Pre-action Steps Flashcards
what obligations do parties have in relation to ADR?
- Litigation should be a last resort. Ongoing obligation to consider ADR.
what action must solicitors take before agreeing to act?
- Solicitor must always do a COI, confidentiality and money laundering checks before agreeing to act
what are the pre-action steps the solicitor must take?
- The solicitor must: consider limitation, process case analysis, consider strengths/weaknesses, obtain evidence (inc. tracing witnesses), cost-benefit analysis, consider PAPs, consider client objectives and factor into advice (i.e. quick resolution, avoiding publicity), explain ADR to client
what is process case analysis?
considering factual and legal issues to determine cause of action (COA)
what is cost-benefit analysis?
is the claim/defence financially viable? Does the o/s have the means to pay? check financial status of other parties
what is the position regarding cost recovery if a case settles pre-action?
- If a case is settled prior to issuing a party is not entitled to costs unless agreed
what are the consequences of not considering/failing to engage with ADR?
- A party can be financially penalised for starting court proceedings without considering ADR / failing to engage
- A party who decides not to engage in ADR (for whatever reason) must be made aware of the potential penalties if they cannot justify their decision to the court
when may ADR not be appropriate?
- ADR may not be appropriate if:
o An injunction is required
o A ruling on a point of law is needed
o The O/S cannot be trusted to follow to outcome
o There are allegations of fraud / disreputable conduct
what can the court order in relation to ADR?
- A court cannot order parties to be involved in ADR but they will encourage it in the court order. The standard wording provides that if a party will not engage with a proposal they must serve a witness statement setting out their reasons within 21 days. This is not to be shown to the trial judge until the question of costs arises.
what must a solicitor confirm in the DQ re: ADR?
Solicitors will need to confirm on the DQ that they have explained to the client:
o The need to try to settle
o Option available
o Possibility of costs if they refuse to attempt to settle
give an overview of mediation
- Partes agree an independent third person or body.
- They can be sent written statements from both sides to consider
- The mediator will pass offers to each side
what are the advantages of mediation
- Discussions with the mediator are confidential unless one party gives express permission for comments to be shared with the O/S
- Confidential and on WP basis
- This is the quickest and cheapest form of ADR
- It is more flexible as there are no legal requirements and parties can choose process (i.e. in-person, online, by correspondence)
- Settlement options are greater
- Less confrontational – more likely to preserve a business relationship
- Takes place in private so less reputational risk, but this could be a disadvantage if one party was public vindication
what are the disadvantages of mediation
- Not binding but could draw up a contractual agreement to that effect and failure to adhere would give rise to a breach of contract claim
- Voluntary – can withdraw at any time
- No disclosure obligations so there is a risk a decision could be made without all the facts. The advantages of mediation tend to outweigh this.
give an overview of arbitration
- Often used in commercial disputes – may be obliged to under contract or they can agree to arbitrate once a dispute has arisen
- The contract may name a specific arbitrator
- Common when parties are in different jurisdictions
- Award is confidential and binding
what are the advantages of arbitration
o Less formal than litigation
o Quicker and cheaper than litigation
o Takes place in private
o Wider range of solutions
what are the disadvantages of arbitration
o Not all court remedies are available i.e. an injunction
o The situation may not be investigated as deeply as in litigation
o Limited rights of appeal
* A party cannot litigate once they decide to arbitrate
can an arbitration agreement be enforced?
- Where this is an arbitration agreement, the winning party can apply to the High Court for permission to enforce the award as if it were a judgment
what governs arbitration?
- Arbitration will only be governed by AA 1996 if the agreement to arbitrate is in writing (i.e. an arbitration agreement)
what are the methods of ADR?
- mediation
- arbitration
- expert determination
- without prejudice discussions
explain expert determination
- Parties appoint an independent expert under an agreed contract
- They usually determine technical issues relating to liability / valuation
explain without prejudice discussions
parties can make offers or concessions to each other these cannot be revealed unilaterally by one party to the trial judge should the negotiations prove unsuccessful.
why is the limitation period important for both parties?
it may affect the claimant’s recovery if the claimant is approaching expiry of the limitation period / provide a cast iron defence for the defendant
what is the limitation period for contract claims?
6 years from the date of the cause of action (i.e. the breach)
what is the limitation period for tort claims?
