Category: Litigation

When suing in English Courts for a sum of money expressed in a foreign currency, the claim form and particulars of claim must expressly state:

• That the claim is for payment in a specified foreign currency i.e euro or US dollars.
• Why it is for payment in that currency i.e. the claim is for payment in [euro/US dollars] because the contract so provides.
• The sterling equivalent of the sum at the date of the claim i.e. the cross rate of [EUROS/US dollars] to the £ sterling.
• The source of the exchange rate relied on to calculate the sterling equivalent i.e. the rates according to FT.com.

Dion McCarthy, Trainee Solicitor

dmccarthy@astonbond.co.uk

There are many ways in which either individuals or companies can attempt to reclaim monies owed to them by debtors. However, the best way to begin this process is by sending a letter before action that complies with the pre-action protocol. The benefits of sending this type of letter are that if the matter becomes protracted and it then becomes a requirement to go to court, the courts look favourably upon the fact that you made all attempts to resolve the matter before initiating litigation. It must be remembered that litigation is a process of last resort. This letter sets out your claim, the reasons why your claim has come about and timeframes in which the individual or the company must pay the debt. It may also work in getting you money back quickly and with little expense.

If however, this procedure does not prove to be fruitful you may then attempt to use what is known as a statutory demand. A statutory demand is a claim for monies owed to you by a debtor that has not paid and may only be used for a debt of more than £750. This is an exceptionally useful tool for both individuals and companies, once this document has been served the debtor has 18 days in which to either set aside the statutory demand or to obtain an injunction in the case of a company, however, they have 21 days in which to pay the money that is owed. If they fail to pay following the service of the demand you may then make an application to court either to have the company wound up or to issue a bankruptcy petition against the individual. Care must be taken when using this procedure as if the debtor is a company you are then obliged to put a notice in the London Gazette of the fact that the winding up petition has been issued against the company and this will then in turn alert all other creditors of the company that there is a petition being issued. If there are creditors of the company that have either fixed charges, floating charges or first charge holders they will then take precedence over any debt owed to you if you are not a secured creditor.

If however, the debtor is an individual you are then able to make a petition to have the individual made bankrupt. Again this is a catch all scenario and the same provisions as already stated above shall also apply.

It is also pertinent to mention that it is critical that the information contained within a statutory demand is correct and accurate as any material errors may mean that the statutory demand is defective and therefore the debtor can ask the court to set aside the statutory demand. There are also other instances where the court may set aside the statutory demand, for instance if the debt is disputed. If it is clear on the face of it that there is likely to be a ‘genuine’ dispute between the parties then this procedure may not work and you may then need to issue a claim in the County Court.

Service of the statutory demand is also very important, if the statutory demand is not served correctly it may then also become defective. Therefore, it is always a good idea to have the statutory demand served by a process server or alternatively to serve the statutory demand on either the individual personally or if a company by personal service and then complete a certificate of service.

01753 486777

It is critical upon receipt of a statutory demand that you deal with it in an expedient manner. A statutory demand is a very important document that could ultimately lead to either your bankruptcy if you are an individual or your company being issued with a winding up petition and therefore ultimately being wound up.

If you have personally had a statutory demand issued against you, you must either pay the debt that is owed or dispute the debt directly with the petitioner. If no agreement can be reached relatively quickly directly with the petitioner you must then make an application to the court to have the statutory demand set aside. There is going to be a hearing in relation to this application and you will therefore need to make sure and ensure that you are prepared for the hearing with documentary evidence and your statement with the application must be very detailed. The court will generally set aside a statutory demand if there is a ‘genuine’ dispute between the parties, therefore, it is your responsibility to prove that there is a genuine dispute between yourself and the petitioner. The court will not entertain the facts of any dispute between the parties and will not make a judgment on this, however, the court are only interested in the mere fact that there is a genuine dispute between the parties. The Court may also set aside the application if there is a genuine counter claim for equal to or more than the sum being demanded.

If the statutory demand is issued against the company, the company cannot make an application to have the statutory demand set aside, however, they must make an application to the court for an injunction against the petitioner issuing a winding up petition against the company. It is also important as part of this application that the petitioner does not advertise the fact that they will issue a notice in the London Gazette.

If the winding up petition is advertised in the London Gazette the banks monitor the fact that a winding up petition has been issued against the company and therefore freeze the company’s bank account. This has the effect that it will of course affect your ability to be able to trade as a business and get access to vital money to pay suppliers. The only way to unfreeze the accounts is to make an application for a validation order this will require documentary evidence that there is a genuine dispute or that the company is able to pay its debts, there will be hearing on this issue.

