Part 5 – Applications to court outside the insolvency proceedings
June 2014
The official receiver in the administration of a case may need to make an application to court for a court order or for permission to pursue a course of action. A minority of such applications will be outside the insolvency proceedings, for example restoration of dissolved companies (see Chapter 38) and antecedent recoveries (see Chapters 31.4A and 31.4B). This Part covers making the application, the court’s case management system and some of the applications which may be made to the court between the issue of proceedings and the claim being determined.
19.55 Applications outside the insolvency proceedings
An application by the official receiver outside the proceedings will be made under either Part 7 or Part 8 of the CPR (see paragraphs 19.27 and 19.28). Where the application is likely to be contested the official receiver should follow the Part 7 procedure, for example recovering a preference. Where the application is uncontentious he/she should follow the Part 8 procedure, for example an application to restore a company to the company register (see Chapter 38 and Case Help Manual – Restoration of Companies). The official receiver should use Form N208 to lodge a Part 8 claim. Guidance on completing the form is contained in Form N208A. The Civil Procedure Rules generally use the term “claim” when referring to an application to the court. For the rest of this part the term “claim” should be read as including an application. It is anticipated that the majority of claims will be filed in the County Court, however claims over £25,000 may be filed in the High Court.
19.56 Form and content of a Part 7 claim
Where the official receiver believes that the claim will be contested he/she should use Form N1. The claim form includes:
Guidance on completing Form N1 is provided in Form N1A.
A statement of truth is a statement made by the party that he/she believes that the facts stated are true [Note 2]. Further details on statements of truth and when they are used is contained in paragraph 19.100.
The claim Form N1 together with the defendant’s guidance notes (Form N1C) must be filed in the appropriate court together with one copy and a number of additional copies for each person to be served. The claim may be filed by post or on-line at https://www.moneyclaim.gov.uk/web/mcol/welcome. An on-line claim may not be against more than two people. The official receiver should register as an individual to complete the claim. The official receiver should enclose the appropriate court fee, details are provided in the Ministry of Justice leaflet Ex50. The court, unless it orders or directs otherwise, will serve a sealed copy of the claim form, on the named defendant or defendants [Note 3]. In some circumstances the court may direct that the claimant serves notice of the claim. On receiving notice of the claim the defendant, or defendants, may acknowledge service (see paragraph 19.63), defend the claim (see paragraph 19.64), accept the claim (see paragraph 19.65) or fail to respond (see paragraph 19.66).
19.59 The power to dispense with service of a claim
The court has the power to dispense with service of a claim Form N1. An application to dispense with service must be supported by evidence and may be made without notice [Note 4]. It is extremely unlikely that the official receiver will have to make such an application, and should only do so after consulting Technical Section.
19.60 Application without notice to dispense with service of a claim – duty of disclosure
Where the official receiver makes an application to dispense with the service of a claim without providing notice to the defendant or defendants (see paragraph 19.59) he/she owes a duty to the court to disclose all matters relevant to the application, including any matters adverse to it. Failure to comply with this duty may result in the order being set aside.
19.61 Application without notice to dispense with service of a claim – the nature of the order
A without notice order is, by its nature, a provisional order made by the judge on the basis of evidence and submissions of one side only. Where the other side provides evidence and/or argument against the provisional order the judge may discharge or vary his/her original order as he/she is not hearing an appeal [Note 5].
19.62 Electronic filing of the claim Form N1
The official receiver may file claim Form N1 together with all supporting documents (see paragraph 19.58) by fax or other electronic means such as e-mail [Note 6]. Full details of the electronic filing of documents can be found in CPR Practice Direction 5B.
19.63 Defendant’s acknowledgement of service
Where the defendant is unable to file a defence within the time allowed (see paragraph 19.64) or disputes the court’s jurisdiction [Note 7] he/she may file an acknowledgement of service. An acknowledgement of service must be filed at court up to 14 days after the service of the claim form or particulars of claim, whichever is the later [Note 8]. The court must notify the claimant where an acknowledgement of service has been received [Note 9].
19.64 Defendant – filing a defence
A defendant who wishes to defend all or part of the claim must file a defence with the court [Note 10]. A defence must be filed at court up to 14 days after the service of the claim form or particulars of claim, whichever is the later [Note 11]. This period may be extended by agreement between the claimant and defendant up to 28 days after the service of the claim [Note 12]. The court will serve a copy of the defence on all other parties, including the claimant [Note 13]. The claimant may file a reply to the defence, verified by a statement of truth [Note 14].
19.65 Defendant – admission of claim
The defendant may agree with the claim either in full or in part. This must be in writing but may be by letter [Note 15]. An admission must be filed at court up to 14 days after the service of the claim form or particulars of claim, whichever is the later [Note 16]. Once an admission has been received the claimant may apply for judgment to be entered for the admitted amount [Note 17]. On receiving an admission for part of the claim the claimant has 14 days after service in which to respond. The claimant may accept the amount admitted or reject the admission and ask for the proceedings to continue. The claimant must file notice of his/her intentions with the court and serve a copy on the defendant [Note 18].
