Owner closing business to avoid paying me

[rogerswendy]

Hello

 

I am taking an Estate Agent/Builder to court because he owes me approx £2.5K. I am told that he has opened and closed a number of businesses and is likely to to close the business that owes me money to avoid paying me. This person committed a criminal act in order to get this business and has already been investigated by Trading Standards. TS decided not to take action against him for cost reasons. I am wondering if I can take out a personal claim against the owner of this business if he does decide to close the business that owes me money. What do you think

thanks for taking the time to read this. Any advice you can give me would be welcome.

[renegadeimp]

You can take a claim out against him. If he owns a business or owns his own home, or has assets such as cars, then IF you win a judgement, you can get bailiffs to go in and force him to pay up.

 

If he has noa ssets however, then you would be wasting money.

[rogerswendy]

Thanks very much for this and for replying so quickly. Yes, he does have a number of assets to that is good to know!

[fletch70]

Does it make a difference if it's a limited company rather than a sole trader or partnership?

[rogerswendy]

This chap has a limited company at the moment but if he closes it he does not have the limited liability that the company currently provides him with.

[fletch70]

But would your claim be against him or his company. I suspect it would be against the company.

[rogerswendy]

It was he (the owner/director of the company) who broke the law, not the company. He asked me to give him the keys to the empty property for the purpose of calling in various tradesmen to give me a quote. Instead he called in a team of workers and demolished the inside of the property before he had given me a quote or agreed the detail of the job. I was only told that he had started the job when he texted me to ask me to approve the estimate. He had already demolished the inside of the property but that time and I was left with little choice (for reasons I wont go in to here) but to continue with the job. I can prove all this as I have ample email and text evidence. For this reason I wonder if I can claim against him, rather than his company, if need be?

[Conniff]

I've moved you to the Debt subforums:- Legal Issues

[steampowered]

Generally speaking, you can only claim against the company you contracted with. To claim against the individual you would need to show:

 

- Frau;d

- That use company was a sham, with no legitimate purpose but to conceal the true facts;

- That the contract was really with the individual not the company (e.g. if he did not tell you there was a company involved until after a contract was formed); or

- A breach of insolvency legislation. You cannot legally close a business without paying creditors and simply remove the money. That would be treated as an unlawful dividend and a breach of duty by the director, and the money could be recovered through the courts.

 

It is certainly doable if you meet these criteria, but it is a little more complicated than simply bringing a basic claim against the individual because if his Defence says your contract was with the company you will need a proper justification for why you are claiming against him.

[BankFodder]

What you are trying to do is to "pierce the corporate veil".

This means that you are trying to go beyond the Ltd status of the company in order to attack the individuals behind it.

 

It is a tricky thing to do - and the judges are not at all keen.

 

However, if you can show personal wrongdoing then you stand a chance.

I'm afraid that it is not an area that I am familiar with. Google "piercing the corporate veil" and you will come up with lots of info, I am sure.

 

Please do keep us up to date on this as it is an interesting area, which I don't think we have much on, on this forum

[rogerswendy]

Hello

Thanks for this reply to my question. I heard from the court today. It seems they tried to serve the notice of my small claim on the Estate Agent/Builder but the notice was returned with "not known at the address given". I have been down to the office today and find that it is business as usual, lights on, the same name above the door, the same Facebook page, the same telephone numbers etc. I telephoned the court and they tell me that I can make a request for a judgement. However, I was warned that it might be a problem if the defendant stated that he had not received the letter. Any suggestions what I could do in this circumstance? I have taken a video of the outside of the shop and then panned the camera down to a copy of today's paper, but is that enough? I have this person's home address, and the address of his other business. Could I send a copy of the letter I received to either or both those addresses?

thanks

Wendy

[steampowered]

Process server?

[rogerswendy]

Is a process server somebody I would have to engage to serve the claim or is it somebody I could ask the court to appoint? Can you advise?

[renegadeimp]

How would it be a problem? He would need to prove that the business wasnt there to get a set aside.

[rogerswendy]

Thanks, that sounds like very reasonable.

[steampowered]

How would it be a problem? He would need to prove that the business wasnt there to get a set aside.

 

Although the claim form has been technically served if the right address was used, the court has discretion to set aside default judgment where the Defendant has a real prospect of successfully defending the claim. Given the implications of default judgment I think a court would expect Claimant to show he has done everything he can do to bring the claim to the Defendant's attention, if there is any doubt I think a set aside would be granted. Here the court has told the Claimant that the claim form was returned, I think this is not enough.

