FLK1 Disputes Flashcards
What is alternative dispute resolution?
Litigation is considered the last resort and sanctions may be imposed on those clients who refuse to consider other options. Alternative dispute resolution (ADR) is a collective term which refers to any means of settling disputes outside of the traditional litigation process.
Negotiation, in which the parties and the lawyers discuss possible solutions whether in formal meetings or by correspondence, is a form of ADR which is used routinely throughout the litigation process.
In practice, the vast majority of claims are settled and negotiation is usually a key element in achieving this outcome.
Although there are a number of other different types of ADR the two most important are arbitration and mediation.
ADR, such as mediation, is a means of resolving disputes with the assistance of an independent third party who may help the parties to reach their own solution but who cannot impose a solution.
It is voluntary and confidential or ‘without prejudice’. This means that if it fails and court proceedings are taken, the court will not be made aware of the ADR until after the judge has dealt with the issues of liability and the award of damages. The parties choose the process and can withdraw at any time before a settlement is reached. If either party does not like the proposed solution, they do not have to accept it.
Arbitration is also voluntary, but only in the sense that the parties either voluntarily entered into an arbitration agreement or agreed to decide the matter in this way once a dispute arose. If the former, the effect is that one party may force the other to arbitrate against their will provided the original contractual agreement to arbitrate is valid.
In contrast, litigation is not voluntary (save that the claimant chooses to issue a claim in the
first place). Once the case is started, usually, neither party can withdraw without paying the
opponent’s costs. If the parties are unable to negotiate a settlement or otherwise resolve their
differences through ADR, the court will impose its own solution which may be enforced by the
party who obtains judgment.
When should ADR not be considered?
When a dispute arises, a solicitor should discuss with the client the availability of ADR. If the client is willing (or has already agreed) to participate in ADR, it should be used unless:
a) it is obviously inappropriate, for example because an injunction is required;
b) the other party is unlikely to co- operate in the process; or
c) the other party cannot be trusted to comply with an award.
Although actively promoted by the courts, there is no point in proceeding with ADR if it will inevitably fail. Nevertheless, a party who decides not to engage in ADR must be made aware that penalties may well be imposed for this failure, unless they can justify their stance to the court.
The litigation process is subject to rules, one of which specifically requires the parties to consider the use of alternative dispute procedures, if appropriate.
As a consequence, parties who choose to litigate may well receive judicial encouragement (and sometimes a degree of pressure) to attempt ADR although they cannot be ordered by a court to pursue this route.
The importance the court attaches to proposals for ADR is evidenced by the provisions of the Civil Procedure Rules 1998 which dictate how a case is litigated; and a failure to respond to a reasonable proposal to attempt settlement by ADR may have a significant impact on any subsequent order for costs.
What do the parties need to complete during the course of the court proceedings with regards to ADR?
During the course of the court proceedings the parties complete what is known as a directions questionnaire and, to ensure that clients are fully aware of the importance and implications of ADR, solicitors are required to confirm they have explained to their client:
(a) the need to try to settle;
(b) the options available; and
(c) the possibility of costs sanctions if they refuse to attempt to settle.
The message is clear – clients should always consider ADR and engage in the process unless there are convincing reasons not to do so; and even then, they should be prepared to justify their decision before a sceptical judge if necessary.
What is an essential feature of ADR?
The independence of the third party is an essential feature of ADR, as is the fact that (with the exception of arbitration) they cannot impose a solution.
Because of this, the parties are more likely to be open in their discussions and less likely to be aggressive towards each other.
As a consequence, the prospects of reaching a settlement are higher. A further advantage is that the independent third party will not only be trained to act as a neutral, but they also should have the appropriate industry or commercial knowledge required to understand the dispute.
This may allow them to come up with ideas the parties may not have thought of and which solve the problem without either side losing face.
What is the procedure for mediation?
In a typical mediation, the parties will agree an independent third person or body who will act as a ‘go- between’ known as a mediator.
The mediator will be sent written statements from both parties and, thereafter, will discuss the case with them on a ‘without prejudice’ basis.
Because any future judge in the proceedings will not be made aware of the discussions, the parties should feel free to engage in frank exchanges with both the mediator and each other.
These conversations will also assist the mediator in identifying the real areas of disagreement and the points that are most important to the respective parties, with the aim being to move the parties towards constructive solutions to the problem.
In many cases, the mediator and the parties will meet in the same building. This enables any issues to be dealt with quickly because, if necessary, the parties can meet face to face to resolve their differences. There are, however, other forms of mediation in which the dispute is dealt with by correspondence, telephone conversations or online with the use of technology.
What are the advantages of mediation?
Apart from the fact that an independent third party may find it easier to lead the parties to a settlement, mediation has other attractions.
- Cost and speed
Mediation can be significantly cheaper than both arbitration and litigation, primarily because the process is quicker.
A skilled neutral can often help the parties to resolve their dispute in a relatively short period of time.
Nevertheless, clients should not be given the impression that mediation comes at ‘bargain basement’ prices.
The parties have to pay the third party for their services and, in addition, lawyers will usually be instructed.
However, if the mediation is successful, there will be a significant reduction in the amount of time the lawyers would have spent in preparing and presenting the case and this, in itself, will save costs.
- Flexibility
Mediation is also very flexible, because the parties may choose the procedure to be followed.
There are no legal requirements and thus no need to comply with any statutes, rules of court or even case law.
- Privacy
Mediation takes place in private so that clients, customers and the public are unaware of the circumstances or the outcome of the dispute. This may be important where the party’s reputation is an issue or where there may be possible future claims from other litigants.
- Preserving a business relationship
Mediation is also ideal for cases where the parties to the dispute will need to continue to deal with each other. The fact they have chosen a non- confrontational method of solving their problem makes it much easier for them to continue their relationship, since the solution is theirs and has not been imposed upon them.
- Commercial reality
A third party unconnected with the dispute may be able to assist the parties to arrive at realistic and workable terms of settlement. This could include arrangements that a court could not order, such as discounts on future orders. In contrast, litigation with its final court judgment will be decisive but the process carries inherent risk and uncertainty.
- Ability to withdraw
If the client is unhappy with the progress, mediation allows them to withdraw at any time.
What are the disadvantages of mediation?
- Inappropriate for the matter
There are occasions where mediation is simply not appropriate, such as where the client needs a ruling on a point of law or if an injunction is required.
Matters involving allegations of fraud or other commercially disreputable conduct are also generally unsuitable for mediation.
However, although in most other cases the advantages of mediation will usually outweigh the disadvantages, these must also be considered.
- Disclosure
Because there are no formal procedures for disclosure of documents and evidence, there is a risk the parties may resolve the dispute without knowing all the facts.
This may lead to a decision that is subsequently found to be unjust. However, many business clients take the view that a quick decision, even if it is not completely accurate, is better than wasting time and money on a protracted dispute in order to get a (potentially) more correct outcome.
- Privacy
If the client requires public vindication – perhaps to ensure that any damage to their reputation is repaired – privacy is a disadvantage as they will lose the opportunity to demonstrate they were not at fault.
- Ability to withdraw
As a general principle, no one can be forced to engage in mediation against their wishes.
Furthermore, even if the parties have started to resolve a dispute by mediation, they may withdraw at any stage before a solution has been agreed despite objections from the other party. It will then
usually be necessary to resort to litigation.
As with privacy, the ability to withdraw is both an advantage and a disadvantage. A party who decides to walk away from the mediation process will be pleased they can do so, whereas the other party is likely to be unhappy at the time and money expended without a resolution.
Is a mediation outcome enforceable?
Even if an agreement is reached, it is not automatically binding as the client cannot enforce this like a court judgment.
However, if the parties do agree to terms suggested as a result of mediation, they have entered into a contract. If one of the parties does not carry out that contract, they may be sued for the breach.
How does arbitration arise?
The parties may be contractually bound to use arbitration and many business contracts contain a clause requiring the parties to submit to arbitration in the event of a dispute. It is common in certain industries such as construction and shipping, for example.
In the absence of such a clause, the parties may agree to arbitration once a dispute has arisen and may choose their own arbitrator with the relevant expertise.
What is the procedure for arbitration?
The dispute is referred to an independent arbitrator. The person, professional or trade body may be specified in the original contract; alternatively, the parties may choose their own arbitrator with the relevant experience. An arbitration process will be adopted but this will be less formal than the court procedure.
Once the third party has reached their decision, this is binding on both parties to the dispute.
What are the advantages of arbitration?
Many of the advantages of the parties agreeing to arbitration rather than litigation are similar to those of mediation. The main ones are:
(a) arbitration is likely to be quicker than going to court and may be cheaper although there will be costs implications in retaining the services of an arbitrator, who may be a highly qualified and experienced expert in their field;
(b) the procedures are less formal;
(c) the decision is made by an impartial third party with expertise in the matter;
(d) arbitration takes place in private thus retaining confidentiality – particularly important if the parties wish to preserve a business relationship or to ensure that customers or competitors are unaware of the dispute or the outcome;
(e) the solutions reached are often more practical than those a court has the power to order; and
(f) the decision is binding on the parties.
The binding nature of the outcome is the most important distinction with mediation.
What are the disadvantages of arbitration?
The main disadvantages are:
(a) the dispute may not receive the depth of investigation it would receive in the courts (depending upon the procedures adopted); and
(b) certain remedies such as injunctions are not available.
Furthermore, arbitration is unlikely to be a cheap alternative as the arbitration expert or panel will need to be paid and parties often want to be represented by lawyers, particularly if the amounts in dispute are significant.
One disadvantage mirrors an advantage: the decision is binding with very limited rights of appeal.
Is the outcome if arbitration enforceable?
Once a decision has been reached, the winning party to an arbitration can apply to the High Court under s 66 of the Arbitration Act 1996 for permission to enforce the arbitration award as if it were a court judgment.
What is the main advantage of litigation?
If the parties either cannot or will not engage in ADR, they will be left with no alternative but to proceed by way of litigation through the courts. Once they have done so, neither party can withdraw without paying the opponent’s costs. If the parties are unable to negotiate a settlement, the court will impose its own solution that may be enforced by the successful party.
Indeed, this is the main advantage of litigation as it breaks the deadlock between the parties, albeit at a cost.
Most civil disputes are between individuals and/ or companies and they may arise in many different contexts. The most common types are contractual disputes, perhaps involving the sale of unsatisfactory goods, and negligence claims in relation to, for example, road traffic accidents, injuries at work or inadequate professional advice.
What is the aim of the CPR?
Civil litigation is governed by the Civil Procedure Rules 1998 (CPR), which dictate the procedure that must be adopted when pursuing a claim through the courts.
The aim of the CPR is to provide a more ‘user- friendly’ system of resolving such disputes. This has become increasingly important due to the increase in litigants in person (those individuals who represent themselves) who are unlikely to have the degree of legal knowledge of a lawyer.
