In the current economic climate, disputes, particularly payment disputes, are rife. Consider the following scenario. You arrive at work early on Monday morning, to discover that the supplier with whom you have been having a long-running but relatively minor dispute over payment, has secured a winding up order against your company and appointment of a liquidator from the court. Or, equally distressing, a sheriff officer appears at your door with another form of court order in his hand - an interdict - stopping you from carrying out a key part of your business activities.
As if the consequences of such orders are not bad enough, one of the most distressing aspects of having orders such as these served against your company is that it often comes as a complete surprise, but one that has the potential to turn your business inside out.
These orders can be awarded by a court on an interim basis without their recipients even having the opportunity to present their side of the story. There is, however, something very simple and straightforward you can do to avoid this.
By lodging a form of legal early warning system known as a 'caveat', you are entitled to receive advance notice should anyone apply for an interim interdict or interim winding up order against your business or an order for sequestration against you in the Scottish Courts. With a caveat in place, your solicitor will be advised by the court in advance and you will have the opportunity, not otherwise available, to attend court to defend the application. Caveats provide peace of mind by ensuring that we are given prior warning of any of these types of orders sought against our clients.
If there is no caveat in place the order can be granted without you knowing anything about it in advance. The consequences of this and, as a result, having to deal with the strong possibility of rapid business failure or at least serious disruption are clearly dire. We therefore recommend that all of our commercial clients have caveats lodged at each Sheriff Court where such an order is likely to be made - usually the place of their registered office, any places of business and locations of substantial contracts - and in the Court of Session.
Caveats are inexpensive and simple to lodge and have a lifespan of one year. MacRoberts charge a fixed fee of £50 per caveat (plus VAT) plus the court fees which are £25 for each Sheriff Court caveat and £45 for each Court of Session caveat. We will also write to you approximately a month before they are due to expire in order to determine whether they should be renewed. This corporate early warning system should operate as a fundamental part of every company's risk management strategy.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
