County Court or Adjudication for creditors

Does the County Court provides a debt recovery option that is fit for purpose. 

Matthew uses his recent experience of county court delays to caution creditors within the construction industry against using the county court to recover unpaid invoices.

Most creditors would be better served by looking at Alterative Dispute Resolution such as Adjudication or Arbitration.

Ongoing County Court Delays

In March 2024 I wrote a post concerning debt recovery & construction contracts.

We summarised why disputes occurred, explored the options for debt recovery, and concluded that adjudication remained the optimum forum for resolving construction disputes.

When I wrote my March 2024 post, I had in mind the extensive county court delays that I reported on in September 2023.

In September,2023 I reported on the then latest statistics produced by the Ministry of Justice for the period between April and June 2023 showing that it took on average 78.2 weeks for these claims to reach a trial.

Avoiding the county court system is not always feasible. Although construction adjudication is usually the preferred option, there are times when we must turn to the county court, which is slower and more costly. What have been our recent encounters with delays in the county court?

The delays with the centralised on-line money claims portals.

In the past, solicitors could go to a local county court to file papers easily. However, this has changed. Nowadays, court offices are rarely open and staffed. They only accept court papers in special circumstances, like when there is a time limit issue. They may also ask you to make an appointment. They may also require you to make an appointment.t.

The reason for the above is that the issue of claims is centralised.

In March 2024, I was acting for two Claimants in the County Court. The money claims online portal is unable to process paperwork when there is more than one Claimant.

I sent my clients’ claim forms and the court issue fee to the centralised court system on the 8 March. It is impossible to track progress. One month later and the court had not even cashed the cheque that accompanied the Claim Form (they did so on about day 35).

A further two weeks on and I have no idea if the Claim Form has been issued by the County Court.

This is just the start of the inherent delays within our civil justice system.

It is unclear why the court took 35 days to process the Claim Form.

According to data that is published by HMCTS, the processing time as of 11 April 2024 was 13 business days.

It is fair to say that in most cases you can issue a claim on-line and it is issued within 24 hours.

Unfair Delays for the Claimant

The one month delay referred to above is an improvement  from last summer.

In mid- July 2023 I sent to the court, on behalf of a defendant, by email, an application to stay court proceedings pursuant to section 9 of the Arbitration Act 1996.

The court did not issue my application to stay proceedings until late November 2023. Even after the decision was made, the court did not schedule a hearing for another 4 months.

Pity the Claimant.

The Claimant had issued its Claim Form in June thinking that the court would promptly process its claim and yet some 9 months later no progress whatsoever had been made.

Properly advised the Claimant would have issued an adjudication. Properly advised the Claimant would have understood that the Arbitration Agreement meant that the court did not have jurisdiction to deal with the claim. But having issued a Court Claim, the Claimant was entitled to have its claim heard as opposed to it simply being lost within the county court system.

Other Court Delays

But the delays and disadvantaged of using the court to recover debts do not end there. In my experience almost every stage of litigation suffers delay.

There is invariably a significant delay before Allocation Questionnaires are processed and the matter released to a court hearing centre for directions.

Litigators will recount trials being cancelled a few days before hearing because of lack of judges. This cancellation is at the party’s own cost.

Delays in the County Court have become so bad that we usually issue a health warning to any client that wishes to issue court proceedings.

But what causes the delays? According to ACSO these include:

• Budget cuts. Real-terms funding for the Ministry of Justice fell by 40 per cent between 2010/11 and 2017/18. Although the Government has more recently increased funding, there remains a multi-billion pound black hole.
• Reliance on out of date IT.
• Lack of political engagement on civil justice.
• General Administration delays.

Most business debtors are familiar with the civil justice system and may use defences and counterclaims to delay a creditor further.

Caution before issuing in the County Court

The County Court in England and Wales is beset with the following problems:

• inadequate administrative resource
• lack of judicial resource
• the ability to frustrate progress by tactical defences and counterclaim.

resulting in long delays to recover debts.

The court issue fee is is regressive. It means that the majority of court fees are paid by those with modest claims. 5% on issue for claims under £10K. Trial fees are then also due.

The issue of costs recovery has become ridiculously complex for disputes in the Intermediate Tack of the County Court consequent to the imposition of the new fixed cost rules.

When I was younger we said the only person using the county courts were those on legal and and the stupid. Legal aid has almost vanished. And yet the courts are busier than ever causing massive delay to justice.

In my opinion adjudication offers a far superior option for recovering debts and should be the dispute forum of choice for those engaged in the construction industry.

To discuss matters further, contact Matthew Dillon on 01277 280 760

Matthew Dillon LLB, Solicitor, MCIArb

MJD Solicitors

16 April 2024

This article is for information purposes, does not constitute legal advice and should not be relied upon. For terms and conditions of this article please read https://mjdsolicitors.co.uk/terms-of-use/