To ensure that the process proceeds at a reasonable pace, with the consequent reduction in cost, the courts have control over the conduct of the matter. This includes making appropriate directions, setting strict timetables and ensuring the parties comply with them, backed up by a system of sanctions that the court can impose.
Give an overview of the 5 stages of a civil claim
Stage 1: pre- commencement of proceedings
There are a number of steps to take before issuing proceedings and the starting point is the client – what are their objectives, both legal and commercial? Having established this, evidence must be gathered to confirm the viability of the claim and the prospects of success. Costs will be at the forefront of the client’s mind and should be addressed; and serious consideration must be given to ADR.
Pre- action protocols govern the steps the parties should take before commencing a court case. The parties must establish what issues are in dispute, share information that is available to them concerning these matters and endeavour to resolve the issues. Failure to follow a protocol step or its spirit, without good reason, will usually incur a sanction such as a reduction in the costs recovered by that party if litigation proves successful.
Immediately after collecting sufficient evidence to substantiate a realistic claim, the potential claimant should send to the proposed defendant a letter detailing the claim; and the defendant is expected to send a letter in response.
Only after these steps have been completed should litigation be started.
Stage 2: commencement of the claim
Proceedings are commenced by a claim form, which must be served on the defendant together with full details of the claim, called particulars. If the defendant wishes to contest the claim, they are required to file at the court and serve on the claimant a defence. At this point, the court will allocate the matter to a track, with higher value cases being given greater attention and resources.
Stage 3: interim matters
Once on a track, the court carefully manages a case to ensure the matter progresses towards the trial date. Directions are given to the parties listing all the steps they must take to prepare for trial and a strict timetable is imposed as to when each step must be taken. This will include the parties disclosing any relevant documents that are in their possession and that impact upon the case (whether they assist or not). Evidence the parties wish to rely on, such as witness statements and experts’ reports, must then be exchanged; and costs will also be scrutinised.
In addition, the parties may apply to the court for any specific orders that might be required, perhaps to compel an opponent who has neglected to take a required step in accordance with the timetable to do so.
Stage 4: trial
The judge will hear the evidence at the trial and make a decision as to the outcome, resolving all issues of liability and quantum (damages). As to costs, the judge will decide if any party should pay the other’s costs and, if so, how much.
Stage 5: post- trial
A party who is unhappy with the judgment may decide to appeal all or part of the trial judge’s decision.
If the damages and/ or costs are not paid as required, the party will have to apply to the court to enforce the judgment.
Most commonly, this involves instructing court officials to attend the debtor’s premises and to take their belongings to be sold at public auction. The proceeds are then paid to the appropriate party.
What needs to be considered before a civil claim can be brought?
(a) Can the claim be brought at all?
(b) Who are the parties?
(c) Does the defendant have the means to pay a judgment?
(d) What are the merits of the case?
(e) What steps must be taken before proceedings are issued?
In terms of limitation what needs to be considered before a civil claim can be brought?
Before issuing proceedings, the solicitor must ensure that the client is not precluded from making a claim at all.
The Limitation Act (LA) 1980 prescribes strict time limits with which the claimant must comply. If these are missed, unless there are exceptional circumstances, that is the end of the matter as the claim will be ‘statute barred’.
The rationale behind imposing these deadlines is to prevent a potential defendant remaining under constant threat of litigation for events that happened many years before; and to recognise that the passage of time results in evidence being lost and witness accounts becoming less reliable.
From the outset, a solicitor must ascertain when the limitation period began and when it will expire.
These dates should be diarised to remind the lawyer that time is marching on, particularly if the expiration of the relevant period is drawing near. It is vital that proceedings are issued before the limitation period expires, otherwise the solicitor is likely to face a claim in negligence.
What are the consequences if a party misses a limitation period?
If a party has missed the limitation period, the defendant will have a technical defence to the claim. This means that, if the court agrees the claim is statute barred, the claimant will not succeed in the litigation.
What are the limitation periods for contract or tort?
For claims founded on contract or tort, the basic rule is that the claimant has six years from the date of the cause of action to commence their proceedings and time runs from this point.
However, when calculating the date on which the limitation period expires, usually the day on which the cause of action accrues is excluded from the calculation as is apparent from the examples below.
In contract, the cause of action accrues as soon as the breach of contract occurs. This will be a question of fact to be determined by the court.
In tort, the cause of action accrues when the tort is committed. In negligence, this will be when damage occurs as a result of a breach of duty.
What is the limitation period for personal injury matters?
The limitation period for personal injury matters is three years. This runs from the date of the cause of action or the date of knowledge of the person injured, except for children where the time limit does not start to run until their 18th birthday.
What is the limitation period for latent damage?
Furthermore, in a claim based on negligence where the damage is latent (hidden) at the date when the cause of action accrued, s 14A of the LA 1980 provides that the limitation period expires either:
a) six years from the date of the cause of action; or
b) three years from the date of knowledge of the damage, whichever is later; but
c) no later than 15 years after the date of the negligent act or omission.
What needs to be remembered with limitation periods and contracts?
In a contract case, it is very important to check whether a different limitation period is specified in the contract.
This is because any such provision is usually shorter than the statutory limitation periods referred to above, and the claim should therefore be commenced within the contractually specified period.
Can a limitation period be extended?
The general rule is that actions commenced outside the limitation period where the defendant has raised the issue as a defence will not be allowed to proceed, although extensions may be available in exceptional circumstances.
What needs to be remembered when figuring out who the defendant is when bringing a claim?
All potential defendants should be identified at this early stage to avoid incurring costs later on, for example, to amend court documents. Often this will be straightforward as usually there will only be one potential defendant, but there are occasions when it is less so.
If an employee commits a tort when acting in the course of their employment, both the
employee and the employer should be sued, as the latter is vicariously liable for the
former.
A consumer may have a cause of action against both the retailer and the manufacturer of a defective product.
There are special safeguards in place for children (a person under 18) and protected parties (a person who is incapable of managing their own affairs because of a mental disorder as defined by the Mental Capacity Act 2005).
Because these individuals are considered in law to be unable to make the decisions required of a party to court proceedings, they must have a litigation friend to act on their behalf. For children, this will usually be a parent or guardian.
A litigation friend must be able to fairly and competently conduct proceedings on behalf of the party and have no adverse interest.
A further safeguard is provided to these parties by the requirement that any settlement reached involving a child or a protected party will only be valid if approved by the court.
How should a defendant be sued?
Prospective defendants must be sued in their correct capacity and it is important to check this as a person may have entered into a contract in one of a number of different ways. Equally, a tort may have been committed or suffered by different legal entities.
The solicitor should confirm whether the defendant is:
a) an individual;
b) a sole trader;
c) a partnership;
d) a limited liability partnership (LLP); or
e) a limited company.
Is the defendant worth suing?
Suing a defendant who is on the verge of either bankruptcy or liquidation is a pointless exercise as enforcement of any judgment obtained would be impossible. If the client has any concerns about the prospective defendant’s ability to pay, further enquiries should be made.
These could include:
a) a search at Companies House to ascertain information about the financial position of a company;
b) a bankruptcy search of an individual;
c) instructing an inquiry agent (although the costs of this must be considered); and
d) the use of various internet search engines to see if there is any relevant information there.
If the outcome of these investigations is that the defendant is struggling financially, although making a claim is possible, it would not be viable.
What is a specified claim?
A claim is specified if it is for a fixed amount of money; usually, it is a claim for a debt owed. Because the amount is known already (perhaps from an invoice), the figure owed can be calculated by mere mathematics. Examples would include the price of goods sold and commission due under express contractual terms.
What is an unspecified claim?
If the court will have to conduct an investigation to determine the amount of money payable, the claim is an unspecified one even if the claimant puts forward some figures. Thus, damages claims are usually unspecified.
e.g. Loss of profits where this is not certain
What happens if there is a mixture and some parts of the claim are specified and some are unspecified?
In circumstances where the claim is a mixture of specified and unspecified amounts, the entire claim will be treated as unspecified.
How does a solicitor determine a cause of action?
A cause of action is the legal basis of a claim, such as breach of contract or negligence. To determine whether a client has a cause of action and the likelihood of success, it is essential at the outset that a solicitor analyses all the available evidence, whether given orally by the client and any witnesses or contained in documentation.
Contract dispute
A party enters into an agreement with another, one or more of the terms are breached and this causes the other party to suffer a loss.
Breach of express terms, for example:
* non- payment of monies due (debt claim); or
* failure to deliver a consignment on time.
Breach of statutory implied terms such as:
the goods supplied were not of satisfactory quality, contrary to s 14(2) Sale of Goods Act 1979.
Purpose of the damages:
To put the claimant in the position they would have been in had the contract been properly performed.
Tortious (negligent) dispute
A duty of care is owed by one party to another, the duty is breached and this causes the other party to suffer loss (financial and/ or otherwise).
Negligence including:
* a road traffic collision where a motorist breaches their duty of care to another road user by failing to brake in time; or
* medical negligence where a doctor misdiagnoses a patient.
Negligent mis- statement such as where:
a financial adviser gives inadequate investment advice to a client.
Purpose of the damages:
To put the claimant in the position they would have been in had the negligent act not occurred.
Tortious (nuisance) dispute
Where use or enjoyment of land is unreasonably interfered with by another landowner.
Examples are:
* excessive noise from a neighbour;
* tree roots causing damage to an adjoining property;
water flooding from another’s property.
Purpose of the damages:
To put the claimant in the position they would have been in had the nuisance not occurred.
Misrepresentation
An untrue or misleading statement of fact by Party A that induces Party B to enter into a contract with Party A and that causes loss to Party B.
An example is:
- a car salesman who induces a customer to purchase a vehicle by falsely representing that it has not been involved in any road traffic collisions when this is untrue.
Purpose of the damages:
To put the claimant back to the position they were in before the contract was entered into.
How does a solicitor create a case study of a breach of contract?
Although it is important to identify the relevant cause of action, it is equally vital to understand how this impacts upon the progression of the matter.
The legal elements form the basis of the statements of case (the documents that outline the parties’ positions) and the substantive law provides the structure upon which the evidence will be draped.
Take a claim for breach of contract as an example.
(a) Existence of contract
First, it must be established that there was a contract although, in practice, this will rarely be disputed.
(b) Terms relied on (express and/ or implied)
Next, the lawyer should establish the terms. If the dispute concerns what express terms were agreed in a contract, a written agreement will assist. Where the contract was made orally, the situation is more complex as often the only evidence available is from the parties who made the contract and who are now locked in dispute. In addition, where a contract is entered into in the course of business, there may be implied terms that are imposed by statute. These apply to both written and oral contracts.
(c) Breach of those terms
Thereafter, the solicitor must consider how the client will prove there was a breach that resulted in recoverable losses. What does the client say the opponent did (or failed to do) that amounts to a breach of the contract? This is a question of fact, and the solicitor must assess the evidence the client has to prove the claim.
(d) Consequences
Once a breach has been established, the factual consequences of that breach should be identified.
