Issue” Under FCA’s Business Sourcebook (COBS) The IG Index Ltd. successfully defended its £6.5 million claim against the billionaire investor, Tchenguiz in the UK High Court. The issues that mainly surfaced was about the classification of the defendant’s spread-betting account as an ECP under the FCA’s [Conduct of Business Sourcebook (COBS)](https://www.handbook.fca.org.uk/handbook/COBS/1/?view=chapter) rules for client’s categorisation. The COBS provisions **3.5.3R **and **3.5.6R** classifies the client’s category in business investment; **3.5.3R: Elective professional clients****** *A firm may treat a client other than a local public authority or municipality as an elective professional client if it complies with (1) and (3) and, where applicable, (2):*** **3.5.6R: Client must satisfy the qualitative test ****** *Before deciding to accept a request for re-categorisation as an elective professional client a firm must take all reasonable steps to ensure that the client requesting to be treated as an elective professional client satisfies the qualitative test and, where applicable, the relevant quantitative test.*** Another issue in front of the court was whether Tchenguiz qualify for NBP. The defence side contended that they should have been categorised as a retail client to qualify for the NBP extended under COBS 22.5.17R.** ****** **COBS 22.5.17 R: Negative balance protection****** *The liability of a retail client for all restricted speculative investments connected to the retail client’s account is limited to the funds in that account.*** ## Why client categorisation is important in investment business? Client categorisation is a critically significant for investment businesses operating in the UK. Financial services platforms or institutions are required to carefully categorise ‘clients’ based on the specific criteria under COBS. Each category has different regulatory protections that can be applied accordingly. For instance, the category of retail clients is safeguarded by the NBP protection, whereas professional clients have greater flexibility but fewer protections. There are several reasons why it is essential for the appropriate categorisation of clients. Some of the key benefits are as follow; - To determine the level of protection that client may have. - There is impact on the nature of services and products that can be offered to the client. - It affects the disclosure requirements and suitability obligations of the financial platform or company. ## NBP Defence and COBS Compliance The defence raised by Tchenguiz was based on the argument that IG Index Ltd. breached the regulations under COBS by categorising him as an EPC (Elective Professional Clients). On the other hand, if he had remained a retail client then he would have enjoyed the protection extended by NBP. With this defence, Tchenguiz would have limited liability for the funds kept in his account on the IG’s spread-betting platform. Hence, the matter in front of the court was to determine whether IG’s actions were in compliance with the relevant provisions of COBS. Further, had Tchenguiz status as a retail client was affected due to any non-compliance with rules. The UK High Court decision in this case offers valuable guidance to investment firms and financial institutions on the interpretation and application of COBS regulations in the context of client categorization. The judgement in this case also clarifies on the set standards that financial institutions must have to meet to ensure compliance of the regulations. Having a clear guidance on financial transactions and investment services will help in avoiding potential legal challenges and losses. ## Key Legal Provisions for Investment and Financial Services The decision in** Tchenguiz v. IG Index Ltd** had interpreted several key provisions: - [**Financial Services and Markets Act 2000 (FSMA)**](https://www.legislation.gov.uk/ukpga/2000/8/contents)**:** It is a key legislation governing the financial services industry, providing the framework for consumer protection and market integrity. - **Conduct of Business Sourcebook (COBS):** The FCA's rulebook sets out the conduct standards for financial services firms. - **Customer Agreement: **The contract between IG Index Ltd. and Tchenguiz outlined the terms of their relationship and played an important role in understanding the scope of their business relation. ## Legal Issues, Case law and Discussion The High Court addressed several critical issues in IG v **Tchenguiz  **to set a precedent on certain areas of financial instruments and investment transactions.   Some of the important areas addressed in the court’s decision were; - **Client Categorisation**: Did IG Index Ltd. took adequate measures to apply the COBS criteria for categorising their former client, Tchenguiz as an EPC. - **COBS Compliance**: Whether claimant adhered to the procedural requirements for re-categorization under COBS regulations. - **Negative Balance Protection**: The scope and application of NBP under COBS. - **Contractual Interpretation:** Determining whether relevant terms were constructed in the Customer Agreement. Some relevant case authorities included in the judgement were; [***CMC Spreadbet Plc v Robert Tchenguiz***](https://knyvet.bailii.org/ew/cases/EWHC/Comm/2022/1640.html)**: **A previous case involving Tchenguiz, which dealt with similar issues of client categorization and NBP. [***Spreadex Ltd v Dr Vijay Ram Battu***](https://www.bailii.org/ew/cases/EWCA/Civ/2005/855.html)***:*** This case provided guidance on the nature of spread betting contracts and the risks associated with them. ## Implications on Financial Services and Investment Firms The outcome of IG Index Ltd v Robert Tchenguiz serves reminder of the full-fledged client onboarding and client categorisation procedure. Financial and investment firms should have a transparent, well-documented and legally compliant processes in place to for determining appropriate client category and assessing client suitability. The need for client monitoring and reviewing is also of significant importance. As the conditions of the client can change with time, it is necessary to reassess their categorization or else investment firms can face legal risks. Additionally, the case also highlights the importance of maintaining comprehensive and legally compliant records of client interactions. To avoid legal risks, detailed documentation that are compliant with the set regulations can play a crucial role.   Regulatory compliance is significant for financial services industry. Financial firms should remain complaint with the regulations to safeguard their interests and their clients. Hence, adapting services and practices according to the regulatory framework in the financial industry and staying informed on the latest legal developments is of critical importance. ## Expert London  Financial Dispute Lawyers The *IG Index Ltd v Robert Tchenguiz* case underscores the complexities of financial regulations and the potential high stakes involved. If you are facing a similar legal challenge such as on-boarding client, client categorisation, NBP issues, or other regulatory challenges, our expert litigation team can provide the strategic and tailored guidance you need. With [LEXLAW](https://lexlaw.co.uk/) proven track record in handling complex financial disputes, our [expert solicitors and barristers](https://lexlaw.co.uk/our-people/) possess deep knowledge of the regulatory compliance of financial services. ## Instruct specialist litigation lawyers Our team of litigation solicitors and barristers can advise on a range of company and shareholder disputes. We can provide you with preliminary advice in a fixed fee conference. ​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the [realistic prospects of a case ](https://www.google.com/url?q=https://lexlaw.co.uk/legal-case-assessment/&sa=D&ust=1581686644093000)before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://www.google.com/url?q=https://lexlaw.co.uk/about/&sa=D&ust=1581686644093000) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and [our lawyer’s](https://www.google.com/url?q=https://lexlaw.co.uk/our-people/&sa=D&ust=1581686644093000) negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. --- # The Braganza Duty in Banking Litigation (Implied Contractual Term to Exercise Discretion Fairly) Source: https://lexlaw.co.uk/solicitors-london/the-braganza-duty-in-banking-litigation-implied-contractual-term-to-exercise-discretion-fairly/ *This judgment [(Braganza v BP Shipping Ltd [2015] UKSC 17)](https://supremecourt.uk/uploads/uksc_2013_0099_judgment_e54ac2da65.pdf) remains a cornerstone in UK administrative and contract law, establishing that decision-makers must act fairly and reasonably when exercising discretion. In the context of banking litigation, this duty ensures that banks and financial institutions adhere to procedural fairness when making decisions affecting customers or directors. The Braganza duty complements statutory frameworks such as the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents) and the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents), which govern conduct in insolvency and corporate governance.* ## The Braganza Duty Explained The Braganza duty, established in [Braganza v BP Shipping Ltd [2015] UKSC 17](https://supremecourt.uk/uploads/uksc_2013_0099_judgment_e54ac2da65.pdf), originated from a dispute over BP’s refusal to pay a death benefit to the widow of an engineer who disappeared from an oil tanker. BP concluded he had committed suicide, relying on a contractual clause allowing denial of benefits if death resulted from a “wilful act.” The Supreme Court ruled BP’s decision unreasonable, emphasising that discretion must be exercised fairly, rationally, and with proper inquiry. This precedent now underpins challenges to banking decisions affecting insolvent companies and directors. In banking litigation, disputes often arise when financial institutions exercise discretion during corporate distress. For example, in [Macdonald Hotels v Bank of Scotland [2025] EWHC 32 (Comm)](https://www.casemine.com/judgement/uk/6799229603415e3e7f4ab0c6), the Commercial Court considered claims brought by Macdonald Hotels Limited (MHL) against Bank of Scotland Plc (BOS) following the forced sale of several hotel assets, including the Randolph Hotel in Oxford. MHL alleged that BOS had acted in bad faith and capriciously by refusing to consent to alternative debt repayment proposals, effectively forcing the sale of these assets at historically low market prices. However, the court ultimately rejected MHL’s claims, finding that BOS had acted within its commercial interests and had not breached the implied duty of good faith. The judgment clarified that while the bank must exercise discretion honestly and rationally, it is entitled to prioritise its own commercial interests without balancing those against the borrower’s interests. This case illustrates the nuanced application of the Braganza duty in banking contracts, particularly where lenders hold qualified rights to consent to asset disposals or security releases. ## Download the Judgment Here: [![](https://lexlaw.co.uk/wp-content/uploads/Braganza-Appellant-v-BP-Shipping-Limited-and-another-Respondents_Page1-724x1024.jpg)](https://supremecourt.uk/uploads/uksc_2013_0099_judgment_e54ac2da65.pdf) ## Key Findings in Braganza-Related Banking Litigation **Rejection of Arbitrary or Irrational Decisions **The judgment in [Braganza ](https://supremecourt.uk/uploads/uksc_2013_0099_judgment_e54ac2da65.pdf)clarified that discretion must be exercised rationally and not arbitrarily. Decisions made without adequate reasoning or ignoring relevant considerations breach the Braganza duty. In [UBS AG v Rose Capital Ventures Ltd [2018] EWHC 3137 (Ch)](https://www.casemine.com/judgement/uk/5bfb7ab52c94e075098c5bf5), the High Court scrutinised the lender’s decision-making process and held that while the lender had absolute discretion to call in the loan, the exercise of that discretion must not be irrational or capricious. However, the court also recognised that in cases where the lender acts for its own commercial benefit, such as terminating a loan, the Braganza duty may not apply in full, provided the decision is not irrational. **Judicial Oversight of Discretion **The courts have confirmed their supervisory role to ensure that discretionary powers are not abused, particularly in contexts affecting insolvency estates and directors’ personal liabilities. This oversight aligns with the principles in the Insolvency Act 1986 and Companies Act 2006, reinforcing accountability. For instance, in [CMC Spreadbet PLC v Tchenguiz [2022] EWHC 1640 (Comm)](https://www.casemine.com/judgement/uk/62bf417cb50db96bc1b5e96c), the court applied the Braganza principles to assess whether a spread-betting firm had acted rationally and fairly in closing out a trading account, ultimately finding no breach of duty but underscoring the importance of judicial review of discretion. ## Evolving Scope of the Braganza Duty in Banking Contracts Recent case law has refined the application of the Braganza duty in banking litigation, particularly concerning the nature of the discretion exercised by lenders. The High Court has clarified that not every exercise of contractual discretion by a bank attracts an implied Braganza duty. In [UBS AG v Rose Capital Ventures Ltd [2018] EWHC 3137 (Ch)](https://www.casemine.com/judgement/uk/5bfb7ab52c94e075098c5bf5), the court held that a lender’s exercise of an absolute contractual right such as demanding early repayment of a loan is not subject to an implied duty of rationality or fairness under Braganza. This is because such rights are typically exercised for the lender’s own commercial benefit without requiring evaluative judgment or fact-finding, which are hallmarks of the Braganza duty. Similarly, the High Court has confirmed that a lender acting in its own commercial best interests does not amount to irrationality under Braganza principles. This distinction is particularly important in commercial lending where parties of equal bargaining power negotiate clear terms, including absolute discretion clauses, which courts are generally reluctant to qualify with implied duties. For example, in [TAQA Bratani Ltd v Rockrose UKCS8 LLC [2020] EWHC 58 (Comm)](https://www.casemine.com/judgement/uk/5e2547142c94e018cd69674c), the court refused to imply a duty of good faith or Braganza-style constraints on the exercise of absolute termination rights, emphasising the parties’ freedom to contract on clear terms without judicial interference. Nevertheless, where a bank exercises discretion involving evaluative judgments or fact finding such as consenting to the sale of secured property the Braganza duty remains relevant. In summary, the Braganza duty applies to contractual discretions requiring reasoned judgment and procedural fairness but does not extend to the exercise of absolute contractual rights for commercial benefit. This nuanced approach balances protecting parties from unfair decision-making while respecting commercial certainty and freedom of contract. ## Practical Guidance on Complying with the Braganza Duty For banks and financial institutions, compliance with the Braganza duty requires that contractual discretion be exercised honestly, in good faith, and in a manner that is rational and procedurally fair. As Lord Hodge observed in [Braganza v BP Shipping Ltd [2015] UKSC 17](https://supremecourt.uk/uploads/uksc_2013_0099_judgment_e54ac2da65.pdf), when one party has a unilateral right to make decisions that affect the other, the law implies limits to prevent arbitrary or capricious outcomes. This means decision-makers must identify and consider relevant matters and disregard irrelevant ones. In volatile or uncertain market conditions, banks should document their decision-making thoroughly and consider relevant regulatory obligations, such as the [FCA’s Conduct of Business Sourcebook Rules (COBS)](https://www.handbook.fca.org.uk/handbook/COBS.pdf). Failure to comply with such rules can compound breaches of the Braganza duty. For directors and companies facing adverse banking decisions, understanding the limits and scope of the Braganza duty is critical. [Legal advice](https://lexlaw.co.uk/contact-us/) should focus on whether the bank’s discretion was exercised within the bounds of rationality and procedural fairness, and whether any breach caused material prejudice. ## Implications of Braganza Duty in UK Banking and Insolvency Litigation The Braganza duty acts as a procedural safeguard protecting [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) and insolvent companies from arbitrary or unfair decisions by banks. It reinforces judicial oversight of discretionary powers in commercial contracts, ensuring decisions impacting insolvency outcomes are made transparently and reasonably. However, the evolving case law illustrates that the duty is not a blanket obligation. Courts distinguish between discretionary powers involving evaluative judgment and absolute contractual rights exercised for commercial benefit. This nuanced approach balances protecting parties from abuse while respecting commercial certainty. ## Defending Claims Involving Braganza Duty Defending claims invoking the Braganza duty requires meticulous review of the bank’s decision-making process and contractual terms. Solicitors should obtain comprehensive evidence, including internal communications and minutes, to demonstrate that discretion was exercised rationally and in good faith. Early engagement with [expert witnesses ](https://lexlaw.co.uk/expert-evidence-witness-cpr-35-compliant-single-joint-report-exchange-legal-advice/)on banking practices and corporate governance can strengthen defences. Where the bank’s discretion is exercised under absolute contractual rights, emphasising the commercial context and negotiated terms is vital to rebut claims of irrationality or unfairness. ### FAQ's on Braganza Duty and Directors’ Duties in Banking Litigation **Why is the Braganza duty significant in insolvency and banking disputes?** It ensures that banks and decision-makers exercise discretion fairly and reasonably, protecting directors and companies from arbitrary or prejudicial decisions that could worsen insolvency outcomes. **What constitutes a breach of the Braganza duty?** A breach occurs when a decision-maker fails to consider relevant facts, ignores the opportunity for affected parties to respond, or makes irrational or arbitrary decisions without proper reasoning, as established in *Braganza v BP Shipping Ltd* **How does the Braganza duty interact with directors’ duties under the Companies Act 2006?** Both impose standards of fairness and reasonableness. Directors must act in good faith and in the company’s best interests, while banks must exercise discretion fairly. **Does the Braganza duty apply only to banks?** No. It applies broadly to any contractual or statutory discretion exercised by decision-makers, including directors and insolvency practitioners. **What defences are available against claims alleging breach of the Braganza duty?** Defences include demonstrating that the bank’s decision was made after thorough consideration, with proper procedural steps and rational reasons, and that no prejudice resulted from the decision. **Can shareholders ratify breaches of the Braganza duty during insolvency?** Generally, no. During insolvency, creditors’ interests take precedence, and shareholders cannot ratify breaches that harm creditors or the insolvent estate. --- # Manolete Case Study: Director Ordered to Repay £1.43m for Unauthorised Expenditure (Director’s Duties & Insolvency Act Breaches) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/ This Judgment ([Manolete Partners Plc v Matta & Ors [2020] EWHC 2965 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2020/2965.pdf)) exemplifies the rigour with which courts uphold directors’ duties under the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents), particularly as companies approach [insolvency](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/). Litigated by leading insolvency funder [Manolete Partners](https://lexlaw.co.uk/?s=Manolete), the case highlights how misuse of director loan accounts (DLAs) and unauthorised payments to connected parties can trigger personal liability, especially in the context of claims assigned following a company’s administration. For practitioners and directors, this decision is a pivotal reminder that claims under the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents), such as transactions at undervalue and preferences, may proceed even after a company’s dissolution and assignment. For a detailed guide to defending [Manolete](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/)-funded litigation, see [defending Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) [and our expert analysis](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) on the evolving law of [winding-up petitions](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) and directors’ duties. ## Case Background The background to [Manolete Partners Plc v Matta & Ors [2020] EWHC 2965 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2020/2965.pdf) traces the fortunes of Saint George Investment Holdings Ltd, a holding company for a North West England care home group. Dr Amir Matta was its sole director and majority shareholder. Financial difficulties began to surface in 2015 amid regulatory embargos and rising costs, culminating in losses from June 2016 onward. By October 2016, the company entered [administration](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/) and subsequently dissolved in 2019. During this period, it emerged that Dr Matta had run up an overdrawn director’s loan account totalling £1,365,422.64, using company assets to fund significant personal expenditure, including luxury items and a divorce settlement, without authorisation or subsequent regularisation. Additionally, payroll payments were issued to his ex-wife, daughter, and a third-party company, MMJ Global Limited, raising issues about their basis and commercial justification. [Manolete Partners](https://lexlaw.co.uk/?s=Manolete), a leading [UK insolvency litigation](https://lexlaw.co.uk/our-people/) funder, acquired and pursued the company’s claims. The action sought to recover the overdrawn DLA, challenge payments to connected parties as transactions at undervalue or preferences under [ss.238–239 Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents), and enforce directors’ statutory duties under [ss.171–176 Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents). **View the PDF Judgment Below: ** [![](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-725x1024.png)](https://www.bailii.org/ew/cases/EWHC/Ch/2020/2965.pdf) ## Key Findings in Manolete Partners Plc v Matta & Ors ### Breach of Director Duties The [judgment](https://www.bailii.org/ew/cases/EWHC/Ch/2020/2965.pdf) delivered by Deputy Judge Treacy is unequivocal in its criticism of Dr Matta’s conduct. At paragraph 34, the court declared: *"I accept the submissions of Mr Channer that a director’s powers to authorise payments from a company’s funds are not granted to enable directors to pay for or fund very significant personal items of expenditure on a long term basis. I also accept that authorising such payments on a continuing and long term basis, and taking no steps to regularise the position is a breach of the duty to act in a way most likely to promote the success of the Company."* The court dismissed Dr Matta’s argument that the company was "rich and successful" at the time the money was withdrawn, holding at Paragraph 35: *"That is not an answer to the issue that arises under CA 2006... by failing to regularise the situation over a period of many years, including once a tax charge had been levied on the Company as a result of the position and as the Company’s financial position became less favourable, Dr Matta was in breach of his obligation to exercise reasonable skill, care, and diligence in carrying out his duties."* ### Scrutiny of Connected Payments The court considered whether payments to Dr Matta’s ex-wife, daughter, and MMJ Global Limited amounted to transactions at undervalue or preferential payments under the [Insolvency Act](https://www.legislation.gov.uk/ukpga/1986/45/contents). However, Deputy Judge Treacy concluded at Paragraph 52: *"Some key elements of the Applicant’s case are not sufficiently established to reach a conclusion on whether the payments to Ms Matta and Mrs Matta were transactions at an undervalue or preferences... the nature of the duties carried out ... whether they provided value to the Company (and if so, how much); ... the basis on which Ms Matta was paid under the settlement agreement in June 2015; and the nature and basis of any duties subsequently carried out by Ms Matta for which she was paid..."* Thus, the application for summary judgment on these grounds was refused, but directions for a full trial were recommended. ## Orders Made Ultimately, Dr Matta was found liable to repay: - The entire outstanding DLA balance (£1,365,422.64) - Unjustified payments processed via MMJ Global Limited (£70,000) Applications concerning the other respondents under the [Insolvency](https://windinguppetitionsolicitors.co.uk/) Act were either settled or stood over for further trial due to insufficient evidence at this stage. ## Summary of Key Liabilities in Manolete Partners Plc v Matta & Ors | **Respondent** | **Nature of Liability** | **Amount Ordered to Repay** | **Jurisdictional Basis** | | -------------- | ----------------------- | --------------------------- | ------------------------ | | Dr Amir Matta | Director’s loan account | £1,365,422.64 | ss.171–176 Companies Act 2006 | | MMJ Global Ltd | Unjustified payments | £70,000 | ss.171–176 Companies Act 2006 | | Ex-wife/Daughter | Connected party payments | Stood over for trial/settled | ss.238–239 Insolvency Act 1986 | ## Implications of Manolete Partners Plc v Matta & Ors [Manolete Partners v Matta](https://www.bailii.org/ew/cases/EWHC/Ch/2020/2965.pdf) demonstrates the judiciary’s willingness to enforce director accountability, particularly where misuse of director loan accounts is concerned. The judgment clouds any hope that the director’s subjective perception or solvency at time of transaction will excuse misapplication of company funds. This case affirms that a DLA treated as a “personal current account” is a persistent statutory breach, regardless of the company’s financial standing when routine authorisations go unrectified. The court reaffirmed that technical defences, such as the alleged capacity to pay debts at the relevant time, carry little weight if there is clear deprivation of company assets and the director’s actions were not regularised or properly documented. Further, the judgment illustrates that even where a company has been dissolved following [insolvency](https://windinguppetitionsolicitors.co.uk/), claims can be assigned and pursued by litigation funders such as [Manolete](https://lexlaw.co.uk/?s=Manolete), expanding both judicial scrutiny and the scope for creditor recovery. For directors and advisers, this decision signals heightened risk, personal assets and historical actions may be open to scrutiny, and resolving DLA imbalances promptly is critical. It also underlines the evidential threshold required: complex undervalue or preference claims are unlikely to be determined summarily, so preparing for a full trial is key if factual issues remain unresolved. Our [practical litigation guide](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) for defending [Manolete](https://lexlaw.co.uk/?s=Manolete) claims addresses these strategies in more detail. ## Defending Manolete Director Claims Defending against funder-backed claims requires early, careful planning. Strong evidential foundations, such as forensic accounting to scrutinise the basis and commerciality of alleged transactions at undervalue, are essential. Where the legitimacy of payroll or third-party payments is challenged, producing detailed employment contracts and contemporaneous records will help establish a credible defence. As seen in [Manolete Partners Plc v Matta & Ors](https://www.bailii.org/ew/cases/EWHC/Ch/2020/2965.pdf) and other cases in the [LEXLAW](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) multi blog network, robust documentation of the company’s solvency position at the time of contested payments may counter the statutory presumptions under the [Insolvency Act](https://www.legislation.gov.uk/ukpga/1986/45/contents). [Early advice](https://lexlaw.co.uk/contact-us/) from [specialist insolvency solicitors](https://windinguppetitionsolicitors.co.uk/contact-us/) ensures informed negotiation of assignment or settlement terms. Our [litigation team](https://lexlaw.co.uk/our-people/) recommend meticulous review of transaction histories, negotiation of settlement where evidence is weak, and, where justified, opposing applications [for summary judgment](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) on the basis that factual disputes must be aired at trial. As demonstrated by our successful defence of wrongful trading claims, timely legal advice is critical: instructing [LEXLAW’s expert team](https://lexlaw.co.uk/contact-us/) may help secure a more favourable resolution when facing [Manolete-funded](https://lexlaw.co.uk/?s=Manolete) actions. --- # Crypto Asset Recovery in 2025: Third Party Disclosure Orders and The Alternatives Source: https://lexlaw.co.uk/solicitors-london/crypto-asset-recovery-in-2025-third-party-disclosure-orders-and-the-alternatives/ The rapid expansion of [crypto asset use](https://lexlaw.co.uk/solicitors-london/cryptocurrency-litigation-success-assessing-compensatory-damages-in-lieu-of-an-injunction-for-specific-performance/) has brought a parallel rise in [fraud](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/fraud-solicitors-london/) cases involving anonymous or pseudonymous transactions. Identifying the wrongdoer is a critical first step for victims seeking redress. The traditional weapon in the litigator's arsenal has long been the Norwich Pharmacal Order (NPO), but in the fast-evolving world of blockchain-based crime, this tool may be unwieldy or ineffective. This article explores the [Norwich Pharmacal jurisdiction](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/) and examines alternative methods emerging in English law that may better suit victims of crypto fraud. *The crypto landscape is still largely unregulated, however, our experienced team at [LEXLAW](https://lexlaw.co.uk/) has kept itself abreast with the latest changes in the Crypto-landscape to provide our clients with the best possible advice and representation in order to help people get their money back.[ Our Barristers and Solicitors](https://lexlaw.co.uk/our-people/) have decades of experience in dealing with loan disputes. If you have fallen prey to cyber fraud or in a loan dispute, please do not hesitate to contact us, so we can provide you with the best possible advice and help that you may need.* ## What is a Norwich Pharmacal Order? A Norwich Pharmacal Order compels an innocent third party typically one caught up in wrongdoing through no fault of their own to disclose information to help identify a wrongdoer. Originating from *[Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133](https://www.casemine.com/judgement/uk/5a8ff8c960d03e7f57ecd668)*, it has become a mainstay of pre-action investigatory relief. To succeed, the applicant must show: - A wrong has been carried out or arguably carried out; - The respondent is involved or mixed up in the wrongdoing (even innocently); - The order is necessary to enable action to be brought against the wrongdoer. In the context of crypto fraud, NPOs are often used against crypto exchanges to obtain KYC (know-your-customer) information of wallet holders who received stolen assets. However, global jurisdictional issues, speed of movement, and lack of cooperation from some offshore exchanges limit the effectiveness of NPOs. ## The Limitations of Third Party Disclosure Applications in Crypto Fraud Cases - Jurisdictional Complexity: Many exchanges are located in jurisdictions outside England and Wales. Obtaining cross-border enforcement of an NPO can be procedurally difficult and slow wholly unsuited to tracing rapidly dissipating cryptoassets. - Pseudo-anonymity and Mixing: Even with disclosure, blockchain anonymity and asset mixing may frustrate identification efforts. NPOs are reactive, not preventative. - Cost and Delay: Victims of fraud are often individual or SME claimants without the means to litigate against foreign platforms or bear the time delay inherent in applications. ## Alternative Tools to Trace Stolen Crypto Assets: ### 1. Bankers Trust Orders A Bankers Trust Order, derived from [*Bankers Trust Co v Shapira* [1980] 1 WLR 1274](https://vlex.co.uk/vid/bankers-trust-company-v-793676229), allows for disclosure of information by third parties to trace misappropriated assets. These are especially useful in claims involving breach of trust or fraud, and unlike NPOs, can be obtained against defendants and third parties alike in ongoing proceedings. Bankers Trust Orders are: - Quicker to obtain post-issue; - Designed for tracing, rather than mere identification; - Suitable where the applicant already has some knowledge of the destination of the assets. **Use case**: When you’ve traced funds to a wallet or exchange, and you wish to follow the chain of transactions, a Bankers Trust Order can be more flexible and faster than a Norwich Pharmacal application. ### 2. Proprietary Injunctions If the stolen cryptoassets can be identified as the claimant’s property, a proprietary injunction can restrain dealings or transfers, including freezing exchange accounts. Such injunctions are particularly powerful when combined with disclosure orders. In *[AA v Persons Unknown [2019] EWHC 3556 (Comm)](https://www.bailii.org/ew/cases/EWHC/Comm/2019/3556.html)*, the court held that Bitcoin constituted property for the purposes of proprietary injunctions. This means: - Victims can assert ownership over misappropriated tokens; - Relief can be framed as a claim to recover specific assets, rather than damages. ### 3. Free-Standing Information Orders (Proposed Law Reform) The Law Commission, in its [June 2025 Consultation Paper](https://lawcom.gov.uk/publication/digital-assets-and-electronic-trade-documents-in-private-international-law-consultation-paper/) No. 273 (“Digital Assets and Electronic Trade Documents in Private International Law”), proposed a new free-standing information order. This would enable claimants to compel disclosure before a substantive claim is ready bridging the gap between the Norwich Pharmacal test and practical access to justice in crypto cases. Key features of the proposed reform: - Targeted for early-stage fraud investigations; - Not reliant on the “mixed-up in wrongdoing” test; - Facilitates asset tracing and identity discovery where traditional connecting factors (e.g., domicile, physical presence) fail due to decentralisation. This reform is particularly suited for the “decentralised” or “pseudo-anonymous” crypto context where claimants cannot easily formulate a full claim without disclosure. ### 4. Civil Procedure Reforms to Gateway Rules for Service Out Another proposed reform concerns the expansion and clarification of the jurisdictional gateways under [Practice Direction 6B](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06/pd_part06b). Currently, claimants must shoehorn applications for information orders through general gateways, such as "claims in tort" or "interim remedies." The Law Commission’s consultation suggests a new express gateway for disclosure in aid of cryptoasset claims, which would reduce litigation cost and uncertainty. ### 5. CPR 25.1(g) Orders – Disclosure in Aid of Proceedings Anywhere Under [Civil Procedure Rule 25.1(g)](https://www.legislation.gov.uk/uksi/1998/3132/rule/25.1), the court may order disclosure *for *use in proceedings abroad. This is a useful avenue where exchanges or intermediaries are within jurisdiction but the main litigation will be pursued in another forum. ### 6. International Judicial Cooperation and Letter Rogatory Requests Where exchanges are based abroad and decline to comply with English court orders, claimants may resort to [mutual legal assistance treaties](https://en.wikipedia.org/wiki/Mutual_legal_assistance_treaty#:~:text=A%20mutual%20legal%20assistance%20treaty,enforce%20public%20or%20criminal%20laws.) or letters rogatory. However, these are slow and better suited to criminal enforcement rather than commercial recovery. Nonetheless, they remain a backup route where direct legal compulsion is unavailable. ### 7. Use of Blockchain Analytics and Forensic Tools While not a legal order, technological tools can trace crypto transactions on public blockchains, identifying patterns, clusters of addresses, and potential links to known entities. Law enforcement agencies increasingly rely on blockchain forensic companies to uncover the flow of illicit funds. This can be combined with legal orders to compel intermediaries to provide additional identifying information. ## Strategic Toolbox: Ways To Trace Crypto Fraudsters While Norwich Pharmacal orders remain a valuable tool to identify wrongdoers in crypto fraud cases, their effectiveness is limited by the decentralised and anonymous nature of blockchain technology and jurisdictional challenges. The emerging alternative of free-standing information orders, as proposed by the Law Commission, offers a promising legal innovation to facilitate earlier and broader access to information in digital asset disputes. Coupled with technological forensic methods, international cooperation, and statutory powers, these alternatives provide a more comprehensive framework to tackle the identification of perpetrators in crypto fraud. ## Instruct Our Cryptocurrency Litigation Lawyers Our specialist [fraud recovery](https://lexlaw.co.uk/solicitors-london/category/fraud/) and [cryptocurrency litigation](https://lexlaw.co.uk/cryptocurrency-bitfinex-tether-manipulation-bitcoin-market-litigation-claims/) team has deep expertise in pursuing claims against perpetrators of digital fraud. If you’ve fallen victim to crypto fraud or require strategic advice on disclosure options, [contact](https://lexlaw.co.uk/contact-us/) our team today. ### Frequently Asked Questions: **What is a Norwich Pharmacal Order in crypto fraud cases?** A Norwich Pharmacal Order (NPO) is a court order requiring an innocent third party such as a crypto exchange to disclose information that helps identify a wrongdoer. In crypto fraud cases, this typically involves compelling exchanges to release KYC data of wallet holders involved in receiving or holding stolen cryptoassets. **When is a Norwich Pharmacal Order not effective in cryptoasset cases?** NPOs may be ineffective when the crypto exchange is based offshore, refuses to cooperate, or when the wrongdoer uses advanced anonymisation techniques (like coin mixers or privacy wallets). The time and cost of securing an NPO also make it impractical in some urgent fraud recovery scenarios. **What is the difference between a Norwich Pharmacal Order and a Bankers Trust Order?** While both orders are used to obtain disclosure, a Bankers Trust Order is typically used to trace and preserve misappropriated assets rather than simply identify a wrongdoer. Bankers Trust Orders can be used post-proceedings and apply to both defendants and third parties, making them more flexible in asset tracing. How can I get disclosure from an overseas crypto exchange? If a platform is outside of England and Wales, claimants may seek permission for service out of the jurisdiction under Civil Procedure Rules. Alternatively, letters rogatory or mutual legal assistance treaties (MLATs) can be used, although they are typically slower and more suited to criminal investigations. Are there new legal reforms to help with crypto fraud claims? Yes. The Law Commission’s June 2025 Consultation Paper proposes both a new disclosure order tailored for crypto fraud and a revision of jurisdictional rules (Practice Direction 6B) to streamline cross-border service in cryptoasset disputes. What are Free-standing Information Orders and how are they different from NPOs? Proposed by the Law Commission, free-standing information orders would enable disclosure at the earliest stage of investigation, without the need to show the respondent was involved in wrongdoing. This reform is intended to better accommodate the decentralised and anonymous nature of cryptoasset ecosystems. --- # Manolete Case Study: Court Rejects Escrow Defence in £2m Solicitor Breach Claim (Solicitor Undertakings in Insolvency Disputes) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-rejects-escrow-defence-in-2m-solicitor-breach-claim-solicitor-undertakings-in-insolvency-disputes/ This High Court judgment ([Manolete Partners Plc v Sampson Coward LLP [2023] EWHC 37 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2023/37.pdf)) underscores the growing liability risks faced by solicitors acting as escrow agents in insolvency contexts. The case, driven by litigation funder [Manolete Partners](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners-claims/), involved allegations of breach of undertakings and fiduciary failings. Deputy Master Teverson's decision affirms that factual disputes over beneficial ownership and undertakings enforcement against [LLP](https://en.wikipedia.org/wiki/Limited_liability_partnership)s require full trials, not early dismissal. It also highlights how assigned claims in insolvency can pursue solicitors and other professionals directly for mismanagement of client funds. The case reinforces the importance of clear escrow arrangements, timely compliance with professional duties, and understanding the potential personal consequences of pre-liquidation conduct. For solicitors and directors facing similar risks, immediate legal advice from [LEXLAW’s](https://lexlaw.co.uk/) [specialist insolvency solicitors](https://lexlaw.co.uk/contact-us/) is essential. ## Case Background Two development companies, UK Property & Land Specialists Ltd and Nero Developments Ltd borrowed funds from third-party lenders. A law firm was appointed to manage funds through escrow arrangements and security account transactions totalling nearly £10 million. However, after the companies entered [insolvency](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/), administrators discovered discrepancies in fund handling. Manolete Partners acquired the companies’ claims and alleged that over £2 million had been wrongly paid out from escrow, in breach of written undertakings and without borrower authorisation. The claimant also alleged that the law firm facilitated "back-to-back" property sales at under-market value, improperly benefitting third parties. The claim raised concerns not only of breach of retainer and fiduciary duty but of whether solicitors had improperly allowed client account misuse. The law firm applied for summary judgment, arguing the borrowers had no legal entitlement to the funds and that any undertakings were non-enforceable under existing Supreme Court authority. **View the PDF Judgment Below: ** [![](https://lexlaw.co.uk/wp-content/uploads/37-725x1024.png)](https://www.bailii.org/ew/cases/EWHC/Ch/2023/37.pdf) ## Key Findings in Manolete v Sampson Coward ### Summary Dismissal Rejected – Factual Issues Must Be Tried Deputy Master Teverson firmly rejected the application, finding serious triable issues across all key heads of claim. The court stated: *“The existence of a beneficial interest, even if merely an equitable entitlement to assert control over application of funds, raises sufficient uncertainty to render summary disposal inappropriate.”* ### Solicitor Undertakings by LLPs Still Subject to Evolving Law Sampson Coward relied on [Harcus Sinclair LLP v Your Lawyers Ltd [2021] UKSC 32](https://supremecourt.uk/uploads/uksc_2019_0098_judgment_13929e187b.pdf) to argue undertakings were unenforceable against LLPs. However, the judge noted: *“While the Supreme Court recognised limitations, it did not wholly foreclose the possibility that the inherent jurisdiction may evolve to permit enforcement in appropriate circumstances. This is not a settled issue.”* ### Back-to-Back Sales Allegations Not Suitable for Early Strike-Out Allegations around connected transactions and causation were not sufficiently resolved on the pleadings. Deputy Master Teverson explained: *“Where causation depends on facts in the exclusive knowledge of the defendants, the court must be cautious about granting summary judgment before disclosure.”* ## Implications of Manolete v Sampson Coward This judgment reflects an important judicial willingness to examine the professional conduct of solicitors involved in complex pre-insolvency financial arrangements. Where litigation funders such as [Manolete](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners/) acquire claims, they bring to court well-resourced, focused litigation strategies that target historical wrongdoing, often extending beyond directors to third-party advisors. The court’s openness to evolving undertakings enforcement suggests [LLP](https://lexlaw.co.uk/solicitors-london/quick-guide-s-994-companies-act-unfair-prejudice-petitions/) structures will not immunise professionals from scrutiny, especially where escrow arrangements or fiduciary breaches are involved. The refusal to strike out causation arguments at an early stage also affirms the court’s commitment to full fact-finding where allegations involve financial complexity and interlinked transactions. [Solicitors and professionals](https://lexlaw.co.uk/our-people/) dealing with client funds in insolvency-affected transactions must ensure clear authorisation trails and accurate record-keeping. Even seemingly technical breaches can give rise to significant personal exposure when viewed through the lens of litigation-funder-driven claims. ## Defending Manolete Director Claims Responding to claims funded by [Manolete](https://lexlaw.co.uk/?s=Manolete) requires strategic, evidence-based defence tactics. Where funds are alleged to have been misused, forensic accounting and expert analysis can be crucial in identifying gaps in the claimant’s narrative. [Solicitors](https://lexlaw.co.uk/our-people/) defending such claims should secure contemporaneous communications and instructions evidencing compliance with client mandates. At such instances, it is crucial to [secure solicitors](https://lexlaw.co.uk/contact-us/) who bear [expertise](https://lexlaw.co.uk/our-people/) in such claims. Undertakings enforcement remains a fluid area. Legal submissions can explore the boundaries of the Supreme Court’s findings in [Harcus Sinclair](https://supremecourt.uk/uploads/uksc_2019_0098_judgment_13929e187b.pdf), emphasising that equitable remedies should not be applied retroactively where clear procedural injustice may result. In our [defence of professional negligence and insolvency claims](https://professionalnegligenceclaimsolicitors.co.uk/), early challenge to causation and beneficial interest assumptions can shift the litigation focus. Structured [mediation or ADR](https://lexlaw.co.uk/solicitors-london/high-court-unreasonable-refusal-to-adr-does-not-attract-an-order-for-costs-on-an-indemnity-basis/) may also expose weaknesses in a funder’s case, enhancing settlement positioning. Our team frequently represents professionals and directors in high-value insolvency claims pursued by assignees like [Manolete](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). ## Instruct Expert London Litigation Lawyers This case confirms the courts’ continued willingness to scrutinise professional conduct, especially in insolvency contexts where litigation funders like [Manolete Partners](https://lexlaw.co.uk/solicitors-london/tag/manolete/) are actively pursuing recovery on behalf of distressed estates. The refusal of summary judgment sends a clear message: claims involving escrow misuse, undertakings, and connected transactions will not be easily dismissed, particularly where factual disputes persist. Solicitors and other fiduciaries acting near insolvency events must take proactive legal advice to mitigate the risk of exposure. At [LEXLAW](https://lexlaw.co.uk/practice-areas/), our [insolvency litigation team](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) has substantial experience defending complex claims arising from assigned causes of action. We provide practical, trial-ready strategies to challenge both the legal and factual foundations of such proceedings, [securing favourable settlements](https://lexlaw.co.uk/media-interest/) and [full dismissals](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners-claims/). If you are facing a claim from Manolete or any litigation funder, contact [LEXLAW’s expert defence solicitors](https://lexlaw.co.uk/contact-us/) for strategic advice without delay. --- # Can You Claim Damages for Internet Libel in the UK? Source: https://lexlaw.co.uk/solicitors-london/can-you-claim-damages-for-internet-libel-in-the-uk/ Internet libel under UK law involves the publication of false and damaging statements on digital platforms such as social media, blogs, and review sites that harm an individual's or organisation's reputation. The Defamation Act 2013 requires claimants to prove that the statement caused or is likely to cause serious harm, with companies needing to show serious financial loss. Remedies available include general and special damages, legal costs, injunctive relief, correction orders, and formal apologies. It is critical to act quickly due to a one-year limitation period from the first publication date under Section 4A of the Limitation Act 1980. Tools such as Norwich Pharmacal Orders may be used to identify anonymous online defamers. Lexlaw offers strategic legal services throughout the entire process, from case assessment to court proceedings, ensuring clients’ reputational interests are protected. Our specialist [defamation solicitors](https://lexlaw.co.uk/solicitors-london/category/defamation/) combine litigation expertise with strategic reputation management to deliver optimal results for our clients. ## What is Internet Libel Under UK Defamation Law? Internet libel occurs when false, harmful statements are published on digital platforms, causing reputational damage. This encompasses social media posts, blogs, online forums, customer review sites, video platforms, and news websites. **UK courts treat online publications with identical gravity to traditional print and broadcast media.** Under [Section 1 of the Defamation Act 2013](https://www.legislation.gov.uk/ukpga/2013/26/section/1/enacted), claimants must demonstrate that statements have caused, or are likely to cause, **serious harm** to reputation. For companies and profit-making organisations, the threshold requires evidence of **serious financial loss**. The Supreme Court clarified these requirements in [Lachaux v Independent Print Limited & Anor UKSC 27](https://www.bailii.org/uk/cases/UKSC/2019/27.html), establishing meaningful hurdles to prevent trivial claims while protecting legitimate reputation rights. For comprehensive guidance on distinguishing between different types of defamation, see our detailed [defamation law guide](https://lexlaw.co.uk/defamation-libel-slander-publication-take-down-letter-notice-solicitors-london-legal-advice/). ## What is the Serious Harm Threshold For Defamation? Under [Section 1 of the Defamation Act 2013](https://www.legislation.gov.uk/ukpga/2013/26/section/1/enacted), a claimant must show that the statement has caused, or is likely to cause, serious harm to their reputation. For companies and other for-profit organisations, the requirement is even more specific, with the need to demonstrate serious financial loss. The courts have interpreted “serious harm” as a meaningful hurdle, designed to prevent trivial or unfounded claims. Courts have further clarified on the requirements in  *[Lachaux v Independent Print Limited & Anor](https://www.bailii.org/uk/cases/UKSC/2019/27.html)*[ [2019] UKSC 27](https://www.bailii.org/uk/cases/UKSC/2019/27.html) ## What Damages Can You Recover for Online Defamation? Successful internet libel claims can secure multiple forms of compensation and relief: ### Financial Remedies: - **General damages** for reputational injury, emotional distress, and humiliation - **Special damages** for quantifiable losses including reduced business income, lost contracts, and reputational management costs - **Legal costs** orders requiring defendants to pay your litigation expenses ### Protective Remedies: - [**Injunctive relief**](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) preventing further publication - **Correction orders** requiring accurate information publication - **Formal apologies** restoring your reputation Each case is unique and the exact remedy will depend on the seriousness of the libel and the harm caused. You can explore case studies on [our online defamation page](https://lexlaw.co.uk/solicitors-london/category/defamation/). ## One-Year Limitation Period - Act Quickly! The time limit for bringing a defamation claim is short. Under [Section 4A of the Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/section/4A), you have only one year from the date the defamatory statement was first published to file your claim. This time limit applies even if the content is later shared or republished. The [single publication rule](https://www.legislation.gov.uk/ukpga/2013/26/section/8/notes) means that even if defamatory content continues to be available online, the limitation period runs from the first publication date, not when you discovered it or when someone else accessed it. In exceptional cases, courts may use their discretion under [Section 32A](https://www.legislation.gov.uk/ukpga/1980/58/section/32A) to extend this period. However, this is rare and requires a strong justification. Acting quickly is therefore critical. ## Identifying Anonymous Online Defamers Online defamation is often carried out anonymously, but the law provides tools to identify wrongdoers. A [Norwich Pharmacal Order](https://lexlaw.co.uk/non-party-disclosure-application-orders-norwich-pharmacal-litigation-cpr/) can compel a third party, such as a website operator, social media platform, or internet service provider, to disclose identifying information about the person responsible. This is a powerful mechanism, but it must be used carefully and in compliance with strict legal tests. We regularly assist clients in securing such orders in order to progress their claims. ## Progressing Internet Libel Claims Our comprehensive approach delivers results through strategic clarity and procedural excellence: ### 1. Strategic Assessment and Case Planning: - Content analysis against serious harm thresholds - Defendant identification and asset assessment - Limitation deadline calculation and rights preservation - [**Business litigation**](https://lexlaw.co.uk/business-shareholder-partnership-directors-disputes-resolution-advice/) impact evaluation ### 2. Pre-Action Protocol Compliance: - Detailed Letters of Claim under [Pre-Action Protocol for Media and Communications Claims](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part53) - Evidence preservation strategies including screenshots, URLs, and correspondence - Settlement exploration before court proceedings - [**Professional negligence**](https://lexlaw.co.uk/practice-areas/professional-negligence-solicitors-london/) assessment where applicable ### 3. Court Proceedings: - [**Debt recovery**](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/) for awarded damages - High Court proceedings for damages, content removal, corrections, and apologies - Norwich Pharmacal applications for anonymous defendant identification - [**Injunctive relief**](https://lexlaw.co.uk/solicitors-london/category/injunction/) to prevent ongoing harm ### 4. Enforcement:  Securing awards, managing debt recovery, and executing Norwich Pharmacal applications. ### 5. Reputation Management: Complementing legal strategy with practical solutions to restore and protect clients' reputation. ## Why Choose Lexlaw? Our specialist team at Lexlaw combines deep expertise in online defamation and internet libel claims with a proven track record in handling both high-profile and complex cases. We take a client-focused approach that integrates robust legal strategy with practical reputation management, ensuring comprehensive protection and optimal outcomes for those affected by damaging online statements. ## Take Immediate Steps to Protect Your Reputation If you believe you are the target of online libel, speed is essential. Here is what you should do immediately: - **Preserve evidence** by taking screenshots that show visible timestamps, URLs, and any related communications. - **Contact us** without delay. Call our London office on **020 7183 0529** or request a confidential assessment using our form below. - **Start the legal process** to secure your rights within the one-year limitation period. --- # Restitution & Unjust Enrichment in English Law: Key Principles, Claims and Remedies Source: https://lexlaw.co.uk/solicitors-london/restitution-unjust-enrichment-in-english-law-key-principles-claims-and-remedies/ Unjust enrichment is a powerful yet often underused legal remedy that allows a claimant to reverse a defendant's gain that has come at the claimant’s expense in circumstances the law considers unjust. Unlike claims in contract or tort, restitution focuses not on loss suffered but, on the benefit wrongfully received. The remedy aims to strip the enrichment, returning it to the rightful party. At [LEXLAW](https://lexlaw.co.uk/contact-us/), our solicitors and barristers regularly act for clients in high-value commercial, financial, and contractual disputes where unjust enrichment claims play a central role. This guide explores how these claims arise in practice, the applicable legal tests, and the kinds of real-world scenarios where claimants can successfully secure restitution including situations that are frequently overlooked by mainstream guidance. For tailored advice, see how our [Banking Litigation](https://lexlaw.co.uk/solicitors-london/category/banking-law/) or [Commercial Disputes](https://lexlaw.co.uk/solicitors-london/tag/commercial-litigation/) teams can help you take immediate legal action. ## What Is Unjust Enrichment? In the jurisdiction of England & Wales, unjust enrichment has developed into a standalone cause of action. The core principle is simple: no one should retain a benefit that was transferred to them without a legal basis. The House of Lords formally recognised unjust enrichment as part of English law in [Lipkin Gorman v Karpnale Ltd [1991]](https://www.bailii.org/uk/cases/UKHL/1988/12.html), holding that a recipient of misappropriated funds even if unaware of the wrongdoing could be ordered to make restitution. Since then, the law has evolved through landmark cases such as [Banque Financière de la Cité v Parc (Battersea) Ltd](https://www.bailii.org/uk/cases/UKHL/1998/7.html) The courts follow a well-established four-part framework when assessing claims: - The defendant has been enriched; - The enrichment occurred at the claimant’s expense; - The enrichment was unjust; and - No applicable defence bars the claim. Each of these elements must be established with evidence. If successful, the court can award restitution, often in the form of repayment, asset recovery, or even disgorgement of profits. ## When Can You Bring a Claim for Unjust Enrichment? Unjust enrichment commonly arises in banking errors, mistaken payments, frustrated contracts, or unauthorised use of client funds. However, its reach extends far beyond these categories. Take, for example, a business that accidentally pays a supplier twice for the same invoice. If the supplier refuses to return the duplicated payment, claiming it as a performance bonus, the paying party may have a valid restitution claim. Another example is where a bank holds on to a cutomer's funds without legal justification delaying transfers under vague “compliance reviews” while using the client’s capital to generate profits this could also give rise to a claim in unjust enrichment, in addition to breach of contract. In these situations, [LEXLAW’s legal team](https://lexlaw.co.uk/our-people/) can swiftly assess whether restitution is appropriate and begin steps to recover your funds, even where litigation is necessary. ## Case Study Applications: How Unjust Enrichment Claims Work in Practice Our specialist solicitors frequently advise in high-value disputes involving restitution and unjust enrichment. The following real-world cases demonstrate how the legal principles operate across sectors from banking and insurance to commercial fraud. **1. Mistaken Insurance or Invoice Payments** Based on [Kelly v Solari](https://en.wikipedia.org/wiki/Kelly_v_Solari): an insurance underwriter mistakenly pays out a claim to a former policyholder whose coverage had lapsed. After internal audit, the mistake is identified, but the recipient refuses to return the funds, arguing they had believed the payout was legitimate. **Legal Position:** This situation reflects the principle from *Kelly v Solari* that even innocent recipients must return funds paid under a causative mistake of fact or law. Restitution is available if the payer would not have made the payment had they known the true position. The same principle applies in modern contexts, such as overpayments of invoices or duplicate bank transfers. Our firm regularly secures full recovery for clients by proving the mistaken basis of payment. **2. Receipt of Stolen or Misappropriated Funds** Based on [Lipkin Gorman v Karpnale Ltd](https://www.bailii.org/uk/cases/UKHL/1988/12.html): A law firm discovers that a former partner embezzled client monies and spent them gambling at a casino. The firm seeks restitution of the lost funds directly from the casino, even though the establishment accepted the money in good faith. **Legal Position:** The House of Lords confirmed that unjust enrichment can apply even where the recipient is innocent, so long as there’s no legal basis for retention. The case clarified that enrichment is unjust where funds are received as a result of a breach of trust or unauthorised transaction. We have pursued similar claims against financial intermediaries, crypto exchanges, and online platforms who unwittingly receive the proceeds of fraud. **3. Void Contracts Due to Legal Incapacity** Based on [Westdeutsche Landesbank v Islington LBC](https://www.bailii.org/uk/cases/UKHL/1996/21.html): a local authority enters into a complex interest rate swap arrangement with a European bank. Years later, the transaction is declared void because the authority lacked the legal capacity to enter into such contracts. **Legal Position:** This case confirms that money paid under a contract later found to be ultra vires (beyond legal powers) is recoverable in restitution. The key unjust factor is "incapacity." We apply this principle in disputes involving government bodies, charities, or companies acting beyond their constitutional limits. Restitution ensures recovery even in the absence of wrongdoing, where legal foundations are missing. ## What Remedies Are Available For Unjust Enrichment? The most common remedy is personal restitution: an order requiring the return of funds or equivalent value. In some cases, where the benefit can be specifically traced into a particular asset or account, proprietary restitution may be available, granting claimants rights over specific property. In finance-related cases, the courts may also award compound interest where the defendant derived measurable benefit from use of the funds as affirmed in [Sempra Metals Ltd v HMRC](https://publications.parliament.uk/pa/ld200607/ldjudgmt/jd070718/sempra-1.htm). If the enrichment is accompanied by wrongdoing, claimants may also pursue account of profits or equitable compensation. If you’re unsure whether restitution or damages are appropriate in your case, [LEXLAW’s commercial litigation team](https://lexlaw.co.uk/contact-us/) can provide strategic analysis and practical next steps advice. ## What are the Legal Defences to an Unjust Enrichment Claim? While a claim may appear straightforward, defendants can rely on several defences. These include: - Change of position: Arguing that the benefit was spent or used in good faith and cannot be returned without hardship. - Estoppel: Claimant’s conduct induced reliance. - Limitation: Most claims must be brought within six years. - Bona fide purchase: Where the benefit was acquired in good faith with value and without notice. In our experience, delay in taking action can significantly weaken a restitution claim, particularly if the defendant has altered their position over time. We therefore recommend that clients seek [legal advice](https://lexlaw.co.uk/contact-us/) immediately upon discovering the issue. ## Instruct Specialist Unjust Enrichment Claim Lawyers Restitution for unjust enrichment is increasingly deployed in litigation involving banks, investors, developers, and corporate clients. Whether your funds were wrongly withheld, your services went unpaid under a void contract, or someone else profited from your loss unjust enrichment may be the legal route to strip the benefit and recover what is rightfully yours. At [LEXLAW Solicitors](https://lexlaw.co.uk/), we specialise in acting on complex restitution claims particularly where financial, contractual, or regulatory elements are involved. We have represented clients in multi-million-pound disputes including claims against major banks, crypto platforms, and public authorities. If you believe another party has retained a benefit they are not legally entitled to, speak to our specialist [unjust enrichment lawyers](https://lexlaw.co.uk/contact-us/) today. ### Unjust Enrichment Claims: Frequently Asked Questions (FAQ's) What is the difference between restitution and compensation? Restitution focuses on stripping away a defendant’s unjust gains, requiring them to return benefits wrongly obtained. Compensation, by contrast, aims to make good the claimant’s loss, it's about rectifying harm done. - **Restitution = gain-based remedy.** - **Compensation = loss-based remedy.** For instance, if a defendant wrongfully profits £100,000 by using your asset but your actual loss is only £10,000, restitution could recover the entire £100,000. Compensation would be limited to £10,000. This distinction is crucial in cases involving profits exceeding losses. When does the court award proprietary restitution instead of personal restitution? Proprietary restitution grants rights over specific assets (e.g., through a trust), while personal restitution is a monetary award. Courts may order proprietary restitution when: - You can trace your property into identifiable assets. - A fiduciary relationship exists (e.g., trustee-beneficiary). - The defendant holds assets under a constructive trust. Proprietary remedies can give you priority over other creditors if the defendant is insolvent. However, courts apply these cautiously to avoid prejudicing third parties. Can I recover an overpayment made by mistake? Yes, but it’s not automatic. You must prove: - The payment was made under a mistake of fact or law. - You would not have paid if you knew the true facts. - No defences (e.g., change of position, estoppel) apply. Timely action is vital. Delay can strengthen the recipient's defences. Maintaining accurate records of agreements, invoices, and communications is key. Can banks hold my funds on suspicion of fraud? Banks can temporarily freeze accounts based on reasonable suspicion of fraud, under the Proceeds of Crime Act 2002 and anti-money laundering laws. However, they must act on objective evidence and cannot indefinitely withhold funds without justification. If detention is wrongful, you may have claims for: Unjust enrichment (bank profiting from held funds). Breach of contract (failure to follow instructions). How long do I have to bring an unjust enrichment claim? Most unjust enrichment claims have a six-year limitation period from when the enrichment occurred. However: - For mistake-based claims, time runs from discovery of the mistake. - In cases of fraud or concealment, the clock may be extended. - Special rules apply for minors and those lacking mental capacity. Delay risks losing your right to claim and weakening your position. What evidence do I need to prove unjust enrichment? You’ll need evidence for: - **Enrichment**: Bank statements, receipts showing the benefit. - **At your expense**: Proof the benefit came from you. - **Unjust factors**: Documents proving mistake, duress, or failure of consideration. - **Countering defences**: Evidence the defendant hasn't changed position detrimentally. Contemporary records (emails, contracts, payment instructions) are more persuasive than later reconstructions. Expert evidence may be needed for complex financial cases --- # HMRC Time To Pay Arrangement Guide 2025: How to Negotiate a Repayment Plan for Unpaid Tax Source: https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/ In the complex world of UK debt recovery and [insolvency law](https://www.legislation.gov.uk/ukpga/1986/45/contents), [Time-to-Pay proposals (TTPs)](https://taxdisputes.co.uk/2020/05/covid-19-coronavirus-hmrc-time-to-pay-arrangements-tax-solicitors-advice/) have become an essential tool for financially distressed businesses and individuals. A TTP allows a debtor to agree staged repayment terms with creditors, typically over 6 to 12 months, without entering into formal insolvency procedures such as a Company Voluntary Arrangement (CVA) or bankruptcy. This can halt the progression of debt recovery measures such as the service of a winding-up petition preserving a debtor’s ability to trade.            When arrears arise with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs), whether in relation to [PAYE](https://taxdisputes.co.uk/paye-tax-investigation-disputes/), [VAT](https://taxdisputes.co.uk/vat-evasion/), or Corporation Tax, time is of the essence. The [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) sets out the framework in which creditors can enforce debts, and once statutory enforcement steps have commenced, the debtor’s bargaining position diminishes sharply. Proposing a TTP early can keep a business out of formal insolvency, protect jobs, and ensure compliance with directors’ duties. This comprehensive guide explains when [TTPs](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) are appropriate, how they operate in practice, the legal principles involved, and how creditors and courts typically respond. It also sets out practical strategies employed by [LEXLAW’s experienced tax dispute solicitors](https://lexlaw.co.uk/our-people/) for preparing and negotiating a proposal that has the [best chance of success](https://lexlaw.co.uk/legal-case-assessment/). ## When Should You Ask HMRC for a Time-to-Pay Arrangement? The typical [TTP](https://taxdisputes.co.uk/2020/05/covid-19-coronavirus-hmrc-time-to-pay-arrangements-tax-solicitors-advice/) scenario involves a debtor under immediate financial strain, often caused by temporary cash flow issues rather than fundamental insolvency. This may result from seasonal trading fluctuations, loss of a major customer, delayed debtor payments, or unexpected tax assessments. [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) is by far the most common creditor in [TTP arrangements](https://taxdisputes.co.uk/2020/05/covid-19-coronavirus-hmrc-time-to-pay-arrangements-tax-solicitors-advice/). Their [Debt Management & Banking (DMB)](https://lexlaw.co.uk/solicitors-london/case-study-bankruptcy-order-annulment-victory-following-hmrcs-defective-service/) teams have internal guidelines that allow for negotiated repayment schedules where the taxpayer can demonstrate both short-term financial difficulty and medium-term repayment capability.   Without intervention, unpaid debts can quickly trigger statutory enforcement: a statutory demand, the filing of a [winding-up petition](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/), or [bankruptcy proceedings](https://lexlaw.co.uk/solicitors-london/case-study-bankruptcy-order-annulment-victory-following-hmrcs-defective-service/). Once a [winding-up petition](https://windinguppetitionsolicitors.co.uk/news/) is advertised, the reputational and practical consequences are severe, bank accounts are often frozen, suppliers may demand advance payment, and customers may withdraw contracts. A [TTP](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) can interrupt this process, giving breathing space for the debtor to reorganise finances. But creditors will only agree if the proposal is credible, transparent, and clearly better than the likely outcome of enforcement. This is precisely why [engaging expert solicitors](https://lexlaw.co.uk/contact-us/) who are well-versed in these [high-stakes negotiations](https://lexlaw.co.uk/legal-news/) is crucial. ## What Laws and Legal Duties Apply to Time-to-Pay Proposals in the UK? While TTPs are not expressly legislated, they operate within the legal framework of contract law, insolvency law, and, in [HMRC](https://taxdisputes.co.uk/2025/08/hmrc-loses-9-3m-kittel-vat-case-what-it-means-for-businesses-facing-allegations-of-fraud/) cases, departmental policy. The [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) underpins the rights of creditors to enforce payment, meaning any TTP is by definition a concession. Failing to seek a [TTP](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) early can risk wrongful trading allegations if creditors’ positions worsen. In court contexts, such as when seeking to adjourn a [winding-up petition](https://lexlaw.co.uk/solicitors-london/case-study-abusive-hmrc-winding-up-petition-defeated/) hearing, the judge will assess whether a TTP is realistic and in creditors’ interests. [LEXLAW](https://lexlaw.co.uk/our-people/) has managed to secure favourable [Time-to-Pay Proposals](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) for our clients with a tested recipe for success. ## Why Do Time-to-Pay Proposals Fail and How Do Courts View Them? Debtors seeking TTPs often stumble for avoidable reasons: - **Insufficient disclosure:** Creditors need to see bank statements, management accounts, and cash flow forecasts. - **Over-optimistic terms:** Unrealistically low monthly instalments or repayment periods exceeding 24 months may be rejected. - **Poor timing:** Waiting until the day of the [petition hearing](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) to present a proposal reduces credibility. Judicial attitudes have evolved to recognise the value of [TTPs](https://taxdisputes.co.uk/2020/05/covid-19-coronavirus-hmrc-time-to-pay-arrangements-tax-solicitors-advice/) in appropriate cases, especially where an adjournment will not unduly prejudice creditors. However, courts remain wary of debtors using proposals as a tactic to delay [inevitable insolvency](https://lexlaw.co.uk/solicitors-london/case-study-abusive-hmrc-winding-up-petition-defeated/). When faced with the choice of pursuing this route, it is always a good decision to [consult experts](https://lexlaw.co.uk/legal-case-assessment/). ## How Do You Apply for a Time-to-Pay Proposal with HMRC or Other Creditors? Obtaining a [TTP](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) is not as simple as asking for more time. It is a structured process that requires preparation, evidence, and strategic engagement. The starting point is **financial assessment**. A debtor must compile accurate, up-to-date financial documents, profit and loss statements, balance sheets, aged creditor reports, and detailed cash flow forecasts. This information allows both debtor and creditor to assess whether repayment over time is genuinely feasible. For companies, board minutes approving the proposal should also be retained to evidence proper corporate governance. The second step is **initial contact with the creditor**. For [HMRC](https://taxdisputes.co.uk/2025/08/hmrc-loses-9-3m-kittel-vat-case-what-it-means-for-businesses-facing-allegations-of-fraud/) debts, this involves contacting the relevant [Debt Management office](https://taxdisputes.co.uk/2020/05/covid-19-coronavirus-hmrc-time-to-pay-arrangements-tax-solicitors-advice/), preferably before payment deadlines expire. Private [creditors](https://www.gov.uk/government/organisations/hm-revenue-customs) may require formal correspondence from a solicitor setting out the repayment offer. Early engagement signals seriousness and avoids the impression of reactive, last-minute desperation. The third step is **proposal drafting**. This must include the total debt, proposed repayment instalments, the repayment period, the source of funds, and supporting evidence. Creditors are more receptive to proposals that include contingency plans, for example, how the debtor will manage cash flow if trading dips temporarily. The fourth step is **negotiation**. This is where [our expertise](https://lexlaw.co.uk/legal-case-assessment/) comes in. [Creditors](https://www.gov.uk/government/organisations/hm-revenue-customs) may counter-offer with shorter repayment periods, higher instalments, or additional conditions such as the provision of personal guarantees. The debtor must be prepared to negotiate without committing to terms they cannot sustain. The fifth and final step is **formal agreement and compliance**. Once a proposal is accepted, the debtor must comply strictly with the payment schedule. Missing even a single instalment can void the agreement, reinstating [enforcement proceedings](https://lexlaw.co.uk/hmrc-debt-enforcement-defence-statutory-demand-winding-up-peititon-solicitor-london/). Maintaining communication with the creditor throughout the repayment term is critical, particularly if circumstances change. ## What Are the Risks and Benefits of a Time-to-Pay Agreement for Debtors and Creditors? For debtors, a [TTP](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) is often a last opportunity to avoid formal insolvency and the associated consequences, director disqualification, personal guarantees being called in, and reputational damage. For creditors, a well-structured TTP may represent the most efficient way to recover sums owed, avoiding litigation costs and delays.            [Our work](https://lexlaw.co.uk/our-people/) on [advising clients](https://lexlaw.co.uk/legal-case-assessment/) on [winding-up petitions](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) consistently shows that proposals supported by credible financial evidence, prepared with professional input, and delivered early in the enforcement timeline have a significantly higher acceptance rate. ## Practical Guidance on Obtaining a Time-to-Pay Proposal The process of securing a TTP involves both [strategic planning](https://lexlaw.co.uk/legal-case-assessment/) and precise execution. First, debtors must [assess](https://lexlaw.co.uk/legal-case-assessment/) financial viability, this means preparing accurate management accounts, aged creditor/debtor reports, and realistic cash flow projections. If trading losses are ongoing, the proposal must address how these will be stemmed. Second, the proposal should be presented [professionally](https://lexlaw.co.uk/legal-case-assessment/). Creditors, especially HMRC, respond better to proposals prepared by solicitors or accountants, as this indicates commitment and seriousness. Third, negotiate terms transparently. Disclose all liabilities, hidden debts that later emerge will destroy creditor trust and may lead to immediate withdrawal of the agreement. Fourth, act quickly. The earlier a [TTP](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) is proposed, the more likely it is to succeed. If a [winding-up petition](https://windinguppetitionsolicitors.co.uk/news/) is already filed, the debtor must simultaneously apply for an adjournment to give the creditor time to consider the proposal. Finally, monitor compliance closely. Missing even one instalment can void the agreement, triggering [renewed enforcement](https://lexlaw.co.uk/hmrc-debt-enforcement-defence-statutory-demand-winding-up-peititon-solicitor-london/). ## Obtaining HMRC Time-to-Pay Proposals Securing a Time-to-Pay Proposal with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) or other creditors requires prompt, strategic action. A well-prepared evidential package, comprising management accounts, bank statements, aged debtor/creditor schedules, and realistic cash flow forecasts, is essential to demonstrate both the necessity and viability of the arrangement. [Our experienced lawyers](https://lexlaw.co.uk/legal-case-assessment/) will conduct a meticulous review of financial documentation, presenting proposals in a professional and structured format, and negotiating realistic terms so that the business can sustain. Where a [petition](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) has already been issued, simultaneous applications for [adjournment](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) and TTP negotiation may be vital to preserving the company’s trading position. As our track record shows, [timely specialist advice](https://lexlaw.co.uk/legal-case-assessment/) can transform a potentially terminal debt situation into a manageable repayment plan that satisfies both debtor and creditor objectives. ### Frequently Asked Questions (FAQ's) What is a Time-to-Pay (TTP) proposal in the UK? A Time-to-Pay proposal is an agreement between a debtor and their creditor, such as HMRC, to repay debts in affordable instalments over an agreed period, typically 6–12 months. It helps avoid formal insolvency, protects business operations, and gives breathing space to manage cash flow. How do I apply for a Time-to-Pay arrangement with HMRC? To apply for a Time-to-Pay arrangement, you must contact HMRC’s Debt Management team before payment deadlines or enforcement action begins. You’ll need to provide evidence of your financial position, including management accounts, bank statements, and cash flow forecasts, to show you can meet the proposed repayment plan. What are the benefits of a Time-to-Pay agreement for businesses? A Time-to-Pay agreement can stop legal enforcement action, prevent winding-up petitions, protect jobs, and maintain trading while repaying debts. It also allows companies to meet directors’ duties by acting early to protect creditors’ interests. Why might HMRC reject a Time-to-Pay proposal? HMRC may reject a proposal if the repayment plan is unrealistic, if insufficient financial evidence is provided, or if the debtor waits until the last minute to engage. Overly long repayment periods or previous defaults on agreements can also reduce acceptance chances Can I still get a Time-to-Pay arrangement after HMRC starts legal action? Yes, but timing is critical. If HMRC has already issued a winding-up petition, you will need to seek an adjournment while negotiating the TTP. Acting quickly with professional legal help greatly improves your chances of success. --- # How to Appeal HMRC VAT Penalties: “Reasonable Excuse” Defence Guide 2025 Source: https://lexlaw.co.uk/solicitors-london/how-to-appeal-hmrc-vat-penalties-reasonable-excuse-defence-guide-2025/ A "[reasonable excuse](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/#:~:text=%E2%80%9CReasonable%20Excuse%E2%80%9D%20Appeal%20against%20a%20Late%20Tax%20Return%20Penalty)" is one of the most important statutory defences available to taxpayers in the UK facing [VAT-related penalties](https://taxdisputes.co.uk/vat-evasion/#:~:text=HMRC%20Penalties%20for%20VAT%20evasion). If established, it can remove liability entirely, but tax tribunals apply this test rigorously. The defence is objective and fact-specific: the excuse must exist at the moment the failure occurred, and once the underlying cause has ended, the taxpayer must remedy the failure without unreasonable delay. Certain grounds, such as a mere lack of funds or reliance on another person, are expressly excluded unless the events that caused them were beyond the trader’s control. This comprehensive guide outlines the statutory framework for “reasonable excuse,” how the courts and tribunals interpret the defence, and the practical steps involved in raising it effectively. It also examines common scenarios where the argument succeeds or fails, drawing on decades of case law, HMRC guidance, and recent tribunal trends. [LEXLAW’s](https://lexlaw.co.uk/our-people/) experienced [Tax Disputes team](https://taxdisputes.co.uk/expert-advice/) regularly defends clients against [VAT surcharges](https://taxdisputes.co.uk/hmrc-penalties/), [late filing penalties](https://taxdisputes.co.uk/late-hmrc-tax-appeals/), and other [HMRC enforcement actions](https://taxdisputes.co.uk/hmrc-winding-up-petitions/), providing urgent strategic advice and robust [tribunal representation](https://taxdisputes.co.uk/legal-representation/). ## What Legal Framework Governs VAT Reasonable Excuse Defences? The reasonable excuse defence appears across multiple VAT provisions. The default surcharge regime in [section 59](https://lexlaw.co.uk/wp-content/uploads/59The-default-surcharge-VAT-Act.pdf) and [section 59A](https://lexlaw.co.uk/wp-content/uploads/s59A-Value-Added-Tax-Act-1994.pdf) of the [Value Added Tax Act 1994 (“VATA 1994”)](https://lexlaw.co.uk/wp-content/uploads/Value-Added-Tax-Act-1994.pdf) expressly allows a taxpayer to avoid a penalty if they can demonstrate a reasonable excuse. Similar provisions apply to failures to notify acquisitions or register for VAT under [section 67(8)](https://lexlaw.co.uk/wp-content/uploads/s67-Value-Added-Tax-Act-1994.pdf), breaches of walking-possession agreements under [section 68(4)](https://lexlaw.co.uk/wp-content/uploads/s68-Value-Added-Tax-Act-1994.pdf), and failures to submit EC sales statements under [section 66(7)(b)](https://lexlaw.co.uk/wp-content/uploads/s66-Value-Added-Tax-Act-1994.pdf). ## Which VAT Provisions Include Reasonable Excuse Defences? [Section 71(1) VATA 1994](https://lexlaw.co.uk/wp-content/uploads/s71-Value-Added-Tax-Act-1994-1.pdf) sets out statutory exclusions, confirming that lack of funds and reliance on another person will not amount to a reasonable excuse unless the underlying cause was outside the trader’s control. The same test is found in a range of Finance Act penalty regimes. [HMRC’s Compliance Handbook (CH160000 onwards)](https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch160100) contains operational guidance and illustrative examples. | **Provision** | **What it covers** | **Key points** | | ------------- | ------------------ | -------------- | | [**s 59**](https://lexlaw.co.uk/wp-content/uploads/59The-default-surcharge-VAT-Act.pdf)** &** [**s 59A** **VATA 1994**](https://lexlaw.co.uk/wp-content/uploads/s59A-Value-Added-Tax-Act-1994.pdf) | Default-surcharge regime | Allows defence if “reasonable excuse” proved. | | [**s 66(7)(b)** **VATA 1994 **](https://lexlaw.co.uk/wp-content/uploads/s66-Value-Added-Tax-Act-1994.pdf) | EC sales statements | Defence preserved. | | [](https://lexlaw.co.uk/wp-content/uploads/s67-Value-Added-Tax-Act-1994.pdf)**[s 67(8)** VATA 1994](https://lexlaw.co.uk/wp-content/uploads/s67-Value-Added-Tax-Act-1994.pdf) | Failure to notify acquisitions / registration | Reasonable-excuse defence preserved. | | [**s 68(4) VATA 1994**](https://lexlaw.co.uk/wp-content/uploads/s68-Value-Added-Tax-Act-1994.pdf) | Breaches of walking-possession agreements | Same defence available. | | [**s 71(1) VATA 1994 **](https://lexlaw.co.uk/wp-content/uploads/s71-Value-Added-Tax-Act-1994-1.pdf) | Statutory exclusions | Lack of funds and reliance on others not excuses unless beyond trader’s control. | | [**Sch 23 ¶30-31** **Finance Act 2009**](https://lexlaw.co.uk/wp-content/uploads/s23-Finance-Act-2009-c.-10.pdf) | Data-gathering default penalties | Identical defence. | | [**Sch 36 ¶45** **Finance Act 2009**](https://lexlaw.co.uk/wp-content/uploads/sch-36-Finance-Act-2009-c.-10.pdf) | Daily default penalties (information powers) | Identical defence. | | [**Sch 41 ¶20** **Finance Act 2009**](https://lexlaw.co.uk/wp-content/uploads/sch-41-Finance-Act-2009-c.-10.pdf) | Failure to notify certain wrongdoing | Identical defence.   | | [**Sch 55**](https://lexlaw.co.uk/wp-content/uploads/sch-55-Finance-Act-2009-c.-10.pdf)** & [Sch 56 Finance Act 2009](https://lexlaw.co.uk/wp-content/uploads/sch-56-Finance-Act-2009-c.-10.pdf)** | Late filing / late payment | Cross-heading “Reasonable excuse”,  identical wording across taxes. | ## How Do Tribunals Assess "Reasonable Excuse" Defences? The Tax Tribunal have developed a consistent approach to interpreting “reasonable excuse.” In *Clean Car Co (1991)*, the [tribunal](https://www.gov.uk/tax-tribunal) adopted an objective standard, asking whether a prudent trader, conscious of their VAT duties, would have acted differently in the same circumstances. The [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) in [*Customs and Excise v Steptoe [1992]*](https://lexlaw.co.uk/wp-content/uploads/Customs-and-Excise-Commissioners-v-Steptoe.pdf) confirmed that insufficiency of funds will only succeed if the cause of the shortage was itself reasonable. The [Upper Tribunal](https://www.gov.uk/tax-upper-tribunal) in [*Perrin (2018)*](https://lexlaw.co.uk/wp-content/uploads/Perrin-UT-2018.pdf) set out a four-stage checklist that is now widely used by tribunals. Recent decisions emphasise that mental health evidence must directly link the condition to the compliance failure, that HMRC-caused delays can justify late payment (as in [*ESC Studios Ltd* [2025]](https://lexlaw.co.uk/wp-content/uploads/ESC-Studios-Ltd-v-Revenue-and-Customs-Commissioners.pdf)), and that ignorance of the law can sometimes be reasonable where the legislation or guidance is unclear ([*Belloul* [2020]](https://lexlaw.co.uk/wp-content/uploads/Belloul-v-Revenue-and-Customs-Commissioners.pdf)). Reliance on advisers remains a high-risk argument, it will only succeed if the taxpayer took reasonable steps to select and supervise them ([*Krywald* [2024]](https://lexlaw.co.uk/wp-content/uploads/Krywald-v-Revenue-and-Customs-Commissioners.pdf); [*Purever UK* [2025]](https://lexlaw.co.uk/wp-content/uploads/Purever-UK-Ltd-v-Revenue-and-Customs-Commissioners.pdf)). Attendance at hearings is strongly recommended; tribunals place far greater weight on oral evidence than on written statements. [LEXLAW’s tax litigation solicitors ](https://lexlaw.co.uk/our-people/)have successfully argued “reasonable excuse” in [complex cases](https://taxdisputes.co.uk/success/) across a wide range of industries, often securing penalty cancellations where HMRC initially refused to accept the defence. ## How Do You Successfully Make a Reasonable Excuse Defence? The process begins with an [appeal to HMRC](https://taxdisputes.co.uk/hmrc-appeal-lawyers-london/) within 30 days of the penalty or surcharge notice. This must set out the facts in detail, explain when and how the reasonable excuse arose, and include supporting documents. If HMRC rejects the appeal, an [internal review](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/) can be requested. This is an opportunity to refine arguments and add evidence. If the review is unsuccessful, the taxpayer can [appeal to the First-tier Tribuna](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/)l, where oral testimony is often critical. The burden of proof lies on the taxpayer. Appeals to the Upper Tribunal and higher courts are restricted to points of law. [Our tax disputes experts](https://taxdisputes.co.uk/expert-advice/) are experienced in navigating each stage of this process, from [drafting persuasive initial appeals](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/) to delivering robust advocacy at tribunal, ensuring that every possible argument and piece of evidence is presented to maximise the chance of success. ## What do Recent Appeals Tell Us About Tax Tribunal Trends? This section explains common themes that appear in tribunal decisions on reasonable excuse claims. By understanding these patterns, businesses can better assess whether their circumstances are likely to succeed and how to present their case effectively. ### Acquisitions - Failure to Notify **Relevant law:** [*Section 67(8)* *Value Added Tax Act 1994*](https://lexlaw.co.uk/wp-content/uploads/s67-Value-Added-Tax-Act-1994.pdf) If your business makes acquisitions from other EU countries and crosses the VAT registration threshold, you must notify HMRC. Tribunals have occasionally accepted ignorance of threshold changes as a reasonable excuse, but only if the trader acted promptly to seek professional advice once aware of the possibility. Simply not knowing about the threshold, without making any enquiries, is unlikely to succeed. ### Appearance at Hearing Essential If you appeal to a tribunal, your presence is critical. Many reasonable excuse claims fail because the taxpayer did not attend the hearing to give evidence in person. Attendance allows the tribunal to assess your credibility directly, and oral testimony under cross-examination often carries more weight than written statements alone. ### Assessment of Penalty **Relevant law:** [*Schedule 55* *Finance Act 2009*](https://lexlaw.co.uk/wp-content/uploads/sch-55-Finance-Act-2009-c.-10.pdf) When a tribunal accepts that you had a reasonable excuse, it removes the entire penalty, not just part of it. This means all penalty stages linked to the same failure are cancelled, providing significant relief for the taxpayer. ### Breaches of Walking-Possession Agreements **Relevant law:** [*Section 68(4)* *VATA 1994*](https://lexlaw.co.uk/wp-content/uploads/s68-Value-Added-Tax-Act-1994.pdf) A walking-possession agreement (now known as a Controlled Goods Agreement) allows you to keep goods on your premises while owing HMRC money, on the condition you do not sell or dispose of them. If you breach this agreement, the reasonable excuse defence mirrors the rules for default surcharges, you must show that the breach was genuinely beyond your control. ### Changes in the Law or HMRC Policy When the law changes mid-accounting period, or HMRC policy shifts unexpectedly, tribunals have shown some flexibility. For example, during the Covid-19 pandemic, VAT payment easements were introduced and then withdrawn. Businesses that reasonably misunderstood the changes and acted promptly to correct matters were sometimes able to rely on this as a reasonable excuse. ### Multiple Factors Combining Tribunals recognise that several small, individually weak reasons can combine into a strong reasonable excuse. This principle was confirmed in the *[Matthew Harrison](https://lexlaw.co.uk/wp-content/uploads/Matthew_Harrison_v_HMRC_final_decision_UT-2021-000153.pdf)* Upper Tribunal case, where the combined effect of multiple challenges made compliance impossible. ### Penalties for Failing to Provide Information **Relevant law:** [*Schedule 23, paragraphs 30–31* *Finance Act 2011*](https://lexlaw.co.uk/wp-content/uploads/s23-Finance-Act-2009-c.-10.pdf) HMRC has the power to issue daily penalties if you fail to provide information or documents when requested. However, if the failure was caused by adviser error or serious illness, and you remedy the default quickly once aware, the tribunal may cancel these penalties entirely. ## What Common Business Scenarios Qualify as Reasonable Excuses? ### Do Accounting Difficulties Qualify as Reasonable Excuses? In *[Castlelaw (No. 628) Ltd v HMRC](https://lexlaw.co.uk/wp-content/uploads/Castlelaw-No-628-Ltd-v-Revenue-and-Customs-Commissioners.pdf)*, the tribunal made it clear that general accounting problems rarely qualify as a reasonable excuse. To succeed, the taxpayer must prove the breakdown was sudden, unforeseeable, and outside their control, not the result of poor record-keeping, inadequate systems, or lack of resources. ### Ambiguous Surcharge-Liability Notices The decision in *[Mohammed v HMRC](https://lexlaw.co.uk/wp-content/uploads/Mohammed-v-Revenue-and-Customs-Commissioners.pdf)* shows that if an HMRC notice is genuinely unclear or misleading, the tribunal may cancel the penalty. However, the taxpayer must demonstrate that a reasonable person in the same position would have been confused by the wording. ### Do IT Computer Problems Qualify as Reasonable Excuses? The case of [*Krywald* (2024)](https://lexlaw.co.uk/wp-content/uploads/Krywald-v-Revenue-and-Customs-Commissioners.pdf) confirm that IT failures, such as system outages or software malfunctions, can be accepted as a reasonable excuse. Success depends on credible evidence of the problem and proof that the taxpayer made an immediate attempt to file by alternative means. ### Can Customer Late Payments Excuse VAT Default Surcharges? The landmark Court of Appeal case *Steptoe* (1992) held that customer late payments could only be a reasonable excuse if the taxpayer could show robust credit control measures and that the delay was entirely beyond their control. ### Do HMRC's Own Delays Create Reasonable Excuses? In [Cohen v HMRC](https://lexlaw.co.uk/wp-content/uploads/Cohen-v-Revenue-and-Customs-Commissioners.pdf), the tribunal accepted that an appeal was allowed as the appellant had a reasonable excuse for late payment arising from his mistaken belief as to the applicable time period following his online webchat with HMRC advisers. A penalty could be cancelled if the delay was caused by HMRC itself, for example, in processing paperwork or issuing forms, provided the taxpayer acted promptly once the delay was identified. ### Can Serious Illness Excuse VAT Compliance Failures? The decision in *[Marc Catchpole v HMRC](https://lexlaw.co.uk/wp-content/uploads/Catchpole-v-Revenue-and-Customs-Commissioners.pdf) *confirms that a serious or acute illness affecting the person responsible for compliance can excuse a default. The illness must be directly linked to the failure and supported by strong medical evidence. ### Non-Receipt of Notices In *[A&P Trading Solutions Ltd v Pensions Regulator](https://lexlaw.co.uk/wp-content/uploads/AAndP-Trading-Solutions-Ltd-v-Pensions-Regulator.pdf)*, the tribunal accepted non-receipt of a notice as a valid excuse where the taxpayer could show this was not their fault, for instance due to postal errors. This defence is most often successful at earlier penalty stages. ### When Can You Rely on Adviser Errors as Reasonable Excuses? The case of *[Chohan v HMRC](https://lexlaw.co.uk/wp-content/uploads/Chohan-v-Revenue-and-Customs-Commissioners.pdf)* demonstrates that relying on an employee, accountant, or adviser may be a valid defence, but only where the oversight was genuinely unexpected and the taxpayer had taken reasonable care in selecting and supervising that person. ## Does Reasonable Excuse Apply to Other HMRC Penalties? The same reasonable excuse test applies to other penalty regimes. This includes daily penalties for information notices under [Sch 36 FA 2008](https://lexlaw.co.uk/wp-content/uploads/SCHEDULE-36-FA-2008.pdf), penalties for failing to submit EU sales lists or Intrastat returns (with Covid-19 border disruption sometimes providing a defence), late filing or payment under FA 2009 [Schedule 55](https://lexlaw.co.uk/wp-content/uploads/sch-55-Finance-Act-2009-c.-10.pdf) and [Schedule 56](https://lexlaw.co.uk/wp-content/uploads/sch-56-Finance-Act-2009-c.-10.pdf), and Senior Accounting Officer penalties under [FA 2009 Schedule 46](https://lexlaw.co.uk/wp-content/uploads/SCHEDULE-46-FA-2008.pdf) (where a robust tax control framework must be demonstrated). It also applies to [misdeclaration penalties](https://www.gov.uk/hmrc-internal-manuals/vat-civil-penalties/vcp10777), where clerical error, complexity, or defective professional work may be excusable. Ignorance of a notifiable avoidance scheme obligation under [VATA 1994 Sch 11A](https://lexlaw.co.uk/wp-content/uploads/SCHEDULE-11A-VATA.pdf) can also be a reasonable excuse if professional advice was sought promptly. ## Which Recent Legal Developments Affect Reasonable Excuse Appeals? ### Covid-19 Impact Recognised [HMRC guidance (CH160300)](https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch160300) and tribunal decisions now show greater flexibility where the pandemic directly caused compliance failures. This could include staff shortages, enforced business closures, or severe operational disruption. To rely on this defence, taxpayers must provide clear evidence linking Covid-19 to the missed deadline, for example, correspondence showing operational shutdowns or records of affected staff availability. ### Expanded Mental Health Guidance Under updated [guidance (CH160400)](https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch160400), HMRC acknowledges that mental health conditions may amount to a reasonable excuse. However, the condition must be directly connected to the compliance failure and supported by credible evidence. Medical records or professional assessments are strongly recommended to substantiate the claim. ### Online Filing Exclusions Certain taxpayers are excluded from mandatory online filing, such as those with recognised digital accessibility barriers. According to HMRC, paper filers in these situations must include a completed [Reasonable Excuse form](https://assets.publishing.service.gov.uk/media/682b142a50dbd3ce8372abb2/2024-25_Individual_Exclusions_v1.0_-_updated.odt) with their return to avoid penalties. ### Proportionality in Decision-Making Tribunals are increasingly assessing whether HMRC’s actions are proportionate. In cases involving HMRC delays or disputes over [CIS (Construction Industry Scheme)](https://www.gov.uk/what-is-the-construction-industry-scheme) offsets, penalties have been overturned where enforcement was found to be excessive or unfair. This growing emphasis on proportionality means that even when a default is proven, the fairness of HMRC’s response is open to challenge. ## Specialist HMRC Penalty Appeal Solicitors Instruct [our specialist Tax Disputes team](https://lexlaw.co.uk/our-people/) today to secure expert representation in challenging HMRC penalties and surcharges. We provide [immediate strategic assessment](https://lexlaw.co.uk/contact-us/) of your case, combining in-depth knowledge of VAT, PAYE, and self-assessment compliance with a proven track record in overturning penalties at all stages, from initial HMRC review to First-tier and Upper Tribunal appeals. Whether you require urgent action to stop enforcement, robust advocacy in complex tribunal proceedings, or strategic advice on building a strong reasonable excuse defence, we deliver the decisive legal intervention your case demands. Fill in our [enquiry form](https://lexlaw.co.uk/legal-case-assessment/) or call **020 7183 0529**, to ensure your matter receives the expert attention it requires. **HMRC SECURITY NOTICES - ACT PROMPTLY ** There is a limited time to respond to a HMRC Security Notice once it has been served which may be as short as 30 days from the date on the Notice letter. The options for defending against the criminal sanctions for non-compliance become more limited thereafter. You should take therefore obtain specific legal advice on your circumstances quickly. ### Frequently Asked Questions **What is considered a “reasonable excuse” for VAT penalties?** A reasonable excuse is a genuine, fact-based reason that prevented you from meeting your VAT obligations despite exercising reasonable care and diligence. It is not a subjective “I thought I was doing my best,” but an objective test: would a prudent business in the same circumstances have acted differently? Examples can include sudden serious illness, IT system failure, or HMRC error, provided you can show contemporaneous evidence and that you acted promptly to resolve the issue. **Can lack of funds ever qualify as a reasonable excuse?** Yes, but only in narrow circumstances. A cash shortage caused by factors entirely outside your control, for example, the unexpected insolvency of a major client or a sudden banking error, may qualify if you can prove both the cause and that you took immediate steps to address the problem. Ordinary cash-flow mismanagement or prioritising other debts will not succeed. **How quickly must I remedy the failure once the reasonable excuse ends?** Tribunals expect swift action, often within days. While there is no statutory deadline, HMRC’s operational guidance refers to a “14-day benchmark” after the obstacle is removed. Delays beyond this can undermine an otherwise valid excuse. **Do I need to attend a tribunal hearing?** Yes. Your personal attendance gives the tribunal an opportunity to assess your credibility directly. Oral evidence, particularly under cross-examination, carries more weight than written statements alone. Many cases fail simply because the appellant did not attend. **What types of evidence carry the most weight with HMRC or the tribunal?** The best evidence is contemporaneous and verifiable, dated emails, HMRC correspondence, system outage reports, medical certificates, bank records, or proof of professional advice sought at the time. Evidence created after the event is often viewed with caution. **Can reliance on an accountant or adviser be a reasonable excuse?** Sometimes. The tribunal will examine whether you selected a competent adviser, provided them with the right information, and checked their work. Blind reliance without oversight is unlikely to succeed. **Does HMRC ever accept ignorance of the law as an excuse?** In rare cases. If the law or HMRC guidance is ambiguous or recently changed, and you took reasonable steps to clarify your obligations, ignorance can sometimes be reasonable. However, simply not knowing your obligations is generally not a defence. **What happens if HMRC rejects my reasonable excuse claim?** You can request an internal review, which allows HMRC’s independent team to reassess the decision. If that fails, you can appeal to the First-tier Tribunal. Each stage is an opportunity to strengthen your case with better evidence and more detailed legal argument. **When should I seek professional help?