A Plague on All Your Houses?

There is a General Election tomorrow, as you may have noticed. I have ignored it so far, and generally leave party politics alone on this site, as that’s not what it’s for. However, I can’t help but comment on the policies on housing and landlord-and-tenant from the main parties.

Conservatives

We know most about them because it is basically going to be more of the same. Exactly how much “more” and “same” isn’t so clear and will depend on post-election haggling, and who gets what jobs in a new administration. Chris Grayling, say, in Housing would put a different stamp on things to the current (forgettable) minister.

The big story is extending the right-to-buy to social housing properties. There was a lot of outrage initially as it was thought this might devastate social housing stock, but looking at things a bit further shows that the vast majority of social housing tenants won’t be able to afford to take up any right to buy, even at a hefty discount. And even if they do, and sell up and move out, the property will still be there, and no doubt will be let or sub-let to somebody else, so will remain in use. Whether it is sensible to subsidise what will be the wealthier social housing tenants, and make it much more difficult to manage social housing stock, which is inadequate as it is, are questions I will leave to you.

And further austerity may mean a reduction in Housing Benefit, or its Universal Benefit successor which will make it harder for the worse off to pay rents, which won’t help them or their landlords. While the Bedroom Tax will presumably stay, with all the problems that this causes.

However, supply of rentable properties will remain high, compared to the alternatives. So a mixed picture.

Labour

The headline propsal is 3-year tenancy agreements, with rent increases capped at inflation for 3 years. This must be a good thing for the majority of tenants and landlords, as stability helps them both in the short term. A good tenant wants to stay put in the community and will take more care of a property they can be sure of staying in, and a landlord wants to avoid frequent changes, voids and all that hassle. Whether it will work in the longer term is more doubtful. Until the Conservative reforms allowing unrestricted rents and easy repossession under s21 Housing Act 1986 the private rental market was moribund. Will it go there again? And will it be politically possible to remove rent control after the time is up? Or stop further restrictions in the future.

And what about bad tenants? Often a landlord will use s21 to remove a tenant who is in rent arrears or guilty of antisocial behaviour becuase it removes the possibility or argument in court. This opportunity will go for the 3 year term. Will landlords want to take the risk? They are likely to raise rents initially if they will be frozen later on.

Other proposals on registering letting agents and (possibly) landlords will be generally supported, althought the devil will be in the detail. And the Bedroom Tax will go, which helps both the poorest and the social housing landlords who house them. So again, a mixed picture.

SNP

Not a likely government, but a very likely ally if not a partner. And they have much more radical views on housing. In Scotland they are abolishing s21, so tenants can stay in properties indefinately as long as they pay the rent. Forecasts of a reduction of 40% in private letting as a result, as landlords get out while they can, are probably exaggerated, but there is likely to be some effect. The Bedroom Tax will also go, and they are probably keen on registering landlords, so the effect will be Labour on steroids.

Lib Dems

Their policies include most of the Labour ones, watered down a bit, plus rent-to-buy and help-to-rent proposals involving assistance in raising the deposit for first-timers. How far their proposals will see the light of day in any deal is difficult to foresee. But another choice on the form.

Conclusion

It’s your decision. But you may see my view in the comments above.

There is a much more detailed look at this sort of thing on the Nearly Legal website here.

Note – The title is a slight misquote from Romeo & Juliet.

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Life as a Litigator in 2014/15

In another life I am on the Council of the Warwickshire Law Society, and I thought that you may like to see the report that I prepared for their recent AGM. I was told that it looked a bit too gloomy, and that may be right. But I think that I end up in the right directions. What do you think? – leave a comment below, or tweet me at @CoventryMan.


 

2014/15

Life as a litigator is getting harder and harder. And the coming year looks like it could be worse than the year just past, which was, shall we say, challenging.

While preparing this report I looked back at my February 2014 effort and I see that it recorded a succession of blows, including case management, the Mitchell case (strict compliance with court orders essential), the increase in litigants in person, the Superstrike case (AST landlords must give information on deposits twice), and the loss of a number of local firms. All pretty discouraging stuff. So I ended up hoping for a slowing in the rate of change in order to let us adapt.

Well, we didn’t get that. We have had continued and accelerating change, and this seems likely to continue, regardless of who gets in to No 10 in May.

IN THE COURTS

From April 2014 the County Courts have all been amalgamated into one County Court, so Coventry County Court has become The County Court at Coventry. In practice it has the same hearing centres that were there previously, but the procedure for closing or moving them has suddenly become a lot easier. Already all money claims are issued in Salford, and one wonders how long it will be before all the other claims follow. Or the trial centres reduce yet further. My Family colleagues are already facing the prospect of having to go to Nottingham for hearings, and we will surely not be left alone.

If of course we still have hearings at all – you may have heard the apparently serious suggestion recently that all civil cases for less than £25,000 that could not be resolved by telephone mediation should be dealt with by judges by way of internet decisions, normally without any sort of hearing, and without the intervention of lawyers at any stage.