(e) Damage and loss
Finally, each item of loss claimed will have to be proved.
Although an initial case analysis would be conducted, as the case develops, the solicitor should continually review which issues remain in dispute and how these are to be proved.
What is a pre-action procedure?
Before issuing court proceedings, the parties are required to comply with various pre- action rules, known as pre- action protocols.
These are annexed to the CPR and, over time, a number have been developed, for example in relation to:
a) debt claims
b) personal injury
c) construction and engineering
d) professional negligence.
What is the Practice Direction on Pre- Action Conduct and Protocols (PDPAC)?
In addition, if no relevant protocol exists, there is a Practice Direction on Pre- Action Conduct and Protocols (PDPAC), which contains general guidance to be followed in such cases. Many of the provisions mirror those of the protocols so that, effectively, all civil cases are dealt with in a similar way.
The PDPAC and the protocols are important elements of civil litigation, and solicitors must ensure they understand the content and are able to apply the provisions effectively.
What is the purpose of the Practice Direction on Pre- Action Conduct and Protocols (PDPAC)?
The objective of the PDPAC and the protocols is to initiate and increase pre- action contact between the parties. In particular, to encourage better and earlier exchange of information so the parties are in a position where they may be able to settle cases fairly and early without litigation, and to enable proceedings to run to the court’s timetable and efficiently if litigation does become necessary.
These aims are consistent with the overriding objective of the CPR.
What are the core principles of the PDPAC and the protocols?
There are elements of the PDPAC and the protocols that are common to all.
(1) Litigation should be a last resort. The parties should consider whether negotiation or some other form of alternative dispute resolution (ADR) might enable them to settle their dispute without commencing proceedings.
(2) The parties should exchange sufficient information in order to:
(a) understand each other’s position;
(b) make decisions about how to proceed;
(c) try to settle the issues without proceedings;
(d) consider a form of ADR to assist with settlement;
(e) support the efficient management of those proceedings; and
(f) reduce the costs of resolving the dispute.
(3) The steps taken should usually include:
(a) the claimant writing to the defendant with concise details of the claim;
(b) the defendant responding within a reasonable time; and
(c) the parties disclosing key documents relevant to the issues in dispute.
(4) Only reasonable and proportionate steps should be taken by the parties to identify, narrow and resolve the legal, factual and/ or expert issues.
(5) Where a dispute has not been resolved after the parties have followed the Practice Direction, they should review their respective positions to see if proceedings can be avoided and at least seek to narrow the issues in dispute before the claimant issues proceedings.
(6) If a dispute proceeds to litigation, the court will expect the parties to have complied with the Practice Direction. A party may be sanctioned for failing to do so. Early disclosure of the substance of the claim and supporting evidence, particularly relevant documents, will assist the parties in making an informed decision on the merits of the case at a preliminary stage. This, combined with the active encouragement of ADR, should lead to a greater number of settlements without the need for court proceedings. The volume of pre- action work means that, even if proceedings prove unavoidable, the costs of the litigation should be reduced. It is for these reasons that there are penalties for non- compliance. Although the purpose and principles of the PDPAC and the protocols are similar, in recognition of the differences between types of claims, a variety of protocols are specifically tailored to their individual requirements. Any claims that fall outside the protocols must proceed in accordance with the PDPAC.
How does the PDPAC ensure that no civil claim escapes the requirement to follow the pre-action procedures?
The Practice Direction is clear that, before commencing proceedings, the parties must exchange information so they can understand the issues, consider ADR and attempt to settle the dispute without litigation.
The importance of ADR is recognised specifically in paragraph 8 of the PDPAC, which instructs the parties to give consideration to it. If proceedings occur, both the claimant and defendant will normally be required by the court to provide evidence that they reflected upon alternative means of resolving the dispute. The courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if this provision is not followed then the court must have regard to such conduct when determining costs.
The PDPAC expressly states that only reasonable and proportionate steps should be taken by the parties to try and resolve the matter and costs incurred should also be proportionate. This will include the claimant writing to the defendant with concise details of the claim, including a summary of the facts, the sum due and how the amount is calculated. Thereafter, the defendant must provide a response within a reasonable time – 14 days in a straightforward claim and three months maximum in a complex case – to include confirmation of whether all or part of the claim is accepted, and if not the reasons why, together with details of any counterclaim. Key documents relevant to the issues in dispute should also be disclosed.
What are the consequences for not following the terms of the PDPAC?
A failure to comply with both the Practice Direction and the substance of any approved protocol that applies to the dispute may lead to sanctions later on. Where non- compliance has led to proceedings that might otherwise not have been commenced, or has led to unnecessary costs being incurred, the court may impose penalties. These can include an order:
(a) that the party at fault pays some or all of their opponent’s costs (perhaps on the penalty, indemnity basis);
(b) depriving a claimant who is at fault of some or all of the interest they may subsequently be awarded on any damages recovered; or
(c) requiring a defendant who is at fault to pay interest on any damages awarded to the claimant at a rate of up to 10% per annum above the base rate.
The CPR also include a provision that a person who knowingly makes a false statement in a pre- action protocol letter or other document prepared in anticipation of legal proceedings may be subject to proceedings for contempt of court.
What core steps must be followed in the PDPAC?
Claimant sends letter before claim including:
a) concise details of the claim
b) a summary of the facts
c) what C wants from D (if money, how this is calculated)
d) key documents
Defendant sends a letter of response:
a) within a reasonable time
b) must confirm if the claim is accepted
c) if not, explain the reasons
d) indicate if there is a counterclaim
e) include key documents
Claimant replies and the parties consider:
a) negotiation
b) ADR
c) appointment of expert(s)
Stocktake: before issuing proceedings the parties should:
a) review their positions
b) consider whether proceedings can be avoided
c) if not, narrow the issues in dispute
Sanctions for non-compliance:
a) party at fault pays some or all of opponent’s costs (perhaps on an indemnity basis)
b) C is deprived of some or all of the interest on damages
c) D is required to pay a higher rate of interest on damages
What is the Pre-Action Protocol for Debt Claims?
The vast majority of claims issued each year are for straightforward debt matters such as unpaid invoices for goods sold and delivered or for services provided, for example, construction works.
The claim may also arise because money has been borrowed and not repaid. Because the amounts involved are often relatively small, firms handling large numbers of debt claims will often utilise specialist case management software to ensure the monies can be recovered efficiently and economically.
Debt claims are covered by the Pre- Action Protocol for Debt Claims (PPDC).
a) This applies to any business including sole traders and public bodies (the creditor) that brings a claim against a debtor who is either an individual or a sole trader (the debtor).
b) It does not apply to business to business debts (unless the debtor is a sole trader). Because the PPDC is specifically aimed at debt claims, the focus is slightly different. The potential claimant must give full information on the debt owed, including an up- to- date statement of account with details of interest and charges, and how the debt can be paid.
The standard Reply Form, Information Sheet and Financial Statement forms that are annexed
to the protocol should also be included. This is to encourage settlement, perhaps by way of agreeing repayment plans.
Recognising that most debtors will be individuals, they are given a little longer to respond – 30 days – and court proceedings cannot be issued before this deadline. The creditor should also allow extra time if necessary for the debtor to seek legal or debt advice or in order to pay.
What is the Pre- Action Protocol for Professional Negligence?
At the other end of the spectrum, the Pre- Action Protocol for Professional Negligence applies when a claimant wishes to make a claim against most types of professionals as a result of alleged negligence.
As with all protocols, the primary aim is to set out a code of good practice, achieved by listing the steps the parties should follow before commencing court proceedings. Although many are the same as for the Practice Direction on Pre- Action Conduct, there are some differences.
The first additional requirement is that a party is encouraged to notify the professional in writing of any intended claim. This letter (the Preliminary Notice) contains information about the claimant, a brief outline of the claimant’s grievance against the professional and, if possible, a general indication of the financial value of the potential claim.
The professional should be instructed to inform their insurers immediately and to acknowledge the notice in writing within 21 days of receipt.
Next, the claimant should write a Letter of Claim giving full details of the issues and attaching key documents. The professional must acknowledge this in writing within 21 days of receipt.
Thereafter, they have three months to investigate and to respond.
The Letter of Response sets out whether the professional admits the allegations and if not why not, with accompanying documents. Alternatively, or as well as the Letter of Response, a Letter of Settlement may be sent if the professional intends to make proposals for settlement of all or part of
the claim.
If the Letter of Response denies the claim in its entirety and there is no Letter of Settlement, it is open to the claimant to start court proceedings. In any other circumstance, the professional and the claimant should instigate negotiations with the aim of resolving the claim within six months of the date of the Letter of Acknowledgment. If matters cannot be resolved, there must be a final Stocktake in which the parties review their positions, or at least narrow down the issues, before court action is taken.
As with all the protocols and the Practice Direction, the parties must consider ADR.
How is it decided which country’s laws apply?
The starting point for a claim with international implications is to decide which country’s laws apply.
The United Kingdom’s exit from the European Union (EU) means that, for proceedings issued in an English court after 1 January 2021, the old jurisdictional rules of the EU are no longer valid. The effect is that each country will apply its own domestic rules to cases where the UK is involved.
Choice of law in contract
All contracts should have a clearly worded clause stating what law will govern the contract to avoid uncertainty in the event of a dispute arising. Usually, the parties will be able to nominate the governing law of their choice although there are some exceptions, for example, the Unfair Contract Terms Act 1977 contains requirements that apply to the contract regardless of any agreement to the contrary. If agreement has been reached in advance as to which country’s laws apply to the claim, the case will usually proceed on that basis.
If there is no choice of law clause in the contract:
In situations where no governing law has been chosen, various default provisions come into play.
At this point, the parties no longer have a choice over the law that is applicable to their dispute.
If the court that is determining the dispute is located outside England and Wales, the procedure will vary significantly. Thus, there is a real possibility of becoming embroiled in contentious litigation even before the proceedings have properly commenced because establishing the applicable law would need to be decided as a preliminary matter.
In such situations, it is even more important to agree a governing law clause, if at all possible.
Where can proceedings be commenced if a solicitor is instructed by a client who is based abroad?
If a solicitor is instructed by a client who is based abroad, or is instructed to take proceedings against a party based abroad, the question of jurisdiction must always be considered – in which country’s courts can proceedings be commenced? Because of Brexit, cases within the EU are no longer treated differently and jurisdiction will now be determined in the same way as for those which fall outside the EU rules. In England and Wales, this will mean considering the 2005 Hague Convention (where it applies) and the common law. Although not ideal, the current position does at least have the benefit of consistency.
2005 Hague convention:
The UK is now subject to the 2005 Hague Convention in its own right. The EU Member States are also party to the Hague Convention, along with a few other countries.
The Convention requires the court designated in an exclusive jurisdiction agreement (where a clause limits a dispute to the courts of one jurisdiction) to hear the case and for any proceedings in another contracting State to be dismissed. However, the impact of the Hague Convention is limited as it only covers situations where an exclusive jurisdiction clause exists.
