Dispute Resolution - Case Management, Costs and Enforcement

Question 1

PART 36 OFFERS

What are the effects of an offer to settle under Part 36 being made?

Note: this is at the end of the Costs chapter, but given its importance, I have put these cards first.

Answer 1

If the receiving party makes the ‘wrong’ decision and rejects a Part 36 offer, there are significant penalties.

Question 2

PART 36 OFFERS

What are the formalities of the Part 36 offer?

Answer 2

• In writing
• made pursuant to Part 36
• specifies an acceptance period of no less than 21 days. If the offer is accepted in that period, the defendant will pay the claimant’s costs (the ‘relevant period’)
• state whether it relates to the whole or part of the claim and whether any counterclaim is taken into account.

In practice, the relevant period will require acceptance to be made within 21 days, but it can be more. For simplicity, any reference to ‘Day 22’ means the day after the relevant period.

Question 3

PART 36 OFFERS

When is the offer formally made?

A Part 36 offer is treated as ‘without prejudice save as to costs’. What does this mean?

Answer 3

When (deemed) served on the other party.

The trial judge is unaware of the offer until the case is decided (both on liability and quantum). Only when costs are being dealt with will any relevant offer be produced to the judge.

Question 4

PART 36 OFFERS

When may a Part 36 offer be accepted?

Answer 4

At any time unless notice of withdrawal has been given. However, there are adverse costs consequences for late acceptance.

Question 5

PART 36 OFFERS: Acceptance within relevant period

If the defendant makes an offer which is accepted within the relevant period, what must the defendant do?

What else is the claimant entitled to?

Answer 5

Pay the sum within 14 days.

Their costs of the proceedings (up to the date of the notice of acceptance being served on the defendant).

If not paid within 14 days, the claimant can enter judgment.

If the claimant made the offer, the consequences remain the same.

Question 6

PART 36 OFFERS: Acceptance after the relevant period

If the defendant makes an offer and the claimant accepts after the relevant period, the court normally orders that:

Answer 6

• the defendant pays the claimant’s costs up to the expiry of the relevant period; and
• the claimant pays the defendant’s costs thereafter until acceptance.

Question 7

PART 36 OFFERS: Acceptance after the relevant period

If the claimant makes an offer and the defendant accepts after the relevant period, the court will normally order:

Answer 7

That the defendant pays the claimant’s costs up to acceptance.

Question 8

PART 36 OFFERS: Non-acceptance

When would a court not impose penalties for a party not accepting the Part 36, even if it was wrong to do so?

Give examples.

Answer 8

If it is unjust to do so.

• The offeror has provided insufficient disclosure for the offeree to make an informed decision.
• The offer expired just before trial and crucial allegations that had not been pleaded are raised in the case.

Question 9

Non-acceptance of a Part 36: Claimant’s offer

If the claimant makes a Part 36 and the defendant does not accept it, when would there be penalties on the defendant?

Answer 9

When the claimant wins at trial and equals or beats their offer.

In all other cases, e.g. defendant wins or the claimant wins but receives less than their offer, there are no Part 36 consequences.

Question 10

Non-acceptance of a Part 36: Claimant’s offer

Advise on the Part 36 consequences of the defendant not accepting the claimant’s offer, where they should have done.

Answer 10

(1) Additional damages up to a maximum of £75,000.

• For damages of up to £500,000, additional damages of 10% of the sum awarded.
• For damages between £500,001 - 1 million, 10% of the first £500,000, and 5% of the remainder.

(2) Enhanced interest on damages awarded from day 22 onwards, of up to 10% above the base rate.

(3) Costs on an indemnity basis from day 22 onwards, interest on those costs of up to10% above base rate.

The ‘sum awarded’ means the damages + interest due under contract/statute in the usual way. Where the remedy is non-monetary, ‘sum awarded’ refers to the costs.

