Kerry Underwood

Archive for June 2020

THREE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

TWO MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

THREE MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Written by kerryunderwood

June 30, 2020 at 8:53 am

Posted in Uncategorized

INSOLVENCY: INJUNCTION RESTRAINING ADVERTISEMENT OF WINDING-UP PETITION GRANTED UNDER CORPORATE INSOLVENCY AND GOVERNANCE BILL, NOT YET LAW

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Re A Company [2020] EWHC 1551 (Ch) (16 June 2020)

the Chancery Division of the High Court granted an injunction restraining advertisement of a winding-up petition based on paragraph 5 of Schedule 10 to the Corporate Insolvency and Governance Bill 2019-21 (Schedule 10), which as the name suggests, is not yet law but which will have retrospective effect.

The court found that on the facts paragraph 5(1)(a) and (b) of Schedule 10 were satisfied, that is the petition was presented in the relevant period and the company was deemed unable to pay its debts on a ground specified in section 123(1) of the Insolvency Act 1986.

The court held that the evidential burden of showing that COVID-19 had a financial effect on the company before the presentation of the petition,so as to satisfy paragraph 5(1)(c) of Schedule 10 was on the company, not the petitioner.

This was a low threshold; the requirement was simply that a financial effect must be shown, not that COVID-19 was a cause of the company’s insolvency.

The evidential burden was to establish a prima facie case, rather than to prove the financial effect on a balance of probabilities.

The court held that the fact that the company’s funding drive was stopped by the onset of COVID-19 satisfied the requirement.

As paragraph 5(1) of Schedule 10 was satisfied, the court noted that, at the hearing of the petition, it would only be able to wind-up the company if paragraph 5(3) of Schedule 10 was satisfied.

Thus, the ground on which the petition was based  – section 123(1) of the Insolvency Act 1986 –  would apply even if COVID-19 had not had a financial effect on the company.

The burden of showing this was on the petitioner.

The court was not satisfied with this and found that there was no real chance of a winding-up order being made on the petition.

Allowing the advertisement would also be oppressive and unfair to the company, which was in the process of implementing a scheme of arrangement.

The High Court had previously restrained the presentation of a winding-up petition based on Schedule 10: – see

Re a Company (Injunction to Restrain Presentation of a Petition) [2020] EWHC 1406.

The purpose of the legislation was set out in a government press release on 23 April 2020:

“…the government will temporarily ban the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27th April, through to 30th June, where a company cannot pay its bills due to coronavirus.”

 

Comment

Without going into the facts of this case in detail, it was clear that at the beginning of 2019 the company was unable to pay its debts.

There is much comment on the expected massive rise in unemployment once furloughing ends, and also on the fact that many companies may be unable to continue trading, genuinely due to coronavirus.

What is less commented on the fact that many companies which were about to go into administration or liquidation, irrespective of coronavirus, have had a stay of execution.

Coronavirus has not caused these companies to get into financial difficulties; that is the point that I am making.

However, it will mean that in addition to companies which have genuinely suffered due to coronavirus, a dam will break in relation to companies which were going under anyway but, as stated above, have had a stay of execution.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

June 30, 2020 at 8:07 am

Posted in Uncategorized

INSURED’S RIGHT TO CHOOSE OWN LAWYER

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

 

The issue of whether an individual who has before-the-event insurance is forced to use the solicitors nominated by the insurance company, or whether they have freedom of choice to instruct their own solicitor, is a vexed one which I get a huge number of enquiries about.

The direction of travel of the courts has all been one-way, and that is to give freedom of choice to clients to choose their own solicitor, but to enable the before-the-event insurance company to set limits on the hourly rates and effectively to impose upon those independent solicitors the same terms as would be imposed upon their own panel solicitors.

The latest chapter in this saga is a recent decision of the Court of Justice of the European Union which held that the freedom of choice of an insured person extends to mediation proceedings, as well as substantive proceedings.

That decision was given in the case of

Orde van Vlaamse Balies and Ordre des barreaux francophones et germanophone v Ministerraad (Case C-667/18) EU:C:2020:372 (14 May 2020) .

An insured person’s right to freedom of choice of lawyer under a legal expenses insurance policy stems from the Solvency II Directive (2009/138/EC) and the key wording, which has thrown up so many cases, is contained in Article 201(1)(a) of that Directive which provides:

“(1) Any contract of legal expenses insurance shall expressly provide that:

(a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person”.

Most recent cases have revolved around the meaning of “any inquiry or proceedings”.

Here the request was made in proceedings between the Orde van Vlaamse Balies and the Ordre des barreaux francophones et germanophone  – the bar associations – and the Ministerraad  – Council of Ministers, Belgium – relating to the freedom of an insured person to choose his or her representative in mediation proceedings in the context of a legal expenses insurance contract.

The bar associations sought annulment of a 2017 national law as infringing the constitution, when read with the Solvency II Directive.

The Court of Justice of the European Union concluded that Article 201(1)(a) of the Solvency II Directive must be interpreted as meaning that the term “proceedings” referred to in that provision includes judicial and extrajudicial mediation proceedings in which a court is involved or is capable of being involved, whether when those proceedings are initiated or after they are concluded.

