Date 28 January 2009
Welcome to the January issue of Stay Alert.
In this edition, we bring you up to date on recent developments in Commercial Litigation and cover the following articles:
- No restriction on a creditor’s enforcement options
The recent case of Yoram Amsalem v Hugh Mark Raivid and another [2008] EWHC 3226 (TCC) shows that an extension of time for payment of money under a judgment will not be granted if there is little prospect of payment anyway and that the court cannot restrict a creditor’s enforcement options, despite its willingness to do so.
- The 49th Annual Update
We bring to light some of the main updates to the Civil Procedure Rules (“CPR”) which come into force on 6 April 2009, as a result of the 49th annual update to the CPR.
- EU unites on non-contractual matters
EC Regulation No 864/2007 on the Law Applicable to Non-Contractual Obligations (Rome II) came into force on 11 January 2009. It ensures that the courts in all member states apply the same rules when choosing the applicable law for hearing disputes involving non-contractual obligations (i.e. mainly tortuous claims) on the basis of where the “damage” occurs, or is likely to occur, regardless of the country or countries in which the act giving rise to the damage occurs.
We hope that you find this edition of Stay Alert! useful and interesting. We value your opinions and always welcome any comments you may have. If you have any feedback on this edition or any suggestions on what you would like us to cover in future, please email Clare Mackay – clare.mackay@salaw.com. We look forward to hearing from you.
1. No restriction on a creditor’s enforcement options
The recent case of Yoram Amsalem v Hugh Mark Raivid and another [2008] EWHC 3226 (TCC) showed that an extension for the payment of money under a judgment is unlikely to be granted if there is little prospect of payment of the judgment anyway.
Under the Civil Procedure Rules (“CPR”) 40.11 a judgment must be paid within 14 days of the date of the judgment. However, the court does have some discretion to change the normal 14 day period. CPR 40.11 states that:
“A party must comply with a judgment or order for the payment of an amount of money, including costs, within 14 days of the date of the judgment or order unless-
(a) the judgment or order specifies a different date for compliance, including specific payment by instalments …”
Mr Justice Akenhead (“the Judge”) gave judgment in favour of the claimant, Yoram Amsalem. The defendants requested that the court exercise its discretion under CPR 40.11 (a) to grant an extension of time for making payment. The Judge refused to grant that request without clear evidence. He therefore gave the defendants permission to apply and they subsequently did, before the expiry of the initial 14 day period.
Upon considering that application the Judge said that “there is no realistic prospect, on the figures and on the information that has been put forward, of the defendants being able to pay”. The Judge did have “some real sympathy” for the defendants and said that “they are ordinary individuals who have been caught up in litigation.” However, the court had “no grounds upon which to exercise its discretion” in this case. The Judge “would have been prepared seriously to consider extending the 14 day period if there was a realistic prospect that substantial sums could be paid, and could be offered, within the next few weeks and months. But nothing could be offered.”
Therefore no extension was granted for the payment of the judgment amount. Further, the court could not restrict the judgment creditor’s, Yoram Amsalem, enforcement options but the Judge did say that he “very much hope that the parties could, and will, talk in a way to resolve this matter without the ultimate sanction of bankruptcy.”
This case is a stark reminder that, despite its willingness to do so, the court cannot restrict the enforcement options of a creditor.
2. The 49th Annual Update
The Civil Procedure Rules (“CPR”) will be amended by the Civil Procedure (Amendment No 3) Rules 2008 (SI 2008/3327). The amendments were laid before Parliament on 7 January 2009 and are due to come into force on 6th April 2009. The amendments are the 49th update to the CPR. The amendments include those listed below but the Ministry of Justice has published further detail of the update on their website.
- Financial Limit
The financial limit for fast track actions will increase from £15,000 to £25,000.
The bands setting out the value of the claim will increase from 3 to 4 being: no more than £3,000; more than £3,000 but not more than £10,000; more than £10,000 but not more than £15,000 and more than £15,000.
The court will be able to award fast track trial costs of up to £1,650 on claims over £15,000
- Pre Action Conduct
A new Practice Direction on the pre-action conduct of parties, which aims to provide greater clarity about the general principles governing pre-action conduct and the enforcement of protocols.
- Cost Capping Orders
A costs capping order is an order limiting the amount of future costs which may be recovered. The new rules allow for applications for and variation of costs capping orders on “future costs”. Future costs are costs incurred after the date of the costs capping order but excludes the amount of any additional liability.
- Money Claim Online
Amendments to the CPR to allow claims to be issued electronically through Money Claim Online and through the Claim Production Centre, if the particulars of claim are served separately from the claim form.
We will keep you updated with further commentary on the changes in future Stay Alert! articles.
3. EU unites on non-contractual matters
EC Regulation No 864/2007 on the Law Applicable to Non-Contractual Obligations (Rome II) united the courts of all EU member states (except Denmark) on 11 January 2009. The aim of Rome II is to ensure that the courts in all member states apply the same rules when choosing the applicable law for hearing disputes involving non-contractual obligations (i.e. mainly tortuous claims).
Applicable Law
Rome II determines the applicable law for the resolution of non-contractual disputes in “civil and commercial matters” on the basis of where the “damage” occurs, or is likely to occur, regardless of the country or countries in which the act giving rise to the damage occurs (“the General Rule”).
Exclusions
Article 1(2) sets out certain exclusions which include disputes in relation to cheques, promissory notes, the law of companies relating to creation and legal capacity, relations between parties to a voluntary trust and privacy and defamation claims.
Articles 27 and 28 state that Rome II may not apply if other provisions of Community law already cover non-contractual obligations.
The General Rule may not apply in all circumstances, these include, for example, the below:
- Article 4(2) states that the law of the country of the habitual residence will apply if the party liable and the party suffering the damage both have their habitual residence in that place.
- Article 4(3) states that if the tort or wrong is “manifestly more closely connected” with another country then the law of that country may apply.
- Article 16 states that the mandatory rules on forum will apply irrespective of the law otherwise applicable.
The General Rule will not apply where the non contractual obligation is as a result of those matters listed in Articles 5 to 11 and 18 to 20. These include damage caused by a product, unfair competition, environmental damage (in certain circumstances), intellectual property infringements, industrial action, unjust enrichment, acts performed without due authority, the relationship between the insured and insurer (in certain circumstances), rights of subrogation and contribution claims.
Freedom of choice
Article 14 allows parties to contractually agree the governing law to their non-contractual obligations.
Article 14(1)(a) deals with agreements made before the event giving rise to the damage. In this instance the agreement can only be made by parties pursuing a commercial activity.
Article 14(1)(b) deals with agreements made after the event giving rise to the damage. In this instance the agreement can be made between parties regardless of whether they engage in a commercial activity.
The result of Article 14 is that parties can now obtain certainty as to the nature and scope of their legal relationship. The extent to which the English Courts take into account an express choice of law has been unclear in the past.
The future?
Problems have already been predicted by professionals. For example, it is not clear what “damage” constitutes. In professional negligence cases, damage could occur at the act of reliance on negligence advice, or the moment of financial loss (more likely). Further, parties could still face problems despite choosing a governing law (under Article 14) for a wide range of reasons, one of which includes that the mandatory rules on forum will apply irrespectively (Article 16).
If you have any questions or require further information please contact Clare MacKay by email at clare.mackay@salaw.com or on 01727 798000.
© SA Law 2009
Every care is taken in the preparation of our articles. However, no responsibility is accepted as being owed to any person or organisation who acts on the basis of information contained in them. You should obtain specific advice in respect of individual cases.