Question 11

Non-acceptance of a Part 36: Defendant’s offer

If the defendant makes a Part 36 and the claimant does not accept it, when would there be penalties on the claimant?

Answer 11

• if the defendant wins at trial
• if the claimant wins at trial but receives the same or less than the defendant’s Part 36 offer.

Question 12

Non-acceptance of a Part 36: Defendant’s offer

Advise on the Part 36 consequences of the claimant not accepting the defendant’s offer, and losing at trial.

Answer 12

The claimant pays the defendant’s costs (the general rule) + interest on those costs from Day 22 until judgment.

Interest usually at 1-2% above the base rate.

Question 13

Non-acceptance of a Part 36: Defendant’s offer

Advise on the Part 36 consequences of the claimant winning at trial but receiving less than the defendant’s Part 36 offer.

Answer 13

• The defendant pays the claimant’s costs on the standard basis up to Day 21.
• Thereafter, the claimant pays the defendant’s costs on the standard basis from Day 22 until judgment, and interest on those costs.

Interest usually at 1-2% above the base rate.

Question 14

Allocation to track: Provisional allocation

What will be used by the court to confirm the track and directions for case management?

Answer 14

Directions questionnaire.

Contents of the DQ will be important for drafting but suggest to do mocks for this.

Generally, I have not included all of case management in these slides.

Question 15

Allocation to track

What are the four tracks, and the value of claims which they hear?

What are some factors other than financial value are taken into account?

Answer 15

Small Claims: £10,000 or less
Fast Track: £10,001 - £25,000
Intermediate Track: £25,001 - £100,000
Multi-track: £100,000+

• Remedy sought
• Complexity
• Number of parties;
• Value of any counterclaim

Question 16

When must the cost budgets be filed?

For claims of less than £50,000 what must it be filed with?

Answer 16

21 days before the first Case Management Conference (CMC).
The directions questionnaire.

The parties will then complete a budget discussion report at least 7 days before the CMC.

Question 17

Costs budgets

What does the costs budget consist of? Explain each component.

Answer 17

Incurred costs = detailed breakdown of costs and disbursements
Budgeted costs = estimate of future costs and assumptions for future phases of proceedings, including any ADR or settlement contingencies.

A budget must be dated and verified by a statement of truth signed by a senior legal representative of the party.

Note: very difficult to amend or update the costs budget after it has been approved, therefore it must accurately reflect the costs.

Question 18

What can be done if a party is acting oppressively in seeking to cause the applicant to spend money disproportionately on costs?

What is the consequence of filing the costs budget late or not at all?

Answer 18

An application to court can be made.

The party will be treated as having filed a costs budget only in respect of court fees. No other legal costs can be recovered.

Question 19

Costs management order

In what cases would a costs management order be made, and what is provided in the order?

Answer 19

In all cases, unless the judge is satisfied that litigation can be conducted justly and at proportionate cost without one.

The order provides that the court will record:

• extent to which any incurred/budged costs are agreed; and
• for budgeted costs that are not agreed, the court’s approval after revisions.

Question 20

Costs management order: standard basis

Generally, what is the effect of a costs management order on the standard basis?

When does the court depart from this (still on the standard basis)? Give two examples.

Note: it is my understanding that a CMO is not the norm, which is why an assessment of reasonableness and proportionality would be made when it comes to costs (see later).

Answer 20

• Standard basis: The party who is awarded costs will recovers its agreed/approved budget
• Where there is good reason to depart. This includes: no costs being incurred; costs being much less than budgeted.

Effectively, the consequence of a costs management order is that the parties are tied to their costs budget figures.

The alternative to the standard basis is the indemnity basis - see later.

Question 21

Costs management order

What is the effect of no cost management order?

Answer 21

If there is a difference of 20% or more between costs claimed by the receiving party and costs set out in the budget, the receiving party must provide reasons for the difference and the court will decide whether the additional amount can be recovered.

Question 22

Costs

Costs include…

Answer 22

solicitor’s charges and disbursements such as court fees, expert’s fees, pre-action costs.

