Litigation

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Litigation

Litigation is the process parties go through when taking a matter through court.

There are many types of litigation including:

  • Debt Recovery
  • Commercial Litigation – such as breach of contract
  • Property Litigation
  • Landlord and Tenant Litigation
  • Construction Litigation
  • Criminal Litigation
  • Personal Injury
  • Employment
  • Wills / Trusts / Probate
  • Family

With the exception of criminal litigation, all other litigation is known as “civil litigation” as the parties in dispute are looking for damages (money) or for the other party to carry out a specific action rather than criminal sanctions.

Litigation is not just the trial at court, it covers the entire process from the moment you begin proceedings till after the trial at court. The litigation process is governed by the Civil Procedure Rules 1998 (CPR). Depending on the type of litigation concerned the protocols vary, but by in large the CPR aims to ensure that all litigation is dealt with justly, whilst trying to save time and expense. Throughout the litigation process the party bringing the claim is known as the “claimant” and the other party the “defendant”.

There are several stages to a civil litigation case:

Pre-commencement of proceedings:

These are the steps that parties should go through before starting a court case. This includes establishing exactly what is in dispute, sharing information and trying to resolve the matter. A key part of this stage is, after establishing there is a realistic claim, the claimant should write to the defendant detailing the claim. The defendant should then reply to this letter with its response.

Commencement of the claim:

The claim is started by lodging the correct claim form with the appropriate court and serving it on the defendant. The appropriate court is determined by the type of claim being brought. For example, monetary claims for less than £15,000 are issued at a county court whereas cases exceeding £15,000 are issued at the High Court. The defendant then replies with its defence.

Interim matters

These are largely managed by the court. It includes directing the parties and providing a timetable for parties to comply with so that they can exchange information and evidence before the trial.

Trial

If a matter proceeds to trial, then its purpose is to resolve all the issues including who is liable, how much is to be paid out or what specific performance is to occur. If the successful party’s costs should be paid by the losing party then this is also decided at the trial along with how much.

Post Trial

Once the case has been concluded parties can appeal, although this is usually only permitted with the permission of the court. At the trial the judge would have decide when the losing party should make their payment to the successful party or when they should have carried out a specific action by. If this deadline is missed then the successful party may have to re-apply to the court to enforce the judgment and this is done post trial.

The stages above largely relate to a civil litigation cases for a sum of money. The procedures vary depending on the type of litigation case that is brought to the court, particularly with family matters.

The timescales for litigation vary and cases can take anything from a couple of months to a couple of years depending on the complexity of the case and the availability of the courts. Not all litigation goes as far as the courts. Parties are encouraged to settle matters before reaching trial and can be penalised for not doing so. In most cases matters can be settled between solicitors and in other cases through the use of dispute resolution specialists and mediators who are independent expert negotiators.

This is because litigation can be very expensive both for the parties concerned and for the public purse. It is always wise to discuss alternatives to litigation, the litigation process, costs and timescales with your solicitor at the start of the case as you do want to find yourself in a position where your legal costs far exceed the sums you are attempting to recover.

Intestacy Rules – a guide

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INTESTACY RULES: WHAT DO YOU GET IF THERE IS NO WILL

The intestacy rules are legal regulations which state who will inherit a person’s property/money/possessions in the event they die without a valid will in place. These are laid out in the Administration of Estates Act 1925.

Who Can Administer Someone’s Estate?

If you would like to be the person who sorts out the deceased’s estate, you will need to apply for a ‘Grant of Letters of Administration’, to the Probate Registry. On receipt of the grant you will receive evidence that you have the power to distribute the deceased’s estate, which you would need to show to organisations including building societies and banks. Please note that if the deceased’s estate total value is under £5000, and does not include shares, property or land, then a grant may not be needed.

It is also important to recognise that if the deceased owned property jointly (as a joint tenant), then rights of survivorship apply, which mean that the property will be automatically inherited by the surviving owner(s).

Who Inherits What?

Please note that when there are references to a partner who is married or in a civil partnership, this means by law at the time of death. This is not the same as merely being in a relationship, or if you have ended your civil partnership or have divorced. Those that have informally separated will be able to inherit under intestacy.

Estates Worth More than £250,000

If, at the time of death, the deceased was married/in a civil partnership, and there are surviving great grandchildren/grandchildren/children, the partner will inherit the deceased’s belongings and personal property. They will also inherit the first £250,000 of the estate, along with a life interest in 50% of the remainder of the estate.

Estates Worth More than £450,000

If there are surviving parents but no surviving great grandchildren/grandchildren/children, the partner will inherit the deceased’s belongings and personal property, the first £450,000 of the estate, along with interest from the date of death, and 50% of the remainder of the estate.

