3. Additional Claims and Changing Parties Flashcards
Counterclaims by a defendant against a claimant
Counterclaims are a form of additional claim and these are dealt with in CPR 20.
There are a number of different types of additional claims. The only one that we are interested in here is the ‘classic’ counterclaim by a defendant against a claimant (CPR 20.4). Other types of claim under CPR 20 (also known as ‘additional claims’ or ‘other additional claims’) are detailed in a separate element, as are a number of procedural points relevant to additional claims.
A counterclaim is a separate claim to the main claim and is normally made at the same time as the defendant files its defence. If a counterclaim is made after the defence has been filed, permission of the court is needed (CPR 20.4(2)).
Counterclaims by a defendant against a claimant
At its simplest, a defendant’s counterclaim against the claimant is pursued in the same proceedings as the main claim and is, accordingly, dealt with under the same claim number as the main (substantive) claim by the claimant against the defendant.
The defendant could, of course, commence an entirely separate claim, but it is usually more convenient for the defendant to combine its counterclaim with the main claim. These types of counterclaim are very common.
Counterclaims by a defendant against a claimant
A counterclaim, like any other claim, needs to be based on case analysis which confirms that a viable cause of action exists. The defendant in their counterclaim will need to be able to establish duty, breach, causation and loss against the claimant.
A counterclaim may or may not have anything to do with the claimant’s substantive cause of action against the defendant. However, the parties must be suing/being sued in the same capacities as in the main claim.
If the court does not think the counterclaim should be heard with the main claim, it can order that the counterclaim be struck out or heard separately (CPR 3.1(2)(e)).
Form of counterclaim
The counterclaim, if made at the same time as the defence, should form a single document with the defence (15 PD 3). It normally follows on directly from the defence (within the same document) and is clearly labelled as a counterclaim. This document is then entitled ‘Defence and Counterclaim’.
The counterclaim is essentially a particulars of claim by another name. It must therefore comply with the rules on particulars of claim. As mentioned above, it must contain the four necessary elements of a claim: duty; breach; causation; and loss. It should also comply with CPR 16.4 (and the corresponding provisions in 16 PD).
A court fee will be payable to the court on filing a counterclaim.
Set off
The facts that give rise to a counterclaim may also amount to a defence in the main claim (ie the defence of set off).
The defence of set off may be a partial or complete defence to the main claim. It has the effect of ‘extinguishing’ any claim up to the same amount against the defendant. Please see the illustration below.
There are only certain circumstances where the defendant can actually ‘set off’ its judgment in the counterclaim against the claimant’s judgment in its substantive claim. The most important ones are as follows.
Mutual debts: If the claimant and defendant each owe the other money, one debt can be set off against the other debt. Note that this applies to debts, not damages.
S.53(1) Sale of Goods Act 1979: Where the seller sues for the price of goods sold and delivered, the buyer can set off a claim for breach of implied terms as to quality and fitness for purpose.
Defective services: Where a claim is made for the price of services, the defendant can set off a claim for damages for poor services.
Equitable set-off: This has been developed by the courts when it considers that there is such a close connection between the two transactions that it would be manifestly unjust to allow enforcement of one claim without taking into account the cross-claim.
Form of set off
The defence of set-off should be set out in the defence part of the Defence and Counterclaim, (as opposed to the counterclaim part) (CPR 16.6). It is usually pleaded as in the following example:
“Further or in the alternative, if the Defendant is held liable to the Claimant, the Defendant will seek to set off against the Claimant’s claim as much of the sum awarded by way of counterclaim in these proceedings as to reduce it or extinguish it altogether.”
The above paragraph will usually be the last paragraph of the defendant’s defence, before the start of the counterclaim.
Defence to counterclaim
The claimant needs to respond to any counterclaim against them, just as any other claim against a party needs a response. A defendant’s counterclaim can be either admitted or defended by a claimant.
ØTime for serving defence to counterclaim
There is no requirement for a claimant to acknowledge service of the counterclaim using an acknowledgment of service (CPR 20.4(3)). A claimant’s defence to a counterclaim must, however, be filed and served in accordance with the usual rules for defences (CPR 15). This means, the defence to a counterclaim must be served within 14 days after service of the counterclaim.
If a claimant wishing to defend a counterclaim fails to serve a defence within the requisite time limit, a judgment in default might be entered by the defendant (CPR 12.3(2)(b)).
ØForm of defence to counterclaim
A defence to a counterclaim is very similar to a ‘normal’ defence. Its contents must therefore comply with the usual rules in relation to defences (CPR 16.5 and 16 PD).
Reply
A reply is an optional statement of case served by the claimant if they wish to allege facts in answer to the defence which were not included in the claim (CPR 15.8).
ØWhen to file a reply
Replies are not filed in every case but, if there is one, it should be filed with the directions questionnaire. (The directions questionnaire is a case management document which the court directs should be filed after a claim is defended. Parties are given at least 14 days’ notice of the deadline for doing this).
