LOAN CHARGE LEGAL – Q&A
Important and urgent update for all LCL members – please read
We recently wrote to all Loan Charge Legal members to provide an update on the status of the judicial review claim and intended application for injunctive Interim Relief (IR).
Understandably, following this update, a number of queries were received in relation to becoming a named claimant in the judicial review proceedings. We provide answers below to certain 'frequently asked questions', which we hope will address members' queries. We have also decided to extend the deadline for confirming whether members would like to become formal claimants in the litigation.
The key dates are given below and, if after reading the information contained in this update, you have any follow up questions then please submit them to: firstname.lastname@example.org.
04/02/2021 - New deadline for submitting form to be added as a claimant by 22:00
05/02/2021 - LCL will contact those on the list via email
07/02/2021 - Claimants need to make final decision by 22:00
08/02/2021 - Final list of claimants submitted to RPC
Frequently Asked Questions
Question 1: If I submit the form to be added as a claimant, am I committed to that decision?
Answer: No. Submitting the form is simply an expression of interest/intent at this stage. Once the number of potential claimants is known, you will be contacted after which you will be asked to make a final decision. If you then decide to become a claimant, appropriate arrangements will be made for you to become a claimant.
Question 2: If I don’t become a claimant could I still benefit from the LCL case?
Answer: If you decide not to become a claimant then you may still benefit from a positive outcome in the case. Becoming a claimant is necessary if you wish to apply for IR.
Question 3: Why can I benefit from the case without being a claimant but need to become a claimant to apply for IR?
Answer: Only those who are part of the litigation can apply for IR. You need to be a party to proceedings in order to apply to the Court for relief. A non-party is unable to ask the Court for an Order. However, all those facing the Loan Charge (LC) would be in a position to benefit from any changes made to the LC as a consequence of the claim being successful and the remedy sought by the claimants being granted.
Question 4: By becoming a claimant why am I then also liable for the costs if we lose?
Answer: In litigation the unsuccessful party is generally required to pay the other party's legal costs (this is no different in judicial review proceedings). In order to have the opportunity to apply for IR, you have to be a claimant (i.e. a party to the judicial review litigation) which means that should the claim be unsuccessful the court is likely to make an award of costs against the claimants.
Question 5: Is IR guaranteed if I become a claimant?
Answer: No. IR is in the discretion of the court. IR is an important weapon for claimants to ensure that their claim is not rendered academic by the passage of time. IR may be granted where it appears to the court to be “just and convenient to do so”. In practice, should the application for IR be successful, it is likely that the court will grant IR in principle and each claimant who wishes to benefit from the IR will then be required to establish personal hardship. This usually takes the form of providing a statement of assets and liabilities.
Question 6: What is ‘hardship’ and how do I prove it?
Answer: There is no definitive guidance on what constitutes hardship. However, in short, it is if you cannot afford to pay the requested sums and face financial hardship (for example, bankruptcy/insolvency). If you can comfortably afford to pay the repayments of a TTP arrangement made with HMRC, then claiming financial hardship would be more of a challenge. See also the answer to Question 5, provided above.
Question 7: Can I still request IR if I have been unable to agree a Time to Pay arrangement with HMRC?
Answer: IR is granted to prevent enforcement action (in our case by HMRC of the amount of tax it claims is due). As discussed above, if you are a claimant who is able to establish hardship then the fact you have been unable to agree a Time to Pay arrangement with HMRC would not prevent you requesting and benefitting from IR.
Question 8: If I do not apply for IR, or I apply and it is not granted, and therefore need to continue making TTP payments for the duration of the case, will I be able to claim these back in the event that the case is successful?
Answer: This will depend on the outcome of the case, any relief ordered by the court and any action taken by the government/Parliament as a consequence of the court's judgment.
Question 9: What are the costs involved in becoming a claimant?
Answer: If you have previously donated (any amount) then you do not have to donate further to become a claimant. However, if you have not made a donation then there is a mandatory donation requested of £250. This represents an average donation value and also builds fairness into the process to all those who have supported LCL from the start and helped get it to the positive position it is in today. Any such donations would be added to previous donations which have already been made by others. RPC holds LCL's funds in its client account in the usual way.
Question 10: Are further funds being requested in order to apply for IR?
Answer: No. The original funds raised cover the application for IR.
Question 11: What are adverse costs?
Answer: Adverse costs are where the losing party in a case is ordered by the court to pay the other party's legal costs. In practice, it tends to be in the region of 60-70% of the winning party’s legal costs.
Question 12: What have the funds which have been raised to date been used for?
The funds raised to date take the case through the following two stages:
Phase 1 (Pre-Action) – Initiation and mobilisation of the case, correspondence required with HMT, issuing of the Pre-Action Protocol Letter, preparation of papers for the Judicial Review claim and any renewal application stage if required.
Phase 2 (Progressing to substantive hearing) – Issuing the claim in the High Court and serving it on the defendants/interested parties; progressing to substantive hearing.
Once the case moves beyond Phase 1, it will become necessary to raise further funds in order to cover any adverse costs order which may be made by the court should the claim be unsuccessful. Adverse costs are not related to the application for IR (assuming it is dealt with without the need for a hearing). They are only applicable in the event of the case being unsuccessful.
Question 13: What if no additional claimants join the judicial review claim?
Answer: If there are no additional claimants, the case will proceed as planned with just the current 'lead' claimant. An application for IR will be made and if successful only that individual will benefit from the IR. It also means that in the event that the claim is unsuccessful, an adverse costs order could be made against that individual.
Question 14: Will the number of claimants have any impact on the chance of success of the application?
Answer: The number of claimants is unlikely to influence the outcome of the judicial review claim.
Question 15: What is the likely amount of any adverse costs awarded against the claimant?
Answer: We cannot quantify any such amount at this stage. However, we are in discussions with RPC about an estimated potential liability based on their experience of similar cases. Once we have this information it will be shared with potential claimants, so that members can make an informed decision as to whether they wish to become a claimant. Members will not have to make a final decision until this information has been provided.
Question 16: Why were these adverse costs not accounted for in the initial fundraising?
Answer: The original fund raising was to obtain sufficient monies required to engage RPC and counsel and initiate the case as quickly as possible without undue delay. Provision has been made to include potential adverse costs that may arise from the permission stage of proceedings. However, funds to cover any adverse costs arising from a loss at the second stage (the substantive hearing) are yet to be raised.
Question 17: Why are further funds not being raised at this time?
Answer: LCL has raised sufficient funds to proceed with the case, as explained above. We are not currently in a position to accurately calculate the amount of any further funds needed to make adequate provision for any adverse costs order which may be made in the event the claim is unsuccessful. We will be communicating further on this issue in the near future once the necessary calculations have been carried out.
We would like to express our gratitude to the individual who has volunteered to be the 'lead' claimant for the benefit of all LC victims. It is not appropriate for him to shoulder the entire financial burden of any adverse costs order given that he is pursuing this claim on behalf of all LC victims.