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What does company administration mean?

Administration is an insolvency procedure whereby an ailing company is able to be reorganised in such a way that it can primarily be “rescued as a going-concern” or secondarily have its assets realised in such a way that a better result could be achieved for its creditors than if the company were wound-up straight away.

There are various routes into administration, including by order of the court, by resolution of the Directors, or by a Qualifying Floating Charge Holder (QFCH):

1. By Order of the Court – This is usually as a result of actions brought by members of the company who believe it is being mismanaged by its Directors or by a substantial creditor of a solvent company who does not want to embark down the winding up route.
2. By a Qualifying Floating Charge Holder (QFCH) – In order to qualify, the floating charge must relate to the whole or substantially the whole of the company’s property and have the stated power to appoint administrators. For example, if a creditor holds debentures (or other charges) over all the company’s property then they may appoint an administrator over that company.
3. By resolution of the Directors or members of the company – If the Directors, or a majority of members, are convinced that the company is (or is likely to be) unable to pay its debts then they can place the company into administration. This will require a ‘Notice of Intention to Appoint Administrators’ to be filed at court and given to any Qualifying Floating Charge Holder.

Benefits of Company Administration

Once a company has filed a Notice of Intention to Appoint Administrators then it has the benefit of an interim moratorium on any claims being brought against it by any disgruntled creditors who the company may be in arrears with.

Administrations are a technical process requiring the appointment of specialist Insolvency Practitioners, who will use the time afforded by the moratorium to take control of all the company’s property and assume all the powers of the board of directors in order to achieve the primary or secondary purpose as appropriate.

To the creditor or a member of a company that is placed into administration, the process offers a final opportunity of a return to profitability that could see the company freed from poor management or its business assets streamlined and reorganised such that it begins to flourish once again and provide a return on investment.

Drawbacks of Administration

Expenses

However, Administrations do not always go as smoothly as intended. Insolvency Practitioners, appointed as administrators, are entitled to deduct their fees and charges as secured creditors in preference to any others in the ‘queue’. If an administration is not successful and the company in question is insolvent with very limited assets, this can mean that there will be very few assets to return to creditors and/or members at the end of the process.

Moratorium

The Moratorium on claims, while incredibly useful to the Administrators attempting to resuscitate the company, is open to be used abusively. The courts are very unlikely to allow any sort of claim that might prejudice the recovery of the company to circumvent the moratorium, which prevents those with genuine extant claims against a company in administration from seeking justice. This can be especially damaging if combined with the ‘Pre-Pack’ process detailed below.

Pre-Pack

The Administration is primarily concerned with rescuing the company as a going-concern or returning as much investment to the members and creditors as possible.

In cases of poor management this is often a simple matter of reorganising the management structure of a company and guiding it back to profitability – but these examples are rare.

More often the company being placed into administration is on its way to liquidation and the administration is just one further step on that journey.

As will be appreciated, a company, as a legal personality, is distinct from the business that it carries on. The latter consisting of the assets, the stock and real estate (for example) that a company may own in order to carry on its trading activities.

Oftentimes, and especially with larger companies, the news of being placed into administration is catastrophic for a company’s reputation and the business it carries on.

Creditors might lose confidence; suppliers lose faith and members might seek to sell off their shares as quickly as they can. In order to minimise the disruption, the company’s board may seek to appoint administrators while already having formulated a plan for how the company’s business assets might be sold off.

This ‘pre-packaging’ cuts down on the amount of work that an administrator might have to do and crucially the amount of time that it would take to facilitate the sale of those assets being completed. In this way the company’s most profitable business assets can be quickly hived off and sold, in order to pay the company’s looming creditors and either return to profitable trading or facilitate its eventual dissolution.

Benefits of Pre-Pack

Pre-Packs can be a very cost-effective way for a company with competent leadership to quickly and flexibly hive off and realise company assets in such a way to pay outstanding liabilities. New owners can be approached, under the cover of confidentiality, before the administration is even announced and sales can be completed very quickly after the appointment of administrators to facilitate an almost seamless transfer of the business that can result in minimal job cuts or losses to suppliers. Pre-Packs also offer an ability for a company with very limited funding to obtain the best possible price for its assets to try and make liquidation as profitable as possible for the remaining creditors and members.