This of course supposes that people will continue to litigate. All of you must have heard of the proposed increases in court issue fees that are intended to take effect in April. These will stay much the same up to a (small) claim for £10,000, but will then rise to 5% of the amount in question, so a claim for £40,000 that currently costs £610 will shoot up to £2,000 and a claim for £150,000 from £1,115 to £7,500. Claims over £200,000 will cost £10,000 to issue. There will be other fees including potentially increased trial fees as well. And funding costs can’t be recovered by the client any more even if they win.

The Government states that 90% of all claims will be entirely unaffected by this (no doubt correctly as the vast bulk of claims by number are indeed small debt-collecting claims) and that court fees are a relatively small part of the total cost of a case. However, they are a cost that has to be paid for up front in non-refundable cash, and this will significantly increase the cost of disbursements for even a moderate personal injury claim. One wonders if there will be a similar reaction to the introduction of Employment Tribunal fees a few years ago, when the number issued fell by some 80% after the introduction – probably not as court actions tend to involve more money anyway, but it is sure to have some effect. We shall have to wait and see.

IS THERE ANY GOOD NEWS?

Well the Mitchell case (see above) has been superseded by the much more sensible Denton case, which allows the courts to balance the errors against the interests of justice as a whole. And Superstrike is being overruled by a section in the Deregulation Bill which is due to be approved by the House of Lords on 4th March and so should be passed before the General Election.

In the larger world, Scotland hasn’t drifted off into the North Sea, the new Distance Selling Regulations which apply to solicitors who see people away from their offices aren’t as frightful as they first appeared to be, and if everything goes pop the frightening case of Raithatha v Williamson, which said that a Trustee in Bankruptcy could potentially seize the whole of a pension pot after the pension revisions in April 2015 has met the equally authoritative case of Horton v Henry, which said that he could not. So we all may have some future

BUT WHAT DO WE DO?

We can’t go on the way we have done before because things are radically different. 1,061 solicitors firms closed in the year up to November 2014, out of 10,312. It could be yours.

I’ve thought a lot about this sort of thing over the last few years, and written a number of pieces in my Coventry View blog, most recently telling everybody to be a Sheep if you could, or failing that a Goat, but not in any event a Dinosaur. It seemed a good idea at the time, and involved being Light on Your Feet, Keeping Up to Date, Winning, Knowing the Shortcuts, and Remembering that you are a Lawyer, among other things. I think it’s worth reading for yourselves – but then I would.

Whatever you do, though, have a plan. Nobody owes us a living. Politicians hate lawyers because they have discovered that it is much easier to attack lawyers than the public, and without the lawyers the public can’t in practice enforce the rights that they have. Why abolish the right to claim against the NHS for clinical negligence if you can just make it too expensive to do so, or can arrange things so that your nearest solicitor is in Bradford? So they will carry on doing so, regardless of the result in May.

Litigation matters because it is the sharp end where clients enforce their rights. Our colleagues grant them rights in the contract or the will. If they can’t enforce these rights they are worthless, so this is where we come in. Our colleagues are useless without us. And if we are good at it we can make a good living and enjoy the work as well. A win/win situation.

Where Do We Go Now?

I started this blog in 2011 and as you do at this time of year, I’ve been looking back through the postings to see what I seem to be writing about. The blog is meant to be about property litigation, and to no real surprise I have written quite a lot about that. However, I do keep coming back to a different topic, and this is another piece of that sort.

The topic is the actual way in which people can use their legal rights and the legal system that supports them.

As a practical lawyer I know that for people to have useful legal rights they need a lot more than just having the rights themselves. They need to know about them, be able to get advice, and have practical, and affordable ways of enforcing them.  I have written about the need for all businesses to know some basic law in Law and Business and about some of the other requirements for a practical legal system in Having Rights is Not Enough, and pointed out why Mediation is not the answer,  but this time I want to look at things from another angle. I touched on it in Tell Me what You Want, but I’ve developed it further here.

A lot has been made of the changes in legal procedure and practice over recent years. Some people say that it is a long-needed simplification, and the cutting of miles of unnecessary red tape, that will result in much quicker, easier and cheaper justice for all. Others say that it is the destruction of hundreds of years of justice and a legal profession solely for the advantage of big business, the government and other prowerful players in the field. The argument has raised a lot of heat, but not cast a lot of light, and I’m not going to tackle things in such a broad brush way. Because there was something to be said for both sides.

The practical effect however has changed the legal landscape, and like the earth after the asteroid, it is no longer a place for dinosaurs. This piece is aimed at lawyers who want to survive.

The Sheep, Goats and Dinosaurs

In the new reality you can divide the survivors into two sorts: the sheep and the goats.