Previously, in a landmark decision, the European Free Trade Association (EFTA) Court held that the right to choose ones own lawyer applied at the stage of notification of the claim, or any effort to settle a matter out of court, or any instruction of the lawyer to assess the legal and factual situation, and thus the right arose as soon as a potential cause of action arose.

The judgment was a wholesale rejection of the longstanding arguments of insurance companies that freedom of choice only applied once proceedings have been issued.

That decision was in

Nobile v DAS Rechtsschutz-Versicherungs AG (Case E-21/16)

where the European Free Trade Association (EFTA) Court considered whether provisions in a legal expenses insurance contract were compatible with the freedom for insured persons to appoint a lawyer set out in the Solvency II Directive (2009/138/EC).

In reliance on its terms and conditions, the insurer had declared that it was not obliged to provide cover, as the insured person in question had instructed a lawyer without the insurer’s consent before the start of proceedings.

The court held that Article 201(1)(a) precludes terms and conditions in a legal expenses insurance contract that release the insurance company from its obligations under the contract if the insured person mandates an attorney to represent his interests, without the consent of the company, at a point in time when the insured person would be entitled to make a claim under the contract.

It rejected the argument that the application of the freedom to choose a lawyer was limited to judicial or administrative proceedings.

Here the court held that the right to choose one’s own lawyer applied at the stage of notification of the claim or any effort to settle a matter out of court, or any instruction of a lawyer to assess the legal and factual situation.

Thus the right arose as soon as a potential cause of action arose.

The court also held that it was not necessary for the insured to notify the BTE insurer in advance.

A BTE insurer has no right to deny coverage for the potential proceedings in issue because it deemed such proceedings to be unnecessary, or disproportionate or premature.

Such a right could motivate the insurance undertaking to reject coverage, which could deprive the insured person of the protection afforded by the legal expenses insurance contract.

If DAS’s contract was to be upheld then the insured person’s right freely to choose a lawyer would consist solely of the possibility of suggesting a lawyer, the acceptance of whom would be, ultimately, at the discretion of the insurance company.

It is incompatible with Solvency II Directive to accept that an insurance undertaking could be released from its obligations under legal expenses insurance contracts because the insured person breached some terms and conditions.

However that freedom to choose a lawyer cannot extend to obliging member states to require insurers to cover in full the costs incurred by the person instructed to represent the insured person.

Limitations of coverage may, for example, relate to a single claim or to the economic value of a claim.

However, terms and conditions to limit the coverage may not be such as to render it impossible for the insured person freely to choose a lawyer.

 

Comment

This is an interpretation of an EU Directive and it is likely that the UK will form part of a non-EU European grouping, including countries like Norway and Switzerland, once we leave the EU.

Any which way, these decisions are likely to remain binding on BTE insurers operating in the UK.

This is a case at the most senior level stating in the clearest possible terms that an insured person under a BTE insurance contract has an absolute right to instruct lawyers of their choice the moment the course of action, or potential course of action, arises.

In

Massar v DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij NV (Case C-460/14)

and

Buyuktipi v Achmea Schadeverzekeringen NV and Stichting Achmea Rechtsbijstand (Case C-5/15) (7 April 2016)

the European Court of Justice ruled that the term “inquiry” included disciplinary proceedings by an employer in relation to an employee.

Here, at Paragraph 31, the court said:

“Thus, any stage, even a preliminary stage, which is capable of leading to proceedings before a judicial body must be regarded as falling within the term ‘proceedings’ within the meaning of Article 201 of Directive 2009/138.”

At Paragraph 33 the court recognised the importance of an insured person having the same representative at the preparatory stage of a case as well as at the judicial stage.

In spite of the clarity and certainty of these rulings by what is still the highest court governing matters in the United Kingdom, I will no doubt continue to get scores of emails from solicitors telling me that “the insurance company won’t let my client instruct me.”

There is a very short answer:

Sue.

Written by kerryunderwood

June 29, 2020 at 11:18 am

Posted in Uncategorized

COMPANY IN LIQUIDATION CAN COMMENCE ADJUDICATION PROCEEDINGS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 (17 June 2020)

the Supreme Court considered the relationship between the adjudication regime for building disputes and a rule of insolvency law known as insolvency set-off and the Supreme Court unanimously held that a company in liquidation can bring adjudication proceedings and that an adjudicator has jurisdiction to deal with the same.

The claims maintained their separate identity for many purposes, and it is not futile to allow an adjudication to proceed.

Bresco has a statutory and contractual right to adjudicate.

It would ordinarily be inappropriate for the court to interfere with the exercise of that statutory and contractual right.

Maintaining cash flow is not adjudication’s only purpose – it was designed to be a method of alternative dispute resolution in its own right.

In reality, most adjudicators’ decisions are not challenged, and they lead to a speedy, cost effective and final resolution of the dispute.

Here, adjudication was a proportionate method for Bresco’s liquidators to determine the net balance due between the parties.