Drawbacks of Pre-Pack

Pre-Packs can be undertaken with very little oversight from members or unsecured creditors. This, coupled with the very limited time-frames, can result in the company’s business being sold at an under-value from what it may have achieved had the assets been sold with a wider marketing campaign on the open market.

Pre-Packs can stray into banned practices of phoenix companies and asset stripping. This can occur where the management of an embattled company transfers the same business to another ‘phoenix company’, that they also manage or own, to continue trading but while shedding the debts it had previously incurred. The entire administration and pre-pack process can also be used by business-partners, who hold Qualifying Floating Charges of the required form over the company, to use the administration procedure to oust other partners who they might seek to deprive of their share of the profits.

Conclusions on the Company Administration Process

Administration is intended to be a process by which companies in dire straits are offered a route back to profitability. For larger companies the successful conclusion of this process will mean a great deal to the wider economy or a large number of unsecured creditors and investors. For smaller companies the process can offer a lifeline opportunity to restructure, but for many it is just another step on the pathway to insolvent liquidation. Pre-Packs offer the possibility of a near-instant panacea or a controversial second-chance for the failed company’s business. In all circumstances specialist advice, taken early on in a company’s misfortunes, can make all the difference.

Eldwick Law has specialist insolvency solicitors who can advise creditors, directors or any other member of a company that might be facing administration. That is especially relevant during these very testing times, with many companies going into administration as a result of the COVID-19 government imposed restrictions.

The recent case of Athena Brands Ltd v Superdrug Stores Plc [2019] EWHC 3505, highlights employee’s liability when negotiating a contract on behalf of their employer via email.

For a legally binding contract to be formed, an offer, acceptance of that offer and consideration is required. There must also be certainty regarding the key terms of the agreement, and there must be intention by both parties to create legal relations.

Where an employee (agent) seeks to contract with a third party on behalf of their employer (principle), the employee must have principle authority to do so. This requires an agreement between the agent and principle, for the agent to act on the principal’s behalf. This authority can be express or implied.

Is an email legally binding?

In Athena Brands Ltd v Superdrug Stores Plc [2019] EWHC 3503, an email exchange took place between a Superdrug Stores buyer and Athena Brands, a manufacturer, regarding the sale of a new cosmetic product.

The exchange of emails set out that the product would be sold to the Defendant at a set price during a 12-month period, in which the Defendant could order consignments of stock at any time via purchase orders. The sale price would have exceeded £1.3m, but in response to slower than expected sales – Superdrug stopped placing orders. The manufacturer claimed nearly £980,000 in damages.

The Claimant alleged that the agreement also included a commitment by the Defendant to purchase a minimum amount of £1.3m of stock during this period, which the Defendant disputed on the basis that they were not committed to purchasing any products unless and until it submitted a specific purchase order.

The Defendant alleged that there was nothing in Superdrug’s standard terms and conditions of purchase to indicate that they would agree terms for purchasing minimum quantities or would be bound by any such terms if an employee agreed them.

The email containing the proposed terms was sent by the Claimant’s employee to the Buyer at the Defendant on 23 May 2017 and said:

“Just to confirm, you are placing orders and committing to the yearly quantity against all lines detailed below…. We have agreed that you will call off stock… on an ad hoc basis within a 12-month period…. [there followed a table of products with quantities and prices] If you could drop me a note to confirm all the above ASAP that would be great, I shall then be in a position to push the button at this end.”

The Buyer replied on 25 May 2017, stating:

“Please go ahead with the below [referring to the claimant’s previous email and preceding chain], happy on Nature’s Alchemist…”

The High Court found that there was a clear acceptance of Superdrug’s commitment to buying annual quantities of the product from the manufacturer. The Court ruled that nothing in Superdrug’s evidence showed that the claimant was unreasonable when it relied on the Defendant’s confirmation as binding the company.