Hague convention does not apply:
If the Hague Convention does not apply, the common law rules will come into play. In this instance, jurisdiction may be established by serving the defendant within the jurisdiction, thus in England and Wales.
However, the court may still decline jurisdiction in certain circumstances and, if the defendant is outside the jurisdiction, permission of the court must be obtained.
Even if a claimant does not have any real connection with this country, they may issue proceedings here and it is possible (albeit unlikely) that a claim could reach trial and be enforced without the claimant ever setting foot in England or Wales.
Service within England and Wales -
The courts of England and Wales can hear any proceedings if the claim form was served on the defendant while they were present in these countries (no matter how briefly). This is because service of court papers itself establishes the English courts’ jurisdiction over the defendant. The rationale behind this principle is that the mere presence of the defendant indicates their acceptance of the nation’s jurisdiction.
The defendant could, however, object to the proceedings continuing in England and Wales on the ground that the English courts are not the most appropriate for resolving the dispute.
Service outside England and Wales -
If proceedings are issued and a defendant cannot be served with the documents in England and Wales, the permission of the court must be obtained to serve them outside the jurisdiction. This may be granted in the following circumstances.
(a) The contract was made or breached in England or Wales, is governed by English law, or contains an agreement conferring jurisdiction on the English courts.
(b) In a tort claim, the act causing the damage was committed in England and Wales, or the loss was sustained here.
Although the rules in relation to jurisdiction are complex, they give reassurance to those who interact and trade internationally that the courts are willing and able to step in and provide a remedy to wrongs committed anywhere in the world.
Scotland and Northern Ireland -
A reference to ‘English law’ covers England and Wales but not Scotland or Northern Ireland, which have their own legal systems. Although many of the laws made by the UK Parliament at Westminster do apply or are very similar, this is not always the case. As above, whenever possible, the parties should agree which law is applicable and the jurisdiction to avoid incurring costs in establishing this and in enforcing any judgment.
Which court is the most appropriate for a certain type of case?
In some cases, the client will be able to select the court in which to start proceedings. However, the most important element in determining venue is likely to be the amount in dispute.
a) If the value of the claim is £100,000 or less, it must be started in the County Court.
b) If the value of the case exceeds £100,000, it may be commenced in the High Court. Note that different rules apply to proceedings that include a claim for damages in respect of personal injuries; these cannot be started in the High Court unless the value of the claim is £50,000 or more.
As a consequence, for claims in excess of £100,000 (or £50,000, as appropriate), the claimant has a choice of which court to use. To assist lawyers in determining the appropriate venue, further guidance is provided by the CPR.
These indicate that, in addition to the value of the claim, the High Court may also be used if there are other factors present, in particular:
a) the claim is complex either in relation to the facts, the legal issues, the remedy or the procedures; or
b) the outcome is important to the public in general.
Even if a claim is issued in the High Court, the judge may decide to transfer the matter to the County Court at a later date.
What kind of claims does the county court deal with?
The County Court generally deals with the more straightforward cases including claims for money only where the value of the claim is £100,000 or less (unless damages are sought for personal injuries).
These may consist of:
a) specified claims, namely those for a specific sum of money (debt claims); or
b) unspecified claims for damages, where the amount in dispute will need to be quantified
by the court.
There is a single national County Court, served by named County Court hearing centres across the country. There are also two County Court Business Centres, which issue most civil claims and retain those that are undefended. Because details of what should be included in the claim form are set out in Part 7 of the CPR, they are sometimes referred to as Part 7 claims.
Where and how to issue proceedings depends upon the type of claim:
a) All money- only claims made on paper, including both specified and unspecified claims, must be sent to the Civil National Business Centre in Northampton (this replaces the County Court Money Claims Centre (CCMCC) in Salford and the County Court Business Centre (CCBC) in Northampton). If a hearing is required, usually in contested cases, the matter will be transferred to the County Court hearing centre local to the defendant.
b) The Civil National Business Centre at Northampton deals with online claims for specified sums of money (debt claims) for amounts of up to £100,000. These are made via the website Money Claim Online (MCOL), which allows individuals, businesses and solicitors to issue proceedings, check the status of the claim, request judgment and enforce it over the internet.
This court also provides a service for bulk users, such as utility providers and credit card companies, that file large volumes of claims for money.
c) For all other County Court claims, the claimant can usually issue proceedings in any of the County Court hearing centres situated throughout England and Wales. In such circumstances most claimants will choose to start proceedings in the court closest to their home or business.
What kind of claims does the high court deal with?
The High Court is made up of three divisions:
(a) The King’s Bench Division, which has a workload consisting primarily of actions in contract and tort.
(b) The Chancery Division, which is used for disputes arising over land, trusts, contentious inheritance matters, partnership claims and company law.
(c) The Family Division, where family disputes such as defended divorces and adoption are resolved.
The Central Office of the High Court is located inside the Royal Courts of Justice in London, but a party may also issue their action in a number of regional District Registries such as in Birmingham and Leeds. Most claimants will choose to start proceedings in the court closest to their home or business.
Business and the property courts :
The Business and Property Courts is an umbrella term for a number of courts that decide specialist business and other civil disputes, both national and international. Amongst these are:
a) the Commercial Court, which deals with complex cases arising out of business disputes over contracts, insurance, banking and finance; and
b) the Technology and Construction Court, which handles claims about buildings, engineering and surveying.
Cases that are suitable for hearing in these courts would be outside the norm of most civil disputes and, as a consequence, the (different) procedure is not covered.
How are proceedings issued?
Proceedings commence when the claimant or their solicitor send a claim form and other relevant documents to the appropriate court to be ‘issued’; effectively, a file is opened.
The documents are:
a) a claim form (form N1);
b) particulars of claim (which may be drafted as part of the claim form or sent separately); and
c) documents that are required to be annexed by the CPR such as a copy of any contract.
Many claims are now dealt with online but, if not, sufficient copies for the defendant and any other parties should be sent, together with a covering letter indicating whether the court or the claimant is to serve proceedings and the court issue fee.
Once the claim form has been issued by the court, proceedings are formally started. Although this rarely arises in practice, a claim is ‘brought’ for limitation purposes (and so time stops running) when the claim form is received in the court office.
What is the claim form?
The claim form is the point of departure for the litigation and blank forms are accessible on the Ministry of Justice website. It summarises the most important aspects of the claim, both the substantive law that underpins the case and the facts in support. The content should be sufficiently detailed so that the court and the other parties understand the claimant’s case without being a full recitation of all the evidence in support. The key word is ‘summary’.
Who can make an application to add, substitute or remove a party from a claim form?
An existing party or a person who wants to become a party BUT no-one may be added or substituted as a claimant unless their consent in writing has been filed at court.
Is permission required to add, substitute or remove a party from a claim form?
Yes unless the claim form has not been served.
On what grounds can can party be added, substituted or removed from a claim form if the application was made within the limitation period?
It is desirable:
a) to add a new party to resolve matters in dispute; or
b) to remove a party; or
c) to substitute a party where the existing party’s interest or liability has passed to them.
On what grounds can can party be added, substituted or removed from a claim form if the application was made outside the limitation period?
A party may only be added or substituted if the limitation period was current when proceedings were started AND
a) the original party was named by mistake; or
b) the original party has died/is subject to a bankruptcy order and their interest or liability has passed to the new party; or
c) the claim cannot properly be carried on without the new party.
Although the law is clear, it is important to consider how this applies to the facts of each particular case.
How is a claim form served?
Once a claim form has been issued, it must be served on the other parties within four months. This means that it must be sent to or delivered to the defendant so they are aware of the existence of the proceedings. The rules governing service of documents are set out in CPR Part 6.
A claim form can only be served on a firm of solicitors if the defendant has nominated them in writing and this should not be presumed just because that firm has represented the defendant in pre- action negotiations. Once nominated, all court documents are served on the lawyers unless (exceptionally) the document must be served personally on the party, such as an injunction.
What are the permitted methods of service of a claim form?
This is also used to determine the relevant step for deemed service of the claim form.
(a) personal service;
(b) first class post or document exchange;
(c) leaving the claim form at a specified place;
(d) fax or other means of electronic communication; or
(e) any other method authorised by the court.
Personal service:
The arrangements for personal service will depend upon the status of the defendant.
a) A claim form is served personally on an individual by simply handing it to them. If they refuse to accept the document, it may be left with or near them.
b) If the defendant is a partnership, the form may be left either with a partner or with a person who has the control or management of the partnership at its principal place of business.
c) Personal service is effected on a company by leaving the documents with a person who holds a senior position such as a director, treasurer, secretary or chief executive.
First class post or document exchange:
Only first class post will satisfy the requirements of the CPR for service. Alternatively, where a document exchange (DX) number is provided on the letter heading, this may be used unless otherwise stated. DX is a system used by many solicitors and other professionals to transport documents between their offices, arriving the next business day.
Leaving the form at a specified place:
Here, the claim form is delivered by hand to the address specified by the CPR.
By fax or other electronic means:
Service by fax is waning in popularity as email and similar electronic methods become the normal means of communication. In both instances, the party to be served (or their solicitor) must have expressly confirmed they are willing to accept service in this manner.
i) An email address or fax number on the party’s headed paper is not enough to satisfy this requirement.
ii) In contrast, the inclusion of a fax number on the solicitor’s letterhead is sufficient indication they are willing to accept service by fax.
iii) The same does not apply for an email address, where the solicitor must specifically confirm this method may be used for service.
A party or their nominated solicitors may include in a statement of case a fax number, email address or electronic identification for the purpose of service of proceedings.
Service by an alternative method:
In addition to the specific ways listed in Part 6 above, the court can authorise other methods or places of service, such as sending a text message or leaving a voicemail on a particular telephone number.
The court may also sanction service by a contractually agreed method, or on the agent of an overseas principal. Furthermore, where the party to be served is a limited company, s 1139(1) of the Companies Act 2006 provides that documents may be left at or posted to the registered office of the company.
Where no solicitor is authorised to accept service and the defendant has not given an address for service, the default position of the most common defendants to serve the claim form?
a) Individual
Usual or last known residence.
b) Individual being sued in the name of a business (sole trader)
Usual or last known residence of the individual; or principal or last known place of business.
c) Individual being sued in the name of a partnership
Usual or last known residence of the individual; or principal or last known place of business of the partnership.
d) Limited liability partnership
Principal office of the partnership; or any place of business of the partnership within the jurisdiction that has a real connection with the claim.
e) Company registered in England and Wales
Principal office of the company; or any place of business of the company within the jurisdiction that has a real connection with the claim.
Once a claim form has been issued by the court, how long does the claimant have to serve it?
Once a claim form has been issued, the claimant has four calendar months in which to serve it on the defendant.
It would be unusual for the claimant to wait before serving the document because this imposes an unnecessary deadline upon the solicitor. However, if the limitation period is running out, the claimant may be forced to issue proceedings and, if difficulties arise in relation to tracing the defendant, this four month window gives a little more breathing space.