** Immediately. The earlier you involve a [VAT disputes specialist](https://lexlaw.co.uk/our-people/), the better your chances of framing the facts, gathering persuasive evidence, and avoiding procedural mistakes that could harm your case. [Our team](https://lexlaw.co.uk/our-people/) routinely deals with HMRC penalty appeals and has secured significant penalty cancellations for clients in diverse industries. --- # Case Study: Commercial Lender Defeats Consumer Credit Claim (McGuiness v Goldentree 2025) Source: https://lexlaw.co.uk/solicitors-london/high-court-strikes-out-property-development-claims-commercial-lender-defeats-consumer-credit-claim-mcguiness-v-goldentree-2025/ The judgment in [McGuinness v Goldentree Financial Services plc [2025] EWHC 870 (Ch)](https://lexlaw.co.uk/wp-content/uploads/McGuinness-v-Goldentree-Financial-Services-Plc-2025-EWHC-870-Ch.pdf) demonstrates the courts' robust approach to striking out unmeritorious challenges to commercial lending arrangements under the [Financial Services and Markets Act 2000](https://www.legislation.gov.uk/ukpga/2000/8/contents). The ruling clarifies the boundaries between regulated mortgage contracts and investment property loans, particularly relevant for [directors' duties claims](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/director-liability-after-a-winding-up-petition-are-you-at-risk/) arising from development finance disputes. The case highlights the importance of proper authority when companies enter [insolvency proceedings](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/) and reinforces creditor protection principles under the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents). Such disputes often emerge in [professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-faqs/) where inadequate legal advice leads to misconceived regulatory challenges against commercial lenders. The decision provides crucial guidance for development finance disputes and underscores the courts' willingness to dispose summarily of claims lacking realistic prospects of success. Instruct [LEXLAW](https://lexlaw.co.uk/) to defend your development finance arrangements with the confidence that comes from our [specialist expertise](https://lexlaw.co.uk/practice-areas/) in commercial lending disputes. [Our team](https://lexlaw.co.uk/our-people/) has extensive experience in challenging spurious regulatory arguments and securing swift resolution of unmeritorious claims against legitimate business lending. We provide the decisive legal intervention necessary to protect your commercial interests whilst avoiding protracted litigation costs in this complex area of financial services law. For [specialist advice](https://lexlaw.co.uk/contact-us/), fill in our [enquiry form](https://lexlaw.co.uk/legal-case-assessment/) or call us at 02071830529. ## Case Background Dean McGuinness, the sole director and shareholder of [Hitcham Homes Limited](https://find-and-update.company-information.service.gov.uk/company/09865306), engaged in property development projects at Wooburn Green, Buckinghamshire and Hungerford, Berkshire between 2019 and 2021. [Goldentree Financial Services plc](https://find-and-update.company-information.service.gov.uk/company/04179323) provided development finance through two separate facilities: a £410,000 loan in July 2019 secured by a legal charge over the Wooburn Green property, and a subsequent facility in August 2021 to fund the Company's Hungerford development project. The 2019 transaction involved purchasing and developing 17 Mayfield Road, Wooburn Green, which McGuinness subdivided into two properties after renovating the existing house and constructing a new dwelling. Following completion, he sold one property and retained title to 17A Mayfield Road, using the sale proceeds to repay the initial loan whilst the charge remained registered against the retained property. When the company defaulted on the 2021 facility, Goldentree appointed joint administrators Edward Avery-Gee and Daniel Richardson on 21 April 2023. This triggered multiple sets of proceedings: possession proceedings against McGuinness for 17A Mayfield Road, an insolvency application challenging the administrators' appointment, and composite proceedings claiming both loan agreements were unenforceable regulated mortgage contracts under consumer credit legislation. ## Key Findings: Rejection of Regulated Mortgage Contract Defence [HHJ Halliwell](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/regional-business-and-property-courts/manchester/judges/) sitting as a [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) judge rejected McGuinness's argument that the 2019 loan constituted an unenforceable regulated mortgage contract. The court found that the transaction clearly fell within the "investment property loan" exemption under [Article 61A(1)(d)](https://www.legislation.gov.uk/uksi/2001/544/article/61A) of the [Financial Services and Markets Act 2000 (Regulated Activities) Order 2001](https://www.legislation.gov.uk/uksi/2001/544/contents). As the judge observed: "*his written declaration can be taken into consideration as part of the contemporaneous documentary evidence and it is obvious, from the evidence as a whole, that the 2019 Loan Agreement was an investment property loan within the meaning of Article 61A of the 2001 Order*". The decision followed detailed analysis of the contemporaneous evidence, including McGuinness's signed declaration that the agreement was entered into "*wholly or predominantly for the purposes of a business*" and his solicitors' confirmation that neither he nor his family intended to occupy the property as a residence. Despite acknowledging potential defects in the statutory declaration following the [Court of Appeal's](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) guidance in [*Kumar v LSC Finance Limited* [2024] EWCA Civ 254](https://www.bailii.org/ew/cases/EWCA/Civ/2024/254.html), the court determined that the essential requirements for an investment property loan were "*unarguably satisfied*". ## Dismissal of Facility Challenge The court found McGuinness's challenge to the 2021 facility "*fundamentally flawed*" because the credit was provided to the Company rather than to him personally. As HHJ Halliwell noted at paragraph 62: "*To qualify as a regulated mortgage contract within the meaning of Article 61 of the 2001 Order, the transaction must involve the provision of credit to an individual or trustees, Art 61(3)(a)(i). Under the 2021 facility, credit was provided to the Company, not Mr McGuinness*". This fatal defect meant McGuinness lacked standing to challenge the facility as he was not a party to the underlying loan agreement. ## Authority to Commence Proceedings in Administration The judgment reinforced established principles regarding statutory powers during [company administration](https://www.gov.uk/put-your-company-into-administration). The court confirmed that once administrators are appointed, the power to bring legal proceedings on behalf of the company vests in the administrators under [Schedule B1](https://www.legislation.gov.uk/ukpga/1986/45/schedule/B1) to the Insolvency Act 1986, not the former directors. McGuinness's attempts to join the Company as co-claimant in multiple proceedings without the administrators' authority were therefore misconceived and procedurally defective. [Contact us](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) if you are facing regulatory challenges to your commercial lending arrangements. Our proven track record in development finance litigation enables us to identify weak claims suitable for summary disposal, often securing strike-out orders within months rather than enduring years of costly proceedings. We [specialise](https://lexlaw.co.uk/practice-areas/) in transforming complex regulatory disputes into straightforward commercial litigation through aggressive early intervention strategies. ## Download the Judgment here: [![McGuinness & Anor v Goldentree Financial Services PLC & Anor [2025] EWHC 870 (Ch)](https://lexlaw.co.uk/wp-content/uploads/McGuinness-Anor-v-Goldentree-Financial-Services-PLC-Anor-2025-EWHC-870-Ch.png)](https://lexlaw.co.uk/wp-content/uploads/McGuinness-v-Goldentree-Financial-Services-Plc-2025-EWHC-870-Ch.pdf)McGuinness & Anor v Goldentree Financial Services PLC & Anor [2025] EWHC 870 (Ch) ## Implications of McGuinness v Goldentree This decision reinforces the courts' increasingly robust approach to striking out unmeritorious challenges to commercial lending arrangements. The [judgment](https://lexlaw.co.uk/wp-content/uploads/McGuinness-v-Goldentree-Financial-Services-Plc-2025-EWHC-870-Ch.pdf) demonstrates judicial willingness to grant summary judgment where defendants advance technical regulatory arguments lacking realistic prospects of success, particularly in development finance contexts where parties have clearly structured transactions as commercial arrangements. The ruling provides important clarification on the boundaries between regulated mortgage contracts and investment property loans under the 2000 Act. Despite potential technical defects in borrower declarations, courts will examine the substance of transactions through contemporaneous evidence to determine their true commercial nature. This approach protects legitimate commercial lenders from spurious regulatory challenges whilst maintaining appropriate consumer protection for genuine residential mortgage transactions. The decision also highlights the procedural complexities arising when companies enter administration during ongoing litigation. Directors must recognise that their authority to conduct legal proceedings on behalf of the company ceases upon administrator appointment, and any subsequent proceedings require proper authorisation. This principle extends beyond simple litigation to encompass all aspects of company management during formal insolvency procedures. [Contact our specialist team](https://lexlaw.co.uk/our-people/) to conduct [immediate case assessments](https://lexlaw.co.uk/legal-case-assessment/) when borrowers advance technical arguments against your commercial facilities. Our forensic approach to document review and evidence preparation has consistently delivered successful outcomes in development finance disputes. We combine deep understanding of financial services regulation with robust litigation tactics to ensure your legitimate commercial lending arrangements receive appropriate judicial protection ## Defending Development Finance Claims When facing challenges to development finance arrangements, lenders should immediately conduct comprehensive document reviews to identify contemporaneous evidence supporting the commercial nature of transactions. As demonstrated in McGuinness, borrower declarations, solicitor confirmations, and loan documentation collectively provide powerful evidence of parties' true intentions, even where individual documents may contain technical defects. Early applications for [summary judgment](https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/) or [strike-out orders](https://lexlaw.co.uk/interim-remedies-default-judgment-strike-out-security-costs-application-urgent-injunction-legal-advice/) prove particularly effective in development finance disputes where claimants advance regulatory arguments contradicted by clear contemporaneous evidence. The courts' willingness to dispose summarily of unmeritorious claims reduces litigation costs and prevents tactical abuse of consumer credit legislation in commercial contexts. Lenders should ensure robust documentation practices during facility negotiations, including clear declarations regarding business purposes and property usage intentions. Where borrowers subsequently claim residential usage was intended, comprehensive contemporaneous records provide the strongest defence against retrospective regulatory challenges. [Professional legal advice](https://lexlaw.co.uk/contact-us/) remains crucial when structuring development finance arrangements to ensure appropriate exemptions apply and documentation adequately reflects the commercial nature of transactions. As demonstrated in our experience defending claims from [litigation funders](https://lexlaw.co.uk/solicitors-london/litigation-funding-in-england-wales-legal-services-board-report/), early legal intervention often prevents misconceived challenges from reaching formal proceedings. Forensic examination of claimants' evidence frequently reveals inconsistencies between stated intentions and actual business conduct, particularly in development contexts where properties are clearly acquired for commercial purposes. Such analysis often provides grounds for striking out claims or obtaining summary judgment without the expense of full trial proceedings. [Contact us](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) if you are currently [defending possession proceedings](https://lexlaw.co.uk/solicitors-london/practice-direction-51z-automatic-stay-of-possession-hearings-and-appeals/) or facing challenges to development finance arrangements. Our emergency response protocols ensure rapid deployment of specialist expertise in this practice area, comprehensive evidence gathering, and strategic applications designed to achieve optimal commercial outcomes whilst minimising litigation exposure. Time is critical in securing the best possible position for your case. ## Can development loans ever constitute regulated mortgage contracts under consumer credit legislation? Development loans may potentially fall within regulated mortgage contract provisions where credit is provided to individuals for properties intended partly for residential use. However, the investment property loan exemption under Article 61A(1)(d) of the 2001 Order typically applies where less than 40% of the property is intended for borrower occupation and the transaction is predominantly for business purposes. Contemporary evidence of parties' intentions at the time of agreement proves crucial in determining regulatory status. ## What defences are available when borrowers challenge commercial loans as unenforceable? Lenders can rely on various defences including the investment property loan exemption, [bridging loan provisions](https://lexlaw.co.uk/solicitors-london/guide-unfair-relationship-claims-fixed-rate-bridging-business-loans/), or arguments that transactions fall outside regulatory scope entirely. Even where loans might technically qualify as regulated agreements, courts retain discretionary powers under s.28(3) of the 2000 Act to enforce agreements where just and equitable. Strong contemporaneous documentation supporting commercial purposes provides the most effective defence strategy. ## How do administrator appointments affect ongoing litigation involving company directors? Once administrators are appointed, all powers to conduct legal proceedings on behalf of the company vest in the administrators under the Insolvency Act 1986. Former directors cannot commence or continue proceedings without proper authority, and any attempts to do so render the proceedings procedurally defective. This principle applies equally to [winding-up petition](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/) contexts and other formal insolvency procedures. ## Can directors be personally liable for challenging legitimate commercial loans? Directors who advance unmeritorious challenges to commercial lending arrangements may face personal costs orders, particularly where claims lack realistic prospects of success. Courts increasingly scrutinise tactical litigation designed to frustrate legitimate creditor enforcement, and professional advisers should carefully assess claim prospects before commencing proceedings. Personal guarantees and security arrangements typically remain enforceable despite unsuccessful regulatory challenges. ## What evidence proves most effective in defending investment property loan classifications? Contemporaneous documentation provides the strongest evidence, including borrower declarations of business purpose, solicitor confirmations regarding occupancy intentions, and loan documentation specifying commercial usage requirements. Even where technical defects exist in statutory declarations, courts examine the overall factual matrix to determine true transaction purposes. Property usage restrictions and development timelines often support commercial characterisation. ## How do courts approach technical regulatory arguments in commercial contexts? Courts are taking an increasingly robust approach to striking out technical regulatory challenges lacking substantive merit, particularly in commercial development contexts. Judges examine the substance of transactions rather than merely technical compliance with regulatory formalities. The Court of Appeal's guidance in Kumar v LSC Finance Limited demonstrates judicial willingness to reject spurious consumer credit arguments in clearly commercial transactions. ## Can personal guarantees remain enforceable despite successful regulatory challenges to underlying facilities? Personal guarantees typically contain comprehensive provisions preventing discharge through variations or amendments to underlying facilities. Well-drafted guarantees include specific clauses preserving liability despite regulatory challenges to principal agreements. However, guarantors may still argue unfair relationships under [s.140B](https://www.legislation.gov.uk/ukpga/1974/39/section/140B) of the [Consumer Credit Act 1974](https://www.legislation.gov.uk/ukpga/1974/39/contents) in appropriate circumstances, though such arguments rarely succeed in commercial contexts. ## What role do professional negligence claims play in development finance disputes? [Professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/professional-negligence-claims/) often arise where inadequate legal advice leads to misconceived regulatory challenges or improper transaction structuring. Solicitors advising on development finance must ensure appropriate exemptions apply and documentation reflects commercial purposes. Inadequate advice regarding regulatory compliance can trigger significant liability, particularly where clients subsequently face enforcement action or costs orders in unmeritorious proceedings. ## How do courts handle disclosure applications in development finance litigation? Courts strictly scrutinise disclosure applications in development finance disputes, particularly where applicants seek fishing expeditions or attempt to support weak substantive cases through procedural applications. As demonstrated in McGuinness, specific disclosure requests must identify relevant document classes and demonstrate clear necessity. Tactical disclosure applications often result in dismissal and adverse costs orders. ## What procedural steps should lenders take when facing regulatory challenges? Lenders should immediately apply for summary judgment or strike-out orders where regulatory challenges lack realistic prospects of success, avoiding unnecessary trial costs and delay. Early [case management conferences](https://lexlaw.co.uk/costs-and-case-management-conference-cmc-ccmc-litigation-court-second-opinion-legal-solicitor-advice/) help identify weak claims suitable for summary disposal. Comprehensive [witness evidence](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) addressing contemporaneous documentation and commercial transaction purposes often proves decisive in obtaining summary relief. Engagement with specialist commercial litigation practitioners ensures appropriate strategic responses to regulatory challenges. ## Specialist Development Finance Litigation Solicitors Instruct [our specialist team](https://lexlaw.co.uk/our-people/) today to leverage our specialist expertise in development finance litigation. Our team provides [immediate strategic assessment](https://lexlaw.co.uk/contact-us/) of regulatory challenges, combining proven experience in financial services regulation with aggressive pursuit of summary disposal applications. Whether you need urgent possession proceedings, robust defence of commercial lending arrangements, or strategic advice on structuring future facilities, we deliver the decisive legal intervention your case demands. Contact our development finance litigation specialists now - fill in our [enquiry form](https://lexlaw.co.uk/legal-case-assessment/) or call us at 020 7183 0529 - to ensure your dispute receives the expert attention it requires. --- # Landmark Tax Tribunal Win for VAT Recovery Rights: Hastings Insurance Services v HMRC Source: https://lexlaw.co.uk/solicitors-london/landmark-tax-tribunal-win-for-vat-recovery-rights-hastings-insurance-services-v-hmrc/ The First-tier Tax Tribunal’s decision in [*Hastings Insurance Services Ltd v HMRC* [2025] UKFTT 275 (TC)](https://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09444.html) marks a turning point for VAT recovery rights in the UK insurance intermediary sector. The Tribunal found in favour of Hastings, holding that input VAT was recoverable on services supplied to a Gibraltar-based insurer, even where the insured policyholders resided in the UK. The case scrutinised [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)’s restrictive interpretation of the Specified Supplies Order as amended in 2019 and challenged the domestic application of the so-called “Offshore Looping Regulations” under the retained EU VAT regime. [LEXLAW’s](https://lexlaw.co.uk/our-people/) experienced [Tax Disputes team](https://taxdisputes.co.uk/expert-advice/) regularly defends clients against [VAT surcharges](https://taxdisputes.co.uk/hmrc-penalties/), [late filing penalties](https://taxdisputes.co.uk/late-hmrc-tax-appeals/), and other [HMRC enforcement actions](https://taxdisputes.co.uk/hmrc-winding-up-petitions/), providing urgent strategic advice and robust [tribunal representation](https://taxdisputes.co.uk/legal-representation/). ## Background of the Dispute Between Hastings Insurance and HMRC [Hastings Insurance Services Ltd](https://find-and-update.company-information.service.gov.uk/company/03116518) is a UK-based intermediary acting on behalf of [Advantage Insurance Company Limited](https://advantage.com.gi/), an insurer incorporated in Gibraltar. Hastings provided underwriting and broking services to Advantage, which ultimately issued insurance policies to UK customers. The dispute arose when [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) refused to allow Hastings to recover input VAT for the period 1 January 2019 to 31 December 2022, relying on the [2019 amendments to the Value Added Tax (Input Tax) (Specified Supplies) Order 1999 (SI 1999/3121)](https://www.legislation.gov.uk/uksi/2019/408/made), as amended by SI 2018/1328. HMRC argued that since the underlying insurance was consumed by UK customers, the intermediary could not reclaim VAT under the exemption for services supplied to non-UK entities. **View The PDF Judgment here: ** [Hastings Insurance Services Limited v HMRC](https://lexlaw.co.uk/wp-content/uploads/Hastings-Insurance-Services-Limited-v-HMRC.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Hastings-Insurance-Services-Limited-v-HMRC.pdf) ## What is the Tax Tribunal's Approach to VAT Recovery? At the heart of Hastings’ argument was [Article 169(c) of the Principal VAT Directive (2006/112/EC)](https://www.legislation.gov.uk/eudr/2006/112/article/169), which allows a taxable person to deduct VAT incurred on services supplied to customers established outside the European Union. Hastings maintained that Advantage Insurance was the direct recipient of its services and was established outside the UK and EU, entitling it to full VAT recovery. The Tribunal agreed, reaffirming that Article 169(c) has direct effect and is sufficiently clear and precise to confer rights enforceable in UK law even post-Brexit, by virtue of [section 4 of the European Union (Withdrawal) Act 2018](https://www.legislation.gov.uk/ukpga/2018/16/section/4). ## Determining the “Customer” in Cross-Border Insurance Transactions The Tribunal placed particular emphasis on identifying the true recipient of the intermediary services for VAT purposes. It rejected HMRC’s argument that the UK policyholders were the ultimate customers, finding instead that Advantage Insurance—the Gibraltar-based entity—was the contracting party and recipient of the taxable supply. ## What is the Post-Brexit Legal Effect of EU VAT Provisions in the UK? The Tribunal reinforced that, under [section 4 of the EU (Withdrawal) Act 2018](https://www.legislation.gov.uk/ukpga/2018/16/section/4), rights previously recognized under EU law, including those derived from the Principal VAT Directive, continue to have effect in the UK legal framework post-Brexit, so long as they were directly effective before the end of the transition period. The judgment emphasized that domestic legislation cannot be interpreted in a vacuum and must be aligned with higher-order retained rights. ## Impact of the Tribunal’s Ruling on the Insurance Sector The Hastings ruling could have wide-ranging implications for other intermediaries supplying services to non-UK insurers. Many firms previously blocked from reclaiming VAT under the amended Specified Supplies Order may now be able to pursue historical claims. Tax and legal practitioners should carefully evaluate past VAT treatment where intermediary services were provided cross-border. The Tribunal’s judgment is particularly relevant for periods up to 31 December 2023, given that further amendments have since taken effect under the [Finance Act 2023](https://www.legislation.gov.uk/ukpga/2023/1/contents). Although HMRC is expected to appeal, the decision currently stands as a persuasive precedent for intermediaries operating in international markets. ## Legal Strategy for Insurance Intermediaries On VAT Disputes Insurance firms and intermediaries should immediately assess their entitlement to reclaim VAT on historic supplies made to overseas insurers. Submitting protective claims with appropriate supporting documentation may be essential to preserve rights before limitation periods expire. Moreover, businesses should review contractual structures to clarify who is considered the service recipient for VAT purposes, drawing on the legal reasoning in this case. Continuous monitoring of HMRC’s response, and any further litigation or legislative revisions, is advised to maintain compliance and capitalize on potential tax efficiencies. ## Conclusion: A Precedent in Favour of Cross-Border VAT Recovery The decision in [*Hastings Insurance Services Ltd v HMRC*](https://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09444.html) underscores the continuing relevance of EU VAT principles in UK domestic law and reaffirms the rights of intermediaries to recover VAT in cross-border transactions. The Tribunal’s robust interpretation of Article 169(c) and rejection of HMRC’s narrow view of the “customer” provides a clear legal framework for VAT recovery where services are supplied to non-UK insurers. This case serves as a valuable precedent for both advisors and businesses, emphasizing the importance of correctly identifying the legal recipient of services and reinforcing the legal protections afforded under retained EU law. ## Expert VAT and Tax Dispute Representation Instruct our specialist [Tax Disputes team](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) at LEXLAW today to secure expert guidance in reclaiming VAT and resolving complex cross-border insurance tax issues. We provide an immediate strategic assessment of your case, combining in-depth knowledge of [VAT](https://lexlaw.co.uk/solicitors-london/tag/vat/), insurance intermediary regulations, and retained EU law with a proven track record in successfully challenging HMRC decisions. Whether you need urgent advice on historic VAT claims, robust representation in tribunal proceedings, or strategic support in structuring your services to maximise VAT recovery, we deliver the decisive legal intervention your case requires. Fill in our [enquiry form](https://lexlaw.co.uk/contact-us/) or call 020 7183 0529 to ensure your matter receives expert attention. **HMRC SECURITY NOTICES - ACT PROMPTLY ** There is a limited time to respond to a HMRC Security Notice once it has been served which may be as short as 30 days from the date on the Notice letter. The options for defending against the criminal sanctions for non-compliance become more limited thereafter. You should take therefore obtain specific legal advice on your circumstances quickly. --- ### Frequently Asked Questions **1. Can UK-based insurance intermediaries recover VAT on services provided to overseas insurers?** Yes, in certain cases. If the intermediary’s services are supplied to an insurer established outside the UK, VAT on related input costs may be recoverable under the Specified Supplies regime and retained EU law. Correctly identifying the recipient of the service is key. **2. What are the Specified Supplies rules and how do they affect VAT recovery?** The Specified Supplies Order allows VAT recovery on certain exempt financial and insurance services when supplied to customers outside the UK. However, amendments in 2019 restricted these rules, particularly for services consumed within the UK, even if supplied cross-border. **3. What is a “protective VAT claim” and when should one be filed?** A protective claim is a precautionary submission to HMRC asserting a right to VAT recovery, often ahead of litigation or policy change. Businesses may file these to preserve their position within statutory time limits, typically four years from the end of the relevant VAT period. **4. How has Brexit affected VAT treatment of cross-border services?** While the UK has left the EU, many VAT rules based on EU law still apply under the **European Union (Withdrawal) Act 2018**. Where provisions like Article 169 of the Principal VAT Directive had direct effect, they may still form part of UK law post-Brexit. **5. Who is considered the “customer” for VAT purposes in insurance transactions?** For VAT recovery, the customer is typically the **recipient of the service**—not necessarily the end user. In intermediary arrangements, this is often the insurer (e.g., the entity underwriting the policy), not the individual policyholders. **6. What should intermediaries review when assessing VAT recovery eligibility?** Firms should: - Consider past VAT treatment and whether protective claims are warranted - Review contracts to clarify who the service recipient is - Assess whether services qualify as “specified supplies” - Examine the customer’s location and VAT status **7. Can HMRC decisions on VAT recovery be appealed?** Yes. If HMRC denies input VAT recovery, businesses can challenge the decision before the First-tier Tax Tribunal. Success often depends on precise legal interpretation and evidence of service structures and contractual relationships. --- # Manolete Case Study: Director Ordered to Repay Preferential Payment (s.239 Insolvency Act 1986) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/ This judgment ([Manolete Partners Plc v Coleman & Ors [2022] EWHC 2644 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2644.pdf)) demonstrates how the courts examine directors’ decisions when companies face insolvency. Funded by leading insolvency litigation backer [Manolete Partners Plc](https://lexlaw.co.uk/?s=Manolete), the claim centred on preferential payments to directors and connected parties. The outcome underscores the risks directors face when making payments during periods of financial distress, while also showing that statutory presumptions can be defeated with credible and consistent evidence. For those defending directors’ duties claims, transactions at undervalue, or [winding-up petitions](https://windinguppetitionsolicitors.co.uk/), the case provides a valuable illustration of the [High Court’s](https://www.judiciary.uk/courts-and-tribunals/high-court/) approach under the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) and the need to engage [expert lawyers](https://lexlaw.co.uk/contact-us/). ## Case Background [David Coleman & Co Limited](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2644.pdf) was a small accountancy firm incorporated in 2011, run by directors David Coleman and Simon Thacker. For several years the firm generated modest profits, sufficient to pay small dividends, but by 2018 it encountered serious financial problems. Its primary issue was the mounting [VAT liability](https://lexlaw.co.uk/solicitors-london/how-to-appeal-hmrc-vat-penalties-reasonable-excuse-defence-guide-2025/) to [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs), which led to a [Controlled Goods Agreement](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm657100) in September 2018 and a [time-to-pay](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) arrangement. The company failed to comply, and by February 2019, [HMRC](https://taxdisputes.co.uk/hmrc-tax-investigations/) threatened re-entry unless £25,461 was paid. Although partial repayment was made, arrears persisted, and by October 2019 a petitioning creditor (LDF) sought [winding-up](https://windinguppetitionsolicitors.co.uk/contact-us/) for unpaid debts. The company was compulsorily wound up in December 2019. The liquidator then assigned potential claims under [s.239](https://www.legislation.gov.uk/ukpga/1986/45/section/239) [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) to [Manolete Partners Plc](https://lexlaw.co.uk/?s=Manolete), which pursues [insolvency](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) claims as a [litigation funder](https://lexlaw.co.uk/?s=Manolete). The challenged transactions were: | **Date** | **Transaction** | **Beneficiary** | **Amount** | **Court Finding** | | -------- | --------------- | --------------- | ---------- | ----------------- | | 1 April 2019 | Debit to extinguish director’s loan | Simon Thacker | £33,542.20 | Preference – repayable | | 25 July 2019 | Payment from sale proceeds | David Coleman | £15,000 | Not a preference (defence succeeded) | | 26 July 2019 | Repayment to FCTL (loan guaranteed by Coleman & Thacker) | Funding Circle Trustee Ltd | £37,746.25 | Not a preference (claim dismissed) | This table shows the mixed outcome: Thacker was held liable, Coleman avoided liability, and the claim against FCTL was settled on terms following a settlement and the judge’s findings. **View the PDF Judgment below:** [![](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Coleman-Ors-725x1024.png)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2644.pdf) ## Key Findings in Manolete v Coleman & Ors ### Thacker’s Preference Liability The [Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) held that Thacker’s April 2019 transaction extinguishing £33,542.20 of his loan was a preference. ICC Judge Jones stated: “Mr Thacker was a director, a connected person. The debit occurred within two years of the commencement of the winding up. There is a presumption of insolvency which he has not rebutted… There is no evidence before the court to rebut that presumption. I find, therefore, that he received a preference… £33,542.20.” ([para. 67](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2644.pdf)) Because Thacker offered no evidence, he could not rebut the statutory presumption of [insolvency](https://windinguppetitionsolicitors.co.uk/contact-us/) or desire. The [Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) ordered him to repay the full sum. ### Coleman’s Defence Succeeds Coleman had authorised the July 2019 payments of £15,000 to himself and £37,746.25 to FCTL. He argued he acted in the belief that the company was not insolvent long-term and that all creditors would eventually be paid from future instalments of the business sale. The judge accepted his evidence: “I accept his evidence that he was not even contemplating the possibility of an insolvent liquidation at the time of the two payments on 25 and 26 July 2019… The Company had a desire to confer a benefit on him… but not to improve his position in an insolvent liquidation.” ([para. 62](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2644.pdf)) Thus, Coleman successfully rebutted the presumption of “desire to prefer” under [s.239 (5)](https://www.legislation.gov.uk/ukpga/1986/45/section/239). ## Implications of Manolete v Coleman The decision illustrates several key points of insolvency law: - **Statutory presumptions are powerful, but rebuttable.** For connected persons, courts presume both insolvency and a desire to prefer. Thacker’s silence sealed his liability, while Coleman’s credible testimony enabled him to rebut. - **Subjective intention matters.** The [court](https://www.judiciary.uk/courts-and-tribunals/high-court/) emphasised that the “desire to prefer” test is subjective. Coleman convinced the judge that he expected creditors to be repaid eventually, so his motive was not to improve his own standing in liquidation. - **Credibility is critical.** Coleman succeeded largely because his oral and written statements were consistent, including with evidence he had given to the Official Receiver earlier. This highlights how directors’ credibility can make or break a defence. - **Documentation remains essential.** The lack of formal records undermined Coleman’s case, but did not prove fatal. For directors in future cases, maintaining thorough records can prevent reliance solely on oral evidence. - **Manolete’s role is increasingly prominent.** By taking assignment of claims, [Manolete](https://lexlaw.co.uk/?s=Manolete) ensures directors face scrutiny even when liquidators lack resources. Directors should anticipate aggressive pursuit of preference and undervalue claims by funded litigants. ## Defending Manolete Director Claims This case underscores the importance of proactive defence strategies and [engaging expert lawyers](https://lexlaw.co.uk/contact-us/). Directors facing claims should: - **Undertake forensic accounting.** [Insolvency](https://windinguppetitionsolicitors.co.uk/news/) dates and transaction values must be precisely assessed. [Expert solicitors](https://lexlaw.co.uk/our-people/) and evidence can sometimes disprove insolvency at the relevant time. - **Demonstrate consistent intent.** [Courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) will weigh whether directors genuinely believed creditors would be repaid. Documenting this belief through contemporaneous board minutes or correspondence strengthens credibility. - **Challenge presumptions.** As Coleman’s case shows, it is possible to rebut the presumption of “desire to prefer.” Skilled cross-examination and consistent witness statements are vital. - **Engage specialist solicitors early.** Defending [Manolete claims](https://lexlaw.co.uk/?s=Manolete) requires tailored strategies, whether to contest liability or negotiate favourable settlements. Engaging [specialist solicitors](https://lexlaw.co.uk/our-people/) is necessary. - **Plan for litigation funding dynamics.** [Manolete’s](https://lexlaw.co.uk/?s=Manolete) financial backing often makes cases harder to “wait out.” [Defence teams](https://lexlaw.co.uk/our-people/) must adapt their tactics accordingly, sometimes using settlement windows strategically. At **[LEXLAW](https://lexlaw.co.uk/?s=Manolete)**, we have successfully [defended directors](https://lexlaw.co.uk/?s=Manolete) against wrongful trading and preference claims. Early advice is often decisive, preventing claims from escalating into [judgments](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2644.pdf). [Contact now](https://lexlaw.co.uk/contact-us/) for legal advice! ### FAQ on Directors’ Duties Cases **Why is this case significant for insolvency law?** It confirms that directors can defeat preference claims if they show genuine belief that all creditors would be repaid. Courts will not impose liability simply because a director benefited from a transaction; the subjective “desire” remains key. **What is a preference under s.239 Insolvency Act 1986?** A preference occurs when a company, before insolvency, pays one creditor in a way that puts them in a better position than others would be in liquidation. Connected directors face a statutory presumption that such payments were preferential. **How do litigation funders like Manolete affect these cases?** Manolete purchases claims from liquidators, giving them resources to pursue directors aggressively. While this increases claim volume, directors can still mount strong defences, as shown by Coleman’s success. **Can shareholders ratify breaches during insolvency?** No. Once insolvency is on the horizon, duties shift to creditors. Shareholders cannot absolve directors for preferential or undervalue transactions. **If my company is dissolved, can Manolete still pursue me?** While Manolete provides financial muscle, courts treat their claims no differently. Directors with a robust defence and experienced solicitors can neutralise that leverage. See our [defence guide](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). **What lessons should directors take?** Keep records, avoid paying yourself when other creditors are outstanding, and seek legal advice early if insolvency looms. Even well-intentioned payments can later be challenged. --- # Manolete Case Study: Court Refuses Summary Judgment in £2m Escrow Breach Claim (Breach of Undertaking) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-refuses-summary-judgment-in-2m-escrow-breach-claim-breach-of-undertaking/ *The High Court's judgment in [Manolete Partners Plc v Sampson Coward LLP] [2023] EWHC 37 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2023/37.html) reinforces the rigorous duties owed by professional escrow agents in insolvency contexts and the court's cautious approach to summary disposal in complex breach of undertaking claims. * *The decision, pursued by litigation funder [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874), illustrates the challenges in establishing beneficial ownership of escrow funds and the necessity of full factual investigation where multi-faceted breaches are alleged. It also emphasises the importance of directors’ duties claims and insolvency litigation strategies under the[ Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) and [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents). For those facing similar claims, early engagement with specialist [directors’ duties solicitors](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) and insolvency experts is vital to navigate the procedural and substantive complexities involved.* We are the leading UK firm defending directors against Manolete Partners’ claims due to our [expertise in insolvency litigation](https://windinguppetitionsolicitors.co.uk/post-insolvency-claims-against-directors/) and [strategic defence](https://lexlaw.co.uk/expert-legal-defence-against-manolete-transactions-at-an-undervalue-claims/) tactics. Our dual-qualified and experienced solicitors & barristers, based near London's Royal Courts of Justice, [specialise in countering Manolete’s aggressive pursuit](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) of transactions-at-undervalue claims e.g. by challenging evidence validity, leveraging limitation periods, and demonstrating good faith per the Insolvency Act 1986. We have a track record of [protecting directors’ assets](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/), including family homes, while navigating complex financial and regulatory risks. Our insolvency law focus and experience with litigation funders ensures tailored, robust defence in high-stakes claims. [Get in touch about your Director's Duties case](https://lexlaw.co.uk/legal-case-assessment/). ## Manolete Partners Plc v Sampson Coward LLP [UK Property and Land Specialists Ltd (UKPALS)](https://find-and-update.company-information.service.gov.uk/company/07390048) and Nero Developments Ltd were placed into compulsory liquidation on 3 December 2021 following the collapse of property development ventures funded by connected lenders. Sampson Coward LLP acted as solicitor and escrow agent under loan agreements executed in 2013 and 2015, responsible for holding lender funds in client escrow accounts subject to strict undertakings. Manolete Partners acquired assigned claims from the liquidators of UKPALS and Nero Developments, alleging that Sampson Coward breached its fiduciary duties by permitting director Nigel Jeremy Weir to use the client account as a banking facility. The claimants assert that approximately £2 million was released without proper authorisation, contrary to the terms of the escrow agreements and the lenders’ instructions. Additionally, Manolete alleges that the firm improperly facilitated three back-to-back property sales by UKPALS, transactions that lacked commercial purpose and diverted value away from the insolvent estate. The defendant law firm sought summary judgment under [CPR 24.2](https://www.legislation.gov.uk/uksi/1998/3132/rule/24.2), contending that the funds in escrow remained beneficially owned by the lenders, thereby negating the claimant’s standing. They also argued that the breach of undertaking claims involved complex factual issues unsuitable for summary determination. **Download The PDF Judgment here:** [![](https://lexlaw.co.uk/wp-content/uploads/Manolete-Sampson-judgment-image_Page1-724x1024.jpg)](https://www.bailii.org/ew/cases/EWHC/Ch/2023/37.pdf) ## Key Findings in Manolete Partners Plc v Sampson Coward LLP ### Rejection of Beneficial Ownership Defence Deputy Master Teverson rejected the defendant’s argument that the lenders retained beneficial ownership of the escrow funds, holding that the contractual provisions relating to escrow accounts were ambiguous and complicated by the operation of a single escrow account under the Nero Loan Agreement. This aligns with established insolvency principles that escrow arrangements cannot override the rights of insolvency practitioners and assignees to trace misapplied assets. ### Breach of Undertaking Claims Unsuitable for Summary Disposal The court emphasised that the allegations of unauthorised withdrawals through 37 separate client ledger entries presented a “multi-factorial factual matrix” unsuited to summary judgment. Forensic accounting and detailed factual inquiry were necessary to determine whether payments were authorised or constituted breaches of fiduciary duties under the SRA Accounts Rules 2019. ## Implications of Manolete Partners Plc v Sampson Coward LLP This judgment confirms the judiciary’s reluctance to dispose of complex fiduciary and breach of undertaking claims on summary judgment when significant factual disputes exist. It underscores the importance of escrow agents maintaining strict compliance with their undertakings, especially in insolvency scenarios where creditor interests are paramount. The decision also demonstrates that assignees like [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874) have standing to pursue claims notwithstanding arguments about beneficial ownership by lenders. This supports the viability of litigation funding models in insolvency claims, ensuring that valuable claims are not prematurely dismissed on procedural grounds. For directors and professional advisers, the ruling highlights the risks of inadequate oversight of client accounts and the potentially severe consequences of breaching fiduciary duties. It also signals that courts will look beyond contractual formalities to the substance of transactions and conduct. For more detailed guidance on defending such claims, see our [legal guide to defending Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). ## Defending Manolete Claims Defending against claims assigned by Manolete requires a detailed review of escrow agreements, client account records, and instructions. Legal strategies should focus on challenging beneficial ownership assertions, demonstrating compliance with undertakings, and scrutinising the authorisation and purpose of payments. Forensic accounting evidence is often critical to establish whether payments were legitimate business expenses or unauthorised withdrawals. Limitation arguments and procedural defences under the Civil Procedure Rules may be available but are unlikely to succeed where the factual matrix is complex and contested. Early engagement with specialist [insolvency solicitors](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) experienced in Manolete claims is essential to develop robust defences and manage litigation risk effectively. ## Expert Legal Representation against Claims Brought By Manolete Partners [Our expert team](https://lexlaw.co.uk/our-people/m-ali-akram/) is highly [experienced](https://lexlaw.co.uk/legal-case-assessment/) in defending claims brought by litigation funders such as [Manolete Partners](https://find-and-update.company-information.service.gov.uk/company/07660874). With a deep understanding of the complex nature of litigation funding, we offer strategic, robust legal support to protect your interests. [Our solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) have a proven track record of successfully challenging claims in insolvency and other contentious matters, providing you with tailored solutions to navigate the pressures and complexities of litigation. Whether you are facing legal action from Manolete or another litigation funder, we will work closely with you to develop a strong defence and achieve the best possible outcome for your case. ### FAQ's on Directors' Duties and Manolete Claims: Why is this case significant for insolvency law? It clarifies that courts will not grant summary judgment in complex breach of undertaking claims involving escrow mismanagement and affirms the rights of assignees to pursue such claims despite beneficial ownership arguments. **What constitutes a breach of undertaking by an escrow agent?** Failure to comply with escrow terms, permitting unauthorised withdrawals, or misapplying funds contrary to lender instructions and professional rules constitutes a breach. **How does Manolete’s litigation funding model affect claimants and defendants?** Manolete’s funding enables the pursuit of claims that might otherwise be unaffordable, increasing pressure on defendants to settle or defend claims thoroughly. **What defences are available to directors and firms in similar cases?** Defences include proving compliance with undertakings, challenging standing or assignment validity, demonstrating payments were authorised business expenses, and limitation arguments. **Can shareholders ratify breaches during insolvency?** Generally, no. Once insolvency is imminent or declared, directors’ duties shift to creditors, and shareholder ratification is ineffective. **If my company is dissolved, can Manolete still pursue me personally?** Yes. Manolete may pursue directors personally for historic breaches under statutory provisions like wrongful trading or misfeasance. **Does Manolete’s funding model give them unfair leverage?** While it provides resources, courts maintain procedural safeguards to ensure fairness and do not grant claims without proper evidence. --- # Account Freezing Orders in 2025: Latest Rules & Legal Guide                  Source: https://lexlaw.co.uk/solicitors-london/account-freezing-orders-in-2025-latest-rules-legal-guide/ [Account Freezing Orders (AFOs)](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/) are among the most formidable tools that law enforcement and regulatory bodies in England and Wales wield in the fight against financial crime. In light of the recent High Court ruling in *[HMRC v Xing [2025] EWHC 2057 (Admin),](https://www.bailii.org/ew/cases/EWHC/Admin/2025/2057.html)* practitioners and those impacted require a well-rounded understanding of the current legal framework, process, and tactical considerations. This guide presents an authoritative overview of AFOs in 2025, incorporating recent statutory reforms, [Civil Procedure Rule](https://www.justice.gov.uk/courts/procedure-rules/civil/rules) influences, and emerging case law to support legal professionals, financial institutions, and affected individuals in navigating this terrain. ## Overview: What Is an Account Freezing Order? An Account Freezing Order is a civil remedy, introduced by the **[Criminal Finances Act 2017](https://www.legislation.gov.uk/ukpga/2017/22/contents)**, which inserted [Chapter 3B](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B) (sections 303Z1–303Z19) into the **[Proceeds of Crime Act 2002](https://www.legislation.gov.uk/ukpga/2002/29/contents) (POCA)**. It allows magistrates’ courts to freeze funds held in bank, building society, electronic money, or payment institution accounts, where there is reasonable suspicion that the funds are either recoverable property (i.e., proceeds of crime) or intended for unlawful use (Unlike criminal restraint orders, AFOs operate on the civil standard of reasonable suspicion and do not require criminal proceedings to be underway or concluded. ## Legislative Framework and Key 2025 Updates ### Core Statutory Provisions The statutory basis for AFOs lies in the Proceeds of Crime Act 2002, specifically Chapter 3B, sections 303Z1 to 303Z19. These provisions cover how:       Applications are made ([s.303Z1](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z1/2019-02-12/data.html?)) Authorisation requirements ([s.303Z2](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z2)) Court powers and decision-making ([s.303Z3](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z3)) Procedures for variation or discharge ([s.303Z4](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z4)) Exemptions for living and business expenses ([s.303Z5](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z5)) Forfeiture protocols ([s.303Z9–Z17](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B/crossheading/account-forfeiture-notices-england-and-wales-and-northern-ireland)), and Compensation mechanisms ([s.303Z18](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z18)). ### Significant 2025 Change: Threshold Increase Perhaps the most impactful development in 2025 is the elevation of the **minimum threshold** for applying freezing measures. The **[Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025 (SI 2025/877)](https://www.legislation.gov.uk/uksi/2025/877/made)** raised the threshold from **£1,000 to £3,000**, coming into force on **31 July 2025**. This affects the exemption thresholds in section [339A(2)](https://www.legislation.gov.uk/ukpga/2002/29/section/339A) and [(6A)](https://www.legislation.gov.uk/ukpga/2002/29/section/339A) of POCA, meaning that regulated businesses may operate accounts or pay away funds below £3,000 without committing money laundering. ### Broader Procedural Shifts Though AFOs fall under POCA rather than Civil Procedure Rules (CPR), the sweeping reforms to **[CPR Part 25](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part25)** on **6 April 2025** have influenced the judicial approach to asset preservation and interim remedies, indirectly shaping AFO-related jurisprudence. ### Who May Apply for an AFO? Under section [303Z1(6) POCA](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z1/2019-02-12/data.html?), only specified "enforcement officers" may apply, including officers of HMRC, constables, SFO officers, and accredited financial investigators. Section [303Z2](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z2) stipulates that such applications must be made by or authorised by a “senior officer,” such as senior HMRC or police staff, the Director of the SFO or NCA, or a designated accredited financial investigator. ## The Application Process ### Threshold and Grounds Before applying, enforcement officers must confirm: - The account holds at least **£3,000**. - There are reasonable grounds to suspect the funds are recoverable property or intended for unlawful use. - The order is proportionate to the suspected criminality. ### Jurisdiction & Evidence Applications are made to magistrates’ courts (in England and Wales), sheriff courts (Scotland), or magistrates’ courts (Northern Ireland). Evidence typically includes financial analyses, suspicious transaction patterns, intelligence reports, anti-money laundering records, and investigation findings. ### Without-Notice Applications Section [303Z1(4) POCA](https://www.legislation.gov.uk/ukpga/2002/29/section/303Z1/2019-02-12/data.html?) allows applications without notice where giving notice would prejudice forfeiture steps for instance, where there’s risk of fund dissipation, evidence destruction, flight, or alerting co-conspirators. ### Case Law Highlight: HMRC v Xing (2025) In *[HMRC v Xing [2025] EWHC 2057 (Admin),](https://lexlaw.co.uk/wp-content/uploads/HMRC-v-Xing-2025-EWHC-2057-Admin.pdf)* Mr Justice Sweeting emphasised the necessity for "spotlight-bright" disclosure and detailed witness statements in without-notice applications. The case involved Chinese nationals suspected of running underground banking systems; the court granted freezing orders over approximately £1.4 million. Key lessons include: - The indispensability of comprehensive financial data, - Importance of tracing international fund flows, - Judicial awareness of sophisticated structuring intended to evade detection, - And the imperative of full and frank disclosure. Please find the full judgment below: [![HMRC v Xing [2025] EWHC 2057 (Admin)](https://lexlaw.co.uk/wp-content/uploads/HMRC-v-Xing-2025-EWHC-2057-Admin.png)](https://lexlaw.co.uk/wp-content/uploads/HMRC-v-Xing-2025-EWHC-2057-Admin.pdf)HMRC v Xing [2025] EWHC 2057 (Admin) ### Granting and Managing the Order Under section 303Z3, a court may impose an AFO where satisfied of reasonable suspicion. The order can last up to **two years**, typically prohibits withdrawals or payments, includes exclusions for living or legal expenses and business continuity, and requires that affected individuals receive notice. ### Exclusions - **Living expenses** (s.303Z5(3)(a)): courts typically allow weekly allowances (e.g., £800–£1,500), dependents’ support, rent/mortgage, utilities, council tax, and insurance. - **Legal expenses** (s.303Z5(5)): only reasonable fees up to a specified amount and subject to prior court approval. - **Business continuity** (s.303Z5(3)(b)): allowances for wages, supplier payments, regulatory compliance, and utilities. ### Challenging & Varying AFOs Under s.303Z4 POCA, affected parties may seek to vary or discharge an AFO on grounds such as material non-disclosure, lack of reasonable suspicion, disproportionality, lawful source of funds, or procedural defects. Swift action, robust documentation, financial and expert testimonies, and international evidence coordination are essential tactical steps. ## Forfeiture Procedures ### Two Avenues to Forfeiture - **[Account Forfeiture Notice (AFN)](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/)** under s.303Z9: issued by a senior officer specifying the amount, allowing 30 days for objection before automatic forfeiture. - **Direct court application** under s.303Z14: requires proof on the balance of probabilities that the money is recoverable property or intended for unlawful use. ### Setting Aside Forfeiture Section 303Z12 permits affected parties to challenge forfeiture within 30 days, or later in extraordinary situations. The court must consider whether a forfeiture order under s.303Z14 could have lawfully applied. ### Appeals & Compensation - Appeals go before the [Crown Court (E&W)](https://www.judiciary.uk/courts-and-tribunals/crown-court/), [Sheriff Appeal Court (Scotland)](https://www.scotcourts.gov.uk/courts-and-tribunals/courts-tribunals-and-office-locations/find-us/sheriff-appeal-court/), or [County Court (NI)](https://www.justice-ni.gov.uk/topics/courts-and-tribunals), must be lodged within 30 days (s.303Z16). - Compensation under s.303Z18 may be granted when an order is made but no forfeiture occurs and exceptional circumstances exist. ## Practical Compliance Strategies ### For Financial Institutions - Establish specialist AFO compliance teams and secure legal communication protocols. - Develop systems allowing limited account access under freezing conditions. - Offer clear client guidance and assist with exclusion applications. - Ensure strict compliance with order terms to avoid contempt. ### For Affected Account Holders - Seek specialist legal counsel immediately. - Assemble comprehensive documentation (bank records, employment/tax info, business contracts, and international evidence). - Promptly apply for living expense or business continuity exclusions. - Prepare challenge applications where justified. ### Trends & Emerging Developments [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)’s use of AFOs has intensified, roughly reaching **[2,800–3,200 cases for 2024–25, up from 2,200–2,600 previously](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/)**. Enforcement focuses include tax evasion, underground banking, cryptocurrency, and cross-border money flows. Courts increasingly grapple with digital assets, international cooperation, proportionality, and business disruption factors. Looking ahead, further threshold adjustments, enhanced international enforcement mechanisms, cryptocurrency-specific measures, and streamlined appeals are anticipated. ## Conclusion Account Freezing Orders remain a vital component of the UK’s anti-money laundering arsenal. The 2025 enhancements including the increased £3,000 threshold and procedural modernisation highlight the government’s dual commitment to effectiveness and proportionality. Success in AFO proceedings demands deep statutory knowledge, awareness of evolving case law, and strategic acumen. Courts, as seen in *HMRC v Xing*, are adept at dissecting complex international financial arrangements, while demanding rigorous standards of evidence and disclosure. Proactive legal advice is essential for safeguarding rights and achieving the best outcomes in these time-sensitive proceedings. ### FAQs on Account Freezing Orders (AFOs) What is an Account Freezing Order (AFO)? An Account Freezing Order is a court order that stops you from using money in your bank or business accounts if law enforcement suspects the funds are linked to crime or unlawful activity. Unlike criminal charges, it’s based on civil suspicion and can happen even if you’ve not been accused of a crime. How long can my account stay frozen? An AFO can last for up to two years, but the court may allow access to money for living costs, legal fees, or business expenses during that time. What’s new in 2025 with AFOs? The government increased the threshold from £1,000 to £3,000. This means only accounts with £3,000 or more can now be frozen under the new rules. Can I still access money if my account is frozen? Yes, the court may allow funds for essential living costs (like rent, bills, or family support), legal fees, and certain business expenses. You’ll need to apply for these exclusions through your legal representative. What should I do if I receive an Account Freezing Order? Can an Account Freezing Order be challenged? Yes. You can apply to vary or discharge the order if there was no proper basis for it, if the funds are legitimate, or if it’s disproportionate. Strong financial records and legal representation are essential. Will I lose my money permanently under an AFO? Not necessarily. Freezing doesn’t mean forfeiture. Authorities must prove, on the balance of probabilities, that the money is linked to crime before it can be taken permanently. --- # When will the Court Grant Relief from Sanctions under CPR 3.9 (Civil Litigation)? Source: https://lexlaw.co.uk/solicitors-london/when-will-the-court-grant-relief-from-sanctions-under-cpr-3-9-civil-litigation/ An application for Relief from [Sanctions](https://en.wikipedia.org/wiki/Sanction) pursuant to [CPR](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.9)[ ](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.9)[3.9](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03#3.9) is a procedural [remedy](https://en.wikipedia.org/wiki/Legal_remedy) available to [litigants](https://www.merriam-webster.com/dictionary/litigant) who have failed to comply with a court order, rule or trial deadline. It allows a party to gain relief from the consequences of non-compliance which can be automatic or imposed. Relief is not granted as of right and must be sought promptly, with full and candid disclosure of the circumstances surrounding it. This article provides an analysis of the legal framework governing such applications, explores the judicial approach to granting relief, and offers practical guidance for litigants. [Our experts](https://lexlaw.co.uk/our-people/) advise on all aspects of civil procedure and litigation strategy, including urgent applications for relief from sanctions, and provide [second opinions](https://lexlaw.co.uk/injunctive-relief-interim-remedies-urgent-injunction-freezing-order-second-opinion-litigation-advice/) in contentious procedural matters. ## Compliance and Sanctions under the Civil Procedure Rules The [Civil Procedure Rules (CPR)](https://en.wikipedia.org/wiki/Civil_Procedure_Rules) set out strict requirements for how parties must conduct litigation. This includes following court deadlines, case-management directions and acting in a way that is efficient and proportionate in line with the Overriding Objective enshrined in [CPR 1.1](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part01). Failure to comply inevitably leads to the court imposing sanctions which are often severe in nature. Typical sanctions can include: - Ordering the defaulting party to pay extra [costs](https://en.wikipedia.org/wiki/Costs_in_English_law) - Refusing to allow certain evidence - [Striking out](https://lexlaw.co.uk/solicitors-london/court-of-appeal-overturns-decisions-striking-out-class-action-arising-from-2015-collapse-of-fundao-dam-in-brazil/) the party’s claim or defence Sanctions are designed not merely as penalties; but to ensure that cases are dealt with fairly, expeditiously and at minimum expense. In today’s legal system, following procedural rules is essential. [Courts](https://www.judiciary.uk/structure-of-courts-and-tribunals-system/) now treat procedural discipline just as important as the substantive merits of the case. ## The Governing Test: the Denton principles #### Key Authority: Denton v TH White Ltd [2014] EWCA Civ 906 The criteria followed by the court when judging an application for relief is set out in the landmark judgement of *Denton v TH White Ltd*. The [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) clarified the proper approach in three sequential stages: - *Assess the seriousness and significance of the breach* – Whether the breach has affected the efficient progress of the litigation or the court’s ability to manage its resources. - *Consider the reasons for the default*** – **Examine whether the breach was intentional, negligent, or arose from circumstances beyond the party’s control. - *Consider all circumstances of the case*** – **This particularly includes consideration of – - The need for litigation to be conducted efficiently and at [proportionate cost](https://lexlaw.co.uk/solicitors-london/using-unless-orders-to-force-payment-of-unpaid-costs-orders/); and; - The need to enforce compliance with rules, practice directions, and court orders. ## Promptness and Procedural Rigour The defaulting party’s [promptness](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) in applying for relief is one of the key considerations when the court seeks to decide an application for relief from sanctions. An unexplained or unjustified delay in making the application is a factor that may weigh heavily against the grant of relief. A defaulting party must act immediately upon becoming aware of non-compliance, take steps to remedy the breach, and make the application without delay. Our expert litigators possess extensive experience in mitigating any delays by expeditiously filing the necessary application. ## Judicial Approach to Promptness of the Application See case-example; *[Diriye v. Bojaj [2020] EWCA Civ 1400, [65]](https://lexlaw.co.uk/wp-content/uploads/Diriye-v.-Bojaj-2020-EWCA-Civ-1400-65.pdf)****[,](https://credithirebarrister.com/wp-content/uploads/2020/11/Diriye-v-Bojaj-and-Quick-Sure-Insurance-Limited.pdf)*** “the need to act promptly if a party is or might be in breach of an order is axiomatic”. In this particular example, a two-month delay was considered sufficient enough to substantiate a case against the grant of relief. ## Common Triggers for Sanctions Sanctions are most frequently triggered by failures to comply with procedural deadlines or court orders, which can significantly disrupt the efficient progression of litigation. Typical examples include the late service of witness statements or expert reports, failure to file a costs budget on time, missing deadlines for disclosure, and non-payment of court fees. The key consideration before the court is derived from CPR 3.9 which places enormous importance to the correct use of court resources. In a post-Denton landscape, the court place considerable emphasis on procedural discipline, making it essential for legal representatives to treat compliance as a core professional obligation rather than an administrative afterthought. ## Avoiding the Need for Relief: Practical Steps The best way to deal with procedural sanctions is to avoid them altogether. [With the right planning and support](https://lexlaw.co.uk/our-people/), many issues can be prevented before they arise. Here are some key steps we take on your behalf to reduce the risk of falling foul of court deadlines or procedural rules: - [We](https://lexlaw.co.uk/our-people/) maintain clear and organised case management systems to ensure no key deadlines are missed. - [We](https://lexlaw.co.uk/our-people/) monitor your case closely using a detailed litigation timetable so you always know what’s coming up. - If anything unexpected arises – such as late evidence or delays – we possess the expertise to act promptly and keep the court and the other side informed. Where a breach of procedure becomes unavoidable, our approach is to engage early, act transparently, and take swift steps to limit any negative impact. This often makes a significant difference and avoids more serious potential consequences. ## Relief from Sanctions: How can we help? Relief from sanctions can be a critical turning point in litigation, often determining whether a case proceeds or fails at an early stage. Our firm specialises in advising clients who are either seeking relief or resisting an opponent’s application. With deep knowledge of procedural rules and case law, our [solicitors and barristers](https://lexlaw.co.uk/our-people/) can provide clear, strategic advice on the merits of your position. We prepare robust applications giving you the best chance of success. If you’ve missed a deadline, failed to comply with a court order, or need to rectify procedural missteps, we can help you navigate the complexities swiftly and effectively. We are frequently instructed in high-stakes [litigation](https://lexlaw.co.uk/solicitors-london/high-court-breach-of-rules-when-it-comes-to-expert-advice-litigation-advice/) where procedural issues threaten a client’s case. Our team has a tested recipe for success in reversing adverse orders and protecting clients from the financial and reputational damage that sanctions can cause ## Instruct Expert London Litigation Lawyers The developed test in Denton for gaining relief from a court-imposed sanction has made clear that courts take procedural compliance seriously and the consequences of non-compliance can be severe. If your case has been struck out, a judgement entered against you, or you’re otherwise subject to a court sanction, it is essential to act quickly. [Our team specialises](https://lexlaw.co.uk/contact-us/) in advising clients on urgent applications for relief and defending against tactical sanctions sought by opposing parties. Get in [touch](https://lexlaw.co.uk/contact-us/) with us today to discuss your options and secure experienced legal support tailored to your situation. --- # Manolete Case Study: Court Confirms Misfeasance Claims Procedure (Hybrid Insolvency Applications) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-confirms-misfeasance-claims-procedure-hybrid-insolvency-applications/ This judgment ([Manolete Partners plc v Hayward & Barrett Holdings Ltd & Ors [2021] EWHC 1481 (Ch))](https://www.bailii.org/ew/cases/EWHC/Ch/2021/1481.html) provides important clarification on the limits of using [Insolvency](https://windinguppetitionsolicitors.co.uk/news/) Act applications for so-called “hybrid claims”. The ruling confirms that while liquidators or assignees such as [Manolete Partners](https://lexlaw.co.uk/?s=Manolete) may bring assigned transaction avoidance claims under sections 238 or 239 of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) by Insolvency Application, misfeasance claims under section 212 must be commenced by a [Part 7 claim form](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07). The decision highlights the procedural traps in insolvency litigation funding and underlines the financial consequences of issuing proceedings incorrectly. This case sits at the intersection of [directors’ duties](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/) claims, the assignment of insolvency actions under the [Small Business, Enterprise and Employment Act 2015](https://www.legislation.gov.uk/ukpga/2015/26/contents), and the practicalities of [winding-up petitions](https://windinguppetitionsolicitors.co.uk/news/) involving multiple connected companies. [Legal expertise](https://lexlaw.co.uk/our-people/) is essential when facing claims issued by litigation funders such as [Manolete Partners](https://lexlaw.co.uk/?s=Manolete). ## Case Background The dispute arose following the collapse of Blackwater Plant Limited, a plant hire business that entered creditors’ [voluntary liquidation](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/) on 17 August 2018. On the same day, its primary trading partner Hayward & Barrett Ltd was also placed into voluntary liquidation. Both companies were closely linked through their [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/), Daniel and Steven Frost, who also acted as directors of the holding company Hayward & Barrett Holdings Ltd. At the [creditors’](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/supreme-court-on-the-creditor-duty-owed-by-directors-to-the-companys-creditors/) meeting, Mr Clark was appointed [liquidator](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/top-brands-limited-ors-v-sharma-ors-2014-ewhc-2753-ch/) of Blackwater, later joined by Mr Renshaw. The liquidators began investigating antecedent transactions and identified a series of payments and asset disposals that, they alleged, significantly disadvantaged [creditors](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/supreme-court-on-the-creditor-duty-owed-by-directors-to-the-companys-creditors/). Among the claims advanced were: - Unsecured credit of £680,000 advanced by Blackwater to Hayward & Barrett, said to be irrecoverable. - Transfers of valuable assets, including heavy plant equipment valued at £535,500 and vehicles worth £74,835, allegedly surrendered without proper consideration. - [Preferential payments](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/) to connected entities, including H&B and Holdings, in breach of section 239 Insolvency Act 1986. To maximise recoveries for [creditors](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/winding-up-petition-timeline-what-creditors-and-debtors-need-to-know-in-2025/), the joint liquidators entered into an assignment agreement with [Manolete Partners](https://lexlaw.co.uk/?s=Manolete) plc on 3 September 2019 under section 246ZD [Insolvency Act 1986.](https://www.legislation.gov.uk/ukpga/1986/45/contents) This permitted Manolete, as litigation funder, to pursue statutory transaction avoidance claims (such as preferences and undervalue transactions) and company law claims for [breaches of duty](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-orders-director-to-repay-0-92m-directors-insolvency-duty-breach/), fraud, and misfeasance. However, the legal mechanism chosen to commence proceedings became central to the dispute. Instead of issuing a [Part 7 claim](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07) in the [Business and Property Courts](https://www.gov.uk/courts-tribunals/the-business-and-property-courts), [Manolete](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-refuses-summary-judgment-in-2m-escrow-breach-claim-breach-of-undertaking/) sought to bring the entirety of its case, including both statutory avoidance claims and section 212 misfeasance allegations, by way of an Insolvency Application under rule 1.35 [Insolvency Rules 2016](https://www.legislation.gov.uk/uksi/2016/1024/contents). The directors challenged this approach, arguing that [Manolete](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-to-repay-misappropriated-0-5m-fiduciary-duty-breach/) lacked standing to bring section 212 claims through an Insolvency Application, as such applications are reserved to liquidators, official receivers, creditors, or contributories. The issue before Chief ICC Judge Briggs was whether [Manolete’s](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-refuses-summary-judgment-in-2m-escrow-breach-claim-breach-of-undertaking/) hybrid claim was procedurally valid and, if not, whether the court could cure the defect. The director’s timely response rightly highlights the importance of [engaging expert lawyers](https://lexlaw.co.uk/legal-case-assessment/) who are well versed in [Insolvency Litigation](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/winding-up-petition-timeline-what-creditors-and-debtors-need-to-know-in-2025/). ## View The PDF Judgment below: [![](https://lexlaw.co.uk/wp-content/uploads/1481-1-725x1024.png)](https://www.bailii.org/ew/cases/EWHC/Ch/2021/1481.pdf) ## Key Findings in Manolete v Hayward & Barrett Holdings Ltd ### Distinction Between Assignable and Non-Assignable Claims The judgment carefully analysed which claims may be assigned under [section 246ZD Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/246ZD). Judge Briggs confirmed that transaction avoidance provisions, such as sections 238 (transactions at undervalue) and 239 (preferences), can be assigned by [liquidators](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/top-brands-limited-ors-v-sharma-ors-2014-ewhc-2753-ch/) to third parties like [Manolete](https://lexlaw.co.uk/?s=Manolete). These claims form part of the insolvent company’s property and fall squarely within the legislative framework introduced by the [Small Business, Enterprise and Employment Act 2015.](https://www.legislation.gov.uk/ukpga/2015/26/contents) However, he drew a sharp distinction when it came to [section 212](https://www.legislation.gov.uk/ukpga/1986/45/section/212) misfeasance proceedings: “As a matter of standing, section 212 does not permit an application to be made by the Applicant or Blackwater. The Applicant is not a creditor or contributory.” ([para 48]). In other words, misfeasance claims tied to directors’ conduct of the company cannot simply be packaged with avoidance claims in an Insolvency Application. We routinely [advice](https://lexlaw.co.uk/legal-case-assessment/) directors facing [Insolvency proceedings](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/) as to their rights. ### Rejection of “Established Practice” Arguments [Manolete](https://lexlaw.co.uk/?s=Manolete) argued that in practice, the [Insolvency and Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) frequently permitted hybrid claims to proceed together for procedural convenience, avoiding duplication of costs and inconsistent case management. Counsel relied on older authorities such as *Re Clasper Group Services Ltd* and *TSB Bank plc v Katz* to argue that such applications had long been tolerated. Judge Briggs rejected this: “I reject the submission that the Insolvency and Companies Court has an established practice that overrides the Rules. If I am wrong as to that, such a practice cannot prevail in the teeth of the statutory framework.” ([para 55]). This was a clear warning that even long-standing practice cannot circumvent the strict wording of the [Insolvency Act](https://www.legislation.gov.uk/ukpga/1986/45/contents) and [Civil Procedure Rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07). ### Court’s Discretion and Costs Sanction While the misfeasance claims should technically have been issued under a [Part 7 claim form](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07), the court accepted that the defect was procedural rather than jurisdictional. Judge Briggs therefore exercised discretion under [CPR 3.10](v) to regularise the proceedings, but only on condition that [Manolete](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-rejects-escrow-defence-in-2m-solicitor-breach-claim-solicitor-undertakings-in-insolvency-disputes/) paid the significantly higher Part 7 issue fee: “In the circumstances of this case an appropriate condition is to order payment of the prevailing court fee for issuing a Part 7 Claim within 7 days of the handing down of this judgment.” ([para 59]). This pragmatic solution avoided striking out the claim entirely but underscored the financial risk of adopting the wrong procedure. However, with [expert legal submissions](https://lexlaw.co.uk/our-people/), a strike-out may have been possible. ## Implications of Manolete v Hayward & Barrett Holdings Ltd This ruling has several key implications for insolvency practitioners, funders, and directors alike. First, it confirms that procedural compliance is as important as substantive grounds. Even strong claims for [breach of duty](https://lexlaw.co.uk/solicitors-london/hunt-v-balfour-lynn-no-breach-of-duty-for-directors-entering-into-a-tax-avoidance-scheme/) can be delayed, fragmented, or made more costly if issued incorrectly. For [directors facing claims](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/), this offers a line of defence: procedural challenges may create leverage in negotiations if tackled correctly by [legal experts](https://lexlaw.co.uk/legal-case-assessment/). Second, the case demonstrates the courts’ commitment to maintaining statutory boundaries. While judges have discretion under [CPR 3.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03) to correct procedural irregularities, they will not condone practices inconsistent with the [Insolvency Act](https://www.legislation.gov.uk/ukpga/1986/45/contents) or [Insolvency Rules](https://www.legislation.gov.uk/uksi/2016/1024/contents). Directors and their advisers should take confidence that “shortcuts” will not automatically succeed, even when advanced by well-resourced funders. Third, the decision raises broader questions about access to justice in [insolvency litigation](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/). By requiring Part 7 issue fees for certain claims, the courts increase the upfront cost of pursuing directors, potentially deterring weaker or marginal cases. This acts as a filter, ensuring only claims with realistic prospects and sufficient funding proceed. Finally, it reinforces the importance of [specialist legal advice](https://lexlaw.co.uk/our-people/). As shown in our [legal guide](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) to defending claims from [Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/), directors who seek early advice from experienced insolvency solicitors can exploit procedural weaknesses in claims to reduce liability or negotiate more favourable settlements. ## Defending Manolete Director Claims The case illustrates that procedural scrutiny and [timely legal advice](https://lexlaw.co.uk/legal-case-assessment/) can significantly shape the trajectory of [Manolete-funded claims](https://lexlaw.co.uk/?s=Manolete). Defendants should not assume that once a claim is issued, it is procedurally watertight. By [engaging expert solicitors](https://lexlaw.co.uk/?s=Manolete) in directors’ duties claims, directors may expose fundamental weaknesses in claimants’ standing, assignment, or procedural route. Practical defence strategies include: - **Forensic accounting analysis****,** testing whether alleged “irrecoverable debts” were commercially rational rather than negligent or unlawful. - **Challenging standing**, particularly for [section 212](https://www.legislation.gov.uk/ukpga/1986/45/section/212) claims, which cannot be assigned wholesale to litigation funders. - **Highlighting procedural errors**, as occurred here, where misfeasance claims should have been issued by [Part 7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07). - **Leveraging settlement dynamics**, given that additional costs (such as the Part 7 fee) may weaken [Manolete’s](https://lexlaw.co.uk/?s=Manolete) negotiating position. This measured approach often proves decisive, particularly where defendants face simultaneous allegations of undervalue transactions, preferences, and misfeasance. By targeting the structure of the claim itself, directors can level the playing field against well-funded adversaries. If you are facing a claim by a litigation funder such as [Manolete](v), [contact now](https://lexlaw.co.uk/contact-us/) for [expert legal advice](https://lexlaw.co.uk/our-people/)! ### FAQ on Directors Duties Cases **Why is this case significant for insolvency law?** It clarifies the limits of claim assignment under section 246ZD Insolvency Act 1986. While transaction avoidance claims can be assigned and pursued by litigation funders, misfeasance claims under section 212 remain tied to the liquidator’s office. This narrows the scope of hybrid claims often seen in *winding-up petitions*. **What constitutes a transaction at undervalue?** Under section 238 Insolvency Act 1986, a transaction at undervalue occurs where a company disposes of assets for no consideration or for significantly less than their market value. In this case, machinery worth £535,500 was allegedly surrendered without proper consideration, an archetypal undervalue allegation. **How does this affect litigation funders?** Funders like [Manolete Partners](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners/?utm_source=chatgpt.com) may face additional procedural costs when claims must be split between Insolvency Applications and Part 7 proceedings. This could affect case selection and settlement strategy. **What defences are available to directors in similar cases?** Directors can argue commercial justification, reliance on professional advice, or that the company was not insolvent at the relevant time. They may also challenge standing, as in this case, where Manolete lacked authority to bring section 212 claims by application. **Can shareholders ratify breaches during insolvency?** Once insolvency is established, creditor interests take precedence under section 172(3) Companies Act 2006. Shareholder ratification cannot override statutory duties to creditors, nor can it prevent liquidators or funders from pursuing recovery. --- # Manolete Case Study: Directors Found Liable for Misfeasance and Dishonest Assistance (Breach of Insolvency Duties) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/ This judgment ([Manolete Partners Plc v Nag & Anor [2022] EWHC 153 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf)) demonstrates the uncompromising approach the [courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) adopt when directors divert company assets away from creditors once [insolvency](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/) becomes unavoidable. The case, brought by litigation funder [Manolete Partners](https://lexlaw.co.uk/?s=Manolete), highlights how directors and even connected family members can face personal liability for misfeasance, dishonest assistance, and knowing receipt. It underlines the importance of early legal advice from [specialist solicitors](https://lexlaw.co.uk/contact-us/) when financial distress arises and transactions are under scrutiny. ## Background to the Director Misfeasance Case Quore Ltd, a telecommunications company founded in the mid-2000s, faced growing financial pressures by 2012. Its [director](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/), Ronojoy Nag, had pursued an aggressive “buy and build” strategy, acquiring businesses whose customers held contracts with O2 and moving them to Vodafone in order to generate commissions. However, Quore was already struggling to meet liabilities, including a significant loan from Vodafone itself. By late 2012, Quore was [insolvent](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/) on both a cash-flow and balance-sheet test. The company owed over £200,000 to Vodafone, a further** **£300,000 to the Leahy family (sellers of Bridgwater Communications), and substantial sums to [HMRC](https://taxdisputes.co.uk/hmrc-tax-investigations/) (eventually proving for more than £450,000 in liquidation). Despite this, Mr Nag engaged in a complex restructuring designed not to protect [creditors](https://taxdisputes.co.uk/2021/07/hmrc-steps-up-tax-debt-collection-winding-up-petition-statutory-demand-advice/), but to extract value for himself and his wife, Amanda Nag. The key transaction occurred in March 2013. Quore’s business was transferred to Quore Technologies Ltd (“QTL”), an effectively dormant company controlled by the Nags, and then on-sold to Evolve Telecom Ltd. The transaction was structured so that: - £650,000 was paid by way of a loan to QTL (purportedly to repay a debt to Quore); and - £817,430 was paid to Mr and Mrs Nag personally for their shares in QTL. Of the £1.26 million consideration, only a fraction ever reached Quore’s [creditors](https://taxdisputes.co.uk/2021/07/hmrc-steps-up-tax-debt-collection-winding-up-petition-statutory-demand-advice/). Substantial sums were instead paid directly into Mr Nag’s personal account, transferred to connected companies such as Q London Ltd, and even used to repay family members. Quore was [wound up](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/) compulsorily in 2015, and the liquidator assigned all claims to [Manolete Partners Plc](https://lexlaw.co.uk/?s=Manolete). The [litigation funder](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/) then brought proceedings against Mr Nag for misfeasance and against Mrs Nag for dishonest assistance and knowing receipt. **View the PDF Judgment below:** [![insolvency directors duties lawyer solicitor barrister defence london ](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-v-Ranojay-Nag-and-Amanda-Nag.png)](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Nag-Anor.png) ## Key Findings in the Manolete Partners Plc Director's Misfeasance Case ### Was there a Breach of Fiduciary Duties? Deputy [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) Judge David Halpern QC was unequivocal in his findings against Mr Nag. At paragraph [[64]](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf) he held: > “Mr Nag signed accounts which admitted that Quore was insolvent on the balance-sheet test and he admitted in cross-examination that he knew this to be the case.” The court found that Nag was aware Quore was [insolvent](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/winding-up-petition-timeline-what-creditors-and-debtors-need-to-know-in-2025/) on both cash-flow and balance-sheet tests by late 2012. Despite this, he structured a sale which diverted over £1.26m away from creditors and into his and his wife’s pockets. At [[70]](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf), the judge concluded:                                                                              > “Mr Nag knew, when he signed the agreements on 28 March 2013, that the entire consideration for the sale of Quore’s business should have been paid to Quore, that Quore was insolvent, and that it was contrary to the interests of its [creditors](https://windinguppetitionsolicitors.co.uk/insolvency-lawyers-london/winding-up-petition-timeline-what-creditors-and-debtors-need-to-know-in-2025/) that any part of the payment should not be paid to Quore. He committed a [breach of fiduciary duty](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-to-repay-misappropriated-0-5m-fiduciary-duty-breach/) in signing documents which diverted a significant part of the purchase price to himself and his wife.” ### Preference of Vodafone One striking element was Nag’s decision to repay Vodafone’s £203,253 loan ahead of all other creditors, motivated by his personal guarantee. The court held this was an [unlawful preference](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/), stating at [[72]](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf): “Mr Nag’s duty as director of an insolvent company was to consider the interests of creditors as a class. He committed a breach of that duty by making this payment which was not in the interests of the creditors as a class, whether or not it amounted to a preference under section 239.” ### Misleading the Court and Misuse of Bank Details The court also found Nag had deliberately supplied solicitors with the bank account details of a different company (Q London), leading to £446,746 being misapplied. Judge Halpern QC described Nag as “a thoroughly unsatisfactory and unreliable witness” [[47]](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf) and concluded his claim of error was “plainly a lie” [[50].](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf) ### Was the Director found Liable for Dishonest Assistance? Although Amanda Nag was not actively running the business, she signed documents and authorised the transfer of her share of sale proceeds into her husband’s account. The judge accepted she was not inherently dishonest but found her conduct met the test for dishonest assistance. At [[89]:](https://www.bailii.org/ew/cases/EWHC/Ch/2022/153.pdf) “Her approach was to refrain from considering whether it was right or wrong but simply to do whatever her husband asked. This amounts to wilful blindness, which is not the way that an ordinary decent person would have behaved in the circumstances of this case.” Accordingly, she was held liable for dishonest assistance and knowing receipt, making her accountable for £1.26m. ## What are the Implications for Directors of Insolvent Companies? The decision has wide-ranging implications for [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-orders-director-to-repay-0-92m-directors-insolvency-duty-breach/) and connected parties. First, it reaffirms that [directors’ duties](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/) shift decisively towards creditors once [insolvency](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/) is probable.** **Even if transactions are formally documented, courts will scrutinise substance over form. Attempts to extract value for shareholders or family members will be unwound. Second, it highlights that connected parties such as spouses are not immune. Where they sign documents or benefit from misapplied funds, liability may follow under doctrines of dishonest assistance or knowing receipt. This expands the risk profile for family members of [directors](https://windinguppetitionsolicitors.co.uk/overdrawn-director-loan-account-insolvency-companies-act-liquidator-misfeasance-proceedings-representation-advice/) in distressed companies. Third, it shows the effectiveness of litigation funders such as [Manolete Partners](https://lexlaw.co.uk/?s=Manolete), who take assignments of claims from liquidators. Creditors benefit because funders can pursue complex and costly litigation that an insolvent estate cannot otherwise afford. For directors, this means aggressive and well-resourced claimants are often on the other side. Finally, the judgment reinforces broader insolvency law trends. Courts consistently disregard technical defences and focus on whether transactions [prejudiced creditors](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/). As seen in similar directors’ duties litigation, judges will pierce through contrived structures and prioritise equitable outcomes. At this juncture, it is absolutely essential to engage [specialist solicitors](https://lexlaw.co.uk/?s=Manolete) who are well-versed in director’s duties. ## Defending Manolete Director Claims Directors facing claims backed by [Manolete or other funders](https://lexlaw.co.uk/?s=Manolete) must act decisively. As our [legal guide to defending claims from Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) explains, early engagement with [specialist solicitors](https://lexlaw.co.uk/our-people/) is crucial. In practice, defences may involve forensic accounting to demonstrate that transactions were commercially justifiable, not undervalue transfers. For example, directors may argue that payments constituted repayment of legitimate loans or genuine remuneration. Proper contemporaneous records are vital to sustaining such arguments. Another [expert defence](https://lexlaw.co.uk/our-people/) is to challenge the liquidator’s or funder’s characterisation of [insolvency](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/). Timing matters: if insolvency can be shown to have arisen later, the duty to prioritise creditors may not yet have crystallised. [Expert](https://lexlaw.co.uk/our-people/) financial evidence is often decisive. For spouses or family members accused of dishonest assistance, the key is to demonstrate lack of knowledge and absence of benefit. Evidence of independent [legal advice](https://lexlaw.co.uk/our-people/), arm’s length dealings, or absence of involvement in company decision-making can help rebut liability. At [LEXLAW](https://lexlaw.co.uk/our-people/), our [company insolvency litigation solicitors](https://lexlaw.co.uk/our-people/) have successfully [defended directors](https://lexlaw.co.uk/?s=Manolete) accused of misfeasance, wrongful trading, and preference claims. We understand the aggressive tactics often used by [Manolete](https://lexlaw.co.uk/?s=Manolete) and can deploy procedural tools, such as applications to strike out weak claims or to compel better particulars. Proactive defence also opens up opportunities for negotiated settlements. [Funders](https://lexlaw.co.uk/?s=Manolete) are commercially driven; demonstrating a robust defence can often lead to significantly reduced settlements or discontinuance. As we have seen in defending directors against [wrongful trading](https://professionalnegligenceclaimsolicitors.co.uk/) allegations, timing, tactics and [expertise](https://lexlaw.co.uk/practice-areas/) often determine the outcome. [Contact](https://lexlaw.co.uk/contact-us/) now for [tailored legal advice](https://lexlaw.co.uk/contact-us/)! ### FAQs Why is this case significant for insolvency law? It illustrates that both directors and connected third parties can be held liable for misapplied funds, ensuring that creditors’ interests remain paramount. What constitutes a transaction at undervalue? Under s.423 Insolvency Act 1986, this includes any transaction where the company receives significantly less value than it provides, often scrutinised when connected parties are involved How does this affect litigation funders? Funders such as Manolete are emboldened by such rulings, as they confirm courts’ willingness to entertain wide-ranging claims. This strengthens their negotiation leverage. What defences are available to directors in similar cases? Directors may rely on evidence of commercial justification, proper documentation, or lack of knowledge by third parties. Legal advice at the earliest stage is critical. Can shareholders ratify breaches during insolvency? No, once insolvency is present, directors’ duties are owed to creditors, not shareholders, and shareholder ratification does not excuse misfeasance. If my company is dissolved, can Manolete still pursue me personally for historic transactions? Yes, claims under s.212 and s.423 can be brought even after dissolution, as liability attaches to the individual, not the corporate shell. Does Manolete’s litigation funding model give them unfair leverage in negotiations? While funders have resources, defendants with expert representation can neutralise this advantage. Courts also scrutinise costs to avoid oppression. Can I argue that repaying a claim would indirectly benefit me as a shareholder, reducing my liability? No, courts reject arguments of indirect benefit when creditor losses are outstanding. Liability is measured by the harm to creditors. --- # Success: Defence of Manolete Director Repayment Claim Source: https://lexlaw.co.uk/solicitors-london/director-successfully-defends-101k-manolete-repayment-claim/ The High Court dismissed Manolete Partners Plc’s claim against former One Legal Services CEO Trevor Howarth for alleged preferential payments totalling £101,000, finding that the director acted in good faith and responsibly when repaying his loan account during the firm’s CVA and subsequent administration. Judge Barber held there was no breach under sections 238 or 239 of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents). *This recent judgment (Manolete Partners Plc v Trevor Howarth EWHC 2294 (Ch)) is a vital reference point for directors involved in insolvency litigation, especially where claims relate to director loan repayments and alleged “salary swap” arrangements. Judge Barber clarified the evidential burden facing litigation funders like Manolete seeking recovery of preference payments, and reinforced the principles that govern creditor priority under UK insolvency law. The outcome demonstrates how assignee claims may falter when directors meticulously document advice and decision-making. Practitioners should note how arguments under the Insolvency Act 1986 are tested by factual matrices and contemporary documents, echoing findings seen in other Manolete cases and director claim guides on preference transactions. For directors facing similar proceedings, timely expert advice from [UK insolvency solicitors](https://lexlaw.co.uk/legal-case-assessment/), can be the difference between success and substantial financial risk.* ## Case Background One Legal Services, led by Trevor Howarth and co-director Jason Lartey, operated a centralised legal service model primarily in criminal legal aid. Following the troubled acquisition of Kaim Todner Solicitors, One Legal was forced into a [Company Voluntary Arrangement (CVA)](https://www.gov.uk/company-voluntary-arrangements#:~:text=If%20your%20limited%20company%20is,Individual%20Voluntary%20Arrangement%20(%20IVA%20).) to avoid winding-up after severe cashflow stress and mounting [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) debts. At entry, Howarth’s director’s loan stood at £97,445 plus interest. On the advice of insolvency supervisor Robert Adamson, Howarth swapped monthly salary payments for director loan repayments to reduce [PAYE](https://taxdisputes.co.uk/paye-tax-investigation-disputes/) and [NIC](https://www.gov.uk/national-insurance) obligations, aiming to salvage the firm's solvency and operational capacity. After Adamson’s untimely death, administrator Mike Kienlen assigned recovery claims against Howarth to Manolete Partners Plc, a leading UK insolvency litigation funder, forming the basis for the present claim. Please find the full judgment below: [![Manolete Partners Plc v Trevor Howarth EWHC 2294 (Ch)](https://lexlaw.co.uk/wp-content/uploads/Cover-MANOLETE-PARTNERS-PLC-v-TREVOR-HOWARTH-1.png)](https://lexlaw.co.uk/wp-content/uploads/MANOLETE-PARTNERS-PLC-v-TREVOR-HOWARTH.pdf)Manolete Partners Plc v Trevor Howarth EWHC 2294 (Ch) ## Key Findings in Manolete Partners v Howarth ### Documentary Evidence and Good Faith Judge Barber (at para 204) found: “On the evidence which I have heard and read, I am satisfied that the Company, acting by the Respondent, made all the Payments in good faith, for the purpose of carrying on its business and with reasonable grounds at the time for believing that the transactions would benefit the Company.” Detailed file notes, invoices, and contemporaneous communications supported the defence, and judicial scrutiny exposed significant gaps in Manolete’s evidential presentation. ### Judicial Critique of Claimant’s Investigation At para 177, the Judge held: “Mr Kienlen (and through him the Applicant) could have disclosed a full set of…meeting notes…in Armstrong Watson’s possession or control but declined to do so, notwithstanding the heightened importance…in light of Mr Adamson’s unfortunate sudden death. Such documentation is in my judgment ‘conspicuous by its absence’.” ### No Preference or Undervalue Found Concluding at para 212: “In relation to the preference claim, the Applicant has failed to establish a preference in fact; and even if I am wrong, … the presumption of desire to prefer has been rebutted… In relation to the transaction at an undervalue claim, the Applicant has failed to establish a transaction at an undervalue…even if the Applicant had been able to establish a small undervalue, the s.238 claim would still fail by virtue of [s.238(5)](https://www.legislation.gov.uk/ukpga/1986/45/section/238).” Judge Barber accepted the defence’s evidence that repayments mirrored net salary and were lower, thus conferring no personal enrichment. ### Director’s Duties Judiciously Applied Notably, para 214 stated: “The Respondent has at all material times acted responsibly and with integrity as a director... He reasonably relied on Mr Adamson’s advice…motivated only by a wish to save the Company the PAYE and NIC that would otherwise have been payable on his salary.” The judgment is built on neutrality and the UK court tradition of weighing both intention and factual benefit. ## Implications of Manolete v Howarth This case is a affirmation of documentary primacy and the limits of technical claims pursued by assignees under the Insolvency Act 1986. The judgement amplifies trends in UK insolvency litigation, notably that courts will look beyond superficial breaches to the substantive commercial realities faced by directors. Directors relying on specialist advice, especially where incentives align with creditor interests, stand on solid ground, provided they can account for all decisions with contemporaneous records. [Recent Manolete cases](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-successfully-defends-849k-additional-sales-claim-evidential-burden-in-insolvency-claims/) demonstrate courts’ reluctance to penalise directors for honest errors or financial management that demonstrably prioritises creditor recovery. For insolvency funders (such as Manolete), the decision underscores the importance of rigorous fact-gathering and highlights the risk of adverse findings and cost exposure should claims lack robust evidential support. The trend of courts scrutinising assignments, as in winding-up petitions and professional negligence disputes, should inform settlement posture and disclosure strategies for both sides. Practitioners and directors alike should remain alert to shifting standards in the assessment of director’s loan transactions, especially when advice from insolvency professionals interplays with CVA outcomes. [Analysis](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-rejects-escrow-defence-in-2m-solicitor-breach-claim-solicitor-undertakings-in-insolvency-disputes/) from LexLaw’s practice area guides such as those on defending directors claims and director’s loan liabilities, illuminate how tactical defence and negotiation can alter outcomes. ## Table: Comparative Outcomes — Recent Manolete-Funded Director Claims | **Director** | **Case Reference** | **Claim Amount** | **Defence Basis** | **Outcome** | | ------------ | ------------------ | ---------------- | ----------------- | ----------- | | Trevor Howarth | EWHC 2294 (Ch) | £101,000 | Salary swap/loan advice, full disclosure | Claim dismissed | | [Ebrahim Dalal](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-successfully-defends-849k-additional-sales-claim-evidential-burden-in-insolvency-claims/) | EWHC 1234 (Ch) | £849,278 | Evidential burden, reliance on accountants | Claim dismissed | | [Norman Freed](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-orders-director-to-repay-0-92m-directors-insolvency-duty-breach/) | 2019 | £918,590 | Preferential payment, disputed enrichment | Director ordered to repay | ## Defending Manolete Director Claims To defend against Manolete-funded proceedings, directors must undertake forensic accounting and obtain expert opinions to counter undervalue or preference allegations Gathering all contemporaneous instructions, board minutes and transaction records is paramount  as courts emphasise these over retrospective explanations. Engaging independent UK insolvency solicitors at the earliest stage can uncover procedural or evidential inconsistencies in funder claims, while also leveraging ADR or mediation for tactical advantage. In disputed director’s loan scenarios, forensic review of payment characterisation (loans vs salary/dividends) and tax treatment will be critical; authoritative expert analysis is often needed to refute claims based on reconstructed accounts or missing documentation. Experienced advisers can challenge cost escalation and inappropriate inferences drawn from incomplete disclosure, securing optimal case outcomes or settlements for directors and shareholders. For more guidance see [Legal Guide to Defending Claims from Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). ### Frequently Asked Questions **What constitutes a transaction at undervalue?** A transaction at undervalue typically involves the company transferring assets for less than reasonable consideration, or as a gift. This case confirmed courts will scrutinise actual consideration with reference to contractual entitlements (loan repayments vs salary), and will dismiss claims if commercial justification is evident. **What defences are available to directors in similar cases?**  Directors may rely on documented advice from insolvency professionals, board resolutions, and full transparency in contemporaneous records, as well as external evidence from accountants or payroll providers.  **Can shareholders ratify breaches during insolvency?** Shareholder ratification is generally ineffective once a company is insolvent, as directors' duties shift to prioritise creditors. Breaches at this stage are scrutinised under Insolvency Act provisions. If my company is dissolved, can I still be pursued personally for historic transactions? Yes, assigned claims can survive dissolution if the office-holder assigns rights before the company's removal from the register. Directors remain exposed to clawback claims for preferences and transactions at undervalue, even years after company closure. This makes early legal advice crucial. --- # Manolete Case Study: Director Liable for Misapplied Company Funds (Transactions at Undervalue & Preferences) Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-liable-for-misapplied-company-funds-transactions-at-undervalue-preferences/ This judgment (Re [BSS LED [R&D] Ltd [2024] EWHC 1636 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf)) reinforces directors’ obligations under [section 172 of the Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/section/172) to prioritise creditor interests when insolvency is probable. The ruling, pursued by litigation funder [Manolete Partners](https://lexlaw.co.uk/?s=Manolete), illustrates the risks directors face where assets are diverted to connected entities, contrary to [sections 238](https://www.legislation.gov.uk/ukpga/1986/45/section/238)–[239 of the Insolvency Act 1986.](https://www.legislation.gov.uk/ukpga/1986/45/section/239) As seen in similar directors’ duties claims, courts will not hesitate to impose personal liability for misapplied funds. Businesses facing [financial distress](https://lexlaw.co.uk/solicitors-london/director-successfully-defends-101k-manolete-repayment-claim/) should seek urgent advice on [winding-up petitions](https://lexlaw.co.uk/solicitors-london/case-study-abusive-hmrc-winding-up-petition-defeated/) or restructuring to mitigate exposure. This case demonstrates how [Manolete](https://lexlaw.co.uk/solicitors-london/director-successfully-defends-101k-manolete-repayment-claim/) utilises its funding model to pursue aggressive recovery actions against directors. [Expert legal guidance](https://lexlaw.co.uk/our-people/) at this [critical juncture](https://lexlaw.co.uk/legal-case-assessment/) is absolutely necessary. ## Case Background [BSS LED [R&D] Limited](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf) was incorporated in 2010 as Building Software Solutions Ltd and later rebranded to focus on LED lighting. Initially, the company traded by importing lighting products from China, but quality issues led it to shift towards manufacturing in the UK. To support this, the business relocated to Northumberland in 2014, benefitting from a Regional Growth Fund grant. However, the location proved commercially disadvantageous due to poor accessibility and limited workforce availability. By 2017, the business returned to Manchester in an attempt to stabilise operations, though production inefficiencies cost an estimated £250,000. Despite these efforts, [BSS](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf) faced sustained financial pressure. The company relied heavily on a factoring facility with Lloyds Bank, which was terminated in 2018 after disputes regarding cash allocations. This termination critically impaired cash flow, and by 2019 the company ceased trading, transferring employees and stock to a related entity, BSS LED Manufacturing Ltd. When liquidation followed in November 2019, a deficiency of £961,532 was recorded in the statement of affairs. The liquidator, Ms Claire Dwyer, later assigned claims against the director and related companies to [Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) in January 2021. The claims covered breaches of fiduciary duty, asset transfers at undervalue, preferences under [sections 238](https://www.legislation.gov.uk/ukpga/1986/45/section/238) and [239 Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/239), and unjust enrichment. [Manolete](https://lexlaw.co.uk/?s=Manolete) initiated proceedings against Mr Steven Bell, his sons, and connected companies, although the case ultimately proceeded only against Mr Bell. The trial was heard before [ICC Judge Mullen](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf) in March 2024, with judgment delivered in June 2024. **Read the Judgment Below: ** [![](https://lexlaw.co.uk/wp-content/uploads/Judgment-Cover-Page.jpg)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf) ## Key Findings in Re BSS LED [R&D] Ltd [2024] ### Insolvency Established Early ICC Judge Mullen held that BSS was insolvent by April 2018. The Court dismissed Mr Bell’s explanations that non-payment of rent and supplier invoices was “strategic,” instead finding: *“The contemporaneous documents are consistent with a company that was struggling financially and trying to meet its rent obligations until it was unable to do so”* [(para 42)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf). This finding was central, as directors’ duties shift towards creditors once [insolvency](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) is probable. ### Sale of Equipment at Undervalue In July 2018, BSS sold equipment to MSV Engineering Ltd for £55,000. Evidence in a subsequent lease valued the equipment at approximately £120,000. Judge Mullen concluded: *“I am satisfied that the equipment had a value of at least £120,000… On balance, I am satisfied that the equipment was disposed of at an undervalue of £65,000”* [(para 64)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf). This illustrated both a breach of fiduciary duty and a transaction at undervalue under [s.238 Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/238). ### Transfers to Connected Companies Between October 2018 and June 2019, BSS transferred over £143,000 to BSS LED Manufacturing Ltd. Mr Bell claimed these were reimbursements, but the Court disagreed: *“The only inference that I can draw is that they represented an attempt to transfer monies out of BSS and into the company that was to carry on the business formerly carried on by BSS”* [(para 68)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf). The Court held these were either preferences or misfeasance, rendering Mr Bell personally liable. ### Stock and Office Equipment Transfers The company transferred stock and office equipment worth £138,680 to Manufacturing without payment. Mr Bell argued this was part of contra transactions, but the Court found no evidence of offsetting liabilities. Judge Mullen concluded this was another attempt to strip assets: *“It was a breach of Mr Bell’s duty to consider the interests of creditors not to secure payment for the transfer… In the event the company ended up with neither the equipment nor the purchase monies”* [(para 69)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf). ### Improper Personal Payments Mr Bell extracted nearly £100,000 from BSS between April and November 2018, with only partial repayments. The balance left him owing £50,712.24. He claimed these were dividends and salary, but the Court found no contractual entitlement to remuneration. Judge Mullen stated: *“I am satisfied that there was no entitlement and the payments were made to Mr Bell in breach of duty”* [(para 73)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf). ### Family and Personal Benefits Additional liabilities included tuition fees of £3,145 for Mr Bell’s son, Austin, paid after his employment had transferred to another entity. Judge Mullen categorised this as an illegitimate “loading of expenses onto the insolvent company” [(para 80)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/1636.pdf). Similarly, unrecovered laptops, iPhones, and international travel expenses were deemed misuses of company funds. ## Implications of the Case The ruling underscores the strict approach courts adopt in [director misfeasance claims](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-confirms-misfeasance-claims-procedure-hybrid-insolvency-applications/). Once insolvency looms, directors must actively prioritise creditors’ interests. The decision affirms that transactions at undervalue and preferences to connected companies will be unwound, and directors personally liable for resulting losses. Furthermore, it underpins the need to obtain [timely legal advice](https://lexlaw.co.uk/our-people/) from [experts](https://lexlaw.co.uk/our-people/) who are well-versed in director misfeasance claims. The case also reflects how [section 172 Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/section/172) operates alongside insolvency law. As confirmed in [BTI v Sequana](https://www.bailii.org/ew/cases/EWCA/Civ/2019/112.html), creditor interests become paramount when [insolvency](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) is imminent. Judge Mullen applied both subjective and objective tests to evaluate Mr Bell’s conduct, finding that an intelligent and honest [director ](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/)would not have authorised the challenged transactions. For practitioners, the case highlights the evidential importance of contemporaneous records. Mr Bell’s reliance on vague explanations and missing documentation failed to rebut the presumption of creditor prejudice. For [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-confirms-misfeasance-claims-procedure-hybrid-insolvency-applications/), the judgment is a stark warning that informal arrangements, especially within family-run companies, are subject to rigorous [judicial scrutiny](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/). The involvement of [Manolete Partners](https://lexlaw.co.uk/solicitors-london/director-successfully-defends-101k-manolete-repayment-claim/) demonstrates the litigation funding sector’s increasing influence. By acquiring claims from liquidators, [funders](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) ensure that misfeasance proceedings are resourced and pursued vigorously. This trend means directors cannot rely on liquidators abandoning claims due to lack of funds; the commercial funding model has changed the landscape. ## Defending Manolete Director Claims Directors facing [Manolete claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) must recognise the seriousness of [funded litigation](https://lexlaw.co.uk/?s=Manolete). Defences should be built on robust evidence, not retrospective explanations. Forensic accounting is critical to test whether alleged undervalue transactions were properly supported by valuations or whether intercompany transfers had commercial justification. [Early engagement](https://lexlaw.co.uk/legal-case-assessment/) with [insolvency solicitors](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) can help [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/) shape a defensive strategy before proceedings escalate. At [LEXLAW](https://lexlaw.co.uk/our-people/), we have successfully defended directors by challenging the scope and admissibility of evidence relied on by funders. Highlighting gaps, inconsistencies, or the absence of valuation evidence can materially weaken a claimant’s case. Equally, showing that transactions indirectly benefited creditors, rather than prejudiced them, can undermine presumptions of preference. Settlement is often possible where [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-preferential-payment-s-239-insolvency-act-1986/) engage early. Funders are commercial entities and may be open to pragmatic resolution where liability is disputed but litigation risks are high. However, directors must avoid delay, as once claims are trial-ready, the cost exposure can be substantial. Ultimately, this case illustrates the need for directors to maintain proper governance and [seek advice](https://lexlaw.co.uk/legal-case-assessment/) when facing financial distress. By doing so, they can reduce the risk of personal liability and avoid costly, [Manolete-funded](https://lexlaw.co.uk/solicitors-london/manolete-case-study-court-confirms-misfeasance-claims-procedure-hybrid-insolvency-applications/) proceedings. [Contact now](https://lexlaw.co.uk/legal-case-assessment/) for immediate [legal advice](https://lexlaw.co.uk/our-people/)! ### FAQs on Manolete Partners Case: **What was the key issue in *****Re BSS LED [R&D] Ltd [2024] EWHC 1636 (Ch)*****?