It is important that any statutory demand that it issued against you individually or the company is dealt with very quickly as this may also alert other creditors and they may also begin their own actions for enforcement.

01753 486777

The normal rule under CPR Part 40.11 is that judgment sums should be paid within 14 days unless the Court orders otherwise.

The Court has the discretion to alter the normal 14 day period and to order payment by instalments. However, this is the exception rather than the norm.

The relevant factors for the Court to consider on such an application are enunciated in three decisions of the High Court:

In Gipping Construction Ltd v Eaves Ltd it was observed that the Court has absolute discretion when deciding if the time period should be extended. However, any application must be supported by proper evidence and prior to the application, it must have been discussed between the parties. Nevertheless, mere inability to pay is no defence and the insolvent debtor must take the usual consequences of insolvency.

In Amsalem v Raivid & Raivid the Court considered detailed evidence when considering the application, such as the claimant’s monthly expenditure, the amount of money in bank accounts and the levels of equity available in property.  Additionally, the judge stated that the application ought to be made within the 14 day period, although the Judge indicated that he would have been prepared to consider extending the 14 day period if there was a realistic prospect that substantial sums could be paid within the following few weeks and months. The Judge stated that under CPR Part 70 the court does not decide how judgments should be enforce, since it is up to the judgment creditor to do so and also stated that it should be an exceptional case where the court interferes with the rights of the judgment creditor.

In Gulf International Bank v Al Ittefaq Steel Products Co & Ors, the Court considered the application for a later payment, but decided that such applications are made rarely and normally only a one week extension would be given.

It is quite clear that the method of enforcement is not a matter for the Court nor for the defendant, it is a matter of choice for the judgment creditor. However, should a defendant wish to attempt to persuade the Court to order otherwise, it is advisable that such an application be made within 14 days from the date of judgment and that a proposal is made in which there is a realistic prospect that substantial sums could be paid within weeks or months. The defendant should also provide evidence of its inability to pay by reference to monthly expenditure and equity in assets.

Experience shows that an individual debtor before a District Judge, for example a single mother on benefits, is likely to be given more sympathy that a large commercial entity with assets, before a Master of the High Court.

01753 486777

Ordinarily, where no time for repayment is specified in a contract of loan founded on simple contract and the loan was expressed to be repayable on demand, the lender’s cause of action generally accrues when the loan is made and time for recovery of the loan begins to run from that moment. Consequently, once the loan is outstanding for more than 6 years – which often happens in the case of loans between friends and family, the lender’s right to recover the loan becomes time-barred, even if no demand for payment has been made.

However, there exceptions to this, namely; a lender’s right of action on a contract of loan is not time-barred after 6 years from the date of the loan: if –

• a contract of loan does not provide for repayment of the debt on or before a fixed or determinable date; and
• does not effectively make the obligation to repay the debt conditional on a demand for repayment made by or on behalf of the lender or on any other matter;

Instead, the 6 year period does not start to run unless and until a demand in writing for repayment is made by or on behalf of the lender. I.e. the lender will have 6 years from the date of the demand to recover the debt.

One needs to look to the terms of the loan agreement to ascertain whether there is a fixed or determinable date for repayment and if so, whether the fixed date has expired or whether there has been a triggering event to determine repayment of the loan, although if the latter applies, it is a question of construction when the 6 years runs from.

It is advisable to have a loan agreement professionally drafted by solicitors so as to ensure a clear fixed or determinable date for repayment and/or if you are in the unfortunate position of having to issue or defend County Court proceedings in relation to an unpaid loan, seek legal advice from solicitors as to the enforceability of the loan.

There are a different set of rules for loans from lending institutions and/or if a guarantee is in place.

A distinction should be drawn between removing squatters from residential properties and non-residential properties.

HOW TO REMOVE SQUATTERS FROM RESIDENTIAL PROPERTIES

A new criminal offence of squatting came into force on 1 September 2012, making squatting a criminal offence for the first time: or did it?

New criminal offence

Under the new law, namely section 144 of Legal Aid, Sentencing and Punishment of Offenders Act 2012, squatting in a residential property is a criminal offence if:

(a) the squatter is in a residential property as a trespasser having entered it as a trespasser,

(b) the squatter knows or ought to know that he or she is a trespasser, and

(c) the squatter is living in the property or intends to live there for any period.