6 years from the date of the cause of action. There are exceptions to this:
o Personal injury > 3 years from the date of the COA or, if the damage is latent, date of knowledge of the person injured (NB: in relation to children the clock doesn’t start until they are 18)
In regard to negligence cases, where the damage is latent (i.e. hidden) the latest of:
6 years from the date of the COA; or
3 years from the date of knowledge of the damage
(this is capped at 15 years from the date of the COA)
what is the limitation period for a PI claim?
o 3 years from the date of the COA or date of knowledge of the person injured (NB: in relation to children the clock doesn’t start until they are 18)
what is the limitation period for a negligence claim where the damage is latent?
the latest of:
6 years from the date of the COA; or
3 years from the date of knowledge of the damage
(this is capped at 15 years from the date of the COA)
can the limitation period for contracts be amended?
yes, by provision of the contract. Otherwise, statutory limits apply.
what is the anniversary rule?
when calculating the limitation period, you count in whole years (not 365 days)
what is the effect if a claim is brought out of time?
- D will have a cast iron defence if a claim is bought out of time. Needs to be clearly explained in the defence. The burden of proof then shifts to the claimant to prove it has not expired
can statutory limitation periods be amended?
- The court has discretion to extent LP in exceptional circumstances i.e. case of sexual assault and D won the lottery nearly 20 years later.
what is the effect on limitation when a claim is issued?
- Once a claim is issued, the clock stops. If the claim is struck out, the original limitation period continues
what happens if the claim is received but not issued by the court before limitation?
- If a claim is sent to the court and received by the court before the limitation period expires, but is not issued until after the limitation period has expired, the claim will still be deemed to have been bought within the limitation period
if the solicitor has missed limitation, what is the likely outcome?
- Solicitor will likely be negligent if they do not issue within the limitation period / fail to advise the defendant it has expired
what does a solicitor need to check/consider in terms of the defendant?
- C may have a cause of action against more than one D i.e. consumer v manufacturer & retailed for defective product and so may need to bring a claim against more than 1 person
- Important to check whether suing D in a personal or business capacity
- that the defendant is correctly named/spelt because if this needs to be changed this amounts to wasted costs
- Solicitor should check financial status of defendant using companies house, bankruptcy search, inquiry agent
what must happen if D is a child or protected party?
- If D is a child or protected party a litigation friend will need to act on their behalf. Someone can put themselves forward or they can be appointed by the Court
what must the client have to bring a claim?
a cause of action
what must the solicitor consider in terms of the cause of action? Give an example.
Consider different causes of action available to a client
o i.e. may be a BOC if a clause has been broken but may also be a breach of a term implied by statute
o If a prospective C has a BOC claim and claim in negligence, it is advisable to bring the BOC claim as this is usually easier to prove
what must the client comply with before issuing a claim?
the pre-action protocol
what is the aim of the pre-action protocol?
- Aim of PAP is for parties to consider whether ADR, exchange sufficient information to understand each other’s positions, narrow issues, reduce costs
if there is no specific pre-action protocol, what must the solicitor do? Give an example.
follow the general pre-action protocol i.e. there is no specific PAP for breach of contract
what is the position under the general pre-action protocol?
- Under general PAP – minimum 14 days to respond but up to 3 months if more complicated. Key documents to be disclosed.
what is the effect of a false statement made in a PAP letter?
- A party who makes a false statement in an LBA may be in contempt of court
what are the penalties for failure to comply with PAP?
- Penalties for parties which do not comply with PAP:
o Pay some/all of opponents costs – maybe even on an indemnity basis
o Deprive them of some/all of interest they may have been awarded
o Require the paying party to pay interest up to 10% above base rate
when might it be appropriate not to comply with PAP?
- It may be appropriate not to send a PAP if the limitation period is about to expire
who does the PAP for debt claims apply to?
- Applies to businesses (inc. sole traders and public bodies) claiming payment of a debt from an individual (inc. a sole trader) only
o i.e. it doesn’t apply to business to business debts
what are the time limits under PAP for debt claims?
- Debtor has 30 days to respond or longer if they are seeking debt advice
what information must a debt PAP letter include?
LBA must include:
information about the debt owed,
up to date statement of account (inc. details of interest and charges),
how the debt can be paid,
standard reply form,
information sheet and
financial statement
who does the PAP for professional negligence not apply to?
healthcare professionals
what is the procedure under PAP for prof negligence?
- C sends a preliminary notice. This sets out info about C, their grievance and if possible financial value of the claim. D needs to ack rec in 21 days and inform their insurance immediately.
