Get in quick to avoid imminent increases in Court fees

Hot on the heels of my last blog which recommended filing any insolvency proceedings before the CFA and ATE insurance changes affecting that industry arrive in April, the Ministry of Justice have announced this week that, as of March 2015, Court fees will increase.


From March 2015, Court filing fees for all money claims with a value of £10,000 or more will increase to 5% of the value of that claim. However, the filing fees will be capped at £10,000. Thus, for a money claim of £10,000, the Court fee would be £500. For a claim to the value of £100,000 - £150,000 (a common money claim value in the SME market), the Court fees would be £5000 - £7500. This represents a substantial increase in Court filing fees. One silver lining is that claims lodged via the Money Claim Online system shall enjoy a 10% reduction in filing fees. This is unlikely to reduce the Court fee substantially in larger claims though.


These changes have caused some controversy, not least amongst the judiciary, who are concerned that this increase in fees will reduce access to justice. Interestingly, Employment Tribunal fees were introduced in the summer of 2013 and were also greeted with much controversy. Last year official figures revealed that Employment Tribunal claims have reduced by around 80% since fees were introduced. Some would argue that this heralds a general move by the Ministry of Justice to increase settlements. Interestingly, the official line is that these measures will unburden the Courts which are increasingly swamped with claims that would be more suitable for settlement or Alternative Dispute Resolution such as mediation.


Importantly, the increase in Court fees will not relate to Commercial Court or divorce proceedings. However, the Ministry of Justice has just announced a new consultation to consider raising Court fees in applications in civil proceedings and for the recovery of land.


It may be that this heralds a move to higher Court fees in all proceedings in England and Wales, but for those that are considering money claims, it would be advisable to file such claims before March and avoid the unwelcome fee hike.

A Free Pass for Fraudsters? Funding Reforms to Affect Insolvency Litigation

The last two years has witnessed major changes to the civil litigation regime known collectively as the ‘Jackson Reforms’. These reforms, sculpted by Lord Justice Jackson, have had a major impact on the litigation landscape, especially regarding costs and funding. Most of the reforms came into effect in April 2013. However, insolvency litigation has been exempt from the Jackson Reforms until April 2015. Now that the due date approaches, this piece explores the changes and their probable impact for insolvency proceedings.

The reforms relate to Conditional Fee Arrangements (CFAs) and After the Event Insurance (ATE). CFAs are an agreement between lawyers and those wishing to litigate where payment of a lawyer’s fees are only triggered if the litigation is successful. This is designed as an incentive for those who wish to litigate but do not have the requisite funds. The incentive for the lawyer is that, on top of their fees, they can also receive a ‘success fee’ payment if the litigation is successful.

ATE is a further incentive for those wishing to litigate who are concerned about having to pay the other side’s legal costs if they lose the litigation (a standard rule in civil litigation). ATE provides the prospective litigant with an option to secure insurance to protect against having to pay the other side’s costs if they lose.

A significant proportion of insolvency professionals use CFAs and ATE to fund insolvency litigation, including many of our own clients. Importantly, the Government believes that insolvency litigation is in the public interest as it acts as both a deterrent and a regime to punish fraudulent directors who deliberately wind-up their companies in order to avoid creditors. Such creditors are often HMRC so insolvency proceedings also provide a mechanism for the Government to recover tax. This public benefit is the main reason why insolvency proceedings have remained exempt from the Jackson Reforms, until now.

From April 2015, success fees deriving from CFAs and ATE premiums will no longer be recoverable (by lawyers and insurance companies respectively) for insolvency proceedings. This has caused controversy in the insolvency profession who unsuccessfully lobbied for insolvency proceedings to be exempt from these reforms. They argue that the abolition of the recoverability of success fees and ATE premiums will discourage insolvency litigation which will allow fraudulent directors to profit and the public purse, as well as private creditors, to suffer accordingly.

