Problem one: Delays to dispute resolution
The civil justice system in the UK will inevitably slow as a result of the government measures. In one of my cases, despite ACAS Early Conciliation seemingly operating as well as could be expected, it was in fact the parties that caused delay due to certain key members of staff being furloughed. This has knock-on effects to future or current litigation.
Creative Solution: Save time, money and stress by using remote mediation
The Lord Chief Justice has encouraged parties to litigation to “explore…the possibility for compromise“ and Sir David Foskett, Chair of the Civil Mediation Council says that the pandemic “could result in a greater demand for the help that mediators can bring”.
Mediation is a method of dispute resolution achieved with the assistance of an independent mediator. Most parties will want to avoid time, cost and the matter becoming ‘public’ record. Mediation is therefore a popular mechanism to reach an affordable, private settlement by way of written settlement agreement.
While negotiation will likely be ‘without prejudice’ – meaning what is said or written cannot be used in later proceedings if the mediation does not settle (save for some limited exceptions) – a properly drafted agreement will often stipulate that it is ’legally binding’ on the parties once agreed.
Ordinarily, mediation is achieved through ‘in-person’ meetings. In light of Covid-19, organisations such as the Centre for Effective Dispute Resolution are promoting online mediation. Using online mediation will allow for virtual negotiation using an electronic platform such as Zoom or Skype or telephone. Preparation for mediation, such as the preparation of statements, can also be done online. Together, this approach may bring additional benefits such as lower costs for the parties, lower tension levels and a more direct and pragmatic approach by the parties.
Mediation is a low-risk process. It should not detriment your position at court or tribunal if negotiations fail to be fruitful.
Problem two: I’m happy to wait to proceed with my claim BUT the limitation date may be missed.
Claims in England and Wales are subject to certain limitation dates. These are dates which will limit the time you have to issue your claim with the court or tribunal. For example, simple claims in contract must be issued within six years from the date of the breach of contract.
Creative solution: use the Issue. Serve. Stay method
Issue. Serve. Stay is the most secure way to preserve the claim when limitation is about to expire. It means issuing your claim and serving the claim form and particulars of claim. You will then, due to the fact that you are not in a hurry to proceed and being mindful to court delays, seek to agree a stay.
Problem three: Service of court documents during office closure
Companies can be served at their registered address or any place of business with a real connection to the claim, even if the office is closed. If legal documents do not come to the attention of the right person swiftly – whether this is because of being furloughed or the office being closed – there is a real risk of a judgement in default being issued or a key date being missed.
Creative Solution: Put in place necessary protections
We are aware that Money Claims Online, the platform that facilitates many claims under £10,000, is continuing to serve Claim Forms on companies’ offices. While the court will have discretion to set aside applications for default judgement where it has “good reason” to do so, businesses will have to mitigate the risk of missed service. This need to mitigate is especially important to larger companies with more resources available to them (as the closed office argument is unlikely to wash with the court!)
- If the business is a party to existing proceedings or anticipates future proceedings, it is important to engage with the party and seek agreement for email / alternative address to be used as the method of service.
- Make clear the office is temporarily closed by having clear notices on site, particularly where post is left. Give instructions on how post is dealt with during closure (and, if need be, any alternative addresses for legal paperwork). Replicate this notice on your website, email signatures, social media and digital letterheads.
- Just because the correct staff member hasn’t received a legal document, doesn’t mean that the company can argue improper receipt. Ensure that all staff can identify important legal notices and that there is a structure in place to forward urgently to the right person.
- Arrange temporary post redirection services.
Problem four: Our directors cannot meet for a board meeting
Social distancing is causing directors difficulties to undertake vital board meetings. This causes paralysis to the company’s decision making.
Creative Solution: Hold an electronic board meeting
In order to hold an electronic board meeting, there must be authority to do so. This is usually within the articles of association. It is now relatively common for a company’s articles to explicitly provide that board meetings may be conducted electronically. However, older articles drafted prior to October 2009 may not make such provision.
There has historically been a difference of views as to whether a company’s board may conduct its meetings by telephone or otherwise electronically where this is not specifically authorised by the company’s articles of association.
Where there is no authority, it is recommended that:
- All directors entitled to receive notice give their express consent to the meeting being held by such means.
- The arrangements are such that everyone can hear everyone else.
- Minutes of any such meeting are circulated to each director for approval to ensure they are a correct record of the business transacted.
Problem five: We cannot sign our annual accounts
Companies are still required to comply with their legal obligations during lockdown, including filing of annual accounts to Companies House. These need to be signed by a director.
Creative Solution: Use an electronic signature
Companies House has confirmed that the Registrar of Companies will accept annual accounts that have been signed by a director using an e-signature.
Problem six: We cannot submit ‘wet-ink’ stock transfer forms to HMRC for stamping?
Stock transfer forms are the instrument used to transfer shares in UK companies. Transfers can arise out of a number of scenarios including sales, company buy-back or transmission to beneficiaries after death. Usually, this form must be sent to HMRC to calculate stamp duty due under the transfer.
Creative solution: For a limited time only, submit by email!
With immediate effect from 25 March, HMRC insists that instruments of transfer are not submitted by post. Instead, it will accept emails attaching an electronic copy (for example a scanned pdf). It will also accept e-signatures while COVID-19 measures remain in place. Such emails should be sent to stampdutymailbox@hmrc.gov.uk.
Problem seven: We are concerned about our leasehold property obligations
Creative solution: Negotiation and Communication
This is a big subject and requires its own blog. Take a look at our tips on how to deal with your commercial property during Covid-19 here.