The other half of the estate is inherited by surviving relatives in this order: parents, sisters and brothers, or their children (then their children’s children and so on). The brothers and sisters of the deceased must be from the same parents.

Jointly Owned Bank Accounts

If the deceased jointly owned a bank account with another person, that person will inherit automatically the contents of the bank account.

Children

Children will only inherit where there is a surviving partner if the deceased’s estate is worth more than £250,000. If there is no surviving partner, then any children will inherit the estate irrespective of its value. If the deceased has more than one child, they will inherit in equal shares. It does matter if the deceased’s children are from different partners, they will still inherit equally.

If the children are under 18, a trustee manages their inheritance until they become of age. Once they reach 18, they are automatically entitled to it. They are also automatically entitled to the inheritance if they marry/enter a civil partnership below the age of 18.

If the deceased’s child/children have died before them, but they themselves have children, then these children will inherit the share their parent would have inherited had they been alive.

If the Deceased is Not Married/In a Civil Partnership and Has No Children

If the deceased does not have any children or a partner, then these relatives will inherit in the following order: parents, sisters or brothers (or their children/children’s children and so forth), half brothers or sisters (or their children/children’s children and so forth), grand-parents, uncles and aunts who are whole blood of the deceased (or their children/children’s children and so forth) and finally uncles and aunts who are half blood of the deceased (or their children/children’s children and so forth).

If the deceased does not have any existing family members mentioned above, the Crown (i.e. the State) will receive the deceased’s estate.

How Can I Avoid My Estate Being Distributed Using the Intestacy Rules?

If you have a valid will in place before your death, intestacy rules will not apply. Therefore, in order to avoid these rules, ensure that you have created a valid will, which is regularly checked and updated, so that in the event of your death, your estate passes to those you have chosen.

Probate forms

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Probate Forms

Dealing with the death of a friend or relative is probably one of the most difficult things we will have to do in our lives. It is both physically and emotionally demanding and the last thing anyone wants to turn their mind to is the administration of the deceased’s affairs, but unfortunately it is something that has to be dealt with.

What is Probate?

Probate is the right to deal with a deceased person’s legal affairs and is also known as “administering the estate”. There are two types of probate; where the deceased has left a will and when they have not.

If the person who died has left a will then it will usually name one or more (maximum of four) parties to be an “executor” to deal with their affairs. The executor will make an application to the probate registry for a “grant of probate”. This is a legal document which provides the executor with the authority to deal with the deceased’s estate.

If the deceased has no will then it is open for close family to make an application to the probate registry to deal with the estate. There is an order of priority regarding who can apply to deal with an estate, starting with the husband or wife right down to the deceased’s brothers and sisters. A person under the age of 18 cannot apply, nor can illegitimate relatives other than sons or daughters. Upon a successful application they will be given what is known as “letters of administration”.  The letters of administration are the legal documents which provide the administrators with the authority to deal with the deceased’s estate.

Both grants of probate and letters of administration are commonly known as grants of representation. You can ask a solicitor to apply for the grants of representation on your behalf, but this can be quite expensive and therefore you may wish to complete all the probate forms yourself.  Your choice as to how to deal with the issue may be dependent on the complexity of the deceased’s persons affairs, the complexity of the will, such as if it sets up trusts, the value of the estate and proportionality issues i.e the cost of legal advice when compared to the value of the estate. If inheritance tax is payable it is generally advisable to obtain legal advice – the will may specifically allow this or the executors ought to obtain beneficiaries approval to incurring legal or other costs.

Probate Forms

There are a number of forms that require completion and which form is used will depend on where the person lived and whether inheritance tax is due on the estate. The rules on inheritance tax can be complicated, but currently, inheritance tax is due when the value of a person’s estate is worth £325,000 or more after exemptions. The current rate of inheritance tax is 40%.

If the deceased lived in England or Wales and their estate does not qualify for inheritance tax then you have to complete Probate Application Form PA1 and Inheritance Tax Form IHT205. If inheritance tax is likely to be due on the estate then you have to complete Probate Application Form PA1, Inheritance Tax Form IHT400 and Inheritance Tax Form IHT421 (“probate summary”).

Please note that the forms require you to give a full account of the deceased’s estate and therefore you may need to obtain valuations before completing the forms. In certain situations you may also have to complete the supplementary forms that accompany the IHT400, for example if the deceased had their permanent home outside the UK or where you dealing with jointly owned assets. You should use the IHT400 guidance notes to help you decide whether these need completing.

