General Litigation and Dispute Resolution - FAQs

Q. I would like Pinney Talfourd to assist me with a dispute - what can I expect to happen?

A. The first step is for you to telephone us to briefly explain the dispute to see if it is something that we can in principle assist you with.

The second step is normally for you to meet us face to face to discuss your problem. This can either take place at our offices in Upminster, Hornchurch or Brentwood, or at an alternative venue such as your own office, if this is more convenient. We will discuss with you the circumstances of your case, give initial consideration to any documents you may have, advise you on the merits of your position and the options available to you and then recommend the best immediate course of action.

We understand that costs are always an important factor. We will always discuss fees, costs estimates and funding arrangements at an early stage so that you can make appropriate plans and arrangements.

To assist clients we can sometimes agree fixed fees in advance in respect of an initial consultation. These can range from £100 plus VAT to £500 plus VAT depending on the nature of the issues that become apparent in the initial telephone discussion.

The next stage is usually a process of thorough investigation to assess the strengths and weaknesses of your position. This can involve interviewing witnesses, taking statements, searching for and retrieving documents such as contracts and deeds, and entering into exploratory correspondence with your opponent, if appropriate.

Following the investigation stage we will then report to you with our assessment of the strength of your claim and prospects of success, and we will suggest an appropriate way forward. Sometimes there may be several options for you to choose from, and we are always happy to advise on the advantages and disadvantages of each option.

Q. I have received a Court form - what should I do next?

A. The important thing is to act quickly. As soon as a court document is served on you, the clock starts ticking as generally you only have a limited period of time within which to respond. Together with the claim form, you may have received a set of documents called a "Response Pack". You have the choice of either acknowledging service, or entering a defence. Usually, the most advisable course of action is to send off the Acknowledgement of Service to the court immediately while, at the same time, obtaining an appointment with us as quickly as possible.

It is very important that you do not ignore Court forms. If you fail to observe the strict deadlines, judgment can be entered against you, or you can be debarred from filing evidence.

Preparation is the key in defending legal proceedings, so the best course of action is always to contact your solicitors for legal advice as soon as you receive a claim against you.

Q. I have received something called a "statutory demand" - what is it and what can I do?

A. A statutory demand is the first step in insolvency and bankruptcy proceedings. As with court claims, time is of the essence as there is a limited period to respond if you dispute the debt. This is done by applying to the Court to set aside the demand. If you have no dispute over the debt, you have a period of 21 days within which to pay the debt. If you fail to take the appropriate action within these deadlines, your creditor will then be able to present a petition to the court to make your company insolvent or, if you are an individual, to make you bankrupt.

Due to the time pressures involved, you should take urgent legal advice. The Pinney Talfourd dispute resolution team is experienced in such matters and is able to respond quickly to your request.

Q. I have a judgment order for payment but my opponent has failed to pay - what are my options?

A. You can request that the County Court Bailiff attends your opponent's premises to request payment. If no payment is made, or payment is insufficient he can seize the goods for sale.. This is called execution.

At Pinney Talfourd we recommend that if execution is required for significant debts, that your request for execution is transferred to the High Court so that collection is put in the hands of a certificated High Court enforcement officers, who are much more likely to act quickly and are often much more effective and persuasive than County Court Bailiffs.

The dispute resolution team at Pinney Talfourd is also very experienced in other methods of enforcing judgment orders, including applying to the court for an attachment of earnings order, which is where an order is sent to the debtor's employer so that a specified amount can be taken from the defendant's earnings each pay day and sent to you, until the judgment debt is paid off in full.

Another alternative is to make an application for a third party debt order. This is useful when you know that the defendant is owed money from a third party. An order allows you to step into the shoes of the defendant so that you receive the payment, which you then may apply to the debt owed to you.

Sometimes, however, the defendant may not have enough money or valuable possessions to pay off a debt. It is often the case with individuals that the only significant asset to their name is their home or other properties. In such cases, it is often advisable to apply to the court for a charging order. This prevents the defendant from selling his/her property or land without first paying you what is owed. In some circumstances you will be able to apply to the court to request an order to force your debtor to sell the asset in order to pay off the debt.