Question 23

Determining the costs: summary or detailed?

For each of the small claims, fast track, intermediate track and multi-track, how are costs assessed?

Answer 23

Small claims: Legal costs not recoverable; disbursements only.

Fast track: costs summarily assessed.

Intermediate track: not given in course updater. Probably summarily assessed but may depend on complexity band.

Multi-track: detailed assessment.

Question 24

Determining Costs: Fixed costs

When are fixed costs used?

Give examples of when fixed costs are used.

Answer 24

For all fast track and intermediate track cases.

• Default judgment (fixed by Part 45)
• Costs incurred in enforcing a judgment.
• In fast track, preparing the case and appearing at trial.

In some circumstances, such as for summary judgment, parties can agree a higher sum and the judge will usually concur.

Question 25

Determining Costs: Summary assessment

What is the general rule about summary assessment?

Answer 25

The court should, unless good reason not to, make a summary assessment of costs:

• at the conclusion of a fast track trial; and
• at any other hearing that has not lasted more than one day.

To assist the court, the parties must file and serve a statement of costs (a detailed breakdown of costs) no less than two days before a fast track trial, and at least 24 hours before an interim hearing.

Question 26

Determining Costs: Detailed assessment

If an order is made for detailed assessment, what must the receiving (i.e. non-paying) party do?

What is the process if the paying party wishes to challenge the bill?

Answer 26

Serve a “notice of commencement” on the paying party within 3 months, together with the bill of costs and evidence in support.

1. The paying party has 21 days to serve points of dispute.
2. The receiving party has 21 days to file a reply.
3. The receiving party must file a request for an assessment hearing within 3 months of expiry of the period for commencing detailed assessment proceedings.

On (3) the explanation for such period isn’t specified. Perhaps this would be given in the order.

Question 27

Determining Costs: Detailed assessment

What does the court do if the costs claimed are less than £75,000?

If either party is unhappy with this, what could they do and what is the risk of doing this?

Answer 27

The court decides costs in the absence of parties (provisional assessment)

Request an oral hearing within 21 days. The risk is that if the party fails to achieve an adjustment of at least 20% in their favour, they will be ordered to pay the costs of the hearing.

Question 28

Determining costs: Factors

What factors should the court consider in assessing the amount of costs the party receives?

NOTE: This in the case that a CMO HAS NOT BEEN MADE.

Answer 28

• the receiving party’s last approved or agreed budget,
• Conduct of parties
• Value involved
• Importance of the matter
• Complexity
• Skill, effort, specialised knowledge and responsibility
• Time spent on case
• Place and circumstances in which work was done

Note: this is in relation to judgment as well as settlement.

Question 29

Determining costs: Standard basis

What is the two-stage procedure a court will undertake on the standard basis?

Any doubt will be made in favour of…

Answer 29

(1) Were any items in the receiving party’s bill unreasonably incurred or unreasonable in amount?

(2) After disallowing the above items, is the overall figure proportionate?

The paying party.

If disproportionate, the total costs will be reduced or disallowed.

Question 30

Determining costs: Standard basis

What are some factors for determining whether the total costs are proportionate?

Answer 30

• Do the costs bear a reasonable relationship to the sums?
• What is the value of any non-monetary relief in issue?
• How complex is the litigation?
• Were any costs incurred due to the conduct of the paying party?

Question 31

Determining costs: the indemnity basis

When does the court award costs on the indemnity basis?

How are costs determined on this basis?

Answer 31

When the court is dissatisfied with the paying party’s behaviour in the proceedings (or in pre-action conduct).

• Costs must be reasonably incurred and reasonable in amount;
• Any benefit of the doubt is given to the receiving party.

Note: costs do not have to be proportionate. Indemnity basis is effectively a double whammy on the paying party - not only are they paying, but they are paying potentially disproportionate costs.

Question 32

Non-party costs

When will the court order that a non-party meets the costs of the paying party?