The Defendant’s failure to make the claimant aware of Superdrug’s policies which governed the negotiation of purchase contracts was particularly relevant to the Court’s ruling. It was found, had they done so, the outcome would likely have been different.

Despite the fact the contract was agreed via an email exchange, it was found to be sufficiently clear to create a liability of £1.3m on the part of the Defendant. This highlights the dangers that businesses face when discussing contract terms in any sort of written form and that a legally binding contract contains a number of components that the court will assess objectively to determine validity.

This case also serves as a reminder for employers to make clear to employees their responsibilities when acting on their employer’s behalf and the risks of failing to do so.

At Eldwick Law, we have an expert team of contract lawyers who can assist with your claim.

Should you have any queries with regard to this article, please do not hesitate to contact us via email: mail@eldwicklaw.com, or telephone: +44(0)203 972 8469.

 

The recent case of R (Kombou) v Wood Green Crown Court is a sobering lesson for anyone facing a criminal prosecution, and who is considering pleading guilty with potential Confiscation proceedings looming.

Case background

The defendant entered guilty pleas at the Magistrates’ Court to breaches of a Local Authority (Enfield Council) planning enforcement notice. The offences related to unauthorised conversion of a house into 8 separate units.

The defendant sought to change his plea when the matter was committed to the Crown Court and the Local Authority pursued Confiscation proceedings. He applied to vacate his guilty plea but the Crown Court refused his application.

The defendant challenged, by way of Judicial Review, the Crown Court’s decision to refuse permission to vacate his guilty plea. The defendant argued that the Local Authority was improperly motivated because of the benefit which they would derive from the Home Office’s Asset Recover Incentivisation Scheme (“ARIS”).

The High Court rejected his challenge, finding that the fact that the Local Authority had considered bringing confiscation proceedings did not mean the decision to prosecute had been motivated by an improper consideration; there was nothing to support the argument that the decision to prosecute was improperly motivated.

There is some background to the case but one of the reasons the defendant pleaded guilty was because he thought it was possible that the case might end without Confiscation proceedings.

Local Authorities are increasingly relying on planning enforcement notices to prosecute and recover any ‘ill gotten gains’. Local Authorities will receive 37.5% of the money recovered – it’s big business, and so one may naturally be critical of the motivations to prosecute here. The Court concluded that there were no improper motivations in this case, however.

How can we help?

If you are facing a Local Authority investigation or prosecution, it’s important to get early advice from an experienced team of lawyers. Early representation can make all the difference.

Unexplained Wealth Orders (“UWO”) are posing an increasing threat to the assets of private individuals. At a moment’s notice, authorities such as the HMRC and CPS can seize assets where they suspect the property is criminal property. The economy has taken a significant knock and all of the signs suggest authorities such as the HMRC are looking to UWO rather than proceed by way of a criminal prosecution.

Put simply, a UWO requires the responding party to explain what interest they have in whatever property is named in the order, how they obtained the property, and how it is held.

Applications for such orders can be made without notice to the High Court by enforcement authorities including the Serious Fraud Office, Her Majesty’s Revenue and Customs, and the National Crime Agency. Applicants must:

1. Specify or describe the property in respect of which the order is sought; and

2. Specify the person who they believe holds the property.

The threshold tests for obtaining an order are relatively low. Before deciding whether to issue a UWO, the court needs to be satisfied of the following:

1. That there is reasonable cause to believe the respondent holds the property;

2. That the value of the property is greater than £50,000;

3. That there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient to enable the respondent to obtain the property;

Thereafter, for most applications, the court will be asked to consider there are reasonable grounds for suspecting that the person affected by the order or a person connected with that person is or has been involved in serious crime (whether in the UK or elsewhere).

Many commentators discussing UWO focus on people suspected to have suspicious political connections or “politically exposed persons” (PEP). It is important to stress, UWO have an impact well beyond PEP and can affect any individual.

If the individual does not provide satisfactory evidence of how their assets were acquired, these assets can be held as ‘recoverable property’ for the purposes of a civil recovery order under the Proceeds of Crime Act.