In April 2014, Professor Peter Walton published ‘The Likely Effect of the Jackson Reforms on Insolvency Litigation – an Empirical Investigation.’ This research was supported by many organisations with an interest in this issue, such as the Insolvency Practitioners Association.

In his report, Professor Walton argues that the Jackson Reforms are not applicable to insolvency litigation as their main aims were to address the disproportionality of legal costs to the value of the claim (such claims often being frivolous) and the ‘cherry picking’ of only the strongest claims by lawyers. In contrast, Walton argues that insolvency litigation, as it is in the public interest, is never frivolous nor the costs disproportionate as it allows the public purse to be reimbursed.

The statistics in the report also suggest that the Jackson Reforms may have a negative impact on the insolvency industry. For example, insolvency proceedings currently backed by CFAs enforce claims of approximately £300 million per annum. Of that figure, up to £70 million is money owed to HMRC.

Spring Law specialise in the SME market and, worryingly, it is the small to mid-market that may be most vulnerable to the actions of fraudulent company directors. The report points out that the majority of insolvency claims realise £50,000 or less. The concern is that due to the reforms, these smaller value cases are less likely to be pursued. This could have the unsavoury side-effect of giving fraudulent directors a carte-blanche to deliberately fold companies which owe creditors £50,000 or less and avoid any recourse through insolvency litigation.

It has yet to be seen how these reforms will impact insolvency litigation but if the problems outlined above do come to bear, then the Government may be forced to introduce amendments to these reforms. Spring Law work with providers of litigation and ATE funding and they have informed us that insolvency practitioners will need to move quickly to file claims before April 2015 in order to retain CFAs with success fees and ATE insurance. If you would like more information on how to bring such a claim or attain litigation insurance, please contact Andrew Day or Rory Lynch in the Dispute Resolution team.

'Small Change, Change Lives' - charity single for medical research

The season of goodwill is nearly upon us and, as such, I thought a little detour away from the world of law would be in order. I am on the Board of Trustees of a charity called The Friday Foundation - please see below for the story that helped inspire the charity's inception:

'Small change, change lives' 

 

A Christmas Single has been recorded to raise money for research into “Cures for the Big 4” killers that affect so many of us - cancer, diabetes, cardiovascular and neurodegenerative/psychiatric diseases.

The single, performed by  “super group” The Friday Foundation, is dedicated to the memory of the song’s lyricist and co-writer, Jonny Walker, a talented musician and fun loving 21-year-old, who was diagnosed with bowel cancer as a teenager and whose battle ended just a few weeks ago.  His premature death, which came before he was able to hear the completed recording, has been a powerful catalyst for all those involved in making the song a reality.

In a matter of weeks the single has been written, recorded, edited and mastered by people from a variety of backgrounds who have generously given of their time and talent. Amongst those performing are the Military Wives, Jonjo Kerr and Vicky Louise (vocals), James Gambold (drums), Alex Hutchings (guitar), Rich O’Brien (bass), Matthew Elston (violin), and a chorus including Jonny’s parents.

Jonny’s voice can be heard in the final section of the song accompanied by his Dad Mac on guitar, taken from an early demo of his ideas.  Although he never heard the final version, it is destined to become his legacy, raising money for causes in which he also passionately believed and which affect us all, not least his own wider family and friends.

If you would like to buy the single (all proceeds to relevant medical charities) then please visit the iTunes page. 

Alternatively, you can try the Just Giving page.

Many thanks in advance for any and all contributions made.

For more information please visit -

www.fridayfoundation.org

smallchange@fridayfoundation.org

And for those I may not see beforehand - have a very Merry Christmas :)

Rory

Paperless Revolution? Electronic filing introduced in the Chancery Division

In anticipation of electronic filing becoming compulsory in the Chancery Division in 2015, important interim measures and changes have been introduced which will take effect from 1 October 2014.


All court documents to be filed in the Chancery Division from 1 October 2014 shall be allocated a new case number for the purposes of electronic filing. This will include new claims and existing claims. All documents filed shall then be scanned into an electronic file for each claim. This measure will last for approximately 6 months until direct electronic filing shall become available to the public.