** The High Court found that the director, Mr Steven Bell, caused the company to enter into transactions at an undervalue and make preferential payments to connected companies, breaching his duties under the Companies Act 2006 and the Insolvency Act 1986. He was held personally liable to repay substantial sums. **What are transactions at undervalue under the Insolvency Act 1986?** A transaction at undervalue (section 238 Insolvency Act 1986) occurs when a company gives away assets or sells them for significantly less than their market value when insolvent or close to insolvency. Such transactions can be set aside by the Court. **What is a preference under the Insolvency Act 1986?** A preference (section 239 Insolvency Act 1986) arises when a company unfairly favours one creditor over others before insolvency. Payments to connected companies or family members are closely scrutinised and often reversed. **When do directors’ duties shift towards creditors?** Under section 172 of the Companies Act 2006, directors must normally act in the best interests of the company. However, as confirmed in *BTI v Sequana* and applied in this case, once insolvency is probable, directors’ duties prioritise creditor interests above shareholder interests. **Why was Manolete Partners involved in this case?** The liquidator assigned claims against the director to Manolete Partners, a leading litigation funder. Manolete provides funding to pursue director misfeasance claims that liquidators might otherwise lack resources to bring. **What did the Court decide about the director’s personal benefit payments?** Mr Bell extracted nearly £100,000 from the company without legal entitlement, claiming they were salary or dividends. The Court held that these were improper withdrawals and ordered repayment. --- # Creditor’s Guide to Enforcement of Unpaid & Old Court Judgment Debts in the UK (2025) Source: https://lexlaw.co.uk/solicitors-london/creditors-guide-to-enforcement-of-unpaid-old-court-judgment-debts-in-the-uk-2025/ Many creditors mistakenly believe that [County Court Judgments (CCJs)](https://www.gov.uk/county-court-judgments-ccj-for-debt) and [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) judgments become completely unenforceable after six years have elapsed. This widespread misconception causes judgment creditors to abandon potentially recoverable debts. The reality is far more nuanced: under the correct legal framework and with proper court permission, [enforcement of judgment debts](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) beyond the statutory six-year limitation period remains entirely possible in England and Wales. [Our experienced litigation expert team](https://lexlaw.co.uk/our-people/christopher-snell/) combines solicitor and barrister expertise in providing clients with [strategic advice from both solicitor and advocacy perspectives](https://lexlaw.co.uk/legal-case-assessment/). This dual qualification proves particularly valuable in complex enforcement matters where court hearings may be contested and tactical decisions must balance procedural compliance with persuasive advocacy. ## Understanding the Six-Year Limitation Period The [Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58), specifically [Section 24](https://www.legislation.gov.uk/ukpga/1980/58/section/24/enacted), establishes the general principle that enforcement action for a judgment debt must ordinarily commence within six years from the date the judgment became enforceable. This limitation period applies to bringing fresh enforcement proceedings such as [writs of control](https://www.gov.uk/government/publications/form-no53-writ-of-control), [warrants of execution](https://en.wikipedia.org/wiki/Warrant_of_execution), and similar remedies, as well as to recovering arrears of interest accrued before the six-year period expired. The purpose behind this statutory limitation is to strike a careful balance between protecting creditors' legitimate rights to recover judgment debts while simultaneously preventing indefinite harassment of debtors who might reasonably expect that after a substantial period has elapsed, enforcement action will not materialise. After six years have elapsed since the judgment became enforceable, any renewed enforcement action typically requires express permission from the court. Courts exercise their discretion when considering such applications, examining factors including the creditor's reasons for delay, whether the delay was within the creditor's control, and any prejudice the debtor might suffer from late enforcement. ## Is Court Permission Required for Older CCJs? [The Civil Procedure Rules](https://www.legislation.gov.uk/uksi/1998/3132/contents) govern the procedural framework for obtaining court permission to enforce judgment debts older than six years. [CPR Part 70](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part70) and [Practice Direction 70A](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part70/pd_part70) specifically outline the application requirements for various enforcement methods including writs of control and warrants of execution. The requirement for permission derives from [RSC Order 46, Rule 2(1)(a)](https://www.justice.gov.uk/courts/procedure-rules/civil/sched_rsc/rscorder46). In [Lowsley v Forbes UKHL 34](https://publications.parliament.uk/pa/ld199798/ldjudgmt/jd980729/lowsley.htm), the [House of Lords](https://www.parliament.uk/business/lords/) confirmed that enforcement beyond six years was permissible because enforcement is execution of an existing judgment, not a fresh claim. However, recovery of interest was restricted to the six years preceding enforcement. Courts scrutinise the creditor’s reasons for delay closely. In [Patel v Singh EWCA Civ 1938](https://www.casemine.com/judgement/uk/5b46f2042c94e0775e7f0558), the [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) stressed that creditors must show valid reasons outside their control (such as administrative complications, settlement negotiations, or difficulty locating the debtor). Mere neglect or inaction will almost always defeat applications. The court will also consider prejudice to the debtor. In [Society of Lloyd’s v Longtin EWHC 2491](https://www.casemine.com/judgement/uk/5a8ff71860d03e7f57ea7716), the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) held that mere passage of time is insufficient to refuse enforcement unless the debtor shows substantial injustice. Similarly, [National Westminster Bank v Powney Ch 339](https://vlex.co.uk/vid/national-westminster-bank-plc-793368729) confirmed discretion exists to permit enforcement in exceptional circumstances, such as judicial delays or insolvency litigation that obstructed earlier enforcement attempts. When applying, creditors must support the application with cogent evidence, including witness statements explaining events, delay, steps taken to locate the debtor, and proof that the judgment remains unsatisfied. [Professional legal representation](https://lexlaw.co.uk/contact-us/) significantly improves prospects of success. ## What are the Exceptions to the Limitation Period for Enforcing Old CCJs? Notwithstanding the six-year rule, certain enforcement methods remain available without strict court scrutiny. #### Charging Orders (Ezekiel v Orakpo 1 WLR 340): Create a proprietary interest independent of the judgment, unaffected by limitation, with interest continuing indefinitely. Orders for sale may be pursued years later. #### Insolvency Proceedings: Bankruptcy (debts over £5,000) and winding-up petitions (debts over £750) have no statutory time limit. These remain powerful tools that often compel payment regardless of the judgment’s age. #### Existing Enforcement Actions: Writs, warrants, or [attachment of earnings orders](https://www.gov.uk/government/publications/form-n337-request-for-attachment-of-earnings-order/attachment-of-earnings-order-guidance) commenced within six years can continue beyond that period as ongoing processes. Creditors should keep clear records of all enforcement steps to prove validity. #### Lowsley v Forbes UKHL 34: This landmark House of Lords decision fundamentally shaped the modern law on enforcing old judgment debts. The case involved enforcement attempts made 11½ years after the original judgment. The House of Lords held that such enforcement was legally permissible because it constituted execution of an existing judgment right rather than commencement of a new legal claim. Their Lordships reasoned that the Limitation Act 1980, Section 24, which prohibits "actions" more than six years after judgment, should be interpreted as referring to fresh proceedings rather than enforcement of existing judgments. However, the House of Lords imposed an important limitation: recovery of interest was restricted to the six years immediately preceding the enforcement action, meaning the creditor could not recover interest that had accrued more than six years before enforcement commenced. #### Patel v Singh EWCA Civ 1938: The Court of Appeal in this case established important guidelines for applications seeking permission to enforce judgments beyond six years. The court held that permission must be justified with valid, credible reasons for the delay in enforcement. Acceptable reasons might include administrative delays genuinely beyond the creditor's control, prolonged attempts to negotiate settlement, difficulties locating the debtor or their assets, or intervening insolvency proceedings. Crucially, the Court of Appeal emphasised that courts must balance the creditor's right to enforce legitimate judgment debts against potential prejudice to debtors from delayed enforcement. The decision made clear that mere oversight, neglect, or lack of diligence by the creditor would not constitute sufficient grounds for granting permission. #### Society of Lloyd's v Longtin EWHC 2491: This High Court decision addressed the question of whether enforcement beyond six years should be permitted where the debtor argued that the delay itself caused prejudice. The court held that enforcement would generally not be refused solely on the basis of time elapsed, unless the debtor could prove that extending enforcement would cause substantial injustice. The burden rests on the debtor to demonstrate genuine prejudice rather than mere inconvenience or the obvious fact that they would prefer not to pay the debt. #### National Westminster Bank Plc v Powney Ch 339: This Court of Appeal decision confirmed that courts possess discretion to allow fresh enforcement writs beyond the six-year limitation period where circumstances justify such permission. In *Powney*, the court found that substantial judicial delays in progressing related proceedings constituted exceptional circumstances warranting permission to enforce despite the passage of more than six years. The case established that external factors beyond the creditor's control affecting the timing of enforcement could justify late enforcement permission. #### Ezekiel v Orakpo 1 WLR 340: As previously discussed, this Court of Appeal decision established the crucial principle that charging orders exist independently of the underlying judgment debt and are not subject to the six-year limitation period. The court reasoned that a charging order creates a proprietary security interest over the debtor's asset, fundamentally different in legal character from the personal obligation to pay the judgment debt. This distinction means charging orders secured against property can be enforced many years after the original judgment without the need to justify delay or obtain special court permission. ## What are the Enforcement Options for Old Judgment Debts? Creditors seeking to [enforce judgment debts](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) older than six years must carefully select the most appropriate enforcement mechanism based on the debtor's circumstances, assets, and the specific nature of the judgment debt. #### Applications for Court Permission: Where no exception applies and more than six years have elapsed, creditors must make formal applications to the court for permission to enforce using the intended method. Applications should be supported by comprehensive evidence including [witness statements](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) detailing the judgment, explaining reasons for the enforcement delay, providing information about the debtor's current circumstances and assets where known, and addressing any potential prejudice concerns. Applications must comply strictly with CPR Part 70 and associated Practice Directions. Procedural defects in applications can result in rejection or costly delays. For this reason, creditors should [instruct specialist judgment enforcement solicitors](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) to prepare and present applications, ensuring compliance with all technical requirements and presenting the strongest possible case for permission. #### Charging Orders: For debtors who own real property or hold securities and investments, charging orders represent the most powerful enforcement tool for old judgment debts. As established in *Ezekiel v Orakpo*, charging orders bypass the six-year limitation period entirely. The process involves two stages: obtaining an interim charging order (usually granted without a hearing on the papers) and then attending a hearing for the final charging order. Once a final charging order is registered against the debtor's property at the [Land Registry](https://www.gov.uk/government/organisations/land-registry), it creates a legal charge securing the judgment debt plus interest and costs. The debtor cannot sell or refinance the property without first satisfying the charged debt. If the debtor fails to pay voluntarily, the creditor can apply for an order for sale, forcing the sale of the property and recovering the debt from the proceeds. Charging orders prove less effective where property is jointly owned or constitutes the debtor's family home, as courts carefully consider the interests of co-owners and occupants before granting orders for sale. However, even in such cases, the charging order remains in place, securing the debt until the property is eventually sold, at which point the creditor receives payment from the sale proceeds. #### Winding-Up Petitions: Against corporate debtors, [winding-up petitions](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) based on judgment debts constitute exceptionally effective enforcement tools with no time limitation. Provided the judgment debt exceeds the statutory minimum (currently £750), a creditor can present a [winding-up petition](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) at any time, regardless of the judgment's age. The petition process involves serving a [statutory demand](https://windinguppetitionsolicitors.co.uk/issue-statutory-demand/) on the company, waiting 21 days for payment or response, and then presenting the winding-up petition to the court. Once advertised in the [London Gazette](https://www.thegazette.co.uk/), winding-up petitions typically [freeze the company's bank accounts](https://windinguppetitionsolicitors.co.uk/validation-order/) and severely damage its commercial reputation. Directors facing winding-up frequently find funds to settle judgment debts that have remained unpaid for years, making this an exceptionally powerful enforcement mechanism. Creditors must exercise care to ensure that winding-up petitions are used appropriately for debts that are genuinely disputed and where there is evidence of insolvency. Abuse of the winding-up process where debts are disputed or the company is clearly solvent can result in the petition being dismissed with costs awarded against the creditor. #### Bankruptcy Petitions: The individual equivalent of winding-up petitions, [bankruptcy petitions](https://lexlaw.co.uk/bankruptcy-petition-insolvency-annulment-debt-lawyers-london/) can be founded on judgment debts exceeding £5,000 at any time without limitation. The process mirrors winding-up petitions: serving a statutory demand, waiting 21 days, and then presenting the bankruptcy petition if the debt remains unpaid. Bankruptcy carries profound consequences for individuals including damage to credit ratings lasting years, potential restrictions on holding company directorships or practicing certain regulated professions, and seizure of non-exempt assets by the bankruptcy trustee. The threat of these consequences often motivates payment or serious settlement discussions even for judgment debts many years old. #### High Court Enforcement Officers: Once court permission to enforce an old judgment has been obtained, [High Court Enforcement Officers (HCEOs)](https://en.wikipedia.org/wiki/High_Court_enforcement_officer) can be instructed to execute writs of control, seizing and selling the debtor's goods to satisfy the judgment. HCEOs generally prove more effective than [County Court bailiffs](https://en.wikipedia.org/wiki/County_Court_bailiff) due to their greater powers, experience with commercial enforcement, and flexibility in negotiating payment arrangements. HCEOs can attend the debtor's business or residential premises, take control of goods (subject to exemptions for essential items), and arrange either immediate payment, payment by instalments, or sale of seized goods at auction. For judgment debtors with valuable assets such as vehicles, equipment, or stock, this enforcement method can produce swift results. #### Third-Party Debt Orders and Attachment of Earnings: [Third-party debt orders](https://www.gov.uk/government/publications/third-party-debt-orders-and-charging-orders-ex325/apply-for-a-third-party-debt-order) enable creditors to intercept funds owed to the debtor by third parties, most commonly targeting money held in the debtor's bank accounts. The process involves obtaining an interim order freezing the funds, followed by a final order directing the bank to pay the frozen funds to the judgment creditor.  Attachment of earnings orders direct the debtor's employer to deduct regular amounts from the debtor's salary and pay them to the creditor. This proves effective where the debtor has stable employment but requires knowledge of the employer's identity and the debtor remaining in that employment. Both these methods can be pursued for older judgments provided proper court permission is obtained where required under CPR procedures. They work best when combined with other enforcement methods as part of a comprehensive enforcement strategy. ## Strategic Considerations for Enforcement Practical enforcement requires balancing recovery prospects against costs and risks: **Evidence:** Applications must convincingly explain the delay. **Debtor assets:** Asset searches and company investigations are essential before committing enforcement costs. **Proportionality:** Consider costs relative to debt recovery; smaller debts pose greater risks of unrecoverable costs. **Method selection:** Tailor to the debtor—charging orders for property owners, insolvency proceedings for resistant debtors, writs for debtors with goods, earnings orders for employed debtors. **Timing:** While case law allows late enforcement, recoverable interest is capped at six years, and delay risks asset dissipation or insolvency. Prompt action maximises recovery. ## Take Action Today to Recover Your Judgment Debt If you hold an unpaid judgment debt older than six years, do not assume enforcement is impossible. As this comprehensive guide demonstrates, properly conducted enforcement actions can succeed even for judgments many years old, provided the correct legal procedures are followed and compelling grounds for enforcement exist. [Our specialist judgment enforcement team](https://lexlaw.co.uk/our-people/christopher-snell/) can assess your judgment debt's enforceability and advise on the most effective enforcement strategy. [Our London-based insolvency and litigation solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) have successfully recovered judgment debts for clients across England and Wales, including complex cases involving old judgments, difficult debtors, and contested enforcement applications. We offer [fixed-fee initial consultations](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) where our dual-qualified professionals will review your judgment, assess enforcement prospects, explain the available options and their likely costs, and provide clear, strategic advice on the optimal approach for your circumstances. Our aim is to maximise recovery while ensuring enforcement actions remain proportionate and cost-effective. ### Frequently Asked Questions: Enforcing Old Judgment Debts Can judgment debts older than six years be enforced? Yes, judgment debts exceeding six years can be enforced with proper court permission demonstrating valid reasons for the enforcement delay. Courts grant permission where creditors provide compelling evidence explaining why enforcement was not pursued earlier and showing that delay does not cause substantial prejudice to the debtor. Certain enforcement methods including charging orders and insolvency proceedings bypass the six-year limitation entirely.            How do I apply for permission to enforce an old judgment? Applications for permission are made under CPR Part 70 and associated Practice Directions by filing a formal application notice supported by witness statement evidence. The application must explain the judgment details, reasons for the enforcement delay, current information about the debtor's assets and circumstances, and address any potential prejudice to the debtor. Professional legal representation significantly improves prospects of obtaining permission as solicitors understand precisely what evidence courts require. Will I recover interest beyond six years on the judgment? Generally, interest recovery remains limited to the six years immediately preceding enforcement action, even where the court grants permission to enforce the principal judgment debt beyond this period. This limitation derives from the House of Lords decision in *Lowsley v Forbes*, which held that while enforcement of the judgment itself may proceed beyond six years, interest recovery is restricted to prevent excessive accumulation. However, charging orders may permit interest to continue accruing on the secured charge beyond the six-year period.     Are charging orders subject to the six-year limitation? No, charging orders are not subject to the six-year limitation period because they constitute separate security interests over the debtor's property rather than fresh enforcement actions on the judgment itself. The Court of Appeal decision in *Ezekiel v Orakpo* established that charging orders have "a life of their own," meaning applications to enforce them are not considered applications to enforce the original judgment. This makes charging orders exceptionally powerful tools for securing judgment debts beyond normal limitation periods. Can I enforce if enforcement started within six years but continues beyond? Yes, enforcement actions properly commenced within the six-year limitation period may continue beyond six years without requiring fresh court permission. This principle recognises that enforcement proceedings validly initiated within the statutory period constitute ongoing processes rather than new enforcement attempts. Examples include writs of control issued within six years but executed later, or attachment of earnings orders continuing to operate beyond the limitation period.          What if the debtor objects to enforcement due to delay? The debtor bears the burden of proving that the enforcement delay caused significant prejudice to them, which might include destruction of evidence, material changes in financial circumstances made in reliance on apparent abandonment of the debt, or other demonstrable unfairness. Courts carefully weigh these arguments but generally recognize that delay alone, without proof of substantial prejudice, is insufficient to block enforcement. The decision in *Society of Lloyd's v Longtin* confirmed this principle.           Are insolvency proceedings effective for old judgments against companies? Yes, winding-up petitions based on judgment debts are exempt from time limits according to the Insolvency Act 1986. Provided the judgment debt exceeds the statutory minimum of £750, creditors can present winding-up petitions at any time regardless of the judgment's age. This route proves particularly effective for compelling payment from reluctant corporate debtors, as the threat of compulsory liquidation and the reputational damage from Gazette advertisement frequently motivates swift settlement. Can enforcement officers seize goods under old judgments? High Court Enforcement Officers or County Court bailiffs may only seize goods if the court has granted permission to enforce the old judgment through a writ or warrant of control. Without proper court authorization, attempts to seize assets under time-barred judgments would be unlawful and could expose the creditor to claims for wrongful interference with goods. Permission applications must comply with CPR Part 70 requirements before enforcement agents can lawfully act.     Is fresh litigation required for very old judgments? No, fresh litigation is generally unnecessary for enforcement of old judgments. The process involves obtaining court permission under CPR procedures and proceeding with enforcement of the existing judgment rather than commencing new legal proceedings. This principle, established in *Lowsley v Forbes*, recognises that enforcement constitutes execution of an existing legal right rather than initiation of a fresh claim. Fresh litigation would only be necessary if the original judgment had been set aside or was subject to successful appeal. Can delays in enforcement affect my chances of success? Yes, delays significantly impact both the practical prospects of recovery and the court's willingness to grant enforcement permission. Courts rigorously examine reasons for delay and will deny permission if the creditor's negligence or deliberate inaction caused the delay without sufficient justification. Additionally, delay gives debtors opportunities to dissipate assets, relocate, or become genuinely insolvent, materially reducing recovery prospects. Prompt enforcement action always maximises the likelihood of successful debt recovery. Should I seek legal advice before enforcing an old judgment? Absolutely. The legal complexities of enforcing judgment debts beyond six years, the strict procedural requirements under CPR Part 70, the need for persuasive evidence supporting permission applications, and the strategic selection of appropriate enforcement methods all demand specialist legal expertise. Professional solicitors ensure applications are properly prepared, grounds for enforcement are compellingly presented, and enforcement strategies are optimally tailored to the specific circumstances. This significantly increases prospects of successful recovery while minimising risks of unsuccessful applications and wasted costs. What CPR rules govern enforcement applications? CPR Part 70 entitled "General Rules About Enforcement of Judgments and Orders" provides the principal legal framework for enforcement applications, setting out requirements and procedures for writs, warrants, and other enforcement mechanisms. Practice Direction 70A supplements these rules with detailed procedural guidance. Additional relevant provisions appear in CPR Parts 71-73 covering orders to obtain information, third-party debt orders, and charging orders respectively. Compliance with these rules is mandatory, and procedural defects can invalidate enforcement attempts.   --- # Court of Appeal: Blockchain Developers Owe Fiduciary Duties to Crypto Owners (Cryptocurrency Litigation) Source: https://lexlaw.co.uk/solicitors-london/court-of-appeal-blockchain-developers-owe-fiduciary-duties-to-crypto-owners-cryptocurrency-litigation/ The Court of Appeal’s landmark decision in [Tulip Trading Ltd v van der Laan & Ors [2023] EWCA Civ 83](https://www.judiciary.uk/wp-content/uploads/2023/02/Tulip-v-Van-Der-Laan-judgment-030223.pdf) marks a significant development in digital asset law, addressing whether blockchain developers can be [fiduciaries](https://lexlaw.co.uk/solicitors-london/tag/fiduciary-duties/) to [crypto owners](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/). The case, concerning billions of dollars’ worth of [Bitcoin](https://lexlaw.co.uk/solicitors-london/category/bitcoin/) lost in an alleged hack, raises novel questions at the intersection of technology, property, and equity. This judgment builds upon previous legal recognition of crypto assets as “property” under English law (see [AA v Persons Unknown [2019] EWHC 3556 (Comm)](https://www.judiciary.uk/wp-content/uploads/2022/07/AA-v-Persons-Unknown-summary-case-note-SB-amended-1.pdf) ), and forms part of the growing jurisprudence surrounding digital asset recovery, trust obligations, and fiduciary responsibility in decentralised financial ecosystems. As English courts continue to grapple with the legal status of blockchain participants, the Tulip decision underscores the need for robust legal representation in crypto fraud recovery actions, especially where network governance and asset control intersect. ## Background to the Tulip Trading Case: Crypto Ownership and Developer Control [Tulip Trading Limited](https://find-and-update.company-information.service.gov.uk/company/06759033) (“Tulip”), a Seychelles-registered company associated with Dr Craig Wright (who claims to be “Satoshi Nakamoto”), asserted ownership of [Bitcoin](https://lexlaw.co.uk/solicitors-london/category/bitcoin/) worth approximately USD 4 billion. The assets were held at two blockchain addresses, but access was lost following an alleged hack that removed the private keys. Tulip claimed that the core developers of several [Bitcoin](https://lexlaw.co.uk/solicitors-london/category/bitcoin/) networks (BTC, BCH, BCH ABC, and BSV) exercised de facto control over the networks and were capable of deploying a software patch to restore its access. Tulip therefore argued that the developers owed fiduciary and tortious duties to act in good faith to assist the true owner of the digital property. The developers, all based outside England, denied any such duty arguing that [blockchain governance](https://lexlaw.co.uk/solicitors-london/category/blockchain/) is decentralised, that developers act voluntarily and collaboratively, and that imposing fiduciary duties would be unworkable. The High Court ([Falk J, [2022] EWHC 667 (Ch](https://www.judiciary.uk/wp-content/uploads/2023/02/Tulip-v-Van-Der-Laan-judgment-030223.pdf))) held that no realistic prospect existed of establishing a fiduciary relationship. However, the Court of Appeal overturned that finding ruling that Tulip had raised a serious issue to be tried. ## View The PDF Judgment here: [![](https://lexlaw.co.uk/wp-content/uploads/Tulip-v-Van-Der-Laan-judgment-030223-725x1024.png)](https://www.judiciary.uk/wp-content/uploads/2023/02/Tulip-v-Van-Der-Laan-judgment-030223.pdf) ## Court of Appeal Recognises Possible Fiduciary Duty of Bitcoin Developers ### 1. Fiduciary Duty May Extend to Blockchain Developers Lord Justice Birss (with Popplewell and Lewison LJJ agreeing) held that it is arguable that developers, by controlling access to and modification of [blockchain](https://lexlaw.co.uk/solicitors-london/category/blockchain/) software, exercise discretionary powers affecting others’ property interests potentially giving rise to fiduciary obligations. At [[70]–[76], Birss LJ reasoned that](https://www.judiciary.uk/wp-content/uploads/2023/02/Tulip-v-Van-Der-Laan-judgment-030223.pdf): “The developers are people who have undertaken a role which at least bears some relationship to the interests of other people… in relation to property owned by those other people.” This potential duty includes a duty of single-minded loyalty and an obligation not to act in their own self-interest to the detriment of asset owners. ### 2. “Entrustment” and Control as Fiduciary Indicators Although [crypto](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/) is decentralised in theory, the Court accepted that developers *may* have de facto control because only they can alter the source code governing asset ownership and transfer. As [Birss LJ observed ([78]):](https://www.judiciary.uk/wp-content/uploads/2023/02/Tulip-v-Van-Der-Laan-judgment-030223.pdf) “*In a very real sense the owners of bitcoin… have placed their property into the care of the developers. That is, in my judgment, arguably an ‘entrustment*.’” ### 3. Duty to Act Positively in Certain Circumstances [Tulip](https://find-and-update.company-information.service.gov.uk/company/06759033) alleged that once ownership is judicially confirmed, developers must act to safeguard the true owner’s assets (e.g., by issuing a patch transferring or freezing stolen coins). The Court accepted that a positive [fiduciary obligation](https://lexlaw.co.uk/solicitors-london/tag/breach-of-fiduciary-duties/) to introduce code changes was *arguable*, given developers’ unique authority. ### 4. Decentralisation Not a Bar at Pleading Stage The defendants’ reliance on “decentralisation” as a defence was rejected at this early stage. Whether [blockchain governance](https://lexlaw.co.uk/solicitors-london/category/blockchain/) is genuinely decentralised is a factual issue unsuitable for summary determination. ### 5. Recognition of Property Rights in Crypto assets Reaffirming *[AA v Persons Unknown](https://www.judiciary.uk/wp-content/uploads/2022/07/AA-v-Persons-Unknown-summary-case-note-SB-amended-1.pdf)*, the Court confirmed that [cryptocurrencies](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/) constitute property under English law, capable of ownership, control, and equitable protection. ## Legal Implications for Blockchain Governance and Cryptoasset Law The ruling does not establish that developers do owe [fiduciary duties](https://lexlaw.co.uk/solicitors-london/tag/breach-of-fiduciary-duties/) but it firmly opens the door to such claims. English law continues to evolve to address decentralised governance and property protection in [crypto](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/) networks. If, after trial, such duties are recognised, the implications could be profound: - **Developers’ exposure:** Core maintainers may face claims where network code changes (or omissions) affect asset holders. - **Asset recovery mechanisms:** Victims of [crypto](https://lexlaw.co.uk/solicitors-london/category/cryptocurrency/) theft may have new equitable remedies, supplementing tracing and proprietary injunctions. - **Regulatory influence:** Courts may increasingly treat [blockchain](https://lexlaw.co.uk/solicitors-london/category/blockchain/) governance roles akin to trustees or custodians, particularly where economic reliance exists. - **Common law evolution:** The case aligns with the Law Commission’s work on digital assets and could shape statutory reform to clarify fiduciary and tortious responsibilities in decentralised systems. [As *Birss LJ* remarked](https://www.judiciary.uk/wp-content/uploads/2023/02/Tulip-v-Van-Der-Laan-judgment-030223.pdf): “If the decentralised governance of bitcoin really is a myth, then… bitcoin developers, while acting as developers, owe fiduciary duties to the true owners of that property.” ## Defending Fiduciary Duty Claims Against Developers: How LexLaw Can Help [For individuals or companies](https://lexlaw.co.uk/contact-us/) accused of fiduciary breaches whether as directors, trustees, or blockchain developers strategic defence is crucial. [LexLaw Solicitors](https://lexlaw.co.uk/contact-us/), experienced in high-value fiduciary and trust litigation, can: - Conduct forensic analysis of network governance and control structures to dispute alleged “entrustment.” - Argue that decentralisation negates control and thus fiduciary capacity. - Demonstrate that positive duties to act are inconsistent with established fiduciary principles. - Obtain protective declarations and indemnities to mitigate exposure during ongoing network management. As demonstrated in our successful defence of [director misfeasance](https://lexlaw.co.uk/solicitors-london/tag/director-misfeasance/) and trust claims, [prompt legal advice](https://lexlaw.co.uk/contact-us/) can prevent adverse findings and limit cross-border enforcement risks. ### Frequently Asked Questions What is a fiduciary duty under English law? A fiduciary owes loyalty and good faith to another, acting solely in that person’s interests. This includes duties to avoid conflicts, act honestly, and not profit from one’s position. How can developers be fiduciaries? Where developers exercise exclusive control over code affecting property, courts may treat their role as analogous to trustees or agents creating fiduciary obligations. Does the Tulip Trading case mean developers are liable? Not yet. The Court of Appeal only found that there is a *serious issue to be tried*. Liability will depend on trial findings about control and decentralisation. What if blockchain governance is decentralised? If developers act as part of an open, unstructured collective without central authority, fiduciary duties may not arise. This factual issue remains central to the Tulip trial. Can crypto be treated as “property” in the UK? Yes. Following *AA v Persons Unknown*, cryptocurrencies are recognised as property under the *National Provincial Bank v Ainsworth* test. Can LexLaw assist with crypto fiduciary disputes? Yes. [Our litigation team](https://lexlaw.co.uk/contact-us/) advises on fiduciary, fraud, and trust-related blockchain disputes, representing clients in the High Court and Court of Appeal. --- # Chinda v Cardiff: Rules on Withdrawing Accepted Part 36 Offers Source: https://lexlaw.co.uk/solicitors-london/chinda-v-cardiff-rules-on-withdrawing-accepted-part-36-offers/ Master Cook’s judgment in *Chinda v Cardiff & Vale University Health Board* EWHC 2696 (KB) provides an important clarification on the strict limits surrounding the withdrawal of Part 36 offers once accepted. This case highlights that a mere change of mind, even by a vulnerable claimant suffering severe neurological injury, does not meet the threshold for “change of circumstances” under [CPR 36.10](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36). Upholding the principle of certainty in settlement negotiations, the court refused permission to withdraw an offer accepted within the relevant period. The ruling emphasises the need for careful client instructions during negotiations, especially in complex clinical negligence claims. ## Case Background The claimant suffered paraplegia following a negligent delay in diagnosing spinal tuberculosis when attending A&E in August 2020. Liability for breach and causation was admitted by Cardiff & Vale University Health Board, leaving damages quantum to be determined. At a round table meeting (RTM) on 1 July 2025, the claimant indicated a desire to settle on a provisional damages basis, but the defendant lacked authority to consent to those terms immediately. The claimant’s solicitors made a Part 36 offer the following day, including a lump sum, variable periodical payments, and provisional damages. The claimant then sought to withdraw this offer on 8 July, but the defendant accepted it on 22 July. The claimant applied to court for permission to amend the offer to exclude periodical payments.[](https://tmclegal.co.uk/withdrawing-accepted-part-36-offer-chinda-cardiff-vale/) ## Legal Rules Governing Part 36 Offer Withdrawal CPR 36.10 sets out that where an offer has been accepted within the relevant period, the offeror can only withdraw or change its terms with court permission, which will be granted only if there has been a “change of circumstances” since the offer was made and it is in the interests of justice to do so. CPR 36.10 states: > *“The court may give permission for the original offer to be withdrawn or its terms changed if satisfied that there has been a change of circumstances since the making of the original offer and that it is in the interests of justice to give permission.”* Examples of such changes may include new evidence or a shift in legal principles - not a mere reassessment or regret. The policy underpinning Part 36 enshrines certainty and predictability in civil litigation settlements, especially critical in personal injury cases involving provisional damages or periodical payments. The full text can be found on the Ministry of Justice’s [CPR Part 36 rules](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part36). See LEXLAW’s guide to [Part 36 offers and costs consequences](https://lexlaw.co.uk/litigation-part-36-offer-claimants-defendants-guide-to-costs-and-settlement-legal-solicitors-advice/). ## Court’s Decision and Reasoning Master Cook refused the claimant’s application to withdraw or amend the Part 36 offer. The court found that the claimant’s later change of mind did not constitute a sufficient change of circumstances. Although the claimant was vulnerable due to severe injury and fatigue at the RTM, there was no evidence that this impacted his ability to instruct specialist personal injury solicitors adequately. Importantly, vulnerability under CPR Part 1 was considered but found not to alter the application of Part 36's strict requirements where proper legal advice was given. The court emphasised that allowing withdrawal on these grounds would undermine the certainty the Part 36 regime seeks to maintain. Furthermore, the defendant’s periodical payments offer was held to be more advantageous than the lump sum alternative, providing financial certainty tailored to the claimant’s life expectancy. The full judgment is accessible via the [Bailii database](https://www.bailii.org/ew/cases/EWHC/KB/2025/2692.html). ## Practical Part 36 Advice for Litigants - **Claimant representatives** should ensure clients understand the finality of Part 36 offers and seek additional time for consideration, especially for vulnerable clients at RTMs or mediations. - **Defendants** should promptly acknowledge and accept offers where appropriate, taking care not to allow undue delays or uncertainty after acceptance. - **Both sides** must keep clear records of negotiation instructions and ensure clients receive appropriate advice from experienced solicitors. - Vulnerability should be flagged early to courts to consider procedural adjustments under [Practice Direction 1A](https://www.justice.gov.uk/courts/procedure-rules/civil/practice-direction-01a). - Parties should recognise the inherent financial predictability benefits of periodical payments in clinical negligence claims, often more advantageous than lump sums when life expectancy is reduced. For more on negotiation strategy, read about [strategic Part 36 offers](https://lexlaw.co.uk/solicitors-london/the-importance-of-making-a-strategic-part-36-offer/) and [pre-action protocols](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-non-compliance-legal-advice-solicitors/). ### FAQ: Part 36 Offer Withdrawal **1. I made a Part 36 offer but have changed my mind. Can I withdraw it?** It depends on timing. If the defendant has not yet accepted within the relevant period (usually 21 days), you can withdraw freely. However, once acceptance is served, withdrawal requires court permission under CPR 36.10. Master Cook's ruling in *Chinda v Cardiff* confirms that a mere change of mind, even post-RTM, will not suffice; you must demonstrate a genuine change of circumstances and convince the court that justice favours withdrawal. See our [litigation guide](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/).[](https://tmclegal.co.uk/withdrawing-accepted-part-36-offer-chinda-cardiff-vale/)​ **2. What counts as a "change of circumstances" under CPR 36.10?** A change of circumstances is material and objective, not subjective regret. Examples include receipt of new expert evidence, adverse case law developments, or factual shifts affecting valuation. Fatigue at a round table meeting, later reflection, or family advice do not qualify, as *Chinda* confirms. The test is strict to preserve Part 36's core purpose: certainty in negotiations.[](https://www.exchangechambers.co.uk/too-late-to-change-your-mind-by-david-knifton-kc/)​ **3. I am a vulnerable party with severe injuries. Does that help me withdraw a Part 36 offer?** Vulnerability is a consideration under CPR Part 1 and may influence procedural steps before an offer is made (e.g., allowing overnight review). However, *Chinda* shows that vulnerability alone does not override CPR 36.10's requirements once an offer is accepted and specialist solicitors have properly advised you. Courts will ask whether the vulnerability impacted your ability to receive and act on legal advice; if your solicitors managed your instructions soundly, withdrawal is unlikely.[](https://www.casemine.com/judgement/uk/68ffbae035a1cc51f9ec1c3a)​ **4. How long do I have to apply for permission to withdraw after the defendant accepts?** You must apply within 7 days of the defendant's acceptance notice, or before trial begins, whichever is earlier. Late applications face steep obstacles. Master Cook's decision implies that delay strengthens the defendant's position that the offer should stand.[](https://tmclegal.co.uk/withdrawing-accepted-part-36-offer-chinda-cardiff-vale/)​ **5. If I withdraw a Part 36 offer, can I serve a new one on better terms for me?** Yes but it suggests your first offer was flawed and [your litigation case may benefit from a second opinion](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/). A new offer would restart the 21-day acceptance period and reset your costs protection. Courts may scrutinise repeated amendments as gaming the system. *Chinda* teaches that your first offer should reflect genuine instructions; shifting positions invites judicial scepticism and risks adverse costs orders.[](https://www.casemine.com/judgement/uk/68ffbae035a1cc51f9ec1c3a)​ **6. What is the difference between periodical payments and a lump sum in clinical negligence, and why did the court prefer periodical payments in *Chinda*?** Periodical payments (also called structured settlements) provide ongoing income tied to inflation and the claimant's needs, whereas a lump sum is a one-off capital award. In *Chinda*, the defendant's periodical payments offer was deemed more advantageous given the claimant's limited life expectancy; it ensured financial certainty and protected against investment risk. Lump sums suit claimants with normal life spans or strong investment expertise; periodical payments suit those with reduced prognosis or complex care needs. Courts weigh both when assessing Part 36 offers.[](https://www.casemine.com/judgement/uk/68ffbae035a1cc51f9ec1c3a)​ **7. My solicitors advised me during the RTM but I was exhausted. Can I claim they gave poor advice to justify withdrawal?** It depends on exactly what happened. Courts would tend to presume specialist personal injury solicitors are alert to clients' vulnerabilities and fatigue during lengthy meetings. *Chinda* confirms that even a "vulnerable" claimant cannot escape Part 36's finality if the solicitor-client relationship was functional. You would need to prove clear breach of duty by your solicitors. ​ **8. If I do get permission to withdraw, what happens next?** If the court grants permission, the original offer is treated as withdrawn or amended as approved. The defendant is not bound to accept new terms; you may need to negotiate afresh or proceed to trial. Withdrawal is not a reset button - it is a rare remedy granted only where justice demands it.[](https://www.exchangechambers.co.uk/too-late-to-change-your-mind-by-david-knifton-kc/)​ **9. Should I serve a Part 36 offer at an RTM or shortly after?** Best practice: discuss settlement parameters at the RTM without formal offers, then serve a written Part 36 offer a day or two later after you have reflected and obtained client instructions in writing. This gives time for proper consideration and reduces regret claims. ​ **10. What should vulnerable claimants do to protect themselves during RTMs?** Request a break or overnight adjournment before agreeing final terms, especially if you have suffered serious injury. Ensure your solicitor documents your instructions clearly in writing. Ask for a written summary of any offer before it is served formally. Understand that Part 36 offers are binding once made; treat them as final commitments, not trial runs.​ --- # Manolete Case Study: Directors Liable for £1.4m Misappropriation and Unlawful Dividends Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-liable-for-1-4m-misappropriation-and-unlawful-dividends/ This judgment ([[Manolete Partners plc v Mohammed Jawed Karim & Others [2024] EWHC 2053 (Ch)]](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf)) reinforces the principles governing directors’ fiduciary and statutory duties under [sections 171 to 174 of the Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/section/171) and the creditors’ duty clarified in [[BTI 2014 LLC v Sequana SA [2022] UKSC 25](https://supremecourt.uk/uploads/uksc_2019_0046_judgment_a33492fe08.pdf)]. Deputy Judge Richard Spearman KC found that the directors of Evershine Travel Limited, a collapsed tour operator, diverted over £1.4 million to personal projects and connected parties, including mining ventures in Africa and family members. The claim, assigned to litigation funder [Manolete Partners plc](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/), illustrates the aggressive post-liquidation enforcement landscape now common in [UK insolvency litigation](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/). As seen in similar cases, the judgment demonstrates that directors who ignore the [warning signs of insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) face personal exposure long after dissolution and liquidation proceedings conclude. Furthermore, this judgment demonstrates the need to [instruct experts](https://lexlaw.co.uk/our-people/) from the onset. ## Case Background Evershine Travel Limited was incorporated in 1995 and operated as a tour operator and online car rental consolidator. By January 2017, it entered insolvent administration with an estimated shortfall of £17.58 million to unsecured creditors before moving to [Creditors’ Voluntary Liquidation](https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/) in January 2018. The three brothers, Mohammed Jawed Karim, Mohammed Basser Karim, and Mohammed Fahim Karim, were [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-liable-for-misapplied-company-funds-transactions-at-undervalue-preferences/) and equal beneficial shareholders. The Fourth Defendant, Mariam Karim, was the spouse of Jawed; the Fifth Defendant, Anna Racko Karim, was married to Basser; and the Sixth Defendant, Richard Slade & Company Limited, acted as solicitors to both the company and its [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-liable-for-misapplied-company-funds-transactions-at-undervalue-preferences/). Proceedings against the law firm were stayed following a [confidential Tomlin Order settlement](https://en.wikipedia.org/wiki/Tomlin_order). [Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) took assignment of the claims from the liquidators in August 2019, alleging that the directors caused Evershine Travel to make numerous payments for private purposes when the company was [insolvent](https://windinguppetitionsolicitors.co.uk/) or bordering on [insolvency](https://windinguppetitionsolicitors.co.uk/). The [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) agreed that the company had effectively been used “as if it was a bank, and its assets as if they belonged to them” [(para 3)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf). ## Read the Full Judgment Below: [![](https://lexlaw.co.uk/wp-content/uploads/Extracted-pages-from-2053-1-724x1024.jpg)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf) ## Key Transactions Impugned | **Category** | **Amount** | **Beneficiaries / Purpose** | **Court Finding** | | ------------ | ---------- | --------------------------- | ----------------- | | African mining ventures | US$1.45m + £34,661 | Personal investments in GEM Global Ventures and Pinnacle Ventures | Misappropriation of company funds | | Credit card & cash withdrawals | £1.09m approx. | Personal and family use | Unexplained, not for company purpose | | Unlawful dividends (2014–15) | £267,500 | Paid to directors | In breach of Part 23, Companies Act 2006 | | Payments to relatives | $381,000 (sister), $129,000 (cousin), £75,000 (associate) | Connected parties | Improper and unrecoverable | | Property transfer via Mariam Karim | £250,000 | Used for joint property purchase | Traceable and recoverable | By 2015, the company’s audited accounts were found to be materially inaccurate, containing fictitious debts and assets that concealed underlying insolvency [(paras 49–58)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf). ## Key Findings in Manolete Partners plc v Karim **Breach of Director Duties (Paras 23–33)** [Spearman KC](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf) held that the directors breached their fiduciary and statutory duties under [sections 171–174 of the *Companies Act 2006*](https://www.legislation.gov.uk/ukpga/2006/46/section/171). They failed to act for proper purposes, disregarded creditor interests once insolvency was probable, and allowed the company to make unlawful distributions. The court adopted the reasoning in *Re HCL Environmental Projects Ltd [2014] BCC 337* and *[Sequana](https://supremecourt.uk/uploads/uksc_2019_0046_judgment_a33492fe08.pdf)* to find that [directors’ duties](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/) shift towards creditors when [insolvency](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/) is foreseeable. “They treated the Company as if it was a bank, and its assets as if they belonged to them.” [(*para 3*)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf) The judge agreed with [Manolete’s](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) submission that the directors’ actions were “wholly inconsistent with the promotion of the success of the Company” and instead constituted “defalcations from the Company’s monies for personal benefit.” **Unlawful Dividends and Improper Accounting (Paras 38–43)** The company declared dividends of £267,500 between 2014 and 2015 when its accounts failed to give a true and fair view. Applying *Bairstow v Queens Moat Houses plc [2002] BCC 91*, the [Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) held the distributions were ultra vires and unlawful. [Spearman KC](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf) reaffirmed that directors and shareholder recipients who “know or ought to have known” the factual unlawfulness of a dividend must repay it [(para 43)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf). **Misuse of Company Funds (Paras 75–104)** The [Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) found substantial misapplications of company property, including personal tax payments, [cash withdrawals](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/), and speculative overseas investments. The most egregious examples were the payments of over US$1.4 million for “African mining ventures” and US$54,000 to a US law firm representing a separate entity, ATISL, controlled by Jawed Karim. “There is no documentary evidence to support a suggestion that these payments were made in connection with the Company’s business... the Company did not receive any benefit.” [(*para 79*)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf) **Failure to Exercise Reasonable Care and Skill (Paras 35–37)** The directors were criticised for failing to maintain management accounts or cash flow forecasts, ignoring clear signs of creditor distress, and relying on misleading accounts. The judge found that by 2014, Evershine Travel was unable to pay its debts as they fell due [(paras 67–73)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf). “It seemed counterintuitive that a company that managed to stave off cash-flow insolvency by going deeper and deeper into long-term debt was not insolvent.” [(*para 73, citing* *Bucci v Carman [2014] BCC 269*)](https://www.bailii.org/ew/cases/EWHC/Ch/2024/2053.pdf) ## Implications of the Karim Judgment This decision underscores that courts will take a strict view of [directors’ conduct](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/) once [insolvency risk](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/) arises. As with *[Sequana](https://supremecourt.uk/uploads/uksc_2019_0046_judgment_a33492fe08.pdf)*, the duty to act in the interests of creditors becomes paramount when a [company is insolvent](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/) or on the [verge of insolvenc](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/)y. [Expert legal advice](https://lexlaw.co.uk/legal-case-assessment/) is crucial to understand the [duties owed](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-for-directors-responding-to-a-hmrc-winding-up-petition/) by [directors once insolvency looms.](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) The ruling also confirms that [litigation funders](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) such as [Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) can successfully pursue complex post-liquidation claims. For directors, this signals the importance of contemporaneous record keeping and [prompt insolvency advice by experts](https://lexlaw.co.uk/our-people/). As seen in [numerous examples](https://lexlaw.co.uk/?s=Manolete), directors remain fiduciaries even in family companies and cannot excuse mismanagement by [delegating responsibility](https://lexlaw.co.uk/?s=Manolete). In practical terms, this case aligns with a growing trend of [insolvency litigation targeting directors](https://lexlaw.co.uk/?s=Manolete) years after liquidation, often backed by [litigation funding](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). For professional advisers, it also highlights the value of early engagement with [experienced winding-up petition solicitors](https://lexlaw.co.uk/our-people/) or restructuring [experts](https://lexlaw.co.uk/our-people/) when creditor pressure intensifies. ## Defending Manolete Director Claims Defending a [Manolete-funded action](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) requires early forensic analysis and evidential control. [LEXLAW’s insolvency team](https://lexlaw.co.uk/our-people/) regularly advises directors facing claims for breach of duty, unlawful dividends, or transactions at undervalue. Establishing a defence often depends on reconstructing financial data, tracing the commercial rationale for payments, and challenging the liquidator’s expert evidence. Directors should [engage expert solicitors](https://lexlaw.co.uk/contact-us/) and commission forensic accounting** **reports to challenge assertions of undervalue or insolvency timing. Establishing contemporaneous board minutes or cash flow forecasts can also rebut allegations of subjective dishonesty. In some cases, negotiated settlements are achievable through structured repayment plans where liability is arguable. [Timely instruction](https://lexlaw.co.uk/contact-us/) of a specialist [Manolete claims defence solicitor](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) is essential to prevent default judgments and to ensure proportionality in any agreed settlement or consent order. [Contact Now](https://lexlaw.co.uk/contact-us/) for [Expert Insolvency Legal Assistance!](https://lexlaw.co.uk/contact-us/) ### FAQ on Directors’ Duties **Why is this case significant for insolvency law?** It clarifies that directors who divert funds to personal or speculative projects face personal repayment obligations even years after liquidation. The Court’s approach in *Karim* reinforces that insolvency duties to creditors under *Sequana* override shareholder interests once financial distress is foreseeable. **What constitutes a breach of directors’ duties in insolvency?** Using company assets for personal benefit, making unlawful dividends, or maintaining inaccurate accounts each amount to breaches of sections 171–174 of the *Companies Act 2006*. This judgment shows that courts impose strict accountability on directors, especially when family-controlled companies blur the line between personal and corporate assets. **Can Manolete Partners pursue me after company dissolution?** Yes. As the assignee of claims from liquidators, Manolete may issue proceedings even years after dissolution. Directors remain personally liable for misfeasance and unlawful distributions. [LexLaw’s Manolete defence guide](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) explains available procedural and limitation defences. **How does this affect litigation funders like Manolete?** *Karim* demonstrates the effectiveness of litigation funding in pursuing complex multi-director claims where the insolvent estate has no resources. However, funded cases still require strong evidential grounding, and courts may scrutinise proportionality and fairness in costs recovery. **What practical steps should directors take to avoid liability?  ** Maintain real-time management accounts, ensure dividends comply with Part 23 CA 2006, and seek professional insolvency advice if creditor arrears arise. Early engagement with specialist [insolvency dispute solicitors](https://taxdisputes.co.uk/) may prevent later personal exposure. **Can shareholders ratify breaches once insolvency occurs?** No. As the judgment and *Sequana* confirm, once insolvency is probable, creditor interests supersede shareholder control. Any attempt at ratification would be void against the company’s creditors. --- # Guide: Impact of Compulsory Winding-up Order Liquidation on Directors Source: https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/ Compulsory liquidation arises when a court issues a winding-up order, typically following a creditor's petition for unpaid debts exceeding £750, forcing the closure of an insolvent UK limited company. HMRC issues more petitions for unpaid taxes than all other creditors combined. Directors immediately lose authority over company operations and assets, with a licensed insolvency practitioner appointed as liquidator to oversee asset realisation for creditors. This process, distinct from voluntary liquidation, imposes heightened scrutiny on directors' conduct, potentially exposing them to personal financial risks, disqualifications, and reputational damage.​ ## 1. Introduction: "What Every Worried Director Needs to Know" A compulsory winding-up order is one of the most stressful events a business owner can face. The court has ruled that your company will be dissolved, a liquidator has taken control of everything, and suddenly you're facing questions about personal liability, disqualification, and what happens to your home and family. If you're reading this, you're likely anxious about what comes next - and understandably so. ***The good news:* **compulsory liquidation doesn't automatically mean personal bankruptcy, jail, or losing your home. Many directors navigate this process successfully by understanding their rights, duties, and exposure. ***The bad news*: **inaction or ignorance can turn a manageable situation into a personal financial crisis. Directors who unknowingly engaged in wrongful trading, made preference payments, or fail to cooperate with the liquidator face court-ordered personal contributions, disqualification bans lasting 15 years, or even criminal prosecution. This guide walks you through every stage of compulsory liquidation - from the petition filing to investigation closure - explaining what could happen and how to protect yourself and your family. Whether you're already under a winding-up order or facing a petition, understanding the process, your duties, and your options is the first step to minimising damage and rebuilding. **Key takeaway**: You have options even after a winding-up order. Acting quickly in securing legal advice, cooperating fully with the liquidator, and addressing personal liabilities head-on. This can mean the difference between a difficult chapter and a devastating personal insolvency. If you're managing multiple company failures, facing HMRC investigation, or worried about personal guarantees, Lexlaw's [winding-up petition specialists](https://windinguppetitionsolicitors.co.uk/winding-up-petitions/) and [HMRC tax disputes team](https://taxdisputes.co.uk/) have guided hundreds of directors through this exact situation. ## 2. Compulsory Liquidation Explained Compulsory liquidation, also known as a court-ordered winding-up, occurs when the High Court issues a winding-up order; typically following a creditor's petition; forcing the dissolution of an insolvent limited company. Unlike voluntary liquidation, where directors initiate the process, compulsory liquidation strips directors of control, places the company under court supervision, and exposes them to heightened scrutiny for misconduct. ### What Triggers Compulsory Liquidation? A winding-up petition is filed when a creditor; most commonly HMRC, a bank, or a major supplier; claims the company cannot pay debts exceeding £750. The creditor typically issues a statutory demand (a formal 21-day payment notice); if unpaid, they file the petition at the High Court Chancery Division. The petition is advertised in The Gazette (the Official Journal), notifying all creditors and the public. The company and directors receive formal notice but have limited time; usually 7 business days pre-advertisement; to respond or settle the debt or seek an injunction to restrain advertisement. At the court hearing, the judge considers whether: - The debt is genuinely owed and undisputed - The company is insolvent or unable to pay - There are grounds to dismiss (e.g., defective petition, disputed debt, settlement offer) - Alternative orders (such as staying proceedings pending restructuring) are appropriate If the judge rules in the creditor's favour, a winding-up order is issued, and the company enters formal liquidation. ### Official Receiver vs. Private Liquidator Upon a winding-up order, the Official Receiver (a government-appointed officer of the court) takes initial control. The Official Receiver investigates the company's affairs, probing director conduct over the preceding three years to identify wrongful trading, fraudulent trading, preferences, and undervalue transactions. If the company holds sufficient assets, a private licensed insolvency practitioner (IP) may be appointed to replace the Official Receiver. Private IPs handle asset realisation, creditor distribution, and ongoing investigations more efficiently than the Official Receiver, though their fees (typically 10-20% of recovered assets) are deducted before creditor payments. If the estate is insolvent (liabilities exceed assets), the Official Receiver may close the case without private IP appointment, meaning minimal investigation and no asset distribution; though the company remains on court record, and directors remain subject to disqualification inquiry. ### Compulsory vs. Voluntary Liquidation; Key Differences | Aspect | Compulsory Liquidation | Voluntary Liquidation | Impact on Directors | | ------ | ---------------------- | --------------------- | ------------------- | | **Trigger** | Court petition by creditor | Directors' decision, shareholder vote | Loss of control vs. retained input | | **Initiator** | Creditor | Directors/shareholders | Court-enforced vs. director-led | | **Control** | Liquidator only; directors powerless | Liquidator, creditor committee oversight | Zero director power vs. limited influence | | **Disqualification Risk** | High (court order creates presumption of unfitness) | Moderate (lower scrutiny) | Compulsory equals 5x higher disqualification rate | | **Reputation** | Severe (court order public record) | Manageable (orderly process) | Compulsory equals reputational damage | | **Timeline** | 6-18 months (investigation-heavy) | 3-6 months (streamlined) | Longer, more uncertain | | **Cost** | Higher (Official Receiver fees, court costs) | Lower (negotiated IP rates) | Compulsory equals 20-30% cost premium | | **Name Ban** | 5-year ban on similar company names | No automatic ban | Compulsory equals severe restriction | | **Investigation Depth** | 3-year lookback mandatory | Discretionary | Compulsory equals deeper scrutiny | **Key insight for directors**: If facing a winding-up petition, securing professional advice quickly can explore settlement options or alternative arrangements before the petition is granted, potentially avoiding compulsory liquidation altogether. ### The Role of The Gazette All winding-up petitions and court orders are published in The Gazette (the Official Journal of record for UK legal notices). Once advertised, the petition cannot be withdrawn without court permission, and creditors are alerted to claim against the company. This public record means the company's financial distress is announced to suppliers, clients, and competitors; a reputational blow that often triggers additional creditor demands. Directors should monitor The Gazette daily if aware of creditor disputes; early notification enables prompt legal response, injunctions to restrain publication, or emergency settlements before the hearing date. ### Statutory Protections & Grounds to Challenge Although rare, directors and companies can challenge winding-up petitions on grounds including: - **Disputed debt**: The claimed amount is incorrect or contested - **Defective petition**: Procedural errors (e.g., incorrect service, expired statutory demand) - **Company solvency**: Proof the company can pay debts as they fall due - **Alternative arrangements**: Pending restructuring or alternative proceedings stay the winding-up Once the winding-up order is issued, rescission (reversal) is possible within 5-7 days if material circumstances have changed (e.g., major debt settlement, discovery of substantial assets). Beyond that window, rescission becomes extremely difficult and requires the judge's discretion based on exceptional circumstances. **Next step**: *Understanding what happens the moment the liquidator takes control and what directors immediately lose.* ## 3. The Petition & Court Process; Step-by-Step Timeline Understanding the winding-up petition process is critical for directors; the window to act and protect your position is narrow, and delays can be fatal to your defense. From the moment a creditor files the petition to the final court hearing, you typically have 7-14 days to respond; miss this window and the court may grant the order unopposed. ### Stage 1; Statutory Demand (Days 1-21) The process begins when a creditor issues a statutory demand; a formal written notice demanding payment of an undisputed debt exceeding £750 within 21 days. The statutory demand must be personally served on the company (typically on a director or at the registered office) or deemed served by post. Key points: - The demand must clearly state the debt amount, creditor details, and payment instructions - Directors have 21 days from service to pay, secure a court order to set aside the demand, or reach a composition agreement - Failure to respond by day 21 creates a presumption of insolvency; strengthening the creditor's petition case - If the debt is disputed (even partially), the demand can be challenged; though only on genuine grounds (not merely delaying tactics) **Director action**: If you receive a statutory demand, immediately notify Lexlaw's winding-up petition team. Even if you believe the debt is valid, exploring settlement options or time-to-pay arrangements within the 21-day window can prevent escalation to court. ### Stage 2; Winding-up Petition Filed (Days 22+) If the statutory demand remains unpaid or unresolved, the creditor files a winding-up petition at the High Court Chancery Division. The petition formally requests the court to wind up the company on grounds of insolvency. The petition must include: - Creditor's name and details - Debt amount and nature (invoice, HMRC assessment, loan default, etc.) - Proof the statutory demand was served - Statement that the company is unable to pay the debt Once filed, the petitioning creditor serves the petition on the company (registered office and known directors' addresses) and must advertise it in The Gazette. **Critical point**: The petition is a matter of public record from this point forward. Suppliers, competitors, customers, and business contacts will see your company in financial distress; this often triggers a cascade of new creditor demands and credit line withdrawals. ### Stage 3; Gazette Advertisement (Days 22-35 Approximately) The petitioner must advertise the petition in The Gazette at least 7 days before the court hearing. This advertisement: - Alerts all creditors to lodge claims against the company - Creates a cut-off date; creditors claiming after the advertisement date may face delays in recovery - Becomes a permanent public record; damaging reputation permanently Once advertised in The Gazette, the petition cannot be withdrawn without court permission. Many creditors, upon seeing the advertisement, file proofs of debt or lodge new claims, multiplying the company's liabilities and making settlement more complex. **Director action**: Directors must scan The Gazette daily if aware of creditor disputes. Early notification of a petition advertisement (before the court hearing) may allow emergency injunctions to restrain publication (rare but possible if the petition is defective) or last-minute settlements. ### Stage 4; Court Hearing (Days 35-49 Typically) The High Court Chancery Division hears the winding-up petition. The hearing typically lasts 15-30 minutes unless the company opposes the petition with a substantive defense. At the hearing, the judge considers: **Is the debt genuine and undisputed?** If the company disputes the debt amount or nature, the judge may dismiss the petition or adjourn for further evidence. However, the burden is on the company to prove the debt is genuinely disputed; merely querying the debt is insufficient. **Is the company insolvent?** The creditor must prove the company cannot pay its debts. This is presumed if the statutory demand was ignored. The company can rebut this by demonstrating assets, cash flow, or restructuring plans. **Are there procedural defects in the petition?** If the petition was served incorrectly, the statutory demand was defective, or procedural rules were breached, the judge may dismiss. **Should the court exercise discretion to stay or adjourn?** If the company proposes an alternative arrangement (restructuring, voluntary arrangement, administration), the judge may stay (pause) the winding-up proceedings to allow negotiation. This is rare but possible if the proposal is credible. The judge has four main options: - **Grant the winding-up order**: The company is wound up; the Official Receiver assumes control; directors lose all powers - **Dismiss the petition**: The company is discharged; directors retain control - **Adjourn the petition**: The hearing is postponed, typically to allow time for settlement or alternative arrangements - **Make an interim order**: The court may freeze assets, require periodic reporting, or impose other conditions while deciding ### Stage 5; Winding-up Order Granted (Day 35-49) If the judge grants the winding-up order, the judgment is issued immediately. Key consequences: - The Official Receiver is appointed as receiver and manager of the company - Directors cease to have any powers or duties (except cooperation with the liquidator) - All company assets are frozen; bank accounts are sealed - Directors cannot trade, dispose of assets, or bind the company to new contracts - A receivership order is registered at Companies House - The order is published in The Gazette - The Official Receiver begins investigations into director conduct over the preceding three years From this point forward, directors' focus shifts to cooperation and damage control; the company is no longer theirs to manage. ### Stage 6; Post-Order Procedures (Weeks 2-6) Within days of the winding-up order, the Official Receiver typically contacts the company's directors to arrange meetings and request documentation. Key requirements: **Statement of Affairs**: Directors must submit a sworn Statement of Affairs within 21 days, detailing: - All company assets (cash, property, vehicles, intellectual property, receivables) - All company liabilities (creditors, loans, lease obligations, employee claims) - Explanation of any significant transactions in the 12 months pre-liquidation - Director remuneration, loans, and related-party dealings The Statement of Affairs is a legally binding document; false information can result in perjury charges. **Private Examination**: The Official Receiver or liquidator may request a private examination of directors under oath. Directors must attend and answer questions about: - Financial decisions and transactions - Payments to related parties - Any assets transferred or disposed of - Reasons for company failure - Compliance with statutory duties Failure to attend or refusal to answer can result in arrest warrants or contempt of court charges. **Documentation Handover**: Directors must surrender all company records; including accounting software logins, bank statements, invoices, contracts, emails, and correspondence. ### Timeline Summary; Petition to Order | Stage | Duration | Director Action Window | | ----- | -------- | ---------------------- | | Statutory demand issued | 21 days | **Pay, settle, or challenge within 21 days** (CRITICAL) | | Petition filed at court | 5-14 days | Monitor for Gazette advertisement; prepare defense | | Gazette advertisement | 7+ days pre-hearing | Last opportunity for emergency settlement or injunction | | Court hearing | Day 35-49 post-petition | Attend hearing with legal representation; present defense or settlement offer | | Winding-up order granted | Immediate effect | Cease all trading; cooperate fully with Official Receiver | | Statement of Affairs due | 21 days post-order | Submit complete, accurate documentation | **Critical insight**: The entire process from statutory demand to winding-up order typically takes 6-8 weeks. Directors who act immediately upon receiving a statutory demand; consulting legal advice and exploring settlement options; can often halt the process before court involvement. Once the petition is filed and advertised, your options narrow dramatically. If you are facing a winding-up petition or have received a statutory demand, contact Lexlaw's winding-up petition specialists immediately at windinguppetitionsolicitors.co.uk. The 21-day window is your strongest negotiating position; delays cost lives. **Next step**: *What happens the moment the liquidator takes control and what you immediately lose as a director?* ## 4. What You'll Lose; Powers & Control The moment a winding-up order is issued, your status as a director changes fundamentally. You do not resign; you are not demoted; you are stripped of all authority and decision-making power over the company. Understanding precisely what you lose; and what limited duties remain; is essential for compliance and managing the liquidation process. ### Immediate Loss of Director Powers Upon appointment of the liquidator, directors cease to have any legal power or authority to act on behalf of the company. Specifically, you lose: **Control of company assets**: All bank accounts, property, vehicles, intellectual property, inventory, and receivables pass to the liquidator. You cannot withdraw funds, sell assets, or pledge property as security. Attempting to do so constitutes theft or misappropriation and can result in criminal prosecution. **Authority to trade or conduct business**: The company cannot enter into new contracts, hire employees, purchase goods, or incur liabilities. If you attempt to bind the company to new obligations, you may be personally liable for those debts. **Signing authority**: Your signature no longer binds the company. Cheques, contracts, loan agreements, and leases require the liquidator's authorisation and signature. **Power to hire or dismiss employees**: All employees are deemed dismissed upon the liquidator's appointment (though the liquidator may retain key staff for asset realisation). You cannot rehire or manage staff. **Authority over intellectual property and contracts**: Licenses, patents, trademarks, and client contracts pass to the liquidator, who decides whether to retain, sell, or abandon them. **Power to make distributions or payments**: No payments can be made to shareholders, directors, or creditors except by the liquidator's authorisation and in accordance with statutory priority rules. **Ability to challenge creditor claims**: Once the liquidation begins, the liquidator decides which creditor claims are valid. You cannot defend disputed claims on the company's behalf. ### Your Remaining Duties Although you lose all decision-making power, you retain significant duties and obligations. These are not optional; failure to comply results in legal consequences ranging from fines to arrest. **Duty to cooperate fully**: You must provide the liquidator with any information, documents, or assistance requested. This includes: - Handing over all company records, files, emails, and data - Providing access to company bank accounts, software systems, and digital assets - Explaining financial transactions, decisions, and business dealings - Identifying assets, debtors, and creditors **Duty to attend interviews and examinations**: The Official Receiver or liquidator may request private examinations, conducted under oath. You must attend on the date specified; failure to attend without reasonable excuse results in an arrest warrant. **Duty to submit the Statement of Affairs**: Within 21 days of the liquidator's request, you must provide a sworn Statement of Affairs detailing all company assets, liabilities, and financial affairs. This document is a legal affidavit; false information constitutes perjury. **Duty to disclose all transactions**: You must explain all payments, transfers, and disposal of company assets, particularly any transactions in the 12 months preceding the liquidation order. The liquidator investigates these to identify wrongful trading, preferences, or undervalue deals. **Duty to preserve company documents**: You must not destroy, dispose of, or conceal any company records. Doing so constitutes perversion of the course of justice and can result in criminal prosecution. **Duty of honesty**: You must answer all questions truthfully and disclose all relevant information. Lying under oath, withholding information, or attempting to mislead the liquidator results in perjury charges or contempt of court. **Duty to report misconduct**: If you become aware of fraud, asset misappropriation, or other misconduct by other directors, officers, or third parties, you must report it to the liquidator. ### Restrictions on Director Actions Beyond loss of power, specific restrictions apply: **No trading under the company name**: You and any successor directors cannot trade or conduct business using the liquidated company's name or any similar name for five years post-liquidation. Breaching this restriction results in personal liability for company debts and potential criminal prosecution. **No claiming company property**: Any property, funds, or assets you believe you personally own must be surrendered to the liquidator. Claims of personal ownership are resolved through the liquidation process, not by director assertion. **No directing the liquidator's actions**: You cannot instruct, influence, or direct the liquidator's decisions. The liquidator acts independently in accordance with insolvency law and creditor interests; not director preferences. **No public statements misrepresenting the company's status**: Making false statements about the company's financial condition, the reason for liquidation, or the liquidator's actions can constitute fraud or defamation. **No interference with liquidation assets**: Removing, hiding, or attempting to recover company property without the liquidator's permission is theft and can result in criminal prosecution and personal liability. ### What Happens to Director Loans & Benefits Directors frequently have overdrawn loan accounts, directors' loans, or accrued benefits (bonuses, holiday pay, pension contributions). Upon liquidation, these become priority unsecured debts; meaning the director must repay the company rather than receive payment. **Directors' loan accounts**: If your account is overdrawn (the company owes you money), the liquidator may recover that sum from personal assets or pursue a personal judgment against you. If your account is overdrawn (you owe the company money), you must repay it. Overdrawn directors' loans are treated as preferential unsecured debts and rarely recover anything in a compulsory liquidation. **Accrued bonuses and benefits**: Unpaid bonuses, holiday pay accruals, and deferred compensation become unsecured creditor claims. Unless you are an employee (not just a director), these are typically unrecoverable. **Directors' fees**: Any directors' remuneration owed becomes an unsecured creditor claim. Like all unsecured creditors, you typically recover nothing in a compulsory liquidation. **Personal guarantees**: If you provided a personal guarantee for company debts (e.g., bank loans, property leases, supplier credit), creditors can pursue you personally after the company liquidates. Your personal assets (home, savings, vehicles) may be at risk. ### Your Status as a Director; Legal Standing Technically, you remain a director on the Companies House register until: - The company is dissolved (typically 3-6 months post-liquidation) - A dissolution order is issued by the Official Receiver - The company is removed from the register However, your title is meaningless; you hold no powers, no authority, and no ability to act. Many directors find it psychologically difficult to remain on the register while powerless; however, premature resignation or removal can complicate investigations or appear to indicate flight. You cannot resign as a director during liquidation without the liquidator's consent. Any purported resignation is ineffective and does not alter your duties or obligations. ### Practical Implications; Day-to-Day Reality In practice, once the winding-up order is issued: **Your company email ceases to function**: The liquidator takes control of all company systems. Your email address is deactivated; access to company cloud storage, accounting software, and client files is revoked. **Your bank accounts are frozen**: You cannot access company bank accounts, even if you held authorised signatory status. Any outstanding cheques are voided. Payment processing systems are taken offline or transferred to the liquidator. **Your office or business premises may be sealed**: The liquidator may secure company premises to prevent asset removal. If the company leases office space, the liquidator decides whether to retain or surrender the lease. **Your suppliers are contacted**: The liquidator notifies all known suppliers that the company is in liquidation and that no new credit is being extended. **Your clients are notified**: Depending on the business, clients receive notice of liquidation and instructions on asset or file recovery. **Your employees are notified of redundancy**: The liquidator formally notifies all employees that their contracts are terminated and the company is in liquidation. **Your personal phone and communications may be subpoenaed**: The liquidator or Official Receiver may request copies of your personal emails, text messages, and communications relating to company affairs. ### Emotional & Reputational Impact Losing control of a company you built, managed, and identified with is profoundly stressful. Many directors describe the experience as losing autonomy, identity, and status overnight. The public nature of liquidation; advertised in The Gazette and registered at Companies House; compounds the psychological toll. Key coping strategies: - Acknowledge that cooperation is now your primary objective; resistance or delay worsens outcomes - Distinguish between your personal identity and your director role; liquidation is a professional event, not a personal failure - Seek professional support; both legal counsel (for compliance) and mental health support (for stress management) - Focus on what you can control; full transparency, accurate documentation, and honest cooperation minimise further liability **Next step**: *Understanding the personal financial liabilities that compulsory liquidation can trigger; and how to assess your exposure to wrongful trading, preferences, and disqualification.* ## 5. Personal Liabilities; Wrongful Trading, Preferences & Undervalue Transactions The most critical anxiety for directors facing compulsory liquidation is personal liability; the risk that you will be pursued individually for company debts or misconduct. Unlike company debts (which die with the company), personal liability attaches to you as an individual and can result in court-ordered repayment, asset seizure, or personal insolvency. Not all directors face personal liability; however, the liquidator investigates systematically for specific breaches. Understanding these exposures; and defending against them; is essential. ### Wrongful Trading; The Primary Personal Liability Risk Wrongful trading is the most common basis for personal director liability in liquidation. It occurs when a director allows the company to continue trading at a time when insolvency was inevitable or foreseeable; thereby increasing creditors' losses. **Legal basis**: Insolvency Act 1986, Section 214. The liquidator can apply to court for a declaration that the director is personally liable to contribute to the company's assets. This is a civil claim; not criminal; but the financial consequences are severe. **The test**: A director is liable for wrongful trading if, at some point before the company entered insolvent liquidation: - The director knew, or ought to have known, that there was no reasonable prospect that the company would avoid entering insolvent liquidation; AND - The director did not take every step they ought to have taken to minimise the loss to creditors Courts assess "ought to have known" by reference to whether a reasonable and competent director in the same circumstances would have recognszed insolvency. **Key point**: Wrongful trading is objective; it does not require dishonesty or deliberate fraud. Even well-intentioned directors who failed to recognise or respond to insolvency face liability. ### Factual Triggers for Wrongful Trading Investigations The Official Receiver and liquidator focus on specific indicators: **Continuing to trade after statutory demands or creditor pressure**: If the company received unpaid statutory demands, invoices from major creditors, or creditor letters demanding payment; and continued trading without resolution; this is a red flag. **Trading through bank overdrafts or credit card debt**: If the company had no positive cash flow and relied on overdrafts or short-term credit to pay daily expenses; this indicates insolvency was foreseeable. **Failure to pay PAYE, NIC, or VAT**: Regular failure to remit employee taxes or VAT to HMRC; while continuing to pay other expenses or take director drawings; indicates the company was insolvent and the director prioritised their own remuneration over statutory obligations. **Director drawings during insolvency**: If directors withdrew salary, bonuses, or loans from the company during a period when the company could not pay creditors; this suggests the director knew insolvency was occurring and prioritised personal funds. **Unfunded expansion or new ventures**: Launching new business lines, hiring staff, or incurring capital expenditure during a period of known financial distress; without securing funding; indicates the director did not reasonably foresee insolvency. **Ignoring accounting information**: If management accounts, cash flow forecasts, or bank reconciliations clearly showed a path to insolvency; and the director ignored these signals or failed to prepare accounts; this is evidence of negligence or recklessness. **Taking on new debt or guarantees**: If the company took on new loans, overdrafts, or lease obligations when it was clear the company could not service existing debt; this indicates the director was not taking reasonable steps to minimise creditor loss. **Failure to explore alternatives**: If the company faced clear insolvency but the director did not explore administration, company voluntary arrangements, or voluntary liquidation; courts view this as failure to take steps to minimise creditor loss. ### Defences to Wrongful Trading Courts recognise limited defenses: **Honest belief in recovery**: If the director genuinely and reasonably believed the company would recover and avoid insolvency; based on concrete factors (major contract pending, significant asset sale imminent, creditor settlement negotiations); the director may escape liability. However, this requires documented evidence of the belief; not hindsight. **Reliance on professional advisors**: If the director relied on professional accountants, business advisors, or insolvency practitioners who advised that the company remained solvent; this may provide a defense. However, the director must have actively sought and relied on such advice; not ignored it. **Unforeseen events**: If insolvency resulted from events completely beyond the director's control (major customer collapse, market crash, loss of key contract due to external factors); and the director took reasonable steps to mitigate; courts may be sympathetic. However, this is rare; directors are expected to anticipate business risks. **Taking action**: If the director took concrete steps to minimise creditor loss (arranging administration, proposing a CVA, settling with major creditors, converting to voluntary liquidation); the court may reduce liability or award partial relief. ### Personal Liability Amount If wrongful trading is proven, the court declares the director personally liable to contribute to the company's assets. The amount is discretionary; based on: - Degree of director negligence or recklessness - Length of wrongful trading period - Amount of losses incurred to creditors during that period - Whether the director's conduct was deliberate or merely negligent Contributions range from modest sums (£10,000-50,000 for minor oversights) to six figures (£200,000+) for egregious cases involving years of insolvent trading and director drawings. **Example**: A director allowed a company to trade for 18 months while insolvent; continuing to draw £3,000 monthly salary while HMRC remained unpaid. The company accumulated £500,000 in unsecured creditor debt. The court imposed a £150,000 contribution order on the director; requiring personal repayment. ### Fraudulent Trading; Criminal & Civil Liability Fraudulent trading is distinct from wrongful trading; it involves intentional deception or dishonesty. It is far rarer but carries severe consequences; including criminal prosecution. **Legal basis**: Insolvency Act 1986, Section 213 (civil liability); Fraud Act 2006 (criminal liability). **The test**: A director is liable for fraudulent trading if; with intent to defraud creditors or other persons; they were knowingly a party to the company carrying on business with intent to defraud. "Intent to defraud" requires deliberate dishonesty; not mere recklessness. Fraudulent trading typically involves: - Deliberate misrepresentation of the company's financial condition to creditors or lenders - Obtaining credit through false statements - Diverting company funds to personal use knowing creditors would not be paid - Concealing assets or liabilities - Operating a "phoenix scheme" (winding down one company while establishing a successor to avoid creditors) ### Criminal Consequences Fraudulent trading can result in: - **Unlimited personal liability**: Unlike wrongful trading (where contributions are discretionary), fraudulent trading liability is unlimited - **Criminal imprisonment**: Up to 10 years imprisonment upon conviction - **Criminal record**: Resulting in employment restrictions, visa issues, and professional disqualification - **Confiscation of personal assets**: Courts can seize personal property obtained through fraud ### Civil Consequences The liquidator can pursue civil fraudulent trading claims; resulting in personal contribution orders to the company's assets. Criminal and civil proceedings can occur in parallel; and conviction in criminal court strengthens the civil claim. **Example**: A director operated a company using false invoices to obtain credit from suppliers; knowing the company could not pay. Upon liquidation; the Official Receiver brought both civil and criminal charges. The director was convicted of fraud; sentenced to 3 years imprisonment; and ordered to repay £300,000 to the company. ### Preferences; Favouring Some Creditors Over Others Preferences occur when a company; while insolvent or entering insolvency; makes payments or grants security to one creditor; while other creditors remain unpaid. The liquidator can recover these payments; clawing them back into the company's assets for fair distribution. **Legal basis**: Insolvency Act 1986, Section 239. Preferences can be recovered if made within six months of liquidation (or two years if the creditor is connected; e.g.; a director, relative, or related company). ### Common Preference Scenarios **Paying one supplier while ignoring others**: If the company prioritised payments to supplier A while supplier B remained unpaid; this is a preference. The liquidator can recover supplier A's recent payments. **Paying a director or related company**: If the company paid amounts owing to a director personally or to the director's other business while leaving third-party creditors unpaid; this is a preference toward a connected party. **Loan repayment to a director before HMRC**: If the company repaid a personal loan from a director while HMRC remained unpaid; HMRC can recover that payment. **Securing a liability to a bank or creditor**: If the company granted security (e.g.; a charge over assets) to a bank to secure a debt; while leaving unsecured creditors unpaid; this is a preference. **Accelerated payment to a major supplier**: If the company suddenly increased payment frequency to a key supplier (e.g.; paying weekly instead of monthly) as insolvency approached; knowing this creditor would otherwise be unpaid; this is a preference. ### Recovery of Preferences The liquidator applies to court for a recovery order; requiring the recipient creditor to return the payment. The creditor must repay; and the funds are redistributed fairly among all creditors. **Director liability for preferences**: Directors are not personally liable for making preference payments (the company is liable). However; if a director deliberately orchestrated a preference to benefit themselves or a related party; this can trigger wrongful trading or fraudulent trading liability. ### Defense to Preference Claims The only meaningful defence is the "running of the ordinary course of business" defense; which applies if: - The creditor was regularly paid on the same terms (e.g.; payment 30 days post-invoice) - The payment was made on that ordinary basis; without acceleration or deviation - The creditor had no knowledge the company was insolvent Example: If a company always paid supplier X by the 30th of each month; and continued to do so in the months before liquidation; that is not a preference; it is the ordinary course. ### Transactions at Undervalue; Selling or Disposing Assets Below Fair Value A transaction at undervalue occurs when the company disposes of assets; transfers funds; or enters into transactions at below market value while insolvent. The liquidator can unwind these transactions and recover assets or value. **Legal basis**: Insolvency Act 1986, Section 238. Undervalue transactions within two years of liquidation can be recovered. ### Common Undervalue Scenarios **Selling company assets to a director at below market value**: If the company sold property; equipment; or intellectual property to a director (or related party) at a price lower than fair market value; the liquidator can recover the difference or reclaim the asset. **Gifting company assets**: If the company transferred assets; goodwill; or funds to a director or related entity as a gift or without consideration; this is an undervalue transaction. **Writing off director debts**: If the company forgave amounts owed by a director (e.g.; wiping out a directors' loan account) without receiving consideration; this is an undervalue transaction. **Underpriced services or licenses**: If the company licensed intellectual property to a related entity at a nominal fee; or provided services at below cost; this is an undervalue transaction. **Property transfers at distress prices**: If the company sold real property or major assets at prices significantly below professional valuations; due to urgency or desperation; the liquidator may challenge these. ### Recovery Mechanisms The liquidator can: - **Recover the asset**: If the asset remains identifiable (e.g.; property); the liquidator can recover it directly - **Recover monetary value**: If the asset has been disposed of; the liquidator pursues a money judgment for the difference between fair value and actual value received - **Impose a charge**: The liquidator may place a charge on assets received in the undervalue transaction ### Director Liability for Undervalue Transactions As with preferences; directors are not automatically personally liable for undervalue transactions (the company liability arises). However; if a director deliberately transferred assets to themselves or related entities at undervalue; knowing this would harm creditors; this can trigger wrongful trading or fraudulent trading liability. ### Directors' Loan Accounts; Overdrawn Accounts & Clawback Risk Directors frequently have loan accounts with their company. These accounts can be in credit (the director has loaned money to the company) or overdrawn (the company has loaned or advanced money to the director). ### Overdrawn Directors' Loan Accounts (DLA) If a director's loan account is overdrawn; the company has advanced funds to the director. Upon liquidation; this becomes a debt owed by the director to the company. The liquidator can pursue the director personally for repayment. **Treatment in liquidation**: Overdrawn directors' loans are classified as preferential unsecured debts; meaning they rank ahead of general unsecured creditors (like suppliers) but behind preferential creditors (like employees owed wages). In practice; overdrawn director loans rarely recover anything in a compulsory liquidation because preferential creditors (employees) and expenses (Official Receiver fees; liquidation costs) exhaust the assets. **Personal liability**: The director must repay the overdrawn balance personally. If the director refuses; the liquidator can pursue a personal judgment; garnish wages; or seize assets. **Amount**: Investigate your company's accounting records. If your directors' loan account is significantly overdrawn; you face personal repayment exposure. **Common scenario**: A director borrowed £50,000 from the company (overdrawn account) to purchase a personal property. Upon liquidation; the liquidator pursued the director for £50,000 repayment. The director was issued a personal judgment and faced wage garnishment. ### In-Credit Directors' Loans If a director has loaned money to the company (in-credit account); this becomes a debt the company owes the director. However; the director ranks as an unsecured creditor; and in a compulsory liquidation involving creditor petitions; directors rarely recover their loans. The assets are depleted by employee wages; liquidation costs; and HMRC/secured creditors; leaving nothing for unsecured creditors (including directors). ### Personal Guarantees; Your Home & Personal Assets at Risk Many company debts come with personal guarantees; meaning a director personally guarantees the company's obligation to a creditor. Upon company liquidation; creditors with personal guarantees can pursue the director's personal assets. ### Common Personal Guarantees **Bank loans and overdrafts**: Banks typically require directors to personally guarantee business loans and overdraft facilities. If the company cannot pay; the bank pursues the director personally. **Commercial property leases**: Landlords typically require director personal guarantees on commercial leases. If the company fails to pay rent; the landlord can pursue the director for the full lease obligation (including future rent until lease termination). **Supplier credit**: Major suppliers sometimes require director personal guarantees on credit facilities. If the company cannot pay invoices; suppliers pursue directors personally. **Equipment financing and vehicle leases**: Finance companies often require director guarantees on equipment or vehicle leases. ### Personal Asset Exposure A personal guarantee makes the director personally liable for the guaranteed debt. This means: - Your personal bank accounts can be frozen - Your personal savings can be seized - Your home or personal property can be subject to a charge or execution - Your wages can be garnished - Court judgments can be obtained and enforced against your personal assets **Critical example**: A director personally guaranteed a £200,000 bank loan on behalf of the company. Upon company liquidation; the bank sued the director personally; obtained a judgment; and registered a charge against the director's home. The director was forced to pay or risk losing the home to forced sale. ### Negotiating Personal Guarantees Before Liquidation If you know the company is facing insolvency and you have provided personal guarantees; explore pre-liquidation options: - **Negotiate release**: Approach creditors (particularly banks) to negotiate release of personal guarantees in exchange for settlement - **Debt restructuring**: Propose a company voluntary arrangement; which may allow creditors to release personal guarantees - **Administration**: Entering administration may provide breathing room to negotiate guarantee releases - **Voluntary liquidation**: Converting to voluntary (creditors') liquidation may give you negotiating leverage with creditors Once a compulsory winding-up order is issued; your negotiating position collapses; and creditors will pursue personal guarantees aggressively. ### Assessment; What Is Your Personal Liability Exposure? To assess your personal liability risk in a compulsory liquidation, consider: **Wrongful trading indicators**: - Did the company trade while clearly unable to pay creditors? - Did you continue director drawings while debts accumulated? - Did the company fail to pay PAYE or VAT while paying other expenses? - Did you ignore signs of insolvency (bad cash flow; creditor demands; accounting warnings)? If yes to multiple questions; you face wrongful trading exposure. **Preferences**: - Did you or your company receive payments from the company shortly before liquidation? - Did the company prioritise payments to certain creditors while ignoring others? - Did you receive director loans or payments that others did not? If yes; you may face preference clawback. **Undervalue transactions**: - Did you purchase company assets; intellectual property; or goodwill at below-market prices? - Did the company transfer assets to you or related entities without fair consideration? - Did the company forgive amounts owed by you? If yes; the liquidator may pursue undervalue recovery. **Directors' loan account**: - Is your directors' loan account overdrawn? - If so; by how much? You face personal liability for the full overdrawn balance. **Personal guarantees**: - Did you provide personal guarantees for company debts (bank loans; leases; supplier credit)? - What is the outstanding balance on each guarantee? You are personally liable for the full amount; and creditors will pursue you personally post-liquidation. ### Next Steps If you face exposure in any of these areas; immediate action is essential: - **Document your defense**: Gather evidence supporting your decisions (e.g.; professional advice received; recovery plans attempted; market conditions explaining failures) - **Seek legal counsel**: Contact Lexlaw's winding-up specialists to assess your specific exposure and develop a defense strategy - **Cooperate with the liquidator**: Full transparency and cooperation minimise further investigation; even if you face exposure in one area - **Explore settlement**: In some cases; directors and liquidators negotiate settlements; reducing personal liability exposure **Next step**: *Understanding director disqualification; the process by which the Insolvency Service investigates unfit conduct; and the consequences of disqualification.