The order may also be accompanied by an interim freezing order, as an unexplained wealth order alone will only lead to investigation, rather than the assets being frozen or seized. This is typically imposed to prevent any assets being disposed of before the unexplained wealth order process is complete. However, this could lead to a number of innocent people fighting to retain their assets on the basis of an assumption of fraud.

In National Crime Agency v Baker and ors [2020] EWHC 822 (Admin), the High Court discharged three unexplained wealth orders brought against two high profile Kazakhstan individuals relating to three London properties worth over £80m. In this case, following a detailed examination of the evidence, the court found the source of ownership of the properties were no longer unexplained. In this case, all properties were subject to freezing orders whilst the unexplained wealth order process was being carried out.

Whilst it is a complex task for agencies to prove how individuals obtained their wealth and identify ownership of assets, especially overseas, it seems that unexplained wealth orders are being used as an alternative to impair the individual in question, as it would be onerous to arrest and charge the individual with a criminal offence based on investigative purposes.

Further, this type of order places the burden on the individual, rather than the enforcement agency to evidence the source of the wealth. The threshold for an obtaining an order is relatively low as the civil standard of proof applies, making it easy for agencies to pursue anyone they believe worth investigating. The authorities only have to be satisfied that the evidence is strong enough on the balance of probabilities that there has been a serious criminal act.

In Baker, the Court emphasised the relatively limited purpose of UWOs as an investigative tool as once property and asset ownership has been explained, the purpose of the order falls away. The nature of an unexplained order seems draconian and unnecessary, especially as it places such as unfair burden on the individual. It seems these orders are being used as an alternative for bringing criminal charges, making it wholly unfair on the individual. The individual in question must prove the burden themselves and undergo an investigation, whilst their assets are likely to be frozen and tried without a jury. This seems wholly unfair and a cause for change regarding the nature of unexplained wealth orders, due to their detrimental effect on those who could be innocent individuals.

Being investigated can be extremely daunting and as the threshold for investigation is low, it is crucial that you obtain the right legal guidance as early as possible. Eldwick Law have a team of lawyers who are experts in this area of law and can assist you with your case, no matter how big or small.

COVID-19 has changed the scope of business contracts in a variety of ways including the performance of contractual obligations. It is important for businesses to recognise their legal standing and the contractual issues they may be facing in light of coronavirus, so that they are not exposed to a claim for damages.

Whether a party can suspend or terminate a contract due to the current climate will depend on a number of factors and the specific circumstances of the contractual terms in question.

Force Majeure

Unforeseen circumstance clauses contained within contracts are often expressly referred to in force majeure clauses in contracts. A force majeure clause will typically allow parties to renegotiate, extend, suspend and/or terminate the performance of the contract when an unforeseen or unexpected event has occurred. Force majeure is not a doctrine of English common law, meaning it is not implied in a contract. Therefore, parties wishing to rely on this clause must expressly insert a force majeure clause into a contract to rely upon it. Parties will often insert a force majeure clause to allocate risk between them when negotiating the drafting of a contract. Unexpected global events, such as the Coronavirus pandemic has the obvious ability to significantly disrupt the performance of a contract and is an example of where some force majeure clauses would be scrutinised quite carefully for who ultimately bears the loss.

Is COVID-19 a force majeure event?

Force majeure clauses must be specific, as the consequences of an unexpected event will be determined by the interpretation of the clause by the courts. The clauses will be examined in great detail to determine whether they can be taken to cover the intervening event and to ascertain whether the event is materially relevant to the performance of the contractual obligations in question. Whether a force majeure clause has been triggered in a contract will depend entirely on the exact wording that the parties have used, this often includes a non-exhaustive list of events. For example the presence of words such as: “pandemic”, “epidemic”, “outbreak”, “government action”, or “crisis” will be crucial in parties being able to argue that their force majeure clauses apply to the current circumstances.