Whether or not the time limit is met depends upon the method of service used; so the period ends on the date:
a) personal service was effected or delivery was made at the relevant place; or
b) the letter was posted or left with the DX provider; or
c) the transmission of the fax was completed or the email was sent.
Once this has been done, the claimant has completed the ‘step required’ for service of the claim form.
When is there deemed service of a claim form?
The potential problem with any method of service, apart from personal service, is that the claimant cannot know precisely when the defendant receives the claim form and this information is essential in order to determine the next stage in the proceedings. To avoid disputes about whether and when documents are served, the CPR adopt the concept of deemed service. This means that a document will be taken to have arrived on a given day regardless of whether it actually did.
However, there are different rules for the claim form as opposed to all other court documents.
The claim form is deemed to have been served on the second business day after the step required has occurred. Establishing this requires two pieces of information.
a) A ‘business day’ is any day except Saturday, Sunday, a bank holiday, Good Friday or Christmas Day.
b) The ‘step required’ is, for example, putting the claim form in the post.
What is the deemed service of documents other than the claim form?
Personal service, delivering the document to a permitted address, fax and email
If served before 4.30pm on a business day, on that day. If not, on the next business day.
b) First class post or DX
The second day after it was posted provided that day is a business day. If not, on the next business day.
Key difference between deemed service of a claim form and deemed service of any other document:
A key difference is that service by first class post or DX is effected on the second day after the document was posted, in contrast with the claim form where it is the second business day.
This is illogical, not just because it is inconsistent, but because this may fall on a Sunday when there is no postal delivery service. In such cases, the practical effect is that service will ‘roll on’ to the next business day.
When should particulars of claim be served if not included in claim form?
In many cases, such as debt actions, the particulars of claim will be included on the claim form itself. However, for more complex cases, there is unlikely to be sufficient space to detail the legal elements and the facts in support. In such instances, the particulars of claim may be served separately:
a) either at the same time as the claim form; or
b) within 14 days after service of the claim form (but no later than four months after the date of issue of the claim form).
What are the deadlines for service if a claim for is to be served out of jurisdiction of England and Wales?
If a claim form is to be served outside the jurisdiction of England and Wales, the CPR allows extra time for this to occur; instead of four months, the document must be served on the other parties within six months of being issued.
Furthermore, there are special procedures in place which govern how service is effected. With regards to Scotland and Northern Ireland, permission is not required to serve proceedings in these countries but there are special provisions as to the methods of service of the claim form that are acceptable.
These are detailed in CPR Part 6.
In all other cases, including those involving EU Member States, the claimant must obtain permission to serve proceedings out of the jurisdiction. However, there is an exception: the Civil Procedure Rules have been amended to streamline the process so that where a contract contains an English jurisdiction clause, no permission will be needed to serve the claim in these circumstances.
The claim form must be accompanied by a notice setting out the grounds on which the claimant is entitled to serve it outside the jurisdiction together with evidence that England and Wales is the proper forum. Examples of the grounds that may be relied upon are that the breach of contract occurred in England and Wales or the excessive cost or delay of the case being heard in a foreign court. The application must be supported by evidence and is made without notice.
If an order permitting service outside the jurisdiction is made, the time limit for responding to the claim will be extended. Service is usually effected through the judicial authorities of the State in question or the British Consul.
How does the defendant need to respond to a claim?
Quite when the defendant needs to respond depends upon the approach taken by the claimant in drafting their claim.
If the claim form is marked ‘particulars of claim to follow’, the defendant must await service of these. This is logical as it is the particulars of claim that set out the detail of the case and, without this information, the defendant cannot properly draft their response.
Once the defendant has been served with both the claim form and the particulars of claim (whether separately or together), the defendant must react in some way.
To assist, at the same time, the defendant will receive Form N9 – the response pack – which explains how the defendant should respond and the time limits for doing so.
There are three options open to the defendant under the CPR, namely:
(a) to file an admission (Part 14);
(b) to file an acknowledgment of service (Part 10); or
(c) to file a defence (Part 15).
There is a fourth choice, which is to ignore the claim entirely, but this does not mean the litigation goes away as the claimant will be able to apply for judgment in default.
When is it best for a defendant to make an admission?
If a defendant is aware they owe the money, provided they have the means to pay, it is likely to be in their interests to admit the claim as this will bring the matter to an early conclusion and limit their liability for costs.
A defendant who wishes to admit either the whole or part of the claim should complete the appropriate sections of the response pack.
There are two types of admission forms – one for specified (debt) claims and the other for unspecified claims (where damages are sought) and the defendant should ensure they select the correct form.
What is the procedure if a defendant makes an admission of an entire specified claim?
If a defendant admits the whole claim for a specified amount, they must provide details of their income and expenditure and make an offer of payment, either in full or by way of instalments.
Upon receipt of the form, the claimant may then file a request for judgment. If the claimant rejects the defendant’s payment terms, the judge will decide the appropriate rate of payment, usually in the absence of a court hearing.
What is the procedure if a defendant makes an admission of a part of a specified claim?
Alternatively, the defendant may admit only part of a claim for a specified amount. In this instance, the claimant has 14 days in which to consider any offers made and to decide on their next course of action as follows:
(a) to accept the part admission in full satisfaction of the claim and request that judgment be entered by the court for that amount;
(b) to accept the part admission but not the defendant’s proposals for payment in which case the court will decide on their suitability; or
(c) to reject the offer entirely and proceed with their claim as a defended action.
This decision is likely to be based, primarily, on the defendant’s ability to pay.
Alternatively, the defendant may admit only part of a claim for a specified amount. In this instance, the claimant has 14 days in which to consider any offers made and to decide on their next course of action as follows:
(a) to accept the part admission in full satisfaction of the claim and request that judgment be entered by the court for that amount;
(b) to accept the part admission but not the defendant’s proposals for payment in which case the court will decide on their suitability; or
(c) to reject the offer entirely and proceed with their claim as a defended action.
This decision is likely to be based, primarily, on the defendant’s ability to pay.
Where the defendant admits liability for a claim for an unspecified amount and offers a sum of money, the court will serve a notice on the claimant asking whether or not they accept the figure in satisfaction of the claim.
If the offer is accepted, the claimant may enter judgment for the amount offered and, if the defendant has asked for time to pay, the following procedure applies:
The defendant must provide details of their income and expenditure and make an offer of payment, either in full or by way of instalments. Upon receipt of the form, the claimant may then file a request for judgment. If the claimant rejects the defendant’s payment terms, the judge will decide the appropriate rate of payment, usually in the absence of a court hearing.
However, if either the claimant does not accept the offer or the defendant makes no offer, the claimant will enter judgment for damages to be assessed at a disposal hearing.
What is an acknowledgement of service and what is the effect of serving it?
In many cases, the defendant may be sure they want to defend the claim but are not yet in a position to draft a full defence, perhaps because they are still gathering evidence. Filing the acknowledgment of service form buys the defendant time to enable them to do this. The effect is that, instead of having 14 days from service of the particulars of claim to file their defence, they now have 28 days.
When should a defence be filed?
The third viable option for the defendant is to respond to the proceedings by filing a full defence. As stated above, this may either be within the initial 14 day limit from service of the particulars of claim or within 28 days if an acknowledgement of service is filed.
The response pack contains forms that the defendant can use and most litigants in person (parties who are not represented by a lawyer) will take advantage of these.
Alternatively, a separate document may be prepared and this is the approach a solicitor would generally take. The reason is that a well drafted defence would set out more factual detail than could be included on the form.
Once the defence has been filed, a copy must be served on all other parties. The court will be responsible for this unless the defendant’s solicitor has indicated otherwise.
What can the defendant include in their defence?
As part of the defendant’s response, they may wish to pursue their own claim against the claimant and this is known as a counterclaim.
Can the deadline for filing the defence be extended?
On occasion, the defendant may not be able to meet the deadline for filing the defence and so, with agreement from the other parties, this can be extended by a maximum of 28 days. The effect is that the defendant has a total of 56 days from the date of service of the particulars of claim. Any further extension would need the court’s permission.
What is the mechanism in the CPR that prevents a defendant from evading liability by doing nothing?
Once proceedings have been served upon the defendant, it is common for them to take no action at all. To ensure such defendants cannot evade liability for monies owed by simply doing nothing, the CPR include a mechanism whereby the claimant can force the issue and this is known as a judgment in default (of the defence) or a default judgment – the terms are interchangeable. This means that the claimant obtains a judgment without there being any consideration of the facts involved.
What is the procedure for a judgment in default?
The claimant will make an application under CPR Part 12 and this will require them to complete a request for default judgment. To succeed, they must satisfy the court that:
a) the particulars of claim have been served upon the defendant; and
b) the defendant has not filed an acknowledgement of service form or a defence within the
relevant time period.
When may a claimant not obtain judgment in default?
There are limited circumstances where a claimant may not obtain a default judgment, specifically if there is a pending application by the defendant for summary judgment or to have the claimant’s statement of case struck out.
How is the application for a default judgment dealt with?
The application for a default judgment is dealt with in different ways depending upon whether it is a debt claim or not.
When applying for judgment in default for a specified sum, the claimant must:
a) indicate the date payment was due;
b) calculate an up- to- date total for the interest claimed; and
c) state a daily rate at which interest accrues.
This will enable the court to enter judgment for the correct figure on any given day. Once final judgment has been entered, the payment will usually be required within 14 days.
However, if the claim is for an unspecified sum, the court will grant the claimant’s request for default judgment but the case will need to come back before the court to decide the amount of damages payable (a disposal hearing).
How are default judgments set aside?
Having initially ignored the proceedings, if the claimant enters default judgment, the defendant will have no choice but to face them.
If the defendant accepts that the monies are owed, it is best for them to pay the judgment, if at all possible, to avoid increased costs and interest.
If not, the way forward is for the defendant to apply for the judgment to be set aside. There are two grounds under CPR Part 13 upon which the defendant may rely in their application.
Mandatory grounds:
The court is obliged to set aside a default judgment if it was wrongly entered. This would occur where judgment has been entered too early, before the time for filing an acknowledgment of service or a defence (whichever is applicable) expired; or because the claim has already been paid in full.
Discretionary grounds:
The court also has the power to set aside a default judgment in circumstances where the defendant:
a) has a real prospect of successfully defending the claim; or
b) there is some other good reason why the defendant should be allowed to defend the claim.
The first of these grounds is clearly linked to the merits of the defence and indeed, there is little point in the defendant being allowed to re- open proceedings in a case where their prospects of success are limited.
With regard to the second ground, good reasons that may satisfy the test could be that the defendant was ill or away on holiday so they could not respond within the time constraints. Excuses such as pressure of work or the documents being misplaced would not be sufficient.
In addition, the court will also take account of the promptness of the defendant’s application to set aside. It is therefore essential that the defendant issues their application as soon as they become aware of the default judgment, to comply with the overriding objective of ensuring that cases are dealt with expeditiously and fairly.
