Insolvency exemption in latest no win, no fee U-turn
Insolvency cases will be exempt from no win, no fee reforms until April 2015, the government has revealed in its second climb-down in its struggle to overhaul the civil justice system.
Justice minister Jonathan Djanogly said today that insolvency practitioners need longer to adjust to civil justice reforms included in the Legal Aid, Sentencing and Punishment of Offenders Act. Another factor is that reform would cost the government significant tax income, with HM Revenue and Customs often the biggest creditor in insolvency cases.
The legislation, given royal assent earlier this month, removes the recoverability of success fee and after-the-event insurance premiums from losing defendants, with effect from April 2013. The government has already performed a U-turn on mesothelioma claims, exempting them from reform until an impact assessment has been made.
In a written statement made in the House of Commons today, Djanogly said: ‘Insolvency cases bring substantial revenue to the taxpayer, as well as other creditors, and encourage good business practice which can be seen as an important part of the growth agenda with wider benefits for the economy.
‘These features merit a delayed implementation to allow time for those involved to adjust and implement such alternative arrangements as they consider will allow these cases to continue to be pursued.’
Campaigners had argued in favour of an exemption for insolvency cases throughout debates on in both houses of parliament. Opposition members had laid down an amendment in favour of an exemption, though Lord Justice Jackson had recommended the abolition of recoverability for insolvency cases in his original report on civil justice.
The government has also confirmed it has asked the Civil Justice Council for further advice by the end of June on implementing qualified one-way costs shifting.
Details will be announced before the summer recess, with suggested changes to the civil procedure rules necessary by the autumn for them to come into effect by April 2013, the government’s intended target.
Desmond Hudson, chief executive of the Law Society, said: 'Following the case made by the Law Society and others, the government has accepted that more time is needed to evaluate the effect of the new civil proceedings arrangements on insolvency cases and to allow the legal sector time to adjust. We would like to see this logic applied to other types of cases, where a similar implementation delay, until 2015, would help to avoid unwelcome impacts on ordinary people’s right to secure legal redress.'
Comments
QUOTE:- "Insolvency cases
QUOTE:- "Insolvency cases bring substantial revenue to the taxpayer"
Oh, that's OK then.
It's clearly (according to them) unjust for ordinary people to bring cases, but OK for cases to be brought which benefit HMRC.
Makes perfect sense.
Good news
Given that every penny lost to HMRC is lost to us all as taxpayers, this is good news. Insolvency practitioners were being advised that these reforms were likely to curtail claims against directors and bankrupts, despite being liable under insolvency legislation for various claims. There's a broader public policy argument here, as opposed to PI cases; namely that if clais against such people stopped, more creditors (including ordinary people) would lose out and more would be forced themselves into bankruptcy/administration/liquidation or close their businesses.
And the even broader public
And the even broader public policy argument is that all should be equal before the law-but not now presumably.
Surely if this economic
Surely if this economic arguement is acceptable in this context surely it applies to the general public in that whatever is received in damges is usually spent in the local (ish) economy and therefore providing an economic boost locally and through VAT and other taxes to HMRC ?
Of interest may be this
Of interest may be this section of the Annual Review of Insolvency Practitioner Regulation 2011 (Pages 4 to 6)
http://www.bis.gov.uk/insolvency/insolvency-profession/regulation/review-of-ip-regulation-annual-regulation-reports
2.1 Monitoring the Authorising Bodies
The Insolvency Service monitors the regulatory activities of the Authorising Bodies by undertaking on-site visits and themed reviews. The purpose of monitoring is to assess compliance against the principles set out in the Memorandum of Understanding agreed with the Secretary of State as to how they authorise and regulate their practitioners, and to encourage regulatory good practice. Most of the RPBs are also recognised by the Department of Enterprise Trade and Investment (DETI) in Northern Ireland which exercises similar oversight powers in the province and where this is the case joint monitoring visits are undertaken by both oversight regulators.
During 2011 three full monitoring visits were undertaken. These were to the Solicitors Regulation Authority (who have delegated authority for regulatory matters from the Law Society), the Law Society of Scotland and the Insolvency Practitioner Unit which exercises The Insolvency Service’s direct authorisation function. In addition the monitoring visit to ACCA which commenced in 2010 was concluded. Monitoring visits to insolvency practitioners carried out by ACCA, IPA and ICAEW were observed and ad-hoc meetings were held with several RPBs to follow up recommendations made in previous reports. A themed review was carried out on how efficient arrangements are for the transfer of an insolvency practitioner’s cases when an authorisation is withdrawn or when an insolvency practitioner dies or is otherwise unable to continue to administer cases.
2.1.1 Monitoring visit to the Solicitors Regulation Authority (SRA)
Previous Reviews in 2009 and 2010 have referred to concerns about the adequacy of the SRA’s complaints handling procedures for insolvency practitioners and the impact the establishment of the Legal Ombudsman may have on them. It has been confirmed that the Legal Ombudsman will not be in a position to deal with the majority of complaints against solicitor insolvency practitioners and therefore it is incumbent on the SRA to deal with these complaints. Discussions took place during 2011 with both the SRA and the LS to try to resolve this issue and in September 2011 The Insolvency Service undertook a joint monitoring visit with DETI to the SRA’s offices in Redditch.
The visit found that the SRA was not dealing with complaints in accordance with the principles agreed with the Secretary of State in the Memorandum of Understanding. Furthermore, the SRA’s move to outcomes-focused regulation for all of its solicitors is not compatible with The Service’s drive for greater consistency in complaint handling and sanctions across all of the RPBs. The SRA’s outcomes-focused regulation regime came into force on 6th October 2011 (one week after the monitoring visit) and under this regime the SRA will not investigate all complaints received, but will use the information received to form a risk profile for legal firms. (Clearly unacceptable) Other areas of concern noted during the visit were that the new principles-based handbook (which replaced the Solicitors Code of Conduct) no longer required solicitor insolvency practitioners to comply with the Insolvency Code of Ethics; that the SRA website failed to inform members of the public on how to complain about a solicitor insolvency practitioner; that potential new applicants for authorisation as an insolvency practitioner could not apply on-line and that there remained an issue with enabling bonds being received late. Monitoring visits of insolvency practitioners authorised by the SRA are carried out under contract by the IPA, and it is intended that a monitoring visit to an SRA insolvency practitioner will be observed during 2012.
A draft monitoring report was issued in December 2011 and The Insolvency Service has held meetings with the LS and the SRA to discuss it. The SRA Handbook was amended in April 2012 to include reference to the Insolvency Code of Ethics and the SRA have given an assurance that on-line applications will be possible in the summer. The important matter of complaint handling has not yet been fully resolved although an acceptable solution has been identified.
John Hyde has also written a blog on the subject
(http://www.lawgazette.co.uk/blogs/blogs/news-blogs/no-win-no-fee-climb-down-a-case-double-standards)