Need to recover debt from an individual or sole trader? New protocol in place from October 2017.

By Nerys Thomas – Solicitor (Head of Litigation and Dispute Resolution)

From 1st October 2017 a new Pre-Action Protocol will be introduced which sets out the steps needed to be taken when looking to pursue a debt claim (The Pre-Action Protocol for Debt Claims). 

All businesses (including public bodies and sole traders) seeking to recover a debt from an individual will need to comply with the Protocol.   

The Protocol will not apply to business-to-business debts unless the Potential Defendant/debtor is a sole trader. 

As is the case with all Protocols, the intention is for the procedure to provide a way of filtering through potential claims, possibly facilitating a resolution where possible, or if the matter could not be resolved the parties will hopefully be in a position where the issues have been narrowed and/or a clearer understanding of the issues in dispute will be known.    

It is the intention that the Protocol will complement any regulatory regime to which the Potential Claimant/creditor is subject and should any conflict arise between the regulatory obligation and the Protocol, the former will take precedence.   

The likely impact upon the Potential Claimant/creditor in complying with the Protocol is the cost of preparing the required correspondence and responding to queries, should any be raised. 

Furthermore, the Protocol specifies deadlines, of mostly 30 days, which become relevant at various stages of the procedure, hindering the Potential Claimant/creditor from being able to issue the claim at their own discretion.

From a Potential Defendant/debtor’s perspective, a Letter of Claim requires a Reply Form being completed and possibly, depending upon the response being given in the Reply Form, a Standard Financial Statement which requests a great deal of personal information surrounding the person’s/sole trader’s finances, something a great deal of people/sole traders are likely to be uncomfortable with due to the imbalance this presents between parties.  

As with all Protocols, unless there is a justified reason for not using it, there may be cost consequences for failing to comply with the process.

Should you have any queries in relation to the above or any other dispute matters, please contact Nerys Thomas and the rest of the Commercial Law team on commercial@cjch.co.uk

Security of Tenure for Commercial Leases – What does it mean?

Security of Tenure for Commercial Leases

The Landlord and Tenant Act 1954 Part II (‘the Act’) confers security of tenure on business tenants and regulates the manner in which business tenancies can be terminated.

What does this mean? Sam Pearson, our commercial law trainee explains that firstly, a business tenancy will not come to an end at the expiration of a fixed term. Secondly the tenancy cannot be terminated unless the Landlord gives sufficient notice to quit.

The statutory right of renewal can be triggered if either the Landlord gives notice of termination or the Tenant requests a new tenancy. Notices must be prepared and served in the required format and within strict time periods. There are many pitfalls with the notice, drafting and procedure and we strongly recommend seeking professional advice.

A Landlord can only oppose a business tenancy protected by the Act on certain statutory grounds:

  • tenant’s failure to repair.
  • persistent delay in paying rent.
  • substantial breaches of other obligations.
  • offering suitable alternative accommodation.
  • demolition or reconstruction.
  • landlord’s intention to occupy the holding.

Compensation may be payable to the Tenant if the Landlord’s application is successful. If the Landlord’s opposition to a new tenancy fails and new terms are not agreed, then an application to Court will be required. A Judge will set the terms and rent after receiving expert evidence.

On taking a new commercial lease the parties may have agreed that the tenancy will not have any statutory right of renewal. In order to do so the Landlord must serve a notice on the Tenant in the prescribed form. The Tenant must make a formal declaration confirming receipt of the notice and accepting the absence of any statutory right of renewal.

Whether you’re looking to renew a commercial lease, seeking advice on a contested lease renewal or looking to contract out of the Act our experts at CJCH Solicitors are ideally placed to provide you with the right advice to suit your business needs.

Our commercial team are available to assist at commercial@cjch.co.uk, or on 0333 231 6405.