What procedural requirements are there for setting aside a default judgment?
The application is made by filing an application notice (form N244), which is usually supported by a witness statement outlining the defendant’s submissions.
What orders can an applicant make with regards to an application to set aside default judgment?
(a) the defendant succeeds and the judgment is set aside, allowing them to continue to defend the action;
(b) the claimant wins and the judgment remains in place, so they may proceed to enforcement; or
(c) a conditional order is made, namely, the judgment is set aside on condition the defendant pays monies into court, for example, the amount of the claim. This is the least likely outcome and is used in situations where the court is concerned the defence is being pursued as a delaying tactic where the defendant does not have the money to pay.
What costs order will the court likely make on an application to set aside a default judgment?
Dealing specifically with an application to set aside a default judgment, the costs order made at the conclusion of the hearing will depend upon the outcome as follows:
a) If the application is granted on a mandatory ground, the claimant will have been at fault for entering judgment when they should not have done and, therefore, the claimant is liable to pay the defendant’s costs.
b) Where the defendant establishes the discretionary ground of a good reason for the default, as neither side is at fault, costs are usually in the case.
c) Where the defendant only establishes the discretionary ground of a defence with a real prospect of success at trial, the defendant is at fault in failing (initially) to deal with the proceedings. As a consequence, they normally have to pay the claimant’s costs.
e) If the application fails, the defendant will pay the claimant’s costs of the application.
What is discontinuance?
A claimant may decide not to pursue their claim, even though no settlement has been reached. This may be for a variety of reasons but will usually be because, after further consideration of the evidence, they conclude their prospects of succeeding at trial or of recovering any money from the defendant are so slim that it would be better to cut their losses and discontinue.
Can a claimant discontinue all or part of a claim?
Yes, at any time during the proceedings.
Is permission required to discontinue a claim?
Not usually, but permission must be obtained in certain circumstances such as if the court has granted an interim injunction.
If there is more than one claimant, can a claimant discontinue a claim?
A claimant may not discontinue unless every other party consents in writing or the court gives permission.
If there is more than one defendant can a claimant discontinue a claim?
The claimant may discontinue the claim against all or any of the defendants.
What is the procedure for discontinuing a claim?
The claimant must file and serve a notice of discontinuance on the parties to the proceedings. If consent is required, a copy of this must be attached to the notice.
What is the effect of discontinuing a claim?
The proceedings are brought to an end against the defendant on the date the notice of discontinuance is served upon them. The claimant will be liable for the costs of the proceedings unless the court orders otherwise and it is vital that the solicitor explains this to the client.
Because of the costs implications of discontinuance, a claimant should not issue proceedings lightly and should consider carefully their prospects of success before doing so.
What is a pre-action settlement?
Where a settlement is reached prior to the issue of proceedings, the prospective claimant will not be entitled to recover their legal costs unless this has been agreed.
Once settlement terms have been agreed, they must be clearly and accurately recorded in writing, so that the agreement can be enforced if one of the parties defaults. It may be sufficient for the terms to be recorded in an exchange of correspondence, but more complicated settlements should normally be recorded in a formal settlement agreement.
What formalities should be undertaken if a settlement has been reached after the issue of proceedings?
If a settlement is concluded after proceedings have started, it is preferable for this to be recorded in a court order or judgment.
This is so that enforcement proceedings may be commenced to recover any monies due under the settlement (including costs) should the agreement not be honoured.
What is a consent order and when are they used?
Where none of the parties is a litigant in person, it will often be possible to avoid an application to the court by drawing up a consent order or judgment for sealing by a court officer. Although in theory the court retains the power not to approve the proposed order, in practice, it will only be referred to a judge if it appears to be incorrect or unclear.
The formalities for a consent order are as follows:
(a) the order agreed by the parties must be drawn up in the terms agreed;
(b) it must be expressed as being ‘By Consent’; and
(c) signed by the legal representative acting for each of the parties to whom the order relates.
Where none of the parties is a litigant in person, it will often be possible to avoid an application to the court by drawing up a consent order or judgment for sealing by a court officer. Although in theory the court retains the power not to approve the proposed order, in practice, it will only be referred to a judge if it appears to be incorrect or unclear.
The formalities for a consent order are as follows:
(a) the order agreed by the parties must be drawn up in the terms agreed;
(b) it must be expressed as being ‘By Consent’; and
(c) signed by the legal representative acting for each of the parties to whom the order relates.
What is a Tomlin order?
A Tomlin order stays the claim on agreed terms that are set out either in a schedule to the order or separately. The key to an effective Tomlin order is to appreciate that certain terms must appear in the order itself, while others can be put in the schedule or a separate document that is normally held by the parties’ solicitors.
What terms must appear in a Tomlin order?
‘By consent’
This term records the fact of there being agreement.
b) Stay of proceedings
Confirms the proceedings are ‘paused’.
c) Liberty to apply
This provision allows any party to apply to the court for the stay to be lifted and the court can be asked to enforce the settlement if a party does not perform its part of the agreement. The important effect is that new court proceedings do not have to be commenced to enforce the terms.
d) Payment of costs or detailed assessment of costs
Where one party is to pay another’s costs and/ or the parties want the amount of those costs to be assessed (checked and calculated) by the court, that direction must go in the order itself.
e) Signed by the parties’ solicitors
A formal requirement signifying consent to the agreement.
What terms can be put in the schedule or a separate document of a Tomlin order?
Terms that the parties wish to keep confidential or that the court does not have the power to order must be set out in a schedule to the Tomlin order or in a separate document.
Often this will be for the payment of a sum of money so that other businesses or customers cannot see how much the matter was settled for.
Any other agreed terms should also be recorded, for example that in future dealings one party is to give the other a discount.
How can a court’s jurisdiction be disputed?
If a defendant wishes to dispute the jurisdiction of the court, this must be stated on the acknowledgement of service. The defendant then has 14 days after filing the acknowledgment of service form to make a challenge, failing which they will be treated as having submitted to the jurisdiction. The application to the court to dispute the court’s jurisdiction must be supported by evidence as to why England and Wales is not the proper forum for the case.
a) If the court grants the application and finds that the claim should not have been brought in England and Wales, service of the claim form will usually be set aside. As a consequence the proceedings come to an end.
b) If the court refuses the defendant’s application, the original acknowledgement of service ceases to have effect and the defendant must file a further acknowledgement within 14 days. The proceedings will then continue in the usual way.
What are statements of case?
Statements of case are the formal documents in which the parties concisely set out their respective cases.
They are served between the parties and filed at court.
The statements of case are central to the litigation as they ensure that each party knows their opponent’s case at an early stage, providing them with the opportunity to assess how strong it is, to determine what evidence is needed to counter it and to consider whether to make an offer to settle and on what terms.
At trial, the court will only decide those issues that are raised in the statements of case and so they must be drafted carefully and reviewed continually as the matter develops.
Statements of case are invariably the first documents that are served between the parties and are served in sequence.
- Claim form
- Particulars of claim
- Defence
Usually, these will be the only statements of case in civil proceedings. However, on occasion, they will not be sufficient and the CPR provide for additional documents that may also prove useful.
- Reply
- Counterclaim
- Defence to the counterclaim
- Request for further information
- Response to the request for further information
Part 16 of the CPR sets out the requirements and the formalities of statements of case.
However, precedents are another useful starting point when drafting these documents, although they must always be tailored to the particular matter that is the subject of the litigation.
When drafting, it is important to remember that, although the documents themselves are formal, the style adopted should be clear using plain English where possible.
Where a solicitor prepares a party’s statements of case, it should be signed in the name of the firm.
What are the ethical considerations of statements of case?
A solicitor must not mislead the court so should only include assertions in the statements of case that are properly arguable. For example, a solicitor should not include a client’s allegation that the opponent has acted fraudulently unless there is some evidential basis for this.
What if a client has filed a statement of case and subsequently tells their solicitor before the litigation ends that it contains a material error, the effect of which is to mislead the court?
In those circumstances, the solicitor should advise the client to amend the statement of case and, if the client refuses to do so, should cease to act.
In order to keep client confidentiality, the solicitor should not inform the court or any other party of the reasons why they are no longer representing their client.
What must a particulars of claim include?
Specifically, the document must include:
a) A concise statement of the facts on which the claimant relies. This means that it must outline all the facts giving rise to the dispute, to demonstrate the required elements of the cause of action on which the claim is based.
b) If the claimant is seeking interest, a statement to that effect and the details. However, the precise contents of the particulars of claim will depend upon the relevant cause of action, for example, whether the claim is for breach of contract or negligence.
In a claim based on breach of contract, what needs to be included in the particulars of claim?
Where the claimant alleges breach of contract, the particulars of claim should deal with the essential material facts that will establish the cause of action.
(a) The status of the parties: this is the starting point and, apart from providing background information, these details are required in certain situations.
For example, the parties should confirm the defendant’s business when relying on sale during the course of that business to establish terms implied by the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982.
Next, the claimant will set out the chronological events explaining what has occurred.
This may include pre- contractual matters if they assist in establishing the claim, such as
the request for a sample or relevant pre- contract statements.
Thereafter, the particulars of claim will move into the substance of the matter. However, whilst it may appear that the claimant is simply ‘telling their story’, behind this are the legal elements that underpin their case.
(b) Existence of contract: this must be established (although rarely disputed in practice) and will consist of the date, type (written or oral), parties, subject matter and consideration.
Where a claim is based upon a written contract, a copy of the contractual documents must be attached to or served with the particulars of claim. If the claim is based on an oral agreement, the contractual words used, by whom, to whom, and when and where they were spoken should be specified.
(c) Terms: details of any express terms are included and these will usually be found in the contract itself. Likewise, any implied terms relied upon should be stated specifically.
At this point, the particulars of claim may appear to revert back to a mere description of the facts, perhaps the date that the goods were delivered or the payment of the first instalment. However, in addition to telling the chronological story, this paragraph sets out what parts of the contract have been performed. This is important in limiting the areas of dispute the court will need to consider.
(d) Breach alleged and particularised: this section contains details of which terms were breached and specifically how. Examples would be a failure to pay for the goods, late delivery or the poor quality of the items supplied. Initially, the breach is alleged generally.
(g) Interest: where the remedy sought by the claimant is either damages or the repayment of a debt, the court may award interest on the sum outstanding, but only if claimed.
In breach of contract cases, there are three alternative ways of claiming interest as follows:
- The contract itself may specify a rate of interest payable on any outstanding sum.
- If there is no provision in the contract for interest, interest may be claimed under the Late Payment of Commercial Debts (Interest) Act 1998, which gives a statutory right to interest on commercial debts that are paid late. As the Act is only concerned with commercial debts, it does not apply to unspecified (damages) claims or to a specified amount (a debt) owed by a consumer. The relevant rate of interest is 8% per annum above the Bank of England’s base rate on the date the debt became due for payment. The claimant is also entitled to a small, prescribed amount of statutory compensation for the inconvenience of having to recover the debt.
