Boris Johnson isn’t alone in having a County Court Judgment (known as a CCJ) against his name – according to figures from Registry Trust, the agency that records information about County Court Judgments, over 250,000 CCJs were recorded against UK individuals in the first quarter of 2021.

But what is a County Court Judgment and what does it mean? Almost all CCJs are money judgments, which means that one party (the debtor) owes money to another (the creditor), either as a result of a loan or other credit agreement which was not paid back on time, or because money was paid for goods or services which were not delivered or carried out. In these circumstances the creditor can go to court to issue a Claim against the debtor, requiring the money to be repaid.

If the Claim is ignored, or is unsuccessfully defended, then a County Court Judgment will be entered against the debtor. All Judgments are entered onto a central register which is managed by Registry Trust on behalf of the Government, and will stay on the register for six years. All the main credit reference agencies have access to the register and will use the presence of a CCJ as one of the factors when calculating credit scores. This is why people are warned that a Judgment may affect their credit rating, which in turn could make it harder to borrow money in the future, take out a mortgage, open a bank account or carry out a number of other services. The register is open, meaning that any other individual or business can also look up details of a CCJ for a small fee.

So what does this mean for Boris? Well, assuming that the Judgment has not been entered in error then the main thing is that more than 30 days have passed since the Judgment was registered. This is significant because if a Judgment is paid off in full within 30 days the debtor can apply to have the CCJ completely removed from the register as if it had never been entered. However after 30 days, even if the Judgment is subsequently paid in full, the details will remain on the register for six years and will continue to affect credit ratings for that time.

Michael Higgins, Managing Director of Lovetts Solicitors, who specialise in issuing claims and entering Judgments on behalf of their clients who are owed monies, commented “It is unusual for a high profile individual to allow a matter such as this to progress for so long. Even if he was personally unaware of court proceedings, once the Judgment was registered he should have taken prompt action to settle the matter and either have the Judgment settled or, if it was registered in error, applied to the Court to have the Judgment set aside whilst the matter was investigated.”

Notes to Editors

Lovetts Solicitors are the leading specialists in commercial debt recovery. Founded in 1994 exclusively to carry out debt recovery and contract litigation services their clients range from sole traders to FTSE 100 corporations. They are a member of the County Court Users Association and one of the largest issuers of County Court Claims for business debts in the UK. If further comment is required, contact 01483 457500 or email [email protected]

Lovetts Solicitors Managing Director, Michael Higgins, appeared on a Federation of Small Businesses panel with the Member of Parliament for Guildford; Angela Richardson and MBE, EM3 LEP Board Member; Ren Kapur to set out the post-pandemic Roadmap to Economic Recovery.

Michael Higgins expressed his ‘admiration for the way businesses have coped during the pandemic’ before giving advice on the importance of cash flow and the impact late payment has on businesses.

Key metrics prior to the pandemic showed an economy that was already struggling. These included:

• In 2015, 1.5 million money claims were issued through the Courts. By the end of 2019 this was up by 30% to 2 million claims. County Court Judgments (CCJs) have a significant impact on the credit rating of companies and individuals.
• Cashflow was clearly a problem because:
  • In 2015 only 47% of claims would result in a default County Court Judgment compared to 58% in 2019.
  • County Court Judgments also known as CCJs have a significant impact on credit ratings so most businesses or individuals will seek to avoid having one but by the end of 2019 58% of debtors did not appear to have the means to pay at the court claim stage.
• This is also reflected in the statistics for companies being wound up and going into liquidation. There was an 18% increase in company insolvencies in 2019 compared to 2015.

The pandemic will undoubtedly have impacted the economy even further. Cash flow for businesses will be crucial as part of the roadmap to post-pandemic recovery. Michael gave attendees some key tips for businesses to help protect their cash flow. These inclused:

• Create a process of sending out invoices promptly.
• If you have the time, contact your customer prior to the invoice becoming due to double check they have your invoice and it is on their payment run.
• Have a process where you chase late payment promptly in house for a certain period of time that you are comfortable with from a cashflow perspective and stick to that time frame.
• Once that credit control period has ended, get it to a third party debt recovery specialist and ask them to send a letter. A Solicitors letter can cost as little as £5 and on average 86% of cases will get paid.
• 58% of business fear chasing late payment in case it upsets customers. But Lovetts Solicitors experience they don’t get upset, if you have already chased your customer and warned it will be referred to a third party debt collector, they aren’t going to be surprised when they do get a Solicitors letter.
• Some companies have an internal policy to not pay customers until they receive a Solicitors letter because it means they can keep hold of the money longer and improve their cashflow to the detriment of their customers.
• As mentioned above 86% of cases are resolved upon receipt of a Solicitors letter and we often see our clients continue to trade with their customers.

Could the government do more? It was mutually agreed by Michael and Ren that the government could go further in providing support for businesses in order to aid in the economic recovery. However, credit was given for the introduction of the furlough scheme and government grants to help businesses and the general public.

The potential impact of the pandemic in respect of the mental health of employees was also discussed. The panel agreed that employees working from home and in isolation from colleagues was likely to have an impact on mental health and would have to be managed carefully. Michael explained how Lovetts Solicitors had partnered with Oakleaf, a mental health charity based in Guildford, and that mental health first aid courses were offered. Oakleaf also work to support individuals with their mental health by arranging activities that can be attended to via zoom, hampers for their members at Christmas, they offer one to one support and recently have helped 95% of their clients to feel less isolated during the pandemic.