19.66 Defendant – failing to respond to the claim
Where the defendant fails to lodge an acknowledgement of service, fails to submit a defence or an admission, or partial admission, the claimant may obtain a default judgment [Note 19]. A default judgment cannot be obtained, for example, where the claim:
Where the defendant fails to lodge an acknowledgement of service or defence the claimant may file a request for a default judgment to be entered [Note 21]. The default judgment will:
The defendant may make an application to vary or set aside the default judgment on a number of grounds, including the debt being paid [Note 23] or there is a realistic prospect of the claim being successfully defended [Note 24].
19.68 Where the claim is defended
The defendant may file a defence within 14 days of the service of the claim or within 28 days if he/she has acknowledged service [Note 25]. The defence must say which allegations are denied, require further information or are admitted. The defence must include the reasons for denying the claim and the reasons why [Note 26]. A copy of the defence must be served on all the other parties [Note 27] and the claimant has the right to file a reply [Note 28].
19.69 Case management – how a defended claim is dealt with by the court
A defended case will be allocated to one of three “case management tracks”, the small claims track, the fast track or the multi-track [Note 29]. Usually the proceedings will be transferred automatically to the defendant’s home court (ie based upon the defendant’s address for service) [Note 30]. The court will serve the appropriate allocation questionnaire on each of the parties with a date by which they must be filed in court. The allocation questionnaires N149, N150 and N151 may be found on this web page [Note 31]. On receipt of the completed questionnaires the court will allocate the claim to a track unless it has stayed the proceedings to allow settlement. The court may hold an allocation hearing if it thinks it is required before making the decision [Note 32].
19.70 Case management – the three tracks
A summary of the case management system is provided in paragraphs 19.20 to 19.22. It is likely that all proceedings issued by the official receiver will be allocated to the multi-track.
Any party may make an application for an interim remedy pending settlement of the claim (see part 25 of the Civil Procedure Rules 1998). Although an interim application to strike out the proceedings may have the effect of disposing of the claim if successful. Interim remedies include, amongst others, an interim injunction, an interim declaration, orders for preserving property, a freezing injunction and orders to obtain further information [Note 33]. Interim hearings are usually held in public where appropriate or practicable. For example the room for the hearing may be too small or a public hearing may defeat the purpose of the application. Common interim remedies sought include:
In proceedings which do not involve a litigant in person judgments or orders agreed by all parties may be entered and sealed by a court officer without a hearing, for example the dismissal of proceedings. Normally the application and a draft order is lodged at court, endorsed by all parties [Note 34].
A “Tomlin Order” is a court order settling a dispute by way of a stay of proceedings [Note 35]. The terms of the settlement are contained in a schedule to the order which is not made public. Such orders are usually obtained where the proceedings are complex or the parties do not wish the contents to be made public [Note 36].
An “unless order”, or peremptory or Hadkinson order, is made where there has been a breach of some other order or rule [Note 37]. The order requires somebody to do something, usually within a time limit. Failure to comply with the order may result in the claim or defence being struck out or the debarring of a party from defending the proceedings.
An injunction is an order by the court requiring a party to do a specific act or acts (a mandatory or positive injunction) or to refrain from doing a specific act or acts (a prohibitory or negative injunction). A perpetual injunction is a final injunction.
An interim injunction, or interlocutory injunction, is a temporary court order which stays in force “until a named day” or “until trial or further order”. An interim injunction is a provisional measure taken at an early stage in the proceedings before the court has had any opportunity to hear all the evidence of both sides [Note 38]. Applications for an interim injunction are normally made in private and supported by a witness statement. In cases of emergency an application may be made without notice to the other parties [Note 39].
A quia timet injunction is an order to prevent a wrongful act which is threatened or imminent but which has not been committed at the date of the application. The applicant must show that the prospect of loss was sufficiently imminent and certain and the refusal of the defendant was clear [Note 40].
A freezing injunction [Note 41] (formerly known as a Mareva injunction) [Note 42] is an interim injunction which restrains a defendant from removing from the jurisdiction, disposing of, or dissipating his/her assets to frustrate any judgment the claimant may obtain. To obtain a feezing injunction the claimant must show:
19.79 The official receiver and freezing injunctions
The official receiver may obtain a freezing injunction in respect of his/her application for the restoration of an insolvent’s position, for example with regard to transactions at an undervalue or transactions defrauding creditors [Note 43]. The initial application for a freezing injunction may be made without notice to avoid the defendant disposing of the assets before the injunction is made. An application for a freezing injunction would be heard by a judge in the High Court [Note 44].
A claimant may vacate or, in the terminology of the CPR, discontinue all or part of a claim at any time unless an interim injunction (see paragraph 19.76) has been granted or any party has provided an undertaking to the court [Note 45]. The claimant must file notice of discontinuance and serve a copy on every other party to the proceedings [Note 46]. Where an interim injunction has been granted or an undertaking given the defendant has the right to apply to the court for the notice of discontinuance to be set aside [Note 47]. Where an application has been discontinued the claimant is liable for the defendant or defendants’ costs up to and including the date the notice was served [Note 48].
19.81 The official receiver and vacating an application
The official receiver may need to apply to the court for the vacation or discontinuance of an application for a public or private examination or for an income payments order. The official receiver should use word template form PEVOH to vacate an application for a public examination. To vacate an application for a private examination or an application for an income payments order a letter to the court should be sufficient. The official receiver must serve a copy of the application to vacate the application on the company director, bankrupt or third party, if applicable. The official receiver should not be liable for any costs and is advised to contact Technical Section if any application for costs to be awarded against him/her is made.
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