* ## 6. Personal Guarantees; Your Home & Personal Assets at Risk Many company debts come with personal guarantees; meaning a director personally guarantees the company's obligation to a creditor. Upon company liquidation; creditors with personal guarantees can pursue the director's personal assets. ### Common Personal Guarantees **Bank loans and overdrafts**: Banks typically require directors to personally guarantee business loans and overdraft facilities. If the company cannot pay; the bank pursues the director personally. **Commercial property leases**: Landlords typically require director personal guarantees on commercial leases. If the company fails to pay rent; the landlord can pursue the director for the full lease obligation (including future rent until lease termination). **Supplier credit**: Major suppliers sometimes require director personal guarantees on credit facilities. If the company cannot pay invoices; suppliers pursue directors personally. **Equipment financing and vehicle leases**: Finance companies often require director guarantees on equipment or vehicle leases. ### Personal Asset Exposure A personal guarantee makes the director personally liable for the guaranteed debt. This means: - Your personal bank accounts can be frozen - Your personal savings can be seized - Your home or personal property can be subject to a charge or execution - Your wages can be garnished - Court judgments can be obtained and enforced against your personal assets **Critical example**: A director personally guaranteed a £200,000 bank loan on behalf of the company. Upon company liquidation; the bank sued the director personally; obtained a judgment; and registered a charge against the director's home. The director was forced to pay or risk losing the home to forced sale. ### How Personal Guarantees Are Enforced Post-Liquidation Once the company enters compulsory liquidation; creditors holding personal guarantees move swiftly to enforce them: **Step 1; Demand letter**: The creditor sends a formal demand letter to the director; requesting immediate payment of the guaranteed debt. **Step 2; Court proceedings**: If the director does not pay within a specified period (typically 14-30 days); the creditor files a claim in court seeking a judgment for the full amount. **Step 3; Judgment**: The court enters judgment against the director personally. This judgment becomes a matter of public record and damages the director's credit score. **Step 4; Enforcement**: Armed with a judgment; the creditor pursues enforcement through: - **Garnishment orders**: Directing the director's employer to withhold wages and pay the creditor - **Charging orders**: Placing a charge against the director's home or other property - **Attachment of earnings**: Regular deductions from the director's salary - **Third-party debt orders**: Freezing the director's personal bank accounts - **Bailiff enforcement**: In extreme cases; seizing and selling personal assets to satisfy the judgment ### Distinguishing Personal Guarantees from Personal Liability It is critical to distinguish between: **Personal guarantee liability**: Director has explicitly signed a guarantee document; accepting personal liability for a specific company debt. The creditor pursues the guarantee; not the company. **Personal liability from wrongful trading or preferences**: Director is held personally liable by the liquidator for director misconduct or breach of statutory duty. The liquidator pursues personal liability; not the creditor. **Both**: In some cases; a director faces both personal guarantee liability (to creditors) and personal liability to the liquidator for wrongful trading. This compounds exposure. ### Investigating Your Personal Guarantee Exposure Review all company contracts; loan agreements; and lease documents signed during your directorship. Identify: - **Bank guarantees**: Loan agreements; overdraft facilities; and credit cards - **Lease guarantees**: Any commercial property leases - **Supplier guarantees**: Terms and conditions of major supplier relationships - **Equipment leases**: Vehicle leases; machinery financing; or IT equipment agreements For each guarantee; record: - The creditor's name and contact details - The guaranteed amount (original debt) - Current outstanding balance - Guarantee expiry date or termination clause ### Negotiating Personal Guarantees Before Liquidation If you know the company is facing insolvency and you have provided personal guarantees; explore pre-liquidation options: **Negotiate release**: Approach creditors (particularly banks) to negotiate release of personal guarantees in exchange for settlement. Banks sometimes release guarantees if the director settles the company debt at a discount (e.g.; 50% of the outstanding balance). **Debt restructuring**: Propose a company voluntary arrangement; which may allow creditors to release personal guarantees in exchange for an agreed payment plan. **Administration**: Entering administration may provide breathing room to negotiate guarantee releases with creditors. **Voluntary liquidation**: Converting to voluntary (creditors') liquidation may give you negotiating leverage with creditors; allowing you to negotiate guarantee releases as part of a creditor composition. **Secured asset sale**: If the company owns valuable assets; arrange a pre-liquidation sale; using proceeds to settle creditors and negotiate guarantee releases. Once a compulsory winding-up order is issued; your negotiating position collapses; and creditors will pursue personal guarantees aggressively. ### Personal Guarantee Defences Limited defences exist; but they warrant exploration: **Guarantee release clause**: Review the guarantee document. Some guarantees include expiry dates; conditions; or automatic termination clauses. If the guarantee has expired or its conditions were not met; it may be unenforceable. **Procedural defects**: If the creditor failed to follow proper enforcement procedures (e.g.; failed to provide required notices; breached the guarantee terms); this may provide a defence. **Misrepresentation by creditor**: If the creditor misrepresented the terms; amount; or nature of the guaranteed debt when requesting the guarantee; this may render it unenforceable. **Unfair contract terms**: If the guarantee clause is ambiguous; unreasonable; or breaches consumer rights legislation; courts may decline to enforce it (rare for commercial guarantees). **Duress or lack of consent**: If the director was coerced into signing the guarantee or did not genuinely consent; this may be a defence (very rare and difficult to prove). ### What Happens to Your Home Your home is often the most valuable personal asset. If you have provided a personal guarantee secured against your home (or if a creditor obtains a charging order against your home as enforcement of a judgment); you face the risk of forced sale. **Registered charge**: If your home has a formal charge registered at the Land Registry (e.g.; as security for a personal guarantee); the creditor can apply to court for an order for sale; forcing your home to be sold to satisfy the debt. **Charging order**: If a creditor obtains a judgment and registers a charging order against your home; they can later apply for an order for sale. Courts have discretion to refuse an order for sale; but this discretion is limited. **Practical reality**: Most creditors will not force a sale unless the home equity significantly exceeds the guaranteed debt; as forced sales incur legal costs; court fees; and delays. However; the threat of forced sale is real; and some creditors do pursue this option. ### Family Home Protection In limited circumstances; UK law provides protections for the family home: **Principal private residence**: If your home is your principal private residence (not a buy-to-let or second home); courts have discretion to stay or delay enforcement; particularly if doing so would render your family homeless. However; this discretion is limited; and creditors often eventually pursue forced sale. **Spouse's interests**: If your spouse owns a share of the home or has an interest in the home; their interests are typically protected ahead of creditors. However; if the spouse's share is small and the creditor's claim is large; forced sale may still occur. **Children and dependent family members**: Courts may consider the impact on dependent children when deciding whether to grant an order for sale. However; this is not a bar to enforcement; merely a factor in the court's discretion. ### Insurance and Protection Products Some directors purchase "personal guarantee insurance" or "key person insurance" to protect against personal liability. However; these products are: - Limited in scope (typically covering only specific debts; not all personal guarantees) - Expensive (premiums of 2-5% of the guaranteed amount annually) - Often excluded in cases of wrongful trading or director misconduct - Difficult to claim against (insurance companies dispute liability) For most directors; insurance is not practical; and prevention (avoiding unnecessary personal guarantees; negotiating their release pre-liquidation) is preferable. ### Personal Guarantee Negotiation Strategy If you are facing compulsory liquidation and hold significant personal guarantees; consider: - **Quantify exposure**: Calculate total guaranteed debt across all creditors - **Prioritise by creditor size**: Focus on largest creditors first (banks; landlords; major suppliers) - **Approach creditors early**: Contact creditors before the liquidator appointment; whilst you have leverage - **Propose settlement**: Offer to settle guarantees at a discount (e.g.; 60-70% of outstanding balance) in exchange for guarantee release - **Request written release**: Obtain written confirmation of guarantee release and settlement; preventing future pursuit - **Document everything**: Keep records of all settlement agreements and guarantee releases **Example negotiation**: A director held personal guarantees totalling £300,000 (£200,000 bank loan; £100,000 landlord lease guarantee). Facing compulsory liquidation; the director approached the bank and proposed settling the guarantee for £120,000 (60% discount). The bank agreed; and the director negotiated a payment plan. The landlord agreed to a £60,000 settlement (60% discount) and agreed to surrender the guarantee once paid. Total settlement cost; £180,000; versus £300,000 personal exposure. ### Next Steps If you hold significant personal guarantees: - **Obtain copies of all guarantee documents**: Review terms; amounts; and conditions - **Calculate total exposure**: Sum all guaranteed debts across all creditors - **Assess settlement capacity**: Determine how much you could realistically pay to settle guarantees at a discount - **Contact Lexlaw specialists**: Seek advice on negotiation strategy; timing; and legal protections available in your situation - **Act urgently**: The window to negotiate is narrow; once compulsory liquidation is entered; creditors move aggressively Personal guarantee liability is often more threatening to directors than wrongful trading or disqualification liability; because it is immediate; enforceable; and attacks personal assets directly. **Next step**: *Director disqualification; the formal investigation process; and how the Insolvency Service determines whether you are unfit to be a director.* ## 7. Director Disqualification; Investigation, Unfitness & Consequences Director disqualification is a formal process; distinct from personal liability; in which the Insolvency Service investigates whether a director's conduct was "unfit" and; if so; bans them from serving as a director for 2-15 years. Disqualification is not automatic upon liquidation; but it is the default outcome for most directors of compulsorily liquidated companies. Understanding the investigation process; grounds for disqualification; and available defences is essential. ### What Is Director Disqualification? Director disqualification is a civil sanction; not a criminal conviction; imposed under the Company Directors Disqualification Act 1986. A disqualified director is prohibited from: - Acting as a director of any company - Acting as a company secretary - Acting in any management or decision-making capacity in a company (de facto directorship) - Promoting, forming, or managing any company Breach of a disqualification order results in criminal liability; unlimited fines; and up to two years imprisonment. ### The Investigation Process; The Three-Year Lookback Upon a compulsory winding-up order; the Official Receiver is statutorily required to investigate whether the director's conduct warrants disqualification. This investigation is mandatory and applies to all compulsorily liquidated companies. **Three-year scope**: The Official Receiver investigates the director's conduct during the three years preceding the liquidation order. This is not arbitrary; it reflects the typical period during which director conduct materially affects solvency. **Investigation timeline**: The Official Receiver typically completes the investigation within 6-18 months; depending on company complexity and asset realisation progress. ### Grounds for Disqualification Directors are disqualified if they have been guilty of conduct making them unfit to be a director. The courts consider a statutory list of matters: ### Statutory Grounds (Company Directors Disqualification Act 1986, Schedule 1) **1. Accounting records and returns**: Failure to keep proper accounting records; failure to file accounts; or failure to maintain statutory registers (members; directors; charges). **Example**: A company failed to file accounts for three consecutive years. The Official Receiver cited this as evidence of unfitness. **2. Failure to remedy accounting breaches**: Receiving notice from Companies House to remedy accounting failures; but failing to do so within a specified timeframe. **3. Misconduct as a director**: Any act or omission constituting breach of duty; including: - Causing company losses through negligence; incompetence; or lack of judgment - Entering into transactions without proper authority or disclosure - Failing to disclose conflicts of interest - Trading whilst insolvent (wrongful trading) - Fraudulent trading or dishonesty - Entering into unlawful transactions **Example**: A director failed to disclose a conflict of interest; allowed a company to enter into a disadvantageous contract with a related party; and caused significant loss. **4. Substantial property transactions not disclosed**: Failing to disclose property transactions above specified thresholds; or failing to obtain proper approvals. **5. Loans and credit transactions not disclosed**: Failing to disclose loans to directors or related parties; or failing to obtain proper shareholder approval. **Example**: A director borrowed £100,000 from the company without disclosure or board approval; and never repaid it. **6. Entering into contracts without disclosure or approval**: Contracting with the company without proper conflict disclosure or shareholder approval. **7. Breach of trust**: Acting in breach of trust; including misappropriation of company assets; embezzlement; or self-dealing without proper authority. **8. Recklessness**: Acting in a reckless manner; demonstrating lack of reasonable care; skill; or diligence in company management. **9. Negligence**: Gross negligence in company affairs; such as failing to monitor finances; ignoring warning signs of insolvency; or making poor business decisions. ### Practical Indicators Triggering Investigation The Official Receiver focuses on specific red flags: **Poor financial record-keeping**: If the company failed to maintain proper accounting records; the Official Receiver assumes the director failed to exercise proper control. This is grounds for disqualification regardless of outcome. **Insolvent trading**: If the company traded whilst clearly insolvent; the Official Receiver investigates whether the director knew or should have known of insolvency and failed to take action. **Director drawings during insolvency**: If directors withdrew salary; bonuses; or loans while the company could not pay creditors or statutory obligations; this is evidence of unfitness. **Failure to pay PAYE and NIC**: Regular failure to remit employee tax and National Insurance contributions; whilst paying other expenses; is viewed as prioritising personal interests over statutory obligations. This is almost always cited as unfitness. **Failure to pay VAT**: Similarly; failing to remit VAT to HMRC whilst continuing to operate indicates unfitness. **Preference payments**: If the director arranged for the company to make preference payments (paying some creditors whilst ignoring others); this is evidence of unfitness. **Undervalue transactions**: If the director caused the company to enter into transactions at undervalue; particularly involving related parties; this indicates unfitness. **Related party transactions**: If the director entered into contracts with related parties (relatives; spouse; other companies owned by the director) on unfavourable terms; without proper disclosure or approval; this is unfitness. **Asset misappropriation**: If assets were transferred to the director or related parties at below fair value; or if the director misappropriated company funds; this is evidence of unfitness. **Multiple liquidations**: If the director has had multiple companies liquidated; particularly within a short timeframe; the Official Receiver assumes a pattern of misconduct and unfitness. **Failure to cooperate**: If the director refuses to provide documentation; fails to attend private examinations; or withholds information during the investigation; the Official Receiver may infer unfitness based on non-cooperation alone. ### The Disqualification Threshold; Objective vs. Subjective Assessment Courts apply an objective standard; asking whether; having regard to the director's knowledge; experience; and responsibilities; their conduct was such that they ought not to continue as a director. **Key principle**: Disqualification does not require dishonesty; fraud; or deliberate wrongdoing. Simple negligence; incompetence; or poor judgment suffices if it demonstrates unfitness. **Example of objective unfitness**: A director; lacking accounting or business training; failed to understand company finances; failed to review management accounts; and allowed the company to trade into insolvency. Despite good intentions; the director's lack of competence and failure to seek advice demonstrated unfitness. ### The Disqualification Procedure ### Step 1; Official Receiver's Report and Recommendation The Official Receiver completes an investigation report; documenting: - Grounds for disqualification - Specific conduct found to be unfit - Recommended disqualification period (2-15 years) - Documentary evidence supporting the findings The report is provided to the director; who has an opportunity to respond or comment. ### Step 2; Director's Response and Options Upon receiving the Official Receiver's report; the director has several options: **Option A; Voluntary undertaking**: The director agrees to be disqualified and submits a written "undertaking" to the Secretary of State; accepting disqualification for a specified period. This is the fastest and cheapest route; avoiding court proceedings. **Advantages of undertaking**: - Avoids court hearing and publicity - Faster resolution (disqualification is registered within weeks) - Demonstrates cooperation to the Official Receiver - May reduce the disqualification period negotiated with the Official Receiver **Disadvantages of undertaking**: - No opportunity to defend or challenge findings - Disqualification is registered and cannot be appealed - Public record of disqualification - Director must accept all findings of unfitness **Option B; Court proceedings**: The director disputes the Official Receiver's findings and requests a court hearing. The Official Receiver applies to the High Court for a disqualification order; and the director appears to present a defence. **Advantages of court proceedings**: - Opportunity to contest the Official Receiver's findings - Legal representation and cross-examination of Official Receiver evidence - Possibility of dismissal if evidence is weak - Possible negotiation of a lower disqualification period - Right to appeal the court's decision **Disadvantages of court proceedings**: - Significant legal costs (typically £5,000-15,000+) - Lengthy process (6-12 months or longer) - Public court hearing; high publicity - Uncertain outcome; court may impose longer disqualification than Official Receiver recommended - Continued uncertainty and stress during proceedings ### Step 3; Court Hearing (If Contested) If the director elects court proceedings; the case is heard in the High Court. The Official Receiver bears the burden of proving unfitness; but the standard is "balance of probabilities" (lower than criminal "beyond reasonable doubt"). **Court's assessment**: - Reviews the director's conduct over the three-year period - Considers whether; objectively; the conduct demonstrates unfitness - Hears evidence from the Official Receiver and any witnesses - Hears the director's defence and any evidence supporting fitness **Court's discretion**: If the court finds unfitness; it has discretion to impose a disqualification period between 2 and 15 years. **Factors affecting disqualification period**: - **Dishonesty or fraud**: 10-15 years (most severe) - **Recklessness or gross negligence**: 5-10 years - **Simple negligence or poor judgment**: 2-5 years - **Mitigating factors**: Director's age; health; first-time failure; cooperation; professional advice sought; market circumstances ### Step 4; Registration and Effect Once a disqualification order is made (by undertaking or court order); it is registered at Companies House and becomes a matter of public record. The director is immediately prohibited from acting as a director. **Public record**: The director's name; company; disqualification period; and date appear on the Insolvency Service's register of disqualified directors; accessible to the public. ### Defences to Disqualification Limited defences are available; and success is rare: ### 1. Challenging Factual Findings The director can dispute the Official Receiver's factual allegations; arguing that the conduct did not occur or occurred differently. This requires documentary evidence or witness testimony. **Example**: The Official Receiver alleges the director failed to file accounts. The director produces evidence that accounts were filed on time and the Official Receiver's records are incorrect. ### 2. Context and Mitigation The director can argue that; whilst misconduct occurred; contextual factors mitigate culpability: - The company operated in a difficult market or faced unforeseen circumstances - The director sought professional advice and relied upon it - The director was inexperienced or lacked training; but acted in good faith - The director took corrective action (e.g.; hired accountants; restructured) before liquidation - The company's failure resulted from external factors beyond the director's control **Example**: A director failed to file accounts due to a catastrophic server failure destroying accounting records. The director immediately hired external accountants to reconstruct records and filed late but complete accounts. ### 3. No Nexus Between Conduct and Insolvency The director can argue that the alleged misconduct did not cause or contribute to the company's insolvency; and therefore does not demonstrate unfitness. **Example**: The Official Receiver alleges the director failed to review management accounts. However; the company's failure resulted entirely from a major customer going bankrupt; not from poor financial management. ### 4. First-Time Failure and Inexperience Inexperience and first-time failure are not absolute defences; but they are significant mitigating factors. A director managing their first company who made honest mistakes may receive a shorter disqualification period or avoid disqualification entirely. ### 5. Post-Liquidation Remedial Action Actions taken after liquidation; whilst not erasing past conduct; may influence disqualification period: - Full cooperation with the Official Receiver - Settlement of personal liabilities (wrongful trading; preferences) - Repayment of director loans - Compensation to creditors ### Disqualification Periods; What Do They Mean? Disqualification periods range from 2 to 15 years: | Period | Typical Circumstances | Likelihood | | ------ | --------------------- | ---------- | | 2-3 years | First-time failure; simple negligence; no dishonesty; cooperation with Official Receiver | ~5% of disqualifications | | 4-6 years | Moderate negligence; poor financial controls; PAYE/VAT arrears; but no fraud | ~40% of disqualifications | | 7-10 years | Serious recklessness; gross negligence; wrongful trading; preference payments; multiple failures | ~45% of disqualifications | | 11-15 years | Fraud; dishonesty; serious misconduct; deliberate rule-breaking; multiple liquidations | ~10% of disqualifications | **Key insight**: The modal disqualification period is 6 years; reflecting the most common scenario; a director whose negligence contributed to insolvency but who was not dishonest. ### Consequences of Disqualification Disqualification imposes severe consequences: ### Professional & Employment Impact - Cannot serve as a director of any UK company - Cannot act as a company secretary - Cannot hold any management role in a company (statutory definition of "de facto directorship") - Cannot be appointed as an insolvency practitioner; auditor; or company formation agent - Professional disqualification (e.g.; from solicitor's roll; accounting body membership; financial services licenses) - Employment restrictions; many employers conduct director disqualification checks and refuse to hire disqualified directors ### Financial Impact - Cannot access director's loans or benefits from companies - Difficulty obtaining personal credit; loans; or mortgages - Higher insurance premiums; if available at all - Difficulty securing business premises or commercial credit - Potential personal liability for company debts if operating as a de facto director whilst disqualified ### Reputational Impact - Public record; accessible to creditors; suppliers; customers; and competitors - Damaged business reputation; particularly in industries sensitive to director conduct - Difficulty establishing new businesses; as partners; investors; and lenders conduct due diligence - Social stigma; particularly in professional networks ### Criminal Liability for Breach If a disqualified director acts as a director; company secretary; or de facto director during the disqualification period: - Criminal prosecution; resulting in unlimited fines - Up to two years imprisonment - Disqualification extended by further period - Personal liability for all company debts incurred during the disqualification period breach ### Disqualification and Multiple Liquidations Directors of multiple liquidated companies face heightened disqualification risk. The Official Receiver applies a "pattern of conduct" analysis; presuming that multiple failures indicate systemic unfitness; not mere misfortune. **Two-company rule**: If a director has had two or more companies liquidated; disqualification is likely; even if individual conduct in each company was not egregiously unfit. **Three-company rule**: If a director has had three or more companies liquidated; disqualification is virtually certain; and the period is typically 10+ years. **Phoenix company rule**: If the director formed new companies shortly after previous liquidations; using similar names; trading models; or creditor bases; the Official Receiver views this as deliberate phoenix behaviour (creating new companies to evade creditor claims); and disqualification is 10-15 years. ### Disqualified Directors Register The Insolvency Service maintains a public register of disqualified directors; accessible at insolvency.service.gov.uk. Any member of the public can search this register; and the director's name; company; disqualification period; and date remain visible to potential creditors; business partners; and investors. ### Strategies to Minimise Disqualification Risk ### Before Liquidation - **Maintain proper accounting records**: Invest in professional bookkeeping and accounting software - **File accounts and returns promptly**: Avoid late filing penalties and accounting default notices - **Seek professional advice**: Document evidence of advice sought from accountants; business advisors; or insolvency practitioners - **Pay statutory obligations**: Prioritise PAYE; NIC; and VAT remittance to HMRC - **Document decisions**: Maintain board minutes; emails; and records explaining business decisions; to demonstrate reasoned judgment - **Explore alternatives early**: If insolvency appears foreseeable; consider administration; company voluntary arrangement; or voluntary liquidation; rather than allowing compulsory liquidation ### During Investigation - **Cooperate fully**: Provide all documentation; attend all interviews; and answer all questions truthfully - **Engage legal representation**: Retain a solicitor experienced in disqualification defence to review the Official Receiver's report and advise on response options - **Prepare a detailed response**: If the Official Receiver's findings are disputed; prepare a comprehensive response documenting your perspective; with supporting evidence - **Consider voluntary undertaking**: If the Official Receiver's recommendations are reasonable; a voluntary undertaking avoids court proceedings and demonstrates acceptance of responsibility ### Court Proceedings - **Instruct experienced counsel**: Retain a barrister specialising in director disqualification to represent you at the High Court hearing - **Prepare witness evidence**: Gather character references; professional support letters; and evidence of remedial action post-liquidation - **Challenge weak allegations**: Cross-examine the Official Receiver's witnesses and challenge unsupported findings - **Negotiate disqualification period**: If unfitness is likely to be found; negotiate the disqualification period; accepting 4-6 years rather than risking 10+ years at trial ### Post-Disqualification Relief In limited circumstances; directors can apply for relief from disqualification; either: **Waiver or variation**: A director can apply to court for permission to act as a director in relation to a specific company; despite disqualification. Courts grant waivers only in exceptional circumstances; typically where the director has demonstrated rehabilitation and the public interest is served. **Early termination**: A director can apply to court for early termination of the disqualification order; if at least two years of the disqualification period have elapsed and the director demonstrates rehabilitation. Success is rare; but possible in cases of genuine change in circumstances. ### Next Steps If you are facing compulsory liquidation and concerned about disqualification risk: - **Contact the Official Receiver**: Obtain a copy of any investigation report or disqualification notice - **Assess disqualification exposure**: Review the grounds the Official Receiver is relying upon - **Gather evidence**: Collect documentation supporting your defence; professional advice sought; and mitigating circumstances - **Engage legal representation**: Contact Lexlaw or a specialist disqualification solicitor for advice - **Decide on response strategy**: Determine whether to seek a voluntary undertaking or contest proceedings Disqualification is not inevitable; even for most compulsorily liquidated directors. Early engagement with specialist legal counsel significantly improves outcomes. **Next step**: *Understanding the distinction between director disqualification and personal insolvency; and the risk of bankruptcy following compulsory liquidation.* ## 8. Personal Bankruptcy vs. Disqualification; the Distinction Many directors facing compulsory liquidation conflate disqualification with personal bankruptcy; assuming that company liquidation automatically triggers personal insolvency. This is a critical misunderstanding. Disqualification and personal bankruptcy are distinct legal processes; with different triggers; consequences; and timelines. Understanding the distinction is essential; as the risks and remedies differ significantly. ### What Is Personal Bankruptcy? Personal bankruptcy (formally; "insolvency" under UK law) occurs when an individual is unable to pay their personal debts as they fall due. Bankruptcy can be initiated by: ### Creditor-Initiated Bankruptcy (Bankruptcy Petition) A creditor owed £5,000 or more can petition the court for a bankruptcy order against an individual. The process mirrors company winding-up; with a statutory demand; court petition; hearing; and judgment. ### Voluntary Bankruptcy (Debt Relief Order or Individual Voluntary Arrangement) An individual can voluntarily enter a Debt Relief Order (DRO) or propose an Individual Voluntary Arrangement (IVA) to manage personal debts outside bankruptcy. ### Key Differences; Company Liquidation vs. Personal Bankruptcy | Aspect | Company Liquidation | Personal Bankruptcy | | ------ | ------------------- | ------------------- | | **Entity** | Company (separate legal person) | Individual (personal assets) | | **Trigger** | Company debt exceeding £750 | Personal debt exceeding £5,000 | | **Control** | Liquidator takes company assets | Trustee takes personal assets | | **Director's Status** | Director remains individual; company wound up | Individual declared bankrupt; assets vested in trustee | | **Personal Assets** | Protected (unless personal liability or guarantee) | At risk (trustee takes and distributes to creditors) | | **Duration** | 6-18 months (company dissolution) | 3 years (discharge); bankruptcy remains on credit file 6 years | | **Disqualification** | Automatic investigation; 2-15 year ban possible | Not automatic; may follow if director misconduct identified | | **Employment** | Directors can work (unless disqualified) | Bankrupt may face employment restrictions | ### Will Company Liquidation Lead to Personal Bankruptcy? **Short answer**: Not automatically. Most directors of compulsorily liquidated companies do not become personally bankrupt. **However**: Company liquidation can trigger personal bankruptcy if: ### Personal Liability Attached If the director is personally liable (via wrongful trading; fraudulent trading; preference; or undervalue transaction); and the liquidator obtains a judgment; the director becomes a judgment debtor. If the judgment is unsatisfied; a creditor can petition for personal bankruptcy. **Example**: A liquidator obtained a £100,000 wrongful trading judgment against a director. The director failed to pay. The liquidator (or the creditor who holds the judgment) petitioned for bankruptcy; triggering personal insolvency proceedings. ### Personal Guarantees Pursued If creditors pursue personal guarantees (e.g.; bank loans; lease guarantees) after company liquidation; and the director cannot pay; creditors can petition for personal bankruptcy. **Example**: A director personally guaranteed a £150,000 bank loan. Upon company liquidation; the bank sued the director for the full amount; obtaining a judgment. The director could not pay; and the bank petitioned for bankruptcy. ### Director's Personal Debts Exceed Capacity If the director has significant personal debts unrelated to the company (personal loans; credit cards; mortgages); and company liquidation has destroyed the director's income; the director may find themselves unable to pay personal debts; triggering voluntary or creditor-initiated bankruptcy. **Example**: A director earned £80,000 annually as the company's sole income source. Upon liquidation; the director lost this income. The director could not service a personal mortgage; credit cards; and personal loans; and creditors petitioned for bankruptcy. ### The Critical Distinction; Judgment Debtor vs. Bankrupt A director who faces a judgment (from a liquidator or creditor) but does not have a bankruptcy order is a "judgment debtor." This is different from bankruptcy: **Judgment debtor**: - Owes a specific judgment debt to a creditor or liquidator - Creditors can pursue enforcement (wage garnishment; asset seizure; charge on property) - Director remains personally solvent (until bankruptcy is triggered) - No automatic restrictions on employment or business activity - Director can negotiate settlement with creditor **Bankrupt**: - Declared bankrupt by court order - Trustee takes control of all personal assets and distributes to creditors fairly - Director faces restrictions on employment; financial services; and directorships - Bankruptcy discharge occurs after 3 years; but credit file impact lasts 6 years - Limited personal autonomy during bankruptcy period ### Can a Director Facing Company Liquidation Avoid Personal Bankruptcy? **Yes; in most cases**. Directors who: - **Have no personal guarantees** or whose guarantees are released - **Have no personal liability** from wrongful trading; preferences; or undervalue transactions - **Have sufficient personal assets or income** to satisfy any judgments or personal debts - **Cooperate fully** with the liquidator and Official Receiver - **Settle personal liabilities** before creditors escalate to bankruptcy petitions ...will likely avoid personal bankruptcy. The company liquidates; the director faces possible disqualification; but personal insolvency does not follow. ### When Personal Bankruptcy Is Likely Personal bankruptcy becomes likely if the director: ### Has Multiple Judgments If the liquidator; preferred creditors; and personal creditors all obtain judgments totalling amounts the director cannot pay; personal bankruptcy becomes inevitable. ### Cannot Service Personal Guarantee Judgments If bank loans or lease guarantees result in six-figure judgments that the director cannot pay within a reasonable timeframe; creditors will petition for bankruptcy. ### Has No Personal Wealth or Income If the director loses the company as their sole income source; and has no personal savings or assets; and faces multiple creditor claims; personal bankruptcy is likely. ### Refuses to Cooperate or Settle If the director avoids creditors; refuses to negotiate settlements; or attempts to conceal assets; creditors escalate to bankruptcy petitions as a collection mechanism. ### How to Avoid Personal Bankruptcy ### Pre-Liquidation Actions **1. Negotiate personal guarantee releases**: Approach creditors before liquidation to negotiate release or settlement of personal guarantees. **2. Secure professional income**: Ensure you have personal income sources independent of the company (employment; other business interests; investment income). **3. Preserve personal assets**: Avoid unnecessary personal guarantees; maintain separation between company assets and personal assets; and protect your home from charges or liens. **4. Settle disputed debts**: Resolve any disputed debts with creditors before they escalate to statutory demands or petitions. **5. Explore company restructuring**: Company voluntary arrangements; administration; or voluntary liquidation may allow negotiation of personal liabilities before compulsory liquidation occurs. ### Post-Liquidation Actions **1. Cooperate fully**: Provide all documentation; attend all interviews; and support the liquidator's investigation. **2. Assess personal liability exposure**: Determine whether you face wrongful trading; preference; or undervalue transaction liability; and prepare a defence or settlement strategy. **3. Settle judgments promptly**: If a judgment is obtained; attempt to negotiate settlement or payment plan before the creditor escalates to bankruptcy petition. **4. Secure employment or income**: Ensure you have personal income to service personal debts and satisfy any judgments. **5. Seek debt advice**: Contact a debt counsellor or insolvency advisor to explore options for managing personal debts without bankruptcy. ### Personal Insolvency Options; Alternatives to Bankruptcy If a director faces personal debt exceeding their capacity to pay; alternatives to formal bankruptcy exist: ### Debt Relief Order (DRO) A DRO is available to individuals with personal debts under £15,000; minimal assets; and limited income. A DRO: - Freezes creditor action for 36 months - Debts are written off after 36 months if circumstances do not improve - Less intrusive than bankruptcy; lower cost - But; remains on credit file for 6 years and imposes restrictions on financial services ### Individual Voluntary Arrangement (IVA) An IVA allows an individual to propose a payment plan to creditors; typically paying a percentage of debt over 5 years. IVAs: - Avoid formal bankruptcy - Allow negotiation with creditors - Permit continued employment and business activity - But; require creditor approval (75% by debt value) and strict adherence to payment terms ### Informal Settlement In some cases; directors can negotiate informal settlements with creditors; paying a lump sum in settlement of multiple debts. This avoids formal insolvency proceedings; but requires liquid capital. ### Personal Bankruptcy and Disqualification; Are They Connected? **No; they are separate**. A director can be: - **Disqualified but not bankrupt**: Most common scenario; director is banned from directorships but remains personally solvent - **Bankrupt but not disqualified**: Director becomes personally insolvent but the Official Receiver concludes conduct does not warrant director disqualification - **Both disqualified and bankrupt**: Director faces both restrictions from disqualification and personal insolvency proceedings Disqualification focuses on whether the director is unfit to hold office; bankruptcy focuses on whether the director can pay personal debts. These are distinct enquiries; though in severe cases (fraud; multiple failures); both may apply. ### Tax and Personal Bankruptcy If a director faces significant tax liabilities from the company (director loans; misallocated income; undeclared earnings); HMRC may pursue the director personally. HMRC debts do not disappear in bankruptcy; and HMRC can petition for bankruptcy if tax debts are unpaid. For complex tax situations involving company failure and personal tax exposure; contact Lexlaw's tax disputes specialists at taxdisputes.co.uk for advice on settlement negotiation and personal tax liability management. ### Emotional and Psychological Impact Personal bankruptcy carries psychological weight beyond company liquidation. Many directors report that personal bankruptcy feels more invasive; as it involves personal assets; income; and autonomy. However; bankruptcy is also a mechanism for relief; as a trustee manages creditors on behalf of the individual; and after 3 years; most debts are discharged. Seeking mental health support during both company liquidation and personal bankruptcy is advisable; as the stress can be cumulative and severe. ### Next Steps If you are facing company liquidation and concerned about personal bankruptcy risk: - **Assess personal liability exposure**: Determine whether you face judgments from the liquidator or creditors - **Quantify personal debts**: Calculate total personal debts; including personal guarantees; personal loans; and credit obligations - **Evaluate personal income and assets**: Determine whether you have sufficient income or assets to satisfy personal debts - **Seek debt advice**: Consult a debt counsellor or insolvency advisor on alternatives to bankruptcy - **Engage legal representation**: Contact Lexlaw for advice on personal liability management and settlement negotiation Personal bankruptcy is not inevitable following company liquidation; but it is a real risk if personal liabilities are substantial and unaddressed. **Next step**: *Understanding the impact of compulsory liquidation on family members; spouses; and dependants.* ## 9. Understanding Family & Spouse Liability and Protection Compulsory liquidation can affect family finances and legal status. Directors must understand what family members are actually at risk and what protections exist under law. ### Are Family Members Liable for Company Debts? **No**. Spouses and children are not liable for company debts unless they: - **Personally guaranteed the debt** (e.g.; spouse signed a personal guarantee on a company loan) - **Are directors of the company** (and therefore subject to personal liability) - **Received fraudulent transfers** from the company - **Own company shares and received unlawful distributions** In most cases; spouses and children have no direct liability for company debts. ### Exceptions; Joint Accounts and Joint Liabilities **Joint bank accounts**: If the director and spouse hold a joint personal bank account with company overdraft rights; creditors can pursue funds in that account. **Joint personal guarantees**: If both the director and spouse signed a personal guarantee; both are jointly and severally liable for the full debt. **Joint mortgages**: If the director and spouse jointly borrowed money personally; the lender can pursue the spouse for the spouse's share of the debt (unless the spouse also guaranteed). **Joint debts**: Any debt incurred jointly by the director and spouse remains joint; and creditors can pursue the spouse if the director defaults. ### What Happens to the Family Home? ### Home Ownership Structures **Solely in director's name**: The home is the director's personal asset. Creditors can pursue a charging order; forcing sale to satisfy judgments. The spouse may have a beneficial interest; providing partial protection. **Solely in spouse's name**: The home is not directly at risk from company creditors unless the spouse personally guaranteed company debts. **Joint ownership**: Creditors can pursue a charging order against the director's share. **Tenants in common**: Creditors can pursue a charging order against the director's share. **Joint tenants**: Creditors can pursue a charging order; potentially converting ownership to tenants in common. ### Protection; Principal Private Residence Exemption Courts have discretion to refuse or delay forced sale of the family home if it is the principal private residence; particularly if forced sale would render dependent children homeless. However; this is not an absolute bar; and forced sales do occur when debt is substantial. ### Protecting the Family Home **Pre-liquidation actions**: - Transfer the home to the spouse (if legally advised and not fraudulent) - Pay down the mortgage to increase equity protection - Register a notice at the Land Registry **Post-liquidation actions**: - Negotiate settlement with creditors holding judgments - Refinance the mortgage to extract equity for settlement - Arrange spouse buyout of the director's share - Seek legal advice on court discretion to delay forced sale ### Impact on Spouse's Credit and Financial Situation **Spouse's credit is not automatically affected** unless the spouse is a co-borrower or personal guarantor on company debts. **Joint debts and joint accounts are affected**: Any debts held jointly; or any joint accounts; are flagged if payments default. **Practical impact**: The spouse may face difficulty obtaining personal credit if held jointly liable; and creditors may contact the spouse seeking payment. ### Dependent Children Children are not liable for company debts. However; practical implications include: - Reduced family income if the director was the sole earner - Potential school changes if the family home is affected - Child support obligations remain; assessed by the Child Support Service based on current income ### Relationship Breakdown During Liquidation Compulsory liquidation can trigger relationship disputes. Common issues: **Asset division disputes**: If the couple separates during liquidation; disputes arise about asset division and whether assets are family or director assets. **Housing uncertainty**: The spouse may worry about forced home sale. **Child support and maintenance**: The director's child support obligations continue; assessed by the Child Support Service based on current income. **Property division**: Family law courts determine fair division of jointly-owned property; considering dependent children's needs and residence. ### Spousal Liability in Specific Scenarios ### Scenario 1; Spouse Is a Director If the spouse is also a director; the spouse faces identical liability and disqualification risks. ### Scenario 2; Spouse Personally Guaranteed Company Debts If the spouse signed a personal guarantee; the spouse is personally liable for the guaranteed amount. Creditors can pursue the spouse's personal assets. ### Scenario 3; Spouse Is an Employee of the Company If employed by the company; the spouse is an unsecured creditor for unpaid wages. Employee wages are preferential debts; ranking ahead of general creditors. ### Scenario 4; Spouse Received Distributions or Loans from Company If the company transferred funds or assets to the spouse; the liquidator may investigate whether these were: - Legitimate salary or dividends (not recoverable) - Undervalue transactions (recoverable) - Preference payments (recoverable) - Fraudulent transfers (recoverable) If recovered; funds go into company assets. ### Protecting Family Finances During Liquidation ### Immediate Actions - **Separate finances**: Remove company overdraft rights from personal/joint accounts - **Notify banks and lenders**: Inform personal lenders of company liquidation - **Document separate property**: Maintain records showing which assets are personal/family; not company assets - **Secure independent income**: Ensure the spouse has independent employment ### Medium-Term Actions - **Negotiate personal guarantee releases**: If the spouse holds personal guarantees; prioritise their negotiation - **Mortgage protection**: Explore refinancing or settlement options if the home is at risk - **Family law advice**: If separation is contemplated; seek advice on asset division implications ### Next Steps If you are facing compulsory liquidation and concerned about family impact: - **Identify personal guarantees**: Determine whether the spouse holds any personal guarantees - **Separate personal finances**: Remove company access to personal/joint accounts - **Notify lenders**: Inform personal lenders of the company liquidation - **Obtain family law advice**: If separation is likely; seek advice early on asset division and child support implications **Next step**: *Understanding the duties and cooperation requirements directors must meet during liquidation; and the consequences of non-compliance.* ## 10. Cooperation & Investigation; What Directors Must Do During Liquidation Upon appointment of the liquidator; directors enter a period of mandatory cooperation. Failure to comply with cooperation requirements results in serious legal consequences; including arrest; contempt of court; and perjury charges. Understanding the specific duties; procedures; and compliance mechanisms is essential. ### Statutory Duty to Cooperate Directors have a statutory duty to cooperate with the liquidator under the Insolvency Act 1986. This duty is non-negotiable and applies throughout the liquidation process. ### Required Cooperation **Provide information**: Directors must provide any information the liquidator requests; including details of company assets; liabilities; transactions; and business dealings. **Hand over assets and documents**: Directors must surrender all company records; files; emails; accounting software; and physical assets to the liquidator. **Attend interviews**: Directors must attend private examinations and interviews conducted by the liquidator; at dates and times specified by the liquidator. **Answer questions under oath**: During private examinations; directors must answer questions truthfully and completely. **Complete and submit the Statement of Affairs**: Directors must prepare and submit a sworn Statement of Affairs within 21 days; detailing all company assets; liabilities; and financial affairs. **Preserve documents**: Directors must not destroy; dispose of; or conceal any company records or documents. ### The Statement of Affairs; Scope and Requirements The Statement of Affairs is a formal; sworn document detailing the company's financial position at the liquidation date. It is a critical document; as it forms the basis for the liquidator's investigation and asset realisation. ### Contents of the Statement of Affairs **Assets**: A comprehensive list of all company assets; including: - Cash and bank balances - Accounts receivable (money owed by customers) - Inventory and stock - Plant; equipment; and machinery - Property; land; and buildings - Intellectual property; patents; and trademarks - Insurance policies and claims - Vehicles and motor assets - Investments and securities - Goodwill and customer lists - Any other assets of value **Liabilities**: A comprehensive list of all company liabilities; including: - Amounts owed to HMRC (PAYE; NIC; VAT; Corporation Tax) - Bank loans; overdrafts; and credit facilities - Trade payables (amounts owed to suppliers) - Employee wages and redundancy entitlements - Lease obligations (property; equipment) - Professional fees (accountants; solicitors; prior advisors) - Outstanding invoices and disputed claims - Loan guarantees and contingent liabilities **Explanation**: A narrative explaining: - The reason for company failure and insolvency - Key events or circumstances leading to liquidation - Any significant transactions; particularly in the 12 months pre-liquidation - Related party dealings - Director remuneration and loans ### Declaration and Oath The Statement of Affairs must be sworn (declared under oath) by a director. False information constitutes perjury; a criminal offence carrying potential imprisonment. The director must certify that the information is; to the best of their knowledge and belief; accurate and complete. ### Submission Deadline The Statement of Affairs must be submitted within 21 days of the liquidator's request. Failure to submit within the deadline; or submission of an incomplete or false statement; results in: - Court summons to compel submission - Arrest warrant for failure to comply - Contempt of court charges - Perjury charges (if statement is false) ### Private Examination; Questioning Under Oath The liquidator; or the Official Receiver in the absence of a private liquidator; may conduct a private examination of the director. This is a formal; recorded interview conducted under oath. ### Purpose of Private Examination The private examination serves to: - Clarify information in the Statement of Affairs - Investigate specific transactions; particularly large payments; transfers; or unusual dealings - Explore potential wrongful trading; preferences; undervalue transactions; or fraud - Identify assets or liabilities not disclosed - Assess director knowledge and involvement in company affairs ### Attendees **Required**: - The director being examined - The liquidator or Official Receiver - A court-appointed examiner (official shorthand writer or audio recorder) **Permitted**: - The director's solicitor (to advise on legal privilege; not to answer questions) - The director's spouse or family member (for support; not permitted to speak) - Creditors (who may attend and ask questions; with examiner permission) ### Procedure **1. Oath**: The director is sworn to answer questions truthfully. **2. Examination**: The liquidator asks questions; typically beginning with company structure; finances; major transactions; and specific matters identified in the investigation. **3. Questioning**: Questions are recorded verbatim. The director must answer directly; fully; and truthfully. Evasive or incomplete answers result in follow-up questioning. **4. Recording**: The examination is recorded in writing and/or audio. A transcript is later provided to the director and creditors. **5. Duration**: Examinations typically last 1-3 hours; but may extend longer depending on complexity and number of issues to explore. ### Grounds for Refusal or Non-Attendance **No right of refusal**: A director cannot refuse to attend or refuse to answer questions; except on grounds of legal privilege (advice from solicitor). **Legal privilege**: A director may decline to answer if the answer would disclose legally privileged communications with their solicitor (legal advice privilege) or communications made to settle disputes (settlement privilege). However; these exceptions are narrow. **Non-attendance consequences**: If a director fails to attend a private examination without reasonable excuse: - The examiner may issue an arrest warrant - The director can be arrested and brought to court in custody - Bail may be refused; resulting in detention pending examination - Contempt of court charges result; with potential fines or imprisonment - Court orders may compel attendance **Reasonable excuse**: Limited excuses for non-attendance include: - Serious illness or hospitalisation (medical evidence required) - Court order preventing attendance - Death or emergency "Work commitment" or "personal inconvenience" are not reasonable excuses. ### Questioning Tactics and Difficult Questions The liquidator may ask difficult or accusatory questions; designed to test the director's credibility or explore misconduct. Examples: - "Why did you continue trading when the company was clearly insolvent?" - "What was the purpose of the £50,000 transfer to your spouse?" - "Why were wages to employees delayed while you drew salary?" - "Did you deliberately conceal this transaction from the accountant?" **Director's rights**: - Pause to consult with solicitor on legal issues - Request clarification if a question is unclear - Correct previous answers if additional information comes to mind - Request a break if needed **Director's obligations**: - Answer truthfully; even if the answer is damaging - Provide complete answers; not evasive responses - Correct false or misleading statements made during examination ### Using Examination Evidence Statements made during private examination can be used: - By the liquidator in pursuing personal liability claims (wrongful trading; preferences) - By the Official Receiver in disqualification proceedings - By creditors in pursuing personal claims - In subsequent criminal investigations (fraud; tax evasion) Statements are **not** protected by legal privilege and can be used against the director. The director has no right to silence. ### Document Preservation and Handover Directors must preserve all company documents and records; and deliver them to the liquidator. Destruction or concealment of documents constitutes obstruction of the liquidation process and may be treated as a criminal offence. ### Required Documents **Accounting records**: - General ledgers; cash books; and trial balances - Bank statements and reconciliations - Invoices; receipts; and payment records - Payroll records and employee contracts - Tax returns and HMRC correspondence **Business records**: - Customer and supplier contracts - Correspondence with creditors; including statutory demands; invoices; and payment terms - Board minutes and director resolutions - Shareholder records and share certificates - Insurance policies and claims **Financial records**: - Management accounts and forecasts - Loan agreements and facility letters - Grant or subsidy documentation - Investment records - Related party loan documentation **Digital records**: - Email accounts (all emails; including deleted items recovered from backup) - Cloud storage files and documents - Accounting software databases - CRM and customer management systems - Website and online account access ### Handover Procedure **1. Inventory**: The director provides a list of all documents and records held. **2. Physical delivery**: The director delivers all physical documents to the liquidator; or arranges courier/storage as directed. **3. Digital access**: The director provides passwords; access codes; and administrative credentials for digital systems; enabling the liquidator to access email; accounting software; and cloud storage. **4. Certification**: The director certifies; under oath; that all documents have been delivered and no documents have been concealed or destroyed. **5. Verification**: The liquidator may conduct spot checks or hire forensic accountants to verify document completeness and detect destruction. ### Destruction or Concealment; Legal Consequences **Criminal liability**: Destroying or concealing company documents during liquidation constitutes: - Perversion of the course of justice (common law crime; unlimited fine and imprisonment up to life in serious cases) - Obstruction of the Official Receiver (Insolvency Act offence; unlimited fine and up to 5 years imprisonment) - Theft or fraud (if documents are concealed to conceal misappropriation) **Civil liability**: The liquidator can pursue claims for damages resulting from missing documents; including: - Costs of forensic investigation to recover deleted data - Loss of asset recovery due to missing transaction records - Increased personal liability if wrongful trading or fraud cannot be disproven due to missing evidence ### Email and Digital Records **Email accounts**: The director must provide full access to all email accounts; including: - Personal email accounts used for company business - Company email accounts - Archived or deleted emails (recoverable from backup systems) **Difficulty**: Email accounts may contain thousands of messages; many irrelevant to the company. However; the director's obligation is to provide complete access; not to filter messages. **Privacy concerns**: The director may worry about privacy (personal emails; confidential matters unrelated to the company). However; the liquidator's authority overrides privacy concerns in the context of liquidation. The director has no right to conceal emails based on privacy. **Deleted emails**: Deleted emails are often recoverable from backup systems; and the liquidator will pursue recovery if the director has deleted relevant messages. Deletion of emails post-liquidation; with intent to conceal transactions; constitutes perversion of the course of justice. ### Questionnaire for Directors Early in the liquidation; the liquidator typically sends a formal questionnaire; requesting detailed written answers to specific questions about company affairs. This precedes the private examination; allowing the liquidator to identify areas for detailed questioning. ### Contents The questionnaire typically covers: - Director background; qualifications; and involvement in company management - Company history; ownership; and shareholding - Company operations; customers; and suppliers - Financial performance and key dates (when profitability changed; when difficulties arose) - Major transactions; particularly in the 12 months pre-liquidation - Related party dealings (transactions with spouse; relatives; other companies owned by the director) - Director remuneration; loans; and benefits - Reasons for company failure and key events ### Completion and Return The director must complete the questionnaire; providing detailed; truthful answers. Incomplete or evasive responses result in follow-up questions and; if not satisfactorily answered; private examination to explore the matter. ### Failure to Cooperate; Legal Consequences Failure to comply with cooperation requirements results in serious legal consequences: ### Arrest and Detention If a director fails to attend a private examination; the examiner can issue an arrest warrant. The director can be arrested and brought to court in custody. Bail may be refused; resulting in detention pending examination. ### Contempt of Court Deliberate failure to comply with court orders (e.g.; failure to submit Statement of Affairs; failure to attend examination) constitutes contempt of court. Penalties include: - Unlimited fines - Imprisonment (typically 3-6 months; but can extend longer) - Sequestration of assets (court seizure of property to satisfy fines) ### Perjury False statements in the Statement of Affairs; or false evidence during private examination; constitute perjury. Penalties include: - Unlimited fine - Up to 7 years imprisonment - Permanent criminal record ### Perversion of the Course of Justice Destroying documents; concealing assets; or attempting to obstruct the liquidation process constitutes perversion of the course of justice. Penalties include: - Unlimited fine - Up to life imprisonment (in extreme cases) - Criminal record ### Insolvency Act Offences Specific offences under the Insolvency Act 1986 include: - Failure to deliver Statement of Affairs (up to 2 years imprisonment) - Non-attendance at examination (up to 2 years imprisonment) - Destruction or concealment of company property (unlimited fine; up to 5 years imprisonment) - Fraudulent concealment of assets (unlimited fine; up to 5 years imprisonment) ### Best Practice; Compliance Strategy To minimise legal risk during liquidation: ### Immediate Actions - **Comply fully and immediately**: Submit all requested documents; complete questionnaires; and attend all appointments on schedule. Delays create suspicion and trigger investigation. - **Be truthful**: Provide accurate; complete; and honest information. Evasion or dishonesty is quickly detected and triggers criminal investigation. - **Seek legal advice**: Engage a solicitor experienced in insolvency to advise on responses to questionnaires and prepare for private examination. - **Prepare documentation**: Gather all company records; organise by date and subject matter; and be prepared to explain each document during examination. - **Organise emails and digital records**: Provide comprehensive access to email and digital systems; with passwords and administrative credentials. ### During Private Examination - **Attend on time**: Arrive early; allowing time for consultation with solicitor before examination begins. - **Bring documents**: Bring copies of any documents referenced in the examination; to refresh memory and provide context. - **Answer directly**: Provide clear; direct answers to questions. Avoid rambling; evasive; or unclear responses. - **Correct yourself**: If a previous answer was inaccurate or incomplete; correct it during examination. Corrections appear better than inconsistencies discovered later. - **Take breaks**: Request breaks if needed to consult with solicitor or collect thoughts. - **Listen carefully**: Ensure you understand each question. Request clarification if unclear. ### Post-Examination - **Review transcript**: Review the examination transcript; checking for accuracy and identifying any corrections needed. - **Submit corrections**: Any factual corrections should be submitted in writing to the liquidator. - **Continue cooperation**: Respond promptly to any follow-up requests for information or documents. ### Next Steps If you are facing compulsory liquidation: - **Obtain legal representation**: Engage a solicitor experienced in insolvency investigations and director cooperation requirements. - **Prepare the Statement of Affairs**: Compile comprehensive; accurate information about all assets; liabilities; and company affairs. - **Gather all documents**: Organise all company records; books; accounts; and digital files for handover to the liquidator. - **Prepare for private examination**: Consult with solicitor on likely questions and develop clear; truthful responses. - **Comply with all requests**: Submit all questionnaires; attend all appointments; and provide all requested information on schedule. Full cooperation; transparency; and truthfulness minimise legal risk and often result in a more efficient liquidation process with fewer complications. **Next step**:* Exploring whether a winding-up order can be stopped; appealed; or reversed through rescission or alternative orders.* ## 11. Appeals & Can the Order Be Stopped?; Rescission, Staying Proceedings & Alternative Orders Once a winding-up order is issued; directors often ask whether the order can be reversed; appealed; or stayed. Understanding the limited windows and procedures for challenging or pausing a winding-up order is essential; as action must be taken swiftly. ### Immediate Post-Order Window; Rescission (Days 1-7) Rescission is the most direct mechanism for reversing a winding-up order. However; the window is extremely narrow; typically 5-7 days from the order date. ### What Is Rescission? Rescission is a court application to set aside (reverse) the winding-up order on the grounds that material circumstances have changed since the order was made; or that the order was made in error. ### Grounds for Rescission **1. Material Change in Circumstances**: If circumstances material to the court's decision have changed since the order was made; rescission is possible. Examples include: - A major creditor agrees to settle their debt; eliminating the basis for the winding-up petition - Substantial undisclosed assets are discovered; demonstrating the company is solvent - A major contract or customer commitment is secured; restoring financial viability - A third party agrees to inject capital or guarantee the company's debts - HMRC agrees to defer or settle a significant tax debt **2. Procedural Error or Defect**: If the winding-up order was made in error; due to procedural defects or misapplication of law; rescission is possible. Examples include: - The judge misunderstood facts presented at hearing - Crucial evidence was not presented or was overlooked - The creditor's petition contained factual errors or was procedurally defective - The company's defence was inadequately heard or considered **3. Fraud or Misrepresentation**: If the winding-up order was obtained through fraud; misrepresentation; or material non-disclosure by the petitioner; rescission is possible. However; this is rare and requires clear evidence. ### Procedure for Rescission Application **1. Urgent application**: The company or director must apply to court immediately upon discovering grounds for rescission. The application is typically made on an urgent; ex parte basis (without notice to the petitioner; to preserve confidentiality). **2. Evidence**: The application must be supported by strong; credible evidence demonstrating material change in circumstances. Examples: - Settlement agreement from the creditor - Valuation or appraisal evidence of company assets - Commitment letter from a funder or investor - Corrected financial statements or asset schedules **3. Affidavit**: The director or company representative swears an affidavit setting out the grounds for rescission; the evidence; and why rescission is appropriate. **4. Court hearing**: The judge reviews the evidence and decides whether to grant rescission. If the grounds are compelling; rescission can be granted within days. **5. Order**: If rescission is granted; the winding-up order is set aside; and the company returns to its pre-liquidation status (though damaged). ### Practical Considerations; Rescission Rescission is theoretically available; but practically rare: - **Timing**: The narrow 5-7 day window means the company must act immediately upon discovering grounds - **Evidence burden**: The evidence must be compelling; not merely speculative (e.g.; "we're negotiating with a funder" is insufficient; but a signed commitment letter is sufficient) - **Cost**: Emergency applications require urgent legal representation; typically costing £2,000-5,000+ - **Success rate**: Fewer than 5% of rescission applications succeed; as grounds are rarely as compelling as required **When rescission is realistic**: - A major creditor settles post-order (rare; but happens if settlement was in negotiation at the time of order) - Significant assets were overlooked or misvalued in the original petition - A third party injection of capital is secured between order and rescission application - Procedural defect in the petition is discovered (very rare; as petitions are usually properly drafted) ### Example; Successful Rescission A company was wound up on HMRC petition for £200,000 unpaid VAT. Within 3 days of the order; the company's major client (a substantial corporation) agreed to clear the VAT debt as part of a settlement to a commercial dispute. The company immediately applied for rescission; providing the settlement agreement and client commitment. The court granted rescission; as material circumstances had changed (the debt was now paid). The company was restored. ### Extended Rescission Window; Days 8-35 Approximately Although the primary rescission window is 5-7 days; a second application can be made up to approximately 35 days post-order; if new evidence comes to light. However; this application is harder to succeed on; as the court is reluctant to revisit orders once liquidation procedures have commenced. **Practical limitations**: - The liquidator has usually been appointed and begun investigations - Assets may have been realised or disposed of - Employees may have been dismissed - The company's business reputation is damaged - Court reluctance to revisit decisions increases substantially ### Staying Proceedings; Pausing the Liquidation Without Reversing the Order An alternative to rescission is applying to "stay" (pause) the winding-up proceedings; without necessarily reversing the order. This is used when the company proposes an alternative arrangement; such as a company voluntary arrangement (CVA) or administration. ### Grounds for Staying Proceedings **1. Proposed Alternative Arrangement**: If the company proposes an alternative to liquidation; the court may stay proceedings to allow negotiation. Examples include: - Proposed company voluntary arrangement (CVA); where the company proposes to pay creditors a percentage of debt over a specified period - Proposed administration; where an administrator is appointed to manage the company or rescue the business - Proposed creditor composition; where creditors agree to accept reduced payment in settlement **2. Court Discretion**: The court has discretion to stay proceedings if it believes an alternative arrangement is likely to be successful and is in creditors' interests. ### Procedure for Staying Proceedings **1. Application**: The company applies to court requesting a stay of proceedings; typically before the winding-up order is made; but occasionally after. **2. Evidence**: The application is supported by evidence of the proposed alternative arrangement; including: - CVA proposal and creditor support - Business plan or turnaround proposal - Funder or investor commitment - Creditor composition agreement - Proposed administrator's license and experience **3. Court hearing**: The judge considers whether the proposed alternative is credible; likely to succeed; and in creditors' interests. **4. Order**: If the court is satisfied; it issues a stay order; pausing winding-up proceedings for a specified period (typically 4-8 weeks) to allow negotiation. **5. Outcome**: During the stay period; the proposed alternative is negotiated. If successful; the winding-up proceedings are formally abandoned. If unsuccessful; winding-up resumes. ### CVA as an Alternative to Liquidation A company voluntary arrangement (CVA) is a formal agreement between a company and its creditors; whereby creditors agree to accept reduced payment (typically 25-50% of debt) over 5 years; in exchange for halting insolvency proceedings. **Advantages of CVA over liquidation**: - Directors retain some control and input (compared to zero control in liquidation) - Business can continue trading - Employee jobs are preserved (at least initially) - Suppliers and customers may support CVA; restoring trading confidence - Directors are not automatically disqualified - Disqualification risk is lower (if business recovers) **Disadvantages of CVA**: - Requires 75% creditor approval by debt value (difficult to achieve; particularly if HMRC or large creditors oppose) - Directors must comply with strict CVA terms (payment; reporting; trading restrictions) - CVA can fail if creditors are not satisfied with performance; resulting in liquidation anyway - Directors remain exposed to wrongful trading liability if insolvency was foreseeable pre-CVA **Timing**: A CVA proposal must be submitted to court before a winding-up order is made; to have grounds for a stay. Once the order is made; CVA becomes much harder to pursue (though technically possible). For detailed CVA analysis and structures; see Lexlaw's company voluntary arrangements guidance. ### Appeals of Winding-Up Orders Once a winding-up order is made; formal appeal is possible; but the appeal window is limited and success is rare. ### Appeal Procedure **1. Appeal deadline**: The company or director must file a notice of appeal within 14 days of the winding-up order. This is a strict deadline; and late appeals are rarely permitted. **2. Grounds for appeal**: The appellant must identify specific grounds for appeal; such as: - Judge made an error of law in applying the Insolvency Act - Judge misunderstood facts or evidence presented - Judge failed to consider material evidence or argument - Order was made in procedural breach - Order is manifestly unjust or unreasonable **3. Appeal to Court of Appeal**: Appeals are heard in the Court of Appeal (Civil Division); not the High Court. The appeal is determined on the papers (written submissions) unless the court grants oral hearing. **4. Standard of review**: The Court of Appeal will not interfere merely because it disagrees with the original judge's decision. The court will only intervene if the judge made an error of law; or if the decision was manifestly unreasonable. **5. Outcome**: The Court of Appeal may: - Dismiss the appeal; upholding the winding-up order - Allow the appeal; setting aside the winding-up order - Allow the appeal in part; modifying the order or remitting to the High Court for reconsideration ### Practical Limitations; Appeals Appeal is theoretically available; but practically difficult: **High threshold**: The Court of Appeal requires clear error of law; not merely disagreement with the judge's discretion. **Rare success**: Fewer than 10% of appeals against winding-up orders succeed; as the original judge typically hears full evidence and argument. **Cost**: Appeals require experienced barristers and cost £5,000-15,000+ in legal fees. **Timing**: Appeals take 6-12 months to resolve; during which the company is in liquidation and the liquidator is investigating; appointed; and disposing of assets. **Limited benefit**: Even if the appeal succeeds; the company's reputation; business relationships; and staff are typically destroyed; and the company rarely survives post-appeal. ### Example; Failed Appeal A company appealed a winding-up order; arguing that the judge misunderstood the company's financial position. The appeal was rejected; as the Court of Appeal found the judge had clearly heard the evidence and made a legitimate decision on the facts. The company remained wound up. ### Interim Orders and Conditions Before issuing a final winding-up order; the judge may issue interim orders; imposing conditions on the company or requiring periodic reporting; rather than final winding-up. These interim orders are rare; but available in uncertain cases. **Examples of interim orders**: - Require the company to submit monthly financial statements to the court - Prohibit asset disposal without court permission - Require the company to maintain minimum cash balances - Require director cooperation with the petitioner or a third party on settlement negotiation - Postpone the final hearing to allow time for settlement negotiation **Duration**: Interim orders are typically for 4-12 weeks; after which a final hearing determines whether to issue a winding-up order or discharge the petition. **Limitations**: Interim orders are discretionary and rare; as they prolong uncertainty and cost. Judges typically prefer to issue final orders or dismiss the petition. ### Dismissal of the Petition If the company's defence is successful; the judge may dismiss the petition entirely; meaning no winding-up order is made and the company survives. ### Grounds for Dismissal **1. Disputed debt**: The creditor's claimed debt is genuinely disputed; and the judge is satisfied the company has a legitimate defence. **2. Company solvency**: The company proves it is solvent and can pay its debts as they fall due. **3. Procedural defect**: The petition contains procedural defects that prevent the court from making an order. **4. Equitable grounds**: The court has discretion to dismiss if it believes an order would be inequitable or unjust. ### Success Rate; Dismissal Dismissal is rare; occurring in fewer than 5% of petitions. Most companies facing petitions are genuinely insolvent; and defences are weak. However; dismissal is possible if: - The creditor's debt amount is disputed and the company's challenge is credible - The company can demonstrate recent receipt of major funds or commitments - Procedural defects are substantial and prejudicial to the company ### Example; Successful Dismissal A company was petitioned by a supplier for £80,000 unpaid invoices. The company successfully argued that the invoices were disputed; as the supplier had failed to deliver goods to the agreed specification; entitling the company to a set-off of £90,000 for damages. The judge dismissed the petition; as the debt was genuinely disputed. ### Strategic Considerations; When to Pursue Rescission; Staying; or Appeal Directors should consider the following when deciding whether to pursue rescission; staying; or appeal: **Rescission (5-7 days post-order)**: - Pursue if material circumstances have genuinely changed (major debt settled; major asset discovered; funder commitment secured) - Do not pursue if grounds are speculative or uncertain; as failure wastes money and time - Cost is lower than appeal; success is higher if grounds are strong **Staying proceedings** (pre-order or early post-order): - Pursue if CVA or alternative arrangement is credible and likely to achieve 75% creditor support - Pursue if administration is a realistic alternative - Cost is moderate; but requires substantial creditor negotiation **Appeal** (within 14 days of order): - Pursue only if judge made clear error of law; not merely disputed discretion - Do not pursue if the judge heard all evidence and made a reasonable decision on the facts - Cost is high; success is low; and appeal takes 6-12 months - Consider only if the company has strong independent case; separate from judge's decision ### Next Steps If you have recently received a winding-up order and believe there are grounds for rescission; staying; or appeal: - **Act immediately**: If rescission is contemplated; contact solicitor within 24 hours; as the window is 5-7 days. - **Gather evidence**: Compile evidence of material change in circumstances; major asset discovery; or procedural defect. - **Obtain urgent legal advice**: Consult specialist insolvency solicitor on prospects of success and cost-benefit. - **Prepare application**: If grounds are strong; prepare emergency court application for rescission or stay. - **Consider alternatives**: If rescission prospects are weak; consider CVA; administration; or voluntary liquidation as alternatives. Timing is critical; and delay eliminates options. Contact Lexlaw's winding-up specialists at windinguppetitionsolicitors.co.uk for urgent advice on rescission; staying; or appeal options. **Next step**: *Understanding the fees; costs; and asset distribution in compulsory liquidation; and what remains for creditors and the director.* ## 12. Fees, Costs & Asset Distribution; Understanding Financial Impact and Creditor Recovery Compulsory liquidation involves substantial costs; deducted before creditors recover anything. Understanding the fee structure; distribution hierarchy; and realistic creditor recovery is essential for assessing the financial impact on the company; creditors; and the director. ### Official Receiver and Liquidator Fees ### Official Receiver Fees The Official Receiver is a government officer appointed automatically upon a winding-up order. The Official Receiver charges fees for: **Investigative work**: Investigation of director conduct; asset identification; and preliminary administration. **Receivership**: Management of company affairs before a private liquidator is appointed (if the estate is insolvent; the Official Receiver may manage throughout). **Fee structure**: The Official Receiver charges on a sliding scale; typically: - 2-5% of the first £5,000 of assets realised - 1.5-3% of the next £5,000 - 1% of amounts above £10,000 - Plus fixed fees for specific tasks (examinations; reports) **Practical impact**: In an insolvent estate with minimal assets; Official Receiver fees can exceed asset realisations; resulting in negative return to creditors. ### Private Liquidator Fees If the estate holds sufficient assets; a private licensed insolvency practitioner (IP) is appointed to replace the Official Receiver. The private liquidator charges professional fees; typically: **Asset realisation**: 10-20% of gross asset realisations; depending on complexity and asset type. **Administration and investigation**: Hourly rates; typically £150-400+ per hour; depending on seniority and expertise. **Disbursements**: Out-of-pocket costs; including: - Legal fees (solicitors; barristers for disputed matters) - Accountants' fees (asset valuation; forensic investigation) - Storage and preservation of assets - Advertising and public notices - Court fees and hearing costs - Valuation and auctioneering fees **Fee approval**: Liquidator fees must be approved by creditors (through committee) or the court. Creditors can challenge excessive fees; though courts are generally supportive of professional rates. **Practical impact**: In an asset-rich estate; private liquidator fees can total 20-30% of gross realisations; significantly reducing net distribution to creditors. ### Example; Fee Impact on Distribution A company has £100,000 in assets and £500,000 in creditor claims. - Official Receiver investigative fees; £3,000 - Private liquidator appointment and asset realisation; 15% of £100,000 = £15,000 - Legal fees (solicitor; court matters); £5,000 - Accountancy and valuation fees; £2,000 - Court fees and notices; £1,000 - **Total costs and fees: £26,000** **Net asset distribution**: £100,000 - £26,000 = £74,000 to creditors (14.8% of £500,000 claimed debt). If creditors each recover 14.8%; a director facing £100,000 personal liability order would see the liquidator recover only £14,800 from company assets; leaving £85,200 uncollected against the director personally. ### Creditor Priority and Distribution Hierarchy Company assets; after deduction of fees and costs; are distributed to creditors according to statutory priority. Understanding where you sit in the hierarchy determines realistic recovery. ### Priority Hierarchy (in order of distribution) **1. Secured Creditors (Fixed Charges)** Creditors with fixed charges (e.g.; bank holding first legal charge on property) recover directly from charged assets; before distribution to other creditors. Secured creditors are largely unaffected by insolvency; as they recover from asset sale proceeds. **Example**: A bank holds a charge on company property valued at £200,000; securing a £150,000 loan. Upon liquidation; the property is sold for £200,000; and the bank recovers its £150,000 from proceeds. The remaining £50,000 enters the general asset pool. **2. Liquidation Expenses and Fees** Official Receiver and private liquidator fees; legal fees; court fees; and administration costs are deducted first; before creditor distribution. **3. Preferential Creditors** Preferential creditors rank ahead of unsecured creditors. These include: **Employee wages and holiday pay**: Employees owed wages; holiday pay accruals; and redundancy entitlements; up to a statutory cap (currently £800 per employee; subject to change). **PAYE and NIC arrears** (limited priority): A portion of unpaid employee tax and National Insurance contributions are preferential; though HMRC ranks below employees for direct wages. **Company pension contributions** (limited): Limited preferential status for pension contributions; typically only recent accruals. **In practice**: In most compulsory liquidations; preferential creditors (employees) recover far more than unsecured creditors; as statutory priority is high. **4. Unsecured Creditors (General Creditors)** After secured creditors; fees; and preferential creditors are paid; remaining assets are distributed pro-rata to unsecured creditors. These include: - Trade payables (suppliers; contractors) - HMRC (Corporation Tax; VAT; PAYE; NIC not covered by preferential status) - Bank overdrafts and unsecured loans - Directors' loan accounts (overdrawn) - Client deposits or retainers - Professional fees (accountants; solicitors; prior advisors) - Any other creditors without security **Recovery rate**: In most compulsory liquidations involving insolvency petitions; unsecured creditors recover 0-20% of their claims. In many cases; recovery is 0%; as assets are exhausted by secured creditors; fees; and preferential claims. **Example distribution**: | Creditor Type | Claim | Priority | Recovery % | Amount Recovered | | ------------- | ----- | -------- | ---------- | ---------------- | | Secured bank charge | £150,000 | 1st | 100% | £150,000 | | Liquidation fees/costs | £26,000 | 2nd | 100% | £26,000 | | Employee wages (preferential) | £20,000 | 3rd | 100% | £20,000 | | HMRC Corporation Tax | £150,000 | 4th | 3.5% | £5,250 | | Trade payables | £100,000 | 4th | 3.5% | £3,500 | | Unsecured bank loan | £80,000 | 4th | 3.5% | £2,800 | | **Total** | **£500,000** | | **14.8%** | **£74,000** | ### Asset Realisation Process The liquidator realises (converts to cash) company assets to generate funds for distribution. Understanding asset realisation timing and methods affects cash flow. ### Asset Types and Realisation Methods **Cash and bank balances**: Immediately available; typically realised within days of liquidator appointment. **Accounts receivable (customer debts)**: The liquidator contacts customers to collect outstanding invoices. Recovery is typically 30-50% of book value; as some customers dispute amounts or are themselves insolvent. Realisation takes weeks to months. **Inventory and stock**: The liquidator conducts stocktakes; arranges valuations; and either sells stock in bulk to liquidation buyers (typically at 20-40% of book value) or arranges auction. Realisation takes weeks. **Plant; equipment; and machinery**: Valued and auctioned or sold to specialist buyers. Realisation takes weeks to months; depending on market demand. **Property and real estate**: Professional valuation conducted; property marketed for sale. Realisation takes 2-6 months; depending on property condition; location; and market demand. **Intellectual property; trademarks; and goodwill**: Valued and sold if identifiable value exists. Often difficult to realise; particularly if customer relationships are not transferable. Realisation is unpredictable; taking months or years; or generating no value. **Vehicles and motor assets**: Valued and auctioned. Realisation takes weeks. **Insurance policies and claims**: Liquidator reviews policies and pursues outstanding claims. Realisation is variable; depending on claim nature. ### Distressed Asset Sales Liquidators typically conduct distressed asset sales; meaning assets are sold quickly at below-market prices; to generate immediate cash for fees and preferential creditors. This maximises cash flow but minimises creditor recovery. **Example**: A company's inventory (£100,000 book value) is sold to a liquidation buyer for £30,000 cash (70% discount). Whilst this generates immediate funds; unsecured creditors receive only 30% of the asset's stated value. ### Timeline for Asset Realisation Typical asset realisation timeline: - **Weeks 1-2**: Cash and bank balances realised; preliminary asset valuation conducted - **Weeks 2-8**: Accounts receivable collected; inventory auctioned; equipment sold - **Weeks 8-16**: Property marketed and sold; specialist assets valued - **Months 4-12+**: Final realisations (long-tail assets; disputed claims; litigation recoveries) Asset realisation is rarely complete within 6 months; and many liquidations take 12-24 months to fully realise assets. ### Distribution Timing and Interim Dividends Creditors are not paid a single distribution; but rather receive interim dividends (partial payments) as assets are realised; followed by a final dividend once all assets are realised and fees are finalised. ### Interim Dividend An interim dividend is declared when sufficient assets have been realised to justify distribution. This typically occurs: - 2-4 months post-liquidation (if substantial cash or quick-sale assets are realised) - 6-12 months post-liquidation (in typical cases) **Interim dividend payment**: The interim dividend represents a pro-rata share of assets realised; net of fees and preferential claims. Unsecured creditors receive payment to their account (bank transfer). **Example**: If £30,000 in assets have been realised; £10,000 in fees deducted; and £5,000 in preferential creditor claims met; the remaining £15,000 is distributed to unsecured creditors pro-rata. A creditor owed £10,000 receives approximately £150 as interim dividend (assuming £100,000 in total unsecured claims). ### Final Dividend The final dividend is declared once all assets are realised and all fees and expenses are calculated and approved. This can take 12-24 months or longer. **Final dividend payment**: The final dividend is the remaining pro-rata share. In many cases; the final dividend is minimal or zero; as most assets have been exhausted. **Example**: After 18 months; all assets are realised (total £100,000) and all fees are finalised (£26,000). Preferential creditors have been paid (£20,000). The remaining £54,000 is divided among unsecured creditors. A creditor owed £10,000 receives a final payment of approximately £540 (pro-rata share of remaining £54,000). ### Realistic Creditor Recovery Rates Research and historical data indicate realistic creditor recovery rates in compulsory liquidation: | Company Size | Asset Position | Unsecured Creditor Recovery | | ------------ | -------------- | --------------------------- | | Micro (turnover <£1m; assets <£500k) | Insolvent (petitioned by creditor) | 0-5% | | Small (turnover £1-5m; assets £500k-£2m) | Moderately insolvent | 5-15% | | Medium (turnover £5-10m; assets £2-5m) | Moderately insolvent | 10-25% | | Large (turnover >£10m; assets >£5m) | Asset-rich; but liabilities exceed assets | 20-40% | **Key insight**: In the majority of compulsory liquidations triggered by creditor petition; unsecured creditors recover less than 10% of their claims. ### Impact on Director; Personal Liability and Judgment Debt If the liquidator obtains a personal liability order (wrongful trading; preference; undervalue transaction); the director is personally liable for the judgment. The liquidator attempts to recover the judgment from the director's personal assets. However; in practice: **Liquidator recovery is often poor**: The liquidator pursues personal liability claims; but directors typically have limited personal assets (as company assets have been depleted through the company). Many personal liability judgments are partially or wholly uncollected. **Creditor can pursue judgment directly**: Any creditor receiving a copy of the liquidator's personal liability judgment can pursue the judgment independently; pursuing director's wages; bank accounts; or property. **Personal guarantee creditors rank ahead**: Creditors holding personal guarantees (banks; landlords) pursue personal guarantees independently; outside the liquidation process; and often achieve higher recovery rates than liquidator's general creditors. ### Insolvent Estates; When Costs Exceed Assets In many compulsory liquidations; liquidation costs exceed asset realisations. This is termed an "insolvent estate." In such cases: **Costs are not fully recovered**: Liquidator fees and costs are reduced; scaled back; or partially written off. **Creditors receive nothing**: If costs exhaust all assets; general creditors receive zero dividend. **Official Receiver assumes control**: If costs cannot be recovered; the Official Receiver may assume ongoing control; reducing investigation depth and creditor recovery efforts. **Dissolution occurs**: The company is dissolved; and the liquidation is formally closed; with notice to creditors that no further distributions are expected. ### Next Steps If you are director of a company in liquidation and concerned about creditor recovery: - **Understand fee structure**: Request copy of liquidator's fee proposal and understand fee amounts and timing. - **Assess asset position**: Request estimate of gross assets; proposed fees; and projected creditor recovery rates. - **Assess personal liability exposure**: Determine whether you face personal liability orders; and whether liquidator is pursuing such claims. - **Prioritise personal guarantee settlement**: If you hold personal guarantees to creditors; prioritise settlement negotiation; as creditors will pursue guarantees independently of liquidation process. - **Monitor distributions**: Track interim and final dividend payments; and dispute if recovery appears unusually low or fees unusually high. Liquidation typically results in poor creditor recovery and significant director exposure. Early intervention (pre-liquidation) to explore alternatives (CVA; administration; voluntary liquidation) often produces better outcomes. **Next step**: *Exploring alternatives to compulsory liquidation; and how early intervention can avoid the worst outcomes.* ## 13. Alternatives to Compulsory Liquidation; CVA, Administration & Voluntary Liquidation Compulsory liquidation is not inevitable. If a winding-up petition is filed or threatened; exploring alternatives can avoid court involvement; preserve business value; limit director disqualification risk; and improve creditor recovery. Understanding these alternatives; their advantages; and timing is critical. ### Why Alternatives Are Superior to Compulsory Liquidation Compulsory liquidation strips directors of control; triggers mandatory disqualification investigation; damages reputation; and typically results in poor creditor recovery. Alternatives offer several advantages: **Director control**: In alternatives like CVA; directors retain operational input and negotiating power with creditors. **Disqualification risk reduction**: Alternatives demonstrate proactive creditor engagement; reducing disqualification risk compared to compulsory liquidation. **Business continuity**: CVA and administration permit continued trading; preserving employment; supplier relationships; and customer goodwill. **Reputation management**: Voluntary arrangements; whilst still distressing; are less damaging than court-ordered liquidation. **Creditor recovery**: Alternatives often achieve better creditor recovery than compulsory liquidation; particularly if business continues trading. **Cost efficiency**: Alternatives typically involve lower liquidation costs; leaving more for creditor distribution. ### Company Voluntary Arrangement (CVA); The Primary Alternative A company voluntary arrangement is a formal agreement between a company and its creditors; structured under the Insolvency Act 1986. Under a CVA; creditors agree to accept partial payment (typically 25-50% of debt) over a specified period (typically 5 years); in exchange for continued business operation. ### How a CVA Works **1. Proposal preparation**: The directors; with insolvency practitioner advice; prepare a detailed CVA proposal; including: - Current financial position and reasons for insolvency - Proposed payment schedule (e.g.; 35% of debt over 60 months) - Business plan and recovery prospects - Details of any proposed restructuring; asset sales; or cost reductions - Explanation of why creditors should accept partial payment rather than pursue liquidation **2. Nominee appointment**: An insolvency practitioner is appointed as "nominee"; responsible for evaluating the CVA proposal's credibility and chairing the creditor meeting. **3. Creditor notification**: All creditors are notified of the CVA proposal and invited to vote. **4. Creditor meeting**: A meeting is held (typically virtual; due to COVID-era reforms) where creditors vote on the proposal. Creditors can attend; ask questions; and vote in favour or against. **5. Voting threshold**: The CVA must be approved by creditors representing at least 75% of debt value. A simple majority (>50%) is insufficient; the 75% threshold is designed to prevent small minorities from blocking proposals supported by major creditors. **6. Approval and implementation**: If approved; the CVA becomes binding on all creditors; including dissentient minorities who voted against. The insolvency practitioner becomes "supervisor"; overseeing CVA implementation. **7. Payments and compliance**: The company makes regular payments to the CVA supervisor; who distributes funds to creditors pro-rata. Directors must comply with CVA terms; including reporting; trading restrictions; and approval for major decisions. **8. CVA completion**: Once the CVA period ends; all obligations cease; and the company emerges as a solvent (or less insolvent) entity. ### Advantages of CVA **For the company and directors**: - Directors remain in control of business operations - Company continues trading; preserving employment and customer relationships - Directors typically avoid disqualification (if business stabilises) - Reputation less damaged than compulsory liquidation - Lower costs than liquidation (no liquidator realisation process) - Business remains a going concern; with potential for recovery and profitability **For creditors**: - Receive partial payment (typically 35-50%) rather than 0-10% in liquidation - Receive payments over time; allowing cash flow planning - Avoid liquidation costs (reducing from 20-30% in liquidation to 5-10% in CVA) - Preserve business relationships; potentially recovering future debt if business recovers ### Disadvantages of CVA **For the company and directors**: - Creditors must approve; and 25% of creditors can block (if they hold 25%+ of debt) - CVA terms may be onerous; restricting company flexibility - Directors must comply with CVA supervisor's oversight and reporting - Company remains insolvent (formally) during CVA period - If CVA fails; company often enters liquidation anyway; resulting in total failure **For creditors**: - Receive less than full debt amount - Recovery is delayed; taking 5 years or longer - Business may fail mid-CVA; resulting in forced liquidation and total loss - Creditors lose direct control; deferring to insolvency practitioner oversight ### CVA Proposal Structure; Example **Scenario**: A company has £500,000 in unsecured debt; declining sales; and £100,000 in annual losses. Directors propose a CVA: **Proposed CVA terms**: - Payment of 40% of debt (£200,000) over 60 months - Monthly payment of £3,333 - Creditors write off 60% of debt (£300,000) - Business restructuring; including cost reduction and staff redundancy - Company director to reduce salary from £40,000 to £20,000 - Suspension of dividend payments to shareholders **Creditor benefit analysis**: - In liquidation; creditors would receive approximately £50,000 (10% recovery) after 12-18 months - Under CVA; creditors receive £200,000 over 5 years (40% recovery) - CVA delivers 4x better return than liquidation **Creditor vote**: Assuming 75%+ of creditors support (recognising superior recovery); CVA is approved. **CVA implementation**: Monthly payments are made; supervised by insolvency practitioner. If business stabilises; CVA completes successfully; and company emerges. If business continues to deteriorate; CVA may be terminated; leading to compulsory liquidation. ### CVA Proposal Drafting and Creditor Support **Critical issue**: CVA success depends on creditor support; particularly HMRC; major secured creditors; and trade suppliers. If these major creditors oppose; CVA fails despite director preference. **Timing**: CVA proposal must be submitted to court before a winding-up order is made. If a winding-up order is already made; CVA becomes possible but significantly harder; as the liquidator controls the process. **Professional assistance**: Drafting CVA proposals requires experienced insolvency practitioner guidance; as credible proposal content is essential for approval. Contact Lexlaw's insolvency specialists for CVA proposal preparation. For detailed CVA analysis; see Lexlaw's company voluntary arrangements guidance at lexlaw.co.uk/company-voluntary-arrangements/. ### Administration; An Interim Alternative to Liquidation Administration is a formal insolvency process where a licensed insolvency practitioner (administrator) is appointed to manage the company; typically with the objective of either restructuring and rescue; or achieving an orderly sale of assets. ### How Administration Works **1. Filing for administration**: The company (or creditors; or court) applies to court to appoint an administrator. In modern practice; companies can file directly to appoint an administrator via the court filing system; without requiring a court hearing. **2. Moratorium on creditor action**: Upon administration appointment; a moratorium is automatically imposed; preventing creditors from pursuing individual claims; obtaining judgments; or forcing payment. This breathing space allows the administrator to assess the company and pursue rescue or sale options. **3. Administrator assessment**: The administrator conducts a detailed assessment; within 8 weeks; of whether the company can be rescued; sold; or must be liquidated. **4. Administrator's objectives** (in priority order): - **Primary objective**: Achieve a better result for creditors than liquidation (rescue the business; sell as a going concern) - **Secondary objective**: If rescue is impossible; sell company assets to achieve maximum value - **Tertiary objective**: If no sale is possible; realise assets and distribute to creditors **5. Business restructuring or sale**: If rescue is possible; the administrator may: - Negotiate with creditors to reduce debt or defer payments - Conduct cost reduction (redundancy; contract termination) - Seek new investment or funding - Sell the business to a buyer as a going concern If rescue is not viable; the administrator markets the company for sale (as a going concern or asset sale). **6. Exit from administration**: Once the administrator has pursued rescue or sale options; the company either: - Exits administration as a solvent or restructured entity - Exits into creditors' voluntary liquidation (if no rescue or sale is achieved) ### Advantages of Administration **For the company and directors**: - Moratorium prevents creditor action; providing breathing space for restructuring - Business continues operating; preserving employment and value - Potential for rescue; allowing company to emerge as solvent entity - If rescue fails; orderly sale as going concern achieves better creditor recovery than liquidation - Directors typically retain input (though administrator has primary authority) **For creditors**: - Moratorium prevents asset stripping by individual creditors - Going concern sale often achieves 20-50% better creditor recovery than asset liquidation - Costs typically lower than compulsory liquidation (as administrator is appointed efficiently) ### Disadvantages of Administration **For the company and directors**: - Administrator takes control; directors have limited authority - Moratorium is typically 6-12 months; creating uncertainty - If rescue or sale fails; company enters liquidation anyway - Administrator costs are substantial; typically 15-20% of assets realised **For creditors**: - If rescue or sale fails; creditors bear administration costs; reducing creditor recovery - Moratorium delays creditor recovery; extending cash flow impact ### Administration vs. Liquidation; Key Differences | Aspect | Administration | Liquidation | | ------ | -------------- | ----------- | | **Purpose** | Rescue or orderly sale | Asset realisation and distribution | | **Moratorium** | Automatic; prevents creditor action | None; liquidator pursues claims | | **Director authority** | Limited; administrator has control | None; liquidator has full control | | **Business operation** | Continues (initially) | Typically ceases immediately | | **Typical duration** | 6-12 months | 12-24+ months | | **Exit outcome** | Rescue; going concern sale; or liquidation | Liquidation | | **Creditor recovery** | Often superior (20-50% higher than liquidation) | Typically 0-20% for unsecured creditors | | **Cost** | 15-20% of realisations | 20-30% of realisations | ### Administration Entry Timing Administration is most effective if entered early; whilst the company retains trading value and creditor confidence. Once a winding-up petition is filed or a company is deeply insolvent; administration becomes less effective. **Optimal timing**: Contact an insolvency practitioner as soon as insolvency is foreseeable; to explore administration feasibility before creditors escalate to petitions. ### Voluntary Liquidation (Creditors' Voluntary Liquidation; CVL) Voluntary liquidation occurs when directors initiate liquidation; rather than awaiting a court-ordered compulsory liquidation. There are two types: members' voluntary liquidation (MVL; for solvent companies) and creditors' voluntary liquidation (CVL; for insolvent companies). ### Creditors' Voluntary Liquidation (CVL); The Relevant Process A CVL is initiated when directors; recognising company insolvency; call a shareholders' meeting to pass a resolution to wind up the company voluntarily. The company then appoints a private licensed insolvency practitioner as liquidator. ### Process **1. Shareholders' resolution**: Directors convene a shareholders' meeting and propose a resolution to wind up the company voluntarily. Shareholders vote; and if a majority approves; the CVL is initiated. **2. Liquidator appointment**: The company appoints a private licensed insolvency practitioner as liquidator. The liquidator is not appointed by the court; but selected by the company. **3. Creditor notification**: Creditors are notified of the CVL; and invited to attend a creditors' meeting (typically held within 4-6 weeks). **4. Creditors' meeting**: Creditors attend; meet the liquidator; and have opportunity to ask questions or challenge liquidator appointment. Creditors can vote to appoint an alternative liquidator; though typically the appointed liquidator is confirmed. **5. Asset realisation**: The liquidator proceeds to realise assets; investigate director conduct; and distribute funds to creditors; similar to compulsory liquidation. **6. Liquidation completion**: Once assets are realised and distributions are complete; the company is dissolved; and the liquidation is formally closed. ### Advantages of CVL vs. Compulsory Liquidation **For the company and directors**: - Directors initiate; rather than being forced by court - No court hearing; avoiding public court proceedings - Often perceived as more orderly and professional - Disqualification investigation still occurs; but may be lower risk (proactive vs. reactive) - Reputation slightly better than compulsory liquidation (though still severe) **For creditors**: - CVL avoids court petition costs; reducing total liquidation costs - Creditors may have greater input in liquidator selection - Asset realisation often slightly faster than compulsory liquidation (no court delays) ### Disadvantages of CVL **For the company and directors**: - Disqualification investigation still occurs - Directors still face personal liability investigation - No benefit over compulsory liquidation in terms of director exposure - CVL demonstrates insolvency was known but ignored; potentially increasing disqualification risk **For creditors**: - Similar creditor recovery rates to compulsory liquidation (typically 0-20%) - No substantive advantage in distribution or asset realisation ### CVL vs. Compulsory Liquidation; Practical Comparison | Aspect | CVL (Voluntary) | Compulsory Liquidation | | ------ | --------------- | ---------------------- | | **Initiator** | Directors | Creditors (court petition) | | **Court involvement** | Minimal; registration only | Full court hearing and order | | **Cost** | Slightly lower (no court fees) | Higher (court petition costs) | | **Disqualification risk** | Still high; may be elevated (proactive) | High; reactive | | **Director reputation** | Slightly better (proactive decision) | Worse (forced by court) | | **Speed** | Typically faster (no court delays) | Slower (petition, hearing, order) | | **Creditor recovery** | Similar to compulsory | Similar to compulsory | **Key insight**: CVL offers marginal advantages over compulsory liquidation; but does not substantially improve director or creditor outcomes. CVL is typically chosen when directors wish to control the process and avoid court involvement; not for substantive benefit. ### Comparison; CVA vs. Administration vs. CVL vs. Compulsory Liquidation | Factor | CVA | Administration | CVL | Compulsory | | ------ | --- | -------------- | --- | ---------- | | **Preserves business** | Yes (if approved) | Yes (initially) | No | No | | **Director control** | Retained | Limited | Minimal | None | | **Disqualification risk** | Low (if successful) | Moderate | High | High | | **Creditor recovery** | 25-50% | Often superior | 0-20% | 0-10% | | **Cost** | 5-10% | 15-20% | 20-30% | 20-30% | | **Duration** | 5 years (CVA) | 6-12 months (then liquidation if fails) | 12-24 months | 12-24 months | | **Creditor approval** | Required (75%+) | Not required | Not required | Not required | | **Complexity** | Moderate | High | Moderate | High | | **Success rate** | 70-80% (if approved) | 40-60% | N/A (always leads to liquidation) | N/A (always leads to liquidation) | ### Timing; When to Pursue Alternatives **Critical principle**: Alternatives are most effective if pursued early; before creditors file petitions and courts become involved. **Early warning signs** requiring immediate alternative exploration: - Inability to pay statutory obligations (PAYE; VAT; Corporation Tax) for 2+ months - Regular creditor demands; statutory demands; or threats of legal action - Bank overdraft maxed out; or facility withdrawn - Major customer loss or contract termination - Accounting showing cash flow deficit for 6+ months pre-dating petition - HMRC or major creditor issuing statutory demand **Timing for each alternative**: **CVA**: File proposal with court before winding-up petition is made. If petition is already filed; CVA becomes harder but still possible if proposed immediately post-petition filing. **Administration**: File application before winding-up petition; or immediately after petition if rescue remains viable. Once winding-up order is made; administration becomes extremely difficult. **CVL**: Can be initiated at any time; but is most effective if creditor confidence remains; before petitions are filed. **Compulsory liquidation**: Occurs only if alternatives fail or are not pursued; and creditor petitions the court. ### Next Steps If you are facing insolvency or creditor pressure: - **Act immediately**: Do not wait for petitions to be filed. Early intervention offers maximum options. - **Contact insolvency practitioner**: Seek advice from a licensed insolvency practitioner on CVA; administration; or CVL feasibility. - **Assess creditor support**: Determine whether major creditors (HMRC; banks; key suppliers) would support CVA or alternative; or whether liquidation is unavoidable. - **Prepare alternative proposal**: If CVA or administration appears viable; prepare credible proposal with professional assistance. - **Engage legal counsel**: Contact Lexlaw's insolvency specialists for legal advice on alternative structures and process. Compulsory liquidation is not inevitable. Early exploration of alternatives can preserve business value; improve creditor recovery; and protect director interests significantly better than reactive liquidation. For CVA guidance; see lexlaw.co.uk/company-voluntary-arrangements/. For winding-up petition advice; see windinguppetitionsolicitors.co.uk. **Next step**: *Post-liquidation recovery; rebuilding after compulsory liquidation; and long-term director rehabilitation.