In all other cases, the court has a discretion to award interest either under s 35A of the Senior Courts Act 1981 (SCA 1981) in respect of High Court cases, or under s 69 of the County Courts Act 1984 (CCA 1984) for County Court cases. For specified claims, the interest must be precisely calculated as a lump sum for the amount that has accrued from breach of contract up to the date of issue of the proceedings, plus a daily rate so it is easy to provide an updated total.
(h) Summary of relief: traditionally, although not a requirement of the CPR, the remedies claimed are summarised towards the end of the particulars of claim.
(i) Statement of truth: the claim form or particulars of claim must contain a signed statement of truth that its contents are believed to be true (Part 22) as set out in Chapter 3 of the DR book.
In a claim based on breach of negligence, what needs to be included in the particulars of claim?
Particulars of claim relating to an action in the tort of negligence will be approached in a similar way, although the content will differ to reflect the legal elements of duty of care, breach of that duty, causation and loss.
The court has a general discretion (which is usually exercised) to award interest on damagesin any negligence claim in accordance with s 35A SCA 1981 in respect of High Court claims, and s 69 CCA 1984 for County Court matters. In practice, interest is normally awarded from when the loss was sustained.
What is the purpose of a defence?
The defence sets out the defendant’s answer to the claim with the aim being to highlight what issues are in dispute. Rule 16.5 assists in the approach that should be adopted when drafting this document. The defence must state, for each allegation, whether it is:
a) denied;
b) not admitted; or
c) admitted.
Where a defendant denies an allegation, they must state:
- their reasons for doing so; and
their own version of events if different from that given by the claimant.
A non- admission is made where the defendant has no knowledge of the particular matter alleged.
If the defendant admits the statement does the claimant need to prove the allegation?
No
If the defendant makes a non-admission does the claimant need to prove the allegation?
Yes
If the defendant denies a statement does they claimant need to prove the allegation?
Yes
The purpose of the defence is to narrow down the issues between the parties so that only the matters in dispute are tested in court. In the example above, the central issue to determine is who was at fault in causing the collision.
It is vital not to miss an allegation because the effect is that it is deemed to be accepted.
Accordingly, best practice dictates that a systematic approach is adopted to ensure every allegation in the particulars of claim is dealt with and nothing is admitted through omission. This will mirror, as far as possible, the sequence of events in the particulars of claim, with the defence usually answering each paragraph in turn. If more than one allegation is included in the paragraph, these should be dealt with on a point by point basis.
What is are the contents of a defence?
When drafting the defence, the defendant must comply with the formalities required by the CPR and must include:
* the name of the court;
* the claim number (the unique reference number that is allocated by the court on issue of proceedings);
* the parties;
* the title (DEFENCE);
* the date and signature of solicitors in the name of the firm;
* the statement of truth; and
* details of who is to be served and where.
If the defendant alleges that the relevant limitation period for the claim has expired, the details of this must be given in the defence, for example, when it began and expired, and whether it ran under the terms of a contract or under the Limitation Act 1980. The burden of proof is then normally transferred to the claimant to show the claim is not time- barred.
There are some instances where the burden of proof falls upon the defendant, specifically in relation to:
(a) contributory negligence; and
(b) a failure by the claimant to mitigate its loss.
Where these matters are alleged, they should be made and detailed in the defence.
What is counterclaim?
A counterclaim arises where the defendant is alleging they have their own cause of action against the claimant. Effectively, they could have taken action against the claimant first and issued proceedings.
This may also be referred to as a set off.
In summary, a counterclaim will be relevant if the defendant has actually suffered loss that is attributable to the claimant. If the defendant simply has a good reason for not paying the monies owed, but has not incurred any loss, they should only file a defence.
How are a defence and counterclaim structured?
A defence and counterclaim is essentially what the title suggests: a defence and a (new) claim, set out in a single document. The title to the action remains the same but the heading will now be ‘DEFENCE AND COUNTERCLAIM’. The document is then sub- divided into two sections, with the defence outlined at the beginning and the counterclaim following on immediately thereafter.
In terms of the content, the best approach to drafting a counterclaim is to treat it as a stand- alone claim, for example, for breach of the Sale of Goods Act 1979 on the basis the goods were not of satisfactory quality. However, rather than repeat aspects that have already been included in the statements of case, such as details of the contract and the incorporation of the implied terms, the counterclaim will refer back to the defence. The first paragraph will simply state that the relevant paragraphs are repeated. The effect of this is that, for example, the existence and terms of the contract are accepted and the defendant’s allegation of breach is also confirmed. The rest of the counterclaim will then set out the allegations of loss resulting from the claimants’ breach.
In summary:
* A counterclaim is treated as if it were a claim and should be filed with the defence.
* It will form one document, with the counterclaim following on from the defence.
Permission is not required from the court unless the defence has already been filed.
What additional claims aside from a counterclaim may be launched?
Part 20 also applies to additional claims made by a defendant for a contribution or indemnity or some other remedy against any person whether or not they are already a party. These are referred to as additional claims.
A common scenario is where the defendant wishes to pass the blame, either in whole or in part, onto a third party. The defendant may be seeking a full indemnity from the third party, or a contribution towards any damages they have to pay the claimant.
What is an indemnity?
A claim for an indemnity may arise where there is a contractual relationship between the defendant and the third party, in which the latter is obliged by the terms of a contract to indemnify the defendant if they are found liable for the claim. This may also arise by way of statute.
What is contribution?
A claim for a contribution can be made where there are joint wrong- doers and the defendant argues that the third party is partly responsible for the harm the claimant has suffered.
When can additional claims be made?
The defendant may also make other additional claims without the court’s permission provided this is done either before or at the same time as they file the defence.
What is a reply to a defence?
A claimant may wish to file a reply to the defence but is under no obligation to do so. Replies tend to be used if the claimant wants to respond to matters that have been raised in the defence but which are not covered in the particulars of claim.
What is a defence to a counterclaim?
If the claimant decides to dispute the counterclaim, they must file a defence to the counterclaim within 14 days (unless an extension of up to 28 days has been agreed with the defendant). If they fail to do so, the defendant may enter judgment in default on the counterclaim.
Can amendments be made to statements of case prior to the expiry of a limitation period?
If the statement of case and has been filed but not served, it can be amended at any time.
If the statement of case has been filed and served, the statement of case can only be amended with the written consent of all parties or the permission of the court.
What is the procedure for applying for permission?
When applying for permission, the applicant should file a copy of the statement of case with the proposed amendments together with an application notice.
The court will then decide whether or not to exercise its discretion to grant the application, taking into account the overriding objective of dealing with the case justly and at proportionate cost.
In particular, the court will need to strike a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if it is permitted.
Can amendments be made to statements of case after the expiry of a limitation period?
Where the limitation period has ended, the court may allow an amendment only in the following three circumstances:
a) to add or substitute a new claim, if this arises out of the same or substantially the same facts as an existing claim;
b) to correct a (genuine) mistake as to the name of a party;
c) to alter the capacity in which a party claims.
What is a request for further information?
There will be occasions where the statement of case is somewhat confusing or fails to set out the case precisely enough. At this point, CPR Part 18 comes into play. The rule provides that, at any time, either the court or the parties may request further information and, if successful, a party will be ordered to:
(a) clarify any matter that is in dispute; or
(b) give additional information in relation to any such matter.
What is the procedure for making a request of further information?
The procedure for making or responding to Part 18 requests is as follows:
* If either party requires further information, they must (first) serve a written request on the other party, allowing a reasonable time for the response.
A request should be concise and strictly confined to matters that are reasonably necessary and proportionate to enable the applicant to prepare their own case or to understand the case they have to answer.
* Requests must be made as far as possible in a single comprehensive document and not piecemeal. If brief, this may be by letter; if not, the request should be made in a separate document, which must be sent to the other party.
* Any request must be headed with the name of the court, the title and number of the claim and identify that it is a Part 18 request. The requests should be set out in separate numbered paragraphs, and state the date for a response.
Once the request has been received, the other party must deal with the issues raised.
* The response must be in writing, dated and signed by the party or their solicitor. It should set out the same information as the request and then give details of the response.
* The response must be:
∘ served on all the parties;
∘ filed with the court; and
∘ verified by a statement of truth.
If a request for further information is not responded to, or cannot be complied with, an application may be made to court under Part 18. The court will grant an order if it is satisfied that the request is confined to matters that are reasonably necessary and proportionate to enable the applicant to prepare their case or to understand the case against them.
What are interim applications?
If the parties are unable to resolve their differences by negotiation, they will have little alternative but to issue proceedings.
However, cases do not always proceed seamlessly to trial and, in many cases, one or other of the parties will need to bring a particular matter before the court along the way.
Applications that are made after litigation starts but before the trial are known as interim applications and they are many and varied.
Interim applications are the general term for applications such as summary judgment etc.
What is the procedure for applying for an interim application?
Before applying to the court, the parties should seek to resolve matters between themselves so as to comply with the overriding objective and to avoid the imposition of costs penalties.
This will usually be achieved by the exchange of correspondence, whether by letter or email, and only if that fails should an application be made.
Under Part 23, the party who is applying (the applicant) must complete an application notice and Form N244 should be used. The party against whom the order is sought is known as the respondent.
To which court is an application notice made?
The application must be made to the court where the claim started or (if relevant) to where it has been transferred.
What is the content of an application notice?
An application notice must state what order is being sought and why.
Although there is no specific requirement to provide evidence, as a matter of practical reality, it will be necessary to set out the facts the party is relying on in support of, or for opposing, the application.
If the issues raised are straightforward, the applicant will complete the box to be found on the second page of Form N244.
However, if there is insufficient space on the form, a witness statement may be filed at the same time.
Furthermore, the party may also rely on the contents of a statement of case, such as the particulars of claim. The application must be verified by a statement of truth.
Evidence in support:
The witness statement should be made by the person best able to address the relevant points from personal knowledge. If the application is a more technical one, such as for the amendment of a statement of case, this is likely to be the solicitor; whereas in other situations, it may be the client.
The statement should:
(a) include the factual information and the evidence in support of the application; and
(b) anticipate the opponent’s case, where appropriate.
Sufficient detail must be provided to persuade the court to make the order, as there will be no oral evidence from witnesses at the hearing. Although the solicitor will make submissions, the judge will decide the issue primarily on the basis of the written evidence. Hence, it is important that the witness statement covers all the required points including, if necessary, attaching relevant documents as exhibits.
Draft order:
Practice Direction 23A states that, except in the most simple of applications, the applicant should attach a draft of the order sought to assist the judge.
When should an application notice for an interim application be served on the opponent?
The application notice must be served on the opponent at least three clear days before the court hearing to allow the other party to respond and to object to the application should they wish to do so. Clear days means that the date of service and of the hearing are excluded, as well as weekends and bank holidays.