- C will need to provide an LBA. D will need to ack rec within 21 days and has 3 months to respond. The response must confirm which allegations are admitted / denied.
D to send letter of settlement (LOS) if they wish to settle.
If the claim is denied and no LOS > C can start proceedings
All other cases > parties to negotiate within 6 months of letter of acknowledgement. If the issues cannot be resolved, the parties must try to narrow down the issues before proceeding
re: PAP for professional negligence
what does the preliminary notice set out?
This sets out info about C, their grievance and if possible financial value of the claim
re: PAP for professional negligence
when must D reply to the preliminary notice? what must they do?
o D needs to ack rec in 21 days and inform their insurance immediately.
re: PAP for professional negligence
what must D do once they have received the LBA?
D will need to ack rec within 21 days and has 3 months to respond. The response must confirm which allegations are admitted / denied.
D to send letter of settlement (LOS) if they wish to settle.
re: PAP for professional negligence
if the claim is denied and there is no letter of settlement, what can C do?
what happens in all other cases?
issue proceedings
In all other cases, parties to negotiate within 6 months of letter of acknowledgement. If the issues cannot be resolved, the parties must try to narrow down the issues before proceeding
what is it important to remember when considering jurisdictional issues?
- Could be international or domestic jurisdictional issues i.e. ‘English law’ refers to the law of England & Wales, not Scotland and Northern Ireland.
re: jurisdictional issues
what will the applicable law be?
- If there is a choice of law / governing law clause in the contract, the court with jurisdiction will usually apply this law.
- NB: whilst parties can nominate governing law, some terms implied by statute cannot be contracted out and will apply regardless i.e. Unfair Contract Terms Act 1997
re: jurisdictional issues
what happens if there is no governing law clause?
o If E&W courts have jurisdiction to hear the matter, they will apply the system of law with is ‘most closely connected to the agreement’ i.e. sale of goods = law of the seller’s country or if the contract was issued in E&W, then English law.
o If a court outside of E&W is hearing the matter, the procedure will vary depending on the country’s laws
re: jurisdictional issues
what is an exclusive jurisdiction clause?
a clause that states the country that will hear the matter should a dispute arise
re: jurisdictional issues
what jurisdiction do the english courts have to hear matters?
1) The Hague Convention 2005
2) Common law applies where the Hague Convention does not:
re: jurisdictional issues
what is the position under the Hague Convention?
1) countries party to the Hague Convention (i.e. the UK) have to honour exclusive jurisdiction clauses. If a case is bought in a different country to that set out in the agreement, the claim will be dismissed.
re: jurisdictional issues
what is the position under common law?
Common law applies where the Hague Convention does not:
* English courts have jurisdiction to hear any proceedings where the claim form has been properly served on any D whilst they are in E&W
o D could object to the proceedings continuing in the UK on the basis their country’s court would be more appropriate/convenient.
re: jurisdictional issues
give some examples of countries party to the Hague Convention
- 127 countries party to the Hague Convention: UK, EU, Singapore, Mexico
re: jurisdictional issues
what happens if D cannot be served in E&W?
- If D cannot be served in E&W, C will need the court’s permission to serve the documents outside the jurisdiction. Permission may be granted where:
o Contract - the contract was made or breached in E&W; it is governed by English law; or there is a jurisdictional clause in favour of E&W courts
o Tort - the loss sustained or act causing damage was committed in E&W
re: jurisdictional issues
when might the court grant permission for service outside of E&W?
Contract:
o the contract was made or breached in E&W
o it is governed by English law; or
o there is a jurisdictional clause in favour of E&W courts
Tort
o the loss sustained or act causing damage was committed in E&W
if parties fail to engage in ADR, what will the court consider at the costs stage?
- the nature of the dispute
- the merits of the case
- the extent to which other settlement methods have been attempted
- whether the costs of the ADR would be disproportionately high
- the effect of any delay and whether the ADR had a reasonable prospect of success.
how have the court’s powers in relation to ADR changed?
previously, the court could strongly encourage ADR. Now, the court can order parties to engage / stay proceedings to engage in ADR.
when can the court order / stay proceedings for parties to engage in ADR?
so long as:
- it does not impair the claimant’s right to proceed to a hearing
- it is proportionate to achieve the legitimate aim of settling the dispute fairly, quickly and at a reasonable cost