In relation to witness statement exhibits, for Part 7 claims a direction of the court will be needed for those that are more than 30 pages long. For Part 8 claims, witness statement exhibits that exceed 100 pages will also require a court direction.


There have also been changes regarding court bundles. It will become mandatory from 1 October 2014 for all hearings, no matter how short, to have bundles that have been filed at least 2 days before the hearing. If a bundle is not filed within the requisite time period then the hearing shall be adjourned.


These changes come hot-on-the-heels of the government announcement last week that from 1 October 2014, parties given permission to appeal to the Supreme Court or Privy Council will need to file court bundles electronically. This is a pilot scheme that will also run until 2015 when the system will be made permanent (depending on the outcome of the pilot). These changes certainly herald a concerted effort by the courts to move into a paperless reality. Whether this will work in practice, and trainees and paralegals will be free of painstaking bundling, is yet to be seen. It certainly would have been most welcomed during my legal training contract!


For more information on the changes please see: http://www.judiciary.gov.uk/publications/practice-note-chancery-chambers-changes-1st-october-2014/

Government consults on prohibiting the advertising of jobs exclusively in other EEA countries

The government have announced a consultation to create new legislation which will prohibit the advertising of jobs exclusively in other EEA countries.


This is an interesting development as there has been recent controversy in the media regarding some companies exclusively advertising jobs to other EEA nationals while not offering those same jobs to the UK market.


This week's Channel 4 Dispatches programme covered the issue and claimed that some large, established companies had even set up recruitment offices in Lisbon solely to recruit Portuguese staff. They even had an advertisement on the homepage of their website in Portuguese for such prospective workers, asking them to visit the recruitment office in Lisbon if they were interested in employment. Worryingly, this same company had a message in English on their homepage saying that no job vacancies were available.


When contacted by Dispatches, the company in question claimed the advertisement in Portuguese was an error and that their recruitment office in Lisbon was no longer in operation. However, a worker with a secret camera revealed that the majority of staff were from Portugal or other EEA countries and were being exploited, especially around zero-hours contracts and bad working conditions. The foreign workers claimed that they would put up with such conditions due to chronic unemployment in their homeland which is why they were favoured for employment.


It would appear that such a practice has become quite widespread which is why this new government consultation is welcomed. Of course, due to open worker borders in the EEA, it is important to encourage other EEA nationals to come and work in the UK if this is their desire. Equally, it is vital that such jobs are also advertised to UK citizens, especially when we are still in times of austerity and many people cannot find work despite their best efforts.


For more information on the consultation visit:


https://www.gov.uk/government/consultations/recruitment-sector-prohibiting-the-advertising-of-jobs-exclusively-in-other-eea-countries

Obesity and Flexible Working - Recent Developments in Employment Law

There have been some interesting developments in employment law in the last few weeks which denote a mention and are indicative of the changing face of this oftentimes fast moving area.

The right to flexible working hours had previously been an option that employers had to consider if it was requested by employees who were carers or parents with children under the age of 17. From 30 June 2014, the right to request flexible working hours has now been extended to all employees who have been in employment for 26 weeks or more.

Employers now have a responsibility to consider such requests for flexible working hours in a 'reasonable' manner and must respond to such requests within 3 months. The employer can refuse the request but must set out their reasoning. For employers who are facing such requests it is advisable to only refuse such requests if there is a valid business reason for doing so.

An example of a valid business reason would be that the job can only be done at a specific location which would rule out a request to work certain hours of the week from home. This may apply especially to those roles that are not office based such as in the hospitality industry. ACAS has provided useful advice and guidance for employers and employees to aid them through the process.

The second development that I wanted to mention is a recent case from the Court of Justice of the European Communities which relates to obesity. A child-minder who worked for a local government body in Denmark brought a claim for disability discrimination alleging that his employment was terminated due to his obesity.