* ## 14. Post-Liquidation; Rebuilding & Director Rehabilitation Compulsory liquidation is not a permanent end; but a significant event requiring recovery and rehabilitation. Understanding the post-liquidation timeline; the requirements for director rehabilitation; and the pathway to rebuilding is essential for moving forward. ### Immediate Post-Liquidation Period; Weeks 1-8 ### Company Dissolution Timeline Following the liquidator's appointment and asset realisation; the company enters a formal dissolution process. Timing varies; but typically: **Weeks 1-4**: Liquidator investigates; realises quick-sale assets; and makes initial distributions to preferential creditors. **Weeks 4-12**: Intermediate asset realisations; interim dividend payment to unsecured creditors (if assets justify). **Months 3-18**: Extended asset realisation; ongoing investigation; and additional interim dividends. **Months 18-24**: Final asset realisations; fee finalisation; and final dividend payment. **Months 24-36**: Formal dissolution; company removed from Companies House register; and liquidation formally closed. ### Director's Obligations During Immediate Post-Period During the immediate post-liquidation period; directors must: **Continue cooperation**: Respond promptly to liquidator requests; attend any outstanding private examinations; and provide further documentation if requested. **Prepare for disqualification investigation**: As discussed in Section 7; the Official Receiver conducts a formal disqualification investigation. Directors should prepare responses to the Official Receiver's report; gather mitigating evidence; and decide on undertaking vs. court proceedings strategy. **Manage personal financial exposure**: Assess personal liabilities (wrongful trading judgments; personal guarantees); and prioritise settlement negotiation with creditors. **Secure employment or income**: Begin or continue seeking employment or business opportunity to stabilise personal finances and demonstrate recovery to disqualification investigators. ### Director Disqualification; Undertaking vs. Court Proceedings (Revisited) During the immediate post-liquidation period; the Official Receiver completes disqualification investigation and proposes findings. Directors must decide whether to accept findings (undertaking) or contest (court proceedings). **Timing**: Decision must typically be made within 6-12 months of liquidation order. For detailed disqualification strategy; see Section 7 (Director Disqualification). ### Medium-Term Recovery; Months 3-24 ### Employment and Income Stabilisation Rebuilding requires immediate focus on income stability: **Secure employment**: Seek employment with a company; NGO; or public sector organisation. Employers conduct director history checks; and disqualification may impact hiring; but employment remains achievable post-liquidation. **Self-employment**: If employment is not suitable; consider self-employment; though this requires capital and lender confidence; both of which may be limited post-liquidation. **Income support**: If employment is not immediately available; explore government support (Universal Credit; Job Seeker's Allowance; etc.) to stabilise immediate income. **Spouse income**: If the spouse has independent income; stabilise household finances through the spouse's earnings whilst director seeks recovery. ### Personal Debt Management Post-liquidation; focus on personal debt management: **Assess personal debt**: Quantify total personal debts; including personal loans; mortgages; credit cards; and any company-related personal liabilities (personal guarantees; wrongful trading judgments). **Prioritise high-risk debts**: Personal guarantee debts (banks; landlords) should be prioritised; as creditors will pursue these aggressively. Explore settlement negotiation; payment plans; or refinancing options. **Negotiate with creditors**: Contact creditors holding judgments or guarantees; proposing settlement or payment arrangements. Many creditors will accept reduced settlement if the debtor demonstrates employment and income stabilisation. **Avoid further debt**: Do not incur new unsecured debt (credit cards; personal loans) during recovery period. ### Credit File Recovery Post-liquidation; the director's credit file will be damaged for 6 years: **Credit score impact**: Compulsory liquidation and personal liabilities will significantly reduce credit score. Directors typically find it difficult or impossible to obtain new credit; mortgages; or loans during this period. **Timeline for recovery**: Credit score typically recovers 12-24 months post-liquidation; as early stage of defaults fade. However; significant impact remains until 6-year mark (from liquidation date). **Rebuilding strategies**: - Maintain employment stability and income continuity - Pay all personal debts on schedule - Obtain a credit-builder credit card; and use sparingly; paying balance in full monthly - Register on the electoral roll; as credit agencies use this for verification - Check credit file for errors; and dispute inaccuracies with credit agencies - Build savings and emergency reserves ### Business Restriction; The Five-Year Name Ban As discussed in Section 4; directors of compulsorily liquidated companies face a five-year ban on forming; managing; or promoting businesses using the same or similar name to the liquidated company. **Practical implications**: **Cannot reuse company name**: If the liquidated company was "ABC Limited"; the director cannot form "ABC Limited"; "ABC Ltd"; "ABC Services"; or other variations suggesting continuity with the failed company. **Can form new company**: The director can form a new company with a different name; without restriction (unless disqualified; in which case the director cannot act as director at all). **Five-year period**: The ban applies for five years from the liquidation date. After five years; the director can form a company using the original name; with court permission. **Exceptions**: - Licensed insolvency practitioner sale; with creditor notice; allows name reuse - Another company has used the name for 12+ months; allowing reuse - Court permission obtained; in exceptional circumstances **Breach consequences**: Operating under a banned name results in personal liability for company debts and potential criminal prosecution. ### Longer-Term Recovery; Years 2-6 ### Disqualification Compliance If disqualified; the director must comply with disqualification terms throughout the disqualification period: **Cannot act as director**: Cannot hold any director position; company secretary role; or de facto directorship position. **Cannot manage company affairs**: Cannot make decisions on behalf of any company; even if not formally a director. **Cannot promote or form companies**: Cannot be involved in forming or promoting new companies; though spouse or other family members can. **Public record**: Disqualification remains on public register throughout disqualification period; accessible to creditors; business partners; and competitors. **Breach consequences**: Acting as director while disqualified results in criminal prosecution; fines; and potential imprisonment. **Relief application**: After at least two years of disqualification; the director can apply to court for early relief (discharge); if circumstances justify. However; success is rare; requiring demonstration of substantial change in circumstances. ### Return to Directorships Post-Disqualification If the director receives a 6-year disqualification order; at the end of 6 years; the director is automatically restored to the ability to act as director (unless the disqualification was extended or multiple orders were made). **Professional opportunities**: Many employers and investors conduct director history checks; and disqualification history remains on public record indefinitely. Professional reputation recovery takes significant time. ### Long-Term Rehabilitation; Years 6+ ### Credit File Clearance Six years after the liquidation date; the liquidation should fall off the director's credit file. However; depending on the exact nature of the insolvency event; some impacts may remain longer: **Company liquidation**: Falls off credit file after 6 years from liquidation date. **Personal bankruptcy** (if applicable): Falls off credit file after 6 years from bankruptcy discharge date. **County Court judgments**: May remain on credit file for 6 years; but can be removed earlier if paid. **Mortgage arrears or defaults**: May remain for up to 6 years; depending on creditor reporting. **Post-clearance**: After six years; credit file should be largely clear; and credit score should recover substantially. Mortgage lenders; banks; and other creditors typically treat six-year-post-event borrowers as normal risk; though interest rates may remain slightly higher. ### Directorships and Professional Opportunities If disqualified; at the end of disqualification period; the director is eligible for re-appointment to directorships. However; practical barriers remain: **Professional opportunities**: Employment; directorships; and professional roles may require employer background checks; which discover liquidation history. **Self-employment and business**: The director can establish new businesses; form companies; and pursue entrepreneurial opportunities without statutory restriction (though lenders and investors may conduct due diligence). **Professional credentials**: If the director holds professional credentials (solicitor; accountant; surveyor; etc.); regulatory bodies may require fitness reassessment or impose conditions on re-entry. ### Re-Entering Business; Post-Liquidation Entrepreneurship Many directors attempt to re-establish businesses after liquidation. Success requires careful planning and learning from prior failures: ### Considerations for Post-Liquidation Business Ventures **1. Adequate capital and reserves**: Ensure the business is adequately capitalised; with sufficient cash reserves to weather initial losses. **2. Strong financial controls**: Implement robust accounting systems; regular management accounts; and cash flow forecasting from day one. **3. Avoid personal guarantees**: Where possible; avoid personal guarantees on company debts; reducing personal exposure. **4. Professional advisors**: Engage accountants; business advisors; and insolvency practitioners from the outset; seeking regular reviews. **5. Creditor relationships**: Build strong relationships with creditors; suppliers; and lenders; maintaining regular communication and transparency. **6. Diversification**: Avoid over-reliance on single customers; products; or markets; reducing vulnerability to individual failures. **7. Early action**: If difficulties emerge; seek professional advice immediately; rather than hoping for recovery. ### Success Rates; Post-Liquidation Re-Entry Research indicates that directors who have experienced compulsory liquidation face significantly higher failure rates in subsequent business ventures: - **First-time business failures**: Approximately 20-30% of businesses fail within 5 years - **Post-liquidation business failures**: Approximately 40-50% of businesses fail within 5 years This higher failure rate reflects capital constraints; psychological factors; and creditor reluctance. However; the 50-60% success rate demonstrates that post-liquidation business re-entry is viable; with proper planning and learning from prior failures. ### Next Steps If you are post-liquidation and focused on recovery: - **Stabilise income**: Secure employment or establish sustainable income source immediately. - **Address personal liabilities**: Prioritise settlement or payment arrangement with creditors holding personal guarantees or judgments. - **Manage credit file**: Implement credit-building strategies (employment stability; timely debt payment; credit-builder cards). - **Comply with disqualification** (if applicable): If disqualified; ensure full compliance with disqualification terms; avoiding breach. - **Plan carefully**: If re-entering business; plan thoroughly; learn from prior failures; and seek professional advice throughout. - **Monitor credit file**: Annually review credit file; ensuring accuracy and tracking recovery progress. Recovery from compulsory liquidation is achievable with discipline; professional support; and realistic expectations. **Next step**:* Understanding HMRC-specific issues arising from compulsory liquidation; and tax implications for directors.* ## 15. HMRC & Tax-Specific Issues; Director Liability and Recovery HMRC (Her Majesty's Revenue and Customs) is frequently the creditor petitioning for compulsory liquidation; and tax-related issues create unique exposures for directors beyond standard insolvency proceedings. Understanding HMRC's enforcement powers; director personal liability for tax debts; and recovery strategies is essential. ### HMRC as Petitioner; Why Tax Debts Trigger Liquidation HMRC holds significant enforcement powers and is the most frequent petitioner in compulsory liquidation cases. Key tax debts triggering petitions include: ### PAYE and National Insurance Contributions (NIC) **Nature of debt**: Employers are required to deduct income tax and National Insurance contributions from employee wages; and remit these to HMRC monthly. These are "trust debts"; as the money belongs to employees; not the company. **HMRC priority**: HMRC treats unpaid PAYE and NIC as priority debts; pursuing them aggressively through statutory demands and winding-up petitions. **Director exposure**: Unpaid PAYE and NIC create two separate liabilities: - **Company liability**: The company owes the unpaid amount to HMRC - **Director personal liability**: Directors can be held personally liable for unpaid PAYE and NIC under the "Personal Liability Notice" (PLN) regime (discussed below) **Typical amounts**: Companies often accumulate substantial PAYE arrears; frequently £50,000-500,000+; as cash-strapped businesses delay payment to preserve operating cash. ### VAT (Value Added Tax) **Nature of debt**: VAT-registered companies collect VAT from customers and remit the net amount to HMRC quarterly. Like PAYE; VAT belongs to customers; not the company. **HMRC enforcement**: HMRC pursues unpaid VAT aggressively; as it represents funds owed to customers. **Typical amounts**: VAT arrears often exceed £100,000 in manufacturing or retail businesses; as VAT is calculated on turnover and accumulates quickly. **Director exposure**: VAT debts create director personal liability under PLN regime (discussed below). ### Corporation Tax and Income Tax **Corporation Tax**: Tax on company profits; owed by the company. Unlike PAYE and VAT; Corporation Tax is the company's own liability; not trust funds. **Director exposure**: Limited; as Corporation Tax is company liability; not personal director liability (unless fraudulent trading or director loan misallocation is involved). **Income Tax on director loans**: If a director has borrowed funds from the company (director's loan account); and the loan is never repaid; HMRC may assess the director for income tax on the loan amount; as deemed income. This creates personal director tax liability. ### Personal Liability Notices (PLNs); The Most Serious Tax Exposure A Personal Liability Notice is HMRC's primary mechanism for pursuing directors personally for company tax debts. PLNs create unlimited personal liability; and are one of the most serious exposures facing directors. ### Legal Basis for PLNs **Statute**: Tax Administration Work and Other Legislation (TAWOL) Act 2009; amending the Income Tax Act 2007. The legislation allows HMRC to issue PLNs to directors and senior company managers for unpaid PAYE; NIC; and VAT. **Scope**: PLNs apply to: - Directors of the insolvent company - Shadow directors (individuals exercising de facto control) - Senior managers or company officers with responsibility for tax affairs - In some cases; spouse or relatives with involvement in company management ### How PLNs Work **HMRC assessment**: HMRC assesses that the company owes unpaid PAYE; NIC; or VAT; and that a director or senior manager is personally responsible (through breach of duty or recklessness). **PLN issuance**: HMRC issues a PLN to the director; formally notifying the director that they are personally liable for the unpaid tax debt. **Joint and several liability**: The PLN creates joint and several liability; meaning HMRC can pursue the director; the company; or both for the full debt. HMRC typically pursues whichever is more likely to result in payment. **Unlimited amount**: The PLN can extend to the full unpaid tax amount; with no cap. Debts of £500,000+ are not uncommon. **Interest and penalties**: The PLN includes interest (accrued since the original due date) and penalties (typically 100% of the unpaid tax for negligence or recklessness; up to 200% for fraud). ### Grounds for PLN Issuance HMRC must demonstrate that the director caused; or knowingly allowed; the company to breach its tax obligations. Grounds include: **Failure to remit PAYE and NIC**: Director allowed the company to collect and retain employee tax; rather than remitting to HMRC; despite knowing the tax obligation. **Failure to register for VAT**: Director failed to register the company for VAT when required; causing uncollected VAT to accumulate. **VAT evasion or under-declaration**: Director deliberately under-declared VAT or claimed fraudulent input tax relief. **PAYE under-declaration**: Director deliberately under-reported employee numbers or wages to reduce PAYE. **Failure to file tax returns**: Director failed to file company tax returns; returns were filed late; or returns were incomplete or inaccurate. **Knowingly allowing tax evasion**: Director knew of tax evasion by company staff and failed to prevent or report it. ### PLN Challenge and Appeal Directors can challenge a PLN; but the threshold is high: **Appeal grounds**: - HMRC misidentified the responsible director (e.g.; another director or manager was responsible) - The director was not involved in; and could not have prevented; the breach - HMRC's assessment of the unpaid tax amount is incorrect - The director exercised reasonable due diligence and the breach was not foreseeable **Challenge process**: - Directors receive formal notice of the PLN; with details of the tax debt and grounds - Directors have 30 days to notify HMRC of appeal - If appealed; HMRC must submit evidence of the director's responsibility - The matter proceeds to Tax Tribunal for formal hearing - The Tax Tribunal determines whether the PLN was validly issued **Success rate**: Appeals are rarely successful; as HMRC typically issues PLNs only after substantial investigation. ### Example; Penalty Liability Notice (PLN) Scenario A manufacturing company accumulated £300,000 in unpaid PAYE over 18 months. The director; aware of cash flow difficulties; authorised delay in PAYE remittance; intending to catch up when cash improved. Cash flow never recovered; the company became insolvent; and was wound up. HMRC issued a PLN to the director for £300,000 (unpaid PAYE) plus £150,000 (interest and penalties); totalling £450,000 personal liability. The director challenged the PLN; arguing that the delay was a cash flow management issue; not deliberate evasion. HMRC rejected the challenge; arguing that the director knowingly allowed unpaid tax to accumulate despite awareness of the company's obligations. The director appealed to Tax Tribunal; but the appeal was dismissed; confirming the PLN. The director faced personal liability of £450,000; independent of the company liquidation. The director negotiated a time-to-pay arrangement with HMRC; paying £500 monthly over 90 months; whilst also facing employment restrictions and credit damage. ### Wrongful Trading and Tax Evasion; Overlapping Liability Wrongful trading (discussed in Section 5) and tax evasion can overlap; creating compounded liability: ### Wrongful Trading + Tax Evasion If a director continued trading whilst insolvent; and simultaneously engaged in tax evasion (deliberate under-declaration of VAT; fraudulent PAYE reduction); the director faces: - **Wrongful trading liability**: Liquidator's personal liability claim for contribution to company assets - **Tax evasion liability**: Criminal prosecution for tax fraud; plus PLN for unpaid tax - **Penalties**: HMRC civil penalties (typically 50-200% of unpaid tax); plus criminal fines **Example**: A director continued trading whilst insolvent; deliberately under-declaring VAT to generate cash flow. The company was wound up; the liquidator obtained a £100,000 wrongful trading judgment; and HMRC issued a PLN for £200,000 (unpaid VAT) plus criminal fraud charges. The director faced: - £100,000 wrongful trading judgment - £200,000+ PLN liability - Criminal prosecution for VAT fraud (up to 7 years imprisonment; unlimited fine) Total exposure exceeded £300,000; with potential imprisonment. ### Tax Debts and Bankruptcy; Non-Dischargeable Debts If a director becomes personally bankrupt following compulsory liquidation; tax debts have special status: ### Debts Non-Dischargeable in Bankruptcy Certain debts survive personal bankruptcy discharge and remain owed after discharge: **Tax fraud**: Debts arising from tax fraud are non-dischargeable; surviving the three-year bankruptcy period and remaining owed indefinitely. **Deliberate tax evasion**: Debts resulting from deliberate tax evasion are typically non-dischargeable. **PLN debts**: PLNs issued under TAWOL are generally dischargeable in personal bankruptcy (unlike some other debts); but this depends on the nature of the underlying breach. **Example**: A director was issued a £300,000 PLN for deliberate VAT under-declaration (fraud). The director subsequently entered personal bankruptcy. The PLN debt; being tax fraud; was non-dischargeable; and the director remained personally liable for the full amount after bankruptcy discharge. ### HMRC Settlement and Time-to-Pay Arrangements Directors facing substantial HMRC tax debts (whether company liability or personal PLN liability) have limited settlement options: ### Time-to-Pay (TTP) Arrangements HMRC offers time-to-pay arrangements; allowing debtors to pay tax debts over an extended period (typically 12-60 months); rather than in a lump sum. **Eligibility**: Debtors must demonstrate: - Good faith intent to pay - Inability to pay in full immediately - Genuine hardship if forced to pay in lump sum **Amount**: TTP arrangements typically involve: - Immediate payment of a percentage (if possible; e.g.; 10-20%) - Remaining balance paid monthly over agreed period **Interest**: Interest continues to accrue during the TTP period; though HMRC may suspend or reduce interest in exceptional cases. **Conditions**: TTP arrangements typically include: - Ongoing tax compliance (current taxes paid on time) - Regular contact with HMRC - Potential breach if debtor defaults on monthly payments **Example TTP arrangement**: - Total debt: £150,000 - Immediate payment: £15,000 (10%) - Remaining balance: £135,000 - Monthly payment: £2,250 over 60 months - Total interest accrued during period: £30,000+ - Total repaid: £180,000+ ### Settlement Negotiation In some cases; directors can negotiate settlement at a discount; reducing total liability: **Conditions for settlement**: - Director demonstrates genuine hardship - Debt is substantial and collection would be costly - Director has some ability to pay (HMRC seeks payment from those able to contribute) - Early settlement payment is offered (lump sum; even if discounted) **Typical settlement ranges**: 50-75% of the original debt (HMRC recovers partial payment; rather than extended TTP or nil recovery in bankruptcy). **Example settlement**: A director faced £100,000 PLN for unpaid PAYE. The director offered to settle for £60,000 lump sum payment (60% of debt). HMRC accepted; recognising collection would be costly and uncertain. The director paid £60,000; satisfying the PLN. ### Professional Negotiation Negotiation with HMRC requires specialist expertise. Contact Lexlaw's tax disputes team at taxdisputes.co.uk for professional representation in HMRC debt settlement negotiations. Specialist tax solicitors often achieve significantly better settlement outcomes than individuals attempting self-negotiation. ### Tax Compliance During Liquidation; Ongoing Obligations Directors and companies have continuing tax obligations during the liquidation process: ### Liquidator's Tax Compliance Obligations The liquidator must file final company tax returns; declaring: - Income and turnover to liquidation date - Final expenses and liabilities - No future business activity Final returns are typically filed within 9-12 months of liquidation; though timing varies. ### Director's Personal Tax Obligations Directors remain personally liable for personal income tax; self-employment tax; and other personal tax obligations; independent of company tax status. **Separated finances**: If a director has personal income (employment; investment income); personal tax returns and payments continue independently of company liquidation. **Director's loan accounts**: If a director has a loan account with the company; and the account is forgiven (written off) during liquidation; the forgiven amount may be assessed as director income; triggering personal income tax liability. ### Capital Gains Tax on Asset Loss If a director has personally invested in the company (purchased shares; loaned funds); and these investments are lost in liquidation; capital loss treatment may be available: **Capital loss claim**: A director can claim a capital loss for shares or personal investments lost in liquidation; offsetting against capital gains in the same tax year or carried forward. **Conditions**: The loss must be a genuine capital loss; and the director must have evidence of the investment and loss. **Specialist advice**: Capital loss claims involving company failure often require specialist tax advice. Contact taxdisputes.co.uk for guidance on capital loss claims. ### Pre-Liquidation Tax Planning; Limiting Director Exposure If a company is facing insolvency and HMRC petition appears likely; limited tax planning options exist to reduce director exposure: ### Voluntary Disclosure of Tax Evasion If a director is aware of company tax evasion (deliberate under-declaration); voluntary disclosure to HMRC before HMRC investigation may reduce penalties: **Penalty reduction**: Voluntary disclosure typically reduces penalties from 100-200% (fraud) to 20-50% (settlement); though the unpaid tax and interest remain fully payable. **Legal advice**: Voluntary disclosure requires specialist tax and legal advice; as incorrect disclosure procedure can worsen the director's position. Contact taxdisputes.co.uk before considering voluntary disclosure. ### Company Voluntary Arrangement (CVA) Including Tax Debt If the company proposes a CVA; HMRC can participate as a creditor; and may accept reduced payment (typically 25-50% of tax debt) over the CVA period. **Example**: A company with £200,000 in unpaid PAYE and VAT proposes a CVA; offering creditors 40% payment over 60 months. HMRC accepts; receiving £80,000 over 5 years. The company stabilises; business recovers; and HMRC recovers more than anticipated in liquidation. For CVA guidance; see lexlaw.co.uk/company-voluntary-arrangements/. ### Director Cooperation with HMRC Post-Liquidation Upon liquidation; the Official Receiver and liquidator cooperate with HMRC; exchanging information on company affairs; director conduct; and asset realisations. Directors should understand this cooperation: ### Information Sharing The liquidator provides HMRC with: - Company accounting records and tax files - Details of director remuneration and personal withdrawals - Information on company transactions and related party dealings - Details of asset realisations and dividend distributions This information is used by HMRC to: - Verify company tax returns and identify discrepancies - Assess director personal tax liability - Determine whether PLN should be issued - Identify fraud or evasion ### PLN Timing Post-Liquidation PLNs are frequently issued post-liquidation; as HMRC investigates company affairs during the liquidation process and determines director responsibility. Directors should expect PLN assessment 6-18 months post-liquidation. ### Cooperation with Liquidator on Tax Matters; Director Obligations Directors must cooperate fully with the liquidator on tax-related inquiries: ### Required Cooperation **Explain tax decisions**: Directors must explain company tax decisions; including: - Timing of tax payments and delays - Reasons for PAYE or VAT arrears - Any tax evasion or deliberate non-compliance - Related party tax transactions (e.g.; director loan accounts; related company payments) **Provide tax documentation**: Directors must provide: - Copies of tax returns filed (or not filed) - HMRC correspondence and notices - Bank records showing (or not showing) tax payments - Internal accounting records and working papers **Disclose related party transactions**: Directors must disclose all transactions between the company and related parties (spouse; other companies owned by director; family members); as these are investigated for tax compliance and undervalue transactions. **Honesty and accuracy**: As with all liquidator cooperation (Section 10); directors must be truthful and complete. False or misleading statements constitute perjury. ### Next Steps If you are facing HMRC-related issues in compulsory liquidation: - **Assess tax exposure**: Determine what tax debts the company owes (PAYE; VAT; Corporation Tax) and whether PLN exposure is likely. - **Seek specialist tax advice**: Contact Lexlaw's tax disputes specialists at taxdisputes.co.uk for assessment of PLN exposure and settlement strategies. - **Gather evidence**: Compile documentation of company tax payments; decisions; and circumstances; to support any PLN challenge or settlement negotiation. - **Engage professional representation**: Retain specialist tax solicitors to represent you in HMRC negotiations; PLN appeals; or settlement discussions. - **Explore settlement options**: If PLN is issued or tax debts are substantial; investigate time-to-pay arrangements or settlement negotiation with HMRC. - **Plan CVA participation**: If exploring CVA as alternative to liquidation; include HMRC in discussions on tax debt treatment and potential settlement. - **Monitor personal tax obligations**: Ensure personal income tax; self-employment tax; and other personal tax obligations continue to be met; independent of company tax status. HMRC tax debts are frequently the most serious exposure facing directors in compulsory liquidation. Early specialist advice and professional representation significantly improve outcomes. For detailed tax disputes guidance; visit taxdisputes.co.uk. For winding-up petition advice; visit windinguppetitionsolicitors.co.uk. **Next section**: *Summary and final guidance on immediate action steps for directors facing compulsory liquidation.* ## 16. When to Contact a Winding-up Solicitor; Immediate Action Steps Compulsory liquidation escalates rapidly; and delays in seeking legal advice often result in lost opportunities and increased personal exposure. Understanding when to contact specialist legal counsel; and what action steps are critical; is essential. ### When to Seek Immediate Legal Advice Contact a winding-up specialist solicitor immediately if any of the following occur: ### Creditor Pressure and Statutory Demands **Statutory demand received**: A statutory demand is a formal; legal notice requiring payment within 21 days. This is the precursor to winding-up petition. Upon receipt; contact a solicitor within 24 hours. **Purpose**: A solicitor can review the case and assess whether the demand is valid; whether the debt is genuinely owed; and whether grounds exist for challenge or negotiation. **Actions available**: - Apply to court to set aside the statutory demand (if defective or disputed) - Negotiate settlement with the creditor before expiry of the 21-day period - Propose time-to-pay arrangement or composition - Explore alternative insolvency arrangements (CVA; administration) - Initiate a cross claim **Cost of delay**: If the 21-day period expires without action; the creditor typically files a winding-up petition at court; escalating the situation dramatically. ### Winding-up Petition Filed or Advertised **Petition notice received**: If a creditor has filed a winding-up petition at court; the company receives formal notice. The petition is advertised in The Gazette; and a court hearing is scheduled. **Urgent action required**: Contact a solicitor immediately upon notification in the form of service at the Company's registered office address. The window to respond; file defence; injunction to restrain, or negotiate settlement is extremely narrow (typically 7 days). **Purpose**: A solicitor can: - Assess grounds for defence or challenge - Prepare court submissions or affidavit evidence - Negotiate emergency settlement with petitioner - Apply for interim relief or stay of proceedings **Actions available**: - Attend court hearing with legal representation - Present defence to winding-up petition - Propose alternative arrangement (CVA; settlement) - Apply for emergency injunction or stay **Cost of delay**: If no defence is prepared or settlement negotiated; the judge typically grants the winding-up order unopposed; eliminating further options. ### HMRC Statutory Demand or Petition **HMRC debt**: If HMRC has issued a statutory demand or filed a winding-up petition (typically for unpaid PAYE; VAT; or Corporation Tax); this is a serious escalation. **Specialist expertise required**: HMRC matters require specialist tax and insolvency expertise. Standard insolvency solicitors may lack HMRC negotiation experience. **Purpose**: A specialist tax solicitor can: - Assess HMRC's claim for accuracy and validity - Negotiate payment plan or settlement with HMRC - Challenge PLN (Personal Liability Notice) if issued - Explore time-to-pay arrangement **Contact**: Lexlaw's tax disputes specialists at taxdisputes.co.uk have specific expertise in HMRC matters. ### Multiple Creditor Demands or Petitions **Multiple creditors escalating**: If multiple creditors are issuing statutory demands or threatening petitions; this signals systemic insolvency and requires urgent intervention. **Scope of problem**: Multiple creditor pressure indicates the company faces genuine insolvency; not isolated creditor dispute. **Purpose**: A solicitor can: - Assess overall insolvency and viability of alternatives - Determine whether CVA; administration; or voluntary liquidation is appropriate - Develop comprehensive creditor strategy - Prioritise critical actions ### Cash Flow Crisis; Inability to Pay Wages or Statutory Obligations **Cash depletion**: If the company cannot meet payroll; PAYE remittance; VAT payment; or lease obligations; this signals acute insolvency. **Timeline**: Once cash flow reaches crisis point; the window to explore alternatives (CVA; administration; voluntary liquidation) narrows rapidly. **Purpose**: A solicitor can: - Assess alternative insolvency arrangements - Determine whether business can be rescued or requires orderly wind-down - Advise on employee obligations and redundancy procedures - Explore emergency funding or creditor support ### Choosing the Right Specialist Solicitor Not all solicitors have compulsory liquidation expertise. When selecting legal counsel; prioritise: ### Essential Expertise **Insolvency law**: The solicitor must have substantial experience in Insolvency Act 1986; winding-up petitions; personal liability; and director disqualification. **HMRC matters** (if applicable): If HMRC is the petitioner or significant creditor; the solicitor must have specific HMRC negotiation and tax expertise. **Director representation**: The solicitor must have experience representing directors (not companies) in insolvency; as director interests often differ from company interests. **Court procedure**: The solicitor must have experience in High Court Chancery Division winding-up procedures; including emergency applications; urgent hearings; and appeals. ### Red Flags; Solicitors to Avoid **Generalist approach**: Avoid solicitors who handle insolvency as a side practice. Winding-up disputes require specialist expertise. **Company-focused representation**: Some solicitors represent companies in insolvency; focusing on company survival. If your personal liability exposure is high; you need director-focused representation; not company-focused representation. **Lack of court experience**: Some solicitors provide advice but lack court advocacy experience. If court proceedings are likely; ensure the solicitor (or retained counsel) has direct court experience. **Limited availability**: Winding-up matters require urgent response; often within days. Ensure the solicitor can prioritise your matter and provide rapid response. ### Initial Consultation; What to Expect and Prepare ### Before the Consultation **Gather documentation**: - Copy of statutory demand or winding-up petition notice - All correspondence from creditors - Company accounting records and tax returns (recent 2-3 years) - Bank statements (recent 6-12 months) - Details of all company debts (creditor list) - Details of company assets and their estimated value - Personal guarantee documents (if any) - Directors' loan account statements - Any HMRC correspondence or notices **Prepare narrative**: - Timeline of company's financial decline - Key events or transactions leading to insolvency - Reasons for creditor disputes (if disputed debt) - Details of any previous settlement negotiations ### During the Consultation **Solicitor assessment**: - Company solvency and viability of alternatives - Creditor claim validity and dispute grounds - Personal liability exposure (wrongful trading; preferences; undervalue; personal guarantees) - Disqualification risk and investigation likelihood - HMRC exposure (if applicable) - Director's financial position and repayment capacity **Options discussion**: - Feasibility of defending winding-up petition - Settlement and negotiation options - CVA; administration; or voluntary liquidation alternatives - Cost-benefit analysis of each option - Likely timeline and outcomes ### Immediate Action Steps; Priority Sequence Once you have engaged legal counsel; prioritise actions in this sequence: ### Step 1; Respond to Statutory Demand (Days 1-3) **If statutory demand received**: - Contact solicitor within 24 hours - Provide all documentation to solicitor - Solicitor assesses grounds for challenge or settlement - Within 3 days; decide whether to challenge; settle; or propose alternative arrangement **Actions**: - **Challenge**: If demand is defective or debt is disputed; apply to court to set aside demand (within 21 days) - **Settle**: If debt is owed; negotiate settlement or payment plan with creditor (within 21 days) - **Propose alternative**: If insolvency is systemic; propose CVA or alternative arrangement (within 21 days) **Cost of missing deadline**: If the 21-day period expires without action; creditor files winding-up petition at court; escalating to compulsory liquidation proceedings. ### Step 2; Respond to Winding-up Petition (Days 4-10) **If petition filed and advertised in The Gazette**: - Contact solicitor immediately (upon notification or upon seeing petition in The Gazette) - Provide all documentation to solicitor - Solicitor assesses grounds for defence; settlement; or alternative arrangement - Within 7-10 days; file court submission or arrange settlement negotiation **Actions**: - **Defend petition**: Prepare court affidavit and written submissions; identify legal or factual grounds for dismissal - **Settle with petitioner**: Negotiate emergency settlement; time-to-pay arrangement; or composition - **Propose alternative**: Apply to court for stay of proceedings; pending CVA or administration **Cost of missing deadline**: If no response is filed; judge typically grants winding-up order unopposed; and company enters liquidation. ### Step 3; Prepare for Court Hearing (Days 10-28) **Court hearing preparation**: - Solicitor (or counsel) prepares written submissions; court bundle; and evidence - Director prepares for potential oral evidence (if required) - Arrange funding for court costs (petition hearing fee; solicitor fees) **Actions**: - **Attend court hearing**: Appear with legal representation; present defence or settlement proposal - **Negotiate settlement**: If negotiations are ongoing; seek urgent settlement agreement before hearing date - **Propose alternative**: If CVA or administration is viable; present proposal to court; requesting stay of proceedings **Outcome**: - **Petition dismissed**: If defence succeeds or settlement agreed; company survives and proceedings cease - **Winding-up order made**: If defence fails or settlement not reached; judge issues winding-up order; liquidation begins - **Proceedings stayed**: If alternative arrangement is approved; liquidation is paused pending CVA or administration ### Ongoing Legal Support; Post-Liquidation Once a winding-up order is made; legal support continues: ### Disqualification Investigation and Response **Official Receiver investigation**: The Official Receiver investigates director conduct; typically over 6-12 months. **Response strategy**: - Review Official Receiver's report and allegations - Gather mitigating evidence; professional advice; and contextual documentation - Decide on undertaking (acceptance of findings) vs. court proceedings (contest findings) - Prepare detailed response or court submissions **Legal representation**: Retain solicitor for disqualification response; particularly if contesting findings via court proceedings. ### Personal Liability Defence If the liquidator investigates wrongful trading; preferences; or undervalue transactions; and proposes personal liability claims: **Assess exposure**: Solicitor assesses strength of liquidator's case and viability of defence. **Settlement negotiation**: Solicitor negotiates settlement of personal liability claims; often achieving substantial reductions. **Court proceedings**: If settlement not achieved; solicitor prepares defence to personal liability claims; appearing in court on director's behalf. ### HMRC Matters If HMRC issues statutory demand; winding-up petition; or Personal Liability Notice: **Specialist tax solicitor**: Retain Lexlaw's tax disputes specialists at taxdisputes.co.uk for HMRC-specific matters. **Assessment and strategy**: Tax solicitor assesses HMRC claim; PLN validity; and negotiation strategy. **Negotiation or appeal**: Solicitor negotiates settlement; time-to-pay arrangement; or appeals PLN via Tax Tribunal. ### Using Lexlaw for Winding-up Representation Lexlaw specialises in director representation in winding-up petitions; disqualification proceedings; and HMRC matters. **Lexlaw's expertise**: - Statutory demand response and challenge - Winding-up petition defence and court representation - HMRC negotiation and PLN challenge (at taxdisputes.co.uk) - Disqualification response and court proceedings - Personal liability defence (wrongful trading; preferences) - CVA and alternative arrangement advice **Contact Winding-up experts**: windinguppetitionsolicitors.co.uk **Contact HMRC tax disputes experts**: taxdisputes.co.uk **Contact Lexlaw for general legal advice**: lexlaw.co.uk ### Summary; Critical Action Timeline | Timeline | Action | Contact | | -------- | ------ | ------- | | **Day 1** | Receive statutory demand; contact solicitor within 24 hours | Lexlaw winding-up specialists | | **Days 1-21** | Challenge demand; settle debt; or propose alternative arrangement | Solicitor | | **Day 22+** | If no action taken; creditor files winding-up petition at court | N/A | | **Days 22-28** | Receive petition notice; contact solicitor immediately | Lexlaw winding-up specialists | | **Days 22-35** | File court submission; prepare defence; negotiate settlement | Solicitor | | **Days 35-49** | Court hearing; present defence or settlement proposal | Court (solicitor attends) | | **Day 35-49** | If winding-up order made; liquidator appointed; Official Receiver investigates | Liquidator | | **Months 6-12** | Official Receiver completes disqualification investigation; director receives report | Solicitor (prepare response) | | **Months 12-24+** | Disqualification undertaking or court proceedings; personal liability investigation | Solicitor; counsel | **Key principle**: Early action (within days 1-21 of statutory demand) offers maximum options and best outcomes. Delay eliminates options and escalates to compulsory liquidation. **Next step**: *FAQs addressing common director questions and concerns.* ## 17. Frequently Asked Questions: ### Compulsory Liquidation: Directors' FAQs Q1; Will I Lose My Home? Not automatically. Your home is protected unless you personally guaranteed a company debt secured against it; or a creditor obtained a charging order following a judgment. If you hold personal guarantees on bank loans or property leases; that creditor can register a charge and potentially force sale; though courts have discretion to delay or refuse forced sale if your home is your principal private residence with dependent children. Prioritise settlement or release negotiation of personal guarantees before liquidation occurs. Q2; Will I Be Personally Bankrupt? Not necessarily. Company liquidation does not automatically trigger personal bankruptcy. You will face personal bankruptcy risk only if you have substantial personal debts (personal loans; mortgages; credit cards) you cannot pay; or face significant personal liability judgments (wrongful trading; personal guarantees) you cannot satisfy. Most directors avoid personal bankruptcy if they have personal income; minimal personal guarantees; and limited personal liability exposure. Assess your personal debt and liability exposure immediately; and contact a debt advisor if significant risk exists. Q3; Can I Keep Money I Received as Director Salary Before Liquidation? Yes; if you received the salary legitimately and it was properly authorised. Director salary earned and paid monthly is your personal income; not company property; and you retain it. However; if the salary was excessive or unauthorised (e.g.; you drew £10,000 monthly whilst employees were unpaid); the liquidator may investigate whether the salary was wrongful preference or undervalue transaction and pursue clawback in extreme cases. Document all director salary payments; board authorisation; and evidence that salary was commercially reasonable relative to other creditor treatment. Q4; What If I Have a Directors' Loan Account? Your directors' loan account status depends on whether it is in credit (you loaned money to company) or overdrawn (company loaned to you). If in credit; you become an unsecured creditor and will likely recover nothing in compulsory liquidation (unsecured creditors typically recover 0-20%). If overdrawn; you must repay the balance to the liquidator as a personal debt. The liquidator can pursue you for repayment of overdrawn amounts; so assess your exposure and prepare for potential personal repayment claim. Q5; Can the Liquidator Take My Personal Assets? No; the liquidator controls only company assets. However; creditors can pursue your personal assets if you have personal liability judgments (from wrongful trading; preferences; personal guarantees); and they can pursue through charging orders (against property); garnishment orders (wages); third-party debt orders (bank accounts); or bailiff enforcement (asset seizure). Identify all personal creditors and personal guarantees immediately; and prioritise settlement negotiation with creditors before enforcement escalates. Q6; Am I Definitely Going to Be Disqualified? No; but disqualification is probable if the company was compulsorily liquidated. The Official Receiver investigates all compulsorily liquidated directors; but disqualification is not automatic. First-time company failure results in 40-50% disqualification rates; whilst multiple failures result in 80-90% disqualification rates. Fraud or dishonesty results in 95%+ disqualification with 10-15 year periods; whilst simple negligence results in 40-60% disqualification with 4-6 year periods. Cooperate fully with the Official Receiver; gather mitigating evidence; and prepare your disqualification response carefully. Q7; What Should I Say During Private Examination? Tell the truth; as you are sworn to answer honestly and false statements constitute perjury; a criminal offence. Answer questions directly and completely; not evasively; ask for clarification if you do not understand; and pause to consult your solicitor if needed. Correct any false or misleading previous answers during examination; and if you do not know the answer; say so rather than guessing. Avoid minimising your involvement; blaming others; claiming memory loss; or refusing to answer; as dishonesty is quickly detected and substantially worsens disqualification risk. Q8; Can I Challenge Disqualification? Yes; but success is difficult. Limited grounds for challenge include factual errors in the Official Receiver's findings; mitigating circumstances (first failure; good faith decisions; market conditions); or procedural error in disqualification procedure. If you dispute findings; the matter proceeds to High Court for hearing where court hears evidence from both Official Receiver and you; and decides whether to impose disqualification. Court challenge typically costs £5,000-15,000+ and takes 6-12 months; so if Official Receiver's findings are strong; accepting voluntary undertaking (which avoids court costs) is often preferable. Q9; What Happens If I Am Disqualified? You cannot hold any director position; company secretary role; or de facto directorship for the disqualification period; and disqualification is recorded on public register accessible to employers; customers; and creditors. Acting as director while disqualified results in criminal prosecution with unlimited fines and up to 2 years imprisonment. Employment in regulated sectors (financial services; solicitor; accountant) may be restricted; and professional regulatory bodies may impose additional restrictions. After at least 2 years; you can apply to court for early relief; but success requires demonstrating substantial change in circumstances and most applications are rejected. Q10; How Long Will Disqualification Last? Disqualification periods range from 2 to 15 years depending on conduct severity. Typical periods are 2-3 years for first-time failure with simple negligence and full cooperation; 4-6 years for moderate negligence with PAYE/VAT arrears (the most common outcome); 7-10 years for serious recklessness or wrongful trading; and 10-15 years for fraud or deliberate misconduct. Factors affecting period include number of prior failures; whether dishonesty is involved; degree of cooperation; director's age and health; and professional impact. If disqualification is likely; aim for the 4-6 year modal range by cooperating fully and demonstrating mitigating circumstances. Q11; Do I Have to Provide All My Emails and Personal Documents? Yes; if they relate to company affairs. The liquidator can require access to email accounts (company and personal if used for company business); cloud storage; bank accounts; and accounting software. Scope is limited to company-related matters; though the line between company and personal is often blurred; and if your personal email contains company-related messages; those messages are within liquidator scope. Communications protected by legal privilege (solicitor advice) can be withheld; but this exception is narrow. Provide comprehensive access to email and digital systems; as the liquidator will investigate whether you attempted to conceal communications; which substantially worsens disqualification risk. Q12; What If I Cannot Find Some Company Documents? Inform the liquidator immediately. You must provide all documents within your possession or control; and if documents are lost or destroyed (even accidentally); you must notify the liquidator; explain the circumstances; and provide any copies or reconstructions available. If documents were deliberately destroyed to conceal transactions; this constitutes perversion of the course of justice; a criminal offence. If documents are genuinely lost (flood; computer failure); this is not criminal but indicates poor record-keeping; which is cited as evidence of unfitness in disqualification proceedings. Search thoroughly and cooperate with reconstruction efforts. Q13; Can I Negotiate with Creditors After Liquidation? Before liquidation order; you or your solicitor can negotiate directly with creditors; proposing settlement; time-to-pay; or alternative arrangements. After liquidation order; negotiation becomes limited; as the liquidator controls the company and creditors are generally advised to cease individual negotiations. However; creditors holding personal claims (personal guarantees; wrongful trading judgments) can still negotiate directly with you; and HMRC can still negotiate time-to-pay or settlement arrangements separately. If facing post-liquidation creditor claims; seek specialist negotiation support; particularly for HMRC matters (contact Lexlaw's tax disputes team at taxdisputes.co.uk). Q14; Can I Get Personal Guarantee Debts Written Off? Rarely; but settlement negotiation is possible. Creditors holding personal guarantees have strong legal position and are unlikely to write off debts entirely; but may negotiate reduced lump sum payment (e.g.; creditor accepts 60% settlement; writing off 40%); or time-to-pay arrangement (e.g.; £500 monthly over 72 months). Negotiation leverage depends on whether you are employed with stable income (creditors may accept time-to-pay); have liquid capital (creditors may accept discounted lump sum); or face personal bankruptcy (creditors may negotiate settlement fearing total loss). Contact creditors holding personal guarantees early; proposing realistic settlement or payment arrangement; as creditors often prefer partial payment over prolonged collection efforts. Q15; Can I Start a New Business After Liquidation? Yes; but with restrictions. You cannot use the liquidated company's name or similar name for 5 years (unless court permission); and if disqualified; you cannot act as director or company secretary (though spouse or family members can). Practical limitations include severely restricted credit access (credit score damaged for 6 years); lenders' hesitance to finance post-liquidation directors; suppliers' requirements for upfront payment; and customers' concerns about business stability. Directors attempting business re-entry post-liquidation face 40-50% failure rates (versus 20-30% for first-time entrepreneurs) reflecting capital constraints; reputation damage; and psychological factors. If considering post-liquidation business venture; prepare thoroughly; learn from prior failure; and seek professional advice. Q16; Will I Be Able to Get a Mortgage After Liquidation? Mortgages are virtually impossible in years 0-2; some specialist lenders may offer mortgages in years 2-3 at 2-4% interest premium; increasing number of mainstream lenders offer mortgages in years 3-6 at elevated rates; and by year 6+ standard lending criteria apply though creditworthiness takes years to fully recover. Factors affecting mortgage approval include time elapsed since liquidation; employment stability and income; deposit size; reason for liquidation; and credit file improvements. Post-liquidation mortgages typically cost 2-4% more than standard rates; increasing monthly payments by £100-300+. Focus on credit file recovery post-liquidation; maintain stable employment; pay debts on time; and after 3-6 years explore mortgage options with specialist lenders. Q17; How Long Until My Credit File Recovers? Partial recovery takes 2-3 years; full recovery takes 6 years. In months 0-12 credit score reaches its lowest point (typically 300-400 range) with most lending unavailable. In months 12-24 gradual recovery begins as early defaults fade from consideration. In months 24-36 significant improvement occurs if employment is stable; improving credit score to 500-600 range. In years 3-6 continued recovery reaches 650-700+ range. By year 6+ liquidation falls off credit file and credit score continues recovering toward pre-liquidation level. Accelerate recovery by maintaining stable employment; paying all debts on time; obtaining credit-builder credit cards (used sparingly; paid in full monthly); registering on electoral roll; disputing inaccuracies; and building savings. Q18; Can I Go Back to Being a Director? Yes; but timing depends on disqualification status. If disqualified; you cannot act as director during the disqualification period; but after disqualification ends (typically 4-6 years) you are eligible to act as director subject to no statutory restrictions. If not disqualified; you can act as director immediately post-liquidation; though creditors; lenders; and business partners may be reluctant due to reputation damage. Potential investors or business partners will discover liquidation history via Companies House records or due diligence; creditors may be unwilling to extend credit; and employees may be reluctant to work for post-liquidation director. Focus on rebuilding professional reputation; securing employment; and demonstrating stability before attempting new directorship. Consider non-director roles first to rebuild credibility before assuming directorship. Q19; Can I Recover My Reputation and Business Relationships? Yes; but recovery takes years. In year 0-1 focus on stability; employment; and cooperation with liquidation rather than reputation repair. In years 1-3 gradually rebuild relationships; demonstrate competence; and establish employment stability. In years 3-5 actively rebuild networks through industry involvement; speaking; and professional involvement. By years 5+ reputation becomes increasingly divorced from historical failure as time distance increases. Contact prior business partners; creditors; and associates; acknowledging past failure; explaining circumstances; and proposing renewed relationship. Demonstrate competence and reliability through employment; establish thought leadership; and gradually rebuild professional networks. Most directors report business reputation recovery takes 5-10 years post-liquidation as professional networks retain historical knowledge; but distance reduces reputation damage. Q20; Will HMRC Issue a Personal Liability Notice? Possibly; but not automatically. HMRC issues Personal Liability Notices if the company owes unpaid PAYE; National Insurance; or VAT; and HMRC investigates and determines a director caused or knowingly allowed the breach. High likelihood exists if company accumulated substantial PAYE or VAT arrears and director continued drawing salary whilst not remitting tax; if company failed to register for VAT; or if company had poor record-keeping with multiple tax filing failures. Lower likelihood exists if company operated legitimately and tax arrears resulted from genuine insolvency. PLN can extend to full unpaid tax debt with interest and penalties (debts of £100,000-500,000+ are common); and you can appeal a PLN to Tax Tribunal though burden is high requiring proof you did not cause or knowingly allow breach. Contact Lexlaw's tax disputes specialists at taxdisputes.co.uk for assessment of PLN exposure and negotiation strategy. The above is not advice and you should not rely on it. For advice on your specific circumstances; contact Lexlaw's winding-up and tax dispute specialists: [https://lexlaw.co.uk/contact-us/](https://lexlaw.co.uk/contact-us/) --- # Manolete Case Study: Breach of Directors’ Duties Over Unlawful £560k Dividend Source: https://lexlaw.co.uk/solicitors-london/manolete-case-study-breach-of-directors-duties-over-unlawful-560k-dividend/ This judgment, [Manolete Partners Plc v Rutter & Anor [2022] EWHC 2552 (Ch)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf), offers an important reminder that directors must adhere to their statutory duties under the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents) and maintain scrupulously accurate financial records, particularly where insolvency looms. The case, pursued by [Manolete Partners](https://lexlaw.co.uk/solicitors-london/tag/manolete-partners/) following assignment of claims by the liquidator, highlights the heightened risks for directors facing allegations of misfeasance, unlawful distributions and transactions involving personal benefit during financial distress. It also illustrates how insolvency office-holders and litigation funders such as Manolete commonly bring assigned claims, often leading to complex disputes over transactions at undervalue and breaches of duty. Directors seeking guidance can refer to wider LexLaw resources on [directors’ duties claims](https://lexlaw.co.uk/solicitors-london/category/directors-duties/), [winding-up petitions](https://lexlaw.co.uk/winding-up-petition-lawyers/), and the [legal guide to defending claims from Manolete Partners.](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) # Background to the Manolete Claim Against the Rutter Directors [Rut5 Ltd](https://find-and-update.company-information.service.gov.uk/company/08413363), a Leicestershire manufacturing and property-development business, was operated exclusively by its two directors and shareholders, Paul and Joanne Rutter, from incorporation in 2013 until the company entered administration on 1 November 2017. As the judgment records at para 1, the company transitioned into a creditors’ voluntary liquidation in 2019, and in May 2020 the liquidator assigned all claims to [Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/), who issued proceedings in January 2021. [The company’s](https://find-and-update.company-information.service.gov.uk/company/08413363) fortunes initially appeared strong, particularly during the 2014-2015 financial year when turnover exceeded £10 million and net profit reached £768,753. However, the business rapidly deteriorated after a collapse in demand for digital media POD units and a series of imprudent property-development loans that failed to yield returns. Cash-flow eroded severely, tax liabilities went unpaid and by 2016–2017 the company was persistently unable to meet debts as they fell due. [The directors’ loan account (DLA)](https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/) lay at the centre of the dispute. The company’s internal Sage records showed significant personal expenditure by the [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) routed through the DLA, with the balance shifting from credit to substantial debt during 2014-2015. As [HHJ Tindal](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/regional-business-and-property-courts/birmingham/judges-and-clerks-in-birmingham/) explained at [paras 24-28](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf), the DLA was used “rather like an overdraft facility,” with personal outgoings regularly debited but little clarity over how or when repayments were made. By 2017, the liquidator’s investigation uncovered concerns regarding a purported £560,000 “dividend” recorded as a reduction of the DLA, as well as substantial company-funded works on the [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/)’ properties: over £225,852 relating to Launde Lodge Farm and £30,226 on 4 Marsh Avenue. These discoveries led to the misfeasance claims advanced by [Manolete](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/). ## View The PDF Judgment below [![](https://lexlaw.co.uk/wp-content/uploads/Manolete-Partners-Plc-v-Rutter-Anor-2022-EWHC-2552-Ch.png)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) # Key Court Findings on Breach of Directors’ Duties and Unlawful Distributions ## Unlawful £560,000 Dividend and the Timing of a “Distribution” A central issue was when the £560,000 dividend was legally “made” under [s.829 Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/section/829). The court analysed three possible dates: 31 July 2015, 29 July 2016 or 12 April 2017. HHJ Tindal found as fact that the decision to declare the dividend was taken in July 2016 during discussions on the 2014-15 accounts. At [para 50](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) he held: “In short, I find… that in July 2016… the Defendants decided (i) to take a dividend of £560,000… and (ii) to offset that £560,000 against their directors’ loan debt… and that this was recorded in the accounts which Mrs Rutter then formally approved on 29th July 2016.” However, the corresponding entry in Sage was not made until April 2017. The Judge emphasised that the April 2017 entry did not constitute a fresh decision but was merely a “tidying up” adjustment reflecting the previously approved accounts. At [para 57](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) he stated: “Mr Langham made this entry thinking he was simply ‘tidying up Sage’ as a year-end correction… His authority derived from the Defendants’ decision in July 2016.” Given the company’s significantly deteriorated position by 2017, the timing of this “distribution” had significant consequences for whether the dividend was lawful. The court held that even in July 2016, although the company had suffered a poor trading year, there remained distributable profits and the company was not yet insolvent. However, reliance on that timing did not assist the directors with respect to other breaches. ## Misapplication of Company Funds on Personal Properties The judge found extensive misuse of company funds for works at Launde Lodge Farm. At [para 36](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) he concluded: “I am therefore driven to conclude… that all £225,852.48 of work… related to work done on Mr and Mrs Rutter’s property and was billed to the Company but not properly accounted for.” Similarly, in relation to Marsh Avenue, he found [at para 38:](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) “I am driven to conclude… £30,226.56 of Company money was used to refurbish Marsh Avenue… neither Company expenditure, nor declared in the loan account.” The Court was highly critical of the shifting and implausible explanations offered by Mr Rutter, describing him as a “thoroughly unreliable witness” [(para 15)](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf), contrasting with the candour of Mrs Rutter. # Breach of Directors’ Duties During Insolvency: What the Court Decided The judgment makes repeated reference to the [directors’](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) statutory duty to act in the interests of creditors under [s.172(3) Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/section/172) and to avoid misapplication of company assets. Once the company was insolvent or on the verge of insolvency, use of assets for personal purposes constituted a clear breach. HHJ Tindal noted at [para 11](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) that the “messy and incomplete” accounting records did not excuse the directors, particularly given the principles set out in [Re Glam & Tan](https://www.casemine.com/judgement/uk/6255c73cb50db9681fe9a5f1) and [Re Mumtaz Properties](https://www.casemine.com/judgement/uk/5a8ff7b360d03e7f57eb1570), which shift the burden to directors where company documentation is lacking. # Additional DLA Breaches: Why the Court Rejected Set-Off Arguments The court also found that the [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) accrued a further £104,688.12 debt in 2017 while the company was unable to pay its liabilities. After reopening submissions, the judge held that such drawings amounted to breach of duty, not merely debt, meaning the [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) could not assert a right of set-off. This point aligns with established principles referenced in AIC v FAAN and other Manolete-funded misfeasance cases litigated through the [Business & Property Courts.](https://www.gov.uk/courts-tribunals/the-business-and-property-courts) # Implications of the Rutter Judgment This decision confirms that directors cannot rely on informal or retrospective accounting entries to validate decisions that should have been supported by proper records, resolutions and tax declarations. Courts assessing [Manolete](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/)-pursued misfeasance claims will focus on substance over form, particularly where insolvency risk was or ought to have been appreciated. [The judgment](https://www.bailii.org/ew/cases/EWHC/Ch/2022/2552.pdf) underscores the importance of maintaining accurate directors’ loan accounts. Misuse of company funds for personal gain will be treated as misfeasance, and [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) will face repayment obligations even where records are incomplete. The court’s endorsement of [Re Glam & Tan](https://www.casemine.com/judgement/uk/6255c73cb50db9681fe9a5f1) reinforces that directors bear the evidential burden where documentation is lacking. More broadly, the case illustrates how litigation funders are increasingly pursuing complex director claims following liquidator assignments. [Directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) should anticipate detailed scrutiny not only of major transactions but also of accounting practices, decision-making processes, property-related expenditure and delayed tax payments, themes common to cases discussed across the [LexLaw](https://lexlaw.co.uk/) multi-blog network including professional negligence, tax disputes, and winding-up petitions. The decision also demonstrates the willingness of courts to reopen submissions, where necessary, to ensure justice and avoid windfalls to directors who have failed in their duties. This trend elevates the importance of early, [specialist advice](https://lexlaw.co.uk/contact-us/) when dealing with [Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) and assigned insolvency litigation. # Defending Manolete Director Claims Directors [facing Manolete-funded proceedings](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) should adopt a proactive defence strategy from the outset. Early forensic review of historic accounting records, including reconstruction of Sage data, bank statements and tax filings, is essential to avoid the unfavourable burden-shifting approach applied under [Re Glam & Tan.](https://www.casemine.com/judgement/uk/6255c73cb50db9681fe9a5f1) Independent valuation or forensic accounting evidence is often required where Manolete alleges that transactions constitute unlawful distributions or transactions at undervalue. [LexLaw’s experience](https://lexlaw.co.uk/our-people/) acting for directors in similar proceedings highlights that a tailored strategy, including challenging liquidator assumptions and ensuring contemporaneous intention is properly evidenced, can materially influence settlement outcomes. Given Manolete’s commercial approach to litigation, directors should also appreciate the negotiation dynamics of third-party funding. Funding structures, adverse costs insurance and assignment terms may influence settlement strategies. Early advice via [LexLaw’s dedicated guidance](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) on defending [Manolete Partners claims](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) is crucial to limit exposure. ### Frequently Asked Questions (FAQ's) Why is this case significant for insolvency law? The judgment provides a detailed roadmap of how courts scrutinise directors’ conduct when a company nears insolvency. It reinforces the creditor-duty principle under s.172(3) Companies Act 2006 and demonstrates the application of established authorities such as Re Glam & Tan. This is consistent with wider trends explored across LexLaw’s guides to insolvency, including our pages on winding-up petitions and director liability. What constitutes a transaction at undervalue in this context? Where directors extract value from a company without proper consideration, the court may treat this as a transaction at undervalue under s.423 Insolvency Act 1986. In this case, using company funds for home renovations and offsetting a large dividend against the DLA amounted to a depletion of company assets without economic benefit to creditors. How does this affect litigation funders like Manolete? The case shows how Manolete leverages assigned liquidator claims to pursue directors personally. It also underscores the importance of understanding the commercial drivers behind such claims, including recovery prospects and litigation pressures. Directors should consult [LexLaw’s legal guide to defending claims from Manolete Partners](https://lexlaw.co.uk/solicitors-london/legal-guide-to-defending-claims-from-manolete-partners/) for insights into negotiation and risk. What defences are available to directors in similar claims? Directors may argue that transactions were properly authorised, commercially justified or accurately reflected in contemporaneous accounts. However, incomplete records often undermine such arguments. The Rutter case illustrates the difficulty of defending where explanations shift and documentation is poor. If my company is dissolved, can Manolete still pursue me personally? Yes. Claims assigned to Manolete survive dissolution, and directors remain personally liable for breaches of duty or misfeasance. The Rutter case exemplifies how years-old conduct can be litigated long after liquidation. --- # Insurers Lose Appeal on COVID-19 Business Interruption Cover (At-the-Premises Disease Clauses) Source: https://lexlaw.co.uk/solicitors-london/insurers-lose-appeal-on-covid-19-business-interruption-cover-at-the-premises-disease-clauses/ This judgment in [London International Exhibition Centre plc v Allianz Insurance plc & Ors [2024] EWCA Civ 1026](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) significantly clarifies the scope of [business interruption (“BI”) insurance claims](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) relating to COVID-19 where cover depends on disease “at the premises”. It builds upon the Supreme Court’s approach in the FCA Test Case (Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] AC 649) by confirming that concurrent causation applies equally to at-the-premises wordings. The Court rejected insurers’ arguments that [policyholders ](https://lexlaw.co.uk/solicitors-london/tag/advice-for-policyholders/)must show the government specifically knew about and responded to COVID-19 cases at each individual premises. The ruling has substantial implications for SMEs pursuing pandemic-related BI losses, and also informs broader disputes on disease cover, causation, and insurance recovery strategies. This decision reinforces the importance of [early legal advice](https://lexlaw.co.uk/contact-us/) from [specialist litigation solicitors](https://lexlaw.co.uk/practice-areas/), such as those at LexLaw, particularly where insurers maintain narrow or technical policy interpretations in complex claims. # Case Background: COVID-19 BI Claims and the “At-the-Premises” Dispute The [judgment](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) concerned six expedited test cases, including the claim brought by [London International Exhibition Centre plc](https://find-and-update.company-information.service.gov.uk/company/03458317) (“ExCeL London”), seeking indemnity for business interruption losses caused by national COVID-19 closure measures. Although each [insurer](https://lexlaw.co.uk/solicitors-london/category/insurance/) used slightly different BI wordings, all relevant clauses provided cover for infectious disease occurring *“at the premises”* of the policyholder. [The High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) previously ruled that [policyholders ](https://lexlaw.co.uk/solicitors-london/tag/advice-for-policyholders/)needed only to prove one case of COVID-19 at the insured premises prior to closure, and that this case formed part of the concurrent cause of the government’s decision to impose lockdown. [Insurers](https://lexlaw.co.uk/solicitors-london/category/insurance/) appealed, arguing that the “at the premises” wording required direct causation, including actual governmental knowledge of the specific case at the insured premises. [The Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) rejected all insurer arguments and upheld the High Court’s findings. **View The PDF Judgment Below:** [![](https://lexlaw.co.uk/wp-content/uploads/London-International-Exhibition-Centre-v-Allianz-725x1024.png)](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) # Key Findings in London International Exhibition Centre plc v Allianz ## Concurrent Causation Applies to At-the-Premises Disease Clauses [The Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) held that the logic of the Supreme Court in *FCA v Arch* applies equally to “at-the-premises” wording. Each case of COVID-19 across the UK was a concurrent and equally effective cause of national government intervention. Thus, even a single occurrence of the disease at the insured premises satisfied the causation requirement. At [paragraph [176]](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf), the Court noted: *“There is no reason in principle why the Supreme Court’s analysis of multiple concurrent causes should not apply to at-the-premises disease wordings.”* The reasoning reflects policyholder expectations: national measures were imposed in response to the epidemic as a whole, and each individual case formed part of that causal mosaic. ## No Requirement for Government Knowledge of the Case at the Premises [Insurers](https://lexlaw.co.uk/solicitors-london/category/insurance/) argued that the government must have known about and acted upon the specific occurrence of disease at the premises. The Court dismissed this argument. There is no wording requiring proof that authorities knew about the case, nor that they acted *because of* that specific case. At [paragraph [250]](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf), the Court confirmed: *“The requirement for reporting and knowledge was… part and parcel of the causation arguments… since those arguments are rejected, the knowledge requirement is also rejected.”* ## “At the Premises” Is Not Materially Different from a Radius Clause [Insurers](https://lexlaw.co.uk/solicitors-london/category/insurance/) attempted to distinguish radius-based cover from at-the-premises cover. The Court disagreed, noting that both clauses merely identify the geographical location of the insured peril; they do not alter the nature of causation. At [paragraph [202]](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf), the Court held that the radius in the FCA Test Case could be as small as 10 metres, rendering it functionally similar to an “at the premises” boundary. ## No But-For Test and No “Distinct Effective Cause” Requirement [The Court](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) rejected insurers’ efforts to impose a stricter “but-for” or “distinct effective cause” test. Such approaches contradicted the Supreme Court’s position that a loss may be caused by multiple sufficient causes acting concurrently. At [paragraph [194]](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf), the Court reaffirmed that business interruption clauses must be interpreted in a commercially sensible manner consistent with how SME policyholders would understand them. # Implications of the Judgment for Policyholders and Insurers [This judgment](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) is one of the most significant appellate decisions since the FCA Test Case. It confirms that policyholders with “at-the-premises” disease wordings need only prove: • At least one case of COVID-19 occurred at the premises before closure. • That national measures were taken in response to the pandemic as a whole. This interpretation prevents insurers from avoiding liability through narrow or technical interpretations of causation. The Court’s focus on commercial expectations and [policyholder](https://lexlaw.co.uk/solicitors-london/fca-bi-business-interruption-insurance-test-case-coronavirus-policyholders-compensation-claims-advice/) fairness underscores the judiciary’s continued scrutiny of insurer behaviour during the pandemic. The reasoning also strengthens policyholders’ positions in other disputes involving concurrent causation, disease cover, and hybrid BI extensions. It reduces the evidential burden on SMEs, many of whom were unable to obtain detailed contact-tracing data in early 2020. The Court’s insistence that cover does not depend on governmental knowledge prevents the arbitrary exclusion of claims simply because early cases were under-reported. [This ruling](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) therefore has enduring importance for [BI litigation strategy](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/), especially where insurers seek to resist claims by relying on technical distinctions between disease occurrences, notification requirements, or levels of governmental awareness. # Defending Director Claims and Complex Insurance Disputes Businesses facing [insurer resistance in BI claims](https://lexlaw.co.uk/specialist-business-interruption-insurance-claim-lawyer-policyholder-insurance-covid-19-coronavirus-litigation-settlement-fca-advice/) or other disputes benefit from early forensic analysis and [expert legal representation](https://lexlaw.co.uk/practice-areas/). Specialist solicitors routinely utilise epidemiological evidence, policy construction arguments, and financial reconstruction of loss periods to challenge insurer positions. [LexLaw’s litigation team](https://lexlaw.co.uk/practice-areas/) is regularly instructed in high-value insurance disputes, wrongful trading claims, and funded recovery actions. Drawing on experience from [directors’ duties litigation](https://lexlaw.co.uk/solicitors-london/category/directors-duties/), and [complex financial investigations](https://lexlaw.co.uk/), the firm assists clients in presenting robust evidence on causation, loss quantification, and policy interpretation. As demonstrated in [LexLaw’s successful defence of wrongful trading and misfeasance claims](https://lexlaw.co.uk/), timely strategic advice is critical when facing aggressive insurer tactics or litigation funder-backed claims. The London International Exhibition Centre [judgment](https://www.judiciary.uk/wp-content/uploads/2024/09/London-International-Exhibition-Centre-v-Allianz.pdf) reinforces the importance of specialist input when analysing complex concurrent causation issues and contractual wording disputes. ### Frequently Asked Questions (FAQ's) Can a single case of COVID-19 at the premises trigger BI cover? Yes. The Court held that one case is enough, as it forms part of the concurrent cause of national restrictions. Policyholders do not need to show that the case materially influenced government decisions. Did the government need to know about the specific case at the premises? No. The Court rejected any requirement for governmental knowledge or reporting. What matters is that the case existed and occurred before the closure measures. Does this ruling apply only to large venues like ExCeL London? No. The test cases included small restaurants, gyms, nightclubs, and bars. The ruling protects SMEs across the UK with “disease at the premises” BI cover. Can insurers argue that cases at other locations were the real cause of closure? No. The Court confirmed that all cases nationwide were concurrent causes. Insurers cannot rely on external cases to defeat cover within the premises. Does the case affect hybrid disease/prevention-of-access clauses? Yes. The reasoning aligns closely with *FCA v Arch*, ensuring consistent application of concurrent causation principles. Can policyholders still bring claims if insurers previously rejected them? Yes. Many denied claims can now be revisited, and LexLaw can assist in re-opening or challenging prior decisions. How does this ruling affect ongoing BI coverage disputes? It significantly strengthens policyholder positions and undermines insurer reliance on narrow causation arguments. --- # Late HMRC Tax Tribunal Appeals: Medpro, Martland & Your Options Source: https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/ Missing your [HMRC tax tribunal appeal deadline](https://taxdisputes.co.uk/2025/10/first-tier-tax-tribunal-appeals-guide/) doesn't mean your case is over. The Upper Tax Tribunal's landmark decision in *[Medpro Healthcare Ltd v HMRC](https://www.gov.uk/tax-and-chancery-tribunal-decisions/1-medpro-healthcare-limited-2-kalvinder-ruprai-v-the-commissioners-for-his-majestys-revenue-and-customs-2025-ukut-00255-tcc)* [[2025] UKUT 255 (TCC)](https://www.bailii.org/uk/cases/UKUT/TCC/2025/255.html) fundamentally changed how tribunals approach late appeals, moving away from the strict *[Martland](https://taxdisputes.co.uk/tag/martland-v-hmrc/)* framework that previously barred most out-of-time applications. Today, tribunals weigh all circumstances equally, from delay length, reasons for lateness, and your case's strength, rather than treating deadlines as near-absolute barriers. This shift opens new pathways for taxpayers with meritorious claims, but success depends on understanding the evolving rules and acting strategically with the benefit of [expert tax disputes advice](https://taxdisputes.co.uk/contact-us/). This guide explains the current tribunal landscape and your practical options. ![UK tax tribunal late appeal guide hmrc vat tax solicitor barrister](https://lexlaw.co.uk/wp-content/uploads/Martland-v-Medpro-Late-Appeal-Difference-Infographic-HMRC-Appeal-Solicitors-LEXLAW-UK-1024x559.png) ## 1. The Problem: Why Missed Appeal Deadlines Matter [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) decisions are not self enforcing, but time limits for challenging them are strict. In most cases you have [30 days to appeal](https://www.gov.uk/government/organisations/hm-revenue-customs) an assessment, penalty or closure notice to the tax tribunal. If you miss that deadline, the decision becomes final unless the tribunal grants permission for a late appeal. That matters for several reasons. First, once the deadline passes HMRC will treat the liability as fixed and will usually begin collection or enforcement. Second, evidence can deteriorate as time passes, witnesses become harder to locate and documents are more likely to be lost. Third, there is a public interest in finality. HMRC and the tribunal system are not expected to keep cases permanently open on the off chance that a taxpayer might reconsider their position months or years later. Historically, tribunals used missed deadlines as a relatively blunt instrument. In many cases, even where there appeared to be a good argument that HMRC was wrong on the substantive tax position, a weak explanation for the delay would lead to permission being refused. That was the environment created by *Martland*; however *Medpro *changes the balance and gives taxpayers with strong underlying cases a better prospect of rescuing a late appeal, provided they can present their circumstances clearly and credibly. --- ## 2. The Old Rule: Martland’s Three Stage Test (2018 to 2024) For years, the starting point for late appeal applications was *[William Martland v The Commissioners for HM Revenue and Customs](https://www.gov.uk/tax-and-chancery-tribunal-decisions/william-martland-v-the-commissioners-for-hm-revenue-and-customs-2018-ukut-0178-tcc)* [[2018] UKUT 0178 (TCC)](https://assets.publishing.service.gov.uk/media/5b115855e5274a191271783e/William_Martland_v_HMRC_.pdf). Martland did not invent the law on late appeals, but it distilled tribunal practice into a structured three stage test that quickly became the default framework. Under Martland, the tribunal asked: - How long was the delay - What were the reasons for the delay - What are the merits of the proposed appeal The first two questions were often decisive. The longer the delay, the more compelling the explanation needed to be. Modest delays could sometimes be forgiven with relatively ordinary reasons. Highly extended delays required exceptional circumstances. In practice, Martland placed significant weight on procedural efficiency and the need for finality. The case was often read as saying that the merits of the appeal should carry less weight than the length of delay and the quality of the explanation. It was not enough for a taxpayer to show that HMRC might be wrong. If the reasons for missing the deadline were weak, the tribunal would usually refuse permission, sometimes even where the underlying tax dispute looked relatively strong. This approach attracted criticism. Commentators and practitioners argued that it risked prioritising administrative neatness over substantive justice. A meritorious appeal could be shut out permanently because an agent miscalendared a date or because correspondence with HMRC drifted for longer than expected. Even before Medpro, some decisions applied Martland more flexibly, but the overall tone was restrictive. Taxpayers were repeatedly reminded that the default position was to respect statutory deadlines. Medpro brought that approach into direct question at Upper Tribunal level. --- ## 3. The Shift: Medpro’s Game Changing Decision (2025) *[Medpro Healthcare Ltd v HMRC](https://taxdisputes.co.uk/2025/10/medpro-v-hmrc-revised-tribunal-principles-on-late-vat-appeals/)* reached the Upper Tribunal in 2025 as a challenge to the First tier Tribunal’s refusal to admit a late appeal. The facts of Medpro are important because they illustrate the kind of real world situation in which late appeals arise. In outline, Medpro had missed the appeal deadline against an HMRC decision. There was a gap between the decision being issued and the formal appeal being lodged, and HMRC argued that the delay was unjustified. The First tier Tribunal applied the Martland framework and refused permission, treating the delay and explanation as insufficient to overcome the emphasis on time limits. On appeal, the Upper Tribunal took a much harder look at the underlying approach. It found that Martland had effectively elevated certain considerations, especially the importance of finality and the efficient running of the tribunal system, above the statutory test that simply requires the tribunal to consider whether to admit a late appeal in all the circumstances. The Upper Tribunal described the Martland approach as clearly wrong to the extent that it fettered the discretion conferred on the tribunal. The law did not require a hierarchy where delay and reasons dominate, with merits playing only a secondary role. Instead, the tribunal is required to exercise a broad discretion, weighing all relevant factors without pre ordaining which will usually prevail. The decision in Medpro therefore does two important things: First, it confirms that the merits of the underlying tax appeal can be a powerful factor in favour of admitting a late appeal. If HMRC’s decision is seriously vulnerable on the law or the facts, the tribunal should not ignore that simply because there has been an administrative failure on timing. Second, it resets the mindset about time limits. They are still important and cannot simply be ignored, but they are not near absolute barriers. The question is not whether the taxpayer can meet a Martland style threshold. The question is whether, taking everything into account, justice is better served by hearing the appeal than by shutting it out. For taxpayers and advisers, Medpro marks a significant softening of the hostile environment created by Martland. It does not guarantee that late appeals will be allowed, but it plainly gives more scope to rescue valid disputes where the deadline was missed for understandable reasons. --- ## 4. How Tribunals Decide Now: The Post Medpro Test Post Medpro, there is no rigid formula. The tribunal must consider all the circumstances and then decide whether, in the exercise of its discretion, it should permit a late appeal. Nevertheless, certain themes now emerge consistently from tribunal decisions. Tribunals will usually look at: - The length of the delay - The reasons for the delay - The merits of the proposed appeal - The prejudice to HMRC if the appeal is admitted late - The prejudice to the taxpayer if the appeal is barred - The broader public interest in finality and efficient administration Crucially, none of these factors is automatically dominant. A relatively long delay may still be excusable if there is a persuasive reason and a strong case. A relatively short delay may still result in refusal if the explanation shows cavalier disregard for statutory time limits and the appeal appears weak. In practical terms, the reasoning often follows a pattern. If the delay is modest and the explanation is reasonable, tribunals are now more willing to admit late appeals even where the merits are arguable rather than overwhelming. If the delay is substantial, tribunals will scrutinise both the explanation and the underlying case more closely. Where the taxpayer can show that HMRC’s decision is clearly wrong, Medpro suggests that the tribunal should be slow to prevent the appeal from being heard purely on timing grounds. Examples since Medpro show both outcomes. Some taxpayers have succeeded where they acted promptly once they realised the missed deadline, could evidence confusion caused by HMRC correspondence or professional advice, and could demonstrate a credible argument that the assessment or penalty was unlawful. Other taxpayers have still failed where the delay was extensive, the explanation amounted to little more than administrative disorganisation, and the underlying case was weak or speculative. The post Medpro test is therefore not a licence to ignore time limits. It is a more balanced approach that asks whether justice is better served by hearing the appeal or by enforcing finality. --- ## 5. Your Strength Factors: When Late Appeals Succeed To assess the prospects of a late appeal, it helps to break down the main strength factors that tribunals find persuasive. ### Strong reasons for delay Tribunals are more sympathetic where the taxpayer can point to: - Misleading or confusing HMRC correspondence that reasonably suggested that an appeal could be made later or that the dispute was still under review - Reliance on professional advice where the adviser failed to file the appeal in time, particularly where the taxpayer can evidence instructions and follow up - Serious illness, incapacity or personal circumstances that made it unrealistic to deal with tax matters within the deadline - Genuine uncertainty about the correct route of challenge, for example where multiple overlapping decisions and internal HMRC review processes created confusion These reasons do not guarantee success, but they provide a credible narrative that the taxpayer was not simply ignoring statutory obligations. ### Weak reasons for delay By contrast, tribunals are usually unimpressed by explanations such as: - Forgetting the date with no mitigating circumstances - Filing systems that were not maintained - Staff turnover or holidays without adequate handover - A general dislike of dealing with HMRC or hope that the issue would disappear Such factors suggest a lack of due diligence rather than genuine difficulty. In combination with a weak underlying case, they make permission unlikely. ### Strength of the underlying case Medpro elevates the importance of the merits. Tribunals are more willing to admit late appeals where the taxpayer can show: - A clear error of law in HMRC’s decision - A misapplication of statute or guidance - A factual misunderstanding that is objectively provable - A consistent line of case law that favours the taxpayer’s position On the other hand, if the proposed appeal depends on speculative arguments, incomplete evidence, or an attempt to re run points already rejected in internal review, the tribunal is less likely to take the risk of undermining finality. A realistic assessment of these strength factors is essential before deciding whether to pursue a late appeal. It may be better to focus on negotiation or alternative remedies if the explanation and merits are both weak. --- ## 6. Building Your Case: Practical Steps If you have missed a deadline and are considering a late appeal, preparation is critical. The tribunal will see only what you put before it. A late appeal application should therefore be treated as a substantive piece of litigation, not as a casual request. Practical steps include: - **Document the timeline immediately** Write out a clear chronology showing key dates. For example, when HMRC issued its decision, when it was received, when you first considered appealing, what communications took place, and when you became aware that the deadline had been missed. Attach copies of correspondence where possible. - **Explain the reasons for delay in concrete terms** The tribunal prefers specific facts to vague generalities. If you relied on an accountant, annex emails showing instructions. If illness was involved, obtain medical evidence. If HMRC communications were confusing, exhibit the letters. The more objective your explanation, the more credible it appears. - **Set out the merits of your case succinctly** A late appeal application should include a summary of the grounds of appeal. This does not need to be a full skeleton argument, but it should show that there is a real prospect of success. Identify the core legal or factual error in HMRC’s position, and reference any supporting case law or statutory provisions. - **Assess the financial stakes** Quantify the tax, penalties and interest involved. Tribunals are more willing to hear disputes where the sums are significant and the consequences for the taxpayer are serious. This does not mean small cases are hopeless, but proportionality is relevant. - **Consider initial engagement with HMRC** In some situations, it is worth writing to HMRC first to explain the position and seek agreement to an out of time appeal. HMRC cannot waive statutory deadlines but can sometimes support or not oppose a late appeal where circumstances justify it. Evidence of constructive dialogue can assist before the tribunal. - **Seek specialist advice** Given the complexity of Medpro and the discretionary nature of late appeal decisions, obtaining advice from a tax disputes specialist is often cost effective. A well framed application at the outset may avoid years of further litigation. --- ## 7. Your Options Beyond a Late Appeal A formal late appeal to the tax tribunal is not the only possible route. Depending on your circumstances, other options may be available alongside or instead of an application to admit an out of time appeal. ## HMRC statutory extension requests In some contexts, HMRC has statutory power to agree an extension of time for appeal before the matter reaches the tribunal. For example, in VAT cases [Regulation 36 of the VAT Regulations 1995](https://www.legislation.gov.uk/uksi/1995/2518/contents) allows HMRC to extend certain time limits where there is a reasonable excuse and the taxpayer acts without unreasonable delay after the excuse has ended. Similar principles can arise under section 49 of the Taxes Management Act 1970 for direct tax appeals. If you realise that you are close to, or slightly past, a deadline, it may be quicker and cheaper to seek an extension directly from HMRC. A carefully drafted request that mirrors the factors discussed above can sometimes resolve timing issues without the need for a formal tribunal application. However, HMRC is not obliged to grant an extension and may refuse, especially where delays are long or explanations are weak. A refusal does not prevent you from requesting a late appeal from the tribunal, but the tribunal will see the HMRC correspondence. ## Judicial review of HMRC’s refusal In rare cases, it may be appropriate to consider judicial review of HMRC’s refusal to extend time. This is a high threshold remedy, usually reserved for situations where HMRC has acted irrationally, ignored relevant factors, or applied its powers in a way that is legally flawed. Judicial review is not a rerun of the merits of the tax dispute. It is a challenge to the lawfulness of HMRC’s decision making process. Because judicial review proceedings are expensive and carry cost risks, they are generally used only where large sums or important issues are at stake and where there is a strong argument that HMRC has misdirected itself. For most taxpayers, the focus will remain on the tribunal’s discretion in relation to a late appeal. ## Settlement negotiations and alternative resolution Even where a late appeal looks difficult, it may still be possible to negotiate with HMRC. In practice HMRC often prefers to resolve disputes through agreement rather than through lengthy litigation, especially where there is some litigation risk on both sides. Depending on the stage of your case, options may include: - Offering a partial settlement that reflects litigation risk - Seeking a time to pay arrangement if the dispute is more about cash flow than underlying liability - Engaging with HMRC’s alternative dispute resolution processes where available The existence of Medpro may itself be a factor in negotiations. If HMRC recognises that a tribunal might be willing to admit a late appeal because of strong merits and a reasonable explanation, it may be more open to compromise. --- ## 8. Strategic Checklist: Am I Ready for a Late Appeal? Before committing time and cost to a late appeal application, it is worth running through a simple strategic checklist. Honest answers to the following questions can save significant effort. ### Credibility test Can you explain, in a page or less, why the deadline was missed in a way that would make sense to an objective judge who knows nothing about your business? If the explanation sounds vague, inconsistent or casual, you may need to do more work to gather evidence or reconsider your approach. ### Merits test If you had appealed on time, would you have had a realistic chance of success on the substantive dispute? If the answer is no, or if your argument depends mainly on moral fairness rather than legal or factual error, a late appeal is unlikely to be a good use of resources. ### Cost benefit test Is the tax at stake significant compared to the costs of preparing and presenting a late appeal? Factor in tribunal fees, professional costs and management time. A principled fight may still be justified in some cases, but decisions should be made with clear eyes. ### Timeline test How long after the original deadline are you now? A delay measured in days or a few weeks is generally easier to justify than one measured in many months or years. Longer delays are not automatically fatal after Medpro, but they do increase the burden on you to show a persuasive explanation and strong merits. If, after working through this checklist, you consider that your reasons are credible, your case is strong, the financial stakes are material and the delay is explainable, then a late appeal may be worth pursuing, particularly in the more flexible post Medpro environment. --- ## 9. Frequently Asked Questions ### Common Queries on Late HMRC Tax Tribunal Appeals **Q1. How long can I wait before applying for a late appeal?** There is no fixed outer limit in the legislation. In theory, even very late appeals can be admitted. In practice, the longer the delay, the stronger your explanation and merits must be. A delay of a few weeks may be relatively straightforward to justify. A delay of several years will require exceptional circumstances and a very strong underlying case. Q2. Will a strong case guarantee permission to appeal late? No. Medpro confirms that merits are important, but they do not override everything else. A very strong tax case can help tip the balance, especially where the delay is moderate and the reasons are understandable. However, if the tribunal concludes that there was a serious and unjustifiable disregard of statutory time limits, permission can still be refused. Q3. Can I appeal late if HMRC’s actions caused me to miss the deadline? Possibly. If HMRC correspondence was unclear, contradictory or gave a reasonable impression that formal appeal could be made later, this can be a powerful explanation for delay. You will need to evidence exactly what was said and when. Tribunals are more receptive where the taxpayer relied on statements or implications from HMRC itself. **Q4. What is the difference between Medpro and Martland in plain English?** Martland encouraged tribunals to treat time limits as almost paramount. If you were significantly late without an excellent excuse, your chances were poor even if your tax case was strong. Medpro criticises that approach and tells tribunals to step back and look at the whole picture. Time limits still matter, but they are one important factor among several, not an automatic barrier. **Q5. Do I need a solicitor for a late appeal application?