Answer 32

When satisfied that the non-party is:

• the real party interested; or
• responsible for bringing proceedings.

Note: External funders such as family or friends will not be at risk. Third party funders in a more formal context will be, as they will have an interest in the outcome.

Question 33

Security for costs

When would security for costs be sought and what are the consequences of a successful application?

Answer 33

When a defendant believes they are being pursued by a claimant who has ‘nothing to lose’. The consequence is that the claimant would have to pay money into court as security for the defendant’s costs.

Note: it is not always money ordered, but usually is.

Question 34

Security for costs

What are the legal requirements for the defendant to be successful in their application?

Answer 34

1. A part 25 condition applies:
   - The claimant resides outside a Hague Convention State;
   - The claimant is an impecunious company; or
   - The claimant has taken steps to make enforcement difficult.
2. It is just for the court to make the order.

Residing outside a Hague Convention State: for an individual, this is where they habitually reside. For a company, it is where their central management is located.

Impecunious company: evidence of the company’s financial assets and likely total costs will be essential.

Taken steps to make enforcement difficult: failure to disclose assets may be sufficient evidence.

Question 35

Security for costs: Justness

What factors are considered in determining whether it is just for the court to make the security for costs order?

Answer 35

• Strength of the claim and defence;
• Claimant’s ability to provide security;
• Causes of impecuniosity;
• Property within the jurisdiction;
• Timing of application

Re property within jurisdiction, the court will be unlikely to grant security if the claimant has sufficient assets within the jurisdiction.

Question 36

Security for costs: procedure

What is the procedure for applying for a security of costs?

What must the evidence persuade the court of?

Answer 36

1. Write to claimant requesting security.
2. If security not given, submit an application notice to court + witness statement.

A part 25 condition being met; the justness of security being granted; amount sought.

Question 37

Enforcement of Money Judgments: Procedure

When the opponent is not paying up after a judgment is obtained against them, what is the general procedure for enforcing judgment?

Other than the above procedure, there is another option which is more costly, what is that?

Answer 37

1. File a notice of application at court for an order to obtain information from the debtor, including: details of the debtor; the judgment sought; and amount owed.
2. The order will be personally served on the debtor and a hearing will take place.
3. If the debtor fails to attend, the judge may make a commital order, to be suspended provided that the debtor complies.

• To instruct an enquiry agent.

The hearing usually takes place at the County Court hearing centre local to the defendant.

Examination is conducted by an officer of the court, or the judge if requested by the creditor.

Question 38

Enforcement of Money Judgments: Methods of enforcement

What are the four most common methods of enforcing judgment where the opponent is not paying up?

Answer 38

• Taking control of goods
• Charging order
• Third party debt order
• Attachment of earnings order

Question 39

Enforcement: Taking control of goods (Part 83)

Advise on the procedure of starting proceedings to take control of goods, in both the High Court and County Court.

Whichever court judgment was obtained from, enforcement will be done in that court.

Answer 39

High Court:

1. Creditor delivers a request and two copies of a writ of control to the court, along with the judgment.
2. The judge seals the writ and returns a copy to the creditor.
3. The creditor forwards the writ to the enforcement officer for the writ to be executed and the enforcement officer immediately takes control of the goods.

County Court:

1. Creditor files a request for a warrant of control at the County Court hearing centre where the goods are being seized.
2. The warrant is executed by the enforcement officer and the enforcement officer immediately takes control.

Sometimes after executing the writ/warrant, the enforcement officer will give the debtor a few days to pay. This happens where the debtor enters a controlled goods agreement. If payment is still not received, the goods are sold at a public auction.

Question 40

Enforcement: Taking control of goods (Part 83)

Advise on the procedure of taking control of goods once the enforcement officer has executed the writ or warrant of control.

Advise on exempt items.

Answer 40

• The enforcement officer (the bailiff) can peaceably enter the debtor’s home or use reasonable force to enter business premises if they believe the debtor’s goods are inside.