This case is of interest as obesity was not officially considered a 'disability' under EU employment law. The court held that obesity may be considered a disability under the EU Equal Treatment Framework Directive if it could be classed as 'severe'. The court went on to rule that for a case of obesity to be 'severe' the relevant person's body mass index (BMI) would need to be 40 or more. This would indicate a level of obesity that would make professional life very difficult for the individual concerned.

The Danish child-minder in question had a BMI of 54 which meant that he was able to successfully argue disability discrimination against his employer. This is a potentially tricky situation for employers as they are unlikely to know the BMI of a seemingly obese prospective employee. One solution may be to add BMI as a category on health questionnaires issued to new employees. Employers would then need to remain mindful of behaviour that an employee with a BMI of over 40 may deemed to be discriminatory.

These two changes are symptomatic of modern living practices and lifestyles and are inclusive provisions which are welcomed. Disability discrimination law is evolving as more types of disability are being identified and classified. Allowing flexible working hours, rather than being a dosser's charter as previously feared, has been proven to increase the productivity of employees, as shown by studies in the US. Employees will welcome these new rights and employers need to be aware of this fast moving area of law or risk being caught out.

ACAS early conciliation comes into force for Employment Tribunal claims

On 6 May 2014, a new measure came into force whereby it is necessary for those wishing to commence an Employment Tribunal claim to first consider Early Conciliation (EC) discussions with ACAS (The Advisory, Conciliation and Arbitration Service). ACAS is an independent, publically funded organisation that helps resolve employment disputes and the EC discussions are free of charge.

ACAS have promoted EC as 'the free, fast and less stressful alternative to an Employment Tribunal for resolving workplace disputes' and have set up an information page on their website.

Previously an Employment Tribunal claim would be commenced by completing and filing an ET1 Form. However, from 6 May 2014, those wishing to commence a claim must fill-out an Early Conciliation Notification Form. ACAS will then contact the potential claimant within two days of receiving this form and the claimant will subsequently be contacted by an ACAS qualified conciliator who shall try and help the parties settle the dispute without the need for a tribunal hearing.

Once the EC process is began by filing the Early Conciliation Notification Form, the parties have one month, with the help of the conciliator, to settle the dispute. This period of one month can be extended by 14 days if necessary and agreed by all the parties. If the dispute is not settled within a month then the claimant will need a Conciliation Certificate from ACAS in order to file an ET1 Form. The Conciliation Certificate confirms that the EC requirements have been adhered to.

Importantly, the three month deadline to file an Employment Tribunal claim is paused if EC is commenced. Thus, if settlement is not reached after one month via EC, then a claimant still has one month to file an ET1 Form and thus commence an Employment Tribunal claim. Moreover, the EC discussions are completely confidential so they cannot be mentioned in a subsequent Employment Tribunal hearing.

Apart from confidentiality, other advantages to EC include saving time and money and having an opportunity to see the strengths and weaknesses of your claim. This is especially useful as the other party may have a strong counter-argument which you were unaware of and would otherwise have only emerged during Employment Tribunal proceedings. Thus, the EC allows you to determine the outcome and terms of any settlement rather than risking an adverse ruling by an Employment Tribunal. This is especially relevant as new laws mean that a claimant can now be liable for some or all of a respondent's costs of Employment Tribunal proceedings in certain circumstances, such as bringing a frivolous case that is 'without merit'. In this respect, knowing the other parties' counter-argument early on is useful and potentially cost saving.

The government have introduced this change as a further stage in their 'Red Tape' campaign to improve the economy by protecting employers from costly Employment Tribunal proceedings. It also has the added benefit of minimising the risk to employees of bringing often expensive, stressful and time-consuming Employment Tribunal proceedings. Interestingly, early conciliation has also been introduced in family law proceedings. Time will tell as to whether these early conciliation measures work in practice and they do seem to be a logical progression that should both reduce the risk associated with commencing legal proceedings and free the family courts and Employment Tribunal from claims which are more suitable for settlement.