This time limit is different in some specialist proceedings (eg Commercial Court claims) so it is necessary to check the relevant rules and court guides if dealing with a specialist claim.
A reply must be verified by a statement of truth (CPR 22.1(1)(a)).
As this statement of case is usually being prepared at the same time as the claimant is considering their response to any counterclaim that has been made, the ‘Reply and Defence to Counterclaim’ normally form one document with the defence to counterclaim following on from the reply (15 PD 3.2).
Ø Last statement of case
The reply should be the last statement of case in a claim confirms that permission of the court is needed to file any statement of case after the reply (CPR 15.9).
Amendments
This topic primarily focuses on new causes of action, parties and additional claims and how existing proceedings might be affected. However, it is important to remember that amendments relate to any type of amendments to statements of case, and not just amendments which relate to new causes of action, counterclaims and additional claims.
Changes in the parties’ knowledge of a case (eg upon disclosure or the exchange of witness statements) or even simple drafting errors sometimes necessitate the amendment of a statement of case.
For example, if a factual mistake has been made in the originally drafted and served particulars of claim, this can be corrected by the claimant serving an amended particulars of claim with the mistake corrected.
Adding parties and additional claims
In the ‘Counterclaims and other statements of case’ element within the topic of ‘Statements of case’, you were introduced to ‘classic’ counterclaims (CPR 20.4), which are one form of additional claim.
In this current topic we will additionally cover the other different types of counterclaims and additional claims (CPR 20), as well as how to add, substitute and remove parties to a claim (CPR 19).
Both CPR 19 and CPR Part 20 can deal with the possible addition of a party to a claim. You will see as you work through this topic that as a general rule of thumb, Part 20 is used when a defendant is adding a party to an existing claim. Part 19 is used when a claimant is adding a party to an existing claim.
Description of the additional claim
Description of the additional claim
A counterclaim by a defendant against the claimant. (CPR 20.2(1)(a) and 20.4)
A counterclaim by a defendant against the claimant and some other person. (CPR 20.2(1)(a) and 20.5)
An additional claim by a defendant against any person (already a party to the proceedings) claiming a contribution or an indemnity. (CPR 20.2(1)(b) and 20.6)
An additional claim by a defendant against any person (already a party to the proceedings) claiming some remedy other than a contribution or an indemnity. (CPR 20.2(1)(b) and 20.7)
An additional claim by a defendant against any person (not already a party to the proceedings) claiming a contribution or an indemnity or some other remedy. (CPR 20.2(1)(b) and 20.7)
An additional claim being made by a party which has itself been joined to the main proceedings pursuant to CPR 20. (CPR 20.2(1)(b) and 20.7)
Additional claims: an overview
Important note:
Ø A claim by the original claimant cannot fall into any of the categories summarised in the above table, even if the claimant is adding a further claim to its existing claim. Therefore, a claim by the original claimant is not an additional claim.
Ø It is also worth noting that the terms ‘contribution’ and ‘indemnity’ are also defined in the CPR, as follows:
Contribution ‘A right of someone to recover from a third person all or part of the amount which he himself is liable to pay.’
Indemnity ‘A right of someone to recover from a third person the whole amount which he himself is liable to pay.’
Counterclaims against a person other than the claimant
Sometimes the defendant will have a counterclaim against both the claimant and another person at the same time. This type of counterclaim (CPR 20.5) is much more unusual in practice than the classic counterclaim previously mentioned (CPR 20.4).
A counterclaim against a person other than a claimant is a counterclaim by the defendant against:
The claimant AND Some other person
Counterclaims against a person other than a claimant
The defendant’s own cause of action, as particularised in the counterclaim, must be against the claimant and some other party who is, for example, jointly liable with the claimant to the defendant.
If this other party is not already a party to the ‘main’ court action between the claimant and the defendant, the other party will need to be joined into the main claim as a third party so that the defendant’s counterclaim can proceed.
Remember that if the claimant was not involved in the claim which the defendant is bringing, this would essentially be a claim by the defendant against some other party who is not involved in the current proceedings (ie the main claim between the claimant and the defendant). In those circumstances, it would not be a ‘counterclaim’ (because it would not be a claim by the defendant against the claimant) and it would have nothing to do with the main cause of action (since the claimant would not be involved).
Counterclaims against a person other than a claimant
For this type of counterclaim the defendant’s counterclaim must be against the claimant and the third party together.
There must be some connection between the claimant and third party in respect of the counterclaim. (If there was not, the defendant would simply issue an entirely separate action against the third party.)
As with other counterclaims, it is still the case that the defendant’s counterclaim might arise from a completely different set of facts from the main/substantive claim.
Contribution or indemnity
The remaining types of additional claim relate to the defendant claiming a contribution or indemnity from someone else to cover any liability it might be ordered in the main claim that they, the defendant, owe to the claimant.