The new criminal offence only applies to residential properties. The squatter must have entered the property without the owner’s permission, therefore, the criminal offence of  squatting does not apply to tenants in rental arrears or refusing to leave/holding over at the end of a tenancy agreement or licence (even if they leave and re-enter the property).

Squatters may be punished by a maximum prison term of up to six months, a maximum £5,000 fine, or both.

Even if the squatter entered the property before 1 September 2012, providing they remain in the property on or after 1 September, they may be guilty of a criminal offence.

Existing criminal law protection

Contrary to popular belief, the existing law, which has been in existence for many years and remains unchanged by the new offence, allowed/allows residential property owners to immediately recover their property from squatters and to even break into their own property to do so.

If there are squatters in your home or in a residential property to which you are not living in but one in which you intend to move into (i.e. an empty property which you have been carrying out repairs on), you may be classed as a ‘displaced residential occupier’ or a ‘protected intending occupier’ and therefore be protected by criminal law and able to take reasonably direct action without recourse to civil courts.

If you are a protected intending occupier you can ask the squatters to leave the property immediately. If the squatters refuse to leave they will be committing an offence under Section 7 of the Criminal Law Act 1977, which states that it is an offence (subject to certain defences) for someone who is on residential property as a trespasser/squatter to refuse to leave when required to do so by a displaced residential occupier or a protected intending occupier.

Notwithstanding the above, it was/is common for the Police to refuse to act and state that it is a civil matter – despite it actually being a criminal matter. We were previously instructed to liaise directly with the Police, so as to ensure that they duly act.

A displaced residential occupier, a protected intending occupier, or a person acting on their behalf, can use reasonable force to secure entry to the property. We have previously used professional agents for this, such as bailiffs. The Police cannot break into the property (the Police are not your agent) under the existing law.

Property owners have to prove that they are either a displaced residential occupier or protected intending occupier of the property, normally by way of statement witnessed by a solicitor or commissioner for oaths.

CASE STUDY UNDER EXISTING CRIMINAL LAW PROTECTION

We were previously instructed by a residential property owner whose property in Slough, Berkshire, had been taken over by squatters. The Police advised him that they could do nothing as it was a civil matter. He sought to instruct us to obtain an order for possession from the county court.

Upon receiving instructions, we immediately called the Police and were met with the same response, “it is a civil matter.” With wilful communication with the Police and upon them being ‘enlightened’, they agreed to act and accepted that it was indeed a criminal matter.

With the Police onboard, we then instructed a bailiff and two security guards to enter the property and requested the squatters to immediately leave.

We often found that bailiffs, in common with the Police, were not aware of the rights afforded to residential property owners under the existing law and were unwilling to act without a court order. Fortunately, we were able to hand-select a bailiff that was familiar with this area of law. Furthermore, since the squatters were Lithuanian, we also selected two Lithuanian security guards for support and to also translate.

A member of our firm attended the property and was present throughout the removal of the squatters – so as to assist the bailiffs and Police with contemporaneous legal issues. Often squatters’ try-their-luck by producing fake tenancy agreements and claim to have been paying rent to the “landlord”. In these circumstances it pays to be prepared.

From initial contact with our client, we successfully recovered our client’s property under the existing law, within 48 hours. Despite this, the common perception is that the existing law did not adequately protect property owners.

Pitfalls of the new law

Due to the “reasonable belief” element of the new offence, protection will not extend to situations where someone enters a residential property in good faith but does not in fact have a right to occupy (for example, a would-be tenant deceived by a bogus letting agent).

We suspect that squatters will use this as a loophole and produce for inspection fake tenancy agreements.

The future of the new law

It could be said that the new law is simply ‘headline-grabbing’, as section 7 of the Criminal Law Act 1977 previously protected homeowners and made it a criminal offence for a squatter to remain in a residential property once asked to leave by the owner. However, the new offence now extends the criminal offence to include all residential properties, not just those that are currently, or about to be, occupied. No doubt landlords, local authorities and second home-owners who were previously unprotected, will welcome the new offence.

The new offence ought to make it much more straightforward for residential property owners to recover possession from squatters seeing as they now only need to call the Police and prove ownership, trespass and so on. But, the big question remains as to whether Police will enforce the new offence.

OTHER CRIMINAL OFFENCES

Squatters may also be guilty of a range of other criminal offences such as:

• Causing damage to Property – s1 of the Criminal Damage Act 1971
• Theft of items from inside the property – s9 of the Theft Act 1968
• Abstracting electricity without authority – s13 of the Theft Act 1968

01753 486 777