It is possible a court will not enforce an adjudicator’s decision due to the insolvency process, but that is an issue for the court at the time of enforcement.

The operation of the insolvency set-off between claims and cross-claims does not mean there is no longer a dispute under the construction contract, or that the claims “simply melt away so as to render them incapable of adjudication”.

It does not deprive adjudication of its potential usefulness to liquidators and appropriate undertakings could be given, such as the sort discussed in

Meadowside Building Developments Ltd (In Liquidation) v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC).

 

The Supreme Court’s Press Summary reads:

 

Background to The Appeal

This case is about the relationship between (a) the adjudication regime for building disputes and (b) a

rule of insolvency law called insolvency set-off.

Adjudication was introduced by Parliament in 1996 to help resolve disputes in the building industry.

Parties to a construction contract have the right to refer their disputes to an independent adjudicator for a quick decision. The adjudicator’s decision is binding unless and until it is successfully challenged in court. In the meantime, the losing party must comply with the adjudicator’s decision – a principle known as “pay now, argue later” which is designed to stop financial disputes from holding up the project’s cash flow.

Insolvency set-off means that, when a company enters liquidation and there are mutual debts between the company and one of its creditors, the debts in each direction automatically cancel each other out.

This leaves a single net balance owed in one direction. The liquidator of the company will calculate the balance and decide how much the company owes or is owed overall.

The facts of the case

Bresco and Lonsdale are electrical contractors. In 2014 Bresco carried out installation work for Lonsdale on a construction site at 6 St James’s Square, London SW1. In 2016 Bresco entered insolvent liquidation.

Both parties claimed they were owed money by the other. Lonsdale said Bresco had abandoned the project prematurely, forcing them to pay £325,000 for replacement contractors.

Bresco said Lonsdale had never paid for some work Bresco had done, so Lonsdale owed £219,000 in unpaid fees plus damages for lost profits.

In 2018 Bresco’s liquidators took steps to refer their £219,000 claim to an adjudicator.

Lonsdale objected to the adjudication. They said Bresco’s claim (if any) and Lonsdale’s cross-claim had cancelled each other out by the process of insolvency set-off. This meant there was no longer any claim, or therefore any dispute under the contract, so adjudication was unavailable (“the jurisdiction point”).

In any case the adjudicator’s decision would not be enforced until the liquidator calculated the net balance. So an adjudication was pointless (“the futility point”).

Mr Justice Fraser accepted both Lonsdale’s points and granted an injunction to stop the adjudication.

Following an appeal by Bresco, the Court of Appeal rejected the jurisdiction point but upheld the injunction on the basis of the futility point. Bresco appealed again to the Supreme Court. Lonsdale cross appealed on the jurisdiction point.

Judgment

The Supreme Court unanimously allows the appeal and dismisses Lonsdale’s cross-appeal, with the result that the adjudication can go ahead. Lord Briggs gives the only judgment.

Reasons for The Judgment

(1) The jurisdiction point

The Supreme Court concludes that the adjudicator does have jurisdiction.

The insolvency set-off between Bresco’s claim and Lonsdale’s cross-claim does not mean that there is no longer a dispute under the construction contract, or that the claims have simply melted away [47].

The claims maintained their separate identity for many purposes [29]. Despite insolvency set-off, Bresco could have brought court proceedings to determine the value of its claim, or exercised a contractual right to go to arbitration [50-51]. It follows that Bresco could also refer its claim to adjudication [52].

(2) The futility point

The Court of Appeal thought there was a basic incompatibility between adjudication and insolvency setoff. If the adjudicator found in favour of Bresco, the courts would refuse to enforce the award because it would interfere with the insolvency process. The adjudication would not promote the goal of “pay now, argue later”: it was futile and a waste of resources [54-56].

The Supreme Court rejects that view [58]. Bresco has a statutory and contractual right to adjudication.

It would ordinarily be inappropriate for the court to interfere with the exercise of that statutory and contractual right [59].

Maintaining cash flow is not the only purpose of adjudication under the 1996 Act. Adjudication was designed to be a method of alternative dispute resolution (ADR) in its own right. In reality most decisions of an adjudicator are never challenged in court and they lead to a speedy, cost effective and final resolution of the dispute [13-15]. Here an adjudication will be a simple, proportionate method for Bresco’s liquidators to determine the net balance [60-62]. It is possible that the courts will not grant summary enforcement of the adjudicator’s decision due to the insolvency process, but that does not deprive the adjudication of its potential usefulness to the liquidators [64-67].

References in square brackets are to paragraphs in the judgment.

 

See my blogs –

INSOLVENCY: MEADOWSIDE EXCEPTIONS TO BRESCO RULE APPLIED: ADJUDICATIONS TO PROCEED

INSOLVENCY PROHIBITION IN BRESCO IS NOT ABSOLUTE

COMPANY IN LIQUIDATION CANNOT COMMENCE ADJUDICATION

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

June 24, 2020 at 4:47 pm

Posted in Uncategorized

COSTS OF APPLICATIONS FOR INTERIM INJUNCTIONS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Immediate Costs Award In Failed Application For Interim Injunction

In

Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd and another [2020] EWHC 1468 (Pat)

the Patents Court held that the costs of an application for an interim injunction, refused because damages were an adequate remedy, should be decided immediately and not reserved to the trial judge.