The words ‘contribution’ and ‘indemnity’ have differing meanings in different legal contexts and there is detailed case law in this regard (the specifics of which are beyond the scope of this module). For our purposes, the CPR glossary definitions as mentioned above will apply. For the purposes of the CPR an indemnity is equivalent to a 100% contribution.
A right to a contribution might arise in tort, contract or under the Civil Liability (Contribution) Act 1978 – for instance, in a road-traffic accident case, that Act might give a driver being sued by an injured pedestrian the right to seek a contribution from another driver who also contributed to the accident.
A right to an indemnity will often arise from a contract (with one party contracting to indemnify another) or some other statutory provision: for example, a defendant being sued for professional negligence might have a contractual right to claim an indemnity from his insurers.
Claims for a contribution or indemnity from an existing party
A crucial hallmark of both claims for contribution and indemnity is that the party pursuing the claim for contribution / indemnity is seeking to recover something which it is itself obliged to pay to someone else.
A defendant who has acknowledged service of a claim or who has served a defence may make an additional claim for contribution or indemnity against an existing party (most likely a co-defendant) (CPR 20.6) by filing a contribution notice with the court and serving that notice on the other party.
There would need to be a legal basis on which the defendant could base this claim, so case analysis will again be essential, as when considering any other claim.
For this type of additional claim to arise, there must be other existing parties already involved in the action ie it must be more than a simple ‘one claimant against one defendant’ claim by this time.
These types of additional claims often involve the defendant pointing the finger of blame at a third party whom, for some reason, the claimant cannot or does not wish to sue directly, exposing the defendant to full blame.
Claims for a contribution or indemnity from a third party
As mentioned above, one of the more common CPR 20.7 claims is a claim for a contribution or indemnity from someone not already an existing party, ie a third party. The same principles will apply as apply to a defendant claiming a contribution or indemnity from an existing party (pursuant to CPR 20.6). So again, there would need to be a legal basis on which the defendant could base this claim against the third party and case analysis will be essential as when considering any other claim.
Other additional claims
The issues in this type of additional claim are purely between the defendant and the third party (ie do not involve the claimant at all), but many of these issues will depend upon what happens in the main claim between the claimant and the defendant.
Permission or no permission?
It is necessary to ascertain if the court’s permission is required for your client to pursue a counterclaim or an additional claim.
Classic counterclaim (CPR 20.4) No Permission? If filed at the same time as/with the defence. Permission? If filed at any other time.
Counterclaims against a person other than the claimant (CPR 20.5). Permission is always required.
Claimants for a contribution or indemnity from an existing part (CPR 20.6). No Permission? If filed and served at the same time as/with the defence (or – if the additional claim is made against a party added to the main/substantive claim at a later date – within 28 days after that party files its defence). Permission? If filed at any other time.
Other additional claims (CPR 20.7). No Permission? If the additional claim is issued before or at the same time as the defence is filed. Permission? If filed at any other time.
Permission is applied for using the ‘normal’ interim application procedure. The Application Notice will be accompanied by a draft order and evidence in support which will include details of the stage the main claim has reached, details of the additional claim, a summary of the relevant facts, explanation of any delay and the name and address of any proposed party (20 PD 2).
Structure and form of additional claims
Classic counterclaims
A counterclaim by a defendant against the claimant (and not against anyone else) will usually take the form of a ‘particulars of counterclaim’ (CPR 20.4(1)). The defence and the counterclaim should normally form one single document, with the counterclaim following on from the defence (20 PD 6.1).
As the defence and counterclaim form one document, they are filed and served together (in accordance with the time limits specified in relation to defences).
Counterclaim against a person other than a claimant
A claim for a contribution or an indemnity from another party (ie someone who is already a party to the main / substantive proceedings) is made by serving the appropriate notice. There is no set form for making a CPR 20.6 claim (ie no equivalent to the N1 claim form), but an example format is provided on the Court Service website (see PF22).
If done in circumstances when the court’s permission is not required, the notice is filed and served with the defence.
If the court’s permission is required, the court will give directions as to when the notice should be served.
Other additional claims
Other claims are started by issuing an N211 claim form which is similar to the ‘normal’ claim form (ie the N1), other than it is buff coloured and contains more room for the details of all the parties to be inserted.
If such an additional claim is made without the court’s permission, the claim form should be served on the person against whom it is made within 14 days of it being issued (CPR 20.8).
If the court’s permission is required, the court will give directions as to when the notice should be served.
All additional claims
A party upon whom an additional claim is served becomes a party to the proceedings if he was not already a party (CPR 20.10). If an additional claim is served on someone who is not already a party to the proceedings, it must be accompanied by (CPR 20.12(1)):
- a response pack; and
- a copy of every statement of case and any other documents that the court directs.
A copy of the additional claim form must also be served on every existing party (CPR 20.12(2)).