Q. I am being sued by a person or company who has no money, or is based in another country - what protection have I got?

A. You may be confident of successfully defending a claim, but at the same time you may be seriously concerned that your opponent is not able to pay any legal costs awarded against it. The usual costs award rule in court proceedings is that the unsuccessful party will be ordered to pay most of the successful party's legal costs.

In certain circumstances a defendant is able to make an application to the court early on in proceedings for an order that the claimant pays money into court as security for the legal costs that he might become liable to pay if he loses the claim. If the court grants this order the claimant will not be able to proceed with his claim unless he makes a payment into court.

The legal issues surrounding such applications for security for costs are complex, and the court will only normally make such an order if you are able to present evidence to the court to show that your opponent's finances are, or will become, critically fragile. You must also be able to show that you have good prospects of successfully defending the claim. Alternatively, you may be able to show the court that your opponent is a company or individual resident outside England and Wales, or is nothing more than a nominee claimant, or has given unreliable address details with the intention of evading a costs order. If your opponent is resident abroad you will also need to show that there may be difficulty in enforcing any costs order in that foreign jurisdiction. This is not normally the case where your opponent is resident in another EU member state.

Q. I have an emergency situation where immediate action needs to be taken - how can you help?

A. Sometimes circumstances exist where immediate action is required, for example you may have been evicted from your business premises or home unlawfully, or another business may be using your registered trademark, or a debtor may be about to flee the country with your money. The Pinney Talfourd Dispute Resolution team can offer advice and take immediate action, if appropriate, by making applications to the court for emergency injunctions. These can include the following:

1) Search and seizure orders - sometimes defendants are liable to destroy crucial documents and condemning evidence. It may be possible to apply to the court for an order to search their premises and take away and preserve these documents.

2) Negative injunctions - these are orders that stop your opponent taking certain damaging action.

3) Positive injunctions - these are court orders that positively require your opponent to take certain action.

4) Freezing orders - it may be possible to obtain an order to freeze your opponents bank accounts and assets to prevent those assets being dissipated or moved out of the jurisdiction.

Q. What is bankruptcy?

A. Bankruptcy is one way of dealing with debts you cannot pay. The bankruptcy proceedings:

free you from overwhelming debts so you can make a fresh start, subject to some restrictions; and
make sure your assets are shared out fairly among your creditors.

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

Q. What are the Alternatives to bankruptcy?

A. It may be better for both you and your creditors to use one of the alternative procedures set out below instead of bankruptcy.

a. Debt Relief Orders DROs provide debt relief, subject to some restrictions. They are suitable for people who do not own their own home, have little surplus income and assets and less than £15,000 of debt. An order lasts for 12 months. In that time creditors named on the order cannot take any action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts that were included in your order. DROs do not involve the courts. They are run by The Insolvency Service in partnership with skilled debt advisers, called approved intermediaries, who will help you apply to The Insolvency Service for a DRO. Is a DRO likely to be suitable for me? To apply for a DRO, you must meet certain conditions:

You must be unable to pay your debts.
You must owe less than £15,000.
You can own a car to the value of £1000 but the total value of other assets must not exceed £300.
After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month.
You must be domiciled (living) in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales.
You must not have been subject to another DRO within the last 6 years.
You must not be involved in another formal insolvency procedure at the time you apply.

b. An informal arrangement or "family arrangement" If you know that you cannot pay all your debts, you could consider writing to your individual creditors to see if you can reach some compromise. Include a timetable of when you will repay them. The disadvantage with an informal arrangement is that it is not legally binding so your creditors could ignore it later and ask you to pay in full. Your local Citizens Advice Bureau can advise and help you make this kind of arrangement.

c. Administration orders If one or more of your creditors has obtained a court judgment against you, the county court may make an administration order. Administration is a court-based procedure whereby you make regular payments to the court to pay towards what you owe your creditors. Your total debts must not be more than £5,000 and you will need enough regular income to make weekly or monthly repayments. You do not have to pay a fee for an administration order but the court will take a small percentage from the money you pay towards its costs. If you do not pay regularly, the order could be cancelled and you may become subject to the same restrictions as someone who is bankrupt. If your circumstances change and you cannot pay as ordered, you can apply to the court to change the order. The court which made the order will tell you what to do. Details of administration orders are available at your local county court.

d. Individual voluntary arrangements An individual voluntary arrangement begins with a formal proposal to your creditors to pay part or all of your debts. You need to apply to the court and you must be helped by an insolvency practitioner. Any agreement reached with your creditors will be binding on them. How does it work?