How can an consent order be used in an interim application?
If the parties have reached agreement on the order they require, they can apply to the court for an order to be made by consent without the need for attendance at the hearing. The parties must ensure they provide the court with any material it needs to be satisfied that it is appropriate to make the order, and usually a letter will suffice. The main advantage of this is the saving of costs for all concerned.
When can orders be made without notice?
The general rule is that applications must be made on notice to the other party. This ensures that the opponent is aware of the application so they may file evidence in response and arrange for attendance at the hearing.
However, there are exceptions to this rule, usually where:
* there is exceptional urgency; or
* the overriding objective of the CPR would be best achieved by making an order without notice.
The most common examples are where the applicant is applying to freeze their opponent’s financial assets or to search their premises.
Clearly, in these instances, giving warning of the intended action would defeat the purpose of the application as it would allow time for assets to be moved or destroyed.
Where an application is made without notice to the respondent, the evidence must explain why notice was not given.
In addition, the applicant has a duty of full and frank disclosure, which means they cannot take advantage of the respondent’s absence at the hearing and must draw the court’s attention to evidence and arguments they reasonably anticipate the respondent would wish to make.
If an order is made on an application without notice, the following copy documents must be served on the respondent, as soon as it is practicable to do so:
(a) the court order;
(b) the application notice; and
(c) any supporting evidence.
The respondent may then apply to set aside or vary the order within seven days of service of the order upon them.
How are interim application hearings conducted?
Many courts now have the facilities to conduct hearings by telephone or video conferencing. This is actively encouraged and, under PD 23A, the general rule is that interim applications with a time estimate of one hour or less will be conducted by telephone if at all possible. However, there are exceptions such as the hearing of an application made without notice to the other party.
What is an interim costs order?
Any interim application will involve the parties in expense, for example, in collecting evidence, preparing the notice of application and supporting witness statement, and attending the hearing. A court fee is also payable.
At the end of any interim application, the judge will decide the issue of costs – often referred to as ‘pay as you go’ litigation. The general costs rule applies with the loser paying the winner’s costs.
Thus, if the application is granted, it is normal to order the respondent to pay the applicant’s costs.
However, the type of costs order will depend upon the nature of the application and interim costs orders usually reflect, to a large extent, the conduct of the parties.
For example, a party who wants permission to amend their statement of case starts from a weak position as the document should perhaps have been properly drafted in the first place; hence, they may have to pay the costs of the application even if they win.
What different types of cost order are there?
[Named party’s] costs
The party named in the order is entitled to their costs of the interim application whatever other costs orders are made in the proceedings. These costs are normally summarily (instantly) assessed and ordered to be paid within 14 days.
An example would be an order for ‘claimant’s costs’. This would mean that the defendant must pay the claimant’s costs.
This applies when there is a clear ‘winner’ such as where the claimant succeeds in their application for summary judgment. The unsuccessful party would be ordered to pay the costs.
b) Costs in the case
In an order for costs in the case, no party is named and, at this stage, neither party can recover their costs. It only becomes apparent who is to pay the costs of the interim application at the conclusion of the proceedings. The ultimate loser of the litigation will also be liable for these costs.
This could apply if the court makes a conditional order, for example, that the defendant may continue to defend the proceedings but only if they file a full defence within 14 days. If they fail to do so, only then would the claimant receive the costs of the interim application.
c) No order as to costs
Each party is to bear their own costs of the interim application whatever costs orders are made at the end of the proceedings.
This order is often made when the outcome of the interim application is effectively a draw with neither party being perceived to be at fault. An example may be where evidence later comes to light that requires additional witness statements to be filed.
What is a summary judgment?
Once a claim has been served, the defendant may:
(a) do nothing – in which case the claimant will apply for default judgment;
(b) admit the claim, allowing the claim to be enforced; or
(c) file a full defence so the case proceeds to trial.
However, there is a fourth option. Sometimes the defendant will simply file a weak defence, either because their case has no substance or as a delaying tactic to buy more time. This may be because they are looking for additional evidence, or simply that they do not have the available financial assets to pay the claim.
If the defence received is poor, the claimant would almost certainly succeed at trial but this would cost them additional time and money.
To enable a claimant to bring the matter to an early conclusion, Part 24 of the CPR provides a solution. This is known as summary judgment.
Who can bring a summary judgment?
Although such applications are normally brought by the claimant, the defendant may also apply for summary judgment. This may occur if, for example, a litigant in person has filed a weak particulars of claim or one which has no legal basis.
What is the test for summary judgment?
Rule 24.3 states that the court may give summary judgment against a claimant or defendant on the whole of a claim or an issue if:
(a) it considers that the party has no real prospect of succeeding on the claim, defence or issue; or
(b) there is no other compelling reason why the case or issue should be disposed of at trial.
There are some cases which are clearly not suitable for summary judgment, for example, where there are complex issues that need proper investigation at trial or difficult questions of law.
However, Part 24 is a useful mechanism that should be considered by the parties wherever appropriate, particularly as it is consistent with the overriding objective of the CPR to deal with matter justly and at proportionate cost.
A claimant applicant has to prove both that the defendant has no real prospect of successfully defending the claim and that there is no other compelling reason why the matter should proceed to trial; but a defendant respondent need only succeed in preventing the claimant from proving one aspect to ensure the dismissal of the application for summary judgment.
What is meant by no real prospect?
In determining whether the claimant has a real prospect of succeeding in their claim or the defendant of defending theirs, the court will consider the evidence and this will vary from case to case. With the increase in litigants in person, there is a risk that claims are pursued or defended with limited understanding of the legal merits of a particular issue or the requirements of evidence.
In these situations, the responsibility will fall upon the court to weed out the somewhat hopeless cases.
What is meant by compelling reason?
In addition to the prospect of success being determined, the judge must also be satisfied that there are compelling reasons to allow the matter to proceed to trial.
Although this covers a range of situations, the most common reasons would be:
* The need to allow more time for the matter to be investigated, perhaps due to difficulties in contacting an important witness.
* The claim or defence is of a highly complicated and/ or technical nature so it can only be properly understood with all the evidence that would be available at a full trial.
* The need to hear from witnesses, particularly if one of the central issues (such as the terms of a contract) is disputed oral evidence.
It is important to bear in mind that the hearing is not the trial. The submissions should be based upon the criteria of Part 24 so the respondent should concentrate on establishing a compelling reason to allow the proceedings to continue and not attempt to argue their case in its entirety.
Obtaining an order for summary judgment is not a given and indeed, the easier option may be for the judge to allow the proceedings to continue.
What is the procedure for applying for summary judgement?
An application for summary judgment can be made by either party at any time. The only occasion where the court’s permission is required is where the claimant wishes to apply before the defendant has filed an acknowledgement of service or a defence. However, given the requirement to convince the judge that the defendant has no real prospect of defending the claim, a claimant will invariably wait until after the defence has been filed.
The procedure is as follows:
* The applicant applies with Form N244 and (usually) a witness statement in support.
* The respondent must:
∘ be given at least 14 days’ notice of the hearing date; and
∘ file and serve any written evidence at least seven days before the hearing.
If the applicant wishes to rely on further evidence, this must be filed and served at least three days before the hearing.
What orders may the judge make following a hearing for summary judgment?
The judge has a number of possible orders at their disposal.
(a) Judgment on the claim: this means that the claimant has succeeded in their application for summary judgment and the matter will proceed to enforcement.
(b) The striking out or dismissal of the claim: here, the defendant has succeeded in their application to dispose of the claimant’s claim and the case comes to an end.
(c) The application is dismissed: the applicant has failed to bring the case to an early conclusion and it will now proceed towards trial.
(d) A conditional order: the application has not been granted, but equally the respondent has not succeeded in having it dismissed – neither side has won. A conditional order will be made where the court concludes it is possible, but not probable, that the claim or defence may succeed. The party will be allowed to continue with the litigation provided they pay a sum of money into court or take a specified step in relation to their claim. This ensures that the party is genuine in their desire and ability to pursue the matter and, in the case of the defendant, they are not merely delaying payment.
Where the court dismisses the application or makes an order that does not completely dispose of the claim, case management directions are usually given as to the future conduct of the case.
What costs order will be made following summary judgment hearing?
The costs order awarded will depend upon the type of claim and the outcome of the
application.
* Where a claimant succeeds in obtaining summary judgment for a specified sum, the court may award fixed costs under Part 45. However, it is open to the claimant to request a higher figure as their costs usually exceed these, and to ask for summary assessment of the costs.
* If a claimant is awarded summary judgment in an unspecified claim, the usual rule applies so that the winner (the claimant) is granted their costs. These will be summarily assessed and a further hearing will be listed to assess the damages payable by the defendant (a disposal hearing).
* If the defendant secures summary judgment so the entire claim is struck out, the court will normally order that the claimant pays the defendant’s costs of the whole claim – again, subject to summary assessment.
* If the application is dismissed, the proceedings will continue and the unsuccessful party will pay the successful party’s costs of the summary judgment hearing.
* If a conditional order is made, the usual order will be for costs in the case.
Applying for summary judgment is a useful means of bringing the matter to an early conclusion or, at the very least, putting pressure on the opponent to confront the claim.
Who can apply for an interim injunction?
Either party may apply for (and be granted) an interim injunction in support of their cause of action.
When can an interim injunction be applied for?
A party may seek an injunction at any time after proceedings have been commenced and, in exceptional cases, even beforehand. However, the court must be satisfied that the matter is urgent or it is otherwise desirable in the interests of justice.
If granted before trial, these orders are known as interim injunctions. They remain in force until the matter comes to trial (or until further order), at which point the court will decide whether or not to make a final injunction.
What is an injunction?
Injunctions may be distinguished from other court orders because breach is punishable as a contempt of court. They are a discretionary remedy and may only be granted when damages are not an adequate remedy for the applicant.
There are different types of injunctions but the primary aim is to maintain the status quo – the current position – until the trial. Generally, they will be used to prevent the defendant from taking certain steps, such as soliciting customers of the claimant, but they can also order a party to take action, for example to stop committing a nuisance.
What guidelines does the court refer to when hearing an application for an interim injunction?
When the court hears an application for an interim injunction, it does not know all the facts and so, to assist in making the correct decision, judges refer to the American Cyanamid guidelines.
When deciding whether to grant an interim injunction, the court will determine whether:
(a) there is a serious question to be tried;
(b) damages are an adequate remedy for either side;
(c) the balance of convenience lies in favour of granting or refusing the injunction; and
(d) whether there are any special factors.
What is a cross undertaking in the context of an interim injunction?
If an interim injunction is granted, the applicant must undertake to the court to pay any damages that the respondent (or any other party affected by the order) sustains by reason of the injunction, if it subsequently transpires that the injunction ought not to have been granted.
This is often called the applicant’s ‘cross- undertaking’.
How is an interim injunction applied for?
As with other types of applications, the party who seeks the order must apply by way of an application notice with evidence in support – usually, a witness statement.
