Unit 7 Aspects of Costs and Enforcement

Question 1

Non- party costs

Answer 1

Part 46.

Court has a discretionary power to make an order that a non- party meets the costs.

Court would have to be satisfied that the non- party was the real party interested in the litigation or that they were responsible for bringing the proceedings e.g. third party funders.

Third party must be added as a party to the proceedings and may attend the hearing when the court determines the issue of costs.

Question 2

Security for costs - the order

Answer 2

D worried C cannot or will not pay costs if defeated.

The court has the discretionary power to make an order for security for costs if:
(a) it is satisfied, having regard to all the circumstances of the case, it is just to make such an order; and
(b) one or more of the conditions in Part 25 applies.

Question 3

Security for costs - the conditions

Answer 3

Most common:

• Claimant resident outside a 2005 Hague Convention State
• Claimant is an impecunious company (unable to pay)
• Claimant has taken steps to make enforcement difficult (relocating, failure to disclose assets)

Question 4

Security for costs - justness

Answer 4

(a) The strength of the claim and the defence: the less likely D is to win at trial, the less justified they are in seeking security.
(b) The claimant’s ability to provide security: no point if no ability
(c) The causes of the claimant’s impecuniosity: contributed to by the defendant’s behaviour.
(d) Property within the jurisdiction: need sufficient assets in reach
(e) The timing of the application: the order should be applied for as soon as practicable.

Question 5

Security for costs - procedure

Answer 5

D should write to the claimant first and ask for security to be provided voluntarily.

If not, D should submit a notice of application to the court with a witness statement in support.

If the order is granted, it will specify the amount of the security, the date by which the claimant must provide it and the form it will take. Most commonly, the claimant is required to make a payment into court.

Question 6

Offers to settle and costs

Answer 6

Encouraged to negotiate to settle before and throughout.

If reached prior - the prospective claimant will not be entitled to recover their legal costs unless this has been agreed.

If reach after commenced - the terms should be recorded in a consent order or a Tomlin order to ensure that enforcement proceedings may be issued to recover any monies due under the agreement, including costs.

Question 7

Part 36 offers - form and content

Answer 7

Must:
(a) be in writing;
(b) make clear it is made pursuant to Part 36;
(c) specify a period of not less than 21 days during which, if the offer is accepted, the defendant will pay the claimant’s costs (known as ‘the relevant period’); and
(d) state whether it relates to the whole of the claim or to part of it, and whether it takes into account any counterclaim.

Offer is made when it is deemed served.

Judge not aware of the offer until issue of costs after case decided.

Question 8

Part 36 offers - acceptance

Answer 8

May be accepted at any time unless notice has been given of its withdrawal.

• Within relevant period
  Sum must be paid within 14 days and, if not, can enter judgment.
  Also entitled to their costs of the proceedings up to acceptance.
  If cannot agree, judge assesses costs on standard basis.
• Late acceptance
  Court will normally order that:
  (a) D pays the C’s costs up to the date on which the relevant period expired; and
  (b) the C pays the D’s costs thereafter until the date of acceptance.
  However, if the D accepts the C’s offer late, the D will usually be ordered to pay the claimant’s costs of the proceedings up to the date of acceptance.

Question 9

Part 36 offers - non -acceptance

Answer 9

Order made in most cases. Exception not to.

It may be unjust where the offeror has not provided sufficient disclosure to allow the offeree to make an informed decision; or, for example, the Part 36 offer expired only days before the trial and crucial allegations that had not been pleaded were raised in the opening of the case.

Question 10

Part 36 offers - C offers - claimant wins at trial and equals or beats their own offer

Answer 10

D pays damages and additional amount:
(a) For damages of up to £500,000, the defendant must pay an additional amount of 10% of the sum awarded.
(b) For damages in excess of £500,000 and up to £1 million, 10% of the first £500,000 is payable and thereafter, 5% up to a maximum of £75,000.

Up to day 21:
- interest on damages
- costs on standard basis

From day 22 (after relevant 21 day period) to judgement:
- interest on damages and interests on costs, max of 10% above base rate
- 35% uplift on Cs fixed recoverable costs (for fast and intermediate track)/indemnity costs for multi-track

Question 11

Part 36 offers - C offers - claimant wins at trial but does not beat their own offer

Answer 11

Part 36 has no effect - no extra penalty is imposed on either party.

Question 12

Part 36 offers - C offers - C loses at trial

Answer 12

Claimant will not be awarded damages at all and will be ordered to pay the defendant’s costs on a standard basis in the usual way.

Part 36 has no effect.

Question 13

Part 36 - D offers - claimant wins at trial and beats the defendant’s Part 36 offer

Answer 13

Defendant will be ordered to pay:
* the amount of the judgment plus interest as claimed in the particulars of claim; and
* the claimant’s costs on the standard basis.

Part 36 has no effect.

Question 14

Part 36 - D offers - claimant wins at trial but fails to beat the defendant’s Part 36 offer

Answer 14

(a) the defendant pays the claimant’s fixed costs (for fast and intermediate track)/costs in standard basis for multi-track, from when those costs were incurred until the relevant period expired (Day 21);
(b) thereafter, the claimant pays the defendant’s fixed costs (in fast and intermediate track)/or standard basis for multi-track, from the date of the expiry of the relevant period (Day 22) until judgment; plus
(c) interest on those costs (a commercial rate of 1% or 2% above base rate has generally been adopted).