First, find an authorised insolvency practitioner prepared to act for you. (Your local court can give the names of local practitioners.) A list is also available for you to look at in your local Official Receiver's office.
Then you apply to the court for an "interim order". This prevents your creditors from presenting, or proceeding with, a bankruptcy petition against you while the interim order is in force. It also prevents them from taking other action against you during the same period without the permission of the court.
The insolvency practitioner tells the court the details of your proposal and whether in his or her opinion a meeting of creditors should be called to consider it.
If a meeting is to be held, the date of the meeting and details of the proposals are sent to your creditors. Only those creditors who had notice of the meeting are bound by the arrangement, so it is important that you have accurate records of all your creditors' names and addresses. Otherwise, the arrangement might fail because the practitioner cannot contact all the creditors and, therefore, bind them to it.
At the meeting, the creditors vote on whether to accept your proposals. If enough creditors (over 75% in value of the creditors present in person or by proxy, and voting on the resolution) vote in favour, the proposals are accepted. They are then binding on all creditors who had notice of, and were entitled to vote at, the meeting.
The insolvency practitioner supervises the arrangement and pays the creditors in accordance with the accepted proposal.

Q. What will an individual voluntary arrangement cost?

A. You should ask several practitioners what they charge before you ask any of them to act for you. Insolvency practitioners are usually accountants, some are solicitors and their fees are similar to those charged by members of these professions for other kinds of work.

Q. When can you make an individual voluntary arrangement?

A. It is better and cheaper for you to set up an individual voluntary arrangement before you become bankrupt but you can propose one afterwards. If you do propose an individual voluntary arrangement after bankruptcy, it is possible for you to nominate the Official Receiver to be the supervisor of the arrangement. This type of arrangement is called a fast-track voluntary arrangement and is only suitable in certain cases.

Q. Are there any restrictions?

A. Generally speaking no, but the court cannot make an interim order if you have applied for one in the previous 12 months. There is no maximum or minimum level of debt and no maximum or minimum level of repayments, except what is acceptable to your creditors. An arrangement might particularly suit you if:

you have friends or relatives prepared to help pay or contribute towards paying your debts;
your income enables you to pay regular sums to creditors.

Q. What are the advantages of an individual voluntary arrangement compared to going bankrupt?

It gives you more say in how your assets are dealt with and how payments are made to creditors. You may be able to persuade your creditors to allow you to retain certain assets (such as your home). You will obviously have to act responsibly and flexibly in order to reach agreement with your creditors.
You avoid the restrictions which apply to a bankrupt.
Because you will not have to pay some of the fees and expenses which are charged in a bankruptcy, the overall costs are likely to be less.

Q. Can an individual voluntary arrangement be proposed by a member of a partnership?

A. Yes. You can propose an individual voluntary arrangement on your own which must take into account the claims that the creditors of the partnership have against you personally. It will not affect the rights of the partnership creditors to take action against the partnership itself or against any other partner. Alternatively, you and your partner(s) may wish to propose an arrangement involving the partnership creditors and the personal creditors of the partners. This can be done in two ways:

the partners may propose interlocking voluntary arrangements, with each partner making proposals for their own debts and the debts of the partnership; or
the partnership may propose a partnership voluntary arrangement (usually accompanied by voluntary arrangements for each partner). An authorised insolvency practitioner must help you to make proposals to creditors. He or she will be able to advise you which procedure to follow. Warning: If you enter a voluntary arrangement but fail to give full details of your assets and debts or fail to do what you have agreed under the arrangement, then the insolvency practitioner, or any creditor bound by it, may still petition for your bankruptcy.