Legal Update 2021 – 11 points to consider

  1. Hearings & Trials

During the Covid-19 pandemic the Court embraced technology.

The Covid-19 pandemic temporarily caused uncertainty as to how the Courts and the legal profession would adapt.

The Courts Service brought forward remote hearings that it had been considering for a few years. While with any new procedure and technical difficulties, remote hearings may prove to be a permanent fixture.

Remote hearings save time with waiting and travelling time a thing of the past.....

However, Judges may consider that Witnesses feel less inhibited by not being in Court and therefore may be inclined not to tell the whole truth. Losing the ability to pick up on body language, often a sign for a mistruth, is missing from remote Hearings.

Learning opportunities and experience of real time Court will be lost, to the detriment of the development of junior legal staff.

  1. Jurisdiction

The Lord Chancellor's Advisory Committee have issued new rules on serving Claim Forms out of Jurisdiction in English Courts.  The Civil Procedure (Amendment) Rules 2021 (SI 117/2021) implemented those changes which came into effect on 6 April 2021. There is now a new wording provided under CPR 6.33 (2B) which reads as follows:

2B) The Claimant may serve the claim form on a Defendant outside the United Kingdom where, for each claim made against the Defendant to be served and included in the claim form: either

  1. The Court has power to determine that claim under the 2005 Hague Convention and the Defendant is a party to an exclusive choice of court agreement conferring jurisdiction on that court within the meaning of Article 3 of the 2005 Hague Convention; or
  2. A contract contains a term to the effect that the court shall have jurisdiction to determine that claim.

These changes are definitely a positive and an economically viable development for parties opting for the English Courts as the forum for any disputes to be resolved.

It is recommend terms and conditions are reviewed to include exclusive English jurisdiction clause.

  1. Alternative Dispute Resolution/Mediation...... not so Alternative!

The Master of the Rolls (Sir Geoffrey Vos) has revealed that compulsory mediation is being discussed as a way of keeping more disputes out of court.

Sir Geoffrey Vos admitted that the idea of compulsion was 'highly controversial' but said the Civil Justice Council, which he chairs, is looking at the extent to which litigants should be forced to mediate and if so, in what circumstances. The sub-group's report on the issue will be available shortly.

Sir Geoffrey suggested that the legal profession should stop referring to mediation as 'alternative', and that it should be 'part and parcel' of resolving all disputes, whether they are between businesses and consumers, amongst families or between the citizen and the state.

  1. Court fee increases

Court fees will increase from 30 September 2021.

The proposal is to increase fees in line with inflation. The fees being considered for an increase are those which are below the estimated cost of the service.

Increase is being applied across all areas of law.

Applies to 67 fees within the Civil Proceedings Fees Order 2008 No 1053

  1. The Corporate Insolvency & Governance Act 2020

For protection of viable businesses during the pandemic.....

  • Directors liability for trading whilst insolvent removed extended from 1 March 2020 to 30 September 2020 and 26 November 2020 until 30 June 2021 (mind the 8 week gap!).
  • The inability to present a Winding Up Petition based on a Statutory Demand served during the Covid-19 period 26 March 2020 to 30 June 2021 30 September 2021 unless financial hardship is not caused by pandemic.
  • Landlords taking recovery action for commercial rental arrears extended to March 2022.

The three four five times extended deadline for restrictions and amendments under the Corporate Insolvency & Governance Act ("CIGA") could end on 30 September 2021. 

  1. Insolvency Service

The Insolvency Service will be given powers to investigate directors of companies that have been dissolved, acting as a strong deterrent against the misuse of the dissolution process.

The measures included in the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill will be retrospective.

This measure extends the investigative powers of the Insolvency Service to include former directors of dissolved companies. Extension of the power to investigate also includes the relevant sanctions such as disqualification from acting as a company director for a period of time.

Extending the disqualification regime to former directors of dissolved companies will also act as a strong deterrent against using the dissolution process as a method of fraudulently avoiding repayment of Government backed loans given to businesses to support them during the Coronavirus pandemic. This includes loans made under the Bounce Back Loans Scheme and represents part of the package of measures designed to combat Bounce Back Loan fraud announced by the Chancellor in Budget 2021.

  1. Breathing Space from 4 May 2021

Breathing Space will give a person with debt problems vital access to professional advice and a crucial 60 days of 'breathing space' to consider the best way forward and obtain an appropriate debt solution for their circumstances. People across England and Wales who are struggling to repay their debts could be eligible, and the Government expects up to 700,000 people to benefit in the first year of the scheme.

  • 11,500 submissions already made according to the Insolvency Service
  1. New IVA Protocol

A new version of the IVA protocol has been published. Insolvency practitioners who administer IVAs are being given advance warning of the updated protocol so that they can update their systems and procedures, as well as train their staff, before IVAs drafted compliant with the 2016 protocol will no longer be proposed to creditors after 21 July 2021.

A protocol consumer IVA can last any length of time, however most IVAs will be proposed for 60 or 72 months.

A person suitable for a protocol consumer IVA is likely to:

  • be in receipt of a regular sustainable income; for example, but not limited to, from employment or a regular pension
  • have several lines of credit or types of debt
  • have uncomplicated assets
  1. Witness Statement

New guidance has been issued for the drafting of Witness Statements.  Typically Lawyers draft the Witness Statement and this results in content, for example, reference to Terms and 'legal terminology' which is clearly not the drafting of the individual, now should be more in the words of the Witness and free of formalised text.

Practice Direction PD57AC which seeks to promote and enforce best practice on the preparation of witness statements.

The PD will apply to witness statements for use at trials in the Business and Property Courts, specifically to claims issued after 6 April 2021 or to existing proceedings where the witness statements for trial are signed on or after 6 April 2021.

  1. Financial Conduct Authority

The Financial Conduct Authority (FCA) announced on 14 May 2021 plans for a new Consumer Duty which will set a higher level of consumer protection in financial markets for firms to adhere to.

In accordance with the FCA rules and principles, firms are currently required to treat customers fairly and many firms are providing the right outcomes for consumers i.e. goods and services at fair prices, high standards of customer service etc. However, in their press release, the FCA have stated they have seen evidence of practices that cause consumer harm and how consumers lack confidence in the financial services industry, with only 35% respondents agreeing, in the FCA's 2020 survey, that firms are honest and transparent in their dealings with them.

The FCA is therefore proposing to expand its existing regulations to ensure firms provide a higher level of consumer protection regularly to enable consumers to get good outcomes such as, goods and services that are fit for purpose, that represent fair value and are clearly communicated and understandable.

  1. Business Interruption Insurance

The Supreme Court delivered its judgment in the Financial Conduct Authority's (FCA)'s business interruption insurance test case on 15 January 2021 Financial Conduct Authority (Appellant) v Arch Insurance (UK) Ltd and others (Respondents) UKSC 2020/0177

It has substantially allowed the FCA's appeal on behalf of policyholders. This completes the legal process for impacted policies and means that many thousands of policyholders will now have their claims for coronavirus-related business interruption losses paid. 

The judgment brings to an end legal arguments under 14 types of policy issued by six insurers, and a substantial number of similar policies in the wider market which will now lead to claims being successful. 

Each policy needs to be considered against the detailed judgment.  Policyholders may be able to refer their claim to the Financial Ombudsman Service, whose role is to resolve individual disputes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.