The court thus distinguished the approach in such cases as compared with the approach to costs where the application for an interim injunction is granted, based on the balance of convenience as per the very recent case of –

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

– see below.

The general situation in such cases is that, absent any special factor, the court normally reserves costs until after trial, although this is not an absolute rule, and indeed in that case did make an immediate costs order.

Broadly, where an interim injunction is granted, it is not correct to say that the defendant is the unsuccessful party, or that the claimant is the successful party as the idea of an interlocutory injunction is simply to “hold the ring” until trial when the dispute between the parties can properly be decided.

The position is different when an interim injunction is refused, as that does effectively mean a defeat for the claimant on that point.

Thus, generally, a claimant who loses an application for an interlocutory injunction can expect to have an immediate award of costs against it, but a claimant who succeeds on an interlocutory injunction is generally likely to find costs reserved until after the trial.

 

Interim Injunctions Decided On Balance Of Convenience

In

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

the Chancery Division of the High Court considered the question of costs on successful applications for interim injunctions where the balance of convenience was a decisive factor.

In

Picnic at Ascot Inc v Derigs [2001] FSR 2,

the court stated that, in a case without any other special factors, where an applicant obtains an interlocutory injunction on the basis of the balance of convenience, the court normally reserves costs until after trial but in the Picnic case, the court was not laying down a hard and fast rule on how costs should be dealt with on applications for interlocutory injunctions where the balance of convenience was a decisive factor.

The logic of this practice is that, at this stage, there is no winner or loser.

There was no rule against awarding costs on such applications.

The present case was so significantly against the claimants on the balance of convenience that it was not within the general approach described by the court and it would be wrong to treat it as such and it would also be wrong to put off dealing with the matter of costs and, having heard the injunction application, the judge was best placed to ascertain whether the claimants really were justified in resisting the application.

The court here also ruled that there was no invariable rule that, when parties make common cause, running the same arguments, a costs order should be on a joint and several basis.

The costs order here was made against only one of two claimants as he was the “the real master of the litigation” on the claimants’ side.

An order against the other claimant might also have interfered with the purpose of the injunction.

The court held that it may not be possible to set off costs when different parties are involved and clear distinctions can be drawn.

The party facing the costs order here was not entitled to take advantage of a previous costs award that only his fellow claimant had obtained.

Written by kerryunderwood

June 15, 2020 at 7:41 am

Posted in Uncategorized

IMMEDIATE COSTS AWARD IN FAILED APPLICATION FOR INTERIM INJUNCTION

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd and another [2020] EWHC 1468 (Pat)

the Patents Court held that the costs of an application for an interim injunction, refused because damages were an adequate remedy, should be decided immediately and not reserved to the trial judge.

The court thus distinguished the approach in such cases as compared with the approach to costs where the application for an interim injunction is granted, based on the balance of convenience as per the very recent case of –

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

all written up in my blog of 18 May 2020 –

COSTS OF APPLICATIONS FOR INTERIM INJUNCTION DECIDED ON BALANCE OF CONVENIENCE.

The general situation in such cases is that, absent any special factor, the court normally reserves costs until after trial, although this is not an absolute rule, and indeed in that case did make an immediate costs order.

Broadly, where an interim injunction is granted, it is not correct to say that the defendant is the unsuccessful party, or that the claimant is the successful party as the idea of an interlocutory injunction is simply to “hold the ring” until trial when the dispute between the parties can properly be decided.

The position is different when an interim injunction is refused, as that does effectively mean a defeat for the claimant on that point.

Thus, generally, a claimant who loses an application for an interlocutory injunction can expect to have an immediate award of costs against it, but a claimant who succeeds on an interlocutory injunction is generally likely to find costs reserved until after the trial.

Written by kerryunderwood

June 12, 2020 at 10:26 am

Posted in Uncategorized

PLAYING BEHIND CLOSED DOORS WOULD KILL SEMI-PRO FOOTBALL

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By Kerry Underwood

Underwoods Solicitors deal with all aspects of football law and Kerry is of course vice-chair of Hemel Hempstead Town Football Club and can be contacted at Kerry.underwood@lawabroad.co.uk or 01442 430 900.

At 2pm this afternoon Thursday 11 June 2020, the National League South, that is the level that is two divisions off of the Football League meets by Zoom to discuss whether to have play-offs, following the decisions of Leagues 1 and 2 to end their seasons now, but to have play-offs and promotion and relegation.  

Also to be decided is whether the new National League South season should start behind closed doors.

Here are my thoughts as in the article by Jon Dunham in this week’s Hemel Hempstead Gazette.

TEXT OF ARTICLE

The vice-chairman of Hemel Hempstead Town believes any idea of playing National League South matches behind closed doors is “an absolute non-starter”.

In their latest update to their 68 clubs, the National League confirmed that August 8 remains the official start date for the 2020-21 season but that it will ‘inevitably need to be reviewed and updated’.