It is the duty of the party seeking to rely on the clause to prove that the force majeure event has significantly prevented or delayed them from performing their contractual duties. Classic Maritime Inc v Limbungan Makmur [2019] EWCA Civ 1102 suggests that the party looking to rely on a force majeure clause must have been willing and ready to perform the contract, even if the exceptional event had not occurred. The unexpected event must be the cause of the failure to perform the contract, rather than an excuse if the underlying problem is something else. Therefore, to give a current example, it isn’t enough that COVID-19 was around at the same time as the breach of contract, it has to be the cause of the breach.

The English courts have previously not looked particularly favourably on reliance of force majeure clauses. However, the current climate makes it more likely than ever that parties will try to rely on force majeure clauses; due to the vast economic impact the pandemic is having on society and in turn, the impact it will have on the ability to perform contractual obligations. The Courts will not offer general guidance for this particular area of law, rather they will consider the cases on their individual merits.

What if the contract does not include a force majeure clause?

If force majeure is not a clause defined within a contract, parties may try to rely on specified time periods, which could warrant automatic termination. Parties will often scour their contracts for any clauses which provide flexibility, such as an option for the parties to terminate or renegotiate the contract, or any redress clauses. These clauses would need to be specifically drafted within the contract for them to take effect.

Further, if a force majeure clause cannot be invoked, parties may seek to rely on the frustration of a contract to bring the contract to an end. A contract can be frustrated when something occurs after the formation of a contract, rendering it impossible to fulfil. Similar to force majeure, the burden of proof for frustration is on the person seeking to assert it. COVID-19 may possibly be a factor that parties can rely on when considering if their commercial contract has been frustrated, however this will heavily depend on the circumstances and wording of the individual contract and will often require parties taking detailed specialist advice.

The realities of a global pandemic may require parties to be forced to re-negotiate aspects of a contract if the situation changes, since each contract is analysed on its own merits; however this would need to involve constructive communication between all parties involved and potentially the involvement of specialist providers of mediation services. It is important to understand the different legal and practical implications of that COVID-19 might have on current or future commercial contracts.

Our commercial contract lawyers are experts in this field and can provide practical and specialist advice during this difficult time.

Should you have any queries with regard to this article, please do not hesitate to contact us via email: mail@eldwicklaw.com, or telephone: +44(0)203 972 8469.

On 13 March 2020 the High Court decided that Gate Ventures PLC, a company specialising in media and entertainment investment previously chaired by Lord Grade, will enter into administration. The company’s management faced accusations of mismanagement and misapplication of monies which resulted in the company falling into serious financial difficulties. Eldwick Law represented a number of Chinese individuals with small shareholdings in their fight to uncover the truth.

Gate Ventures was founded in 2015 by the legendary British songwriter and composer Geoff Morrow whose compositions were performed by stars including Barry Mannilow and Elvis Presley. The company invested in start-ups, films and had backed stage-shows such as 42^nd Street and Sunset Boulevard. Gate Ventures initially saw a surge in its share price of 55% when it debuted on the AIM market and was once backed by several prominent investment organisations.

However, the company’s fortunes were much changed by March 2020. It was alleged that Gate Ventures’ management had fallen into farce under the chairmanship of Jonny Hon, a prominent businessman based in Hong Kong. The court heard of how Mr Hon spent thousands of pounds of company money on lavish meals with foreign dignitaries, including President Obama’s press-secretary and Prince Albert of Monaco, as well as private tours of exclusive fashion houses. The court heard how Sarah Ferguson the Duchess of York, a one-time member of Gate Ventures’ board of directors, had rendered invoices of £200,000 for branding and marketing for her company ‘Ginger and Moss’ and had received £90,000 in loans from Gate Ventures which had yet to be repaid.

Lord Grade, another director and presiding chairman of Gate Ventures at the time proceedings came to court, presented the defence on behalf of the company’s management following the withdrawal of their lawyers for non-payment of legal fees. Lord Grade admitted that spending limits were not in place during the chairmanship of Mr Hon but asserted that he had presided over the emplacement of strict financial controls and that the company was close to being revived through a series of high-profile investments. However, the company’s defence ran into real difficulties when Lord Grade was unable to offer any answer to claims made by the Applicant’s lawyers that Gate Ventures inexplicably spent £1 million to buy shares in a dormant company with no assets, whose directors included members of the board of Gate Ventures, and had made a series of loans to other board members without the requisite shareholder approvals.

