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On 1 April 2016, litigants involved in some insolvency applications will be able to take advantage of a new court pilot scheme. Intended to provide litigants with a streamlined procedure and an early date for trial or disposal of simple applications, the pilot scheme—known as Insolvency Express Trials (IET)—will only be available to applications brought in the Bankruptcy and Companies Court of the High Court before the Bankruptcy Registrars.
The 83rd update to the Civil Procedure Rules (see LexisPSL Dispute Resolution blog post: CPR changes—February and April 2016) includes a new Practice Direction 51P (made under CPR 51.2), which sets out the procedure underlying the IET pilot scheme. Commencing on 1 April 2016, the pilot scheme will operate for two years, and will be evaluated after 12 months, and then every six months. Prior to the expiry of the pilot scheme its success will be assessed, and the Chancellor of the High Court will then determine if it should be continued and made permanent.
We spoke to Chief Registrar Baister to find out more about the background to the IET pilot scheme, and his thoughts and expectations on how it will operate.
Two main ideas lay behind the decision to experiment with an express trial procedure:
In one sense there is nothing in the IET process that could not be achieved using the existing framework in which the Registrars hear cases. If litigants get on with things quickly, there is no reason why straightforward cases should not already be heard quickly and at relatively low cost. The IET scheme is designed to give that possibility some formality—a framework if you like—and to concentrate the litigants’ minds on what can be done. It also has the advantage of incorporating guarantees as to what the court will do, which I accept is not the case for the generality of proceedings.
I’m not sure whether there are any advantages to the court, though there may be some if it enables us to get some cases through the system more quickly than otherwise might be the case. For the parties the main advantages are speed and cutting out costs management, which I am told can be burdensome and expensive, so the hope is that litigation costs will come down.
There could be disadvantages too, I accept. Applicants could try to get quarts into pint pots, by which I mean use the IET procedure for cases that are simply too complicated (because there will inevitably be interlocutory applications which the IET is not designed to accommodate)—and I can see that it could be used oppressively, for example to railroad a disadvantaged litigant to trial at a pace with which he cannot keep up. That is why there is provision to object to the use of the procedure, and the court can take a case out of the IET list if it looks unsuitable for the list. The scheme is being launched as a pilot. These are all things (and others we will not have thought of) we shall have to look at during the pilot phase.
Yes. CFAs had a negative effect in several respects, but one of them was to encourage very costly litigation that from the outset was often about fee rolling and would bring little or no benefit to creditors. The high costs that CFAs meant were also often an obstacle to settlement, because the costs rather than the underlying claim became the focus of the parties (or at least of the applicant). All the Registrars have experience of this. The IET, it is hoped, should keep costs within reasonable boundaries.
Perhaps down. I originally advocated an upper limit of £50,000 but was persuaded it was too low. I suspect that CFA uplifts played a part in the debate. On that basis I would hope that the costs limit might come down, but that may be a pious hope. And, of course, there may be major changes if Lord Justice Jackson’s move in the direction of fixed costs becomes a reality. We shall have to wait and see. In the meantime the best I can say is to remind court users that the current costs limit is just that—it is not a target.
I would hope that as a rule disapplication will be dealt with at the first (and only) directions hearing. But I can’t rule out the possibility of disapplication at a later stage, for example if a case that looked simple at first turned out to give rise to disputes about the scope of disclosure or the need for expert evidence or something of that kind.
This is a good question, and the honest answer is that I don’t think we thought about the possibility when we came up with the idea. I think the simple answer is 'no', but as I said earlier, there is no reason why any application should not proceed as quickly as one under the IET, so that may be the way forward in the situation you contemplate.
Again this is a very good question, but I am not sure whether I can give an answer that goes beyond repeating many of the points I have already covered. The short answer is that we will have to see. Litigation is very unpredictable, and it is hard, therefore, to foresee what any test might be until we have heard argument on the subject—that is, after all, the way we find things out in our system (we hear what people say in court, evaluate what they say, and then decide where it leaves us). I think for the moment I will leave it at that.
As to pre-issue discussion, it would plainly be a good idea, but I would not want to say anything that might be taken as prescriptive or even indicative.
I honestly have no idea. When the IET was floated as an idea it received support from users who thought it was worth trying, which is exactly what we are going to do. The proof of the pudding will, however, be in the eating—or not.
May I end by saying I hope that practitioners will:
Interviewed by Stephen Leslie.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
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The pilot scheme for Insolvency Express Trials
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First published on LexisPSL Restructuring and Insolvency
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Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.
Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.
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