They also said  ‘it is assumed that it is not practical and sustainable to commence the new season if matches are to be played behind closed doors’.

And that assumption seems to fit in exactly with Tudors vice-chairman Kerry Underwood, who also feels some sort of clarification on a potential start date when fans will be allowed into grounds is needed.

“Playing games at our level behind closed doors is an absolute non-starter and would kill the semi-professional game, there’s no doubt about that,” Underwood said.

“We get no TV money obviously, our money is dependent on gate takings and people spending money in the bar and buying food and so on.”

“We know that Premier League clubs, as they soon will be, can survive without anyone walking into the ground.”

“But what on earth is the point of having non-televised football being played behind closed doors? It’s like painting a picture and then not displaying it.”

“It would mean football in the National League would have no more relevance than me having a kickabout in the local park.”

“And my guess is that is the view of all 68 clubs.”

“I am also vice-chairman of my local cricket club and the ECB have given clear guidance all along and they said some time ago that the professional season would not start before August 1.”

“Personally, I think there is zero chance of football in front of live crowds before August.”

“And I think the National League could say now that there will be no football before the first Saturday in September because I know clubs are worried as they are currently having to have their pitches and everything ready in line with August 8.”

“And a lot of contracts involve players getting paid a month before the season starts so they can train and everything like that.

“So, contractually, that is putting clubs in a position where they would need to pay out from the beginning of July.

“If it was said now that there will be no football until the first Saturday in September at the earliest, that would at least clarify it for the 68 National League clubs.”

Hemel are currently without a manager following the departure of Sammy Moore last month.

At the time, the club insisted there was ‘no hurry’ when it comes to appointing his successor.

And Underwood added: “That remains the position but, as you would expect, we have had a lot of interest from good candidates.

“And whenever the season starts, we are confident we will be ready with a good team in place.”

With thanks to Jon Dunham and the Hemel Hempstead Gazette

Written by kerryunderwood

June 11, 2020 at 10:06 am

Posted in Uncategorized

INSOLVENCY: EXTRA-TERRITORIAL JURISDICTIONS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Wolloff and Short (as Joint Liquidators of Akkurate Limited) v Calzaturificio Rodolfo Zengarini SRL and another [2020] EWHC 1433 (Ch)

the Chancery Division of the High Court held that it did not have power under Section 236(3) of the Insolvency Act 1986 to require persons resident in the European Union to produce documents relating to their dealings with a company being compulsorily wound up in England and Wales.

Section 236(3) does not have extra-territorial jurisdiction.

However, the court held that it did have such power under Council Regulation (EC) No 1346/2000 on insolvency proceedings.

The court here exercised its discretion to make such an order.

The 79-paragraph judgment is an exhaustive examination of the law in this field.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

June 9, 2020 at 10:24 am

Posted in Uncategorized

THREE MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

TWO MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Written by kerryunderwood

June 9, 2020 at 8:39 am

Posted in Uncategorized

COSTS FOLLOWING DISCHARGE OF WORLDWIDE FREEZING ORDER

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Les Ambassadeurs Club Ltd v Albluewi [2020] EWHC 1368 (QB)

the Queen’s Bench Division of the High Court ruled on costs after discharging a casino’s Worldwide Freezing Order against a customer, who sought his costs of the Worldwide Freezing Order and the continuation and discharge applications, given findings of lack of risk of dissipation and material non-disclosure.

The casino said that as the court had criticised the customer, costs should be the customer’s costs in the case, but the court rejected this submission as the outcome of the applications had not hinged on his criticisms of the customer, and the casino’s non-disclosures were an independent matter.

The customer sought indemnity costs, arguing that non-disclosure breached an important duty, taking the matter “out of the norm”, and that there had been no basis for alleging risk of dissipation.

The court distinguished cases where a freezing order application had no basis from those, as here, where it was arguable, but the evidence failed to establish risk of dissipation.

Standard basis costs were ordered.

Relevant factors included the non-disclosure, its inter-relationship with whether risk of dissipation was established and the importance of upholding the duty of disclosure in without notice applications.

However, none of this was decisive and the non-disclosure was not in bad faith; the casino had failed to appreciate the potential relevance of certain matters to the risk of dissipation.

There is no general practice that material non-disclosure leads to indemnity costs, but it is relevant, and deliberate or culpable non-disclosure usually will.

Considering whether to order an interim payment, the court described the starting point for interim applications as “pay as you go” and referred to CPR 44.2(8) – payment on account, absent “good reason” otherwise.

Since enforcing any judgment the casino obtained might be difficult, due to absence of assets within the jurisdiction, it was just to allow the casino to set off the customer’s costs judgment against any judgment the casino obtained, by not ordering an immediate interim payment.

This was “not a point of general application” but reflected the customer’s concession that the casino had a good arguable case, and the “unsatisfactory features” of the customer’s indebtedness.

