Silence is not a Strategy by Tanya Barrett

Manolete Through the Lens - Silence is not a Strategy

It is not unusual to see Defendants attempt to avoid liability by simply failing to engage. Whether through silence or delaying tactics these efforts are often designed to stall proceedings or avoid accountability. Here is a recent case study where such tactics were deployed against Manolete and ultimately failed.

In summary:

• An upfront payment was made to the Liquidator for the assignment.
• The claim was issued and proceeded to judgment despite the Defendant’s tactics.
• Immediate Cost Coverage: all legal costs were paid by Manolete as they were incurred
• The Liquidator and the estate were protected from risk by Manolete's complete indemnity.

Background
This matter involved a company that previously had operated as an organiser of exhibitions and events before it entered into Creditors' Voluntary Liquidation. The sole director had made unauthorised personal payments and withdrawals totalling over £393,000, including funds used in relation to the purchase of a holiday home in Florida.

Brief Details of the Claim
A Part 7 claim was brought for:

• £393,000, being the balance of the overdrawn Director’s Loan Account (DLA).
• In the alternative, damages for breach of statutory duties under sections 171, 172, 174 and 175 of the Companies Act 2006.

Evasion Tactics
Despite early correspondence, the director failed to engage meaningfully at any stage:

• A Letter Before Action was issued and acknowledged, but no substantive response was received.
• Draft proceedings were sent via email and post. The posted letter was returned with a handwritten note stating that he was refusing to accept delivery.
• Part 7 proceedings were issued. The director failed to file an Acknowledgment of Service or Defence, although he did send a lengthy email disputing the validity of the assignment and the claim, but confirmed receipt.

Outcome: Judgment in Default
An application for Judgment in Default was made which was listed for hearing. At the hearing the court was satisfied the Defendant had been properly served and granted Manolete:

• Full claim amount: £393,000
• 8% statutory interest
• Legal costs summarily assessed

Reflections on the Case
This case is a reminder that silence and evasion by a Defendant is not a deterrent to pursuing a claim. The Defendant believed that avoiding formal engagement would somehow halt the process. Manolete ensured that it did not and a full judgment followed.

Key Takeaways

• Precision and persistence in procedure are essential, particularly where service or communication is disputed.
• The 'Manolete Effect' cannot be halted by evasion tactics.

Tanya Barrett
Associate Director (London)