One thing we know can have a positive impact on our mental health is going on holiday. As things stand at present, the government are stating that travel is going to be possible from the 17^th May. Ren Kapur had to say that we should still be a little cautious when it comes to the idea of being able to go on holiday as things could change on a week by week basis. Angela Richardson was able to shine some light on this situation as she confirmed details such as the fact that nothing is set in stone and International travel after 17^th May is subject to review, much closer to the time. Angela put forward the concept of the ‘traffic corridor system’. This is the idea that depending on the infection rates and how safe it is to travel, countries will be put into either red, amber or green categories to prevent the further spread of the virus or new variants from other countries. She went further to encourage stay cations which seems to be the best way of continuing on our pragmatic road map to recovery.

To share some final thoughts, Managing Director of Lovetts Solicitors, Michael Higgins had to say; “it is going to be a tough road to recovery but there is a lot of faith to be had in businesses”. A similar thought was shared by Ren who agreed that she had a lot of faith in our country and our communities that we can all work together to support one another on our Road Map to Recovery.

How To React To A Defence

Defences should be carefully read and considered. Whilst the defendant must prove its defence you must have documentary evidence, or a credible witness who will attend court, to prove yours.

Time To Respond To Court

The court allows a short time to respond to notices informing us of defences and part admissions. If we do not reply to the court by that date, the claim will be stayed. If the case is stayed, no further steps can be taken without the court’s permission – which will not necessarily be given. If the court’s permission is required an application will have to be made and a court fee paid.

Limited Costs in Small Claims Cases

When a claim is for less than £10,000, the case will be allocated to the Small Claims Track and be dealt with at a Small Claims hearing. No legal costs are normally awarded to either side in Small Claims cases (apart from the fixed costs on the Claim Form, and any other court fees incurred, such as the fee payable with the Direction Questionnaire – formerly the Allocation Questionnaire, and the Hearing fee).

Paper Hearings

For very small cases it may be economic not to attend the hearing but to ask the court to consider papers filed at court and make a decision based on these. This is only recommended for extremely small debts where there is a full paper trail and your case can easily be proven by the witness statement and supporting documents filed. The court requires 7 days notice of non-attendance.

There is a risk the defendant will raise points not previously mentioned and if you are not at the hearing, or represented, then the court may find in the defendant’s favour and strike out your claim.

Summary Judgment

If the defence is weak, or your evidence in support of your claim compelling, we may recommend an application for summary judgment. Costs can be claimed, even for a Small Claim.

Fast Track

Claims for between £10,000 and £25,000 are allocated to this track. We suggest these are handled by our Commercial Department, although some may be suitable to remain in the Legal Department on a fixed fee. This can be determined by using our “Initial Assessment of Defence” service shown below.

Multi Track

Claims for over £25,000.00 are allocated to this track. We recommend you instruct our Commercial Department to handle these on your behalf.

What If There Is A Counterclaim?

If a defence includes a counterclaim it must be dealt with as a matter of priority and a defence to the counterclaim filed at court, usually within 14 days or with the Direction Questionnaire (formerly the Allocation Questionnaire). If this is not filed, the defendant will be able to enter judgment against you. A defence which includes a counterclaim need your urgent attention.

INITIAL ASSESSMENT OF DEFENCE (claims under £5,000) – £250

We offer a special service whereby you can get an initial assessment of the case from one of our solicitors for a fixed Assessment Fee of £200 (ex VAT).

As far as is possible at this stage, the assessment will give you advice on:

• your prospects of success
• further evidence required
• any further advice that may be required and an estimate for providing this
• likely costs and complexity
• what we would do and what you would do to prepare for a hearing
• when you could withdraw from the proceedings, and at what cost, if you wanted to continue the case but not go the full way
• if a summary judgment application is suitable

Once the case has been assessed, you can decide if you want us to continue conducting the case for you. If suitable this can be for a fixed price of £450.00 plus VAT.

Our assessment will be based on the information you supply and can only be as accurate as that information provided. Please provide a brief outline of the history of the debt and the dispute together with copies of the contract and any correspondence setting out the dispute.

INITIAL ASSESSMENT OF DEFENCE (claim over £5,000) – £500

This service will give advice as outlined for Small Claims Track cases, but it will also provide further information required for claims allocated to the Fast and Multi Track. As costs are recoverable if you win, or payable if you lose, it is vital to get the initial strategy right.

The Challenge

Lovetts’ client is a major operator of theatre venues in the UK. What do you do when a hirer causes substantial damage to your theatre, then goes bust?

The defendants hired a theatre in a major city for a live show involving a well-known troupe. During the act, the whole audience was invited on-stage to dance with the group, resulting in major damage to the stage costing over £15,000 in repairs. Unfortunately, the defendants went into liquidation before legal action could be taken to recovery the money. Could anything be done?

The Solution

Our client assumed the debt would have to be written off. However, we examined carefully the application of the Third Parties (Rights against Insurers) Act 1930 and whether our clients had a claim against the insurers of the liquidated company. They were represented by their loss adjusters, Cunningham Lindsey, who initially refused to make any payment because the defendant denied liability.

The Benefit

Despite this, after correspondence advocating our client’s legal entitlement, Lovetts secured a payment of over £7,500 in settlement which, in the circumstances, was beyond our client’s expectations.