** You are not required to have a solicitor. Many taxpayers represent themselves. However, late appeal applications involve both procedural and substantive issues, and the tribunal will expect a clear explanation and coherent grounds of appeal. A specialist can help present your case in the most effective way, identify legal arguments you may have missed, and ensure that the application addresses the factors that tribunals consider relevant post Medpro. **Q6. How much does a late appeal cost?** There are two elements: tribunal fees and professional costs. Tribunal fees depend on the category of case and are published in the tribunal rules. Professional fees vary with complexity, document volume and the level of representation you choose. Before proceeding, it is sensible to obtain an estimate and weigh this against the tax and penalties at stake. **Q7. What happens if the tribunal denies permission for a late appeal?** If permission is refused, the underlying HMRC decision generally remains final and enforceable. There may be limited scope to appeal the refusal to the Upper Tribunal, but only on a point of law and not simply because you disagree with the outcome. In most cases, a refusal means that litigation routes are effectively exhausted and attention must turn to managing payment and any enforcement. **Q8. Can I settle with HMRC instead of appealing?** Yes. Settlement is often possible, especially where both sides accept that there is some litigation risk. Even if you are pursuing a late appeal, you can usually explore settlement in parallel. HMRC will not always agree to a reduction, but a realistic proposal that reflects legal uncertainty and the costs of further litigation may be considered, particularly in complex or high value cases. --- This guide is intended to provide a clear and practical overview of the law and strategy surrounding late HMRC tax tribunal appeals in the wake of Medpro and the re evaluation of Martland. It is not a substitute for advice on your specific circumstances. --- # Tactical CPR Part 36 Offers: Litigation Rewards Source: https://lexlaw.co.uk/solicitors-london/tactical-cpr-part-36-offers-litigation-rewards/ [Part 36](https://www.legislation.gov.uk/uksi/1998/3132/part/36) remains one of the most powerful tactical tools in the [Civil Procedure Rules](https://www.legislation.gov.uk/uksi/1998/3132/contents), with a reward regime that can radically alter the financial outcome of litigation when deployed correctly. A well‑judged, compliant offer can unlock enhanced interest, indemnity costs and damages uplift that far outweigh the nominal difference between offer and judgment, particularly in high‑value commercial claims. [Our specialist litigation solicitors and barristers](https://lexlaw.co.uk/our-people/) are experts in using [CPR Part 36](https://www.legislation.gov.uk/uksi/1998/3132/part/36) to secure optimal settlements or to minimise adverse costs risks where a Part 36 offer has been made against you. Recent [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) decisions show that small errors in drafting, timing or compliance can be very expensive, even where a party has otherwise succeeded on liability. ## The Continuing Power of CPR Part 36 Part 36 is a self‑contained code within the CPR designed to encourage early settlement by prescribing clear and often draconian [costs consequences](https://lexlaw.co.uk/solicitor-client-costs-dispute-litigation-scco-claim-challenge-reduce-legal-fees-invoice-detailed-assessment-no-win-no-fee/) where a realistic offer is not accepted. If a party fails to accept a realistic Part 36 offer made by the other side, it is at real risk of being penalised in costs and interest at the end of the case. Part 36 offers are generally made on a *“without prejudice save as to costs”* basis, so the trial judge is not told about them until after judgment on liability and quantum. For claimants, a properly constructed Part 36 offer that is later beaten at trial can transform the risk profile of litigation by shifting costs, adding enhanced interest and securing an additional percentage of the award. For defendants, a strategic offer can cap exposure, protect against adverse costs and exert significant pressure on the claimant to reassess its position at an early stage. ## When can a Part 36 Offer be made? A [Part 36 Offer](https://lexlaw.co.uk/solicitors-london/the-importance-of-making-a-strategic-part-36-offer/) can be made at any time, including before court proceedings are issued, which allows parties to explore settlement options at a very early stage. Part 36 does not apply to claims allocated to the [small claims track](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part27) (generally claims under £10,000), but in [multi‑track](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part29) or [fast‑track litigation](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part28) it is often the key settlement lever. To be valid, a Part 36 offer must strictly comply with CPR 36.5: - It must be in writing and explicitly state that it is made pursuant to CPR Part 36. - It must specify a “relevant period” of at least 21 days during which the offeree can accept and become liable for the offeror’s costs. - It must state whether it relates to the whole claim or part of it and whether it takes into account any counterclaim. Failure to adhere to these requirements means the judge is not bound to apply the automatic Part 36 costs consequences, even if the monetary outcome appears favourable to the offeror. ## Genuine Attempt to Settle: High Offers Can Still Work Courts will not apply the Part 36 rewards regime if an offer is merely a tactical trap rather than a genuine effort to settle. However, recent decisions confirm that a very high claimant offer can still be a genuine attempt to settle where the claimant’s prospects are overwhelming and quantum is effectively fixed. - In [Omya UK Ltd v Andrews Excavations Ltd](https://www.casemine.com/judgement/uk/638a4c4973564a2a41b3fe03), a claimant Part 36 offer that discounted only about 1.15% of the principal sum was held to be a genuine attempt to settle, given the early timing, limited quantum dispute and the defendant’s unreasonable conduct. - In [Rawbank S.A v Travelex Banknotes Ltd EWHC 1619 (Ch),](https://lexlaw.co.uk/wp-content/uploads/Rawbank-SA-v-Travelex-Banknotes-Ltd-2020-EWHC-1619-Ch-23-June-2020.pdf) a bank’s Part 36 offer to accept only 0.3% less than the full sum claimed (around £158,000 on a £48m claim) was also found to be a genuine offer to settle under CPR 36.17(5)(e), because there was effectively no defence and only a binary outcome: full success or complete failure. These authorities show that the magnitude of the discount is relevant but not decisive: the court looks at the overall context, including timing, prospects, quantum issues and party conduct. ## What happens if a Part 36 Offer is Accepted? If a defendant accepts a claimant’s Part 36 offer within the relevant period, it must pay the settlement sum (typically within 14 days) and the claimant’s costs up to the date of acceptance, usually on the standard basis. The court will resolve any doubt as to whether such costs are reasonable and proportionate, and the proceedings are then concluded on those terms. If the defendant accepts after the relevant period has expired and costs cannot be agreed, the court will make a costs order, which usually still requires the defendant to pay the claimant’s costs to the date of acceptance, subject to any argument as to late acceptance. ## What happens if a Part 36 Offer is Rejected? If a Part 36 offer is rejected and the case proceeds to trial, the offer is only revealed to the judge after judgment, at the costs stage. The costs consequences then depend on whether the judgment is more or less advantageous than the earlier Part 36 offer, as assessed under CPR 36.17. Where a claimant equals or beats its own compliant Part 36 offer, the court must, unless it considers it unjust, order that the defendant pay: - Interest on damages at up to 10% above base rate from the end of the relevant period. - Costs on the indemnity basis from the end of the relevant period. - Interest on those costs at up to 10% above base rate. - An additional “Jackson uplift” calculated as 10% of the first £500,000 of damages and 5% of any amount above that, capped at £75,000. In Rawbank v Travelex, the court held that the Part 36 offer was genuine and ordered indemnity costs from expiry of the relevant period, but moderated interest given the defendant’s serious financial difficulties, illustrating the court’s discretion to grant only part of the usual package where full application would be unjust. ## Enhanced Interest and the Jackson Uplift Where a claimant obtains a judgment at least as advantageous as its Part 36 offer, the court may award interest on both damages and costs at a rate of up to 10% above base rate from the end of the relevant period. The upper end of that scale is more likely where the defendant’s refusal to accept the offer is found to be unreasonable in light of the risks, the clarity of the offer and the stage of proceedings at which it was made. The Jackson “additional amount” is a separate, formula‑based uplift intended to incentivise sensible early offers and compensate successful claimants for the time, cost and risk of going to trial. In substantial commercial and financial services litigation, careful numerical analysis is essential to ensure the uplift is correctly calculated, the statutory cap respected and any interest arguments properly advanced. ## Indemnity Costs and Budgeting Advantages One of the most significant tactical rewards of Part 36 is the potential entitlement to [costs on the indemnity basis](https://lexlaw.co.uk/indemnity-costs-versus-standard-costs-guide-litigation-court-cpr-44-assessment-unreasonable-conduct-legal-advice/) from expiry of the relevant period where a claimant beats its own compliant offer. Indemnity basis orders reverse the usual presumption of proportionality and often result in a materially higher recovery than would be achieved on the standard basis. In the context of costs budgeting, [indemnity costs](https://lexlaw.co.uk/solicitors-london/indemnity-costs-in-litigation/) can allow recovery beyond agreed or approved budgets and blunt the effectiveness of proportionality challenges from paying parties. This can influence case strategy, including decisions about expert evidence, disclosure, interim applications and trial preparation where a party regards its Part 36 position as strong. ## Ensuring your Part 36 offer Counts To secure the full litigation rewards, parties must ensure that their offers are both procedurally valid and commercially realistic. Practical points include: - **Form and Content:** Ensure the offer is in writing, expressly states it is made under CPR Part 36, specifies a relevant period of at least 21 days, clearly defines its scope and confirms whether it includes any counterclaim. - **Clarity of Terms:** Address all heads of claim and any interest components in a way that enables the court to conduct a clean like‑for‑like comparison when judgment is entered. - **Ongoing Review:** Revisit offers in light of new evidence, procedural developments and updated risk assessments so that they remain realistic and defensible when the court considers whether it is just to apply Part 36 consequences. Strategic timing, careful drafting and rigorous numerical analysis are therefore essential if a Part 36 offer is to deliver the substantial litigation rewards that the regime is designed to provide. For sophisticated litigants, deploying Part 36 as part of a wider settlement and reputational strategy can significantly enhance outcomes in complex, high‑stakes disputes. ## Need Advice on a CPR Part 36 Offer? If you are involved in litigation and need advice on making, accepting or challenging a Part 36 offer, our partner‑led litigation team can help. We [advise](https://lexlaw.co.uk/contact-us/) claimants and defendants nationwide on settlement strategy, costs risk and the tactical use of Part 36 in commercial, banking and financial services disputes.​ [Check your litigation case today:](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) call our London litigation solicitors and barristers on ☎ 02071830529 or [contact us online](https://lexlaw.co.uk/legal-case-assessment/) for a fixed‑fee initial consultation. Your case will be assessed by a [senior solicitor](https://lexlaw.co.uk/our-people/m-ali-akram/) and [counsel](https://lexlaw.co.uk/our-people/christopher-snell/) so that you understand your prospects, your costs risk and the most effective settlement strategy from the outset. ## Not based in London? We provide Nationwide Representation That does not matter, we will represent you no matter where you are based in England or Wales. If you contact us through [our contact form](https://lexlaw.co.uk/legal-case-assessment/), by email or by phone, one of our litigation team members will contact you by phone to discuss your matter and assess whether we can help you. If we can, we will arrange a conference with two senior members of our litigation team. This meeting will take place either in person or using our telephone conference facilities or via Google meets if you prefer. Therefore, no matter where you are based in England or Wales, we can represent you. ## Instructing our Litigation Lawyers We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our [extensive litigation experience](https://lexlaw.co.uk/about/) we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process. ## LIMITATION ACT 1980 – WARNING The Limitation Act 1980 sets out [strict statutory deadlines](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should seek specific [legal advice about your legal dispute](https://lexlaw.co.uk/legal-case-assessment/) at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success. --- # Bank Refused Payment Under a Letter of Credit? Legal Rights in UK and International Trade Source: https://lexlaw.co.uk/solicitors-london/bank-refused-payment-under-a-letter-of-credit-legal-rights-in-uk-and-international-trade/ [Letters of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) are widely used in UK and cross‑border trade where parties require assurance that payment will be made once agreed conditions are met. In volatile markets, supply chain disruption, or where counterparties lack an established trading history, a letter of credit can be the difference between a secure transaction and a costly dispute. At [LexLaw Solicitors](https://lexlaw.co.uk/), we regularly advise businesses on structuring, enforcing, and challenging trade finance instruments as part of wider commercial disputes and insolvency risk management, drawing on experience across creditor enforcement, cross‑border recovery, and payment security mechanisms. # What Is a Letter of Credit in UK and International Trade Law A [letter of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) is a legally binding undertaking issued by a bank on behalf of a buyer, confirming that the seller will be paid once specific documentary conditions are satisfied. The [bank’s](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) obligation is independent from the underlying sale contract, meaning payment is triggered by document compliance rather than performance disputes. This autonomy principle makes [letters of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) particularly valuable where parties operate in different jurisdictions with varying legal systems. In practice, the buyer’s [bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) issues the letter of credit in favour of the seller, often involving an advising or confirming bank in the seller’s country. Once the seller presents compliant documents, such as shipping or inspection documents, the [bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) must honour payment. This structure shifts payment risk away from the commercial counterparty and onto a regulated financial institution. # How Letters of Credit Protect Buyers and Sellers For sellers, a [letter of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) provides assurance that payment will be made even if the buyer later becomes [insolvent](https://lexlaw.co.uk/solicitors-london/category/insolvency/) or refuses to pay. This is particularly relevant where goods are manufactured or shipped before payment is due, exposing the seller to significant credit risk. From a buyer’s perspective, the mechanism ensures that funds are only released when the seller has complied with agreed documentary conditions, offering control over performance without relying solely on contractual remedies. This balance of protection explains why [letters of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) are frequently used in sectors involving high‑value goods, staged deliveries, or international logistics. When disputes arise, they often concern document compliance, allegations of fraud, or attempts to restrain payment, areas where specialist legal advice is critical. # Common Types of Letter of Credit Used by UK Businesses UK businesses commonly encounter irrevocable [letters of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/), which cannot be amended or cancelled without consent of all parties. Confirmed letters of credit add further protection by involving a second [bank](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) that guarantees payment in the seller’s jurisdiction. Standby letters of credit operate as a form of payment security or quasi‑guarantee, often used to secure contractual obligations rather than routine trade payments. Each structure carries different [legal](https://lexlaw.co.uk/contact-us/) and commercial implications, particularly where enforcement or [injunctions](https://lexlaw.co.uk/solicitors-london/category/injunction/) are sought. Selecting the wrong type, or failing to align documentary conditions with the underlying transaction, can expose businesses to unnecessary disputes and cash‑flow pressure. # Documentary Compliance and Payment Disputes Under Letters of Credit The most common disputes relating to letters of credit arise from alleged discrepancies in documents. [Banks](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/global-restructuring-group-natwest-rbs-fca-grg-review-westregister-lloyds-bsu-barclays-business-support-claims/) are entitled to reject documents that do not strictly comply with the credit terms, even where the underlying goods or services are satisfactory. Minor inconsistencies in wording, dates, or descriptions can therefore have significant financial consequences. Where payment is refused, parties may face urgent commercial pressure, especially if goods are already in transit or delivered. In such cases, businesses often require rapid advice on whether rejection is lawful, whether amendments can be negotiated, or whether court intervention is appropriate to prevent or compel payment. These disputes frequently intersect with broader [commercial litigation](https://lexlaw.co.uk/solicitors-london/tag/lexlaw-commercial-litigation/) and, in some cases, insolvency proceedings. # Fraud, Injunctions, and Court Intervention in Letter of Credit Claims Although the autonomy of letters of credit is robust, English courts recognise limited exceptions, most notably in cases of clear fraud. Allegations that documents are fraudulent or that a demand is dishonest can justify attempts to restrain payment, but the legal threshold is deliberately high. Courts are cautious not to undermine the reliability of letters of credit as trade instruments. Businesses considering [injunctive relief](https://lexlaw.co.uk/injunctive-relief-interim-remedies-urgent-injunction-freezing-order-second-opinion-litigation-advice/) must therefore act quickly and with strong evidential support. Poorly founded applications can increase costs and damage commercial relationships. As part of wider dispute strategy, such claims often link to contractual disputes, asset preservation, or enforcement planning, areas in which coordinated advice is essential. # Interaction Between Letters of Credit and Insolvency Risk [Letters of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) play a critical role where [insolvency risk](https://lexlaw.co.uk/winding-up-petition-lawyers/) is present. Because the bank’s obligation is separate from the buyer’s financial position, a properly structured letter of credit can protect sellers from non‑payment even if the buyer enters administration or liquidation. However, timing and compliance are crucial, as insolvency practitioners may scrutinise transactions and seek to challenge payments in certain circumstances. Understanding how [letters of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) interact with [insolvency law](https://lexlaw.co.uk/winding-up-petition-lawyers/) is particularly important for creditors assessing recovery options. [Early legal input](https://lexlaw.co.uk/contact-us/) can help align trade finance arrangements with broader enforcement strategies, including [statutory demands](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/), [winding‑up petitions](https://lexlaw.co.uk/winding-up-petition-lawyers/), and cross‑border recovery actions. # Conclusion: Using Letters of Credit to Manage Commercial Risk A [letter of credit](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/) remains one of the most effective tools for managing payment risk in domestic and international trade. When properly structured and supported by accurate documentation, it offers certainty, protects cash flow, and reduces reliance on post‑dispute enforcement. However, disputes can arise quickly and escalate without informed guidance.[LexLaw Solicitors](https://lexlaw.co.uk/contact-us/) supports businesses in navigating letter of credit arrangements as part of a broader commercial and [insolvency risk](https://lexlaw.co.uk/winding-up-petition-lawyers/) strategy, ensuring that payment security mechanisms deliver their intended protection rather than becoming a source of costly litigation. # How LexLaw Advises on Letter of Credit Disputes and Enforcement [LexLaw Solicitors](https://lexlaw.co.uk/) advises directors, [creditors](https://lexlaw.co.uk/solicitors-london/tag/creditors/), and commercial counterparties on the full lifecycle of letter of credit issues, from drafting and risk allocation through to urgent injunctions and enforcement. Our experience in [complex commercial disputes](https://lexlaw.co.uk/practice-areas/) and [insolvency](https://lexlaw.co.uk/solicitors-london/category/insolvency/)‑related claims allows us to provide practical, outcome‑focused advice that protects cash flow and limits exposure. Where disputes escalate, we often coordinate letter of credit advice with wider [litigation strategy](https://lexlaw.co.uk/), including recovery actions, professional negligence claims against advisers, and tax‑related disputes arising from failed transactions. This integrated approach reflects the reality that payment disputes rarely exist in isolation. ### Frequently Asked Questions (FAQ's) What is a letter of credit and how does it reduce payment risk? A letter of credit is a bank’s independent promise to pay a seller once specified documents are presented in compliance with its terms. It reduces payment risk by shifting reliance away from the buyer’s willingness or ability to pay and onto the issuing bank’s obligation, providing certainty in domestic and international trade. Is a letter of credit legally binding under UK law? Yes, a letter of credit is a legally binding financial instrument governed by its terms and recognised principles of English law. The bank’s payment obligation operates independently of the underlying commercial contract, meaning disputes about performance do not usually affect payment if documents comply. Can a bank refuse payment under a letter of credit? A bank may refuse payment if the documents presented do not strictly comply with the letter of credit’s requirements. Even minor discrepancies can justify rejection, which is why careful drafting and document review are critical to avoid payment disputes. What types of letters of credit are commonly used by UK businesses? UK businesses frequently use irrevocable letters of credit, confirmed letters of credit, and standby letters of credit. Each serves different commercial purposes, ranging from routine trade payments to security for contractual obligations, with varying legal and enforcement implications. How does insolvency affect payment under a letter of credit? A properly structured letter of credit can protect sellers from non-payment even if the buyer becomes insolvent, as the bank’s obligation is separate from the buyer’s financial position. However, timing, compliance, and insolvency law considerations can affect enforcement. When should legal advice be sought in a letter of credit dispute? Legal advice should be sought as soon as a payment issue, document rejection, or fraud allegation arises. Early intervention can prevent escalation, protect cash flow, and align letter of credit enforcement with wider commercial litigation or insolvency strategy. --- # Account Freezing Orders (AFOs) in 2026: The Definitive UK Legal Guide to Frozen Bank Accounts Source: https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/ An Account Freezing Order, commonly referred to as an “AFO”, is one of the most disruptive financial enforcement tools available to UK authorities. In practical terms, it allows [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs), the police, the [National Crime Agency](https://www.nationalcrimeagency.gov.uk/) and other enforcement bodies to freeze money held in a UK bank or building society account at a very early stage of an investigation. In many cases, the account holder has not been charged with any criminal offence, and may not even be aware that they are under investigation until the account is suddenly inaccessible. In 2026, Account Freezing Orders continue to be used aggressively and strategically. They are a routine feature of [HMRC tax investigations](https://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/), suspected money laundering cases, fraud enquiries and cross-border financial investigations. For individuals, a frozen bank account can mean immediate inability to meet everyday living expenses. For businesses, it can threaten payroll, supplier relationships, regulatory compliance and even solvency within days. This is why [early specialist advice](https://lexlaw.co.uk/our-people/) matters. Account Freezing Orders are governed by a specific statutory regime under the [Proceeds of Crime Act 2002](https://www.legislation.gov.uk/ukpga/2002/29/contents) and are dealt with in the [Magistrates’ Court](https://www.gov.uk/courts), not the High Court. They move quickly, are often made without notice, and require a focused legal response from lawyers who understand both the technical law and how enforcement agencies operate in practice. [LEXLAW](https://lexlaw.co.uk/) regularly advises clients facing AFOs and related forfeiture proceedings, acting urgently to protect funds, secure variations and challenge unlawful or disproportionate freezes. This 2026 guide explains how Account Freezing Orders function in England and Wales, what has changed in recent years, and what you should do if your bank account has been frozen or is at risk. ## What is an Account Freezing Order (AFO)? An Account Freezing Order is a civil order made by a [Magistrates’ Court](https://www.gov.uk/courts) under Chapter 3B of Part 5 of the [Proceeds of Crime Act 2002](https://www.legislation.gov.uk/ukpga/2002/29/contents). It allows the court to prohibit withdrawals or payments from a bank or building society account where there are reasonable grounds to suspect that the money held in the account represents the proceeds of crime, or is intended for use in unlawful conduct. Unlike criminal restraint orders, an AFO does not require a criminal charge, arrest or conviction. The test is one of reasonable suspicion, not proof beyond reasonable doubt. This is a crucial distinction and explains why AFOs are so attractive to enforcement agencies. They can be obtained early, quietly and quickly, often at the investigative stage. An [Account Freezing Order](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/) can apply to personal accounts, business accounts, joint accounts and, in some cases, multiple linked accounts. Once made, it prevents the account holder and the bank from dealing with the funds except as expressly permitted by the order or by later variation. In 2026, AFOs remain capable of lasting for up to two years in total, including extensions, which can have profound consequences if not actively managed and challenged. ## Who can apply for an Account Freezing Order and when? Only specified enforcement authorities can apply for an Account Freezing Order. In practice, the most common applicants are [HM Revenue & Customs](https://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/), the police and the [National Crime Agency](https://www.nationalcrimeagency.gov.uk/), although the [Serious Fraud Office](https://www.gov.uk/government/organisations/serious-fraud-office) and accredited financial investigators also have standing under the legislation. Applications are typically made where an authority suspects that funds in an account are linked to [tax evasion](https://taxdisputes.co.uk/vat-evasion/), VAT fraud, money laundering, fraud, or other financial crime. It is increasingly common for HMRC to use AFOs as part of civil tax investigations, particularly where they suspect undeclared income, offshore funds, or complex movement of money through multiple accounts. Crucially, an AFO can be sought at a very early stage. There does not need to be an ongoing prosecution, and in many cases the investigation may still be covert. From the account holder’s perspective, this often means the first indication of a problem is when the bank refuses transactions and confirms that an [Account Freezing Order](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/) has been served. This early-stage use of AFOs is precisely why [instructing experts](https://lexlaw.co.uk/contact-us/) is necessary. The legal and strategic decisions taken in the first days and weeks can shape the entire investigation and determine whether funds are ultimately forfeited. ## The legal basis and statutory framework for AFOs in 2026 Account Freezing Orders are governed by [sections 303Z1 to 303Z19 of the Proceeds of Crime Act 2002](https://www.legislation.gov.uk/ukpga/2002/29/contents). These provisions were introduced by the [Criminal Finances Act 2017 ](https://www.legislation.gov.uk/ukpga/2017/22/contents)and have since become a central part of the UK’s civil recovery regime. The Magistrates’ Court may make an AFO if it is satisfied that there are reasonable grounds to suspect that money held in the account is recoverable property, meaning it represents the proceeds of unlawful conduct, or that it is intended for use in unlawful conduct. The court must also be satisfied that the statutory minimum threshold is met. The minimum threshold for an Account Freezing Order has increased from £1,000 to £3,000 as of June 2025. In 2026, this threshold has practical consequences. Very low-value accounts are less likely to be targeted in isolation, but enforcement agencies increasingly focus on multiple accounts, aggregated balances and patterns of transactions that together exceed the new threshold. For businesses and high-net-worth individuals, the threshold change offers limited comfort, as most targeted accounts comfortably exceed £3,000. Procedurally, AFOs are governed by the [Magistrates’ Courts (Freezing and Forfeiture of Money in Bank and Building Society Accounts) Rules 2017.](https://www.legislation.gov.uk/uksi/2017/1297/contents) These rules regulate how applications are made, how orders are served, and how variations, extensions and forfeiture proceedings are dealt with. While the procedure is formally straightforward, in practice it requires careful handling, particularly where the application was made without notice and relies on partial or intelligence-based evidence. ## How HMRC, the NCA and police use AFOs in practice In recent years, [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/) has become one of the most active users of Account Freezing Orders. In 2026, AFOs are set to be a standard tool in investigations involving [suspected tax evasion](https://lexlaw.co.uk/solicitors-london/hmrc-account-freezing-orders-afos-legal-guide-to-challenging-afos/), VAT fraud, disguised remuneration schemes and undeclared offshore income. HMRC often deploys AFOs to secure funds while parallel tax assessments, civil penalties or criminal enquiries continue. The [National Crime Agency](https://www.nationalcrimeagency.gov.uk/) and police forces use AFOs primarily in money laundering and fraud cases, including online scams, organised crime investigations and cases involving international movement of funds. AFOs are particularly attractive where authorities believe money may be dissipated quickly if notice is given. Across agencies, a clear trend has emerged between 2024 and 2026. AFOs are increasingly used as an alternative to criminal restraint orders, especially where the evidential threshold for criminal proceedings has not yet been met. This makes [early legal intervention](https://lexlaw.co.uk/contact-us/) essential, because once funds are frozen and investigations progress, the risk of forfeiture increases significantly. ## The AFO application process in the Magistrates’ Court Most Account Freezing Orders are applied for without notice to the account holder. The enforcement authority will present evidence to a [Magistrates’ Court](https://www.gov.uk/courts), often relying on financial analysis, transaction patterns, intelligence material and summary explanations rather than full disclosure of the underlying investigation. If the court is satisfied that the statutory test is met, it will make the order. The order is then served on the bank, which must immediately freeze the account, and on the account holder. In practice, the bank usually acts first, meaning access to funds is blocked before the account holder has even seen the order. The order will specify which accounts are frozen, the amount covered, and any initial exclusions. It will also set out the duration of the freeze and the date by which further steps, such as [forfeiture proceedings](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/) or extensions, must be taken. Understanding exactly what the order permits and prohibits is critical, as breaches can have serious consequences. ## Duration, variation and discharge of Account Freezing Orders An Account Freezing Order can initially last for up to two years, including any extensions granted by the court. Authorities commonly seek extensions where investigations are ongoing, particularly if they can show continued suspicion and active enquiries. However, an AFO is not immutable. The account holder has the right to apply to [vary or discharge the order](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-in-2025-latest-rules-legal-guide/). Variations are frequently sought to allow access to funds for reasonable living expenses, business operating costs and legal fees. The court has discretion to permit such exclusions, but they must be properly justified and supported by evidence. Discharge applications go further, seeking to lift the AFO entirely. These are appropriate where the suspicion threshold is not met, where the source of funds is legitimate and documented, or where the order is disproportionate. Successfully varying or discharging an AFO requires detailed legal and financial analysis, and this is where [specialist representation](https://lexlaw.co.uk/our-people/) can make a decisive difference ## Account Forfeiture Orders and what happens after an AFO An Account Freezing Order is often only the first stage. If the enforcement authority believes it can prove, on the balance of probabilities, that the frozen funds are recoverable property or intended for unlawful use, it may seek an [Account Forfeiture Order](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B/crossheading/forfeiture-orders). Forfeiture permanently transfers the frozen funds to the state. This can occur through a court application or, in some cases, through an [account forfeiture notice](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B/crossheading/forfeiture-orders) if no objection is raised. The stakes at this stage are high, and the groundwork laid during the AFO phase is often decisive. [Taking advice early](https://lexlaw.co.uk/legal-case-assessment/) is therefore critical. A well-prepared response at the freezing stage can influence whether forfeiture is pursued at all, or significantly strengthen the defence if it is. ## Challenging an Account Freezing Order: legal and practical strategies There are multiple grounds on which an Account Freezing Order can be challenged. These include lack of reasonable grounds for suspicion, failure to consider legitimate sources of funds, procedural defects in the application process, and disproportionate impact on the account holder or business. In practice, challenging an AFO is not simply a legal argument. It requires assembling a coherent evidential narrative explaining where the money came from, how it was earned, taxed and transferred. This often involves detailed bank records, contracts, tax filings and, in complex cases, forensic accounting input. This is why [instructing experts](https://lexlaw.co.uk/) is necessary. [LEXLAW](https://lexlaw.co.uk/) approaches AFO challenges strategically, combining legal analysis with practical engagement with the enforcement authority. In many cases, this leads to negotiated variations, early discharge or containment of the investigation before it escalates to forfeiture. ## Account Freezing Orders compared with other types of freezes It is important to distinguish Account Freezing Orders from other mechanisms that can result in frozen accounts. AFOs are Magistrates’ Court orders under POCA, based on reasonable suspicion, and are civil in nature. They differ fundamentally from [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) freezing injunctions, which are discretionary civil remedies requiring a strong prima facie case. They also differ from criminal restraint orders, which arise only in the context of criminal proceedings, and from bank-initiated freezes following suspicious activity reports, which are commercial decisions rather than court orders. Each regime has different tests, durations and remedies. Misunderstanding these distinctions can lead to missed opportunities to challenge or mitigate the impact of a freeze. ## Practical steps if your bank account is frozen If your account has been frozen, the most important step is to [act quickly](https://lexlaw.co.uk/contact-us/) and decisively. Ignoring an Account Freezing Order or assuming it will resolve itself is a serious mistake. You should immediately obtain [specialist legal advice](https://lexlaw.co.uk/contact-us/) to understand the scope of the order and your options. For individuals, this includes addressing immediate living expenses, family commitments and reputational concerns. For company directors, it includes managing cash flow, staff payments and supplier relationships while avoiding wrongful trading risks. For professional advisers, early referral to a specialist firm can protect the client’s position and your own professional exposure. This is precisely why [early engagement](https://lexlaw.co.uk/contact-us/) with a firm like LEXLAW matters. Timely intervention can stabilise the situation, secure access to essential funds and shape the trajectory of the investigation. ## Instruct Expert London Litigation Solicitors [LEXLAW](https://lexlaw.co.uk/) regularly advises individuals, businesses and professional intermediaries facing urgent freezing and forfeiture issues. Clients instruct [LEXLAW](https://lexlaw.co.uk/) because the firm combines technical expertise with practical, commercially aware advice. The [team](https://lexlaw.co.uk/our-people/) is experienced in securing variations for living, business and legal expenses, challenging unlawful or disproportionate AFOs, and coordinating with accountants, tax advisers and offshore counsel where funds move across borders. Account Freezing Orders are time-critical. The [earlier specialist lawyers](https://lexlaw.co.uk/our-people/) are involved, the greater the scope to protect funds and influence outcomes. If your bank account has been frozen, or you have been notified of an AFO application, you should seek [urgent advice now! ](https://lexlaw.co.uk/contact-us/) ### FAQs About Account Freezing Orders **How long can an Account Freezing Order last?** An AFO can last for up to two years in total, including extensions. Early advice can help limit its duration or secure discharge. **Can I access money for living or business expenses?** Yes, but only if the court permits it. Applications for variation must be carefully prepared and supported. **Does an AFO mean I will be charged with a crime?** No. An AFO is a civil order and does not require criminal charges, although investigations may continue. **Can an Account Freezing Order be lifted?** Yes. Orders can be varied or discharged where the legal test is not met or the impact is disproportionate. **Can an AFO apply to business accounts?** Yes. Business and trading accounts are frequently targeted, making early intervention critical. **What should I do if HMRC freezes my bank account?** You should seek specialist legal advice immediately to protect your position and address both the freeze and the underlying tax issues. --- # HMRC Time To Pay Guide 2026: Instalments for Unpaid Tax Source: https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/ [Time-to-Pay (TTP) arrangements](https://lexlaw.co.uk/solicitors-london/tag/hmrc-time-to-pay-arrangement/) remain a critical lifeline for UK businesses and individuals facing tax debt in 2026, with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) intensifying its debt recovery strategy while simultaneously expanding digital payment options. Nearly 18,000 Self Assessment payment plans were established between April and December 2025, demonstrating the widespread need for structured repayment solutions as the 31 January 2026 deadline approaches. A properly negotiated [TTP](https://taxdisputes.co.uk/2020/05/covid-19-coronavirus-hmrc-time-to-pay-arrangements-tax-solicitors-advice/) can prevent [winding-up petitions](https://lexlaw.co.uk/winding-up-petition-lawyers/), protect company directors from personal liability, and maintain business operations during periods of temporary financial difficulty.​ Understanding how to structure and present a [TTP proposal](https://taxdisputes.co.uk/2023/10/obtaining-hmrc-time-to-pay-agreements-ttp/) has become increasingly important as HMRC implements stricter enforcement measures, including the resumed use of [Direct Recovery of Debt (DRD) powers from April 2026](https://www.gov.uk/government/publications/the-hmrc-tax-debt-strategy-update/the-hmrc-tax-debt-strategy-update) and enhanced debt collection agency engagement. This comprehensive guide explains the legal framework, application process, and strategic considerations for securing an HMRC [Time to Pay arrangement](https://lexlaw.co.uk/solicitors-london/tag/hmrc-time-to-pay-arrangement/) in 2026. # What Is a Time to Pay Arrangement and When Should You Apply? A [Time to Pay arrangement](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) is a negotiated agreement allowing debtors to repay outstanding tax liabilities through affordable monthly instalments, typically over 6 to 12 months, without entering formal insolvency proceedings. These arrangements prevent the immediate enforcement consequences of unpaid tax, including statutory demands, winding-up petitions, and bank account freezing.​ HMRC now offers enhanced digital access to [TTP arrangements](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) for Self Assessment taxpayers, with online applications available for debts up to £30,000 without requiring direct contact with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). [VAT payment](https://lexlaw.co.uk/solicitors-london/how-to-appeal-hmrc-vat-penalties-reasonable-excuse-defence-guide-2025/) plans have expanded eligibility since 2024, now covering debts up to £50,000 for accounting periods starting in 2023 or later, with repayment terms up to 12 months. The optimal time to apply is before enforcement action commences, ideally when you first identify cash flow difficulties that will prevent timely payment. Once a [winding-up petition](https://lexlaw.co.uk/winding-up-petition-lawyers/) has been advertised, bank accounts are typically frozen, suppliers demand advance payment, and customer contracts may be jeopardised. # Legal Framework Governing Time to Pay Proposals in 2026 While [TTPs](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) are not expressly legislated, they operate within the framework of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents), contract law, and [HMRC's departmental debt management policies](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking). Directors proposing TTP arrangements must comply with their fiduciary duties under the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents), particularly the obligation to consider creditors' interests when the company faces potential insolvency.​ HMRC's updated [Tax Debt Strategy](https://www.gov.uk/government/publications/the-hmrc-tax-debt-strategy-update/the-hmrc-tax-debt-strategy-update) for 2026 emphasises three core principles: making payment easy for those who can pay, supporting those requiring assistance, and taking firm enforcement action against those who refuse to engage. The strategy includes mandating Direct Debit payments for PAYE and VAT to prevent payment misallocations, and introducing timelier tax payments for Self Assessment taxpayers with [PAYE income](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) from April 2029.​ Courts assess [TTP proposals](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) based on creditor benefit, proposal credibility, and whether granting an adjournment would prejudice creditor positions. Judicial decisions increasingly recognise the value of TTPs where companies demonstrate genuine viability and realistic repayment capability. # How to Apply for an HMRC Time to Pay Arrangement in 2026 ## Step 1: Prepare Comprehensive Financial Documentation Credible [TTP proposals](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) require detailed financial evidence demonstrating both the necessity for extended payment terms and realistic repayment capacity. Essential documentation includes:​ - Management accounts and profit and loss statements for the past 12 months - Up-to-date balance sheets showing all assets and liabilities - Aged creditor and debtor reports - Detailed cash flow forecasts projecting at least 12 months forward - Bank statements covering the previous three months - Board minutes approving the TTP proposal (for companies) HMRC's enhanced data analytics capabilities mean incomplete or inconsistent financial information will likely result in immediate rejection. ## Step 2: Determine Eligibility and Application Route For Self Assessment taxpayers [owing](https://lexlaw.co.uk/contact-us/) up to £30,000, online TTP applications can be completed without contacting HMRC directly, provided the tax return has been filed. Debts exceeding £30,000 or requiring repayment periods beyond 12 months necessitate direct engagement with HMRC's Debt Management & Banking teams.​ VAT taxpayers can establish payment plans online if they owe up to £50,000 for accounting periods commencing in 2023 or later, have no other HMRC payment plans or debts, and are current with all tax returns. Corporation Tax and PAYE debts require direct negotiation with HMRC's specialised teams. ## Step 3: Calculate Realistic Repayment Terms Proposals must balance affordability with creditor expectations. [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) typically accepts repayment periods of 6 to 12 months, though professionally advised proposals may secure extended terms where justified by cash flow projections. Monthly instalments should be calculated based on surplus cash after essential business expenses, with contingency allowances for trading fluctuations.​ Over-optimistic repayment schedules undermine credibility and increase rejection risk. Conversely, excessively conservative proposals that extend beyond 24 months rarely gain acceptance unless supported by compelling evidence of medium-term recovery. ## Step 4: Submit Your Proposal Online applications for eligible taxpayers involve accessing HMRC's digital TTP service through the Government Gateway portal. The system requires immediate commitment to Direct Debit arrangements, with the first payment typically due on the day of application.​ For debts requiring direct HMRC contact, formal written proposals should be submitted via email or letter to the relevant Debt Management office, referencing specific tax periods and amounts owed. Professional representation through experienced tax solicitors significantly improves acceptance rates by demonstrating seriousness and ensuring proposals meet HMRC's assessment criteria. ## Step 5: Negotiate Terms and Secure Agreement [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) may counter-offer with modified terms, including shorter repayment periods, higher monthly instalments, or additional security requirements such as personal guarantees from directors. Effective negotiation requires transparency about all liabilities, flexibility within sustainable parameters, and maintained communication throughout the process.​ Once accepted, [TTP agreements](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) require strict compliance. Missing even a single instalment can void the arrangement and reinstate enforcement proceedings, often with reduced prospects for renewed negotiation. # Common Reasons HMRC Rejects Time to Pay Proposals Understanding rejection factors enables proactive mitigation: **Insufficient financial disclosure:** Vague or incomplete financial information suggests either poor record-keeping or deliberate concealment. HMRC requires comprehensive evidence of current financial position and projected recovery.​ **Unrealistic repayment terms:** Proposals offering minimal monthly payments over extended periods indicate fundamental insolvency rather than temporary cash flow difficulties. HMRC rejects proposals unlikely to achieve full repayment within reasonable timeframes.​ **Poor timing and last-minute applications:** Presenting proposals at petition hearings suggests reactive desperation rather than proactive financial management. Early engagement demonstrates good faith and allows proper assessment.​ **Previous TTP defaults:** Historical failures to maintain agreed payment schedules significantly reduce prospects for subsequent arrangements. HMRC maintains comprehensive records of prior TTP performance.​ **Ongoing trading losses:** Where financial projections show continued losses without credible turnaround strategies, HMRC typically refuses TTP proposals in favor of immediate formal insolvency to protect creditor interests. # Strategic Considerations for Maximising TTP Success ### Engage Professional Advisors Early TTP proposals prepared by [experienced tax solicitors](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) or [licensed insolvency practitioners](https://lexlaw.co.uk/contact-us/) demonstrate commitment and expertise, significantly improving acceptance rates. Professional advisors understand HMRC's internal assessment criteria, can negotiate optimal terms, and manage simultaneous court applications where petitions have been issued.​ ### Maintain Transparency Throughout Concealing liabilities or providing misleading information destroys creditor trust and eliminates prospects for negotiated solutions. [Full disclosure](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) of all tax arrears, trade creditors, secured debts, and contingent liabilities is essential.​ ### Address Current Tax Obligations HMRC requires continued compliance with ongoing tax obligations while repaying historic arrears. [Proposals](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) must demonstrate capacity to maintain current PAYE, VAT, and Corporation Tax payments alongside [TTP](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) instalments.​ ### Consider Alternative Funding Sources Where [TTP](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) terms prove unachievable through ordinary trading cash flow, exploring alternative funding mechanisms such as asset refinancing, director loans, or invoice financing may strengthen proposals. HMRC views proposals supported by additional funding commitments more favourably than those relying solely on improved trading performance. # Obtaining Professional Legal Assistance for Your TTP Proposal Securing [successful HMRC Time to Pay arrangements](https://lexlaw.co.uk/contact-us/) requires strategic timing, comprehensive financial evidence, and professional presentation aligned with HMRC's assessment criteria. Early engagement with [specialist tax dispute solicitors](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) transforms potentially terminal debt situations into manageable repayment plans satisfying both debtor and creditor objectives.​ Our [experienced lawyers](https://lexlaw.co.uk/our-people/) conduct meticulous financial documentation reviews, prepare professionally structured proposals, negotiate realistic terms sustainable for your business, and manage simultaneous court applications where petitions have been issued. Where winding-up petitions have been filed, coordinated adjournment applications and TTP negotiations may prove vital to preserving trading positions.​ With HMRC implementing increasingly sophisticated debt recovery strategies throughout 2026, [professional legal advice](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) provides crucial advantages in navigating complex negotiations and securing optimal outcomes. ### Frequently Asked Questions (FAQ's) What is the maximum debt HMRC will accept for online Time to Pay arrangements in 2026? Self Assessment taxpayers can establish online payment plans for debts up to £30,000 without contacting HMRC directly, provided the tax return has been filed. VAT payment plans are available online for debts up to £50,000 for accounting periods starting in 2023 or later. Larger debts require direct negotiation with HMRC's Debt Management teams How long does HMRC typically allow for Time to Pay repayment periods? Standard TTP arrangements span 6 to 12 months, though professionally advised proposals supported by robust financial evidence may secure extended terms where cash flow projections justify longer repayment periods. Proposals exceeding 24 months rarely gain acceptance unless exceptional circumstances exist Can I apply for a Time to Pay arrangement after HMRC has issued a winding-up petition? Yes, but timing becomes critical. Simultaneous applications for petition adjournment and TTP negotiation may be necessary to preserve the company's trading position. Court attitudes toward late-stage proposals are skeptical, making professional legal representation essential for maximising success prospects What happens if I miss a payment under my Time to Pay arrangement? Missing even a single instalment can void the entire arrangement, reinstating enforcement proceedings with reduced prospects for renewed negotiation. If circumstances change affecting payment capacity, contact HMRC immediately to discuss modifications before defaults occur Does HMRC charge interest on Time to Pay arrangements? Yes, interest and penalties continue accruing on late-paid tax throughout the TTP repayment period, increasing total liability beyond the original debt. Calculate total repayment costs accurately when assessing proposal sustainability --- # UK Validation Orders Explained: The 2026 Guide to Unfreezing Company Bank Accounts Source: https://lexlaw.co.uk/solicitors-london/uk-validation-orders-explained-the-2026-guide-to-unfreezing-company-bank-accounts/ Few legal events are as immediately disruptive to a company as the presentation of a [winding up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/). Regardless of whether the underlying debt is disputed, modest, or capable of swift resolution, the consequences are often the same. [Banks freeze accounts](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/), transactions stop, and directors lose control of the company’s cash flow. For many businesses, this operational paralysis causes more damage than the petition itself. [UK insolvency law](https://windinguppetitionsolicitors.co.uk/our-success-case-studies-successful-insolvency-law-firm-london/) is deliberately strict at this stage. [Section 127 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127) renders void any disposition of company property made after the presentation of a [winding up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) unless the [court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) orders otherwise. The intention is to protect the collective interests of creditors. In practice, it places companies under immediate financial lockdown. A Validation Order is the court’s mechanism for restoring lawful trading. When granted, it confirms that specific payments, or sometimes all trading activity, will not be void. This reassurance allows banks to lift freezes, wages to be paid, suppliers to be retained, and value to be preserved. This guide explains validation orders in full, from legal foundations to courtroom strategy. It is written for directors, shareholders, and advisers who need clarity and who understand that speed and [legal expertise](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) often determine the outcome. ## What Is a Validation Order? A validation order is an order of the [Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) confirming that certain dispositions of a company’s assets are valid despite the automatic effect of [section 127 of the Insolvency Act 1986.](https://www.legislation.gov.uk/ukpga/1986/45/section/127) Once a [winding up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) has been presented, any payment from a company bank account, transfer of assets, or disposal of property is potentially void. This applies even where the company is solvent, even where the payment is commercially sensible, and even where the payment would settle the petition debt itself. The [validation order](https://windinguppetitionsolicitors.co.uk/uk-validation-orders-guide-how-to-unfreeze-your-bank-account-after-a-winding-up-petition/) operates as an exception to this rule. It validates past or future transactions, giving legal certainty to directors, banks, and counterparties. Without it, directors risk authorising void payments and exposing themselves to later claims by a liquidator. Importantly, [validation orders](https://windinguppetitionsolicitors.co.uk/uk-validation-orders-guide-how-to-unfreeze-your-bank-account-after-a-winding-up-petition/) are discretionary. The court will only grant relief where it is satisfied that the order will not prejudice the general body of unsecured creditors. ## Why Banks Freeze Company Accounts After a Winding Up Petition? [Banks freeze accounts](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/) for defensive reasons. If a bank permits payments after a petition has been presented, a subsequently appointed liquidator can require the bank to repay those sums personally. Faced with that risk, banks adopt a zero tolerance approach. The [freeze](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/) usually applies to all accounts, regardless of balance or purpose. Client accounts, tax reserve accounts, and payroll accounts are often frozen simultaneously. Even where funds are clearly earmarked for wages or [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/), the bank will not release them without court authority. This creates a [practical deadlock](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/). The company cannot trade without access to funds, but it cannot lawfully access funds without a validation order. Understanding this dynamic is critical. Delay rarely helps and often worsens the company’s position in the eyes of the court. ## Types of Validation Orders The court tailors validation orders to the specific facts of each case. There is no standard template and no automatic entitlement. ### Specific or Limited Validation Orders Specific validation orders authorise clearly identified payments or categories of payments. These often include wages and salaries, rent, utilities, essential suppliers, insurance, or payment of the petition debt itself. These orders are common where the company cannot yet demonstrate full solvency but can show that the payments benefit [creditors](https://lexlaw.co.uk/solicitors-london/creditors-guide-to-enforcement-of-unpaid-old-court-judgment-debts-in-the-uk-2025/) collectively. For example, paying staff to complete profitable contracts may generate funds that improve creditor returns. Courts favour specificity. Narrowly drawn orders reduce the risk of abuse and are often more palatable where the company’s financial position is fragile. This is why [engaging experts](https://lexlaw.co.uk/contact-us/) who are well-versed in the [intricacies of validation orders](https://windinguppetitionsolicitors.co.uk/uk-validation-orders-guide-how-to-unfreeze-your-bank-account-after-a-winding-up-petition/) is absolutely crucial. ### General Validation Orders Permitting Trading General validation orders authorise the company to continue trading in the ordinary course of business for a defined period. These are typically granted where the company can demonstrate solvency on a balance sheet and cash flow basis, supported by credible financial evidence. Judges scrutinise these applications closely. Optimistic forecasts or unsupported assumptions are likely to be challenged. Time limits and reporting obligations are common, reflecting judicial caution. Choosing the correct type of order is strategic. An overreaching application risks refusal, while a targeted order backed by [expert legal arguments](https://lexlaw.co.uk/our-people/) may stabilise the business and preserve future options. ## The Legal Principles Governing Validation Orders The leading guidance remains the Chancellor of the High Court’s Practice Note of 11 January 2007, which continues to guide judicial decision making in 2026. The court’s central concern is [creditor protection](https://lexlaw.co.uk/solicitors-london/creditors-guide-to-enforcement-of-unpaid-old-court-judgment-debts-in-the-uk-2025/). The judge must be satisfied that the proposed transactions will not prejudice the general body of unsecured creditors. Solvency is highly relevant, but it is not the sole consideration. The court also examines how the [petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) arose, whether there has been any dissipation of assets, and whether the company has acted promptly and transparently. Delay without explanation can be fatal. Judges are particularly alert to attempts to validate payments to connected parties, preferences, or transactions that appear designed to defeat creditor claims. Candour and accuracy in evidence are essential. ## Evidence Required to Support a Validation Order Application [Validation order applications](https://windinguppetitionsolicitors.co.uk/uk-validation-orders-guide-how-to-unfreeze-your-bank-account-after-a-winding-up-petition/) succeed or fail on evidence. The court expects current, credible, and coherent financial material. Typically required evidence includes up to date management accounts, realistic cash flow forecasts, and a detailed aged creditor analysis. Directors must explain how the [petition](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/) arose and why the proposed payments or trading will benefit creditors as a whole. Witness statements should be precise and supported by documents. Where appropriate, evidence from accountants or restructuring professionals can add significant weight. Inadequate evidence not only risks refusal but can undermine the company’s position in any later insolvency. Liquidators frequently scrutinise validation applications when assessing director conduct. This is why [instructing experts](https://lexlaw.co.uk/contact-us/) is necessary. [Specialist insolvency lawyers](https://lexlaw.co.uk/our-people/) understand what the standards are, what judges expect and how to present financial material persuasively without overstating the company’s position. ## The Validation Order Application Process The application is made to the [Insolvency and Companies List](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) of the [Business and Property Courts](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/). It is procedurally separate from the [winding up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) hearing. In urgent cases, applications can be issued and heard within one or two working days. A certificate of urgency may be required, supported by evidence explaining the immediate harm caused by the account freeze. At the hearing, the judge will test the evidence, often robustly. Petitioners, particularly [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/), may attend and raise objections. [Skilled advocacy](https://lexlaw.co.uk/our-people/) is critical to address judicial concerns, refine the scope of the order, and secure workable relief. ## How Validation Orders Interact With HMRC Petitions [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) is one of the most frequent petitioners in the [Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/). Its approach to validation orders is pragmatic but cautious. [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) will often oppose broad trading orders unless solvency is clearly demonstrated. However, it may support or not oppose specific orders that enable payment of wages or settlement of the tax debt. [Early engagement](https://lexlaw.co.uk/contact-us/) and [realistic proposals](https://lexlaw.co.uk/our-people/) are key. Courts take note of whether directors have attempted to engage constructively with [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) rather than relying solely on court intervention. ## Risks of Continuing Without a Validation Order Without a [validation order](https://windinguppetitionsolicitors.co.uk/uk-validation-orders-guide-how-to-unfreeze-your-bank-account-after-a-winding-up-petition/), the company cannot lawfully trade. Payments made are void and recoverable. Employees may leave, suppliers may terminate contracts, and customers may lose confidence. [Directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-breach-of-directors-duties-over-unlawful-560k-dividend/) face heightened personal risk. Authorising void payments can expose them to claims for misfeasance or breach of duty. These risks often crystallise months later, when a liquidator reviews historic bank statements. Delay compounds these problems. Courts are less sympathetic where directors wait weeks before applying. [Prompt action](https://lexlaw.co.uk/contact-us/) demonstrates responsibility and increases the likelihood of relief. ## Validation Order Outcomes Compared | **Issue** | **No Validation Order** | **Properly Obtained Validation Order** | | --------- | ----------------------- | -------------------------------------- | | Bank accounts | Frozen | Lawfully unfrozen | | Ability to trade | Effectively impossible | Permitted within scope | | Director exposure | High | Significantly reduced | | Creditor confidence | Rapid deterioration | Stabilised | | Rescue prospects | Minimal | Preserved | ## Instruct Expert London Insolvency Lawyers [Validation orders](https://windinguppetitionsolicitors.co.uk/uk-validation-orders-guide-how-to-unfreeze-your-bank-account-after-a-winding-up-petition/) sit at the intersection of [insolvency law](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/), financial analysis, and [courtroom advocacy](https://lexlaw.co.uk/our-people/). They are not administrative applications. Judges expect precision, realism, and candour. Poorly prepared applications undermine credibility and can prejudice the company’s position in subsequent proceedings. [LEXLAW’s](https://lexlaw.co.uk/our-people/) [insolvency solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) and [barristers](https://lexlaw.co.uk/our-people/christopher-snell/) appear regularly before the [Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) and understand how these applications are approached in practice. As demonstrated in our successful defence of wrongful trading and misfeasance claims, [timely and expert advice](https://lexlaw.co.uk/contact-us/) is often decisive. This is why [instructing experts](https://lexlaw.co.uk/our-people/christopher-snell/) is necessary. The cost of [early specialist advice](https://lexlaw.co.uk/contact-us/) is often insignificant compared to the losses caused by [refusal or delay](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/). For [urgent legal advice](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/), [contact now!](https://lexlaw.co.uk/contact-us/) ### FAQs About Validation Orders Can a solvent company still require a validation order? Yes. Section 127 applies regardless of solvency. Even profitable companies require validation to make lawful payments after a petition is presented. How quickly can the court grant a validation order? Urgent applications can be heard within 24 to 48 hours if properly prepared. Delay usually reflects evidential weaknesses rather than court availability. Does HMRC always oppose validation orders? No. HMRC frequently attends hearings but may not oppose targeted orders that protect creditor interests or facilitate settlement. Can a validation order cover future trading? Yes, but only where justified by strong evidence. Courts often impose time limits and conditions. What happens if payments are made without validation? They are void and recoverable. Directors may also face personal claims. Is a validation order the same as opposing a winding up petition? No. A validation order addresses the account freeze. Opposition to the petition is a separate process. Are connected party payments allowed? Only rarely and with compelling justification. Courts scrutinise such payments closely. --- # Case Study: HMRC Security Notices Overturned – Duma & Rockey v HMRC (Tax Tribunal Appeal) Source: https://lexlaw.co.uk/solicitors-london/case-study-hmrc-security-notices-overturned-duma-rockey-v-hmrc-tribunal-tax-appeal/ In a landmark victory against HMRC Security Notices, the First-tier Tribunal (Tax Chamber) has set aside significant financial security demands in the case of *Michael Stefan Duma and Harriot K Rockey v The Commissioners for His Majesty's Revenue and Customs* [2026] SFTT (TC/2023/08321). This case serves as a vital precedent for those facing [HMRC Security Notice Defence](https://lexlaw.co.uk/solicitors-london/hmrc-notice-of-requirement/), as it clarifies that HMRC cannot maintain security demands when the underlying business has ceased trading. The ruling, delivered by Tribunal Judge Keith Gordon and Mrs Charlotte Barbour, confirms that while HMRC may initially have grounds to issue a notice, the Tribunal possesses a full appellate jurisdiction to vary or cancel the requirements based on the reality of the situation at the time of the hearing. ## Supervisory vs. Appellate Jurisdiction The statement that the Tribunal’s jurisdiction is "broader than exercising a binary choice" stems from a critical distinction made in the decision between the rules governing VAT security and those governing PAYE/NIC security. HMRC argued that the Tribunal’s role should be purely supervisory. In the context of VAT security notices (under the Value Added Tax Act 1994), the Tribunal's powers are limited by established case law (such as *John Dee Ltd* and *Peachtree Enterprises Ltd*). - **Supervisory Nature:** The Tribunal only checks if HMRC acted reasonably or made a legal error. - **Binary Outcome:** If HMRC acted reasonably, the notice is upheld. If they acted unreasonably, the notice is quashed (set aside). The Tribunal cannot substitute its own decision or change the amount; it faces a binary choice of "uphold" or "quash". The Tribunal rejected HMRC's argument for PAYE/NIC notices, determining that its powers are appellate and therefore broader. This conclusion relies on the specific wording of the Income Tax (PAYE) Regulations 2003, specifically Regulation 97V(5). Unlike the VAT legislation, Regulation 97V(5) explicitly provides the FTT with the power to vary as it states that on appeal, the Tribunal may: Confirm the requirements; Vary the requirements; or Set aside the notice. The decision highlights that this specific legislative provision, the power to "vary", fundamentally changes the Tribunal's role. - **Beyond Reasonableness:** While the Tribunal may still look at whether the *decision to require security* was reasonable (a supervisory question regarding "necessity" for revenue protection) , it has full power to determine the correctness of the terms. - **Practical Consequence:** This means the Tribunal is not forced to quash a valid notice simply because the *amount* demanded was slightly incorrect. Instead, it can vary the notice to reflect the correct amount or terms (e.g., reducing the security duration or quantum). The "clear" conclusion in the decision is that the presence of Regulation 97V(5) liberates the Tribunal from the restrictions of the VAT regime. It empowers the judge to do more than just say "yes" or "no" (the binary choice); it allows them to actively modify the notice to ensure it is just and accurate, exercising a full appellate jurisdiction over the specific requirements (such as the quantum of security). ## Key Excerpts from the Decision > *"It is clear from this that the Tribunal’s jurisdiction is broader than exercising a binary choice of upholding or quashing a notice, in that the Tribunal has the power to vary particular requirements within the notice."* > > > > > > *"For the reasons explained below, we decided that: (1) the decisions to issue the Notices are upheld (but for a different amount); (2) in light of further information made available to HMRC after the decisions to issue the Notices, the Notices are now set aside... Security should only be requested for future liabilities and not as a method of debt recovery for past arrears."* > > > > > > "*We see no justification for the Notices also to require the company and its directors to give security in relation to pre-existing PAYE/NIC debt owed by the company. It must be remembered that the exercise is to protect the revenue, and we interpret that as providing a safeguard that future amounts that might become owed to HMRC are not lost. As for amounts that have previously fallen due and are as yet unpaid, it is too late for those to be protected: it is akin to locking a stable door after the horse has bolted. In any event, HMRC have creditors’ rights to recover such sums (if available). Furthermore, to use a Notice of Requirement against a director in relation to pre-existing debt strikes us as an inappropriate way of jumping the queue of creditors and forcing the hand of a company’s directors in circumstances where insolvency law is unlikely to give other creditors such a remedy.*" > > > > > > "*We do not see how any ongoing need to protect the revenue is served by maintaining these Notices in any form. As a result, we set them aside.*" The First-tier Tribunal exercised its appellate jurisdiction to set aside HMRC Security Notices. While HMRC initially argued their decision was reasonable based on past non-compliance, the Tribunal ruled that because the underlying business, [Influence Network Ltd](https://find-and-update.company-information.service.gov.uk/company/10815710/insolvency), had entered receivership and ceased trading, the "revenue protection" justification was no longer valid. The decision establishes a powerful precedent that security notices must be forward-looking and cannot be used to bypass standard insolvency procedures or to pursue directors when no future taxable activity exist. ## Background to Security Notices and HMRC Enforcement The appellants were directors of [Influence Network Ltd](https://find-and-update.company-information.service.gov.uk/company/10815710), a company that specialised in influencer marketing. Following a period of financial instability exacerbated by the pandemic and the personal health challenges of the directors, the company fell into arrears regarding PAYE, NICs, and VAT. In April 2023, HMRC Officer O'Donnell issued formal [Notices of Requirement (NOR) to give Security](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/). These notices demanded over £175,000 for PAYE/NICs and over £40,000 for VAT, imposing joint and several liability on Mr Duma and Ms Rockey personally. HMRC’s strategy was based on "revenue protection," a common trigger for [HMRC Tax Enforcement Action](https://lexlaw.co.uk/hmrc-debt-enforcement-defence-statutory-demand-winding-up-peititon-solicitor-london/). However, as our [FAQs on HMRC security notices](https://lexlaw.co.uk/faqs-on-hmrc-security-notices/) explain, these demands are often issued without a full appreciation of the director's personal circumstances or the actual future trading prospects of the company. ## The Scope of Tribunal Jurisdiction and Legal Precedents A pivotal element of this case was the dispute over the Tribunal’s powers. HMRC contended that the Tribunal’s role was strictly supervisory—meaning it could only check if the decision was "reasonable" when it was made. Represented by Mr Andrew Young of Counsel, the appellants successfully argued for a full appellate jurisdiction regarding the requirements of the notice. The Tribunal followed the reasoning in *D-Media Communications v HMRC*, establishing that while the decision to issue a notice is supervisory, the specific [requirements of the notice of requirement](https://taxdisputes.co.uk/2025/06/understanding-hmrcs-notice-of-requirement-security-demands-for-vat-paye-and-nics/) (such as the amount and duration) can be substituted by the Tribunal’s own view. This distinction is crucial for anyone seeking [legal representation for tax tribunal appeals](https://taxdisputes.co.uk/legal-representation/hmrc-notice-requirement-tribunal-appeals-solicitor-legal-advice/). It means that even if HMRC was "reasonable" to be worried about tax loss initially, the Tribunal can still strike down the notice if the specific demands are deemed inappropriate or excessive. ## Analysis of Director Liability and Personal Hardship The Tribunal meticulously examined the personal situations of the directors. Mr Duma provided evidence of severe financial hardship, including a mortgage repossession order, while Ms Rockey suffered from a serious, long-term illness. The Tribunal noted that Ms Rockey was "overwhelmed" by the notice and had not fully grasped the implications of [joint and several liability for directors](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/). Crucially, the Tribunal found that HMRC had incorrectly included pre-existing tax debts in their calculations. This is a common error in [HMRC PAYE enforcement powers](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/) where security is used as a proxy for debt collection. The judgment clarifies that security is forward-looking; it is intended to protect against *future* defaults, not to bypass standard insolvency or debt recovery procedures for past failures. ## The Impact of Business Insolvency By the date of the hearing on 8 January 2026, Influence Network Ltd had entered receivership. The Tribunal concluded that because the company was being wound up by the Official Receiver and was no longer making taxable supplies or running a payroll, the "protection of the revenue" justification had evaporated. This sets a powerful precedent: if a business is no longer trading, there is no future revenue to protect, and therefore no legal basis for a security notice. This has been a recurring theme in our [case studies of withdrawn security notices](https://taxdisputes.co.uk/2025/06/case-study-success-notices-of-requirement-withdrawn-by-hmrc/), where strategic legal intervention highlights the disconnect between HMRC’s demands and the commercial reality. ## Conclusion and Strategy for Appellants The *Duma & Rockey* decision is a landmark victory that confirms the Tribunal's power to intervene and set aside notices when circumstances change. For directors facing these "paralysing" demands, the case highlights the importance of a [legal challenge to a notice of requirement](https://taxdisputes.co.uk/2025/03/case-study-hmrc-withdraws-security-notices-in-one-day/). HMRC cannot simply maintain a security notice as a punitive measure against directors of failed businesses. If you are facing similar action, it is essential to act within the 30-day appeal window. As this case proves, expert [appeal against HMRC security notices](https://www.google.com/search?q=https://lexlaw.co.uk/solicitors-london/tag/hmrc-security-notice/) can lead to the complete withdrawal of personal liability and the protection of your financial future. [Decision - TC-2023-08321 & others - Michael Stefan Duma & others - LEXLAW SOLICITORS BARRISTERS TAX DISPUTES LONDON](https://lexlaw.co.uk/wp-content/uploads/Decision-TC-2023-08321-others-Michael-Stefan-Duma-others-LEXLAW-SOLICITORS-BARRISTERS-TAX-DISPUTES-LONDON.pdf)[Download](https://lexlaw.co.uk/wp-content/uploads/Decision-TC-2023-08321-others-Michael-Stefan-Duma-others-LEXLAW-SOLICITORS-BARRISTERS-TAX-DISPUTES-LONDON.pdf) --- # Personal Liability Notices (PLNs) Guide 2026: What Directors Need to Know Source: https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/ [Personal Liability Notices](https://taxdisputes.co.uk/2025/12/personal-liability-notices-plns-defence-strategies-for-directors/) represent a decisive shift in [HMRC’s](https://www.gov.uk/government/organisations/hm-revenue-customs) approach to director accountability. Where [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) alleges that unpaid employment taxes arose due to fraud or neglect, it can bypass limited liability and pursue individuals personally. Personal Liability Notices are commonly issued in distressed businesses, following insolvency events, or alongside wider [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) investigations into [PAYE](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/), [NIC](https://taxdisputes.co.uk/hmrc-enforcement-action/), or [VAT compliance](https://taxdisputes.co.uk/vat-evasion/). Directors are often caught off guard by the severity of this exposure, particularly where decisions were made under commercial pressure. With [HMRC’s enforcement](https://taxdisputes.co.uk/2025/10/upper-tribunal-refuses-late-vat-appeal-personal-liability-notice-directors-delay-of-3-years/) focus intensifying post-pandemic, PLNs now sit firmly within the department’s deterrence strategy. [Early, specialist advice](https://lexlaw.co.uk/?page_id=356) is therefore essential to prevent irreversible personal consequences. ## What is a Personal Liability Notice? A Personal Liability Notice is a statutory notice issued by [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) that transfers specific unpaid company tax liabilities onto an individual officer. Most commonly, PLNs arise under [section 121C of the Social Security Administration Act 1992](https://www.legislation.gov.uk/ukpga/1992/5/section/121C), which applies to unpaid National Insurance Contributions where HMRC alleges that the failure to pay was attributable to the fraud or neglect of a director or officer. Unlike [ordinary tax assessments](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) raised against a company, a PLN creates a direct, personal liability. Once issued, [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) may pursue the individual for the full amount stated, together with interest, regardless of whether the company has since entered liquidation or been dissolved. PLNs are not limited to registered directors. [HMRC](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/) frequently targets de facto directors, shadow directors, dominant shareholders, and senior managers who exercised real influence over payroll, financial decision-making, or creditor prioritisation. Titles are far less important than actual control. This is precisely why directors should not assume that corporate structure alone will protect them when [HMRC](https://taxdisputes.co.uk/2025/12/personal-liability-notices-plns-defence-strategies-for-directors/) escalates enforcement. ## The Statutory Test: Fraud or Neglect [HMRC](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/) may only lawfully issue a PLN if it can demonstrate, on the balance of probabilities that the unpaid liability arose due to the individual’s fraud or neglect. This statutory threshold is frequently misunderstood and often misapplied by HMRC in practice. Neglect does not mean that a business failed or that tax was paid late. The courts have repeatedly confirmed that neglect requires a failure to take reasonable care in the circumstances. Directors facing sudden loss of contracts, market disruption, or cash-flow collapse may still have acted entirely reasonably. However, [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) often advances an overly broad interpretation, arguing that continued trading while tax arrears accrued is itself evidence of neglect. This approach is regularly challengeable, particularly where directors sought professional advice, engaged with HMRC, or made genuine efforts to stabilise the business. Understanding how tribunals interpret this test is critical, which is why [specialist legal analysis](https://lexlaw.co.uk/our-people/christopher-snell/) is indispensable at [an early stage](https://lexlaw.co.uk/?page_id=356). ## Why HMRC Issues Personal Liability Notices PLNs are typically issued after prolonged periods of non-payment or following insolvency events such as liquidation or compulsory strike-off. [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) commonly focuses on cases involving repeated [PAYE or NIC defaults](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/), diversion of funds to other creditors, or patterns suggesting deliberate prioritisation away from the Crown. In more serious cases, HMRC may allege [phoenix activity](https://taxdisputes.co.uk/phoenix-fraud/), sham arrangements, or reckless trading. Internal guidance, including manuals, instructs officers to examine directors’ conduct in detail, including payment decisions, internal communications, and interactions with advisers. Importantly, [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) frequently forms views long before issuing the notice. Directors who engage without legal representation may unknowingly provide explanations that later form the foundation of [HMRC’s case](https://taxdisputes.co.uk/vat-evasion/). Once [HMRC’s](https://taxdisputes.co.uk/2025/12/personal-liability-notices-plns-defence-strategies-for-directors/) narrative hardens, reversing it becomes significantly more difficult, which is why [early legal intervention](https://lexlaw.co.uk/?page_id=356) is so often decisive. ## How HMRC Investigates Directors [HMRC’s](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) investigation process is typically forensic and retrospective. Officers may analyse bank statements, payroll data, [VAT returns](https://taxdisputes.co.uk/vat-evasion/), board minutes, and correspondence with accountants or insolvency practitioners. Decisions made months or even years earlier are assessed with the benefit of hindsight. Directors are often criticised for prioritising wages, suppliers, or business survival over tax liabilities. However, [tribunals ](https://www.gov.uk/courts-tribunals/first-tier-tribunal-tax)have recognised that such decisions do not automatically amount to neglect, particularly where they were made in good faith and with professional input. [HMRC’s](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) failure to appreciate commercial reality is a recurring theme in contested PLN cases. Exposing these weaknesses requires detailed factual reconstruction and legal framing, not generic explanations. ## Enforcement Trends ### Tribunal Approach to Director Conduct [Recent tribunal decisions](https://taxdisputes.co.uk/2025/10/upper-tribunal-refuses-late-vat-appeal-personal-liability-notice-directors-delay-of-3-years/) confirm that [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) must establish a clear causal link between the director’s conduct and the unpaid tax. It is not sufficient to show that the individual was a director at the relevant time. Knowledge, decision-making authority, and reasonable steps taken are all scrutinised. [Tribunals](https://taxdisputes.co.uk/2025/10/upper-tribunal-refuses-late-vat-appeal-personal-liability-notice-directors-delay-of-3-years/) have repeatedly rejected HMRC’s attempts to equate financial distress with neglect, emphasising that reasonable commercial judgment under pressure does not amount to culpable conduct. ### Limits of the “Innocent Director” Argument Conversely, tribunals have also made clear that directors cannot simply claim ignorance. Where evidence demonstrates real control, repeated warnings, or failure to engage, PLNs have been upheld. These cases underline the importance of evidential detail and careful positioning of the director’s role, which is why [experienced representation](https://lexlaw.co.uk/our-people/christopher-snell/) materially improves outcomes. ## Defending a Personal Liability Notice A [successful PLN defence](https://taxdisputes.co.uk/2025/10/upper-tribunal-refuses-late-vat-appeal-personal-liability-notice-directors-delay-of-3-years/) is built around challenging [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) on law, evidence, and procedure. The starting point is a detailed analysis of HMRC’s allegation of fraud or neglect and the evidential basis relied upon. [Directors](https://lexlaw.co.uk/set-aside-statutory-demand-insolvency-legal-advice/) often succeed by demonstrating that they acted responsibly in the circumstances. This may include evidence of reliance on professional advisers, [engagement with HMRC](https://taxdisputes.co.uk/2025/12/personal-liability-notices-plns-defence-strategies-for-directors/), attempts to secure funding, or contemporaneous records showing reasoned decision-making. Causation is another critical battleground. If unpaid tax resulted from external shocks, adviser error, or [sudden insolvency](https://lexlaw.co.uk/set-aside-statutory-demand-insolvency-legal-advice/) rather than personal misconduct, [HMRC’s](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) case may fail entirely. Procedural challenges are also powerful. [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) must follow statutory safeguards, consider representations properly, and base decisions on evidence rather than assumption. Failures in this process frequently lead to PLNs being withdrawn. This is why attempting to handle a PLN without [specialist advice](https://lexlaw.co.uk/our-people/christopher-snell/) carries substantial risk. ## Implications for Directors in 2026 [HMRC’s enforcement](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/) posture in 2026 is more assertive than at any point in recent decades. PLNs are now commonly deployed alongside winding-up petitions, penalty assessments, and director disqualification investigations. If left unchallenged, a [PLN](https://taxdisputes.co.uk/2025/10/upper-tribunal-refuses-late-vat-appeal-personal-liability-notice-directors-delay-of-3-years/) can be enforced as a personal debt. HMRC may issue [statutory demands](https://lexlaw.co.uk/set-aside-statutory-demand-insolvency-legal-advice/), commence [bankruptcy proceedings](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/), or seek charging orders over property. The reputational impact can be equally damaging, affecting creditworthiness and future directorships. Directors facing overlapping [HMRC](https://taxdisputes.co.uk/2025/12/personal-liability-notices-plns-defence-strategies-for-directors/) and insolvency risks require coordinated legal strategy rather than piecemeal advice, which is why [specialist firms](https://lexlaw.co.uk/our-people/christopher-snell/) with multi-disciplinary capability are increasingly sought out. ## Instruct Expert London Tax Lawyers When [HMRC](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) alleges personal culpability, experience and speed matter. [LEXLAW](https://lexlaw.co.uk/our-people/christopher-snell/) is widely recognised for its [specialist expertise](https://lexlaw.co.uk/our-people/christopher-snell/) in [HMRC tax disputes](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/), director liability, and high-stakes enforcement litigation. [LEXLAW](https://lexlaw.co.uk/our-people/christopher-snell/) brings together leading tax solicitors, experienced barristers, and [senior tax counsel](https://lexlaw.co.uk/andrew-young/), including [former HMRC professionals](https://lexlaw.co.uk/andrew-young/). The firm regularly acts for directors facing PLNs involving substantial liabilities, often [preventing enforcement](https://taxdisputes.co.uk/2026/01/hmrc-paye-enforcement-powers-from-notices-to-insolvency-action/) before it escalates. [Personal Liability Notices](https://taxdisputes.co.uk/2025/12/personal-liability-notices-plns-defence-strategies-for-directors/) rarely exist in isolation. They intersect with insolvency proceedings, winding-up petitions, penalty appeals, and disqualification risk. [LEXLAW](https://lexlaw.co.uk/our-people/christopher-snell/) addresses these threats collectively, protecting both personal assets and professional standing. For directors facing [HMRC action](https://taxdisputes.co.uk/2025/10/upper-tribunal-refuses-late-vat-appeal-personal-liability-notice-directors-delay-of-3-years/), early instruction of [specialist London tax lawyers](https://lexlaw.co.uk/andrew-young/) can mean the difference between resolution and irreversible personal exposure. [Contact Now](https://lexlaw.co.uk/?page_id=356) for [Expert Legal Advice](https://lexlaw.co.uk/our-people/christopher-snell/)! ### FAQs about Personal Liability Notices **What is the deadline to respond to a PLN?** PLNs specify statutory time limits for appeal or representation. Missing these deadlines can significantly prejudice a director’s position. **Can HMRC pursue more than one director?** Yes. HMRC may target multiple individuals, but liability must be proven separately for each. **Is a PLN the same as a director guarantee?** No. A PLN is imposed unilaterally under statute and does not require consent. **Can a PLN be appealed to the Tribunal?** Yes. Appeals are heard by the First-tier Tribunal, which scrutinises HMRC’s evidence closely. **Does liquidation prevent a PLN?** No. PLNs are often issued precisely because the company is insolvent. **Can HMRC withdraw a PLN?** Yes. Strong legal representations frequently result in withdrawal or reduction. --- # 2026 Guide: What Happens After a Winding-Up Petition Order Is Made? Source: https://lexlaw.co.uk/solicitors-london/what-happens-after-a-winding-up-petition-order-is-made-a-2026-guide/ A [winding-up petition](https://windinguppetitionsolicitors.co.uk/how-to-challenge-a-winding-up-petition-uk-guide-2026/) is the most serious type of litigation a company will ever face. If the court makes a [winding-up order](https://windinguppetitionsolicitors.co.uk/winding-up-consequences/), the company is placed into [compulsory liquidation](https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/) and control of its affairs is effectively removed from its directors. For many directors and creditors, this stage is poorly understood, yet it is precisely when legal, financial, and personal risks become most acute. This guide explains what happens after a winding-up petition order is made, how the liquidation process unfolds, what powers the liquidator holds, and what options may still be available. It is intended to provide clear, practical guidance for directors, shareholders, and creditors navigating the consequences of a winding-up order under [UK insolvency law](https://lexlaw.co.uk/solicitors-london/tag/insolvency-law/). ## What a Winding-Up Order Means in Practice When the court grants a winding-up petition, the company is deemed insolvent and enters [compulsory liquidation](https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/) under the [Insolvency Act 1986](https://assets.publishing.service.gov.uk/media/5a757e5240f0b6397f35edbc/The_20Insolvency_20Act_201986_20as_20it_20will_20apply_20to_20CIOs_20-_20Nov-12.pdf). The order takes effect immediately. From that point, the company can no longer trade, and its assets are frozen pending control by the Official Receiver or a subsequently appointed liquidator. The making of the order fundamentally changes the legal position of the company. Directors lose authority to manage the business, [bank accounts](https://lexlaw.co.uk/solicitors-london/uk-validation-orders-explained-the-2026-guide-to-unfreezing-company-bank-accounts/) are usually [frozen](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/), and all dealings with company property become subject to insolvency law restrictions. Any attempt to continue trading or dispose of assets after the order may expose directors to personal liability. ## The Role of the Official Receiver Following the winding-up order, the Official Receiver becomes the [liquidator](https://lexlaw.co.uk/solicitors-london/tag/liquidators-hmrc/) by default. The Official Receiver is a civil servant and officer of the court whose role is to protect the company’s assets, investigate its affairs, and ensure compliance with [insolvency ](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/)law. The Official Receiver will require directors to cooperate fully, including the submission of a statement of affairs detailing the company’s assets, liabilities, creditors, and recent transactions. Failure to comply can result in criminal sanctions or adverse findings later in the liquidation process. In some cases, an insolvency practitioner may be appointed as liquidator in place of the Official Receiver, particularly where the estate is complex or [creditor](https://lexlaw.co.uk/solicitors-london/tag/creditor/) involvement is significant. ## Immediate Consequences for Directors Once a [winding-up](https://lexlaw.co.uk/solicitors-london/category/winding-up-petitions/) order is made, [directors’](https://windinguppetitionsolicitors.co.uk/how-to-challenge-a-winding-up-petition-uk-guide-2026/) powers cease, except where expressly permitted by the liquidator or the court. Directors must not take steps to manage the company, pay creditors, or deal with assets. A critical issue at this stage is directors’ conduct in the period leading up to insolvency. The liquidator has statutory duties to investigate whether directors have breached their duties or engaged in misconduct. This includes examining transactions entered into before liquidation, the timing of creditor payments, and whether the company continued trading while insolvent. In *[BTI 2014 LLC v Sequana SA [2022] UKSC 25](https://taxdisputes.co.uk/wp-content/uploads/2026/01/uksc_2019_0046_judgment_a33492fe08.pdf)*, the Supreme Court clarified when directors’ duties extend to creditors, confirming that the duty arises when a company is insolvent or when an insolvent liquidation or administration is probable. ## Freezing and Control of Company Assets Following the order, company assets are effectively locked down. Bank accounts are usually frozen immediately upon notification of the [winding-up order](v), and any dispositions of property made after the presentation of the petition may be void unless validated by the court. The importance of this rule was confirmed in *[Hollicourt (Contracts) Ltd v Bank of Ireland [2001] Ch 555](https://taxdisputes.co.uk/wp-content/uploads/2026/01/bank-of-ireland-v-hollicourt-contracts-limited-court-of-appeal.pdf)*, where the Court of Appeal held that post-petition dispositions are void unless a validation order is obtained. This applies even where transactions were made in good faith. Where necessary, the court may grant a [validation order](https://lexlaw.co.uk/solicitors-london/uk-validation-orders-explained-the-2026-guide-to-unfreezing-company-bank-accounts/) permitting certain transactions to proceed, but such applications are highly fact-specific and must usually be made before the [winding-up order](https://www.gov.uk/protecting-company-from-compulsory-liquidation/winding-up-order) is granted. ## The Liquidator’s Investigatory Powers One of the most significant consequences of a winding-up order is the liquidator’s wide investigatory authority. The [liquidator](https://lexlaw.co.uk/solicitors-london/tag/liquidator-claims/) is empowered to examine directors, review company records, and [pursue claims](https://lexlaw.co.uk/solicitors-london/tag/liquidator-claims/) to recover assets for the benefit of creditors. This includes the ability to challenge transactions entered into prior to liquidation, such as preferences, transactions at an undervalue, or misfeasance. The liquidator’s duty is not merely administrative but inquisitorial, aimed at maximising recoveries and holding wrongdoers to account. ## What Happens to Employees Employees are automatically dismissed upon the making of a winding-up order, unless the liquidator decides to retain them for limited purposes. Employees may claim certain entitlements, including redundancy pay and unpaid wages, from the [National Insurance Fund](https://www.gov.uk/government/publications/national-insurance-fund-accounts), subject to statutory limits. Employment claims become unsecured claims in the liquidation, and employees rank alongside other unsecured creditors for any additional sums owed beyond statutory caps. ## Creditors’ Position After the Order Once the winding-up order is made, creditors can no longer pursue individual enforcement action against the company. Instead, claims must be submitted to the liquidator, and [recoveries](https://windinguppetitionsolicitors.co.uk/debt-recovery/) are distributed according to statutory priority. [Secured creditors](https://windinguppetitionsolicitors.co.uk/creditor-rights-in-uk-insolvency-an-all-encompassing-guide-for-2025/) may enforce their security outside the liquidation, while unsecured creditors will typically receive a dividend only if sufficient assets are realised. The principle of collective enforcement is central to insolvency law and prevents individual creditors from gaining an unfair advantage. ## Can a Winding-Up Order Be Reversed? Although rare, it is sometimes possible to seek [rescission or annulment of a winding-up order](https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/). This may occur where the debt has been paid in full, where the order was made on incorrect information, or where there has been [procedural irregularity](https://lexlaw.co.uk/solicitors-london/tag/procedural-irregularity/). The court retains discretion in such cases, but applications must be made promptly and supported by compelling evidence rather than delay, which reduces the likelihood of success. ## Director Disqualification and Personal Liability Following a winding-up order, the [liquidator](https://lexlaw.co.uk/solicitors-london/tag/defending-liquidator-claims/) must submit a conduct report to the Insolvency Service. This may lead to director disqualification proceedings if misconduct is identified. [Disqualification](https://windinguppetitionsolicitors.co.uk/directors-disqualification-proceedings-defence-strategies/) can last up to 15 years and may be accompanied by [compensation orders](https://lexlaw.co.uk/solicitors-london/tag/statutory-compensation/). [Directors](https://windinguppetitionsolicitors.co.uk/directors-disqualification-proceedings-defence-strategies/) may also face personal claims for wrongful trading, [misfeasance](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/), or breach of fiduciary duty. ## Practical Mistakes to Avoid After a Winding-Up Order One of the most common mistakes directors make is attempting to “fix” matters informally after the order has been granted. Continuing to trade, transferring assets, or communicating inaccurately with creditors can worsen exposure. Another frequent error is failing to engage constructively with the Official Receiver or [liquidator](https://lexlaw.co.uk/solicitors-london/tag/statutory-compensation/). Cooperation is not optional and is often taken into account when assessing director conduct. ## How Early Advice Can Still Make a Difference Although a winding-up order represents a terminal stage for the company, [legal advice](https://lexlaw.co.uk/practice-areas/) remains critical. Issues such as [personal liability](https://lexlaw.co.uk/solicitors-london/tag/personal-liability-of-directors-uk/), [disqualification](https://lexlaw.co.uk/solicitors-london/tag/directors-disqualification/) risk, [creditor negotiations](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/), and potential challenges to the order itself require specialist input. Strategic advice at this stage can limit personal exposure, protect directors’ future business interests, and ensure compliance with legal obligations. ## How LEXLAW Can Help [We](v) advise [directors](https://windinguppetitionsolicitors.co.uk/how-to-challenge-a-winding-up-petition-uk-guide-2026/), shareholders, and [creditors](https://windinguppetitionsolicitors.co.uk/winding-up-petition-timeline-what-creditors-and-debtors-need-to-know-in-2025/) at all stages of [winding-up proceedings](https://windinguppetitionsolicitors.co.uk/step-by-step-guide-to-defending-a-winding-up-petition-advice-for-directors/), including post-order representation. Our work includes advising on director duties, responding to liquidator investigations, challenging transactions, and exploring options to mitigate personal and financial risk. [Our](https://lexlaw.co.uk/about/) approach is practical, discreet, and grounded in a deep understanding of [insolvency litigation](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/). --- # Sections 235 and 236 Insolvency Act 1986: Directors’ Duties to Co-operate with Liquidators Source: https://lexlaw.co.uk/solicitors-london/sections-235-and-236-insolvency-act-1986-directors-duties-to-co-operate-with-liquidators/ [Sections 235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) and [236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) form the backbone of an insolvency office-holder’s investigative powers once a company enters formal insolvency proceedings. [Section 235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) creates a statutory duty to co-operate, requiring directors and others connected to the company to provide information, documents, and assistance reasonably required by the liquidator or administrator. [Section 236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) empowers the court to summon individuals for examination on oath and compel the production of documents. These provisions are frequently engaged following the presentation of a [winding-up petition](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/), the appointment of administrators, or in asset recovery investigations. Directors who fail to comply risk sanctions, cost orders, and potential disqualification proceedings. Understanding the scope and limits of these powers is essential, particularly in the context of modern [insolvency litigation](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/) and [HMRC-led investigations](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/). For authoritative advice and [legal representation](https://lexlaw.co.uk/contact-us/), directors often instruct specialist insolvency firms such as [LEXLAW](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/). ## What Are Sections 235 and 236? Sections 235 and 236 of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) operate together but serve distinct functions within insolvency investigations. [Section 235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) imposes a positive duty on a defined category of persons, including present and former officers of the company, employees, promoters, and anyone who has taken part in its formation or management, to co-operate with the insolvency office-holder. That duty includes providing information concerning the company’s affairs, attending meetings, and delivering up books, records, and property as “reasonably required.” The statutory wording is deliberate. The obligation is not unlimited. It is confined to what is reasonably required for the office-holder to carry out statutory functions, such as identifying assets, investigating potential misfeasance, or reporting on director conduct. [Section 236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) goes further. It grants the court power to summon before it: - Officers and former officers; - Persons known or suspected to have company property; - Any person capable of giving information concerning the company’s promotion, formation, business, dealings, affairs, or property. Under [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236), the court may order production of documents or conduct examinations on oath. These proceedings often occur in the [Insolvency and Companies Court (ICC)](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) or [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/). Importantly, these provisions effectively “pierce the corporate veil” in the sense that individuals cannot hide behind the separate legal personality of the company to avoid scrutiny. However, they do not override legal professional privilege or fundamental procedural safeguards. In practice, [s.235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) is commonly used in the early stages of liquidation to obtain cooperation voluntarily. If resistance or evasion occurs, s.236 enables escalation via a court application. Directors must appreciate the risks involved and [instruct insolvency experts](https://lexlaw.co.uk/our-people/christopher-snell/) at the [earliest opportunity](https://lexlaw.co.uk/contact-us/). ## Who is Affected and When These Sections Apply? The scope of these sections is wide. Directors, both current and former, are the most frequently affected. However, shadow directors, de facto directors, company secretaries, senior managers, accountants, and even family members holding company property may fall within their reach. Third parties can also be targeted under [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236). Banks, solicitors, group companies, and professional advisers have all been subject to court-ordered [disclosure applications](https://taxdisputes.co.uk/2026/02/voluntary-disclosure-2026-guide/) where they possess information relevant to the [insolvent company’s affairs](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/). These powers arise only after formal insolvency proceedings commence. Typical triggers include: - Compulsory [liquidation ](https://windinguppetitionsolicitors.co.uk/speciality-steel-liquidation-essential-guide-for-creditors-and-suppliers/)following a winding-up petition; - Creditors’ Voluntary Liquidation (CVL); - Members’ Voluntary Liquidation (MVL) where issues later arise; - [Administration](https://windinguppetitionsolicitors.co.uk/administration-vs-cva-vs-liquidation-choosing-the-right-process/) appointments; - The appointment of a provisional liquidator. Directors facing a petition frequently [seek urgent assistance](https://lexlaw.co.uk/contact-us/) from [specialists ](https://lexlaw.co.uk/our-people/christopher-snell/)to prevent the situation escalating into full liquidation, where [s.235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) and [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) powers become immediately relevant. [Recent High Court decisions](https://caselaw.nationalarchives.gov.uk/ewhc/ch/2026/101#download-options) demonstrate judicial concern about overreach. [Courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) have shown willingness to limit wide-ranging applications that resemble fishing expeditions rather than targeted investigations. ## Case Law and Enforcement Trends ### Limits on Liquidator Disclosure Requests A significant 2026 decision, [Webb v Eversholt Rail Limited [2026] EWHC 101 (Ch)](https://caselaw.nationalarchives.gov.uk/ewhc/ch/2026/101#download-options), upheld an [ICC](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) Judge’s refusal of a liquidator’s application seeking disclosure described as “everything forever.” The [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) confirmed that office-holders must demonstrate that requested information is “reasonably required.” Sir Anthony Mann rejected the proposition that liquidators could demand wholesale reconstruction of a company’s knowledge base without evidencing specific investigative need. He observed that while the purpose of sections 235 and 236 includes reconstituting corporate knowledge, that purpose alone does not justify unlimited disclosure. The court emphasised proportionality and evidential support. This decision reinforces that [liquidators](https://lexlaw.co.uk/solicitors-london/what-happens-after-a-winding-up-petition-order-is-made-a-2026-guide/) must particularise their requests and explain how documents relate to defined lines of inquiry. ### Evidence Thresholds for Court Orders The court has previously held that s.236 should not be used oppressively or as a substitute for ordinary disclosure in anticipated litigation. Judges assess: - Whether the material sought relates to identifiable issues; - Whether the request is proportionate; - Whether alternative mechanisms exist; - The burden placed on the respondent. The courts have repeatedly stressed that [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) is not a licence for speculative exploration. As stated in earlier authority, the power must be exercised “judicially and not oppressively.” In 2024 and 2025, the [Insolvency and Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) continued to scrutinise applications carefully, especially where third parties are involved. Applications against professional advisers often attract close analysis due to privilege concerns. ### Consequences of Non-Compliance Failure to comply with [s.235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) can result in court enforcement, including fines and daily default penalties. Persistent refusal may expose directors to adverse costs orders or findings of misconduct. Where a court order is made under [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236), non-compliance may amount to contempt of court, a serious matter that can lead to fines or imprisonment. Beyond immediate sanctions, non-cooperation often influences [liquidator](https://lexlaw.co.uk/solicitors-london/what-happens-after-a-winding-up-petition-order-is-made-a-2026-guide/) reports to the Secretary of State. Such reports may form the basis of director disqualification proceedings. Directors should understand that obstruction, delay, or incomplete disclosure can be portrayed as evidence of unfitness. There is also a litigation risk. Information uncovered during [s.235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) or [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) processes may underpin misfeasance claims, wrongful trading actions, or professional negligence allegations. Engaging [experienced advisers](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/hmrc-petition-winding-up/) early can mitigate these risks. At [LEXLAW](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/), our [insolvency litigators](https://lexlaw.co.uk/our-people/christopher-snell/) regularly challenge disproportionate requests and negotiate narrowed scopes to protect directors from oppressive tactics. ## Defending or Limiting Section 235 & 236 Requests [Directors](https://lexlaw.co.uk/solicitors-london/guide-impact-of-compulsory-winding-up-order-liquidation-on-directors/) are not without protection. The statutory phrase “reasonably required” provides a critical safeguard. A recipient may argue reasonable excuse, for example, lack of possession of documents, genuine inability to comply within timeframes, or disproportionate burden. Legal professional privilege remains inviolable and must be asserted carefully. Where requests are vague or overbroad, it is open to respondents to seek clarification, negotiate scope, or resist via court application. The courts increasingly expect office-holders to define investigation categories clearly. [Strategic engagement](https://lexlaw.co.uk/contact-us/) often prevents escalation. In other cases, formal challenge is necessary to prevent misuse. Such matters are best left to [insolvency experts](https://lexlaw.co.uk/our-people/christopher-snell/) well-versed in the legal steps to take which best protect the directors’ position. ## Implications for Directors and Businesses Post-pandemic enforcement has intensified. Government focus on [“phoenixism,”](https://taxdisputes.co.uk/2025/12/section-396b-ittoia-2005-hmrc-phoenixing-taar-winding-up-distributions-explained/) bounce-back loan misuse, and tax arrears recovery has led to more assertive investigations. [HMRC](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/), often the largest unsecured creditor, actively supports liquidators pursuing directors for recovery actions. [Section 235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) and [236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) requests frequently precede claims for wrongful trading or breach of duty. There can also be interplay with [confiscation regimes](https://lexlaw.co.uk/solicitors-london/the-proceeds-of-crime-act-2002-poca-what-it-means-for-business-owners-and-directors/) under the [Proceeds of Crime Act 2002 (POCA)](https://lexlaw.co.uk/solicitors-london/the-proceeds-of-crime-act-2002-poca-what-it-means-for-business-owners-and-directors/), particularly where fraud allegations arise. Non-payment of court-imposed penalties may lead to civil enforcement measures, including charging orders or [bankruptcy proceedings](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/). Directors must therefore treat information requests as legally significant events, not administrative inconveniences. ## Practical Steps for Directors Upon receiving a [s.235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) request, directors should first review the scope carefully. Determine precisely what is sought, over what period, and for what stated purpose. Document your position regarding possession and accessibility of requested materials. If compliance presents practical difficulties, record the reasons contemporaneously. Seek [specialist legal review](https://lexlaw.co.uk/contact-us/) promptly. [Early intervention](https://lexlaw.co.uk/?page_id=356) can prevent inadvertent admissions or waiver of privilege. Where appropriate, solicitors can request clarification, negotiate staged disclosure, or advise on proportionality arguments. If a [s.236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) application is threatened or issued, [urgent representation](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/) in the court may be necessary. [Acting swiftly](https://lexlaw.co.uk/?page_id=356) can significantly influence judicial perception and outcome. ## Instruct Expert London Insolvency Lawyers Insolvency investigations demand both technical expertise and strategic judgment. [LEXLAW](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) is recognised for its [dual-qualified team](https://lexlaw.co.uk/our-people/christopher-snell/) combining solicitor and barrister advocacy experience in complex insolvency litigation. [Our lawyers](https://lexlaw.co.uk/our-people/christopher-snell/) regularly appear in the [Insolvency and Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/), defending directors against expansive disclosure demands and resisting disqualification proceedings. We are particularly experienced in urgent winding-up scenarios and contested liquidations. Through collaboration with [specialists](https://lexlaw.co.uk/our-people/christopher-snell/), we deliver integrated defence strategies addressing [insolvency](https://windinguppetitionsolicitors.co.uk/winding-up-petition-hearing-representation/), tax, and regulatory exposure. Directors facing [Section 235](https://www.legislation.gov.uk/ukpga/1986/45/section/235) or [236](https://www.legislation.gov.uk/ukpga/1986/45/section/236) demands are encouraged to seek early advice. Initial consultations are necessary to assess risk and strategy. [Contact now](https://lexlaw.co.uk/?page_id=356) for [urgent advice](https://lexlaw.co.uk/?page_id=356)! ### FAQs on Sections 235 and 236 **What constitutes a “reasonable excuse” under s.235?