 

Is a process server somebody I would have to engage to serve the claim or is it somebody I could ask the court to appoint? Can you advise?

 

A process server is an independent person who you pay to serve legal proceedings for you. You will find loads if you search on google. They are designed for exactly this kind of situation. It is very common for people to adopt the old head-in-the-sand strategy and refuse/ignore all legal documents, so you use a process server to make it much more difficult for the Defendant to contest service at a later date. It is not expensive and you can try to claim the costs back from the Defendant (you would probably need to show he has been trying to avoid service to get it in small claims track).

 

Alternatively, you can serve it yourself. Either first class post or personal service (i.e. hand it over to the office yourself). You should keep evidence of this (e.g. recorded delivery receipt and/or photograph showing you atttended the premises) and need to file a Certificate of Service with the court (see Civil Procedure Rule 16.7).

[rogerswendy]

Hello All

I have taken your advice and done everything I can to ensure that I have taken every reasonable step to bring the claim to the Defendant's notice. The steps I have taken include providing evidence to the court that the address the claim was returned from (marked "not known at the address given") is the registered office. For this purpose I have gathered video evidence that the shop is open. In addition I have sent the Director a text on his personal mobile notifying him that the claim had been served. Sent a copy of the claim form, defendant’s notes and attachments to all 4 company email addresses (including the Director's personal email address).

Left a discrete message on the company’s Facebook page, marked for the Director's attention, notifying him that some important mail had been emailed to his office email addresses.

Sent a copy of the claim form, defendant’s notes and attachments to the Director's home (with proof of postage)

Sent a copy of the claim form, defendant’s notes and attachments to the Director's second business (with proof of postage)

PHEW! My next question is this: I am now putting the Request for Judgement form together. When I submitted my claim I did not add any of the costs of engaging a very good surveyor to put together a report for the court because I was told I had to first request that the Judge allow it to be presented in the court case. Now I am wondering if I could ask (in the covering letter) whether I could claim half the cost of the surveyor from the defendant. Does anybody have any thoughts on that please? Do you think the court would be willing for me to ask for that at this stage?

thanks

Wendy

[rogerswendy]

By the way, about the certificate of service, is it sufficient that I outline the actions I have taken in a cover letter to the court (accompanying the request for judgement) rather that typing up a formal document for the purpose? What do you think?

Thanks

Wendy

[steampowered]

You have brought the claim to the Defendant's attention, but he still does not have a copy of the claim form thus impossible for him to defend. I think you should put a copy of the claim form through the shop's letter-box or go in and physically hand it to one of the staff.

 

If you are going for default judgment, you do not need an expert report thus no need for a surveyor. You do need the court's permission to use an expert ni small claims track but this comes later, when you get to the directions questionnaire which comes after he serves a defence.

 

For the certificate of service you need to use form N215. You can attach a short witness statement explaining the steps you took to serve the form to this if you wish.

[rogerswendy]

Many thanks for this Steam powered. I will do as you suggest and keep you posted.

Wendy

[rogerswendy]

Hello

Still on the case trying to recover my money from this Estate Agent/ builder. He has not responded to my small claim so I have submitted a Request for Judgement with a plan for him to pay me back over 4 (and a bit) installments. Just wondered, if the court rules in my favour, what would happen if he ignores this ruling? What effect might a CCJ have on his business? I am wondering if the possible penalty will persuade him to pay up?

thanks

Wendy

[steampowered]

If you took the claim out against him personally, it will be registered and affect his ability to get credit if not paid within 30 days. You could also send bailiffs round if not paid.

[rogerswendy]

No, unfortunately it is against his firm. He is pretty much a one man band. Will it affect his ability to access credit etc?

thanks

Wendy

[steampowered]

Assuming we are dealing with a company, you can send bailiffs round to the company's office or place of work or go for a third party debt order against its bank account. Of course this all depends on identifying company assets - if the company does not have any assets you are stuck. If debt is above £750 you could have the company wound-up but this is pointless if the company does not have assets. A CCJ against the company won't affect his ability to get credit personally.

 

If you do not get any joy from the claim against the company, you could consider a new claim against him personally if you think you have a good reason why a court would "pierce the veil" (e.g. using a company to commit fraud) as described in previous posts in this topic.

[rogerswendy]

Thank you very much for this information. If I were to take a claim against him personally, would I be able to do that through the small claims court? Also, as he has an SIA licence (for a security firm) would this impact on his licence do you think? I am inclined to think he may take the court judgement more seriously if it threatened to compromise that licence in some way

Many thanks

Wendy