The Sheep are major companies, the Government and its quangos, and High Net Worth Individuals, engaged in disputes with other Sheep, and the large firms of lawyers they use, based in the major cities.They deal with the High Court, and the Court of Appeal, and apart from some increase in cost, and some decrease in the time taken by the Courts to deal with things, they will have noticed very little change.

The Goats are smaller businesses, clubs and associations, and the rest of the population. They have disputes with other Goats, and also from time to time with Sheep. They also use Goats –  smaller specialised lawyers and other agencies who adapt rapidly to change. They generally deal the County Court and District Registries, and have noticed very significant increases in cost and in the time taken to deal with their cases, and a large reduction in the resourses available for their use. So they have to be canny and resourceful and will be the heroes of this article.

The Dinosaurs used to be either Sheep or Goats, or their lawyers. They didn’t notice the change in the legal environment until too late, if at all, and so are either trying to carry on as if nothing had changed, with disasterous consequences, or have given up any significant use of the court system, and try to deal with things in other ways.  The lawyers have gone out of business.

How to be a lawyer for Goats

In the new world there are many new rules:

  • Be light on your feet – be ready to adapt to changes quickly. Just because you always did something one way doesn’t mean that it’s the best way now.
  • Keep up to date – there are frequent  changes in the law and the CPR and in the court decisions that follow them. You have to be ahead of the crowd to win.
  • Winning matters – this is why your clients come to you.
  • Keep an open mind – there are lots of different was of doing things. If one way doesn’t work there are many others.
  • Payment by the hour is on the way out. Clients much prefer payment by stages (eg up to issue) or by results. You have to adapt.
  • You’ve got to know the shortcuts. Nobody wants to go all the way to trial. Know how to get summary judgment or default judgment, or the Defence struck out. Or more usually, a good offer.
  • Specialise. You can’t know everything well enought to be really good at it. And being really good matters.
  • Get it right first time. You can’t afford to do things twice.
  • Don’t carry passengers. You need a few experts plus a flexible team to draw on when you need them.
  • Be small. You may grow into a Sheep with guaranteed multiple repeat businesses. But until then you can’t afford to be bigger than you have to be.
  • Make friends. This is the key to being a small business. There are lots of people out there who want to help you and you only need to pay them when you need them. And sometimes not even then. A smile may be worth hundreds.
  • And remember you’re a lawyer. You don’t run the client’s business or life. That’s their concern. But you’re liable to lots of extra obligations as a lawyer. And being one will pay the rent next year, when this client has moved on.

I’m not telling you everything. I need to make a living too. As I said, I’m a practical lawyer. But this is the new reality. And if you ignore it you are likely to go the same way as the dinosaurs. Which is not a good idea, on the whole.

A Happy New Year to you all.

Scotland the Brave

This is a legal blog, written by an English solicitor with an interest in landlord and tenant law, and so I haven’t thought it appropriate to comment on what is probably the most important decision for the United Kingdom that has been made in my lifetime, and possibly since WW2 or earlier – should Scotland go off on its own?

However, with the referendum date approaching rapidly I just can’t avoid saying a few things. I will do my best to be non-political, and not provoke anyone unduly, although I will probably be found wanting in both respects. But there are a number of crucial points that everybody seems to be skirting around, and they just need to be said.

  • Can Scotland do it? Yes it can. That isn’t the question. Of course Scotland, a sophisticated modern  nation with a population much like Norway, or Ireland, or New Zealand could be an independent country. The question is whether it ought to go that way.
  • This is not just an economic question. It is interesting and persuasive if one solution or the other produces economic benefits, but that isn’t what it is about. It is a political question of the first order. So whether Scotland will be marginally better, or worse, off if independent shouldn’t be allowed to detract from the bigger questions. And the estimates about how much better or worse off it would be can only be guesses, and are sure to be proved seriously incorrect as times goes on.
  • Couldn’t the referendum have been better organised? Undoubtedly: with all the fuss about giving votes for 16 and 17 year-olds, tying in the dates with the Bannockburn celebrations and with the Commonwealth Games in Glasgow, the failure to get clear indications on the future status of an independent Scotland in the EU, and the £ or € (or Scot Mark) problem, you can see many areas for improvement.  But at the end of the day the decision is made  on the day and on the evidence you are given – however inadequate the evidence a decision still has to be made.
  • Shouldn’t the rest of Britain have been involved in the decision too? Many think so. 90% of the population won’t have any say on a vote what will undoubtedly have the possibility of significantly changing their lives for generations to come. Although I hear that the majority for independence is higher in England than in Scotland at present, if a number of polls are to be believed. But for better or worse the choice is being restricted to the population of Scotland, so it is too late to fight that battle.

So how should it go?

I’m not going to say, as this isn’t that sort of piece. However it is often a good idea to write down the benefits on both sides of a decision and see which look better, and this is the way things appear to me.