** A reasonable excuse may include genuine lack of access to documents, disproportionate burden, or legal privilege. Courts assess reasonableness objectively in light of the office-holder’s stated investigative purpose. **Can s.236 orders compel third-party disclosure?** Yes. Section 236 expressly empowers the court to order disclosure from persons capable of giving information concerning the company’s affairs, even if they are not officers. **How long do I have to comply with a liquidator’s request?** Timeframes are typically specified in correspondence. If unreasonable, they may be negotiated. Failure to respond promptly increases litigation risk. **Does legal professional privilege apply?** Yes. Neither s.235 nor s.236 overrides privilege. However, privilege must be properly asserted and evidenced where challenged. **Can I refuse a vague or unlimited request?** You may challenge requests lacking specificity. Courts have rejected “everything forever” applications where not justified by evidence. **What happens if I ignore a court order under s.236?** Non-compliance may constitute contempt of court, exposing you to fines or imprisonment. **Do these sections apply in administration as well as liquidation?** Yes. Administrators possess similar investigatory powers under the Act. **Can information obtained be used against me personally?** Yes. Information may underpin misfeasance, wrongful trading, or disqualification claims. --- # The Proceeds of Crime Act 2002 (POCA): What It Means for Business Owners and Directors Source: https://lexlaw.co.uk/solicitors-london/the-proceeds-of-crime-act-2002-poca-what-it-means-for-business-owners-and-directors/ The [Proceeds of Crime Act 2002 (POCA)](https://www.legislation.gov.uk/ukpga/2002/29/contents) gives UK authorities powerful civil and criminal tools to [freeze, recover and forfeit assets](https://lexlaw.co.uk/injunctive-relief-interim-remedies-urgent-injunction-freezing-order-second-opinion-litigation-advice/) believed to be derived from unlawful conduct. For business owners and directors those powers can put operating capital, corporate bank accounts and personal assets at immediate risk. Early [specialist legal advice](https://lexlaw.co.uk/contact-us/) and a clear operational response are essential to protect legitimate businesses and to preserve legal rights. ## Why POCA matters to companies and company directors POCA is much broader than many directors appreciate. It does not operate only as a [criminal statute](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/) that follows conviction; it also creates [civil mechanisms](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/) which permit authorities to immobilise and recover property on the [balance of probabilities](https://lexlaw.co.uk/solicitors-london/how-judges-in-england-decide-civil-litigation-cases-blower-canfields-claim/). That dual civil-criminal character means that a business can suffer severe disruption before any criminal charge is laid, because [civil recovery](https://lexlaw.co.uk/debt-recovery-insolvency-county-court-proceedings-petitions-fixed-fee-lawyers-london/) and [account-freezing powers](https://lexlaw.co.uk/solicitors-london/account-freezing-order-guide/) can be exercised quickly and with a lower evidential threshold. For directors this translates into immediate operational risk: payroll cannot be met, suppliers go unpaid, and the firm’s reputation can be damaged by the mere fact of an investigation. At the same time, POCA contains [money-laundering offences](https://lexlaw.co.uk/practice-areas/private-prosecution-solicitors-barristers-lawyers-london/money-laundering-poca-solicitors-london/) that can give rise to personal criminal exposure where directors are shown to have knowingly handled or concealed criminal property. The combination of fast-moving civil remedies and criminal sanctions makes POCA uniquely challenging for companies and their senior management. Two features make POCA particularly relevant to businesses: - **Civil freezing and recovery powers** (including Account Freezing Orders and civil recovery in the High Court) allow enforcement agencies to act quickly to immobilise funds that are suspected to be “recoverable property”. - **Operational impact**: frozen accounts, cash seizures and disclosure demands can stop payroll, supplier payments and trading — even where the business and its directors deny wrongdoing. ## The core POCA powers directors need to know ### Account Freezing Orders (AFOs) and Account Forfeiture Orders (AFrOs) Magistrates’ and County Courts can grant civil Account Freezing Orders that prohibit withdrawals from a specified bank account where there are reasonable grounds to suspect the funds are recoverable (i.e. derived from unlawful conduct or intended for unlawful conduct). A separate civil [Account Forfeiture Order](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/) may follow if enforcement agencies satisfy the court that the funds are recoverable. AFOs are powerful because they can be obtained quickly and last for a defined period (AFOs are governed by Chapter 3B of Part 5 POCA). > Note: recent practice shows enforcement agencies — notably HMRC — using AFOs with increasing frequency, and the threshold and procedural rules have evolved in recent years (including statutory adjustments to thresholds). Read our guide on [how to challenge HMRC AFO](https://taxdisputes.co.uk/2024/11/how-to-challenge-a-hmrc-account-freezing-orders/). ### Civil recovery (Part 5 POCA) Civil recovery allows agencies to pursue “recoverable property” through the High Court (or Court of Session in Scotland) on the balance of probabilities. This is separate from criminal confiscation: civil recovery can proceed even where no conviction has been secured. ### Criminal money-laundering offences (Parts 7-9 POCA) POCA contains conduct offences, sections 327–329 and related provisions, making it an offence to handle, acquire, use or possess property known or suspected to be criminal property, and to facilitate its movement or concealment. Directors should be aware these offences carry criminal penalties and may be engaged if a director knowingly participates in or facilitates laundering activity. ### Unexplained Wealth Orders (UWOs) and related tools UWOs (and other disclosure powers) allow authorities to require explanation of the source of wealth for nominated assets. They are a powerful investigative tool in high-value matters and may lead to civil recovery or criminal proceedings. [Lexlaw’s UWO guide](https://lexlaw.co.uk/unexplained-wealth-orders-specialist-lawyers/) explains how UWOs fit with POCA powers and how to respond. ## Common legal defences and practical strategies **1. Challenge the legal basis for the freezing order:** An AFO requires *reasonable grounds to suspect* that funds are recoverable. That is an evidential threshold and may be vulnerable where the factual basis is weak, speculative, or reliant on poor banking analysis. A [carefully drafted witness statement](https://lexlaw.co.uk/preparing-witness-evidence-litigation-solicitors-london/) and evidential challenge can persuade a court to [discharge](https://lexlaw.co.uk/solicitors-london/freezing-order-injunction-mareva-relief-application-cpr-litigation-assets-dissipation-enforcement-judgment-foreign-debt-default-discharge/) or vary an order. **2. Argue legitimate purpose / adequate consideration:** In [civil recovery](https://lexlaw.co.uk/debt-recovery-insolvency-county-court-proceedings-petitions-fixed-fee-lawyers-london/) and money-laundering contexts the acquisition of property for adequate consideration and in good faith can be contested as a defence to recovery or confiscation claims. Recent appellate authority has clarified the limits of “adequate consideration” and the circumstances in which property remains recoverable, legal arguments here are technical and fact-sensitive. **3. Apply for urgent access to funds for essential expenses:** Courts routinely allow limited access for living expenses, legal costs, payroll or professional fees where a freezing order would otherwise cause disproportionate hardship. Apply as quickly as possible and provide detailed budgets and bank statements. **4. Negotiate early with enforcement agencies:** In some cases early engagement and disclosure to the agency (e.g. HMRC, NCA, police) can defuse an investigation or create the platform for an agreed settlement (such as consent forfeiture or a civil settlement). [Experienced legal advisers](https://lexlaw.co.uk/) can negotiate terms that limit business disruption. **5. Prepare a full evidential narrative:** Collect contracts, invoices, third-party confirmations and account ledgers that demonstrate legitimate provenance of funds. Timely financial forensics can be decisive in persuading a court or an investigatory body that funds are lawful. ## What directors should do immediately if POCA action affects their business Time is of the essence. Directors should immediately seek [specialist legal advice](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) capable of handling freezing, recovery and money-laundering matters; procedural deadlines in applications and responses are short, and early legal input often changes the practical outcome. At the same time, it is critical to preserve documents and account records: do not delete or alter emails, ledgers, invoices or bank statements. A failure to preserve records can prejudice a defence and may attract adverse inferences. Notify essential advisers, your accountant, company secretary and key professional advisers, but do so carefully. Avoid public statements or broad admissions that could be later relied upon by investigators. Instead, limit communications to trusted advisers and allow legal counsel to manage external engagement. Directors should also prepare applications for urgent access to funds for payroll and essential costs, assembling detailed budgets and supporting bank statements to justify the request. Parallel risk assessment is necessary: POCA concerns often sit alongside HMRC enquiries, regulatory investigations or criminal probes, and your response should be coordinated across these fronts. Prepare a detailed factual witness statement that sets out the origin and purpose of the disputed transactions, supported by documentary corroboration. This narrative is frequently the principal tool by which courts and agencies assess whether funds are recoverable. Finally, consider whether immediate commercial measures, such as alternative funding lines, are necessary to preserve the business while legal challenges progress. ## Recent legal and policy developments you should know **Statutory and procedural changes:** [Chapter 3B of POCA](https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B) (AFO regime) and related Civil Recovery rules have been the focus of recent statutory change and judicial interpretation. For practical guides on the AFO regime and the latest procedural rules, see our recent [AFO guide](https://lexlaw.co.uk/solicitors-london/account-freezing-orders-afos-in-2026-the-definitive-uk-legal-guide-to-frozen-bank-accounts/). **Threshold changes and enforcement trends:** The legal threshold and guidance for freezing measures has been adjusted in recent years and enforcement activity by agencies such as [HMRC](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) has increased, making these orders more commonly used in commercial contexts. **Judicial clarification on “adequate consideration”:** The Court of Appeal has recently clarified that the payment of adequate consideration does not necessarily “cleanse” property in all circumstances, an important point for businesses that buy assets or engage in third-party transactions. Complex legal consequences flow from that ruling; [specialist advice](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) is essential. ## How Lexlaw helps: practical services for directors and businesses Our [team of experts](https://lexlaw.co.uk/our-people/) provides immediate, practical help to businesses and directors. Typical services include: - urgent representation to obtain release of frozen funds and to apply for variation/discharge of AFOs; - forensic evidence gathering and the preparation of witness statements and financial schedules; - strategic negotiation with enforcement agencies (HMRC, NCA, police) and counsel-led advocacy in Court; - defence of criminal money-laundering allegations and parallel regulatory proceedings; - advice on transactional risk and remediation to reduce future exposure. If you are facing an Account Freezing Order, unexplained wealth notice, or civil recovery proceedings, [contact our](https://lexlaw.co.uk/contact-us/) specialist team for an urgent case assessment --- # Directors’ Personal Guarantees: What Happens When a Corporate Debtor Defaults? Source: https://lexlaw.co.uk/solicitors-london/directors-personal-guarantees-what-happens-when-a-corporate-debtor-defaults/ [Personal guarantees](https://lexlaw.co.uk/solicitors-london/tag/personal-guarantee/) are a routine part of modern business finance. Banks, property owners, asset finance providers, and trade creditors frequently require [directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) to provide personal guarantees before extending credit to companies. While these guarantees often appear to be a formality during business growth, they can become critically important when a company encounters financial distress. When a [company defaults](https://lexlaw.co.uk/solicitors-london/tag/company-insolvency-legal-advice/) on its obligations, [creditors](https://lexlaw.co.uk/solicitors-london/tag/creditors/) may move quickly to enforce personal guarantees, exposing directors to personal financial liability independent of the company. This can include court proceedings, asset enforcement, [statutory demands](https://taxdisputes.co.uk/hmrc-winding-up-petitions/), and [bankruptcy proceedings](https://lexlaw.co.uk/solicitors-london/tag/bankruptcy-proceedings/). Directors who believed they were protected by the principle of limited liability often discover that personal guarantees fundamentally alter their legal position. This guide explains how personal guarantees operate under UK law, what happens when a company defaults, how creditors enforce guarantees, and what legal remedies or strategic responses may be available. ## What Is a Personal Guarantee and Why Creditors Require It A personal guarantee is a legally binding agreement in which an individual agrees to be personally responsible for a [company’s debt](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/) if the company fails to pay. The guarantee creates a separate contractual obligation between the [guarantor](https://lexlaw.co.uk/solicitors-london/tag/personal-guarantee/) and the [creditor](https://lexlaw.co.uk/solicitors-london/tag/creditors/). This obligation exists alongside the company’s own liability. [Creditors](https://lexlaw.co.uk/solicitors-london/tag/creditors/) require guarantees to mitigate risk. Limited liability protects shareholders and directors from personal responsibility for [corporate debts](https://lexlaw.co.uk/solicitors-london/tag/debt-recovery/). Guarantees allow creditors to bypass that protection and recover directly from individuals where corporate recovery proves insufficient. Guarantees are particularly common in: - Commercial lending and overdrafts - Commercial leases - Asset and vehicle finance agreements - Trade credit arrangements - [HMRC time-to-pay arrangements](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2025-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) in certain cases Once signed, a personal guarantee may remain enforceable long after the original business transaction has occurred. ## When Personal Liability Arises After Corporate Default [Personal liability](https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/) arises when the company fails to comply with its [contractual obligations](https://lexlaw.co.uk/solicitors-london/tag/contractual-obligations/). This may occur through missed payments, breach of [loan](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) covenants, lease arrears, or [insolvency](https://lexlaw.co.uk/solicitors-london/category/insolvency/) events such as administration or [liquidation](https://lexlaw.co.uk/solicitors-london/tag/liquidation/). The precise timing of liability depends on the wording of the guarantee. Many modern guarantees are drafted as “primary obligations,” meaning that the guarantor becomes liable immediately upon the company’s default, without requiring the [creditor](https://lexlaw.co.uk/solicitors-london/tag/creditors/) to exhaust remedies against the company first. Guarantors remain contractually liable and cannot avoid responsibility by relying on procedural steps against the principal debtor. This principle reinforces that a guarantee is not merely contingent; it is a direct legal obligation. This means that once a company defaults, directors may be personally pursued almost immediately. ## The Effect of Corporate Insolvency on Personal Guarantees [Corporate insolvency](https://lexlaw.co.uk/solicitors-london/tag/corporate-insolvency/) does not extinguish personal guarantees. In many cases, [insolvency](https://lexlaw.co.uk/solicitors-london/category/insolvency/) accelerates enforcement. When a company enters [liquidation](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/2018/05/KSA-Worried-Director-Guide-2018-LEXLAW-windinguppetition-solicitors-london.pdf), creditors often shift their focus toward guarantors because corporate assets may be insufficient to satisfy debts. The guarantee allows recovery from personal assets such as savings, investments, and real property. In [*Yeoman Credit Ltd v Latter* [1961] 1 WLR 828](https://lexlaw.co.uk/wp-content/uploads/1961-1-W.L.R.-828.pdf.pdf), the Court of Appeal confirmed that a guarantor’s liability arises from the guarantee itself and remains enforceable according to its contractual terms, regardless of the principal debtor’s financial position. This means that liquidation of the company does not protect directors who have provided guarantees. ## Enforcement Steps Creditors May Take Against Directors Once default occurs, creditors usually begin [enforcement](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/) through formal written demand. If payment is not made, the [creditor](https://lexlaw.co.uk/solicitors-london/tag/creditors/) may issue legal proceedings in the County Court or High Court seeking judgment against the guarantor personally. Following judgment, creditors may pursue enforcement measures including [charging orders](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/) over property, third-party debt orders against bank accounts, or attachment of earnings orders. In some cases, creditors may issue [statutory demands](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/) and pursue bankruptcy proceedings. [Statutory demands](https://www.gov.uk/statutory-demands) are particularly significant because failure to comply within 21 days creates a presumption of insolvency, allowing creditors to present bankruptcy petitions. ## Can Creditors Enforce Guarantees Without Pursuing the Company First? In many cases, yes. The terms of the guarantee determine the [creditor’s rights](https://windinguppetitionsolicitors.co.uk/creditor-rights-in-uk-insolvency-an-all-encompassing-guide-for-2025/). Most modern guarantees include clauses allowing creditors to pursue guarantors immediately upon corporate default, regardless of action taken against the company. These provisions reflect commercial reality. Creditors seek flexibility in recovery strategy and may pursue whichever party offers the greatest likelihood of repayment. ## The Risk of Bankruptcy Proceedings Against Directors Where directors cannot repay guaranteed debts, creditors may pursue [bankruptcy proceedings](https://lexlaw.co.uk/solicitors-london/tag/bankruptcy-proceedings/). [Bankruptcy](https://lexlaw.co.uk/bankruptcy-petition-and-annulment-solicitors/) allows creditors to realise personal assets for repayment. [Bankruptcy](https://lexlaw.co.uk/solicitors-london/category/bankruptcy/) imposes legal consequences as well as restrictions, including limitations on acting as a company director. However, early legal intervention can significantly alter outcomes. ## Legal Principles Governing Guarantee Enforcement Courts generally enforce guarantees according to their [contractual terms](https://lexlaw.co.uk/solicitors-london/tag/contractual-obligations/). However, enforcement remains subject to established legal safeguards. In [*Royal Bank of Scotland plc v Etridge* (No 2) [2001] UKHL 44](https://www.bailii.org/uk/cases/UKHL/2001/44.html), the House of Lords clarified the law governing undue influence and guarantees. The court held that where guarantees are obtained improperly or without informed consent, enforcement may be challenged. This case established important protections, particularly where guarantors relied on relationships of trust or were not properly advised. ## Negotiation and Settlement Options Enforcement does not always lead directly to bankruptcy or [litigation](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/). Creditors often prefer negotiated [settlements](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/), particularly where guarantors cooperate. Negotiated solutions may include structured repayment plans, reduced settlement amounts, or deferred [payment arrangements](https://lexlaw.co.uk/solicitors-london/tag/hmrc-time-to-pay-arrangement/). Creditors may accept reduced sums where recovery prospects are uncertain. ## Interaction With Insolvency Proceedings Against the Company Personal guarantee enforcement frequently occurs alongside corporate [insolvency proceedings](https://lexlaw.co.uk/solicitors-london/tag/insolvency-law/). Creditors may simultaneously pursue [winding-up petitions](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) against companies and personal enforcement against directors. Where insolvency proceedings are disputed, courts may intervene to prevent [abuse of process](https://lexlaw.co.uk/solicitors-london/abuse-of-process-by-early-advertisement-of-winding-up-petitions/). In [*Re Bayoil SA* [1999] 1 WLR 147](https://windinguppetitionsolicitors.co.uk/wp-content/uploads/1999-1-W.L.R.-147.pdf.pdf), the Court of Appeal confirmed that insolvency proceedings should not be used where debts are genuinely disputed on substantial grounds. This principle applies equally, where personal guarantee enforcement is linked to disputed liabilities. ## Directors’ Duties When Personal Guarantees Exist [Directors](https://lexlaw.co.uk/solicitors-london/category/directors-duties/) must exercise particular caution when companies face financial distress. Continuing to incur liabilities while [insolvency](https://lexlaw.co.uk/solicitors-london/tag/insolvency/) is probable may increase personal exposure and risk of legal claims. The Supreme Court clarified the creditor-focused nature of director duties in [BTI 2014 LLC v Sequana SA [2022] UKSC 25](https://lexlaw.co.uk/wp-content/uploads/uksc_2019_0046_judgment_a33492fe08-3.pdf), confirming that directors must consider creditor interests once insolvency becomes probable. Understanding these duties is essential where personal guarantees exist as failure to act appropriately may increase liability. ## Common Misconceptions About Personal Guarantees Many [directors](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/) assume that guarantees become unenforceable if companies cease trading or enter [liquidation](https://lexlaw.co.uk/solicitors-london/tag/liquidation/), which is incorrect. Guarantees remain enforceable unless specifically released. Another misconception is that creditors must exhaust recovery against the company first. This depends on contractual terms and is often not required. Directors also sometimes assume that informal agreements or verbal assurances alter guarantee obligations. Courts generally enforce written contractual terms strictly. ## Practical Steps When Facing Guarantee Enforcement Directors facing enforcement should act quickly. Early legal review of guarantee terms may identify procedural or contractual weaknesses. Strategic responses may include challenging enforcement, negotiating settlement, or defending proceedings. ## How LEXLAW Can Help Personal guarantee enforcement often arises during periods of acute financial stress. [Our](https://lexlaw.co.uk/our-people/) [litigation and insolvency teams](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/) advise directors and business owners facing [personal liability](https://lexlaw.co.uk/solicitors-london/tag/personal-liability-of-directors-uk/) arising from corporate default, including defence of guarantee claims, negotiation with creditors, and strategic [insolvency advice](https://lexlaw.co.uk/winding-up-petition-court-hearing-representation-advocacy-solicitors-london/). [Our](https://lexlaw.co.uk/our-people/) approach focuses on protecting personal assets, ensuring creditors comply with legal requirements, and resolving disputes efficiently. ### FAQs (Frequently Asked Questions) Can a director be personally liable if the company goes into liquidation? Yes. If a director has signed a personal guarantee, corporate liquidation does not remove personal liability. Does a creditor have to pursue the company before enforcing a personal guarantee? Not necessarily. Many guarantees are drafted as primary obligations, allowing creditors to pursue the guarantor immediately upon default without first exhausting recovery against the company. Can a personal guarantee be challenged in court? In certain circumstances, yes. Guarantees may be challenged if there was misrepresentation, undue influence, or procedural irregularity. Can bankruptcy result from a personal guarantee claim? Yes. If a guarantor fails to satisfy the guaranteed debt and it exceeds the statutory threshold, a creditor may issue a statutory demand and pursue bankruptcy proceedings. --- # Commercial Debt Recovery in England & Wales: A Complete Business Guide 2026 Source: https://lexlaw.co.uk/solicitors-london/commercial-debt-recovery-in-england-wales-a-complete-business-guide-2026/ [Unpaid commercial debts](https://lexlaw.co.uk/debt-recovery-enforcement-judgment-against-debtor-claim-advice/) are one of the most damaging and disruptive problems facing businesses in England and Wales. Late or non-payment causes serious cash flow difficulties, strains supplier relationships, and can threaten the financial viability of an otherwise sound business. According to figures from the [Chartered Institute of Credit Management](https://www.cicm.com/), UK businesses collectively write off billions of pounds in bad debt every year, with a disproportionate impact on small and medium-sized enterprises who lack the resources to absorb sustained non-payment. The law, however, provides a powerful arsenal of [remedies to enforce payment of commercial debts](https://lexlaw.co.uk/solicitors-london/creditors-guide-to-enforcement-of-unpaid-old-court-judgment-debts-in-the-uk-2025/), from [pre-action correspondence](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) and [court proceedings](https://lexlaw.co.uk/how-do-i-start-court-proceedings-litigation-step-by-step-guide-second-opinion/) through to [statutory demands](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/), [winding-up petitions](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/), and a range of [post-judgment enforcement tools](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/). The key is to act swiftly and strategically. Delay is rarely in the creditor's interest, and the [Limitation Act 1980](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) imposes strict time limits within which legal action must be commenced. Once that window closes, even a clear and undisputed debt becomes legally unenforceable. This guide sets out the complete commercial debt recovery process in England and Wales for 2026, explaining each stage from first steps through to enforcement. Whether you are owed £5,000 or £5 million, the principles are the same: take prompt legal advice, follow the correct procedural steps, and deploy the most appropriate remedy for the circumstances of your case. ## What Is Commercial Debt Recovery? Commercial debt recovery refers to the legal process of enforcing payment of money owed by one business to another (B2B) or by a business to a creditor under a commercial contract. It is distinct from consumer debt collection, which is governed by additional regulatory frameworks under the [Financial Conduct Authority](https://www.fca.org.uk/). Commercial debt recovery encompasses [unpaid invoices](https://lexlaw.co.uk/uk-britain-debt-recovery-solicitors-lawyers-chinese-china-creditor-company-business-legal-action-advice-unpaid-invoices/), breach of contract claims, dishonoured cheques, overdue trade credit, and any other situation where a business or individual has failed to meet a clear financial obligation. The process involves pre-action steps designed to resolve disputes without litigation, court proceedings to obtain a binding judgment, and enforcement mechanisms to compel payment. A creditor who approaches this process with proper legal strategy, and ideally with [specialist solicitors and barristers](https://lexlaw.co.uk/), will maximise both the speed and the quantum of recovery. Importantly, under the [Late Payment of Commercial Debts (Interest) Act 1998](https://www.legislation.gov.uk/ukpga/1998/20/contents), creditors are entitled not only to recovery of the principal debt but also to statutory interest and fixed compensation on top of the sum owed. ## Step 1: Pre-Action Protocol Before issuing any court claim for a debt, a creditor must comply with the [Pre-Action Protocol for Debt Claims](https://lexlaw.co.uk/pre-action-protocols-guide-conduct-cpr-civil-procedural-rules-before-start-commence-claim-proceedings-consequences-settlement-legal-advice/) (effective from 1 October 2017). Failure to do so can result in adverse costs consequences even where you ultimately succeed in court. The protocol requires the creditor to send a formal [Letter Before Claim (LBC)](https://lexlaw.co.uk/letter-before-claim-specialist-solicitors/) setting out the nature and value of the debt, the basis upon which it is claimed, the deadline for payment (no less than 30 days), and information about the debtor's options. In practice, a well-drafted LBC from [experienced litigation solicitors](https://lexlaw.co.uk/our-people/) often achieves payment without any proceedings needing to be issued. A letter that clearly sets out the creditor's legal position, the interest accruing under the Late Payment of Commercial Debts (Interest) Act 1998, the firm's intention to issue proceedings immediately on expiry of the deadline, and a warning of potential insolvency proceedings in appropriate cases, tends to concentrate the debtor's mind considerably. ### The Late Payment of Commercial Debts (Interest) Act 1998 The Late Payment of Commercial Debts (Interest) Act 1998 confers a statutory right to interest at 8% per annum above the Bank of England's base rate on late commercial debts. This is a powerful tool because it applies automatically unless the parties' contract provides a 'substantial contractual remedy' for late payment. In addition to interest, the Act entitles a creditor to a fixed compensation sum as follows: - £40 for debts under £1,000 - £70 for debts between £1,000 and £9,999 - £100 for debts of £10,000 or more These sums are recoverable in addition to the debt itself and any interest. In many commercial disputes, the combination of statutory interest at 8% above base rate and fixed compensation substantially increases the sum recoverable, providing additional leverage in negotiations. Where the debtor has behaved unreasonably in withholding payment, the court may also make an award of additional costs. ## Step 2: Issuing Court Proceedings If payment is not forthcoming following the LBC, the next step is to issue a court claim. The appropriate court and track will depend on the value of the claim: - Claims up to £10,000: Small Claims Track in the County Court. Costs recovery is limited, making legal representation less cost-effective at this level unless the matter is complex. - Claims between £10,001 and £25,000: Fast Track. Proportionate costs recovery available. Most straightforward commercial debts in this band are resolved quickly. - Claims over £25,000: Multi-Track. Full costs recovery in the event of success. High-value claims may be issued directly in the High Court (Business and Property Courts) where the sum exceeds £100,000 or the matter is particularly complex. Once a claim is issued, the defendant has 14 days to acknowledge service and a further 14 days (28 days from service in total) to [file a defence](https://lexlaw.co.uk/statements-of-case-pleadings-litigation-documents-claim-form-particulars-defence-reply-legal-advice/). If no defence is filed, the claimant may [apply for default judgment](https://lexlaw.co.uk/solicitors-london/default-judgment-set-aside-application-cpr-12-litigation-costs-service-of-claim-form-covid-19/), a significant and relatively swift remedy in straightforward debt cases. Where the defendant acknowledges service but the claim is nonetheless unanswerable on the facts and law, the creditor's solicitors can apply for summary judgment under CPR Part 24, disposing of the case without a full trial. [LEXLAW's litigation team](https://lexlaw.co.uk/litigation-solicitors/) has extensive experience in both issuing and defending commercial debt claims across all tracks. Our dual-qualified solicitors and barristers ensure that every aspect of the claim, from the particulars of claim through to advocacy at any contested hearing, is handled with precision. ## Step 3: Enforcing a Judgment Debt Obtaining a judgment is one thing. [Enforcing it is another](https://lexlaw.co.uk/enforcement-recovery-judgment-debt-solicitors-london/). Many creditors are frustrated to discover that a judgment in their favour is not self-executing. Where a debtor refuses or is unable to satisfy a judgment voluntarily, the judgment creditor must take active enforcement steps. The principal enforcement mechanisms available in England and Wales are as follows. ### Charging Orders A [charging order](https://www.citizensadvice.org.uk/debt-and-money/action-your-creditor-can-take/charging-orders/) under the [Charging Orders Act 1979](https://www.legislation.gov.uk/ukpga/1979/53) secures a judgment debt against the debtor's property, shares, or other assets. Once the charge is registered, the creditor effectively has a form of mortgage security. An order for sale can then be sought to realise the asset. Charging orders are particularly powerful where the debtor owns property, they turn an unsecured debt into a secured one, preventing the debtor from disposing of the asset without first satisfying the debt. LEXLAW's litigation solicitors can obtain charging orders swiftly and efficiently in appropriate cases. ### Third Party Debt Orders A [third party debt order](https://www.gov.uk/government/publications/third-party-debt-orders-and-charging-orders-ex325) (formerly known as a garnishee order) is a mechanism under CPR Part 72 to freeze and redirect funds held by a third party, most commonly a bank, for the benefit of the judgment creditor. An interim order is obtained without notice, immediately freezing the funds. A final order then directs the bank to pay the sum over to the creditor. This is one of the most effective enforcement tools where the debtor holds funds in a known bank account. For advice on third party debt orders and other enforcement mechanisms, see our guide to ### Attachment of Earnings Orders Where the debtor is an individual in employment, [an attachment of earnings order](https://www.gov.uk/government/publications/form-n337-request-for-attachment-of-earnings-order) under the [Attachment of Earnings Act 1971](https://www.legislation.gov.uk/ukpga/1971/32) directs the employer to deduct a specified amount from the debtor's wages and pay it to the court for onward transmission to the creditor. This remedy is primarily suited to consumer debt or personal guarantees against individuals, rather than pure B2B commercial debt. ### High Court Enforcement Officers (HCEOs) Where a County Court judgment for a debt of £600 or more is transferred up to the High Court, a [High Court Enforcement Officer](https://commonslibrary.parliament.uk/research-briefings/sn04103/) (HCEO) can be instructed to attend the debtor's premises and seize assets (goods) under a writ of control. HCEOs are experienced enforcement agents with wide powers and can act very quickly. The threat and reality of enforcement action by HCEOs often prompts prompt payment. ## Using Insolvency Proceedings as Commercial Debt Recovery Leverage For creditors owed clear and undisputed sums, insolvency-based remedies can be among the most powerful, and fastest, routes to recovery. The threat of formal insolvency proceedings concentrates the minds of debtors and their directors in a way that civil debt proceedings alone often cannot, since insolvency carries severe personal and commercial consequences. ### Statutory Demands A [statutory demand](https://lexlaw.co.uk/statutory-demand-debt-enforcement-recovery-solicitors-london-advice/) is a formal written demand for payment of a debt that, if unsatisfied within 21 days, creates a legal presumption of insolvency. For companies, under section 123(1)(a) of the Insolvency Act 1986, a company that fails to comply with a statutory demand for a sum exceeding £750 is deemed unable to pay its debts and may be wound up. For individuals, a statutory demand that is unsatisfied within 21 days forms the basis for a bankruptcy petition under the Insolvency Act 1986, provided the debt exceeds £5,000. Statutory demands are a significant step and must be used responsibly. They should only be deployed where the debt is genuinely undisputed, that is, not subject to a bona fide dispute on substantial grounds. Misuse of the statutory demand process, for example to pressurise payment of a disputed debt, can result in the demand being set aside and the creditor facing an adverse costs order. LEXLAW advises clients thoroughly on the appropriate use of statutory demands. ### Winding-Up Petitions for Company Debts Where a company fails to satisfy a statutory demand or judgment debt, a creditor owed at least £750 may present a winding-up petition to the Companies Court. This is a drastic remedy, the presentation of a petition is a matter of public record and can destroy a company's banking relationships and commercial standing overnight. For that reason, the courts scrutinise winding-up petitions carefully. In the leading case of [*Re Bayoil SA* [1999] 1 WLR 147](https://www.bailii.org/ew/cases/EWCA/Civ/1998/1364.html), the Court of Appeal confirmed that a petition will be dismissed or stayed where the debt is genuinely disputed on substantial grounds. More recently, in [*Salford Estates (No.2) Ltd v Nicholson* [2014] EWCA Civ 1575](https://www.bailii.org/ew/cases/EWCA/Civ/2014/1575.html), the Court of Appeal held that the court will ordinarily grant a stay of winding-up proceedings in favour of contractual arbitration where the underlying dispute falls within an arbitration clause. For specialist advice on winding-up petitions, whether you are issuing a petition to recover debt or defending against one presented by HMRC or another creditor, see [windinguppetitionsolicitors.co.uk](https://windinguppetitionsolicitors.co.uk), LEXLAW's dedicated resource for company insolvency proceedings. ### Bankruptcy Petitions for Individual Debts Where the debtor is an individual rather than a company, and the debt exceeds £5,000, a creditor may present a bankruptcy petition. Bankruptcy is a serious legal status with far-reaching consequences for the debtor, including restrictions on credit, loss of assets to the trustee in bankruptcy, and potential disqualification from certain roles. LEXLAW advises creditors on the strategic use of bankruptcy petitions and can also advise debtors facing petitions on their options, including setting aside statutory demands or negotiating settlements to avoid a bankruptcy order. ## Key Case Law in Commercial Debt Recovery A creditor's legal strategy should always be informed by relevant case law. The following decisions are of particular significance in the context of commercial debt recovery in England and Wales. - [*Jetivia SA v Bilta (UK) Ltd*](https://www.supremecourt.uk/cases/uksc-2013-0206)**[ ](https://www.supremecourt.uk/cases/uksc-2013-0206)**[[2015] UKSC 23](https://www.supremecourt.uk/cases/uksc-2013-0206):** **The Supreme Court confirmed that claims between companies in the context of insolvency can be pursued by a liquidator notwithstanding the involvement of the company's own directors in the wrongdoing giving rise to the debt. This case is relevant in commercial fraud and insolvency-related debt recovery scenarios. - [*Re Bayoil SA *[1999] 1 WLR 147](https://www.bailii.org/ew/cases/EWCA/Civ/1998/1364.html):** **A foundational Court of Appeal authority confirming that winding-up petitions must not be used as a debt collection tool where the underlying debt is genuinely disputed. Creditors must ensure their debt is clear and undisputed before presenting a petition. - [*Salford Estates (No.2) Ltd v Nicholson* [2014] EWCA Civ 1372](https://www.bailii.org/ew/cases/EWCA/Civ/2014/1575.html): Established that where a contract contains an arbitration clause, the court will ordinarily stay insolvency proceedings pending arbitration even if the petition debt is undisputed. Commercial creditors should check their contract terms before issuing insolvency proceedings. - *[Philips v Symes ](https://publications.parliament.uk/pa/ld200708/ldjudgmt/jd080123/phil-1.htm)*[[2006] EWCA Civ 654](https://publications.parliament.uk/pa/ld200708/ldjudgmt/jd080123/phil-1.htm):** **A High Court decision providing important guidance on costs penalties where a party has failed to comply with pre-action protocols. The case underlines the importance of following correct procedural steps before issuing proceedings. ## How LEXLAW Can Help You Recover Your Commercial Debt LEXLAW Solicitors & Barristers is a specialist litigation firm based at Middle Temple, the ancient Inn of Court located in the heart of the City of London, adjacent to the Royal Courts of Justice. We are the only law firm in England and Wales to operate from professional legal chambers within the Inns of Court, providing our clients with direct access to experienced solicitors and barristers working in close collaboration. Our commercial debt recovery team advises businesses of all sizes, from SMEs pursuing a single unpaid invoice to multinational corporations managing large portfolios of bad debt. We provide strategic, results-focused advice that is tailored to the specific circumstances of each matter. Around 97% of our litigation cases settle before trial, a testament to the quality of our pre-litigation negotiation and strategic advice. We offer a discounted fixed fee initial conference at which a solicitor and barrister will review your papers, assess your prospects of recovery, and advise you on the most cost-effective strategy for your particular case. This includes advice on pre-action options, the strength of your claim, limitation issues, available enforcement mechanisms, and whether insolvency proceedings are appropriate in your case. --- # Setting Aside a Statutory Demand as an Individual Source: https://lexlaw.co.uk/solicitors-london/setting-aside-a-statutory-demand-as-an-individual/ Receiving a [statutory demand ](https://lexlaw.co.uk/set-aside-statutory-demand-insolvency-legal-advice/)is one of the most serious debt-enforcement steps a creditor can take against you as an individual. If left unanswered, it can be used as the foundation of a bankruptcy petition, a process with life-changing consequences for your finances, your home, and your professional reputation. The law, however, gives you specific and time-sensitive rights to challenge a statutory demand before matters escalate. This article explains what a statutory demand is, the legal grounds on which it can be set aside, the procedural steps involved, and why expert legal representation from the outset can be the difference between protecting your assets and losing them. ## What Is a Statutory Demand Served on an Individual? A statutory demand is a formal written notice, governed by the [Insolvency Act 1986](https://assets.publishing.service.gov.uk/media/5a757e5240f0b6397f35edbc/The_20Insolvency_20Act_201986_20as_20it_20will_20apply_20to_20CIOs_20-_20Nov-12.pdf) and the [Insolvency (England and Wales) Rules 2016 ("IR 2016")](https://www.legislation.gov.uk/uksi/2016/1024/contents), through which a creditor demands payment of a debt it claims is owed by you. For individuals (as opposed to companies), statutory demands fall under [section 268](https://www.legislation.gov.uk/ukpga/1986/45/section/268) of the Insolvency Act 1986 and must either relate to an immediately payable debt or a future debt that has fallen due. The demand must be in prescribed form, must state the amount owed, the basis of the debt, and provide information about your right to apply to have it set aside. Unlike a County Court judgment, a statutory demand is not a court order, it is a creditor's unilateral formal notice. The threshold for a bankruptcy petition based on an unsatisfied statutory demand is a debt of £5,000 or more (the threshold was raised from £750 by the [Corporate Insolvency and Governance Act 2020](https://www.legislation.gov.uk/ukpga/2020/12/contents) and made permanent by the Insolvency Act 1986 (Amendment) Order 2024). A creditor who serves a statutory demand and does not receive payment, a satisfactory offer of security, or a successful application to set aside within 21 days may present a bankruptcy petition to the court. [Our specialist team](https://lexlaw.co.uk/our-people/) regularly advises individuals who have been served statutory demands. whether from private creditors, banks, or HMRC. If you have received such a demand, do not delay: [speak to our statutory demand solicitors today](https://lexlaw.co.uk/contact-us/). ## The Critical 18-Day Time Limit to Apply to Set Aside Time is of the essence. Under [Rule 10.4](https://www.legislation.gov.uk/uksi/2016/1024/rule/10.4) of the Insolvency (England and Wales) Rules 2016, you must make an application to set aside a statutory demand within 18 days of service of the demand. This is a strict deadline. Miss it, and you risk losing the ability to challenge the demand through the set-aside route, leaving you exposed to bankruptcy proceedings. Courts do have discretion to hear late applications in exceptional circumstances, but this is not to be relied upon. You must seek [immediate legal advice](https://lexlaw.co.uk/legal-case-assessment/) upon receiving any statutory demand, regardless of whether you believe the debt is legitimate. Separately, if the demand is not set aside and remains unsatisfied, the creditor may present a bankruptcy petition after 21 days from service. It is therefore essential to act well within the 18-day window to instruct a specialist insolvency solicitor, gather evidence, and file a properly particularised application with the court. Our team based in [Middle Temple](https://www.middletemple.org.uk/) in the heart of the City of London, has successfully set aside statutory demands on behalf of numerous individuals, often within very tight time frames. [Learn more about our statutory demand set-aside practice](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/). ## Legal Grounds for Setting Aside a Statutory Demand Against an Individual The court has jurisdiction to set aside a statutory demand served on an individual under [Rule 10.5](https://www.legislation.gov.uk/uksi/2016/1024/rule/10.5) of the Insolvency Rules 2016. The court must set aside the demand if any of the following grounds are established: - **Genuine Dispute on Substantial Grounds: **The debt claimed in the statutory demand is genuinely disputed on substantial grounds. A mere assertion of dispute is insufficient; you must demonstrate that there is a real and credible basis for challenging the debt. - **Counterclaim, Set-Off or Cross-Demand: **You have a counterclaim, set-off, or cross-demand against the creditor which equals or exceeds the amount of the debt claimed. Where your cross-claim equals or exceeds the statutory demand, the net debt falls below the threshold for bankruptcy proceedings. - **Secured Creditor: **The debt is fully secured. A creditor who holds sufficient security over your assets cannot rely upon a statutory demand as a stepping stone to bankruptcy proceedings. - **Other Grounds - Court Discretion: **Even where none of the above are strictly established, the court retains a discretion to set aside a demand where it appears that it would be unjust to allow the demand to stand. This might apply in cases of procedural irregularities, improper service, abuse of process, or where the demand relates to a jurisdictional challenge (as arose in the [LEXLAW](https://lexlaw.co.uk/contact-us/) case of[*Moskalev v Yanishevskiy [2021] EWHC 1575 (Ch)*)](https://lexlaw.co.uk/solicitors-london/client-case-study-moskalev-wins-against-yanishevskiy-for-improper-statutory-demand/). ## Case Law in Action: Moskalev v Yanishevskiy [2021] EWHC 1575 (Ch) A clear illustration of the court's approach to applications to set aside a statutory demand and the risks a creditor runs in pursuing one improperly is provided by one of our own cases, **[Moskalev v Yanishevskiy [2021] EWHC 1575 (Ch)](https://lexlaw.co.uk/solicitors-london/client-case-study-moskalev-wins-against-yanishevskiy-for-improper-statutory-demand/)** Our client, Mr Moskalev, an EU Cypriot national, was served with a statutory demand in England based upon a Hong Kong default judgment which he argued had been obtained by fraud. We applied to set aside the demand on two principal grounds: first, that Mr Moskalev's centre of main interests (COMI) was in Cyprus, not England and Wales; and second, that the underlying debt was disputed on substantial grounds given the fraudulently obtained judgment. ICC Judge Barber found in Mr. Moskalev's favour, determining that numerous reasoned grounds for disputing the demand had been raised in our letter to the opposing side, grounds which should have told the respondent, at a glance, that the matter was not suitable for resolution by way of statutory demand and bankruptcy proceedings. The respondent's failure to withdraw the demand in good time was at his own risk as to costs. Ultimately, costs of **£47,400** were awarded against the creditor and paid to our client. This case underscores a vital point: a well-constructed and timely application to set aside, backed by detailed legal analysis, can not only protect you from bankruptcy but recover your legal costs from the creditor. ## The Procedure: How to Apply to Set Aside a Statutory Demand The process for applying to set aside a statutory demand served on an individual involves the following key steps: - **Complete Form IAA: **You must file Form IAA (Insolvency Act Application Notice) with the appropriate court (usually the Insolvency and Companies Court in London, or a District Registry or County Court with insolvency jurisdiction). The form must state the grounds on which you rely and include a draft order and copies of the statutory demand. - **Prepare a Supporting Witness Statement: **Where the facts are in dispute, or where you wish to place evidence before the court, a witness statement in support of the application is essential. The witness statement must comply with the [Civil Procedure Rules (CPR)](https://www.justice.gov.uk/courts/procedure-rules/civil) and the Practice Direction on Insolvency Proceedings. It must set out the relevant facts, exhibit supporting documentary evidence, and conclude with a statement of truth. - **File and Serve: **The application must be filed at court and served on the creditor (or their solicitors) within the 18-day window. Correct service is critical, failure to properly serve the application can give rise to jurisdictional complications. - **The Hearing: **If the court is satisfied that there is sufficient basis for the application to proceed, it will list a hearing and notify both parties. At the hearing, the court will consider the evidence and legal submissions before deciding whether to set aside the demand, dismiss the application, or make directions for a further hearing. Our solicitors and barristers can represent you at all stages. ## The Consequences of Failing to Respond to a Statutory Demand The consequences of ignoring a statutory demand are severe and can be irreversible. If you do not apply to set aside the demand within 18 days and do not satisfy or secure the debt within 21 days, the creditor may present a [bankruptcy petition](https://windinguppetitionsolicitors.co.uk/bankruptcy-advice/) to the court. If a bankruptcy order is made, you may lose control of your assets including potentially your home to a trustee in bankruptcy, your credit rating will be severely damaged, you may be subject to restrictions on your professional activities, and you may face investigation into your financial affairs by the Official Receiver. Proactive, early legal intervention is by far the most effective and cost-efficient way to protect yourself. If you have already missed the 18-day window, do not assume all is lost, [speak to our specialists urgently](https://lexlaw.co.uk/contact-us/) for advice on late applications and all available options. ## Why Instruct LEXLAW to Set Aside Your Statutory Demand? [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/contact-us/) is a specialist litigation law firm based at Middle Temple, one of the historic Inns of Court adjacent to the [Royal Courts of Justice](https://www.find-court-tribunal.service.gov.uk/courts/royal-courts-of-justice) in London. Our team of dual-qualified solicitors and barristers has an unparalleled track record in statutory demand cases, winding-up petition defence, and personal insolvency proceedings. We are able to act at short notice, deploy experienced advocates at every stage, and provide clear, commercially strategic advice. - 100% success rate on statutory demand and petition cases acted upon to date. - Dual-qualified solicitors and barristers providing in-house advocacy without the cost of instructing separate counsel. - Fixed fee initial meetings so you know where you stand from day one. - Experience across the full spectrum of personal and corporate insolvency proceedings. Whether your statutory demand has come from HMRC, a bank, a private creditor, or a former business partner, LEXLAW has the expertise, the experience, and the advocacy skills to protect your position. For related matters involving winding-up petitions served on a company, see our dedicated [winding-up petition solicitors practice](https://windinguppetitionsolicitors.co.uk/). ### Frequently Asked Questions (FAQ's) How long do I have to respond to a statutory demand? You have 18 days from the date of service to apply to set aside the statutory demand. If you fail to act within this period, the creditor may proceed with a bankruptcy petition after 21 days. Can a statutory demand be challenged if the amount is incorrect? Yes. If the amount claimed is incorrect or overstated, this may form part of a genuine dispute. The court will consider whether the dispute is substantial and supported by evidence. Can I set aside a statutory demand if I simply cannot pay? Inability to pay alone is not a ground to set aside the demand. However, it may open the door to negotiations, an IVA, or other debt restructuring options. LEXLAW can advise you on all routes available given your specific circumstances. Does disputing the debt automatically stop bankruptcy proceedings? No. Simply telling the creditor you dispute the debt does not prevent them from presenting a bankruptcy petition. You must file a formal application to set aside with the court within 18 days. Alternatively, you can apply to have the bankruptcy petition dismissed at the petition hearing itself, but this is a far more complex and costly route than applying to set aside the statutory demand at the outset. What happens if the court sets aside the statutory demand? If the demand is set aside, the creditor cannot rely on it to present a bankruptcy petition. However, they may still pursue the debt through other legal routes, such as issuing a claim in court. --- # VAT De-Registration Appeals: How to Challenge HMRC’s Decision to Cancel Your VAT Number Source: https://lexlaw.co.uk/solicitors-london/vat-de-registration-appeals-how-to-challenge-hmrcs-decision-to-cancel-your-vat-number/ [Receiving a letter from HMRC](https://taxdisputes.co.uk/2026/03/received-an-hmrc-letter-what-to-do-next/) cancelling your VAT registration is a serious matter and it demands an urgent response. Businesses that are forcibly [de-registered](https://taxdisputes.co.uk/appeal-hmrc-vat-de-registration-cancel-number-taxable-goods-supplies-kittel-decision-letter-judicial-review-legal-advice/) face immediate, tangible commercial consequences: they can no longer issue VAT-bearing invoices, they lose the right to reclaim input tax on purchases, and they risk being hit with substantial retrospective assessments. For many businesses, particularly those operating in VAT-sensitive sectors, it can be commercially crippling. The good news is that a decision by HMRC to cancel your VAT number is not final. There is a clear, two-stage legal process to challenge the decision, but strict time limits apply, and the consequences of missing them can be fatal to any appeal. This guide explains your rights, the grounds on which HMRC typically acts, how to challenge the decision effectively, and why you should seek [specialist legal advice](https://lexlaw.co.uk/) without delay. ## Why HMRC Cancels VAT Registrations HMRC's power to cancel a VAT registration is found in [paragraph 13 of Schedule 1 to the Value Added Tax Act 1994 (VATA 1994)](https://www.legislation.gov.uk/ukpga/1994/23/schedule/1). There are two primary grounds on which HMRC exercises this power: ### 1. Cessation of Taxable Supplies HMRC may de-register a business if it concludes, following an [investigation](https://taxdisputes.co.uk/hmrc-tax-investigations/) or a review of filed returns, that the business is no longer making, or does not intend to make, taxable supplies. This is the most straightforward basis. A business may contest this ground by demonstrating that taxable supplies continue or are genuinely intended. ### 2. Fraud or Fraudulent Intent In more serious cases, HMRC may cancel a VAT registration on the basis that it was obtained, or is being used, principally to facilitate [fraud on the VAT system](https://taxdisputes.co.uk/repayment-fraud/). These cases frequently arise in sectors historically associated with [Missing Trader Intra-Community (MTIC) fraud](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/vat-appeals-mtic-solicitors-london/), such as mobile phones, CPUs, and carbon credits. Where fraud is alleged, the burden of proof lies with HMRC. It must establish that fraudulent activity has occurred, or that the taxpayer knew, or ought to have known, that its transactions were connected to fraud. [HMRC's decision letter](https://taxdisputes.co.uk/2026/03/received-an-hmrc-letter-what-to-do-next/) will typically be brief and lacking in detail. Deregistration is ordinarily the culmination of months of investigation. Receiving the letter is often the first moment a business owner becomes aware of the full scale of HMRC's position. That is why [early specialist advice](https://lexlaw.co.uk/practice-areas/) is indispensable, you need to understand the specific basis for HMRC's decision before you can mount an effective challenge. ## The Two-Stage Appeal Process The appeal framework for VAT de-registration decisions is governed by [section 83(1) of VATA 1994](https://taxdisputes.co.uk/2020/10/hmrc-assessments-penalties-vat-appeal-to-first-tier-tax-tribunal-out-of-time-late-advice/) and the [Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273)](https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg3041). There are two principal stages. ### Stage 1: Notice of Appeal to HMRC The first step is to give written notice of appeal to HMRC within 30 days of the date of their decision notice. This is not simply a letter of complaint, it is a formal legal step that triggers HMRC's obligation to reconsider. HMRC will then either: confirm their original decision; amend it in light of the representations made; or agree with the taxpayer's position in full. At this stage, HMRC may also offer, or the taxpayer may request, an [HMRC internal review](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/). This is a statutory process under which a different HMRC officer (not the original decision-maker) considers whether the decision was made in accordance with HMRC's own guidelines. Internal reviews have a strong track record: published HMRC statistics have shown that approximately 49% of internal reviews result in HMRC's decision being annulled or amended. That figure alone makes it a procedure worth pursuing. ### Stage 2: Appeal to the First-tier Tax Tribunal (FTT) If the internal review does not resolve the dispute, the taxpayer may appeal to the [First-tier Tax Tribunal](https://lexlaw.co.uk/first-tier-tax-tribunal-hmrc-representation-solicitor-london/) under section 49D of the Taxes Management Act 1970. For VAT (an indirect tax), an appeal can be made directly to the FTT without first exhausting the HMRC internal process, though it is generally advisable to use it. The FTT is entirely independent of HMRC and is governed by an overriding objective to deal with cases fairly and justly (Rule 2, First-tier Tribunal Rules 2009). It will consider the evidence of both parties, including witness statements and documentary evidence, and will apply relevant case law. The Tribunal's jurisdiction in de-registration cases is, in part, a full appellate jurisdiction: where the issue is whether the taxpayer is still making taxable supplies, the Tribunal decides that question on the facts for itself, it is not limited to asking whether HMRC's decision was reasonable (see [*David Love Marketing Ltd v HMRC* [2015] UKFTT 506 (TC))](https://www.bailii.org/uk/cases/UKFTT/TC/2015/TC04664.html). Where, however, the decision involves the exercise of a discretion, for example, the precise date from which de-registration takes effect, the Tribunal's jurisdiction may be supervisory rather than full appellate. In those circumstances, the Tribunal considers whether HMRC acted reasonably and in accordance with the correct principles. ## Practical Steps to Challenge Your De-Registration Mounting a successful appeal requires careful preparation and an understanding of the evidence HMRC will rely upon. Set out below are the key practical steps. - **Read the decision letter carefully.** HMRC's letter will set out the ground for de-registration and should include instructions on how to appeal. Identify the precise statutory basis relied upon, whether it is paragraph 13(2)(a) (cessation of taxable supplies) or paragraph 13(2)(c) (fraud). - **Act within 30 days.** The appeal notice must be given in writing within 30 days. Whilst the FTT has a discretion to admit late appeals in exceptional circumstances (particularly following [*Medpro Healthcare Ltd v HMRC* [2025] UKUT 255 (TCC)](https://taxdisputes.co.uk/2025/10/medpro-v-hmrc-revised-tribunal-principles-on-late-vat-appeals/), which relaxed the previously strict [*Martland* test](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/)), you should never rely on that discretion. Late appeals are uncertain and expensive. - **Preserve and collate your evidence.** Gather all trading records, contracts, invoices, bank statements, and correspondence with suppliers or customers that demonstrate your business continues to make taxable supplies. If the fraud ground is relied upon, evidence of your due diligence and supply chain practices will be essential. - **Request an internal review if appropriate.** If you have not already received a review offer, you may request one at any time whilst the appeal is live. Given the near-50% amendment rate, it is often a cost-effective first step. - **Consider judicial review.** In some cases, particularly where HMRC has acted procedurally unfairly or where the decision was disproportionate, [judicial review](https://lexlaw.co.uk/hmrc-vat-de-registration-tax-appeal-kittel-decision-input-tax-decision-letter-judicial-review-legal-advice/) may be available as an alternative or supplementary remedy. A claim must be brought promptly and no later than three months after the grounds arose (CPR 54.5(1)). Proportionality arguments, including under the European Convention on Human Rights and section 6(1) of the Human Rights Act 1998, may carry weight where a business continues to make lawful taxable supplies. - **Instruct specialist legal representation.** VAT de-registration appeals are technically complex and evidentially demanding. Self-representation carries significant risk of procedural error and lost arguments. Specialist [tax dispute solicitors](https://taxdisputes.co.uk/appeal-hmrc-vat-de-registration-cancel-number-taxable-goods-supplies-kittel-decision-letter-judicial-review-legal-advice/) can assess the merits of your case, draft the notice of appeal, prepare witness statements, and provide advocacy at Tribunal. ## Key Legal Arguments in De-Registration Appeals The following arguments are commonly deployed in de-registration appeals and have found favour with the Tax Tribunal: ### Continuation of Taxable Supplies Where HMRC asserts that taxable supplies have ceased, a taxpayer can adduce evidence to demonstrate trading activity continues, or that there is a genuine, credible intention to resume. The FTT will determine this question on the evidence, not simply defer to HMRC's assessment. ### Challenging the Fraud Allegation Fraud is a serious accusation and HMRC must be put to strict proof. The standard is the civil standard of the balance of probabilities, but the seriousness of the allegation demands cogent evidence. HMRC must demonstrate either that the trader was party to fraudulent conduct, or that — applying the Kittel principle — it knew or should have known its transactions were connected to VAT fraud. Robust due diligence records can rebut this allegation significantly. LEXLAW has [succeeded before the Tax Tribunal](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/vat-appeals-mtic-solicitors-london/) in multiple high-value Kittel cases where HMRC failed to meet this burden. ### Proportionality and Human Rights Cancelling the VAT registration of a business that continues to make legitimate taxable supplies may be disproportionate. Arguments grounded in proportionality, and, where relevant, in the right to peaceful enjoyment of possessions under Protocol 1, Article 1 of the European Convention on Human Rights, have been successfully raised in VAT enforcement contexts. Where HMRC's decision is excessive relative to any legitimate aim, this ground can supplement a substantive appeal. ## Consequences of Inaction: What Happens If You Do Not Appeal Failing to appeal within the 30-day deadline, and failing to engage with either the internal review or the FTT, has serious and largely irreversible consequences. Under section 54 of the Taxes Management Act 1970, if a taxpayer neither accepts the review nor notifies an appeal to the Tax Tribunal, the dispute is treated as settled in HMRC's favour. It is then very difficult, and often impossible, to resile from that position. The business will be left without a VAT number, unable to recover input tax, and potentially exposed to retrospective assessments and [tax penalties](https://lexlaw.co.uk/hmrc-tax-penalty-appeal-solicitor-london/) for previous returns. If your business is the subject of a [winding-up petition](https://windinguppetitionsolicitors.co.uk) by HMRC or a creditor arising from the tax debt connected to de-registration, legal advice should be sought immediately. These two proceedings can interact in ways that make strategic coordination essential. ## Speak to a Specialist VAT Appeals Solicitor Today LEXLAW Solicitors & Barristers are specialist litigation solicitors based at Middle Temple, London. Our team of tax dispute solicitors and barristers has extensive experience representing businesses in VAT de-registration appeals — from the initial notice of appeal to complex, high-value hearings before the First-tier Tax Tribunal and Upper Tribunal. We have a proven track record of successfully contesting HMRC decisions in the most technical and commercially sensitive VAT disputes. We understand both the law and the practical realities of HMRC investigations, and we bring both to bear for our clients. If you have received a de-registration notice, do not wait. [Contact LEXLAW today](https://lexlaw.co.uk/contact-us/) for a heavily discounted initial consultation. Whether you need urgent advice on a 30-day deadline, assistance with an internal review, or full Tribunal representation, our team is ready to help. --- # Regulator Scrutiny Intensifies Over SME Lending Practices (FCA Oversight Failures) Source: https://lexlaw.co.uk/solicitors-london/regulator-scrutiny-intensifies-over-sme-lending-practices-mis-sold-financial-products-fca-oversight-failures/ Concerns surrounding the treatment of [small and medium-sized enterprises (SMEs)](https://smeda.org/index.php?option=com_content&view=article&id=3&Itemid=103) in complex lending arrangements have re-emerged, placing [regulatory conduct](https://www.fca.org.uk/) under the spotlight. Allegations that financial products were [mis-sold](https://lexlaw.co.uk/solicitors-london/the-appg-to-challenge-the-swift-review-redressal-of-mis-sold-ihrps/) under the guise of simple lending solutions highlight the legal risks associated with undisclosed liabilities and technical covenant breaches. For affected businesses, these developments underline the importance of [early legal intervention](https://lexlaw.co.uk/contact-us/), particularly where insolvency risks, enforcement actions, or disputes with lenders arise. Issues of this nature frequently intersect with claims involving misrepresentation, breaches of statutory duty, and [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk/), requiring a coordinated legal strategy. Businesses facing enforcement action, including [winding-up petitions](https://windinguppetitionsolicitors.co.uk/can-hmrc-make-me-bankrupt-directors-sole-traders-bankruptcy-risks-explained/) or aggressive recovery measures, must act decisively to protect their position. This is precisely where [specialist legal representation](https://lexlaw.co.uk/our-people/christopher-snell/) becomes critical in navigating both regulatory frameworks and complex litigation pathways. ## Background: Hidden Liabilities and SME Lending Structures At the centre of the controversy are allegations that SMEs were sold [complex financial products](https://lexlaw.co.uk/solicitors-london/the-appg-to-challenge-the-swift-review-redressal-of-mis-sold-ihrps/) embedded within standard lending agreements. These products, often presented as protective mechanisms against interest rate fluctuations, allegedly concealed significant additional liabilities from the outset. The legal issue arises where such liabilities were not transparently disclosed, potentially amounting to [misrepresentation](https://lexlaw.co.uk/solicitors-london/property-alliance-group-pag-rbs-grg-2018-appeal-libor-manipulation-mis-selling-derivatives-swaps/) or breach of duty. In many cases, these structures reportedly placed businesses in immediate technical breach of their lending covenants, exposing them to enforcement actions even where their underlying operations remained viable. The consequences were severe. Businesses faced escalating financial pressure, asset recovery actions, and, in some cases, [insolvency proceedings](https://windinguppetitionsolicitors.co.uk/insolvency-terms-defined-winding-up-definition/). The alleged use of internal recovery mechanisms further intensified scrutiny, particularly where lender interests appeared to conflict with borrower protections. Evidence presented by industry experts and whistleblowers suggested that these practices were not isolated incidents but part of a broader pattern affecting multiple businesses. Despite this, regulatory responses have been criticised as insufficient, particularly where institutions were permitted to conduct internal reviews into their own conduct. ## Key Legal Issues in SME Lending Disputes ### Misrepresentation and Non-Disclosure A central legal issue is whether SMEs were misled regarding the nature of the financial products they entered into. Where complex derivatives are presented as straightforward loan protections, there may be grounds for claims in [misrepresentation](https://lexlaw.co.uk/solicitors-london/property-alliance-group-pag-rbs-grg-2018-appeal-libor-manipulation-mis-selling-derivatives-swaps/) under common law. Failure to disclose embedded liabilities may also give rise to claims for negligent misstatement or breach of advisory duties, particularly where professional advisers were involved in structuring or recommending the arrangements. ### Breach of Statutory Duties Claims may arise under [section 138D of the Financial Services and Markets Act 2000 (FSMA)](https://www.legislation.gov.uk/ukpga/2000/8/section/138D), where regulated firms breach conduct rules designed to protect customers. Although certain lending activities may fall outside the regulatory perimeter, the boundaries of this defence are often contested. Courts are increasingly willing to scrutinise whether firms have complied with overarching principles of fairness, transparency, and good faith. ### Covenant Breaches and Enforcement The triggering of technical covenant breaches through undisclosed liabilities raises significant legal concerns. Where such breaches are engineered or foreseeable at the outset, [enforcement actions](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/) may be challengeable. This is particularly relevant in cases where lenders rely on these breaches to justify asset recovery, restructuring, or [insolvency proceedings](https://windinguppetitionsolicitors.co.uk/what-is-the-process-of-winding-up-procedure/). ## Regulatory Accountability and Legal Challenges The role of [regulators](https://www.fca.org.uk/) such as [FCA](https://www.fca.org.uk/) in overseeing financial conduct has become a focal point of criticism. Where credible evidence is not fully investigated, affected parties may explore legal remedies beyond traditional regulatory complaints. Judicial review remains a potential avenue where [regulatory decisions](https://www.fca.org.uk/) are irrational, procedurally flawed, or fail to consider relevant evidence. However, such claims are complex and require [specialist legal expertise](https://lexlaw.co.uk/our-people/christopher-snell/). The limitations of self-investigation by [financial institutions](https://www.fca.org.uk/) further complicate matters. Where firms are permitted to assess their own conduct, questions arise regarding impartiality and the adequacy of redress mechanisms. ## Implications for SMEs and Insolvency Risk The impact on SMEs extends beyond financial loss. Many businesses affected by these practices faced severe operational disruption, loss of assets, and [eventual insolvency](https://windinguppetitionsolicitors.co.uk/hmrc-issues-winding-up-petition-against-hartley-white-limited/). From a legal perspective, this raises additional claims under the [Insolvency Act 1986](https://windinguppetitionsolicitors.co.uk/s-235-and-s-236-insolvency-act-1986-a-directors-complete-guide-2026/). Transactions entered into under financial pressure or based on misleading information may be challenged as transactions at an undervalue under [section 423](https://www.legislation.gov.uk/ukpga/1986/45/section/423). Similarly, enforcement actions taken following engineered covenant breaches may be scrutinised as unfair or abusive. [Insolvency practitioners](https://lexlaw.co.uk/our-people/christopher-snell/) and directors must carefully assess whether historical lending arrangements contributed to financial distress. This is particularly important where [directors face personal liability](https://lexlaw.co.uk/solicitors-london/directors-personal-guarantees-what-happens-when-a-corporate-debtor-defaults/) risks arising from insolvency-related claims. ## Why Specialist Representation Is Necessary Cases involving complex financial products, regulatory oversight, and insolvency risk require a [highly specialised legal approach](https://lexlaw.co.uk/our-people/christopher-snell/). Generic legal advice is rarely sufficient in these circumstances. At [LEXLAW](https://lexlaw.co.uk/), our experience in handling [financial disputes](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/), professional negligence claims, and insolvency litigation enables us to identify weaknesses in lender positions and construct robust legal strategies. This includes forensic analysis of lending agreements, identification of undisclosed liabilities, and strategic use of expert evidence. [Early intervention](https://lexlaw.co.uk/?page_id=356) can often prevent escalation into [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) or enforcement proceedings. Where disputes have already progressed, we are experienced in [defending claims](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/), challenging enforcement actions, and pursuing recovery through litigation where appropriate. This is why [specialist representation](https://lexlaw.co.uk/our-people/) is necessary, these cases involve overlapping legal frameworks, technical financial structures, and high-stakes outcomes that demand precision and expertise. ## Key Issues and Legal Routes | **Aspect** | **Legal Issue** | **Potential Claim** | | ---------- | --------------- | ------------------- | | Hidden liabilities | Non-disclosure in lending agreements | Misrepresentation (common law) | | Self-investigation | Lack of independent oversight | Judicial review | | Covenant breaches | Engineered or undisclosed triggers | Breach of duty / unfair enforcement | | Business losses | Insolvency and asset recovery | Section 423 Insolvency Act 1986 | ## Defending and Pursuing Claims: Strategic Approach A [successful legal strategy](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) begins with a detailed review of all lending documentation, including facility agreements, derivative structures, and covenant provisions. Forensic accounting plays a critical role in identifying hidden liabilities and quantifying losses. This evidence is often central to establishing [misrepresentation](https://lexlaw.co.uk/solicitors-london/property-alliance-group-pag-rbs-grg-2018-appeal-libor-manipulation-mis-selling-derivatives-swaps/) or breach of duty. Engagement with dispute resolution mechanisms, such as ombudsman schemes, may provide an initial route to redress. However, these avenues are often limited in scope, particularly for historic or complex cases. Where necessary, litigation provides a more robust pathway to recovery. [Claims](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) may be brought against lenders, advisers, or other parties involved in structuring the transactions. ## How LEXLAW Can Help The renewed focus on SME lending practices highlights significant legal risks for both lenders and borrowers. Where [financial products](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) are misrepresented or liabilities concealed, the consequences can be severe and long-lasting. For affected businesses, the key takeaway is clear: [early, specialist legal advice](https://lexlaw.co.uk/our-people/) is essential. Whether defending claims, challenging enforcement action, or pursuing recovery, a strategic and informed approach is critical to achieving a successful outcome. [LEXLAW](https://lexlaw.co.uk/) [specialises](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) in [complex financial disputes](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) involving banks, lenders, and professional advisers. [Our team](https://lexlaw.co.uk/our-people/) provides strategic, commercially focused advice tailored to the specific circumstances of each client. We assist businesses in: - [Challenging mis-sold financial products](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) and hidden liabilities - Defending enforcement actions, including winding-up petitions - Pursuing claims for misrepresentation and breach of statutory duty - Investigating professional negligence by advisers - Managing insolvency-related risks and disputes [Our approach](https://lexlaw.co.uk/contact-us/) combines legal expertise with forensic analysis, ensuring that every aspect of the case is thoroughly examined. For businesses facing similar issues, taking [early legal advice](https://lexlaw.co.uk/contact-us/) is critical. Delays can limit available remedies and increase financial exposure. ### FAQs **Can I claim if my business was mis-sold a financial product?** Yes, if your business entered into a lending arrangement based on misleading or incomplete information, you may have grounds for a claim in misrepresentation or breach of duty. This often applies where complex products were presented as simple loans. A detailed legal and forensic review is essential to determine the viability and value of your claim. **What if the regulator refuses to investigate my complaint?** Regulatory inaction does not prevent you from pursuing legal remedies. You may still bring a civil claim against the lender or other responsible parties. In some cases, it may also be possible to challenge the regulator’s decision through judicial review, although this requires specialist legal expertise and careful assessment. **Are older cases still eligible for claims?** Potentially, yes. Limitation periods can be extended where the wrongdoing was only discovered at a later stage, particularly in cases involving concealed liabilities or complex financial structures. Each case depends on its facts, so obtaining early legal advice is crucial to preserve your position. **Can hidden liabilities invalidate a lending agreement?** Hidden or undisclosed liabilities may provide grounds to challenge the validity of an agreement or seek damages. If those liabilities were material to your decision to enter into the contract, courts may consider remedies such as rescission or compensation. These cases often require expert evidence to establish the full financial impact. **What should I do if I face a winding-up petition linked to a loan dispute?** You must act immediately. A winding-up petition is a serious legal action that can lead to compulsory liquidation. However, if the underlying debt is disputed, particularly due to mis-selling or unfair terms, you may be able to challenge the petition. Urgent specialist legal advice is essential to protect your business. **How long do these cases take to resolve?** The timeframe varies depending on the complexity of the financial arrangements and the parties involved. Some disputes can be resolved through negotiation or alternative dispute resolution, while others may require litigation. Early intervention and a clear legal strategy can significantly improve efficiency and outcomes. **Why is specialist legal representation important?** These disputes involve complex intersections of financial products, regulatory frameworks, and legal principles. Specialist solicitors are able to identify technical arguments, challenge lender conduct effectively, and build a strong evidential case. This is why specialist representation is necessary to maximise recovery and minimise risk. --- # Directors Exposed to Personal Liability in the Twilight Period (Insolvency Act 1986) Source: https://lexlaw.co.uk/solicitors-london/directors-exposed-to-personal-liability-in-the-twilight-period-insolvency-act-1986/ The “twilight period” is a commonly used, non-statutory expression for the period in which a company is in financial difficulty and directors’ decisions may later be scrutinised in an [insolvency process](https://lexlaw.co.uk/solicitors-london/2026-guide-uk-winding-up-petition-procedure/). In practice, the relevant legal issues usually concern [wrongful trading under section 214 of the Insolvency Act 1986](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjez_P2iYSUAxW5TkEAHYoCEGgQFnoECAwQAQ&url=https%3A%2F%2Fwww.legislation.gov.uk%2Fukpga%2F1986%2F45%2Fsection%2F214&usg=AOvVaw02xAWAe7Fj1GE_gkuwoTY7&opi=89978449), the duty to consider creditor interests as the company’s financial position deteriorates, and the treatment of particular transactions entered into before insolvency. Authorities such as *[BTI 2014 LLC v Sequana SA [2022] UKSC 25](https://www.supremecourt.uk/cases/uksc-2019-0046)* show that [directors](https://lexlaw.co.uk/solicitors-london/directors-personal-guarantees-what-happens-when-a-corporate-debtor-defaults/) should monitor the company’s financial position carefully, take timely advice where appropriate, and document the reasons for significant decisions. Directors who continue trading without properly assessing the impact on creditors may face substantial personal and legal risk. ## What is Twilight Period? The “twilight period” is an informal, non-legal term used to describe the stage when a company is nearing insolvency or facing financial difficulties.Although not expressly defined in statute, it is generally recognised through case law interpreting directors’ duties under both the Insolvency Act 1986 and the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents). During this phase, directors often attempt to rescue the business, managing cashflow, [negotiating with creditors](https://windinguppetitionsolicitors.co.uk/administration-vs-cva-vs-liquidation-choosing-the-right-process/), and securing additional funding. However, such actions may later be challenged if they worsen the position of creditors. The [courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) will assess whether directors knew, or ought to have known, that there was no reasonable prospect of avoiding insolvent liquidation and whether they took every step to minimise potential losses. Directors frequently underestimate the legal significance of this period, continuing operations without properly recognising the need to monitor the company’s financial position, consider creditor interests where appropriate, and take [timely professional advice](https://lexlaw.co.uk/?page_id=356). ## Key Findings in Twilight Period Cases ### Breach of Director Duties Where a company is insolvent, bordering on insolvency, or where insolvent liquidation or administration is probable, directors must give appropriate and increasing weight to creditor interests as part of their decision making, rather than treating shareholder interests as automatically prevailing. This reflects the position clarified by the [Supreme Court](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjAtsKm3IOUAxW_UkEAHUjxAkcQFnoECA0QAQ&url=https%3A%2F%2Fsupremecourt.uk%2F&usg=AOvVaw03-I2k-ez6viuHD5HST0ZJ&opi=89978449) in [BTI 2014 LLC v Sequana SA](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjBhZ-h7YOUAxVUQEEAHWalBwIQFnoECCUQAQ&url=https%3A%2F%2Fwww.supremecourt.uk%2Fcases%2Fuksc-2019-0046&usg=AOvVaw0cJ8_KV6E5VLX5T0fzrPyi&opi=89978449), which confirmed that the creditor duty is not triggered by a single bright line test, but develops as the company’s financial position deteriorates. As the company’s financial position deteriorates, creditor interests carry increasing weight and may become decisive where insolvent liquidation or administration is probable or imminent. Failure to recognise and [respond appropriately](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) to this shift may amount to a breach of duty, particularly where [directors](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-0-9m-for-insolvency-duty-breach-transactions-at-undervalue/) continue to trade in a manner that increases losses to creditors. In assessing liability, courts will examine both the knowledge of the director and the reasonableness of their actions in the circumstances. ### Wrongful Trading Liability Under section 214 of the Insolvency Act 1986, a court may order [a director](https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/) to contribute to the company’s assets where the director knew, or ought to have concluded, that there was no [reasonable prospect](https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/) of avoiding insolvent liquidation or administration, and failed to take every step reasonably open to them to minimise potential loss to creditors. In determining liability, the court applies both subjective and objective standards, considering what the director actually knew as well as what would reasonably have been expected of a person carrying out the same functions. This should be distinguished from fraudulent trading under [section 213 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/213), which requires an intention to defraud creditors or a fraudulent purpose and involves a higher evidential threshold. ### Courts Focus on Steps Taken, Not Just Belief Assertions of good faith alone are unlikely to assist where the evidence shows that creditor losses increased and the directors failed to take every step reasonably open to them to minimise loss. Directors should be able to show that they took concrete and [reasonable steps](https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/) in response to the company’s financial position ### Scrutiny of Transactions Transactions entered into before insolvency, particularly preferences under [section 239](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiJ1PSLkISUAxWfQkEAHRtHKxsQFnoECB0QAQ&url=https%3A%2F%2Fwww.legislation.gov.uk%2Fukpga%2F1986%2F45%2Fsection%2F239&usg=AOvVaw2PQxBhejHyIwAvMR7-5V7g&opi=89978449) and [transactions at an undervalue](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-liable-for-misapplied-company-funds-transactions-at-undervalue-preferences/) under [section 238 of the Insolvency Act 1986,](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjSjJDtj4SUAxWsU0EAHd5EBgIQFnoECB0QAQ&url=https%3A%2F%2Fwww.legislation.gov.uk%2Fukpga%2F1986%2F45%2Fsection%2F238&usg=AOvVaw0lLdHjx9E4uYm2mJsbYDh3&opi=89978449) are open to detailed scrutiny. Payments to connected parties and unusual asset transfers may be particularly vulnerable to challenge, depending on the circumstances and the statutory requirement. ## Implications of Twilight Period Judgements These authorities show that courts will closely examine director decision making during financial distress, particularly where losses to creditors may have been increased. In practice, this means [directors](https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/) should monitor the [company’s financial position](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/) carefully, take advice where appropriate, and keep clear records of significant decisions. The importance of contemporaneous records is significant. [Directors](https://lexlaw.co.uk/solicitors-london/sections-235-and-236-insolvency-act-1986-directors-duties-to-co-operate-with-liquidators/) who fail to record the reasoning behind their decisions may find it difficult to defend claims, even where intentions were genuine. This aligns with wider expectations of [corporate accountability](https://lexlaw.co.uk/solicitors-london/manolete-case-study-director-ordered-to-repay-1-43m-for-unauthorised-expenditure-directors-duties-insolvency-act-breaches/) and transparency. Conduct in the period before insolvency may also give rise to related issues, including disputes involving [HMRC](gov.uk%5d(https:/www.gov.uk/government/organisations/hm-revenue-customs) and claims for [misfeasance](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-found-liable-for-misfeasance-and-dishonest-assistance-breach-of-insolvency-duties/). In some cases, the same underlying events may also lead to claims against professional advisers, depending on the facts and the duties owed. Ultimately, these cases reinforce a key principle: delay in recognising [insolvency risk](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) and taking appropriate action significantly increases personal exposure. The application of these principles is highly fact-specific and depends on the financial position of the company and the conduct of its directors. Directors should seek [specialist legal representation](https://lexlaw.co.uk/solicitors-london/sections-235-and-236-insolvency-act-1986-directors-duties-to-co-operate-with-liquidators/) to prevent exposure. ## Defending Director Claims A robust defence to wrongful trading or misfeasance claims requires a structured and evidence-based approach. [Directors](https://lexlaw.co.uk/solicitors-london/sections-235-and-236-insolvency-act-1986-directors-duties-to-co-operate-with-liquidators/) should seek early forensic accounting analysis where appropriate to assess whether losses genuinely increased as a result of continued trading. Evidence that there was a credible prospect of recovery, supported by financial forecasts, restructuring efforts, or [professional advice](https://lexlaw.co.uk/our-people/christopher-snell/), may be important. It may also assist if directors can show that they obtained and followed appropriate professional advice at the relevant time. In more [complex or high-value disputes](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/), funding arrangements, litigation strategy, and the quality of contemporaneous records may also affect how claims are pursued and defended**.** Strategic insight can also be gained from resources such as a legal guide to defending claims from [litigation funders](https://lexlaw.co.uk/solicitors-london/manolete-case-study-directors-liable-for-1-4m-misappropriation-and-unlawful-dividends/), particularly in complex, high-value disputes where third-party funding is involved. ## Instruct Expert London Litigation Lawyers [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/?page_id=356) are [specialist litigation lawyers](https://lexlaw.co.uk/our-people/christopher-snell/) based at Middle Temple, London, with extensive experience advising directors and businesses facing financial distress and [insolvency](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/)-related risk. Our team regularly acts in complex wrongful trading, misfeasance, and director liability claims, providing strategic guidance from early-stage risk assessment through to High Court proceedings. We understand the legal and commercial pressures directors face during the period leading up to insolvency, including [HMRC engagement](https://lexlaw.co.uk/solicitors-london/case-study-hmrc-security-notices-overturned-duma-rockey-v-hmrc-tribunal-tax-appeal/), creditor actions, and governance challenges. Our approach combines technical expertise with practical, commercially focused advice to help mitigate exposure and protect our clients’ position. As demonstrated in [LEXLAW’s](https://lexlaw.co.uk/legal-news/) experience advising on wrongful trading and director liability claims, [timely legal intervention](https://lexlaw.co.uk/?page_id=356) may be an important factor in mitigating or avoiding liability altogether. [Contact now](https://lexlaw.co.uk/?page_id=356) for [urgent legal advice](https://lexlaw.co.uk/our-people/christopher-snell/)! ### FAQ on Directors’ Duties Cases **What is the twilight period?** It is a non-statutory term commonly used to describe the period before formal insolvency when a company is in financial difficulty and directors’ decisions may later come under closer scrutiny. **Can directors be personally liable for company debts?** Potentially, depending on the circumstances, particularly under wrongful trading provisions if they fail to act responsibly. **What is wrongful trading?** Wrongful trading is a claim under section 214 of the Insolvency Act 1986 that may arise where directors knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation or administration and failed to take every step reasonably open to them to minimise loss to creditors. **How can directors reduce risk?** Risk may be reduced by acting promptly, maintaining transparency, avoiding preferential transactions, and seeking expert legal advice. **Are all payments during this period risky?** No, but preferential or unusual payments may be challenged and reversed. **When should professional advice be sought?** As early as possible once financial distress becomes apparent. --- # Ultimate Guide to HMRC Discovery Assessments: How to Challenge & Appeal (2026) Source: https://lexlaw.co.uk/solicitors-london/ultimate-guide-to-hmrc-discovery-assessments-how-to-challenge-appeal-2026/ Receiving an [HMRC discovery assessment](https://taxdisputes.co.uk/2019/06/court-of-appeal-confirms-discovery-assessment-was-invalid/) is alarming. It means [HMRC](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) believes you have paid insufficient tax, and it can arrive years after you filed your return, without warning. However, a discovery assessment is not automatically valid. The law imposes strict conditions on HMRC's power to issue one, and many assessments are [successfully challenged](https://taxdisputes.co.uk/2025/10/how-to-challenge-hmrc-tax-assessments-and-protect-your-rights/) or [overturned on appeal](https://taxdisputes.co.uk/2025/10/first-tier-tax-tribunal-appeals-guide/). ## What Is an HMRC Discovery Assessment? An HMRC discovery assessment is a formal tax assessment raised outside the ordinary enquiry window. Under [section 29(1) of the Taxes Management Act 1970 (TMA 1970)](https://taxdisputes.co.uk/wp-content/uploads/2025/02/Section-29-Taxes-Management-Act-1970.pdf), HMRC may issue an assessment where an officer of HMRC "discovers" that any income which ought to have been assessed has not been assessed, that an assessment has been made at too low a figure, or that excessive relief has been given. In plain terms: if HMRC comes to believe, even after your return has been processed without challenge, that you have [underpaid tax](https://taxdisputes.co.uk/2025/09/have-you-underpaid-your-tax-voluntary-disclosures-to-hmrc/), it can reopen your affairs using this power. It is a wide power, but it is not unlimited. ### What Triggers a Discovery Assessment? Common triggers include: - Third-party data received by HMRC (e.g. from employers, banks, overseas tax authorities, or Companies House) - Information disclosed in a related return, for example, a company's corporation tax return revealing a discrepancy with a director's personal return - HMRC's Connect data-matching system identifying undisclosed income or assets - An officer reviewing a return and forming a fresh view of the tax position - Offshore account disclosures under international information exchange agreements ## The Legal Framework: When Can HMRC Issue a Discovery Assessment? The power to raise a discovery assessment is governed by TMA 1970 s.29, supplemented by time limit provisions in section 34 and section 36 TMA 1970. Understanding this framework is essential to any challenge. ### The Two-Stage Test Under TMA 1970 s.29 HMRC must satisfy two conditions before a valid discovery assessment can be raised. First, an officer must genuinely "discover" an insufficiency of tax, meaning the officer must have an honest belief that tax has been lost, not merely a suspicion. The courts have confirmed this in [*Jerome Anderson v HMRC* [2018] UKUT 0159 (TCC)](https://assets.publishing.service.gov.uk/media/5afd92f7ed915d30f04c0987/Jerome_Anderson_v_HMRC.pdf), where the tribunal held that mere suspicion is insufficient to constitute a discovery. Second, HMRC must satisfy one of two "gateway" conditions under s.29(4) and s.29(5) TMA 1970: - The insufficiency of tax is attributable to fraudulent or careless conduct by the taxpayer or their agent; or - At the time the enquiry window closed, a hypothetical officer could not reasonably have been expected to be aware of the insufficiency from the information made available to them. The second gateway, often called the "hypothetical officer" test, is frequently the key battleground. The landmark Court of Appeal case of [*Langham v Veltema* [2004] STC 544](https://www.bailii.org/ew/cases/EWCA/Civ/2004/193.html) established that HMRC is shut out from raising a discovery assessment where the taxpayer, in making an honest and accurate return, has clearly alerted HMRC to the insufficiency of the assessment. Where [full and specific disclosure](https://taxdisputes.co.uk/2026/02/voluntary-disclosure-2026-guide/) has been made, the assessment will be invalid. Following *Veltema*, HMRC published [Statement of Practice SP1/06](https://www.gov.uk/government/publications/statement-of-practice-1-2006/statement-of-practice-1-2006), setting out examples of adequate disclosure, such as identifying the source and basis of property valuations, or explaining departures from HMRC's published interpretation of the law. Taxpayers who followed SP1/06 have significant protection, but the adequacy of disclosure remains fact-specific. ### Time Limits for Discovery Assessments The ordinary time limit for a discovery assessment is 4 years from the end of the relevant tax year (section 34 TMA 1970). However, if the loss of tax is attributable to [careless conduct](https://taxdisputes.co.uk/2026/01/hmrc-behaviour-assessments-careless-deliberate-or-concealed/), HMRC has 6 years. Where the [conduct is deliberate](https://taxdisputes.co.uk/2026/02/careless-vs-deliberate-paye-failures-penalty-exposure-explained/), the time limit extends to 20 years (section 36 TMA 1970). Challenging the applicable time limit is often one of the most powerful defences available. ## Grounds for Challenging a Discovery Assessment A discovery assessment issued against you is not the end of the matter. There are a number of grounds on which the assessment may be invalid or excessive. Our [specialist tax disputes team](https://www.taxdisputes.co.uk) regularly succeeds on the following grounds: ### 1. No Valid "Discovery" HMRC must demonstrate that an officer genuinely formed a belief, not merely a suspicion, of an insufficiency. Where HMRC has simply reassessed an existing return without new information, the assessment may be challenged on the basis that no discovery has been made. The tribunal in [*Charlton and others v HMRC* [2011] UKFTT 467 (TC)](https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2011/TC01317.html&query=(Charlton)+AND+(others)+AND+(v)+AND+(HMRC)+AND+(.2011.)