Haworth & Lees Solicitors are a firm specialising in all matters commercial that will be of assistance to any small or medium sized enterprise. Most business are experts in providing goods or services according to their skills, experience and interests. We are no different at Haworth & Lees because even though we are a firm of solicitors we pride ourselves on our accumulated business acumen and links we have with local businesses in the Tameside area.
Andrew Haworth, Partner
When Andrew Haworth, Richard Lees and Richard Hartley set up the firm a number of strategic business decisions were taken. One of the most important was to grow our business into becoming the legal representatives of choice in Tameside. As a result we took the decision to obtain our supplies from local businesses. As a result we have gained an insight into the Tameside business community.
Everybody who is in business must be keenly aware of the threats facing business in these recessionary times. The lifeblood of any businesses are its customers. However, if you do not receive payment for the goods and services you have supplied then serious threats to the cash flow of your business will develop. It is extremely difficult to convince the banks to provide increased funds for working capital at the moment. Therefore, it is vital that all businesses manage their aged debtors and bad debts.
Haworth & Lees Solicitors can assist throughout the business cycle. For example we can ensure that your business contract contains terms and conditions which will hopefully assist you in managing the cash flow issues that result everyday from contractual disputes. Unfortunately, it is the case that when times are troubled a business, in order to ensure it’s own survival, has to resort to the law to ensure that they are paid for work done or services completed. There are a number of legal remedies that can assist businesses. Below is an explanation how Haworth & Lees Solicitors can assist your business in the recovery of unpaid bills.
LEGAL ACTION
Taking legal action to reclaim a debt should be a last resort, and often the threat is enough to make your customers pay you. However, if your usual ways of recovering debt have failed, there are things to consider before beginning the legal process. The court will expect you to make an effort to sort out your dispute with the other side before you take legal action. This means that court action only takes place after you have tried to reach an agreement with the customer. It is important that these issues are recorded accurately. Please contact Haworth & Lees Solicitors prior to issuing any proceedings.
DECIDING WHETHER TO MAKE A CLAIM
Legal action should be a last resort to recover debts and you should explore all other options first. However, we suggest that you discuss the options with Haworth & Lees Solicitors before embarking on any action.
Even if making a claim seems the only answer, you should consider your chances of winning. In many cases your claim may not be disputed. But in others, it could be difficult to prove the customer is at fault – eg that they owe you money or haven’t paid an outstanding bill – unless you have good evidence to support your claim. In these instances you will need to provide as much evidence as you can of the validity of your claim, such as purchase orders or invoices, copies of reminder letters or other requests for payment that you sent before resorting to further action.
BE PREPARED FOR THE COSTS
You will have to pay court fees in advance. However, they may be recovered from the defendant if you win. Note that the issue of costs has to be taken extremely in any legal action. Expert advice from Haworth & Lees Solicitors will ensure that any decision made will be informed as to the risk to costs being imposed against you or not recovered by you. Below are 3 situations when costs are in issue:-
- court fees are payable when you issue a claim and at different stages of the claim This also applies if you have to institute enforcement proceedings if you have to enforce the judgment.
- if you lose, or do not succeed in enforcing your judgment, you will not be able to reclaim the court fees if you win and succeed in enforcing the judgment, you may be able to claim your solicitor’s fees and other costs back from the defendant
- if you have refused to consider alternative ways of sorting out your claim before taking court action, you may not claim your costs back or the court may order you to pay the customer’s costs, even if you win the case
CHOOSING THE RIGHT LEGAL ROUTE
The amount of money you are claiming will determine whether your case will be handled by the County Court or the High Court.
Most claims are issued in the County Court and this is where you should go first to make a claim. County courts deal with a range of claims, including debt recovery. Larger and more complex claims will normally be heard in the High Court.
Depending on the figures involved the case can be allocated to one of three tracks. These are known as the small claims track, the fast track and the multi-track. Once a claim is made to the court and is defended, the County Court will take into account the value of the claim and allocate the case to one of the tracks as appropriate. Allocation is at judicial discretion. Haworth & Lees Solicitors will be able to advise you on any allocation issues.
The county court tracks each have a different claim limit. Small claims track -for simple cases up to £5,000. For example consumer claims, faulty goods, goods not supplied, goods recovery, debt, breach of contract etc. Fast track, for cases from £5,000 to £25,000. Multi-track for complex cases and all cases over £25,000
Some complex cases are dealt with in the High Court. This is a highly formal venue and cases will require a solicitor, as the points of law discussed may be complex. This route will involve building a strong case for a claim and considering how associated costs will be met. The value of a claim in the High Court must be at least £25,000.