The court heard how Gate Ventures had posted losses of £19.5 million despite investments of approximately £24.5 million, some of which had come from an array of smaller investments made by individual Chinese consumers who had secured ‘Intervenor’ status and were represented by Eldwick Law. The company’s dire financial situation was compounded by the fact it owed £2.5 million to Chinese businessman and shareholder Zheng Youngxiong, who had launched the principal action after the company had proven itself unlikely to be able to repay him by the looming contractually-agreed deadline. Lawyers for the Applicant and the Intervenor expressed their disbelief that a company of once such significant assets could be reduced to being unable to pay its own accountants and lawyers, to which Lord Grade and his team of informal advisors had no substantive explanation.

No doubt Lord Grade had hoped to be able to replicate the defence mounted by the company earlier in the year, where the court had denied Mr Youngxiong’s application to place Gate Ventures into administration on the strength of the all-star cast of board members that included Lord Grade (former Director of Programmes at the BBC) and the Duchess of York among others. The judge highlighted on that occasion that he was willing to give the board a chance to enact a rescue plan they had presented to the court, but placed the company under an obligation to produce fortnightly financial reports to monitor its progress. But with neither the mandated reports or any of the envisioned investment having materialised by the hearing in March and with a number of high-profile resignations from the board, including the Duchess of York, and the withdrawal of the company’s lawyers – the situation looked bleak for Lord Grade and his team.

Attempts by Lord Grade to adjourn proceedings to seek alternative advice or to raise additional funds from creditors, who were said to be ‘waiting in the wings’, were robustly opposed by the applicants and ultimately refused by the court. Further attempts to place Gate Ventures into Members’ Voluntary Liquidation, a technical process whereby a company is liquidated and any remaining equity distributed to its creditors and shareholders, was similarly opposed and rejected. It was concluded that the company was in such dire financial straits that it was unlikely to survive the 21-day process without being wound up by its creditors and there was no guarantee of the process being approved by Gate Ventures’ shareholders in any event.

Ultimately the court held that Gate Ventures should be placed into administration to protect the interest of major creditors such as Mr Youngxiong and those of the smaller individual Chinese investors – many of whom had been induced into investing by dazzling roadshows and the extravagant social-media profile of Mr Jonny Hon. It is hoped that, by being placed in administration, Gate Ventures has a chance of returning to the profitable past it once knew and of producing the kinds of returns expected by its shareholders and creditors.

 

The unprecedented outbreak of COVID-19 has changed the way litigation proceedings operate in a number of ways. The recent changes include the closure of the Supreme Court, hearings being conducted remotely via video link, increased electronic pre-trial preparation, and many more procedural matters being dealt with on paper. Courts will be transferring to remote hearings where possible, which will give rise to significant change in working practices for everyone involved.

Changes to the Civil Court system

On 23 March 2020, the UK government issued instructions for everyone to stay at home, save for very limited purposes, as supported by the Coronavirus Act 2020 and related regulations. The Coronavirus Act makes a specific provision implying that the civil court should continue with remote hearings, with the aid of technology which has been supported by guidance subsequently produced by the senior judiciary.

The new legislation will inevitably require a number of adjustments to be made to the civil courts as we know them, which will require co-operation and planning from the courts and the parties involved. Such planning will need to accommodate litigants and witnesses and ensure adequate video and audio quality so that all parties can be heard clearly and documents can be displayed visibly and quickly. While use of technology had already started to be applied and trialled across various courts in England & Wales, the current regime represents the most widespread use of technology in trials so far. Judges will have broad discretion as to how to proceed with cases and will make decisions on whether remote trials will be suitable on a case-by-case basis.