The Benefits of Independence

  • National independence for the first time since the 17th century.
  • Freedom to run things in the way that you want, subject to all the constraints that necessarily exist if you are a small country in a big world.
  • Not having to be ruled by parties in Westminster that you didn’t elect, and with whom you disagree. And the SNP will never form a majority in Westminster, so you can’t win with that ballot box.
  • A chance to take your own place in international affairs, the UN, the EU, and elsewhere.
  • Free use of oil, water, wind and other natural resources, subject of course to market forces, and political constraints imposed by the EU and others, whether or not you manage to join.
  • A nuclear-free country. If you want that.
  • No need to pay for expensive armies navies and air-forces – you can rely on the NATO umbrella, whether or not you join, or at the last resort, the British forces to protect you. And no expensive foreign adventures.
  • Your own Queen (whom you will graciously share with the rest of us).
  • Possibly a small but significant financial advantage. Although this is unclear.

The Disadvantages

  • Loss in the future of a joint  business and academic community, and a culture that has existed since the 17th century.
  • Less influence in the world politically, and economically, because of your smaller size.
  • No say in how things are run in Westminster – your 50 labour MPs will go, so you are more likely to have a government in England that you oppose.
  • Your place in international affairs is unclear – especially in the EU.
  • The likelihood of the almost total loss of your banking, financial and legal sectors, which a country of your size will be unable to manage and support. Look at Iceland. Or indeed Ireland.
  • Serious reliance on oil, as your main source of foreign earnings. This may be lucrative, or a millstone – it will certainly be unpredictable.
  • Losses on both sides of any border of what until now was regarded as a home market in many industries, and possibilities of barriers for future trading.
  • Likely loss of substantial employment possibilities in UK armed forces, government offices and the like.
  • Possibly a small but significant financial disadvantage. Although this is also unclear.

A large part of the effect of independence will depend on the negotiations and arrangements made between a new Scottish government, and the government in Westminster. A friendly and amicable arrangement may result in very little change. The arrangements made by a strongly nationalist UK government, either now or at any time in the future, would be another matter.

So?

Not my call. Although remember that a vote for independence is for ever. Which is a long time.

 The title is the name of a song. Or Sir Humphrey’s comment in Yes Minister. Take your pick.

Distance Selling Regulations on Steroids

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (2013 No 3134)

Now as I’ve said before, you’re a bright and well-informed bunch, and have no doubt heard about the Distance Selling Regulations (Consumer Protection (Distance Selling) Regulations 2000)  which covered Distance Selling – basically selling things to people without meeting them, normally by internet or mail order. You may also have heard about the Cancellation of Contracts Regulations (Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008) which really don’t need much explanation once you’ve read the title.

Well, you can (shortly) forget them, because from 13th June 2014 they have both been replaced by the regulations listed above, which I will call the CCR.

Now this isn’t some neat consolidating exercise, that just bundles the two sets of Regs into a new one. That would be far too easy. The CCR make important amendments to them, and adds in some new stuff too. And, most importantly, they apply to ALL contracts made between traders and consumers, in both cases as defined in the CCR, apart from the exempted transactions, which I’ll mention below. This includes transactions made face-to-face in your office or shop, and because of  the definitions some of these face-to-face transactions are treated as if they were made off-site, in a consumer’s home etc and have cancellation rights. So it matters to most of us one way or another.

I will concentrate in this piece on how this affect professional services, especially for solicitors, as it’s an area of particular interest to me. But I may come back and cover more of it later if the muse takes me.

I apologise if this isn’t one of my most engaging pieces, although I have tried my best. However, it is one of my most important, as it might affect my own income, and that of most other lawyers.

Please note that I haven’t always used the full definitions etc in order to make this more readable. If it matters, read the CCR. And remember this is journalism, not legal advice. If you want to know more, the Law Society have produced a very helpful Practice Note.

The exemptions

The main exemptions are set out in r6 and include many of the usual suspects – gambling, banking & financial services, conveyancing, letting residential property, construction of new buildings, delivery rounds, package holidays, timeshares etc vending machines and automatic commercial premises (the mind boggles, but I assume this is car-parks and the like). There is also exemption for certain things to do with telephones (which you will have to read of you want to know more) and for goods sold by way of execution. And there are also exemptions from some of the obligations in certain circumstances – eg there is no right to cancel for  medicinal products prescribed by a health care professional (not just Doctors, it seems). If this all matters to you you will have to read the CCR for the details.

The important point however is that the vast bulk of services provided by most professionals,  including lawyers, to consumers, will be covered, and all those of us who thought that because we saw people in our offices we could ignore all this rubbish will have to think again.

 Definitions

Trader – person acting for purposes relating to that person’s trade, business, craft or profession. This includes acting through agents/employees, and actions not exclusively for the trade etc.

Consumer – individual acting for purposes wholly or mainly outside that person’s trade, business craft or profession. So can’t be a company or partnership, but may include  transactions by sole-traders outside their trading field – eg personal tax advice.

There are lots more, mainly in r5, which are worth looking at. But some of them are so important that they need a section of their own.