Written by kerryunderwood

June 8, 2020 at 9:45 am

Posted in Uncategorized

PORTAL MISTAKE BINDING: OUTRAGEOUS AND SHAMEFUL DECISION

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

 

In

Mahoney v Royal Mail, Truro County Court, 26 May 2020

a Deputy District Judge ruled that a personal injury claimant who had mistakenly settled a claim on the portal for £550, rather than £5,550, was bound by that error, even though in any case outside the portal system the common law doctrine of mistake would have allowed the claimant to avoid the consequences of the mistake.

The defendant was very well aware of the mistake as it had offered £4,000 and so knew that the claimant responding with an offer of just £550, rather than £5,550, was an error.

Nevertheless the Royal Mail, itself subject in other proceedings to stinging criticism, exploited the position and promptly accepted the offer.

The solicitors for the claimant realized the mistake and contacted the solicitors for the Royal Mail to attempt to withdraw the offer and return the money, including sending a cheque back, but the solicitors for Royal Mail refused to accept the cheque and maintained that the matter had been compromised when it accepted the claimant’s offer on the portal.

The claimant issued Part 7 proceedings to re-start the claim and the Royal Mail sought to have the claim struck-out, relying on similar cases such as Fitton v Ageas, where the court found that the doctrine of mistake did not apply to portal claims.

The Circuit Judge there said that although this might lead to “rough justice” on occasion, the overall benefits of the system far outweighed the negative.

By the way “rough justice” means no justice and injustice, and is a weasel phrase unworthy of any members of the judiciary.

The District Judge here, in a bizarre decision for someone charged with administering something approaching justice if possible, held that it did not matter that the defendant knew that the claimant had made a mistake, and nor did the magnitude of the mistake matter – it was “neither here nor there”.

Well, for the claimant of course it was “here or there”.

The claim was struck-out.

The judge gave an example of where an offer of £25,000 was made instead of £25 and said that the cost of rectifying the error, that is issuing proceedings, would exceed the costs of the mistake.

The difference there is £24,975. I was unaware that the portal and fixed costs scheme in Cornwall had costs exceeding that sum.

From now on we should all make a stampede down to Cornwall, lockdown restrictions permitting, to recover fixed costs of over £25,000 and to test our eyesight at the same time.

On its website Crown Office Chambers report this case as “A v B”.

No restricted reporting order was made, and nor could it be in a case such as this, and everyone else is reporting the defendant as the Royal Mail, well known to be heavily involved in highly controversial legal proceedings elsewhere.

Is it the case that the lawyers who represented the Royal Mail did not want it to know that it was the Royal Mail who behaved in this way?

 

Comment

An outrageous decision which shames our judicial system.

Do courts want the sort of scenes we are seeing on the streets of the United States to occur in the United Kingdom? If you say that what happened to George Floyd is vastly more serious than this, then you are right, but the significance is in the loss of trust in the judiciary, Parliament and the establishment to treat all equally.

The Court of Appeal should strike these judgments down with ferocity and with the severest criticism.

To seek to justify the decision by the fact that the cost of rectifying the error might exceed the cost of the mistake is ludicrous; let’s all save a few bob by scrapping the courts and having summary execution.

Firstly – surely it is more important that justice is done than a few pounds saved.

Secondly – if the message went out to parties that an obvious error would be rectified, then parties would not act in the way that the Royal Mail did here, and the cost of putting it right would be one email – that is around £15 for a junior fee earner.

In any event, how does it save money? The claimant will presumably sue the solicitors in negligence, with all of the costs that that involves.

This decision was made during a nationwide lockdown.

The relevance of that is that the Prime Minister’s most senior adviser can break the law with impunity with no consequences but one of the plebs loses £5,000 because of a typing error that any of us could make.

In any event, if the cost of rectification argument is a legitimate one, then why does it not apply to any other form of legal proceedings outside the portal system?

One law for the plebs, one for the rest.

What is the moral difference between accepting an offer that you know has been made by mistake, thus avoiding paying the proper sum, and the fundamental dishonesty of a claimant exaggerating a claim to try and get more?

 

Remedies

  1. Extend the Civil Procedure Rules to Cornwall, especially CPR 1.3;

        “The parties are required to help the court further the overriding objective.”

  1. Make it compulsory to spell out the amount, that is “five hundred and fifty pounds” and that any offer has to be typed in twice, just like a password, to avoid such a mistake, with Portal software be written to pick up an obvious error, e.g. a claimant offering to accept, as here, less than the defendant had offered, or a defendant offering to pay more than a claimant had offered to accept.

          It is common when filling out a form online for the software to say something like “Did you really mean           that?

  1. A short Act of Parliament stating that any court must take into account an obvious error and apply the common law doctrine of mistake in all cases.
  2. Mass legal tourism to Cornwall, where apparently fixed recoverable costs in the portal are over £25,000.
  3. Compare and contrast the behaviour here with leaving a briefcase on a train and lying to your employer about it, resulting in you being struck off.
  4. Consider whether the legal establishment, responsible in this case and Denton, for causing enormous worry to legal workers should stop bleating about its concerns for the mental health of young lawyers.
  5. Consider what will happen next year when many on the portal will be Litigants in Person.
  6. Consider whether the portal injustices outweigh its usefulness and whether it should now be scrapped.