THE FINAL WARNING LETTER
Whichever course of legal action you choose, you must send a final warning letter to the customer before you begin. You should do this because it often prompts payment and the courts may penalise you on costs if one is not sent. It is advisable to send the letter using a signed-for delivery service so that the customer can’t deny receiving it. Haworth & Lees Solicitors can also assist you in relation to service of all documents.
If your claim is for a fixed amount that is below £100,000, you may be able to start a claim via the internet using the HMCS Money Claim Online service.
It is often seen in advisory articles that small claims matters are informal and can be dealt with by yourself. However, But there may be times when you decide you want to seek advice from a solicitor. You should note that legal aid is not usually available for small claims cases and legal costs aren’t normally recoverable
If your claim is likely to be disputed, if your claim is for a large amount or if the case is complicated, it is probably sensible to get professional help from Haworth & Lees solicitors even if it is only just to check out what you are doing. Haworth & Lees would be able to assist you for a modest fee in these circumstances. Remember time is money and whilst a lot of information is available on the internet it does involve time which may be better spent on running your business.
A CONTESTED COURT CASE
If a defence is entered, the case may progress to a hearing or trial at the defendant’s local court. Unless an agreement is reached first a judge will decide the case.
Even if you have started court action, it is not too late to try to reach an agreement with the defendant.
Both the claimant and the defendant must complete an allocation questionnaire. This helps the judge decide whether your case is suitable for the small claims track, fast track or multi-track. It also gives the option to try mediation to settle the dispute.
THE SMALL CLAIMS TRACK
The small claims track is often referred to as the small claims court. This is informal and the hearing is usually held quickly and before a District Judge. In a small claims case the following should be kept in mind
- Evidence is not normally given under oath. The claimant and defendant are expected to represent themselves. You can be represented if you wish, but will not be awarded costs for this. You may be able to claim limited costs for loss of earnings while attending court, traveling and overnight expenses, and the costs of any witnesses and experts – such as a doctor or surveyor.
- The judge may intervene more than in the other tracks as the claimant and defendant are probably not skilled at presenting a case. In England and Wales , the judge may propose to decide the case on written evidence only. You can refuse or accept this.
- At the end of the hearing the judge tells you their decision and briefly explains the reasons behind it. After the hearing both you and the defendant will be sent a copy of the judgment.
THE FAST TRACK AND THE MULTI-TRACK
Both these tracks involve a longer process than the small claims track for a number of reasons:
- Procedures are much more formal and the case will always go to trial in court.
- The claimant and defendant are not expected to represent themselves.
- The preparation of the case can be complex and there may be witnesses to be cross-examined.
- Costs are usually awarded, including court fees and legal costs.
As you can see it will be vital that you receive expert advice in cases that involve the Fast Track or the Multi track.
RECOVERING INTEREST ON UNPAID DEBTS
Interest can be claimed against your opponent in three situations. It is important to remember that only one sort of interest can be applied at any one time.
INTEREST PERMITTED BY A CONTRACT
Interest written into the contract takes precedence over other forms of interest. However, there are certain conditions that apply in this situation. It is much the preferred route to seek advice from Haworth & Lees Solicitors to ensure that your businesses terms and conditions are enforceable. If you require assistance with your business contracts then our commercial law team will be able to assist.
In other situations where interest has not been included in the contract, simple interest at a flat rate of 8 per cent can be claimed. It only applies if the case is won or is undefended.
In England and Wales, interest runs from when payment was due until judgment is given by the court. If payment is made before judgment, interest stops at that date. In some circumstances interest can be charged after judgment.
Finally, statutory interest can be claimed under the Late Payment of Commercial Debts (Interest) Act 1998. In some circumstances costs of up to £100 can also be claimed. This is only applicable in cases where you have acted in the course of a business and your customer is also in business. The rate of interest is 8 per cent over the Bank of England reference rate – the base rates are set on 30 June and 31 December. For contracts made since 7 August 2002, all businesses and the public sector can claim against all businesses and the public sector. Statutory interest can be claimed after late payment has been received. The limit is six years in England and Wales. The interest usually runs from 30 days after it was due and claimed. A contract or custom and practice may change this, but only if it gives a substantial remedy. A contract can’t exclude statutory interest, but it is not compulsory to claim it.
ENFORCING THE JUDGMENT
Once you receive a judgment in your favour this is not necessarily the end of the matter as it can be difficult to enforce any judgment made by the courts.
First, it is advisable to check that the debtor can afford to pay you. You can apply to the court for an order to obtain information from the judgment debtor. This orders your debtor to go to court for questioning under oath about their financial position. Once you know your debtor’s circumstances, you can decide whether it’s worth applying to the court for enforcement of the judgment. There are a number of options that may be available and at Haworth & Lees Solicitors we will assist you in determining the most productive way forward.