On-Premises, Off-Premises and Distance Contracts

On-Premises Contracts – any contract between a trader and a consumer that is not a distance contract nor an off-premises contract. So read on.

Off-Premises Contracts – contracts that are either

  • made face-to-face off the trader’s premises.
  • where the consumer made an offer face-to-face off the trader’s premises.
  • made immediately after the trader had addressed the consumer face-to-face off the trader’s premises, and whether made on the premises or by distance communications.
  • during an excursion organised by the trader to promote his goods or services.

Note that the consumer’s offer may have been made some time previously – I’d like you to prepare my will – OK I’ll make you an appointment and we can discuss this at the office when I return from holiday. And how soon is “immediately” for the next scenario? Clearly  if you meet a client at court and ask them to come back to the office with you to discuss their problem this counts. What if they come in next week? And what is an “excursion”? Would a visit to a client in hospital count?

An awful lot of transactions that would naturally be considered as on-premises contracts may turn out not to be – especially if there is a series of discussions leading up to signed instructions. And it matters – see below.

Distance Contracts – made under “an organised distance sales or service-provision scheme”, without any meetings up to the point when the contract is made.

Note that the portion in quotes isn’t defined. It clearly covers tele-sales and mail-order, and orders via the internet. Does it include a client who gives instructions entirely by letter and telephone, or by email? Quite probably, but we don’t know.

Why this matters

Part 2 of the CCR sets out different sorts of information that the trader must provide to the consumer before the consumer is bound by the contract. The information is set out in Schedule 1 for on-premises contracts, and Schedule 2 for off-premises and distance contracts. So if you don’t give the consumer the info in Sch 2 because you think it’s an on-premises contract and you’re wrong then they aren’t bound by it, and this can be serious. Not only can’t you sue them for the price, but you may have to repay them any money paid up front. They probably have a right to cancel the contract at no cost to them. And it may even be a criminal offence – more details in Right to Cancel below.

The information for On-Premises Contracts

This information is only needed in so far as it isn’t apparent from the context. For example if you are working in an office with Bloggs & Co Solicitors on the door, you can take it that the client knows your business’s name. And there is an exemption for “day-to-day transactions entered into immediately” although this is not defined. Presumably a barber would be exempt, as would be most transactions in shops. And administering an oath.

The info which must be given “in a clear and comprehensible manner”

  • the main characteristics of the goods or services – ie what you are supplying
  • the trader’s identity (eg trading name) address and telephone number – you have to give your telephone number to all clients whether they ask for it or not.
  • the price, or if this can’t be calculated in advance, how it is calculated.
  • any delivery charges.
  • arrangements for payment, delivery and the time involved.
  • the trader’s complaints handling policy.
  • in sales contracts, confirmation that the trader must supply goods in accordance with the contract.
  • any after-sales service or guarantees.
  • how to terminate the contract.

There are extra requirements if there is digital content.

There is nothing particularly unexpected here, but it does mean the end of the single-visit-and-no-paperwork transaction. You will always have to supply the information which would normally be set out in any client care letter or business agreement, and may as well do so  that way, although it would be possible to set all this out in notices and leaflets, or indeed orally. But remember that these things can be difficult to prove later.

The big danger is the extra information that has to be given to off-premises contracts, and which may be missed if you don’t realise that you are dealing with one at the time. The safest course is to provide all that as well.

The information for Off-Premises Contracts

More comprehensive. Includes all the information needed for an On-Premises contract plus:

  • any fax or email addresses.
  • if trader is acting on behalf of another trader, the other trader’s details.
  • the other trader’s business address if different.
  • details of cost per billing period or any monthly charges .
  • details of any increased phone or other communication charges.
  • where a right to cancel exists, details in accordance with regl 27-38.
  • cost of returning any goods if cancellation.
  • if there is no right to cancel, information about this, or how it has been lost.
  • details of any codes of conduct and how copies may be obtained.
  • any minimum duration for the contract
  • any deposits required or other financial guarantees to be paid by the consumer
  • where applicable, any technical requirements or compatibility problems for digital content
  • any relevant  out of court complaints schemes and how to access them

Much of this won’t apply for a legal business. But the cancellation rights may, and are set out below. And if they do then you must give the consumer a prescribed cancellation form. All this information and a copy of the signed contract (or confirmation of its terms) must be given to the consumer on paper, or another durable medium” (eg email) if the consumer agrees, before any services are provided under the contract. And the burden is on the trader to prove that they did all this, in any dispute with the consumer.

The Right to Cancel

This generally applies to all Off-Premises and Distance Contracts, although there are a number of exceptions, such as medicinal products, products trading on financial markets, and a number of exceptions relating to goods, repairs, auctions, holidays and so on. The only relevant one for a (cheap) lawyer is that there is an exception for transactions when the total to be paid by the consumer does not exceed £42 (or the current equivalent to €50).

