The IET pilot scheme aims to simplify the court process for simple insolvency applications before Bankruptcy Registrars in the High Court in the hope that this will reduce court time and costs for the parties.
For the purposes of IET, ‘simple applications’ are those:
- that can be disposed of in no more than 2 days;
- that require limited directions and disclosure of documents; and
- where the costs of each party will not exceed £75,000 (excluding VAT and court fees but including any uplift on conditional fee agreements).
The usual rules on cost management and cost budgeting will not apply to IETs, but costs for each party will be capped as above.
The scheme is not compulsory so litigants still have the option to use the traditional route. Chief Registrar Baister recognises that the IET procedure could be used oppressively; for example by shoehorning a disadvantaged litigant into a trial which is moving at a pace that they simply cannot keep up with. In order to protect against this, respondents are able to object to an IET and the court has discretion to remove the case from the IET procedure where it thinks fit. It is suggested that the court will only exercise such discretion where the matter, after initial inspection, appears to be more complex than originally envisaged and therefore requires more time or a higher costs limit.
If a litigant wishes to proceed via the IET route, the procedure is quite simple. In addition to the usual contents, the application must:
- be marked clearly with ‘IET’ on the first page;
- include a statement at the end of the application that the case is suitable for the IET list; and
- include a statement that the respondent is entitled to object to the use of the IET procedure.
A limit of 15 A4 pages per application has been set and all evidence in support of the application must be filed at the time of issuing the application. Furthermore, the following timelines will apply:
- Directions hearing – no more than 45 days from filing of application for IET;
- Respondent time to object to IET – no longer than 14 working days before the directions hearing (cannot be any longer than 2 sides of A4 which includes the heading);
- Applicant may file and serve a reply to the respondent’s objection – no later than 7 working days before the directions hearing (cannot be any longer than 2 sides of A4 which includes the heading);
- Final hearing – 3-6 months from the date of the directions hearing with agreed time estimate; and
- Judgment – at the trial or handed down within 4 weeks of trial (where judgment is reserved).
Given many applicants feel constrained by slipping court timetables, the IET should offer a more efficient process for simple insolvency applications with the benefit of costs capping to provide some certainty on costs exposure. The exemption from the cost budgeting procedure will come as a welcome relief as producing and agreeing budgets can be time consuming and drive up costs in more simple matters. However, the strict and non-negotiable nature of the timelines means that an applicant could potentially end up having only seven days within which to file evidence in response to a reply filed by the respondent. It is therefore important that both Insolvency Practitioners and their clients are aware of deadlines from the outset and are confident that they are able to meet them.
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