Written by kerryunderwood

June 5, 2020 at 12:04 pm

Posted in Uncategorized

WHO REGULATES THE REGULATORS?

with 4 comments


This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Below I report the decision of the Court of Appeal in

Competition and Markets Authority v Flynn Pharma Ltd and others [2020] EWCA Civ 617

concerning the circumstances in which a regulator who brings regulatory proceedings and loses should pay the successful party’s costs.

This raises the wider question of whether regulators should enjoy virtual immunity from costs, and indeed regulation and accountability.

The traditional idea that a regulator is a quasi-judicial body enjoying the respect and confidence of those who it regulates is, in the modern age, laughable.

The Law Society Gazette, on 18 May 2020, reported that the Junior Lawyers Division has lost confidence in the Solicitors Regulation Authority fairly to prosecute young solicitors whose judgment is clouded by pressures of work. The chair of that organization has written to the chief executive of the SRA calling for an immediate review of its approach to handling junior lawyers who report mental health issues or a toxic working environment.

This follows the striking off of recently qualified solicitor Claire Matthews who lied to her employer to cover her mistake of leaving sensitive documents on a train.

Ms Matthews is appealing, but the significance is in the flood of lawyers rushing to her support, both with money and pro bono representation.

Hers is not the first such case.

One of the features of that case was that Ms Matthews was ordered to pay costs of £10,000 and that the costs risk if she loses her appeal is around £40,000, and all of these costs are those of the regulator as her own lawyers are acting free of charge.

It is fair to say that the Legal Ombudsman system is regarded as nothing short of a Star Chamber by many lawyers. It serves no purpose and should be scrapped immediately.

My personal workload involves a considerable amount of football law, including appearing before the Football Association to represent managers and players etc.

Now the Football Association’s Judicial Services Team– and that is what it is called – is efficient, well run, well resourced and the FA’s courtroom facilities far exceed anything you will find in any Magistrates’ Court, Crown Court or County Court. The Legal Ombudsman and Solicitors Regulation Authority it most certainly is not.

Nevertheless, this entirely unregulated and unaccountable body has the power of economic life or death over those who appear before it and often hands out what football lawyers consider to be harsh, and inconsistent, sentences.

Put simply the suspicion is that if you are a Premier League Player or a manager whose participation in the sport brings in billions of pounds from Sky, you will get a less serious penalty than if you are a Non-League Player.

The point about all of these bodies is their lack of accountability, although it is fair to say that there is an appeal to the High Court from the Solicitors Disciplinary Tribunal.

My proposal is that there be a regulatory Court of Appeal, presided over by a High Court Judge with an automatic right of appeal to that court from any decision of any regulator.

This would be a far wider right than Judicial Review or the equivalent.

I would also abolish forthwith any legal assumption that a losing regulator should be immune from costs.

 

Competition and Markets Authority Case

In

Competition and Markets Authority v Flynn Pharma Ltd and others [2020] EWCA Civ 617

it was common ground that Rule 104 of the Competition Appeal Tribunal Rules 2015 conferred a discretion on the Tribunal to award costs.

The Court of Appeal said that the question is whether there is a starting point for the exercise of that discretion, and if so what it is.

Here the Competition Appeal Tribunal overturned a finding against Flynn Pharma Limited and Pfizer of abusing a dominant market position, and this decision was due to errors made by the Competition and Marketing Authority (CMA), whose appeal to the Court of Appeal against the decision of the Competition Appeal Tribunal largely failed.

The matter was remitted to the Competition Appeal Tribunal which held that its established practice was that the starting point for the exercise of discretion was that the unsuccessful party should pay the successful party’s costs, that is that costs follow the event.

It ruled that the Competition and Markets Authority should pay a proportion of the defendants’ costs.

The Competition and Markets Authority appealed to the Court of Appeal and that appeal is the subject of this judgment.

It argued that the starting point is that no order for costs should be made against a public body performing its functions in the public interest, unless it has acted unreasonably.

It was not disputed that the CMA had swingeing powers. Section 46 of the Competition Act 1998 gives a party a right to appeal to the Competition Appeal Tribunal. That Tribunal is able to hear detailed evidence as the appeal is on the merits and is not in the nature of judicial review.

Here the Court of Appeal referred to other bodies that had similar powers as the CMA, such as the regulators of communication and postal services, electricity, gas, water and sewerage, railways, air traffic and air operation services, payment systems, healthcare services in England and financial services.

Although the costs rules of the Competition Appeal Tribunal are similar to those in the Civil Procedure Rules there is no equivalent to the general Civil Procedure Rule that “unsuccessful party will be ordered to pay the costs of the successful party”.