Otherwise the consumer has a right  under r29 to cancel any distance or off-premises contract, without giving any reason, at no basic cost to the consumer at all, apart from some delivery charges, or when the consumer requests early supply. The cancellation period starts when the contract is made and normally runs for the next 14 days  ie 15 days including the day of the contract (an increase from the 7 days previously). However, the period is extended until 14 days after the cancellation information is supplied, or 12 months  and 14 days after the contract if sooner.

To cancel, the consumer has to give the trader “a clear statement setting out the decision to cancel the contract”. This does not have to be in writing, but as it is for the consumer to prove that they gave it clearly the best option. It doesn’t have to be on the form supplied by the trader but it can be. And if it is sent it only has to be sent within the cancellation period – it can arrive later.

Once the contract is cancelled all obligations come to an end and the trader has to return all monies paid by the consumer within 14 days. Any ancillary contracts are ended too. Any goods have to be returned or collected, and there are complicated provisions for the cost of this. More relevantly, nothing need be paid for any services supplied in the cancellation period unless

  • the consumer has requested the trader to do so beforehand in a durable medium, and
  • the consumer has been informed that they would have to pay the reasonable cost of this, and
  • the consumer has been given proper notice of their right to cancel.

The amount must be a proportionate part of the total cost, and the right to cancel is only lost if the service has been fully supplied and the consumer has been informed that this would happen.

It is a nightmare. Fortunately Schedule 3 consists of an approved form of notice giving details of the right to cancel, and the prescribed cancellation notice  which can be adapted and completed and given to the consumer, although the information can be provided elsewhere if you want to take the risk.

If this isn’t bad enough, failing to give the consumer details of all the cancellation rights on an off-premises contract is a criminal offence under r19 punishable with a fine of up to £5,000, both on the trader and any individuals concerned, including directors of corporate bodies.

Distance Contracts

I won’t go through these in detail as anybody who is intending to do serious business in this way will have to read the words in the CCR and the guidance very carefully anyway, and the rest of you will just get confused, or bored.

However, briefly, the trader has to provide the same information as for an Off-Premises  contract, adapted for distance/electronic mediums. This includes any “Accept” button being labelled “ORDER WITH OBLIGATION TO PAY”  “or a corresponding unambiguous formulation”. And again the burden is in the trader to prove that they have complied with all this.

Other Provisions

Just in case this wasn’t enough, the government took the opportunity of tacking on some amendments to the law on the delivery of goods to consumers, (within 30 days unless otherwise agreed) and the passing of risk on sales of goods to consumers (on delivery to consumer, or their own delivery service) in rr42 & 43. Plus some more provisions on inertia selling, additional payments under a contract (consent needed and a pre-ticked box won’t do) and prohibiting telephone help lines at premium rates – rr39-41.

Will it do any good?

Well, it will be good for paper manufacturers, and the likes of Brother, Canon, Epsom and HP. Clients will have lots more information, some of which will be useful to them. Some of the sharper practices will be banned, and some of the worst operators will be dragged up to the level of the better ones. But there will be more box-ticking and things to trip over, and I have my doubts on how much good this does in the end. We’ll have to see.

What do we do now?

We need to look at our way of working and not just our terms of business.

  • Consider your clients. Are they ALL businesses, and attending for business purposes? What about the will for the MD, or the tax advice for the partner?
  • Do you always see any consumers in the office and never elsewhere? Or discuss things with them elsewhere and ask them to come in?
  • What about the consumers who live at a distance and who you don’t see at all, but handle by email/post/Skype/phone?

Unless you are certain that all your consumers are going to enter into On-Premises contracts then you need to get lots of paperwork organised and supply it at the appropriate time. You are going to have to get used to the right to cancel and not starting work until the paperwork is in order and the client has requested you to do so in writing. You may choose to treat all clients as being off-premises consumers for safety, or rigorously divide them up into the different sorts. But you need to start NOW as you have 10 days left as I write this.

There is useful advice from the Law Society as mentioned above (here’s the link again) and two helpful and comprehensive pieces by Kerry Underwood here and here. There are many more out there so look at some of them because it’s very important.

And the Regulations apply for all contracts entered into on or after 13th June 2014.

 

UPDATE – for details of a case on the old regulations see here.

 

We’ve Got Our Work Cut Out – the New Procedure

I don’t deal only with housing and landlord-and-tenant law, and so I’m interested by the recent changes in civil procedure, and in particular the new rules on cost management (which came in on 1.4.13) and on case management generally (which came in on 1.10.13), and I  recently went to a very useful talk given by one of our local Midlands District Judges all about this.

We were told how cases that are allocated to the multi-track (generally those worth more than £25,000 or likely to last more than one day) have got to have their costs budgets agreed by the other side or approved by the DJ. The costs are then limited to the budgeted figures. And we were told how DJs are now taking a much more active role in managing cases, with major decisions on disclosure, witnesses, evidence and issues being decided by them at CMCs, which will now last much longer as a result.

