pre action protocol for debt claims

10th July 2018

On the 1 October 2017, the new Pre-Action Protocol for Debt Claims came into force. Contained in the Civil Procedure Rules (CPR), businesses will be expected to follow the new protocol prior to commencing proceedings where they wish to recover a debt. What is a Pre-Action Protocol? A pre-action protocol explains the steps that should be taken by both parties in a civil case prior to taking the matter to court. In turn, this furthers the overriding objective contained in the CPR, which is an important principle in English and Welsh law, which enables the court to deal with cases justly and proportionate to cost. There are currently 13 protocols in force which relate to specific actions (this will increase to 14 with the addition of the new protocol for debt claims). Where a claim is not specifically covered by a pre-action protocol a party should follow the guidelines contained within Practice Direction on pre-action protocols. The aim of a pre-action protocol is to: Ensure the parties understand each other’s positions so they can make a decision about how to proceed; Encourage parties to settle issues without proceedings; Support efficient management of proceedings; and Reduce the costs of resolving a dispute by encouraging the parties to settle using a form of alternative dispute resolution. What does the Pre-Action Protocol for Debt Claims do? The protocol applies to any business trying to recover a debt from an individual (it therefore, does not apply to business to business debts unless the debtor is a sole trader). The reason behind the introduction of this new pre-action protocol is to encourage claimants to provide the debtor with information so they can make an informed decision regarding the payment. The hope is that this will stop proceedings being issued prematurely and provide the defendant with a chance to review and consider all the information and ultimately, allow the parties to settle outside of court. The appeal being that it is much more cost and time effective than taking a matter through the rigmarole of a trial. A potential problem with the new protocol is that it provides a ‘one size fits all’ solution. The effect of this is that debts of all different sizes which fall under this protocol will be required to adhere to the same timescales, and this could result in a delay of the creditor being paid. Implications of not adhering to the Pre-Action Protocol Both claimants and defendants should use their best endeavours to follow the relevant pre-action protocol as a failure to do so may result in serious implications. The court may consider non-compliance with the protocol when providing directions as to the management of the case and when making orders for costs. Stay of Proceedings – If parties are found to be non-compliant with the protocol, the court may order ‘stay of proceedings’. This means that any proceedings are halted in order for parties to undertake steps in accordance with the protocol. Cost Orders – if parties are non-compliant, the court may also impose sanctions on parties in relation to costs, such as: Ordering the non-compliant party to pay the costs of […]

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overriding interests and how they impact on a purchaser of a residential property

6th July 2018

The Land Registry created ‘Overriding Interests’ by way of the Land Registry Act 1925. The reason for this creation was to allow for unregistered rights and interests affecting a property to be accounted for. These interests can be in favour of a seller or third party. Therefore, this can be problematic on the sale as the sellers’ interests can be binding on a buyer despite ownership changing hands. Whilst the term is not specifically defined, examples range from short leases affecting a property through to rights of ways or chancel repair maintenance costs. It is essential that the purchaser’s solicitor enquires about these rights specifically from the outset of the transaction. The previous system in place meant that overriding interests were not registered against the property. Understandably this caused significant issues for buyers. In the case of Williams & Glyn’s Bank v Boland [1980] a sole owner defaulted on his mortgage payments which resulted in his Lender seeking possession via a possession order. The wife of the sole owner was deemed to have a beneficial interest of actual occupation due to her contribution towards the purchase price and her occupation in the ‘matrimonial home’. The Courts ruled that her right was more than just a ‘minor interest’ therefore she had a beneficial interest to occupy the property. As a result of the varying decisions and issues caused, the Land Registry updated the law via The Land Registry Act 2002. What has changed as a result of The Land Registration Act 2002? As of 12 October 2002, the Land Registry is now trying to register overriding interests onto the Title of the property. This will allow buyers to have knowledge prior to purchase and this will eliminate the need of extensive enquiries which can be time consuming and expensive. The Land Registry’s intention is for the Title documents of a property to be a ‘mirror image’ of the actual position. There are now two lists contained in Schedule 1 and 3 of the 2002 Act which define the overriding interests required for registration along with those which are non-registerable. Buyers should seek legal advice when dealing with overriding interests as they are required to register any relevant interests with the Land Registry upon completion of their purchase. A buyer’s legal advisor will carry out the necessary investigations as to whether a seller or third party has any overriding interests over the property.

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