Here the Court of Appeal set out the relevant legal principles to be derived from its extensive review of the case law, and set them out as follows:

i) Where a power to make an order about costs does not include an express general rule or default position, an important factor in the exercise of discretion is the fact that one of the parties is a regulator exercising functions in the public interest.

ii) That leads to the conclusion that in such cases the starting point or default position is that no order for costs should be made against a regulator who has brought or defended proceedings in the CAT acting purely in its regulatory capacity.

iii) The default position may be departed from for good reason.

iv) The mere fact that the regulator has been unsuccessful is not, without more, a good reason. I do not consider that it is necessary to find “exceptional circumstances” as opposed to a good reason.

v) A good reason will include unreasonable conduct on the part of the regulator, or substantial financial hardship likely to be suffered by the successful party if a costs order is not made.

vi) There may be additional factors, specific to a particular case, which might also permit a departure from the starting point.

Here, the Court of Appeal held that those principles applied to proceedings before the Competition Appeal Tribunal and consequently allowed the appeal of the Competition and Markets Authority and substituted a finding that there be no order for the costs of the proceedings before the Competition Appeal Tribunal.

The Court of Appeal stated here that the starting point or default position is that no order for costs should be made against a regulator who has brought or defended proceedings in the Competition Appeal Tribunal acting purely in its regulatory capacity.

It said that that starting point may be departed from for good reason, but the mere fact that the regulator has been unsuccessful is not enough.

That statement is one of general application to regulators.

It said, “there is a public interest in encouraging public bodies to exercise their public function of making reasonable and sounded decisions without fear of exposure to undue financial prejudice, if the decision is successfully challenged.”

However, the Court of Appeal said that the courts have been unable to take into account wider considerations of policy and consequently “there may be merit in the issue being considered by the Law Commission.”

 

Comment

Why should it be that a publicly funded body which has the power to destroy individuals and businesses should enjoy costs protection, but those individuals and businesses whose lives are destroyed enjoy no such protection?

The reality is that regulators, as recognised here, have power, without trial, to impose criminal sanctions on individuals and businesses.

The power of, and the protection given to, regulators is enormous and threatens the whole basis of democracy and accountability in the United Kingdom.

Written by kerryunderwood

June 3, 2020 at 7:48 am

Posted in Uncategorized

NON-PART 36 OFFER CAN BE ACCEPTED AFTER TRIAL STARTS

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB)

a High Court Judge, sitting with an Assessor held that a Calderbank offer, as compared with a Part 36 offer, did not lapse once the hearing started, and consequently could be accepted without the court’s permission part way through the hearing when it was clear that things were not going well for the recipient of the offer, who had become unlikely to recover as much at court as was on offer.

The court pointed out that the party making the offer could have withdrawn it, or time limited it – a so-called time-bomb offer, or made the offer under Part 36 of the Civil Procedure Rules, whereby the court’s permission is requested to accept an offer once the hearing has started.

Here, straightforward contractual principles applied and an unwithdrawn, non-time limited offer remains capable of acceptance.

In this case, the paying party made a non-Part 36 offer to settle costs for £440,000 “subject to the agreement of the Defendant’s costs of Detailed Assessment incurred since that date.”

The court held that that wording did not require a specific figure of costs to be agreed, but rather that it established the defendant’s entitlement to costs, to be assessed if not agreed, in the usual way.

By the end of the second day of a three day hearing the bill of costs had already been reduced to below £440,000, and just before the end of the second day the receiving party emailed the paying party and accepted the offer, but the paying party argued that it was too late.

The Master held that the detailed assessment proceedings had been compromised and that the matter was subject to common law principles of offer and acceptance.

As there was no time limit placed on acceptance of the offer, it had been properly accepted, and it could not be assumed that the common law principles stopped at the door of the court.

Indeed that is not the position under Part 36; rather Part 36 requires the court’s permission to accept a Part 36 offer once the trial has started.

On appeal here, the High Court held that the Master had not expressly applied the contractual principle of an offer lapsing after a reasonable time, but nevertheless on the facts of this case the offer had not lapsed and was thus capable of acceptance.

A non-time limited Calderbank offer is likely always to be held to be capable of acceptance before the conclusion of a detailed assessment.

There remains open the issue as to what extent, if any, withdrawing the offer, or time limiting it, would reduce the limited costs protection afforded in respect of a non-Part  36 offer, under CPR 44.2(4)(c) which requires a court to have regard to all the circumstances, including any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

 

Comment

A correct and sensible decision.

It is beyond me as to why parties so frequently avoid Part 36.

Any party which fails to use Part 36 will suffer the consequences.

Written by kerryunderwood

June 2, 2020 at 3:51 pm

Posted in Uncategorized

COURT FUNDS OFFICE INTEREST RATES REDUCED FROM TODAY 1 JUNE 2020

with 4 comments


Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The Lord Chancellor has today announced an immediate reduction in the Court Funds Office rates of interest payable to clients, with effect from today Monday 1 June 2020.

The Special Account reduces from 0.5% to 0.1%.

The Basic Account reduces from 0.1% to 0.05%.

See –

Interest Rate Reductions On The Court Funds Office Special And Basic Accounts.

In practice, solicitors should be very careful about allowing money to be paid into court on behalf of a protected party, as it will decline in value in real terms.

Solicitors should look for investing the money in a secure way, having taken proper advice, and that investment will of course still need the approval of the court.

Written by kerryunderwood

June 1, 2020 at 12:22 pm

Posted in Uncategorized

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