The talk was fascinating, as much because of the insight into the way the local bench are thinking, the matters that bother them (poor court administration, shortage of staff, loss of files, delays in issuing paperwork) which are hardly any different from those of us on the other side of the table, as well as the guidance to the changes in the law (and in particular the CPR) itself. Time and again we were told that if the Judges are going to make sensible decisions on how to run the cases they need to have lots of information about what is at issue, how disputed matters can be decided and what evidence this will need, how long it is all going to take, and how much it is going to cost. If they don’t get these basics then the orders that they make are either going to be inappropriate, or, after having done this for a time and learned not to do things that afterwards turn out to be a bad idea, much more vague, general and really nothing which cannot be replaced by rules, as had been the case so many times in the past.

The Problem

Now I’m not going to cover all the changes in this article. It’s a bit out of my normal area and there are many others who have covered it far better. And as the DJ told us, nobody knows how all this is going to work out in practice yet, and we need time, and a few decisions of the higher courts before it all beds down.

Also, I’m not going to moan that the courts are trying, yet again, to take the management of our clients’ cases out of our hands and run things themselves, although I might have done so. The older members of you might remember the Woolf reforms that resulted in the CPR in 1989, ending the Rules of the Supreme Court, and the County Court Rules, that had been around since the 1870s. Lord Woolf toured around the country gathering views from the profession before carving things into the stones, and he proposed much the same thing then. It didn’t work because the government wouldn’t give the courts enough money to pay for the extra judges and extra IT needed, and management became ineffective.

I went to one of his meetings in the Midlands and when it came to the questions after his speech I said to him that I, along with many of the other solicitors present, had spent many years building up a reputation in running litigation. Clients came to me because of this. If the litigation was going to be run by the DJs, who have largely left my profession because they didn’t like running litigation, how did he think this was going to be progress? As the clients would have no say in which of a number of DJs sitting in one court are going to manage their important cases they won’t even be able to vote with their feet. And I felt sure that a different DJ would deal with each separate application so there wouldn’t be any continuity. Many people agreed with me, and he really didn’t have an answer.

However, I think that the practical side of serious litigation has now become so awful that another attempt has to be made. A couple of years ago I was talking to the finance director of a medium-sized enterprise in the automotive business. He told me that he had recently become embroiled in litigation with one of his suppliers and was horrified at how things were going on (it wasn’t one of my cases). He had been involved in many projects throughout his career, and had recently moved his factory to brand new premises. In each case he and his colleagues made a plan, and set a budget, and a time-scale. Now these were not always entirely adhered to, and always contained provision for contingencies, but they were manageable, and he could plan the rest of his business around them.

Litigation just wasn’t like that. He was given a number of possibilities as to how his case would progress, a cost estimate that ranged from the improbably tiny to the outrageously huge, and a time scale that ranged from weeks to years. It all depended on what the other side did, and how the court responded. He had no control over it, and was deeply disturbed. He had no criticism of his lawyers, who were doing their best in impossible circumstances, but he couldn’t afford to continue despite having, on the evidence as he understood it, an excellent case, and was going to do a poor deal in order to avoid the uncertainty.

I had heard the same sort of thing many times, as most of us have, but never put quite so clearly. In his view, litigation ought to be a project like any other. It should be managed, budgeted and timed so that it works. OK there will be some uncertainties, but life is uncertain, and we seem to cope with that. The legal system just isn’t delivering on litigation and things will have to change. I wholeheartedly agree with him on this. And the new attempt at cost and case management looks like a valiant attempt to do the job, and it is worth supporting. We have tried solicitor-management of cases for many years and look where we are! If you are going to control cost then the courts will have to fix a price and the parties and their lawyers are going to have to work to it. If the court says that the costs are going to be £30,000 then you will have to get used to doing only that amount of work, and that extra expert, or the possible witness or the third conference with counsel will just have to be cut.

No, what I do want to cover is the matter of timing, and the work that will need to be done in the early stages of a case.

The Solution

The whole management project is aimed at holding two major hearings for every case. The second of these will be the trial, as you would expect, although this will only be reached in a small minority of cases that don’t resolve before then. The first of these will be the new revamped and specially augmented Case Management Conference, which will plan the way in which the whole case will be handled, and in order for it to be effective it will have to be properly prepared for.

Now we are long used to preparing properly for the trial. We index and bundle and brief and file and realise that it is all needed if tedious. It is the end of the process in any event and most cases don’t get that far. There is a lot of time to do all this and the trial date gets fixed in stone some considerable time beforehand.

What is going to be a shock is doing this for the CMC, virtually at the beginning of the case. Not only will it be needed in nearly all cases that issue, as there is little time to settle at that stage, but there will be a lot of things to do in very little time.