Exempt goods for an individual debtor

• items for basic needs.
• items for work and study items up to £1350
• goods belonging to another or being hired.

Question 41

Enforcement: Taking control of goods (Part 83)

Advise on the advantages/disadvantages of taking control of the goods.

Answer 41

Advantages:
- can force entry into a business premises.
- in the High Court, enforcement officers are paid on the amount collected, so they are incentivised.
- in the High Court, interest accrues on the debt.

Disadvantages:

• Cannot force entry into a debtor’s home.
• Logistical difficulties and cost of the method.

Question 42

Enforcement: Charging order on land

What is required for a charging order to be legally valid?

Can a charging order be made in respect of joinly owned property?

Once the charging order is obtained, how can the creditor actually receive money?

Answer 42

• Registration at the Land Registry (for registered land) or Land Charges Department (unregistered land).
• Yes, in respect of the debtor’s beneficial interest.
• Applying to court for an order for sale.

Question 43

Enforcement: Charging order on land

Advise on the procedure for a charging order on land to be made.

What is required for a charging order to be legally valid?

Answer 43

(1) Interim charging order (ICO)
- The creditor files application notice and draft ICO.
- The court officer makes the ICO (or refers to a judge) without a hearing.
- The ICO, application notice and supporting documents are served on the debtor within 21 days.

(2) Final charging order (FCO)

• Within 28 days of service of the ICO, any person may object to the making of an FCO. If so, a hearing will be held.
• Otherwise, an FCO will be made and the charge is registered at the Land Registry

On (1) the debtor will then have 14 days to request that the decision be reviewed by a judge.

After obtaining the charge, the creditor needs to obtain an order for sale by fresh proceedings.

Question 44

Enforcement: Charging order on land

Advise on the advantages/disadvantages of a charging order.

Answer 44

Advantages:

• may encourage the debtor to settle the debt as interest accrues.
• secures the debt.

Disadvantages:

• inappropriate where a mortgage exists.
• a further application for an order of sale would be required.

Note: a charging order on stock and shares is also possible.

Question 45

Enforcement: Third Party debt orders

Advise on the procedure for a third party to pay the creditor.

Where there is a third party who owes money to the debtor.

Answer 45

1. The creditor applies to court without notice.
2. The judge makes an interim order, freezing the bank account held by the third party.
3. A hearing is listed no less than 28 days later.
4. At the hearing, the court finalises the order unless there is good reason not to.

Question 46

Enforcement: Attachment of earnings

What is an attachment of earnings order?

Advise on the procedure.

Answer 46

An order compelling the debtor’s employer to make regular deductions from the debtor’s earnings and pay them into court.

1. The creditor applies to the CCMCC.
2. The court informs the debtor and requires them to pay the sum due or file a statement of means.
3. On receipt of the statement, the court officer makes an attachment of earnings order, specifiying the normal deduction rate and protected earnings rate.
4. The order is sent to the parties and the debtor’s employer.

Protected earnings rate: amount for the debtor to live on.
If either party objects to the order, it will be reconsidered at a hearing.

Question 47

Enforcement: Attachment of earnings

What are the disadvantages of an attachment of earnings order?

Answer 47

• If the debtor loses their job, the payments cease.
• If the debtor moves jobs, the procedure must be repeated.
• The court may order low value instalments.

Question 48

Enforcement in another jurisdiction: Scotland and Northern Ireland

After obtaining a judgment in England, what is the procedure for enforcing it in Scotland/Northern Ireland?

Not particularly important.

Answer 48

(1) The creditor must obtain a certificate of judgment;

(2) Within six months, the creditor must make an application to the court in Scotland/Northern Ireland to register the judgment.

If successful, the judgment will be registered and enforceable using local methods.

Question 49

Enforcement in another jurisdiction: Commonwealth and others

LEAVE OUT. UNIMPORTANT.