Recovering Business Debts

Recovering Business Debts

So, you have a business and you want to recover an outstanding debt owed by an individual. Sounds simple enough – but where do you start? That is where our team of experienced solicitors can help you with recovering business debts. Our civil litigation team is on hand to provide you with support, so you don’t have to sweat the small stuff. Read on if you need help recovering business debts.

Pre-action protocol

Before anyone can bring a claim against a debtor for an outstanding debt, they must first comply with what is known as ‘Pre-Action Protocol’ (PAP). PAP works to encourage communication and potential conflict resolution between the parties at an early stage. It encourages both parties to make it clear what they believe is owed and why it has not been paid.

Failure to comply with the PAP can lead to the court applying costs sanctions to the non-complying party, so it vital that the PAP is adhered to.

Changes in the law

From 1 October 2017 the PAP for businesses who are owed a debt by an individual (or a sole trader) is changing. The new PAP has been designed to pave the way for discussions without the need to engage in the court procedure where possible; further, it allows the debtor to seek legal advice on their position before a claim is issued.

The new procedure

The new PAP provides for creditors to first send the debtor certain information about the debt. The debtor can then ask the creditor for any further information it requires. This saves initial costs for the creditor to a certain extent, particularly if the debtor does not respond.

After this initial information is sent, the creditor can then send a letter of claim to the debtor. This letter must be accompanied by a specified information sheet and reply form together with a financial statement form for the debtor to complete. The letter itself must set out details of the agreement between the parties, information about the debt, whether or not any instalments are currently being paid and whether or not this is acceptable, and an address to which the completed response paperwork should be sent. An updated statement of account for the debt (with details of any interest or further charges) must also be sent.

The debtor then has 30 days to respond before proceedings can be commenced.

If you are a business seeking to recover a debt from an individual, contact us here or call us on 01753 486 777 for a FREE initial consultation.

Amarjit Atwal

Solicitor Advocate ( Litigation )

Amarjit Atwal

Sanctions for Delaying Detailed Assessment Proceedings

Costs: Sanctions for Delaying Detailed Assessment Proceedings

Detailed Assessment is the process where parties costs are assessed, normally by a Cost officer at the conclusion of proceedings unless otherwise ordered by the Court. The Cost officer will determine the costs payable by the paying party to the receiving party. The Civil Procedure Rules (CPR) provides a breakdown of the time limits and procedures for commencing Detailed Assessment.

CPR Time Limits

In accordance with CPR 47.7 Detailed Assessment is to be commenced within 3 months of any Judgment, direction, orders, discontinuance under Part 38 or an acceptance of a part 36 offer. Furthermore, once the Detailed Assessment has been commenced and the receiving party receives the points of dispute, the receiving party must request for a Detailed Assessment hearing within a 3 month period (CPR 47.14(1)).

Sanctions for not complying with Time Limits

The general rule is if the receiving party does not comply the above deadlines the Court will only disallow part or all of the interest payable, CPR 47.8(3) and 47.14(4). However, in more serious circumstances, the Court has the powers to make an order for the disallowance of part or all of the receiving party’s cost pursuant to CPR 47.8(2) and CPR 47.14(3).

For the latter sanction, the Court may make such an order if the paying party makes an application under CPR 47.8(1) or 47.14(3) and (4) to the Court requesting the receiving party to commence Detailed Assessment or request for a hearing within a set time period. If, then the receiving party fail to comply with the deadlines following the paying party’s application, then they are subject to disallowance of part or all of their costs.

The Court will also take into consideration other factors when determining the sanctions to impose on the receiving party, namely their conduct and reasons for their delay in commencing Detailed Assessment or requesting a Detailed Assessment hearing. The Court will look at all the facts of each individual case before making such determination.


The Court in most instances will only apply a disallowance of interest if the receiving party have failed to comply with the deadlines, however, if the paying party takes advantage of the mechanism in 47.8(1) or 47.14(3) and (4), the Court may allow for disallowance of costs.

Therefore, it is imperative that the receiving party commences proceedings within the above time limit as they may face sanctions, and similarly if there is a delay, the paying party is strongly encouraged to make the relevant application. Failing to make an application the Court will be minded to disallow only interest, unless there are exceptional circumstances for the Court to impose further sanctions.

– Gurpreet Dhillon

Feel free to contact us and get in touch with our experienced dispute resolution department today. Our dynamic team think outside the box to assist you in finding the best solution based on your needs and circumstances.

Interpretations of Exclusion Clauses

Contracts: Update on Interpretations of Exclusion Clauses between Commercial Parties

Exclusion clauses are contractual provisions restricting or excluding liability for a specific event. The Court of Appeal has recently deliberated on the construction of exclusion clauses and more particularly how the principal of ‘contra proferentem’ should apply. Contra proferentem is the principle were ambiguous clauses in a contract should be interpreted against the interests of the party seeking the clause to be included in the contract.


In the case of Transocean Drilling UK –v- Providence Resources PLC [2016] EWCA Civ 372, Transocean hired a semi-submersible drilling rig to Providence. After initiating the work, it came to Providence attention that the rig was faulty, namely a misalignment of part of a blowout preventer. As a result of the faulty rig, work was suspended for a period of five weeks.  Providence refused to pay the hiring fees of the rig, Transocean brought an action for the hire costs, and consequently Providence sought to set off the hire costs against their losses plus $10,000,000.00 paid for goods and services which were wasted (spread costs). The contract between the parties had various exclusion and indemnity clauses. The main clause in dispute in this case, was the clause excluding ‘consequential losses’. The consequential losses in this matter referred to the spread costs. The High Court Judge, Popplewell J, took the view that contra proferentem should apply to the construction of the exclusion clause at the first instance, therefore, deciding with Providence. Transocean appealed the matter, and the Court overruled the Judge’s decision and applied three distinct principles.

New Principles

  1. Contra proferentem should only be used as a last method and only apply to cases dealing with ambiguous clauses.
  2. Secondly, that this is a separate principle to the principle that there is a presumption that neither party intends to abandon any remedies for its breach in the absence of clear words [Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689]. Therefore, parties if they wish to do so can abandon remedies, but the language used in the construction of the clause must be clear and unambiguous.
  3. Contra proferentem principle has no part to play if the clause affects both parties equally and more importantly were both parties have equal bargaining power. Therefore, the Court will place weight to the individual facts of each case depending on how the clause affects the parties and how much bargaining power the parties have.

The findings of the above case place extra burden on the parties to agree to robust exclusion clauses, as the Court are minded to take the literal meaning of the clause rather than use their own interpretation for commercial purposes. Therefore, it is imperative that the each and every exclusion clause is constructed carefully and precisely to demonstrate each party’s intentions, as it will be difficult to escape from liability if any unfavourable exclusion clause is agreed.

– Gurpreet Dhillon

Feel free to contact us and get in touch with our experienced dispute resolution department today. Our dynamic team think outside the box to assist you in finding the best solution based on your needs and circumstances.