There is the issue of costs coming up on the on the 24th/25th March?
Cartel customers face £30k court fees
Alan O'Sullivan, This is Money
15 March 2010 Reader comments (1) |Chat
Customers of claims company Cartel Client Review could find themselves further in debt to the tune of £30,000 after it has emerged its legal firm botched their court cases.
Court costs: courts fees can cost between £20-30,000 if a case is unsuccessful.
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The firm working almost exclusively on Cartel's 'debt-free' cases, Consumer Credit Litigation Solicitors, was shut down by the Solicitors Regulation Authority last week due to concerns over 'suspected dishonesty'. It has now emerged CCLS took four cases to a Manchester High Court before Christmas as part of 10 test cases chosen by a Judge Waksman to decide the circumstances in which debts could be deemed 'unenforceable'.
CCLS failed to win the cases for its clients and had costs awarded against them.
However, the solicitors did not have insurance in place to cover it in the event of a failed court case, according to a source at Manchester Civil Justice Center, which has details of all upcoming cases.
This means the indebted individuals who originally hoped Cartel would free them of their debts could now be slapped with further court fees of up to £30,000 each.
This comes despite Cartel customers being led to believe their initial fees were the only costs they would pay in the event of an unsuccessful claim.
Further cases are being held in Manchester presided over by Judge Waksman on March 24 and 25 to decide whether these costs should be borne by the individuals involved or paid for by CCLS. A judgment is expected shortly after Easter.
The SRA says between 50-70,000 people could have paid at least Cartel's £495 minimum fee, with many paying more. The firm promised to free clients of their debts for large fees. The SRA said it found files which just seemed to have been piled into boxes at the CCLS' offices.
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And what has been going on at Cartel Client Review?
Cartel founder Carl Wright paid himself £790,000 in the year to September 30, 2008 from his company Cartel Group Holdings (CGH), of which Cartel Client Review is a subsidiary.
CGH also earned £2.2m from its subsidiaries throughout the year, but Mr Wright declined to disclose how much of these expenses were paid directly by Cartel Client Review.
A This is Money investigation has also found Mr Wright took out a £300,000 loan in August last year, secured against the future success of hundreds of client cases. He said this was for the 'expansion of the business' when asked by us in January.
However, this deal values each claim at only £500, little more than the money paid by some clients to have their case reviewed.
At the same time, Mr Wright took out a 'debenture' on the company, which makes him a priority creditor over any other creditor should the company go bust. This would make it difficult for Cartel to secure loans from other sources, as any other creditor would only be paid after Mr Wright was paid funds owed to him.
Marian Owen, editor of Business Opportunity Watch, a subscription service for entrepreneurs, said: 'Why did he feel it was necessary to suddenly do that? If a company did go bust, debentures like this could be set aside if the liquidator thought a person was trying to get an unfair advantage over other creditors by using insider information.'