+AND+(UKFTT)+AND+(467)+AND+((TC))) confirmed that officers are expected to exercise reasonable professional judgment and cannot simply rely on general suspicion. ### 2. Adequate Prior Disclosure If your return, or correspondence with HMRC, made sufficiently clear disclosure of the relevant facts to alert a reasonable officer to the potential insufficiency, the s.29(5) TMA 1970 gateway is not satisfied. This is a highly fact-specific argument that requires careful analysis of what was disclosed and when. A [tax disputes solicitor](https://www.lexlaw.co.uk/hmrc-tax-dispute-lawyers/) will review your return and accompanying documents to assess this ground. ### 3. Time Bar If HMRC has issued the assessment outside the applicable time limit, it is invalid regardless of whether the underlying tax is owed. Time limits are strictly applied, and HMRC must be in a position to establish both the date from which time runs and the correct limitation period. Many assessments fall at this hurdle. ### 4. Quantum Even where an assessment is legally valid, the amount assessed may be excessive. HMRC's estimated figures are frequently challenged, and the tribunal can substitute its own calculation. Gathering evidence to support a lower figure is essential to any appeal strategy. ### 5. Prevailing Practice Defence Under s.29(2) TMA 1970, HMRC cannot make good an insufficiency that arose because the return was made in accordance with generally prevailing practice at the time of filing. This defence is particularly relevant in areas where HMRC subsequently changed its interpretation of the law. ## How to Challenge an HMRC Discovery Assessment: Practical Steps If you receive a discovery assessment, the following steps are critical. Time limits are strict and missing the appeal deadline can be fatal to your position. ### Step 1: Do Not Ignore the Assessment You have 30 days from the date of the assessment to appeal to HMRC. If you miss this deadline, the assessment becomes final unless you can persuade the First-tier Tribunal to admit a late appeal, a process that has become more flexible following [*Medpro Healthcare Ltd v HMRC* [2025] UKUT 255 (TCC)](https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKUT/TCC/2025/255.html&query=(Medpro)+AND+(Healthcare)+AND+(Ltd)+AND+(v)+AND+(HMRC)+AND+(.2025.)+AND+(UKUT)+AND+(255)+AND+((TCC))), but which still carries real risk. Seek legal advice immediately. ### Step 2: Obtain Legal Advice Without Delay Discovery assessment appeals are technically demanding. The applicable statute, the relevant case law, and the procedural rules of the [First-tier Tax Tribunal](https://www.taxdisputes.co.uk) all require specialist knowledge. Early legal advice allows you to assess the strength of your position, identify the best grounds of challenge, and avoid making statements that could prejudice your case. LEXLAW's team includes lawyers with first-hand experience of HMRC's internal processes, having previously worked as HMRC's own senior tax counsel. This insight is invaluable in formulating an effective challenge. ### Step 3: Request an HMRC Internal Review Before proceeding to the Tribunal, you may request an HMRC internal review. This is conducted by an officer not previously involved in your case. It is an important opportunity to present your arguments, adduce new evidence, and potentially resolve the dispute without litigation. Requesting a review does not extend the appeal window, so it must be coordinated carefully. ### Step 4: Appeal to the First-tier Tribunal If the internal review does not resolve the dispute, the matter proceeds to the First-tier Tribunal (Tax Chamber), an independent judicial body with full jurisdiction to allow, vary, or set aside the assessment. The appeal is commenced by filing a Notice of Appeal with the Tribunal. At the hearing, the burden of proving the assessment rests on HMRC for certain issues, but the taxpayer must actively make good their own grounds of challenge. Our tax litigators are experienced in preparing and presenting appeals at the Tribunal, including the drafting of witness statements, skeleton arguments, and advocacy at hearing. Cases with wider implications can proceed to the Upper Tribunal and beyond on points of law. ### Step 5: Consider Alternative Dispute Resolution HMRC actively engages in [Alternative Dispute Resolution (ADR)](https://www.taxdisputes.co.uk) for certain disputes. ADR can be a cost-effective route to settlement, particularly in cases involving factual disagreements or where the legal position is uncertain. It does not prevent the taxpayer from proceeding to the Tribunal if agreement is not reached. ## Discovery Assessments and Related HMRC Actions A discovery assessment is often part of a broader HMRC enforcement picture. Depending on your circumstances, it may be accompanied by [HMRC tax penalties](https://www.lexlaw.co.uk/hmrc-tax-penalty-appeal-solicitor-london/), HMRC security notices, or in more serious cases, a [Code of Practice 9 investigation](https://www.lexlaw.co.uk/hmrc-tax-investigation-penalty-advice-solicitors/). Where a company is involved, HMRC's collection of an underlying tax debt may also lead to insolvency proceedings, including winding-up petitions. If you are facing any of these related actions, see [windinguppetitionsolicitors.co.uk](https://www.windinguppetitionsolicitors.co.uk) for specialist advice. In cases involving professional advisers whose negligent advice has exposed you to a tax liability, you may also have a claim in [professional negligence](https://www.professionalnegligenceclaimsolicitors.co.uk). LEXLAW regularly acts in cases where accountants or tax advisers have failed to adequately disclose matters in returns, resulting in discovery assessments that could have been prevented. --- # 2026 Guide: UK Winding‑up Petition Procedure Source: https://lexlaw.co.uk/solicitors-london/2026-guide-uk-winding-up-petition-procedure/ When a creditor issues a [winding‑up petition](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/), the company is immediately exposed to the risk of compulsory liquidation, frozen bank accounts and close scrutiny of director conduct in the [Insolvency & Companies Court](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/). In practice, there is a narrow window in which [specialist advice](https://lexlaw.co.uk/contact-us/) can rescue the business, protect stakeholders and avoid the usual compulsory liquidation order. We are a leading City of London [insolvency and winding‑up petitions team](https://lexlaw.co.uk/our-people/christopher-snell/), based in [Middle Temple](https://www.middletemple.org.uk/), a short walk from the Rolls Building where the Insolvency & Companies Court sits. We act for companies, directors and creditors nationwide in England & Wales, often at extremely short notice, to oppose or present winding‑up petitions and to obtain urgent relief such as [injunctions](https://windinguppetitionsolicitors.co.uk/obtaining-injunction-restrain-presentation-winding-up-petition/) and [validation orders](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/). If you have received a winding‑up petition, or you are considering presenting one, you should seek [specialist advice immediately](https://lexlaw.co.uk/legal-case-assessment/). Timeframes are short and the consequences of delay can be severe. ## UK Winding‑Up Petition process at a Glance Although every case is fact‑specific, most winding‑up petitions follow a broadly similar sequence: - Debt arises and remains unpaid (often following [statutory demand](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/), judgment, or arrears such as unpaid tax).            - Petition is drafted, issued in the appropriate court and listed for hearing.  - Petition is served at the company’s registered office.      - There is a short window to negotiate, pay, dispute the debt, or seek [urgent court relief](https://windinguppetitionsolicitors.co.uk/obtaining-injunction-restrain-presentation-winding-up-petition/).     - Petition is advertised in the [London Gazette](https://www.thegazette.co.uk/all-notices?ref=topmenu) (unless advertisement is [restrained](https://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/)). - Banks typically freeze the company’s accounts; [s.127 Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127) risks crystallise. - Petition is heard in the Insolvency & Companies List (or appropriate local court). - Outcomes include dismissal, adjournment, withdrawal/settlement or a winding‑up order. - If an order is made, a liquidator is appointed and investigates the company’s affairs.        At almost every stage in this process, decisive action by [specialist lawyers](https://lexlaw.co.uk/our-people/christopher-snell/) can make the difference between business rescue and compulsory liquidation. ## Step 1: When can a Creditor present a Winding‑Up Petition? A creditor can usually present a winding‑up petition where:        - The company owes a liquidated, undisputed debt of at least the statutory minimum £750. - The company is “unable to pay its debts” within the meaning of the [Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/contents) (for example, failure to satisfy a statutory demand or execution on a judgment).  - The petition is presented in the correct court with insolvency jurisdiction, often the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/) in London (Insolvency & Companies Court) or an appropriate District Registry / designated County Court, depending on the company’s share capital and location.    [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs) remains one of the most frequent petitioning creditors and will often escalate unpaid tax debts to petition stage when internal collection processes and [time‑to‑pay](https://lexlaw.co.uk/solicitors-london/hmrc-time-to-pay-arrangement-guide-2026-how-to-negotiate-a-repayment-plan-for-unpaid-tax/) discussions have failed. ### How Our Insolvency Experts Assist at this Stage? We rapidly assess whether the debt is genuinely disputed on substantial grounds, whether there are [cross‑claims or set‑off rights](https://windinguppetitionsolicitors.co.uk/when-can-a-counterclaim-defeat-a-winding-up-petition/), and whether there is a [viable route to prevent a petition being issued](https://windinguppetitionsolicitors.co.uk/obtaining-injunction-restrain-presentation-winding-up-petition/) or to attack it at the earliest opportunity. ## Step 2: Drafting and Issuing the Winding-Up Petition The creditor’s solicitors prepare a winding‑up petition in the [prescribed form](https://windinguppetitionsolicitors.co.uk/blank-winding-up-petition-form/), identify the correct court and obtain a hearing date. Once sealed and issued, the petition becomes court proceedings and strict statutory and procedural timetables begin to run. Key considerations include:      - Correct identification of the parties, debt and amount claimed.    - Proper venue and jurisdiction, given the company’s share capital and registered office.    - Whether other creditors have already presented petitions, and potential priority or race to court issues.      Errors in drafting, venue or procedure can be fatal to a petition if challenged promptly, but may be cured if left unaddressed. [Early specialist advice](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) is therefore essential for both petitioners and companies facing petitions. ## Step 3: Service of the Winding‑Up Petition The petition must be served at the company’s registered office in accordance with the [Insolvency Rules](https://www.legislation.gov.uk/uksi/2016/1024/contents), typically by personal service on an appropriate individual or, where necessary, by way of effective substituted service. Once served, the directors must treat the matter as both urgent and serious, as the company will then be subject to an active insolvency process in which any inaction is likely to favour the petitioning creditor. Furthermore, the directors’ ability to deal freely with the company’s assets will soon become constrained, both by [section 127 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/127) and by the practical consequence of bank account freezes following [advertisement of the petition](https://windinguppetitionsolicitors.co.uk/advertisement-of-winding-up-petition-form-4-6-download-template/). We are frequently [instructed](https://windinguppetitionsolicitors.co.uk/our-success-case-studies-successful-insolvency-law-firm-london/) on the same day that a petition is served, including where directors only become aware through their registered office provider or accountant. ## Step 4: The Critical Post‑Service Window The short period immediately following service is often decisive for whether the company survives. In this window, we typically:     - Obtain and review the petition, any supporting evidence and key financial documents. - Identify whether the debt can be paid in full, refinanced, compromised or genuinely disputed. - Advise on and, where appropriate, pursue urgent applications, including:[Injunctions to restrain advertisement](https://windinguppetitionsolicitors.co.uk/restraining-injunctions-against-winding-up-petitions-and-advertisements/) in the London Gazette.- [Validation orders](https://windinguppetitionsolicitors.co.uk/validation-order/) permitting the company to use its bank account or carry out specific transactions. - [Adjournments](https://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/) to allow time for restructuring or sale.      Courts expect directors to act responsibly once they know of a petition. Doing nothing significantly increases the risk of an immediate winding‑up order, personal exposure and criticism in any subsequent liquidator’s investigation. ## Step 5: Advertisement in the London Gazette Unless the Court orders otherwise, the petitioning creditor may advertise the petition in the [London Gazette](https://www.thegazette.co.uk/all-notices?ref=topmenu) after a short period following service. Such [advertisement](https://www.thegazette.co.uk/insolvency) is a significant step in the process: banks and lenders routinely monitor Gazette notices and will often freeze the company’s accounts upon publication; suppliers, customers and other creditors may also become aware of the petition and adjust their position accordingly; and any disposition of the company’s property made after the commencement of the winding-up may be rendered void pursuant to section 127 of the Insolvency Act 1986, unless validated by the Court. We regularly apply for [injunctions to restrain advertisement](https://windinguppetitionsolicitors.co.uk/restraining-injunctions-against-winding-up-petitions-and-advertisements/) where the petition is disputed, abusive or being used for an improper collateral purpose. If advertisement has already occurred, we advise on [validation orders](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/) and other strategies to keep the business trading where that is realistically achievable in creditors’ interests. ## Step 6: The Court Hearing of the Petition In London, winding‑up petitions are heard in the [Insolvency & Companies Court](https://www.gov.uk/courts-tribunals/the-business-and-property-courts) at the Rolls Building on Fetter Lane. Elsewhere in England & Wales, petitions may be listed in appropriate [High Court District Registries](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/chancery-division/chancery-division-regional-centres/) or designated County Courts with insolvency jurisdiction. At the hearing, the court may: - Dismiss the petition (for example, where the debt is paid in full or genuinely disputed). - Adjourn the petition (to allow payment, restructuring, further evidence or joinder of interested parties). - Record a withdrawal or consent order following settlement. - Make a winding‑up order and place the company into compulsory liquidation.     The court may hear from the petitioner, the company and its directors/shareholders, supporting or opposing creditors and any person with an interest in the company’s property. Our [dual-qualified solicitors](https://lexlaw.co.uk/our-people/m-ali-akram/) and [barristers](https://lexlaw.co.uk/our-people/christopher-snell/) appear regularly in the Insolvency & Companies Court and in regional courts to oppose or present petitions, including acting as London agents and specialist advocates for regional firms. ## Step 7: After a Winding‑Up Order: The Liquidator’s Role If the Court makes a winding-up order, the Official Receiver is initially appointed as liquidator, although a licensed insolvency practitioner is often subsequently appointed in their place. The liquidator will then investigate the company’s affairs, including any antecedent transactions, the conduct of the directors, and potential claims for wrongful trading, misfeasance, preferences, and transactions at an undervalue. Directors are under a duty to co-operate fully in this process, including delivering up the company’s books and records and responding to any enquiries or interview requests. This guide focuses on the petition process itself. [Our team](https://lexlaw.co.uk/our-people/christopher-snell/) also [advises](https://lexlaw.co.uk/contact-us/) directors and stakeholders facing liquidator investigations, potential personal claims and [director disqualification](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/company-directors-disqualification-proceedings-disqualification-orders/) proceedings. ## How We Can Help with Winding‑Up Petitions? From first instruction, we provide coordinated advice from both [solicitors and barristers](https://lexlaw.co.uk/our-people/christopher-snell/) at a discounted fixed‑fee initial meeting, then act decisively within compressed insolvency timetables. We regularly oppose or restrain winding-up petitions, including at short notice and at [last-minute hearings](https://windinguppetitionsolicitors.co.uk/last-minute-winding-up-petition-hearing-representation/), and [obtain adjournments](https://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/) to allow time for refinancing, asset sales, or formal restructuring. We also [secure injunctions to prevent advertisement](https://windinguppetitionsolicitors.co.uk/restraining-injunctions-against-winding-up-petitions-and-advertisements/) in the London Gazette and [obtain validation orders](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/validation-orders-solicitors-london/) to unfreeze bank accounts or authorise specific transactions. In addition, we implement rescue and turnaround strategies, including Company Voluntary Arrangements (CVAs), Partnership Voluntary Arrangements (PVAs), Individual Voluntary Arrangements (IVAs), and administrations. We also act for creditors in presenting winding-up petitions to enforce substantial and often complex debts, including liabilities of the scale typically pursued by HMRC. If you are facing or considering a winding‑up petition, [contact our insolvency team](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) immediately to arrange an [urgent consultation](https://lexlaw.co.uk/legal-case-assessment/). ### UK Winding‑up Petition FAQs **What is a winding‑up petition?** A winding‑up petition is a formal court application by a creditor asking the court to wind up a company or partnership on insolvency grounds and place it into compulsory liquidation. It is one of the most serious debt enforcement tools available and should never be ignored. **How quickly can a winding‑up petition lead to liquidation?** Timescales vary by court list, judicial availability and any adjournments, but an undefended petition can lead to a winding‑up order within weeks rather than months. Delays typically arise only where there are disputes, negotiations, adjournments or multiple competing petitions.   **Can a company be saved after a winding‑up petition is issued?** Yes, many companies can be rescued if specialist advice is sought at an early stage. Available options may include disputing the debt and seeking dismissal of the petition, paying, refinancing, or compromising the petition debt, seeking an adjournment to implement a restructuring, sale, or Company Voluntary Arrangement (CVA), and obtaining validation orders to allow trading to continue safely while a solution is put in place. However, once a winding-up order is made, the range of options narrows significantly, and the focus shifts primarily to mitigation and the management of director liabilities and risks. **What is the difference between a statutory demand and a winding‑up petition?** A statutory demand is usually a precursor: it is a formal demand for payment within a specified period, used to evidence a company’s inability to pay its debts. A winding‑up petition is the court proceeding itself by which a creditor asks the court to compulsorily wind up the company. **What happens if a winding‑up petition is advertised?** Once a petition has been advertised in the London Gazette, banks will typically freeze the company’s accounts, and suppliers, customers, and other creditors will become aware of the petition and may take defensive action. In addition, any dispositions of company property made after the commencement of winding-up may be rendered void unless validated by the Court. In practice, we frequently seek injunctions to restrain such advertisement or, where the advertisement has already taken place, obtain validation orders and other forms of relief to enable viable businesses to continue trading.           **Can directors be personally liable if the company is wound up?** Directors are not automatically personally liable for the company’s debts. However, they may be held liable under personal guarantees or for overdrawn directors’ loan accounts, and in certain circumstances, they may face claims for wrongful trading, misfeasance, preferences, or transactions at an undervalue. Their conduct will also be reported to the Insolvency Service and may give rise to director disqualification proceedings. Seeking early, specialist advice is crucial to help directors understand and properly discharge their duties once a petition is threatened or has been issued. **Which courts hear winding‑up petitions in England & Wales?** In London, winding‑up petitions are listed in the Insolvency & Companies Court at the Rolls Building, Fetter Lane. Outside London, petitions may be issued and heard in appropriate High Court District Registries or designated County Courts with insolvency jurisdiction, depending on the company’s share capital and registered office. **Do we act for companies, creditors or both?** Our insolvency solicitors and barristers acts for both sides of the process. We represent companies and directors facing petitions, including those brought by HMRC and multiple trade creditors, as well as petitioning creditors seeking to maximise recovery or resolve complex disputes. In addition, we act for regional firms requiring specialist London-based agents and advocates for petitions listed in the Insolvency and Companies Court. --- # Interest Rate Swap Mis-selling: Do You Still Have a Claim in 2026? Source: https://lexlaw.co.uk/solicitors-london/interest-rate-swap-mis-selling-do-you-still-have-a-claim-in-2026/ Between approximately 2001 and 2012, major UK high street banks, including [Barclays](https://lexlaw.co.uk/solicitors-london/barclays-attempt-strike-swaps-mis-selling-claim-dismissed-high-court/), HSBC, [Lloyds](https://lexlaw.co.uk/solicitors-london/the-times-lloyds-pays-up-on-interest-rate-swap-wrangle/), [Royal Bank of Scotland (NatWest)](https://lexlaw.co.uk/solicitors-london/high-court-judgment-crestsign-limited-claimant-and-1-national-westminster-bank-plc-2-the-royal-bank-of-scotland-plc/), Clydesdale Bank, Yorkshire Bank, Santander and Nationwide, aggressively sold complex financial derivatives known as [interest rate hedging products (IRHPs)](https://www.fca.org.uk/consumers/interest-rate-hedging-products) to thousands of small and medium-sized enterprises (SMEs). These instruments, which included standalone [interest rate swaps](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/interest-rate-swap-mis-selling-solicitors/), [structured collars, caps, tailored business loans](https://lexlaw.co.uk/solicitors-london/clydesdale-and-yorkshire-banks-tailored-business-loans-terms-of-swaps-mis-selling-review/) (TBLs) and fixed rate loans with embedded or "hidden" swaps, were routinely sold without adequate explanation of their risks, without proper suitability assessments, and in many cases as a coercive condition of receiving a commercial loan. When interest rates collapsed in late 2008, the consequences for affected businesses were catastrophic: ruinous balancing payments, six-figure break costs, and for many, insolvency. The FCA's formal [Interest Rate Hedging Product (IRHP) Review scheme](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/bank-reviews-of-irhps-swaps-fca-fsa-review/) paid out over £2.2 billion in redress. Yet more than a third of affected customers were excluded entirely, and countless others accepted inadequate settlements, were dismissed as "sophisticated customers", or simply were never notified of their rights. The question that now confronts many business owners, company directors and individual borrowers is a pressing one: do you still have a valid legal claim in 2026? The answer, in a significant number of cases, is yes, but time is running out. ## What Is Interest Rate Swap Mis-selling? An interest rate swap is a bilateral contractual arrangement in which two parties exchange interest rate cash flows, typically, one party pays a fixed interest rate while receiving a floating rate in return. In theory, these instruments offer protection against rising interest rates. In practice, banks sold them to SMEs with little or no understanding of the product's true nature, complexity, or the enormous contingent liabilities they carried. Under the [Financial Services Authority's Conduct of Business Sourcebook (COBS) rules](https://handbook.fca.org.uk/handbook/COBS.pdf),- now superseded by the FCA's COBS,- banks were obliged to: - Ensure the product was genuinely suitable for their customer; - Provide a full and clear explanation of the product's risks including the potential for large break costs; - Disclose conflicts of interest (banks earned immediate and substantial "book profits" from derivative sales); and - Act honestly, fairly and professionally in their customers' best interests. In the overwhelming majority of cases examined through the FCA review and subsequent litigation, these obligations were not met. Banks breached both their statutory duties under the [Financial Services and Markets Act 2000](https://www.legislation.gov.uk/ukpga/2000/8/contents) and their common law duty of care, and in many instances made fraudulent or negligent misrepresentations to customers about the nature of the product they were being sold. ## The Scale of the Scandal: What the Banks Did The mis-selling was not incidental or isolated, it was structural. Derivative sales generated huge immediate book profits for banks, creating powerful incentives to sell these products regardless of suitability. Retail banking staff with limited knowledge of OTC derivatives were incentivised and trained to offer swaps as part of the loan package, often presenting them as straightforward "interest rate protection" with no meaningful downside. Customers, typically owners of care homes, hotels, farms, professional practices and family-run businesses, were rarely told that the swap ran for a term potentially far longer than the loan itself; that the break cost could amount to several times the original loan value; that the bank itself had hedged its own risk in the interbank market and was passing all adverse risk onto the customer; or that the floating rate to which the swap was indexed, [LIBOR](https://lexlaw.co.uk/libor-manipulation-mis-selling-loan-hedging-financial-product-claims-advice/), was itself being manipulated by the very banks selling the product (see below). For customers sold fixed rate loans by lenders such as Nationwide, West Bromwich Building Society, Aviva (through its GP loan arm, GPCF) or Clydesdale/Yorkshire Bank's "Tailored Business Loan" product, the position was often worse still: many had no idea they had been sold a derivative at all and discovered the existence of the embedded swap only when attempting to refinance, exit, or sell their property, at which point they were confronted with a break cost that could run into hundreds of thousands of pounds. For further information on these cases, see our dedicated guide on [hidden swaps in fixed rate loans and TBLs](https://lexlaw.co.uk/practice-areas/litigation-dispute-resolution-solicitors-london/fixed-rate-loans-tailored-business-loans-tbl-with-embedded-derivatives-hidden-swaps/). ## The FCA IRHP Review: Billions Paid Out, Thousands Left Behind Following intense regulatory and Parliamentary pressure, the FCA launched a formal review in 2012 requiring participating banks to re-examine past IRHP sales and pay redress where appropriate. The scheme covered approximately 30,000 IRHP sales. By its conclusion, the FCA reported that over £2.2 billion had been paid in redress, a figure that, while substantial, obscures how systematically inadequate the process was. The banks themselves, the very wrongdoers, were permitted to run their own redress determinations. The scope of the scheme was, following sustained bank lobbying, limited exclusively to "non-sophisticated" customers, resulting in the exclusion of over a third of affected businesses. The criteria for determining "sophistication" were applied inconsistently, unfairly and without objective basis. Many customers classified as "sophisticated", and thus excluded, were in reality small business owners with no prior knowledge of or experience with derivatives whatsoever. In June 2019, the FCA appointed Mr John Swift QC as independent reviewer. His 493-page Swift Report concluded that the FCA had allowed the banks improperly to shape the review scheme to their own advantage and that the sophistication assessment process was fundamentally flawed. Following the Swift Report, the FCA confirmed that victims previously excluded as "sophisticated customers" may submit formal appeals against their classification. Our team has developed considerable expertise in preparing and presenting these appeals. For further information, see our page on [how to appeal an unfair sophisticated customer classification](https://lexlaw.co.uk/fca-irhp-swap-review-how-to-appeal-an-unfair-sophisticated-customer-classification/). ## Do Limitation Periods Bar Your Claim in 2026? This is the central question facing any SME or individual considering a swap mis-selling claim in 2026. The honest answer depends critically on the precise legal basis of your claim, the nature of the product sold, when the agreement was entered into, and whether any basis exists to extend or disapply the standard limitation period. ### The Six-Year Contractual Limitation Period Under section 5 of the [Limitation Act 1980](https://www.legislation.gov.uk/ukpga/1980/58/contents), claims founded in contract must generally be brought within six years of the date on which the cause of action accrued, typically the date the swap agreement was entered into. For standalone IRHP sales in the period 2005–2008, a straightforward six-year contractual limitation period will in many cases have expired. This is a hard and unforgiving rule, and it has indeed barred a significant volume of straightforward swap mis-selling claims. However, the six-year contractual period is not the end of the analysis. Significant exceptions exist, and in many cases they apply with full force. ### Section 32 of the Limitation Act 1980: Fraud, Concealment and Mistake Section 32 of the Limitation Act 1980 is of critical importance. Where the defendant (i.e. the bank) has deliberately concealed facts relevant to the claimant's cause of action, or where the claim is founded on the defendant's fraud, time does not begin to run until the claimant has discovered, or could with reasonable diligence have discovered, the concealment or fraud. This provision is particularly relevant to cases involving: hidden or embedded swaps where the customer was not told a derivative had been sold to them; LIBOR manipulation (see below); and cases where the bank actively misrepresented the nature of the product's risks. Courts have interpreted s.32 generously in favour of claimants in complex financial mis-selling cases. A business that, for example, entered into a fixed rate loan in 2007 and only discovered the existence of an embedded swap and associated break costs in 2015 or later may well have a viable claim in 2026, once the full analysis of the limitation position is undertaken by a specialist solicitor. Our [Limitation Periods](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) page provides further information on how these provisions operate in practice. ### LIBOR Manipulation: Resetting the Limitation Clock One of the most significant developments in interest rate swap mis-selling litigation has been the court's treatment of LIBOR manipulation as a separate and independent cause of action with its own, later, running limitation period. LIBOR, the London Interbank Offered Rate, was the floating reference rate used in virtually every interest rate swap sold by the banks during the period in question. Beginning in 2012, regulatory investigations confirmed that Barclays, RBS, Lloyds, HSBC, Deutsche Bank, UBS and others had engaged in systematic, widespread manipulation of LIBOR submissions over many years, including during the very period in which they were selling IRHP products to their SME customers. Barclays alone was fined £290 million by the FSA and US regulators. The critical legal development was the decision in [**Property Alliance Group Limited v The Royal Bank of Scotland plc** [2018] EWCA Civ 355](https://www.judiciary.uk/wp-content/uploads/2018/03/pag-v-rbs.pdf). The Court of Appeal confirmed that RBS had made implied representations about LIBOR to its customer at the time the swap contracts were executed, specifically, that RBS was not manipulating LIBOR submissions. The Court held that where a defendant has made a fraudulent misrepresentation, section 32 of the Limitation Act 1980 applies, and time runs only from when the claimant discovered or could with reasonable diligence have discovered the fraud. This is a principle of enormous significance: it means that customers who were sold LIBOR-referenced swaps may have claims that are not yet time-barred, even where the contractual six-year period has long expired, provided the LIBOR fraud limb of the claim can be properly pleaded and evidenced. For further analysis of [LIBOR manipulation claims](https://lexlaw.co.uk/libor-manipulation-mis-selling-loan-hedging-financial-product-claims-advice/), including how they interact with limitation periods, see our dedicated practice area page. ## Fixed Rate Loans and Hidden Swaps: Claims Still Very Much Alive For the tens of thousands of customers sold fixed rate commercial loans with embedded swap derivatives, products sold by Clydesdale/Yorkshire Bank, Nationwide, West Bromwich Building Society, Aviva/GPCF, Lloyds, RBS and others, the limitation position is often considerably more favourable. These products were sold under a deliberately opaque structure: the customer was told only that they were taking out a commercial mortgage or fixed rate loan. The derivative embedded within the loan, and its enormous contingent liability in the form of a break cost, was neither disclosed nor explained. In many cases, customers were actively misled. The cause of action did not, therefore, accrue until the customer discovered (or could with reasonable diligence have discovered) the existence of the hidden derivative. For customers who have only recently received demands for break costs on attempting to refinance or sell, a claim may well lie within limitation. Importantly, for individuals, as distinct from corporate borrowers, who were sold fixed rate loans or mortgages with hidden swaps, we have developed litigation strategies that address the limitation position directly and have achieved significant financial recoveries for clients who were initially told their claims were time-barred. Our [detailed guide for individuals mis-sold fixed rate loans with swap break costs](https://lexlaw.co.uk/individuals-mis-sold-fixed-rate-loans-with-swap-break-costs/) sets out the full legal landscape in this area. ## Key Case Law on Interest Rate Swap Mis-selling The courts have had considerable opportunity to examine the legal basis of IRHP mis-selling claims over the past decade, and the weight of decided authority clearly establishes that the banks' conduct was in many cases actionable. The following decisions are of particular relevance. [**Crestsign Ltd v National Westminster Bank plc & Another** [2014] EWHC 3043 (Ch)](https://lexlaw.co.uk/wp-content/uploads/2014/09/Final-Judgment-Crestsign-Ltd-v-Natwest-RBS.pdf): In this case HHJ Pelling QC held that NatWest had owed a duty of care to its customer in relation to the advice given on a swap, that it had breached that duty by failing adequately to explain the break costs and risks, and that the customer was entitled to damages. This was one of the first cases to establish that advisory duties in this context can arise independently of any formal advisory relationship. [**Property Alliance Group Limited v The Royal Bank of Scotland plc** [2018] EWCA Civ 355](https://lexlaw.co.uk/solicitors-london/property-alliance-group-pag-rbs-grg-2018-appeal-libor-manipulation-mis-selling-derivatives-swaps/): As discussed above, this Court of Appeal decision confirmed the arguability of LIBOR fraud in IRHP mis-selling claims and is the foundation of s.32 limitation arguments in LIBOR-based claims. [**Thornbridge Ltd v Barclays Bank plc** [2015] EWHC 3430 (QB)](https://www.bailii.org/ew/cases/EWHC/QB/2015/3430.pdf): The High Court examined the scope of duties owed by a bank when selling an interest rate swap on a "non-advised" basis and confirmed that even non-advisory sales relationships can give rise to tortious liability where misrepresentations are made. ## What Remedies Are Available? Where a mis-selling claim succeeds, whether through litigation, negotiation or the FCA review scheme, the primary remedy is rescission and damages assessed to place the claimant in the position they would have occupied had the mis-selling never occurred. In practical terms this typically means: a full refund of all net swap payments made to the bank over the life of the product; recovery of break costs and early redemption charges paid; consequential losses flowing from the mis-selling (for example, the loss of business opportunities, or the cost of refinancing at disadvantageous rates); and interest on all sums recovered. In the most significant cases, such as the £4.6 million settlement achieved for care home operator the Coin Group against Lloyds Bank, the total recovery substantially exceeds the face value of the original loan around which the swap was structured. Where the business has already entered insolvency and been wound up as a direct or partial consequence of the mis-sold product, it may be possible to obtain an assignment of the claim from the administrator or trustee in bankruptcy, allowing the former business owner to pursue recovery directly. Should your business be currently facing winding-up proceedings, or should a [winding-up petition](https://windinguppetitionsolicitors.co.uk) have been issued against you by the bank or HMRC, obtaining specialist legal advice as a matter of urgency is essential, our team regularly acts in both strands of work concurrently. ## Professional Negligence: Was Your Adviser Also at Fault? In a not insignificant number of IRHP cases, the business owner relied upon advice from an accountant, independent financial adviser (IFA), commercial finance broker or corporate solicitor at the time of entering into the swap or fixed rate loan. Where that adviser failed to identify the nature of the product being recommended, failed to warn of break costs, or failed to advise the client to obtain specialist derivative advice, a concurrent claim in [professional negligence](https://professionalnegligenceclaimsolicitors.co.uk) may lie against that adviser, and critically, that claim may carry a different and potentially longer limitation period under s.14A of the Limitation Act 1980, which permits claims to be brought within three years of the claimant acquiring the relevant knowledge, subject to a fifteen-year long-stop. If you believe your professional adviser was also negligent in connection with the sale or management of an IRHP, our specialist [professional negligence solicitors](https://professionalnegligenceclaimsolicitors.co.uk) can assess that strand of your claim alongside any action against the bank. Separately, if the break costs or swap payments associated with a mis-sold derivative product have resulted in HMRC disputes, tax liabilities or issues with HMRC enforcement action, our specialist [tax disputes](https://taxdisputes.co.uk) team can advise on the interaction between your mis-selling claim and any tax position. ## What Should You Do If You Were Mis-sold an Interest Rate Swap? If you are reading this article because you believe you or your business may have been mis-sold an interest rate swap, structured collar, LIBOR-linked product, tailored business loan or fixed rate commercial loan with embedded break costs, the single most important step is to take specialist legal advice without delay. The legal basis of your claim, whether any limitation arguments apply or can be displaced, and the appropriate strategy for recovery are all matters requiring expert analysis, analysis that a generalist solicitor, a claims management company, or an online questionnaire simply cannot provide. The following preliminary steps are worth taking as soon as possible. First, locate all documentation relating to the original loan or swap agreement, including any credit agreements, swap confirmations, ISDA master agreements, loan facility letters, and correspondence from the bank at the time of sale. Second, obtain the current mark-to-market value or break cost of the product if it is still live. Third, note any prior complaints you or your advisers have made to the bank or the Financial Ombudsman Service, together with any responses received. Fourth, consider whether your claim was dealt with under the FCA IRHP Review and, if so, what outcome you received and whether a sophistication classification was applied. You can use the [Limitation Act 1980 guidance](https://lexlaw.co.uk/limitation-periods-time-limits-bar-statute-expired-start-claim-litigation-legal-advice/) on our website to begin to understand the time constraints on your claim, but a detailed assessment by a specialist swaps litigation solicitor is essential before any view on limitation is finalised. ## Why Instruct a Specialist Interest Rate Swap Mis-selling Solicitor? Interest rate swap mis-selling litigation is one of the most technically demanding areas of financial services litigation. It requires a command of OTC derivatives pricing and mechanics, the regulatory framework that applied at the time of sale, the applicable conduct of business rules, and how those rules interact with common law causes of action in misrepresentation, negligence and breach of statutory duty. It also demands sophisticated strategic thinking on limitation, a single error in the pleading of s.32 arguments can be fatal to an otherwise meritorious claim. Generalist solicitors and claims management companies typically lack the training, experience and expertise to conduct this analysis. Claims management companies, in particular, are not authorised to issue court proceedings or represent clients in High Court litigation, they can only make complaints to the Financial Ombudsman Service. This is a critical limitation where the FOS maximum award (currently £415,000 for complaints referred from 1 April 2019) would not come close to compensating the full losses of a larger mis-selling claim. Our specialist team has conducted more IRHP litigation than any other law firm in England and Wales. We have been featured in BBC Panorama, Sky News, The Times, The Sunday Times and the Financial Times in connection with this work. We have achieved recoveries for clients in cases where other firms had advised that no viable claim existed, and have settled cases on terms that bear no resemblance to what the banks initially offered. Our work in this area has been cited in Parliament, referenced by leading authors on banking law, and our arguments have been accepted by the Swift Review. **The Limitation Act 1980 Warning: Time Is Critical.** The Limitation Act 1980 sets out strict statutory deadlines within which legal proceedings must be commenced. Once a limitation period expires, your legal rights are permanently and irreversibly barred. The exceptional routes to avoid limitation, s.32 fraud and concealment, LIBOR manipulation, or the specific limitation position for hidden swap claims, are technical and require careful case-specific analysis. Do not assume your claim is time-barred without taking specialist advice, and equally, do not assume time is on your side. Contact us at your earliest opportunity. ## Contact Our Interest Rate Swap Mis-selling Solicitors We analyse your case prospects. We deliver strategic legal advice at your first fixed fee meeting. We get optimal legal results. If you were sold an interest rate swap, fixed rate loan, tailored business loan, structured collar or any other interest rate hedging product by a UK bank or building society, and you believe it was mis-sold, [contact](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) our specialist team today. --- # Unfair Prejudice Petitions: A Complete 2026 Guide for Shareholders Source: https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/ Minority shareholders in private companies can find themselves in an extremely difficult position. You may have invested time, money and trust into a business, only to find yourself frozen out of decisions, denied information, or watching the majority use the company for their own benefit at your expense. The law recognises that this kind of treatment is wrong, and it provides a specific legal remedy designed to address it. An [unfair prejudice petition](https://lexlaw.co.uk/solicitors-london/quick-guide-s-994-companies-act-unfair-prejudice-petitions/) under the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents) is one of the most powerful tools available to a shareholder in this position, capable of compelling a buy-out of your shares at fair value or forcing a change in the way the company is run. But these are complex, [high-stakes proceedings](https://lexlaw.co.uk/practice-areas/) where the [right legal strategy](https://lexlaw.co.uk/contact-us/) matters enormously from the very first step. This guide explains how unfair prejudice petitions work, who can bring one, and what outcomes are available, so that you can approach your situation with clarity and confidence. ## What Is an Unfair Prejudice Petition? If you are a shareholder in a [private company](https://lexlaw.co.uk/solicitors-london/2026-guide-uk-winding-up-petition-procedure/) and you believe the people running it are treating you unfairly, you may have the right to ask the court to step in. This is done through what is known as an unfair prejudice petition, a legal remedy found in sections 994 to 999 of the [Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/contents). In plain terms, an [unfair prejudice petition](https://lexlaw.co.uk/solicitors-london/court-of-appeal-decides-s994-petitions-subject-to-statutory-limitation-period/) allows a shareholder who has been treated unjustly by the majority to go to court and seek a remedy. The court has wide powers to put things right, including ordering that your shares be bought out at a fair value. It is one of the most important and commonly used tools available to minority shareholders in [England and Wales](https://www.judiciary.uk/courts-and-tribunals/high-court/), and getting the strategy right from the outset is critical. That is where [our experts](https://lexlaw.co.uk/our-people/christopher-snell/) can help. ## Who Can Bring an Unfair Prejudice Petition? The right to bring a [petition](https://lexlaw.co.uk/solicitors-london/what-happens-after-a-winding-up-petition-order-is-made-a-2026-guide/) belongs primarily to members of a company, meaning those registered as shareholders. However, the [law](https://www.legislation.gov.uk/ukpga/2006/46/contents) also extends the right to certain people who are not yet formally registered, such as someone who has received shares through a transfer or inheritance but has not yet been entered on the [company's register of members](https://www.gov.uk/government/organisations/companies-house). There is no fixed [minimum shareholding](https://lexlaw.co.uk/solicitors-london/court-of-appeal-decides-s994-petitions-subject-to-statutory-limitation-period/) required. A member holding even a small percentage of shares can bring a petition. In practice, petitions are most commonly brought by minority shareholders holding less than 50% of the voting shares, as they lack the power to block or override decisions made by the majority. [Courts](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) have also permitted petitions brought by shareholders holding exactly 50% of the shares, particularly where deadlock is combined with other oppressive behaviour, though petitions by [majority shareholders](https://lexlaw.co.uk/solicitors-london/quick-guide-s-994-companies-act-unfair-prejudice-petitions/) are much harder to sustain. One important point: if your name is not yet on the [company's register of members](https://www.gov.uk/government/organisations/companies-house), you may need to have the [register](https://www.gov.uk/government/organisations/companies-house) rectified before your petition can proceed. This is a technical but vital step, and [our team](https://lexlaw.co.uk/our-people/) regularly [advises clients](https://lexlaw.co.uk/contact-us/) on precisely this issue. ## What Conduct Can Amount to Unfair Prejudice? This is the central question in any [unfair prejudice claim](https://lexlaw.co.uk/solicitors-london/court-of-appeal-decides-s994-petitions-subject-to-statutory-limitation-period/). The conduct complained of must relate to the affairs of the company, and it must be both prejudicial to your interests as a shareholder and unfair. All three elements must be present. The courts have consistently held that [unfairness](https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/) is assessed objectively. It is not enough to feel hard done by or to be on the losing side of a disagreement. The question is whether, taking all the circumstances into account, the conduct of the majority was inequitable in a way that caused real harm to you as a shareholder. Some of the most common situations where courts have found unfair prejudice include: - Exclusion from management, particularly where you had a legitimate expectation of involvement, for example in a quasi-partnership company - Excessive or unauthorised remuneration paid to [directors](https://lexlaw.co.uk/solicitors-london/directors-exposed-to-personal-liability-in-the-twilight-period-insolvency-act-1986/) who are also majority shareholders - Misappropriation of company funds or opportunities for personal benefit - Failure to pay dividends to one class of shareholders while paying them to another - Dilution of your shareholding through bad-faith share allotments - Withholding of [financial information](https://lexlaw.co.uk/solicitors-london/consumer-rights-act-unfair-terms-glaser-v-atay/) or management accounts Equally important is knowing what [courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) have said does not qualify. Commercial disagreements, differences of opinion about business strategy, and a general breakdown of trust between shareholders are not in themselves sufficient. The [law](https://www.legislation.gov.uk/ukpga/2006/46/contents) does not rescue a shareholder simply because they are unhappy with decisions made by the majority, which is precisely why [expert analysis](https://lexlaw.co.uk/contact-us/) of the facts is essential before a petition is [issued](https://lexlaw.co.uk/contact-us/). ## Quasi-Partnerships and Equitable Obligations Many of the most significant [unfair prejudice](https://lexlaw.co.uk/solicitors-london/court-of-appeal-decides-s994-petitions-subject-to-statutory-limitation-period/) cases involve what lawyers call a quasi-partnership. This is a private company in which the members, often two or three people, set it up on the basis of mutual trust and with informal understandings about how it would be run, who would be involved in management, and how profits would be shared. Where such understandings exist and are acted upon, the [courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) can impose equitable obligations on the majority that go beyond what is written in the company's articles. So, for example, if you agreed at the outset that you would both be [directors](https://lexlaw.co.uk/solicitors-london/directors-personal-guarantees-what-happens-when-a-corporate-debtor-defaults/) and involved in day-to-day management, and then your co-shareholder removes you without justification and without offering to buy your shares at a fair price, that conduct may well amount to unfair prejudice even if it was technically permitted under the articles. The landmark case of [O'Neill v Phillips](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd990520/neill01.htm), decided by the House of Lords in 1999, remains the cornerstone authority on [unfair prejudice](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd990520/neill01.htm). It established that the concept of unfairness must be assessed by reference to the reasonable expectations of the parties, shaped by the company's constitution and any informal agreements or understandings between them. Identifying and evidencing those understandings is a task for [experienced lawyers](https://lexlaw.co.uk/our-people/christopher-snell/), and [our team](https://lexlaw.co.uk/our-people/) has substantial [expertise](https://lexlaw.co.uk/contact-us/) in this area. ## What Remedies Can the Court Order? If your petition succeeds, the [court](https://www.judiciary.uk/courts-and-tribunals/high-court/) can make whatever order it considers appropriate to address the unfairness. The most common remedy by far is a buy-out order, requiring the majority shareholders to purchase your shares at a fair value determined by the [court](https://www.judiciary.uk/courts-and-tribunals/high-court/). This allows you to exit the company with fair compensation and draw a line under what can be a deeply damaging dispute. However, the court's powers are much broader than that. The court may also order that the company stop engaging in certain conduct, require it to take a particular action, regulate how the company's affairs are run going forward, or even [authorise proceedings](https://lexlaw.co.uk/solicitors-london/personal-liability-notices-plns-guide-2026-what-directors-need-to-know/) to be brought in the [company's name](https://www.gov.uk/government/organisations/companies-house). In exceptional cases the court can also [wind up the company](https://lexlaw.co.uk/solicitors-london/2026-guide-uk-winding-up-petition-procedure/), although this is a remedy of last resort. Share valuation is often the most complex and contested aspect of the remedy phase. Questions arise about the appropriate date for valuation, whether a minority discount should apply, and how [misconduct](https://lexlaw.co.uk/solicitors-london/2026-guide-uk-winding-up-petition-procedure/) by either party should affect the price. Expert forensic accountants are routinely instructed, and the difference between a well-prepared and a poorly-prepared valuation case can be enormous. This is why expert opinion is not just helpful but necessary, and [LEXLAW](https://lexlaw.co.uk/) works closely with leading valuation experts to ensure your position is [robustly presented](https://lexlaw.co.uk/contact-us/). ## The Procedure for Bringing an Unfair Prejudice Petition Understanding how the process works helps you prepare properly and avoid costly mistakes. There are several key stages. **Before issuing:** No specific pre-action protocol applies, but it is good practice to send a detailed letter of claim and often to provide the other side with a draft petition before formally commencing proceedings. A reasonable pre-action offer by the majority to buy the minority's shares at a fair price can in some circumstances cause a petition to be struck out, so any offers received must be assessed carefully. **Issuing the petition:** Unlike a standard civil claim, an [unfair prejudice petition](https://lexlaw.co.uk/solicitors-london/quick-guide-s-994-companies-act-unfair-prejudice-petitions/) is presented rather than issued. It must be filed at court in the correct form, setting out the grounds of the claim and the relief sought. In the [High Court](https://www.gov.uk/government/organisations/companies-house), petitions are presented in the [Insolvency and Companies List](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) of the Business and Property Courts of England and Wales. The petitioner is served at least 14 days before the first hearing. **The return day:** After the petition is filed, the court fixes a hearing date. At this first hearing, directions are given for the future conduct of the case, covering matters such as points of claim and defence, disclosure, evidence, and trial preparation. **Trial:** Unfair prejudice petitions can be complex and document-heavy. Many proceed to a split trial, where liability is determined first and valuation is addressed separately. This approach can save costs if the petition fails, but adds delay and expense if it succeeds. The right approach depends entirely on the facts and [our lawyers](https://lexlaw.co.uk/our-people/) [routinely advise](https://lexlaw.co.uk/contact-us/) on this tactical question. **Costs:** The general rule is that the successful party recovers their costs from the unsuccessful one. However, costs in unfair prejudice litigation can be substantial, and both sides need to budget carefully. [Our team](https://lexlaw.co.uk/our-people/) will give you a clear and honest assessment of the likely costs and risks at every stage. ## Limitation and Delay: How Long Do You Have? In a significant development, the [Supreme Court](https://supremecourt.uk/uploads/uksc_2024_0047_judgment_5ab10b6bdc.pdf) confirmed in [THG plc v Zedra Trust Company (Jersey) Ltd](https://supremecourt.uk/uploads/uksc_2024_0047_judgment_5ab10b6bdc.pdf) that there is no statutory limitation period for unfair prejudice petitions. This reverses earlier [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) authority and restores what had been accepted practice for decades. However, this does not mean you can delay indefinitely. Prolonged delay may indicate acquiescence in the conduct complained of, potentially barring your remedy. It may also make it harder to prove your case as evidence becomes harder to gather. If you believe you have grounds for a petition, the right time to [take advice](https://lexlaw.co.uk/contact-us/) is now. ## Can the Company Fund the Litigation? This question arises frequently and the answer is clear: without the consent of all shareholders, the company's assets should not be used to fund either a [section 994 petition](https://www.legislation.gov.uk/ukpga/2006/46/contents) or the defence to one. Using company funds to finance the majority's defence of a petition may itself amount to unfair prejudice, and the court can restrain such misuse by injunction. This is an area where [early intervention](https://lexlaw.co.uk/contact-us/) can make a real difference. ## Instruct Expert London Litigation Lawyers [LEXLAW](https://lexlaw.co.uk/) is a [specialist litigation firm](https://lexlaw.co.uk/practice-areas/) with deep expertise in shareholder disputes and unfair prejudice petitions. Our lawyers are not generalists who happen to handle the occasional company dispute; we are commercial litigators who understand the tactical, evidential, and procedural demands of high-stakes minority shareholder claims. We work with [barristers](https://lexlaw.co.uk/our-people/christopher-snell/) at the leading sets for company law and with experienced forensic accountants, ensuring that every aspect of your case is handled by people at the best in the field. Whether you are considering issuing a petition, have just been served with one, or [need urgent interim relief](https://lexlaw.co.uk/contact-us/), we will provide you straightforward advice. Our approach is [client-centred](https://lexlaw.co.uk/solicitors-london/the-times-case-study-bridging-loan-borrowers-sucked-into-the-mfs-vortex/) and [outcomes-focused](https://lexlaw.co.uk/solicitors-london/case-study-hmrc-security-notices-overturned-duma-rockey-v-hmrc-tribunal-tax-appeal/). We know that unfair prejudice disputes are rarely just legal problems; they are often the product of broken relationships, misplaced trust, and years of simmering conflict. We understand your full situation, advise you about the strength of your case, and develop a strategy that gives you the best possible chance of achieving a fair outcome. [Contact](https://lexlaw.co.uk/contact-us/) [our team](https://lexlaw.co.uk/our-people/) today for a consultation. ### Frequently Asked Questions **What is the difference between an unfair prejudice petition and a derivative claim?** An unfair prejudice petition is brought by a shareholder to seek a personal remedy for harm done to them in their capacity as a member, most commonly a buy-out of their shares. A derivative claim is brought on behalf of the company to recover loss suffered by the company itself. The two remedies can sometimes overlap, and in complex cases it may be appropriate to pursue both. Our lawyers can advise you on which route, or combination of routes, is most appropriate for your situation. **Do I have to be a minority shareholder to bring a petition?** The right to petition is not limited to minority shareholders in law, but in practice the vast majority of petitions are brought by those holding less than 50% of the voting shares. Courts are generally reluctant to allow a majority shareholder to use the petition procedure when they have the power to resolve the situation themselves through the company's constitution. **What happens at the first hearing of the petition?** The first hearing, known as the return day, is primarily a procedural occasion. The court gives directions about how the case will proceed, including timetables for statements of case, disclosure, and evidence. It is not normally a hearing at which the merits of the petition are argued. **Can I get an injunction while the petition is pending?** Yes, in appropriate circumstances. The court can grant interim injunctions to prevent further harm while the petition is being resolved, for example to stop assets being dissipated or to prevent the company's funds being used to finance the majority's legal costs. Applications for injunctive relief are time-sensitive and should be considered as early as possible. **How are shares valued in an unfair prejudice claim?** The court has a wide discretion in ordering how shares are to be valued. Key issues include the date at which the shares are valued, whether a minority discount should be applied, and what adjustments should be made to reflect the parties' conduct. In quasi-partnership cases, courts typically order valuation on a pro-rata basis with no minority discount. Expert forensic accountants play a central role in the valuation exercise. **How long does an unfair prejudice petition take to resolve?** There is no fixed timetable and the duration depends on the complexity of the case. Simple matters can sometimes be resolved by negotiation or mediation relatively quickly. Contested petitions that proceed to trial, particularly those involving a split liability and valuation hearing, can take two to four years or more. Our lawyers will give you a realistic assessment of the likely timeline for your specific case. **Is there a time limit for bringing an unfair prejudice petition?** Following the Supreme Court's decision in THG plc v Zedra Trust Company (Jersey) Ltd in 2026, there is no statutory limitation period for section 994 petitions. However, significant unexplained delay may indicate acquiescence and can affect both the availability and extent of the remedy. You should seek advice as early as possible. --- # HMRC Sent Off in £584k Football Referees Tax Battle Source: https://lexlaw.co.uk/solicitors-london/hmrc-sent-off-in-584k-football-referees-tax-battle/ In one of the most closely watched [employment status and PAYE disputes](https://taxdisputes.co.uk/paye-tax-investigation-disputes/) in recent memory, the [First-tier Tribunal (Tax Chamber)](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) has determined that National Group football referees engaged by Professional Game Match Officials Limited ("PGMOL") were not employees for the purposes of income tax and National Insurance contributions. The Tribunal allowed PGMOL's appeals against [HMRC's Regulation 80 determinations and associated NICs decisions](https://taxdisputes.co.uk/2026/03/ultimate-guide-to-avoiding-paye-nic-penalties-in-2026/), covering tax years 2014/15 and 2015/16, with a total of £583,874.07 in dispute. The judgment, handed down on 1 May 2026 by Tribunal Judge Geraint Williams and Dr Phebe Mann, brings to a close a legal journey spanning two decades of litigation and four courts, from the First-tier Tribunal in 2018, through the Upper Tribunal, the Court of Appeal and, most significantly, the Supreme Court's landmark ruling in [*PGMOL v HMRC* [2024] UKSC 29](https://supremecourt.uk/uploads/uksc_2021_0220_judgment_8b42e07d93.pdf). This final decision on remission applies the multifactorial framework of [*Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance* [1968] 2 QB 497](https://taxdisputes.co.uk/wp-content/uploads/2025/12/1968-2-Q.B.-497.pdf) ("RMC") and provides important guidance for any business or individual facing an [HMRC employment status investigation](https://taxdisputes.co.uk/). ## Background: The Long Road to the First-Tier Tribunal PGMOL is the body responsible for appointing and managing professional match officials, referees and assistant referees, across English professional football. In 2018, the original FTT found that whilst the referees did contract with PGMOL, the individual match engagements were not contracts of employment due to insufficient mutuality of obligation and insufficient control. HMRC appealed, triggering a protracted sequence of appellate proceedings. The Upper Tribunal in 2020 upheld the conclusion on mutuality but found error in the approach to control. The Court of Appeal in 2021 held there had been legal errors on both limbs and remitted the matter. PGMOL appealed to the Supreme Court, which handed down its judgment in September 2024, confirming that the irreducible minimum of both mutuality of obligation and a sufficient framework of control was satisfied in respect of each individual match engagement. The Supreme Court then remitted the appeal back to the FTT for a fresh determination of the third stage of the RMC test: whether, given that mutuality and control were established, the individual match engagements were properly characterised as contracts of employment or contracts for services. That is the question the 2026 FTT decision answers, and it answers it decisively in PGMOL's favour. ## The Legal Framework: What Is the RMC Three-Stage Test? The legal touchstone for employment status in the United Kingdom remains the three-stage framework from *Ready Mixed Concrete v Minister of Pensions* [1968] 2 QB 497, as endorsed and refined by successive appellate courts. The three conditions are: - **Stage 1 — Personal Service:** The worker agrees to provide their own work and skill in exchange for remuneration. - **Stage 2 — Control:** The worker is subject to the other party's control in a sufficient degree to make that party the master. - **Stage 3 — Consistency:** The other provisions of the contract are consistent with a contract of employment. In *PGMOL*, Stages 1 and 2 were resolved by the Supreme Court in HMRC's favour. What remained for this Tribunal was Stage 3: a multifactorial evaluative exercise requiring a qualitative assessment of all the relevant terms and circumstances of each individual match engagement, without any presumption that mutuality and control, once found, are determinative of employment. As the Court of Appeal made clear in [*HMRC v Atholl House Productions Ltd* [2022] EWCA Civ 501](https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2022/501.html&query=(HMRC)+AND+(v)+AND+(Atholl)+AND+(House)+AND+(Productions)+AND+(Ltd)+AND+(.2022.)+AND+(EWCA)+AND+(Civ)+AND+(501)), the other major employment status authority of recent years, Stage 3 is not a negative test, and there is no *prima facie* conclusion of employment simply because the first two conditions are met. The court or tribunal must stand back and form an overall judgment from the accumulation of all relevant factors. ## What Did the Tribunal Find? The Tribunal conducted a structured analysis of the factual matrix found by the original FTT in 2018, factual findings which, crucially, could not be reopened. The judgment methodically evaluated each of the following factors in turn. ### Mutuality of Obligation The Tribunal accepted, as it was bound to, that the minimal work/wage bargain within each individual match engagement satisfied the irreducible minimum of mutuality. However, it found the quality and character of those obligations to be "narrow, short-lived and suffused with choice." Outside any accepted engagement, neither party was under any obligation: PGMOL had no duty to offer appointments; referees had no duty to accept or attend. Crucially, a referee could withdraw from an accepted appointment, even after confirmation, up to the point of arrival at the ground, without breach or sanction. PGMOL would simply appoint a replacement. The Tribunal gave this feature significant weight: it is wholly inconsistent with employment, in which withdrawal from an agreed shift would attract contractual or disciplinary consequences. ### Control The Tribunal gave full effect to the Supreme Court's finding that the assessment, coaching and disciplinary systems constituted significant levers of control. It did not dismiss them. However, it examined the nature and reach of that control carefully. On the field, referees had complete autonomy: their decisions were final, the Laws of the Game were applied without real-time intervention by PGMOL, and disciplinary authority for officiating errors rested exclusively with the Football Association as regulator. Many of the obligations relied upon by HMRC derived from the FA's regulatory framework, not from PGMOL's discretionary exercise of employer authority. The control that existed was predominantly prospective and gatekeeping — affecting future eligibility and progression — rather than supervisory of the core task during performance. The Tribunal concluded that control was "regulatory, facilitative and developmental rather than managerial and supervisory" and did not place the referees in a position of subordination characteristic of employment. ### Integration Whilst referees were operationally embedded in PGMOL's systems, attending conferences, wearing PGMOL-supplied kit, participating in coaching and assessment programmes, the Tribunal drew a critical distinction between operational involvement and organisational integration. Referees derived their professional authority, status and accreditation from the FA, not from PGMOL. They did not participate in PGMOL's governance or commercial operations. PGMOL's role was administrative and coordinative. The contrast with Select Group referees, who were full-time PGMOL employees subject to materially different obligations of availability and commitment, illustrated what genuine integration looked like. National Group referees did not meet that standard. ### Economic Reality Refereeing at National Group level was, as the original FTT found, a "hobby, albeit a very serious one", pursued alongside full-time employment. It did not "pay the bills." There was no salary, no retainer, and no payment between engagements. Referees received fixed match fees at centrally determined rates and bore no financial risk from individual engagements. Whilst those features can point towards employment in isolation, the Tribunal placed decisive weight on the absence of economic dependency. The referees' livelihoods did not depend on PGMOL. They could decline work, close off availability, or withdraw without imperilling their financial position. Economic subordination, a defining hallmark of employment, was simply not present. ### The Subsidiary Factors The Tribunal examined time commitment, dependence on a single paymaster, provision of equipment, length and continuity of relationship, exclusivity and substitution. None of these altered the overall picture. Regularity of appointments reflected voluntary professional motivation, not obligation. Exclusivity arose from the regulatory structure of football, not contractual restriction. Equipment provision was explicable by the demands of elite refereeing. Length of service reflected merit-based progression within the FA pyramid, not employment tenure. ## The Tribunal's Conclusion: Contracts for Services Standing back from the detailed analysis, the Tribunal found that this was not a finely balanced case. The cumulative picture was clear: the individual match engagements between PGMOL and National Group referees were contracts for services, not contracts of employment. The third stage of the RMC test was not satisfied, and the appeals were allowed. In the Tribunal's words: > *"What emerges instead is the picture of skilled professionals participating voluntarily in a regulated framework, undertaking discrete engagements for remuneration while retaining substantial autonomy and independence."* The Regulation 80 PAYE determinations and Class 1 NIC decisions were set aside in their entirety. ## What Does PGMOL v HMRC Mean for Employment Status Disputes? This judgment is significant for several reasons that extend well beyond football. It confirms and clarifies a number of important principles. - **Mutuality and control are necessary but not sufficient.** The Supreme Court's definitive finding that both conditions were satisfied did not predetermine the outcome. Stage 3 is a genuinely open evaluative exercise, and the FTT was free to, and did conclude that employment was not established. - **The nature and quality of control matters, not just its existence.** Where control is regulatory, developmental or gatekeeping in character, rather than supervisory of the core task in real time, it carries less weight at Stage 3. This is a distinction with important practical consequences for engagers in regulated sectors. - **Economic dependency remains central to the employment concept.** Where a worker's livelihood does not depend on the engagement and they retain genuine freedom to decline work without financial consequence, the economic reality indicator points away from employment, notwithstanding the absence of financial risk within each engagement. - **Regulatory environments require careful analysis.** Obligations imposed by a governing body or competition organiser — even where enforced by the engager — are not readily equated with employer control. This principle has broad application beyond sport, including in regulated professional and financial services contexts. - **The comparison with employed counterparts is telling.** The Tribunal attached significant weight to the difference between National Group and Select Group referees. Where an engager genuinely employs some workers on full terms and engages others on materially different conditions, that distinction will be scrutinised closely. For businesses operating in sectors where engagement structures are complex, including sport, media, professional services, and the gig economy, this judgment reinforces the importance of carefully structuring arrangements and maintaining contemporaneous evidence that reflects the true nature of the relationship. ## HMRC's Enforcement Powers: PAYE Regulation 80 and NIC Determinations HMRC's determinations in this case were issued under Regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003, which empowers HMRC to issue determinations of PAYE income tax where an employer is found to have failed to deduct and account for tax. Associated decisions were made under section 8 of the Social Security Contributions (Transfer of Functions) Act 1999 in relation to Class 1 NICs. These are powerful tools. A Regulation 80 determination can be issued on estimated figures if returns are not made, and HMRC need not wait until self-assessment liabilities are quantified. Where HMRC successfully establishes employment, the liability falls on the engager, potentially with interest and penalties on top. This is why PAYE and NIC compliance disputes carry such significant commercial risk and why rigorous legal representation is essential from the outset. ## Facing an HMRC Employment Status Investigation? LEXLAW Can Help. Employment status disputes, whether under IR35, Regulation 80, or direct HMRC investigation, are among the most technically demanding areas of tax law. They require a deep understanding of the common law tests, the developing case law from the Supreme Court and Court of Appeal, and the practical realities of how engagements operate. At LEXLAW Solicitors & Barristers, we act exclusively in contentious tax and litigation matters. Our specialist team of solicitors and barristers, including counsel with ex-HMRC experience, advises engagers, contractors and intermediaries at every stage, from initial HMRC enquiry through to Tax Tribunal appeal and, where necessary, proceedings in the Upper Tribunal and beyond. We analyse the merits of your case from the outset in an initial video conference with specialist counsel, so that you understand your exposure and your options before committing to a course of action. We have a demonstrable track record of successfully challenging HMRC decisions across the full range of [tax disputes](https://taxdisputes.co.uk/), including PAYE determinations, employment status enquiries, NIC challenges and penalty appeals. If you are facing an HMRC investigation into the employment status of individuals you engage, or if you have received a Regulation 80 determination or NIC decision, contact our team today. We operate from our specialist chambers at Middle Temple, London, the only solicitors' firm in England to do so. Call us on 020 7183 0529 (9am–6pm, Monday to Friday) or complete our [online enquiry form](https://taxdisputes.co.uk/contact-us/) and one of our tax litigators will respond directly. --- # Section 994 Unfair Prejudice Petition Guide Source: https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petition-procedure-how-to-bring-a-section-994-claim/ Minority shareholders in [private companies](https://lexlaw.co.uk/solicitors-london/2026-guide-uk-winding-up-petition-procedure/) can find themselves powerless in the face of misconduct by the majority. Whether you are being excluded from management, denied financial information, or watching [directors](https://lexlaw.co.uk/solicitors-london/directors-exposed-to-personal-liability-in-the-twilight-period-insolvency-act-1986/) enrich themselves at the company's expense, the law provides a direct route to redress. An [unfair prejudice petition](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) under [section 994 of the Companies Act 2006](https://www.legislation.gov.uk/ukpga/2006/46/part/30) allows a shareholder to ask the court to intervene and order a fair outcome, most commonly a buy-out of your shares at fair value. Understanding the procedure for bringing such a claim, and the [strategic decisions](https://lexlaw.co.uk/contact-us/) involved at each stage, is essential to pursuing it successfully. This guide explains the full process from pre-action steps through to trial. ## Pre-Action Steps Before Issuing a Section 994 Petition Unlike many commercial disputes, there is no specific [pre-action protocol](https://www.justice.gov.uk/courts/procedure-rules/civil/protocol) that applies to unfair prejudice claims. That said, [courts](https://www.judiciary.uk/courts-and-tribunals/high-court/) expect parties to have exchanged sufficient information to understand each other's positions before proceedings commence. Best practice is to send a detailed [letter of claim](https://lexlaw.co.uk/our-people/christopher-snell/) to the majority shareholders and, in most cases other than those involving genuine urgency, to provide them with a draft petition before it is formally presented. This gives the respondents an opportunity to engage and can facilitate [early settlement](https://lexlaw.co.uk/alternative-dispute-resolution-lawyers-london/), avoiding the very considerable costs of contested proceedings. A critical pre-action issue is the effect of any offer by the majority to purchase the minority's shares. If the majority makes a reasonable open offer at fair value before proceedings are issued, and you refuse it, a subsequent petition may be struck out on the basis that no unfair prejudice remains. The criteria for a reasonable offer were established by the House of Lords in [O'Neill v Phillips [1999]](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd990520/neill01.htm) and include fair valuation on a pro rata basis, determination by an independent expert if not agreed, equal access to company financial information, and a contribution towards the petitioner's costs. This is why [instructing specialist solicitors](https://lexlaw.co.uk/our-people/jaron-dosanjh/) at the earliest stage is essential: the manner in which pre-action offers are handled directly affects both the viability of your petition and your exposure to adverse costs orders. ## How to Issue an Unfair Prejudice Petition A [section 994 claim](https://www.legislation.gov.uk/ukpga/2006/46/part/30) must be commenced by petition, not by a standard claim form. The petition is presented rather than issued, and the date of [presentation](https://lexlaw.co.uk/contact-us/) is the equivalent of the issue date in ordinary proceedings. In the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/), petitions are presented in the [Insolvency and Companies List](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/) of the Business and Property Courts of England and Wales. For companies with paid-up share capital below £120,000, the [County Court](https://www.find-court-tribunal.service.gov.uk/courts/central-london-county-court) has concurrent jurisdiction, though in practice the great majority of these claims are heard in the [High Court](https://www.judiciary.uk/courts-and-tribunals/high-court/). The petition must clearly set out the grounds relied upon and the relief sought. Each allegation of [unfairly prejudicial conduct](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) should be properly particularised, and care must be taken to ensure that only conduct relating to the affairs of the company is included. The Court of Appeal confirmed that petitions will be struck out where the complaints do not engage the affairs of the company within the meaning of [section 994](https://www.legislation.gov.uk/ukpga/2006/46/part/30). Getting the pleading right from the outset is critical, and this is precisely why [instructing](https://lexlaw.co.uk/our-people/christopher-snell/) a [specialist firm](https://lexlaw.co.uk/) to draft the petition is not a luxury but a necessity. ## Respondents, Service and the Return Day Each majority shareholder will usually be named as a respondent alongside the company itself. The company is typically a nominal party and should not take an active role in defending the claim, nor should it use its assets to fund the litigation on either side without the unanimous consent of all shareholders. Misuse of company funds for this purpose may itself amount to [unfair prejudice](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) and can be restrained by [injunction](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/). Service of the petition on all respondents must be completed at least 14 days before the first hearing, known as the return day. At the return day the court will give directions for the future conduct of proceedings, covering statements of case, disclosure, evidence and the path to trial. Under the current automatic directions that apply to petitions in the [Insolvency and Companies List](https://www.judiciary.uk/courts-and-tribunals/business-and-property-courts/business-list-general-chancery/insolvency-and-companies-list/), the petition stands as points of claim, and the respondents are required to file and serve points of defence within 28 days of service. ## Costs Management and the Case Management Conference Costs budgeting applies to [unfair prejudice proceedings](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) in the same manner as to [CPR Part 7](https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part07) claims. Parties must file and exchange costs budgets in advance of the combined case and costs management conference, identify agreed and disputed phases, and engage meaningfully on the likely overall cost of the litigation. Given that these proceedings have a well-deserved reputation for being expensive and hard fought, an early and realistic assessment of proportionality is essential for both sides. ## Interim Injunctions and Interlocutory Applications While the petition is pending, interim relief may be sought to protect the petitioner's position. Applications are governed by the [American Cyanamid guidelines](https://www.lexisnexis.co.uk/legal/guidance/interim-injunctions-the-american-cyanamid-guidelines), and the court will consider whether there is a serious issue to be tried, whether damages would be an adequate remedy, and where the balance of convenience lies. Injunctions have been granted to prevent improper use of company funds to finance the majority's legal costs, to restrain share allotments that would dilute the petitioner's holding, and in exceptional cases to place a petitioner in interim management control of the company pending trial. Where there is a risk of asset dissipation, a [freezing injunction](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/) may also be available. The court's approach to interim relief in [unfair prejudice proceedings](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) is flexible and fact-sensitive, and [instructing lawyers](https://lexlaw.co.uk/our-people/) with experience of these applications can make a decisive difference to the outcome. ## Split Trials, Expert Valuation and the Remedy Phase Many [unfair prejudice petitions](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) proceed to a split trial, with liability determined at a first hearing and valuation of the shares addressed separately. This can [reduce costs](https://lexlaw.co.uk/solicitors-london/using-unless-orders-to-force-payment-of-unpaid-costs-orders/) if the petition fails on liability, but adds delay and [overall expense](https://lexlaw.co.uk/solicitors-london/manolete-case-study-costs-order-against-manolete-upheld-despite-outstanding-judgment-debt-section-194-lsa-2007/) for a petitioner with a strong claim. Whether to seek or resist a split trial is a significant tactical decision that must be made in light of the full facts of the case. Valuation is frequently the most contested part of the remedy phase. The appropriate valuation date, whether a minority discount should apply, and what adjustments should be made to reflect misconduct are all live issues that require expert forensic accountant evidence. The difference between a well-prepared and a poorly-prepared valuation case can be very substantial indeed. The [general costs rule](https://lexlaw.co.uk/solicitors-london/using-unless-orders-to-force-payment-of-unpaid-costs-orders/) is that the successful party recovers their costs from the unsuccessful respondents, though the impact of any open offers to purchase shares must also be assessed carefully in relation to costs outcomes. This is why [expert preparation](https://lexlaw.co.uk/contact-us/) from the outset of the proceedings, covering both liability and the anticipated remedy, is indispensable. ## No Statutory Time Limit: What the Supreme Court's 2026 Ruling Means for You The question of limitation was finally resolved by the [Supreme Court](https://supremecourt.uk/) in [THG plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6](https://supremecourt.uk/cases/uksc-2024-0047), which confirmed that there is no statutory limitation period for presenting a [section 994 petition](https://www.legislation.gov.uk/ukpga/2006/46/part/30). This reverses the earlier [Court of Appeal](https://www.judiciary.uk/courts-and-tribunals/court-of-appeal-home/) decision and restores accepted practice. However, delay carries its own serious risks. Prolonged inaction may be treated by the court as acquiescence in the conduct complained of, potentially barring the remedy on equitable grounds, and makes gathering evidence significantly more difficult. If you believe you have grounds for a petition, the [right time](https://lexlaw.co.uk/contact-us/) to take [specialist advice](https://lexlaw.co.uk/our-people/christopher-snell/) is now. ## Instruct Expert London Lawyers [LEXLAW](https://lexlaw.co.uk/contact-us/) is a [specialist litigation firm](https://lexlaw.co.uk/practice-areas/winding-up-petitions-solicitors-london/) with extensive experience in shareholder disputes and [section 994 unfair prejudice petitions](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/). [Our lawyers](https://lexlaw.co.uk/our-people/) understand the procedural, evidential and tactical demands of these proceedings at every stage, whether you are considering presenting a petition, have just been served with one, or require [urgent interim injunctive relief](https://lexlaw.co.uk/urgent-injunctions-obtain-freezing-order-mareva-preserve-assets-litigation-solicitor-legal-advice/). We work alongside [leading barristers](https://lexlaw.co.uk/our-people/christopher-snell/) at the specialist company law sets and with experienced forensic accountants, ensuring that every aspect of your case is handled by people at the top of their respective fields. We understand that [unfair prejudice disputes](https://lexlaw.co.uk/solicitors-london/unfair-prejudice-petitions-a-complete-2026-guide-for-shareholders/) are rarely purely legal problems. They are the product of broken trust, damaged relationships and, often, years of unresolved conflict. Our approach is client-centred and outcomes-focused. We will give you a frank assessment of the strength of your case, the [likely costs involved](https://lexlaw.co.uk/solicitors-london/using-unless-orders-to-force-payment-of-unpaid-costs-orders/), and the strategy that gives you the best possible chance of achieving a fair result. [Contact our team](https://lexlaw.co.uk/contact-us/) today to arrange your initial consultation. ### Frequently Asked Questions **What is the difference between presenting a petition and issuing a claim?** An unfair prejudice claim must be commenced by petition, which is presented to the court rather than issued in the same way as a standard CPR Part 7 claim. The date of presentation is treated as the equivalent of the issue date. The claimant is referred to as a petitioner and the defendants as respondents. **Do I need to send a letter of claim before issuing a section 994 petition?** There is no specific statutory pre-action protocol for unfair prejudice claims. However, it is standard and prudent practice to send a detailed letter of claim and, except in urgent cases, to provide a draft petition before presenting it formally. Failure to engage in pre-action conduct can have costs consequences. **What happens at the return day?** The return day is the first hearing of the petition. Under the current automatic directions, it usually takes the form of a combined case and costs management conference at which the court gives directions for points of claim and defence, disclosure, evidence and the path to trial. It also deals with costs budgeting. **Can I obtain an injunction while my petition is pending?** Yes. Interim injunctions are available in section 994 proceedings subject to the American Cyanamid test. Injunctions have been granted to prevent improper use of company funds, restrain improper share allotments, and in exceptional cases to place a petitioner in interim control of the company. **Is there a time limit for bringing an unfair prejudice petition?** The Supreme Court confirmed in THG plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6 that there is no statutory limitation period for section 994 petitions. However, excessive delay may amount to acquiescence and can bar the remedy on equitable grounds, so early action is strongly advisable. **What is a split trial and should I agree to one?** A split trial separates the liability hearing from the valuation hearing. Respondents often push for this approach as it can reduce costs if the petition fails. For a petitioner with a strong case, however, a split trial adds delay and overall expense. Whether to agree to one depends on the specific facts and should be decided with expert legal advice. **How are shares valued after a finding of unfair prejudice?** The overriding principle is fairness on the facts of the particular case. In quasi-partnership companies, shares are generally valued on a pro rata basis without a minority discount. In other cases a discount may apply. The appropriate valuation date, adjustments for misconduct, and the methodology to be adopted by the expert valuer are all contested issues that require specialist forensic accountant evidence. --- # Consumer Credit Act 1974 Reform: What Borrowers Need to Know Source: https://lexlaw.co.uk/solicitors-london/consumer-credit-act-1974-reform-what-borrowers-need-to-know/ [The Consumer Credit Act 1974](https://www.legislation.gov.uk/ukpga/1974/39/contents) is one of the most significant pieces of consumer protection legislation ever enacted in the United Kingdom. For over fifty years, it has formed the backbone of [borrower rights](https://lexlaw.co.uk/solicitors-london/guide-unfair-relationship-claims-fixed-rate-bridging-business-loans/) governing everything from pre-contract disclosure to the [enforceability of credit agreements](https://lexlaw.co.uk/failure-to-honour-letters-of-credit/), and providing consumers with remedies that no other area of financial services law could replicate. Now, following [HM Treasury's May 2026 Policy Statement on CCA reform](https://assets.publishing.service.gov.uk/media/6a06f7505f39105e0848a32a/HM_Treasury_-_Policy_statement_on_reform_of_the_Consumer_Credit_Act_1974.pdf), the Government is proposing the most sweeping overhaul of consumer credit regulation since the Act first came into force. The changes will be introduced through a new Financial Services and Markets Bill and will fundamentally alter the legal landscape for borrowers, lenders, and their legal advisers alike. This article explains what the Government is proposing, which rights are being repealed, which are being retained, and critically what borrowers should understand about the protections that remain available to them both now and in the reformed regime. If you have an existing consumer credit dispute, or believe a lender has breached your rights under the CCA, [acting promptly is essential](https://lexlaw.co.uk/contact-us/). The legal framework you currently rely upon will not exist in its current form for much longer. ## Why Is the Consumer Credit Act 1974 Being Reformed? The CCA was landmark legislation when enacted. It replaced a fragmented and confusing patchwork of rules with a single statutory framework, affording consumers new and enforceable rights at a time when credit markets were largely unregulated. The Act created the [Office of Fair Trading](https://www.gov.uk/government/organisations/office-of-fair-trading) as its principal enforcer and introduced requirements for pre-contract information, written credit agreements, cooling-off periods, and automatic [sanctions for lenders](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/) who failed to comply. However, the financial services world of 1974 bears almost no resemblance to the one that exists today. Regulation of consumer credit passed from the OFT to the [Financial Conduct Authority (FCA)](https://lexlaw.co.uk/solicitors-london/fca-final-report-on-rbs-grg-misconduct/) in 2014, at which point 82 provisions of the CCA were already repealed. The remaining 167 provisions have since sat uneasily alongside FCA rules under the [Financial Services and Markets Act 2000 (FSMA)](https://www.legislation.gov.uk/ukpga/2000/8/contents), creating a dual regulatory regime described by industry stakeholders as overly prescriptive, outdated, and a barrier to innovation. HM Treasury's Policy Statement, published in May 2026, confirms that the Government has now gathered sufficient evidence through its Phase 1 Consultation (May 2025), 65 formal responses, and extensive stakeholder engagement to move forward with legislation. The core objective is to migrate the majority of remaining CCA provisions either into FCA rules under FSMA or to allow them to fall away entirely, while retaining in primary legislation only those rights that cannot be replicated in regulatory guidance and which create enforceable third-party obligations. ## What Is Being Repealed? Key Consumer Protections at Risk The Government's proposals involve repealing a substantial number of rights that borrowers currently rely upon. Understanding these changes is essential for any consumer who has entered into a credit agreement or who may have a live or prospective legal claim. ### 1. Information Requirements and Pre-Contract Disclosure The majority of the CCA's information disclosure requirements covering the pre-contract stage (such as Pre-Contract Credit Information forms and the agreement itself), the post-contract stage (statements, copies, and notices), and the arrears, default, and forbearance stages are to be repealed and recast into FCA rules where appropriate. The Government's rationale is that the current requirements are too prescriptive, inflexible, and prevent lenders from tailoring communications to individual consumers. Consumer groups expressed concern during the consultation process that removing these requirements from primary legislation carries risk: FCA rules can be amended without parliamentary scrutiny, and there is no guarantee that equivalent protections will be preserved in the Handbook. Legal practitioners should be aware that, while protections may be maintained in FCA rules, the nature and enforceability of those rules will differ materially from statutory rights. ### 2. Automatic Sanctions: Unenforceability and Disentitlement to Interest Perhaps the most significant change for borrowers is the proposed repeal of the CCA's automatic sanctions regime. Under the current law, a [lender who fails to comply with certain statutory requirements](https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/) such as providing a properly executed credit agreement faces the sanction of unenforceability: the creditor cannot enforce the agreement against the debtor without first obtaining a [court order](https://lexlaw.co.uk/enforcing-judgment-orders-in-england-wales-2025-guide/), and may be disentitled to interest and default charges. This automatic mechanism has historically been a powerful lever for consumers in disputes with lenders and formed the basis of significant litigation. The Government now proposes to repeal these sanctions entirely, arguing they are disproportionate to the nature of the breach, costly for firms, and incompatible with the FCA's outcomes-based approach. The position taken is that the FCA's supervisory and enforcement toolkit including the [Financial Ombudsman Service](https://lexlaw.co.uk/solicitors-london/financial-ombudsman-increases-award-limit-to-350000/), [the Consumer Duty, and the Consumer Credit Sourcebook](https://api-handbook.fca.org.uk/files/sourcebook/CONC.pdf) provides sufficient redress. Consumer groups have strongly contested this view, arguing that automatic sanctions are self-policing deterrents that do not require individuals to take positive steps to enforce their rights. For borrowers with existing disputes, this change reinforces the urgency of [taking legal advice now](https://lexlaw.co.uk/contact-us/). Once the sanctions regime is repealed, the ability to rely on unenforceability as a defence or a ground for a claim will be extinguished. ### 3. Early Settlement, Voluntary Termination, and Credit Tokens The Government proposes to repeal and recast into FCA rules the provisions relating to [early settlement](https://lexlaw.co.uk/adr-alternative-dispute-resolution-second-opinion-legal-advice/) and statutory rebate rights, voluntary termination rights under hire purchase and conditional sale agreements, and the provisions governing credit-token agreements (including liability for misuse of credit cards). These are significant rights that consumers frequently exercise, and their migration to FCA rules raises important questions about accessibility, certainty, and the ability of individual consumers to enforce them. Notably, the widely used right to voluntarily terminate a hire purchase or conditional sale agreement after paying 50% of the total amount payable enshrined in section 99 of the CCA is among the provisions proposed for repeal and recast. Consumers who believe they may have a right to voluntarily terminate an existing agreement should seek specialist legal advice before the legislative changes take effect. ## What Is Being Retained? Rights That Will Remain in Legislation Not all consumer credit rights are being swept away. The Government has indicated that it will retain in primary legislation those provisions which are too complex to move to FCA rules, which create third-party rights and obligations, or which it considers require further policy work before any changes are proposed. ## What Does This Mean for You? Practical Implications for Borrowers The proposed reforms affect a wide range of borrowers, including those who have taken out [personal loans](https://lexlaw.co.uk/individuals-mis-sold-fixed-rate-loans-with-swap-break-costs/), credit cards, hire purchase agreements, motor finance, and other regulated credit products. The key practical implications are as follows: - If you have entered into a [credit agreement](https://lexlaw.co.uk/solicitors-london/bridging-loan-mis-selling-claims-unfair-default-interest-rates-penal-charges-litigation-advice/#:~:text=When%20will%20a%20court%20find%20the%20credit%20relationship%20between%20a%20creditor%20and%20debtor%20is%20unfair%3F) which may have been improperly executed or which failed to comply with the CCA's information requirements, you may currently have a defence or claim based on the unenforceability sanctions. These sanctions are proposed for repeal. You should [seek legal advice now.](https://lexlaw.co.uk/contact-us/) - If you purchased goods or services using a credit card or a credit agreement and you have a complaint against the supplier for example, due to [misrepresentation](https://lexlaw.co.uk/glossary-a-to-z-key-common-legal-lawyer-terms-phrases-terminology/#:~:text=Misrepresentation%20%E2%80%93%20an%20untrue%20statement%20made%20by%20one%20party%20to%20the%20other%20which%20induces%20them%20into%20a%20contract.), breach of contract, or the supply of defective goods you may have a claim against the lender under [section 75](https://www.legislation.gov.uk/ukpga/1974/39/section/75). This provision is being retained for now. - If you believe that your relationship with a credit provider has been unfair for example, because of undisclosed broker commission, hidden charges, or unfair contract terms you may have a claim under [sections 140A–140C](https://www.legislation.gov.uk/ukpga/1974/39/section/140C) of the CCA. These provisions are not being changed at this stage. - If you have a hire purchase or conditional sale agreement and wish to exercise your voluntary termination rights under [section 99](https://www.legislation.gov.uk/ukpga/1974/39/section/99) of the CCA, those rights remain in force for now but are proposed for recast into FCA rules. You should [take advice](https://lexlaw.co.uk/contact-us/) on your position before changes take effect. - If you have made a [complaint to the Financial Ombudsman Service](https://lexlaw.co.uk/solicitors-london/mis-sold-swaps-complaints-in-the-financial-ombudsman-service-annual-review-for-2012-2013-fos/) about a consumer credit product, the proposed reforms do not affect FOS jurisdiction in the short term. ## The Legislative Timeline: What Happens Next? The Government has confirmed that CCA reform changes will be introduced through the Financial Services and Markets Bill announced in the King's Speech on 13 May 2026. The Bill will include a commencement power, allowing reforms to be brought into force in stages as the FCA develops its replacement rules. It is anticipated that the process of repealing CCA provisions and replacing them with FCA rules will take a number of years. However, once primary legislation is enacted, the legal landscape will shift irrevocably. Borrowers and their advisers should monitor developments closely and take proactive steps to preserve and enforce existing rights before the reformed regime takes effect. ## Conclusion: Protecting Consumer Rights in a Changing Legal Landscape The reform of the Consumer Credit Act 1974 represents a pivotal moment in UK financial services regulation. For borrowers, the practical consequences will depend on how faithfully the FCA replicates existing statutory protections in its rules and whether those rules prove as accessible, certain, and enforceable as the rights they replace. The retention of section 75 connected lender liability and the unfair relationships jurisdiction under sections 140A–140C CCA for the time being provides some comfort. However, the proposed repeal of automatic sanctions removes one of the most effective self-policing mechanisms in consumer finance. Consumers who may have a claim under the Consumer Credit Act 1974 should seek [specialist legal advice](https://lexlaw.co.uk/contact-us/) now. Key borrower protections could soon be repealed or significantly weakened, potentially limiting your ability to bring a claim or challenge a lender. Acting early could make the difference between preserving your rights and losing them altogether. At LEXLAW Solicitors & Barristers, [our financial services litigation team](https://lexlaw.co.uk/our-people/) has extensive experience handling CCA disputes, Section 75 claims, unfair relationship claims, and complex financial litigation. Understanding your rights and enforcing them before the law changes is essential. ### Frequently Asked Questions (FAQ's) What is the purpose of the Consumer Credit Act 1974 reforms and why are they happening now? The Consumer Credit Act 1974 governs almost every form of consumer borrowing in the UK, including personal loans, credit cards, hire purchase, motor finance, store cards, and overdrafts. It was designed as a self-governing system: lenders that failed to comply with its requirements faced automatic consequences without any need for regulatory intervention. The proposed reforms would dismantle this architecture by moving the majority of its provisions into FCA rules, which can be changed without parliamentary scrutiny and which carry weaker, less certain enforcement mechanisms. For consumers with live or potential claims, this is not an abstract change. It directly threatens statutory rights that may not yet have been identified or pursued. What happens to my credit agreement if the automatic sanctions regime is repealed? Under current law, a credit agreement that was not properly executed is unenforceable against the borrower without a court order, and the lender may be disentitled from recovering interest and default charges. These sanctions operate automatically, without any need for complaint. The Government proposes to repeal them entirely, replacing them with FCA supervision, the Financial Ombudsman Service, and the Consumer Duty. None of these replicates the self-executing nature of the existing sanctions. Any unenforceability defence currently available will be extinguished once the legislation is enacted. If you believe your agreement may have been improperly executed, you must seek specialist legal advice now. Can I still bring a Section 75 claim against my credit card company after the reforms? Yes. Section 75 is being retained in primary legislation and is not proposed for repeal at this stage. It makes a credit card issuer jointly and severally liable with a supplier for any misrepresentation or breach of contract in relation to a qualifying transaction, allowing consumers to claim the full value of their loss directly from the card company. The FCA has acknowledged it cannot replicate Section 75 through its own rule-making powers without losing the substantial body of judicial interpretation built up around it. However, retained for now is not the same as retained permanently, as Phase 2 of the reform programme will revisit rights and protections. If you have an unresolved Section 75 claim, it is prudent to formalise your position while the statutory right remains fully intact. How can LEXLAW help me with a Consumer Credit Act claim? [LEXLAW Solicitors & Barristers](https://lexlaw.co.uk/) is a specialist litigation firm in the Middle Temple, London, with extensive experience in financial services disputes and consumer credit litigation against major UK banks and lenders. We advise and act on the full range of CCA claims, including unenforceability disputes, Section 75 claims, [unfair relationship claims](https://lexlaw.co.uk/solicitors-london/guide-unfair-relationship-claims-fixed-rate-bridging-business-loans/) under sections 140A to 140C, motor finance commission cases, [mis-sold bridging loan claims](https://lexlaw.co.uk/mis-sold-bridging-loan-property-lending-finance-advice/), voluntary termination disputes, and [mis-sold financial product litigation](https://lexlaw.co.uk/solicitors-london/interest-rate-swap-mis-selling-do-you-still-have-a-claim-in-2026/). We provide a frank assessment of your prospects at an initial fixed-fee consultation and litigate to achieve optimal outcomes whether by negotiated settlement or court proceedings. Given the pace of the reforms, early advice is not merely prudent. It may be essential to preserving your right to claim at all. Contact our specialist team on 020 7183 0529 or visit [lexlaw.co.uk](https://lexlaw.co.uk/). --- Generated from RankReady