The DJ will want the Claimant’s lawyers to produce a CMC bundle. In Birmingham (my local major trial centre) this will have to include

  • Contact details of all lawyers and representatives
  • Claim form
  • Statements of Case
  • Orders made (if any)
  • Case Management Information Sheets (ie response to Directions Questionnaire)
  • Disclosure Reports (DR)
  • Electronic Disclosure Questionnaires (EDR)
  • Estimates of costs of proposed experts with list of issues they will address
  • Draft list of issues to be tried (DLI)
  • Draft direction (incorporating all parties suggestions) (DD)
  • Costs budget in Form H

Some of these are easy and obvious. But some are not – the DR and EDR can require considerable thought, the expert quotes may take some time, and the DLI and DD are clearly crucial and important. And enough has already been written about the costs budget to let you know that it is both crucial and complicated, with a lot of scope for messing things up.

All this is certainly achievable, and it will undoubtedly make the DJ’s task easier if it is properly complied with. But it will take a lot of work, and hence cost, in very little time, especially as some of the items such as the DR and EDR need to be served 14 days beforehand, and the whole bundle has to be filed 7 days beforehand. Especially as these items, plus the draft directions and Form H have to be discussed with the opponents as well, and consideration be given to their views.

The Timing

Now looked at from the point of view of the Claimant this is manageable. They have 6 years (normally) to bring proceedings, and hence virtually as much time to prepare as they want, although this will all come at a cost to their clients. Full statements from the witnesses, lawyers crawling over the documents and  quotes from experts once the issues have been extracted won’t come cheap. Counsel will very obviously be needed from considerably earlier than day one. All this cost will be lost if the exploration shows that there isn’t a case, or at any rate a sufficiently strong one. The days of the “suck it and see” claim look numbered.

If things get off the ground then all that ought to be needed is a tweak after hearing from the Defendants in response to the Protocol letter (before issue) and a further tweak, setting out the issues, after the Defence arrives and you’re nearly there.

From a Defendant’s point of view however things are much tighter. Defendants rarely go to their lawyers until they get the Protocol letter, or shortly before this. The letter will set things out is some but not extensive detail. There is then about a month (which might be extended) to respond, and as the lawyers will be starting from cold they will be vague, general and guarded, while they are trying to see their own witnesses, evaluate the documents, and working out what’s going on and what their best tactics will be. So unless serious negotiations get under way the Claimants are likely to conclude that they are wasting time and issue proceedings.

The Claim Form and Particulars of Claim give 4 weeks, extendible to 8 weeks to respond in a formal Defence. And serving the Defence triggers notice of the CMC, usually about 4-6 weeks away. Remember most of the documents have to be filed 1 or 2 weeks before this hearing, with discussions between the lawyers before this.

The Result

I’m not sure whether the intention is to hustle the parties into early settlement via say a formal mediation, but experience shows this to be most effective either very early on, before issue, when little cost has been incurred and the parties can factor the avoidance of future costs in to their calculations, or much later when all the evidence and documents have been disclosed and everybody can take a realistic view of their chances. Will forcing both parties to incur very substantial cost right at the beginning really help? I suppose it might just frighten them away from the courts entirely, but otherwise I have my doubts.

Now parties engaged in the largest litigation have always had to plan from the very beginning, and deal with the vast strategy that this involves. They realise that pre-issue costs can be valued in tens if not hundreds of thousands of pounds. But this is a system that is meant to handle all claims over about £25,000 – a substantial dispute with a supplier, a contested probate for a modest estate, a serious but not catastrophic injury. Even for a more substantial claim for £100,000 the cost is going to be really significant.  Is this really the best way to manage things? Should perhaps there be some middle way? Or is this the only way to keep a lid on things, and people who can’t afford it should just stay away from the courts, if they can.

Only time will tell.

Milestones

I posted my first blog just over a year ago and this is Number 25 so I must  either have become pretty adept at doing the things, or have cloth ears and a hide like a rhino. You had better decide which.

This one is a bit special. I came to the Midlands in 1983 and have been with my present firm for most of the time since. But I’m now on my way, to pastures new. To a more uncertain, less predictable future, elsewhere. Still, basically, in the Midlands. I am, after all, Coventry Man.

Like going to a new school, or off to uni, it is superficially terrifying, but deep down you know you will be OK, once you find your feet. You know that you have skills that worked before, and will work again, even if they are somewhat different in the new context.

It’s just a question of making full use of all the things that you have learned, not only about the boring technical aspects of housing law, or management, or marketing or whatever, but also about how people, and businesses tick. Of knowing who your friends are, what you are really good at, and what it is that people really want.

Sometimes of course you worry that you may be a coachman, or farrier, or groom from 1900, looking at a long horsey future and not noticing the new noisy motors. Perhaps as a solicitor in 2012 I can’t see that ABS/Tesco Law/the SRA will see us all as history by 2020. Who knows? Though I doubt it. And 2020 is a long way off.

So I’m busy packing things into my spotted handkerchief and looking for the stick to hang it on. The grass looks very green and inviting over there. Let’s be moving!