The procedures after completing the forms vary depending on whether you are in England and Wales, Scotland or Northern Island. In brief, you should send the forms with the deceased’s will and the death certificate. After you have sent the forms you will be required to attend an interview to confirm the details you have provided. Once this has been completed you will be provided the grant of probate. If there is any tax that needs to be paid, this must be paid first before you will be issued with the grant of probate.

What factors should impact the deciosn on new will or codicil ?

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A codicil or new will ?

After you have completed your Will events in your life or those around you may lead you to want to change your Will. As a Will is an important legal document designed to put into effect your wishes after you have died it is important that you do not alter the will by writing on it or crossing out any part of it. If you do that you may invalidate all or part your Will and this could lead to problems for those you wish to leave property to.

How can I change my Will?

You can change your Will by signing a document called a Codicil. This can be prepared for you by a Solicitor. A Codicil might be appropriate to allow you to make any of the following changes to your Will:

  1. To leave money or a gift to someone you did not mention in your Will
  2. If someone you left money to has died to allow you to give that money to someone else
  3. To increase or change a particular gift in your Will
  4. To change your Executors
  5. To change funeral arrangements

How does the Codicil work?

A Codicil allows you to either add a fresh clause to your Will or to remove a clause and replace it with a new one (ie example 2 above).

Should I consider having a fresh Will drawn up?

Yes. If there has been a major change in your life ie you have married or divorced it would not be appropriate to change your Will using a Codicil. You should speak to your Solicitor about drawing up a fresh Will. Also, if it is some time since your Will was drawn up you may wish to speak to your Solicitor to see that it takes full advantage of any Inheritance Tax changes that may have taken place.  A new Will may be needed in order to ensure that as little Inheritance Tax as possible is payable.

So a Codicil is for small changes to your Will?

Yes. So if you wish only to make a small change to one area of your Will a Codicil may be suitable. You will need to ask a Solicitor to advise you as the Codicil needs to be written so that it makes the change you wish and does not affect other parts of your Will.

The legal formalities

When you are happy that the draft Codicil reflects your wishes you will sign it along with two witnesses, just as when you signed your Will. The Codicil will be on a separate piece of paper from your Will. It should be kept with your Will. You should let your Executors know that you have added a Codicil to your Will and where they will be able to find it.

Debt Recovery

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A frequent problem that nearly all business will experience at some time is the recovery of money owed.

If the amount is relatively small, such as £150 it is sometimes better to write off the debt, however, this may set a precedent and encourage others to incur small debts against the company in the hope that it will simply be written off. Obviously £150 may not have a dramatic effect on the balance sheet of the business but if it happens 10 times it might.

Businesses are to be encouraged to take a diplomatic but firm approach with debtors as it is often not upsetting a valued customer over a debt which may be caused by factors out of their control. Businesses should be encouraged to discuss the situation with the customer and to try and resolve any problems by agreement. It is not advisable to begin legal proceedings without first speaking diplomatically with the debtor.

First steps

One of the first things to do when a payment becomes overdue is to have a look at the contract that is in place governing the relationship. The contract may include interest payments which will be due for overdue payment. If not, the business may still be able to charge interest under the Late Payment of Commercial Debts (Interest) Act 1988, which comes into play where there are no written terms of credit.

Before legal proceedings are commenced it is recommended that a business undertakes standard credit control practices. It is always common practice to send reminders to the customer, speak to them on the telephone and write letters informing them of the overdue amount before business begin legal proceedings.

Legal proceedings

Once a business has taken the decision to begin legal proceedings, the first step would be to send a formal letter demanding immediate payment of the overdue amount and stating that you will commence the aforementioned legal proceedings if you don’t receive payment of the debt by a specific date. It is advised that a business instruct a solicitor to send this letter as it shows the customer how seriously the business is taking the recovery of the debt.

There are certain evidential barriers which a business will have to pass in order to show that they are owed the debt they claim. In an ideal world a business will have a signed contract setting out the relationship with the customer. However, if this is not possible, other documentary evidence may be appropriate. It is advisable that the business keeps a clear record of any correspondence in relation to the debt in question between themselves and the customer.

Small claims, County Court or High Court ?

The way the claim will flow through the courts will depend on the amount of money that is owed. If it is what is described as a small or medium claim it is likely that the proceedings will be in the County Court. Larger claims will be in the High Court, these will be for debts of over £25,000.

If the debt is undisputed and for more than £750, there is an alternative option available which is to issue a statutory demand. This gives the debtor 21 days to pay up the amount owed after which the issuer of the statutory demand can petition to the court to wind up the Company which owes the money or make the individual bankrupt.