Blackfriars Ltd [2020] EWHC 845 (Ch)

The fact that a case may comprise significant sums, a lengthy trial time and multiple witnesses will not necessarily prevent the court deciding to hold the trial remotely. In One Blackfriars Ltd [2020] EWHC 845 (Ch), during a pre-trial review, the High Court rejected an application to adjourn the five-week hearing until June 2021. This trial is set to involve four live witnesses of fact and 13 expert witnesses. Placing importance on the overriding objective, John Kimbell QC rejected the submission that there was a real risk of unfairness in conducting a remote trial for this claim. It was held that the challenges and upsides of proceeding with a remote trial would apply to both sides equally. In this case, the court placed importance on the fact that there were no allegations of dishonesty or fraud and that the proceedings contained a large number of contemporaneous documents, where most of the relevant matters were likely to be set out.

The trial judge acknowledged the health and safety risks posed by conducting the trial in-person and pointed out that it was not “a case in which it can be said that it is essential to have the witness, the cross-examiner and the judge and the other participants in the same physical space”. It is clear that the court are trying to strike a balance between protecting the health and safety of those involved in litigation and ensuring the course of justice will ensue, with a demonstrable focus on avoiding undue delay.

Is it a just approach?

It has been acknowledged by the courts that they do not have the technological capabilities to offer a full remote service, and have indicated that HMCTS are working urgently to expand the technology available. In the meantime, courts will conduct hearings via Skype, telephone and other available video facilities. One of the issues with this is that many participants may not have the technological knowledge for hearings to progress smoothly, which could cause delays, especially in the early months. Parties are encouraged to be cooperative, especially in cases involving litigants in person, to try and ensure some fairness during the process and the courts have indicated that they would take a more relaxed approach than usual to compliance with certain aspects of the Civil Procedure Rules. For example, if court proceedings were not received due to self-isolation restrictions or office closures a request for relief from sanctions for late service would be expected to be looked upon sympathetically. It is important for the courts and both parties to be flexible in this regard and prioritise cooperation between the parties to ensure justice is not obstructed for the sake of a tactical advantage over one party.

Some would undoubtedly think, such as the parties involved in the Blackfriars Ltd [2020] matter, that it would be more practical to postpone hearings until normality is resumed. Whilst this may seem sensible for some cases, the majority of cases are financially sensitive and adjournments may cause hardship for those involved. This may be particularly distressing whilst we are in a time of financial turmoil due to the current circumstances and not something that one party should be allowed to take advantage of.

Could this change the future of the courts?

The rules in the civil courts are flexible enough to allow the processes to be adapted quickly to ensure that proceedings fall in line with new coronavirus legislation. Some have seen the step towards a new ‘virtual’ court as a blueprint for the future of modern justice, for certain proceedings that can be easily managed without the need of physical attendance by the parties. Virtual hearings are far less costly for both parties and may be more time efficient, for example if both parties have to undergo preparation beforehand to ensure that all of those involved have in their possession the correct documents. While it remains unlikely that procedures will remain so drastically changed once the pandemic subsides, this will at least offer the most widespread trial of digital services the English court system has ever seen and will undoubtedly offer a great many lessons to learn in the making of future reforms.  

Cases are financially sensitive and adjournments may cause financial difficulty for those involved. This may be particularly distressing whilst we are in a time of financial hardship due to the current circumstances and not something that one party should be allowed to take advantage of.

Could this change the future of the courts?

The rules in the civil courts are flexible enough to allow the processes to be adapted quickly to ensure that proceedings fall in line with new coronavirus legislation. With many arguing that traditional courts are far behind in terms of their upkeep of the modern world, the step towards a new ‘virtual’ court may be the future for certain proceedings that can be easily managed without the need of physical presence. Once these hearings are being progressed without a hitch, it may become more sustainable to work this way going forward. Virtual hearings are far less costly for both parties and may be more time efficient, for example if both parties have to undergo preparation beforehand to ensure that all of those involved have in their possession the correct documents. Of course, it is unlikely that procedures will change so drastically once normality returns, however it may be the change the legislature needs as a step in the right direction towards a more modern court system.  

Eldwick Law have a team of expert solicitors who are able to assist you with any litigation during these unprecedented times.

COVID-19 advice and guidance