Question 15

Part 36 - D offers - claimant loses at trial

Answer 15

General rule as to costs would apply and the claimant, as the losing party, would be ordered to pay the winner’s (the defendant’s) costs.

However, to penalise the claimant for not accepting the defendant’s Part 36 offer, they would also be ordered to pay interest on those costs from Day 22 until judgment – usually at 1% or 2% above base rate.

Question 16

Cost orders against C - 44.14(1)

Answer 16

Orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.

Need permission for the amount that exceeds e.g. C awarded 20k damages, C ordered to pay 30k costs, need permission for 10k to enforce.

Question 17

Enforcement of Money Judgments - investigating the judgment debtor’s means

Answer 17

(a) instruct an enquiry agent;

and

(b) apply to the court for an order to obtain information from the debtor.
Hearing takes place where debtor asked questions by an officer of the court on oath.
Standard questions are asked, although the creditor may also request additional ones.

Question 18

Enforcement of Money Judgments - methods of enforcement - taking control of goods

Answer 18

Seizing the debtor’s possessions of an equivalent value. The items are then sold by public auction.

Cannot force entry into home but can use reasonable force to enter business premises if believe goods inside.

Necessary items exception:
Clothes, bedding, furniture which are reasonable required for basic needs. Work tools, computers, vehicles necessary for work or study up to value of £1,350.

Question 19

Enforcement of Money Judgments - methods of enforcement - taking control of goods - choice of court

Answer 19

• County court
  Less than £600.
  Warrant of control.
  Enforcement officer (bailiff)
• High court or County court
  £600+ but less than £5,000.
  Warrant or write of control (depends on court).
  Enforcement officer of applicable court.
• High court
  £5,000+.
  Writ of control.
  High court enforcement officer.

Question 20

Enforcement of Money Judgments - methods of enforcement - Charging orders

Answer 20

Part 73.

Can be made either on:
* Land
Can be over beneficial interest on joint owned land - registered at land registry.
* Securities e.g. stocks or shares.
Normally extends to any interest or dividend payable.

Effect is creditor is in similar position to mortgagee.

Sit on the asset under pursue and order of sale.

Question 21

Enforcement of Money Judgments - methods of enforcement - Charging orders - procedure

Answer 21

Stage 1: interim charging order
* Creditor must file an application notice including details of the judgment debt, the land over which the charging order is sought, and the names and addresses of any other person affected such as a party with a prior charge over the property.
Must also file a draft interim charging order (ICO).
* Usually be dealt with without a hearing.
* Any documents filed must be served by the creditor on the debtor within 21 days.
* Debtor then has 14 days to request that the court officer’s decision be reviewed by a judge.

Stage 2: final charging order
* If any person objects to the making of a final charging order (FCO), they must file and serve written evidence stating the grounds of objection within 28 days of service of the ICO.
* If an objection is received, home court for a hearing.
* At the hearing the court can make a FCO, discharge the ICO or direct a trial.

Stage 3: order for sale
* Need fresh proceedings must be commenced to enforce order.

Question 22

Enforcement of Money Judgments - methods of enforcement - Third party debt orders

Answer 22

Debtor may be owed money by a third party e.g.
* bank or building accounts that are in credit; and
* trade debts due to a business.

Procedure:
(a) The creditor applies to court without notice to the debtor.
(b) The judge will make an interim order, which has the effect of freezing the bank account or funds held by the third party.
A hearing will be listed no less than 28 days later.
(c) At the hearing, the court will consider any objections and, unless there is a good reason not to do so, the order will be made final - requires the third party to pay the money to the creditor.

Question 23

Enforcement of Money Judgments - methods of enforcement - attachment of earnings

Answer 23

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

Procedure:
(a) The creditor applies to the Civil national business centre at Northampton.
(b) The court informs the debtor of the application and requires them either to pay the sum due, or to file a statement of means giving details of their income and outgoings.
(c) On receipt of the form, a court officer will make an attachment of earnings order.
Only if there is insufficient information to do so will the matter be referred to a judge.
Amount that the court considers is reasonable for the debtor to live on, so if their earnings for a particular week are equal to or less than this figure, the creditor will receive nothing that week.
(d) The order will be sent to the parties and to the debtor’s employer.
The employer is entitled to deduct a small additional sum in respect of their administrative costs.
(e) If either party objects to the order that has been made, they can apply for the matter to be reconsidered by the district judge at a hearing.

Question 24

Enforcement of Money Judgments - methods of enforcement - Enforcement in another jurisdiction

Answer 24

• Scotland and Northern Ireland
  Straightforward. Creditor:
  (a) obtains a certificate confirming the date of the judgment, the sum awarded and details of interest and costs; and
  (b) make an application to the court in Scotland or Northern Ireland, supported by evidence, to register the judgment within six months.
• The Commonwealth
  e.g. Australia, Pakistan and Jersey.
  The judgment must be final and registered within 12 months for the 1920 Act but the creditor has six years for matters that fall within the 1933 Act. Failure to do so means the creditor loses their right to enforce outside of the jurisdiction.
• Other countries
  If the 2005 Hague Convention applies (where the parties have an exclusive choice of court agreement), the judgment will be enforced and recognised in that country.

Alternatively, the common law rules will apply - the creditor’s ability to enforce an English judgment will be determined by the national law of the particular country where enforcement is sought.