Responding to a claim

Question 1

Defendant’s Response to Proceedings

Answer 1

When a claimant issues legal proceedings, the process for the defendant depends on the documents served and the timing of their response. Here are the steps and options:

1. Claim Form Served (No Action Required): If only the Claim Form is served, and it is marked “Particulars of Claim to follow,” the defendant is not required to take any immediate action. The defendant waits for the Particulars of Claim, which outline the claimant’s case.
2. Particulars of Claim Served (Action Required): When the Particulars of Claim are served (either with the claim form or later), the defendant must take one of the following actions within 14 days of the deemed service:

• Admit the Claim (Whole or Part): The defendant may choose to admit the claim either in full or partially, meaning they agree with some or all of the claims made by the claimant. This admission can lead to immediate settlement discussions or a court decision based on the admitted facts.
• File an Acknowledgment of Service: This option allows the defendant more time to prepare a defense. By filing an acknowledgment of service, the defendant extends the deadline for submitting a defense to 28 days from the deemed service of the particulars of the claim. This is a holding step, not a defense on the merits, but it keeps the defendant within the timeline.
• File a Full Defense: The defendant may also directly file a defense within the 14-day period or, if an acknowledgment of service has been filed, within 28 days. The defense is a formal document that disputes or counters the claims made by the claimant, providing the defendant’s legal arguments and responses to the claimant’s allegations.

3. Ignoring the Proceedings: If the defendant fails to take any of the above actions (i.e., admitting the claim, filing an acknowledgment of service, or submitting a defense) within the relevant time limits, the claimant can request a Judgment in Default. This results in the court ruling in the claimant’s favor automatically, without considering the defendant’s side of the case.

Question 2

Issuance of Proceedings and Defendant’s Response

Answer 2

Once proceedings are issued, the defendant must take action unless they are prepared for the claimant to win outright. The timing of the defendant’s response depends on whether the claim form is marked “Particulars of Claim to follow.” Without the particulars, the defendant cannot draft a response. Once the particulars are served, the defendant must respond promptly, and they will receive Form N9, which details the response process and deadlines.

Question 3

Defendant’s Response Options

Answer 3

Upon receiving the claim form and particulars of claim, the defendant has three main options under the Civil Procedure Rules (CPR):

1. File an admission (Part 14)
2. File an acknowledgment of service (Part 10)
3. File a defence (Part 15)

A fourth option, ignoring the claim entirely, allows the claimant to apply for judgment in default.

Question 4

Filing an Admission

Answer 4

If a defendant knows they owe the money and can pay, it is in their best interest to admit the claim. This action resolves the case quickly and limits liability for costs. There are separate admission forms for specified claims (debt) and unspecified claims (damages). The defendant must choose the correct form.

Question 5

Admission of Entire Specified Claim

Answer 5

If the defendant admits the entire specified claim, they must provide details of their income, expenses, and offer payment either in full or through installments. The claimant can then file for judgment. If the claimant rejects the payment terms, a judge will set the payment rate, often without a hearing.

Question 6

Admission of Part of a Specified Claim

Answer 6

If the defendant admits only part of a specified claim, the claimant has 14 days to:

(a) Accept the admission and request judgment.

(b) Accept the admission but reject payment terms, in which case the court will decide.

(c) Reject the offer and proceed with defending the rest of the claim
The decision often depends on the defendant’s ability to pay.

Question 7

Unspecified Claims and Admission

Answer 7

In unspecified claims, where the defendant admits liability and offers a sum, the court will notify the claimant. If accepted, the claimant may enter judgment for that amount, and payment terms are handled as with specified claims. If the claimant does not accept the offer, the court will assess damages at a hearing.

Question 8

Acknowledgment of Service

Answer 8

If the defendant intends to defend the claim but needs more time, they can file an acknowledgment of service. This extends the deadline to file a defense from 14 days to 28 days. It buys time to gather evidence before submitting a full defense.

Question 9

Filing a Full Defense

Answer 9

The defendant can file a full defense either within 14 days of receiving the particulars of claim or within 28 days if they filed an acknowledgment of service. Most defendants use the response pack forms, while solicitors may prepare a more detailed defense. 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 solicitor has indicated othertwise.

Question 10

Counterclaim

Answer 10

As part of the defendants response, they may wish to pursue A counterclaim.

A counter claim allows the defendant to pursue their own claim against the claimant. For example, if a defendant disputes the quality of goods or services provided, they may claim a breach of implied terms, such as unsatisfactory quality, and seek repayment or other remedies alongside their defense.

Question 11

Extending the Time Limit

Answer 11

If the defendant cannot meet the defense deadline, they can extend it by up to 28 days with the other party’s agreement, giving a total of 56 days. Any further extension requires court approval.

Question 12

What are the possible outcomes if a defendant fails to respond to a claim for non-payment of an insurance premium within the specified time limits?

Answer 12

If a defendant (e.g., Alpha Motor Services Ltd) fails to respond to a claim for non-payment of an insurance premium (e.g., £37,000) within the required time limits, the following outcomes may occur:

• Ignoring the Claim: If the defendant ignores the claim and takes no action by the deadline (e.g., 14 days after service), the claimant (e.g., Wessex Insurance Plc) can apply for default judgment. This allows the court to rule in favor of the claimant without hearing the defendant’s defense.
• Filing an Acknowledgment of Service: If the defendant files an acknowledgment of service within the initial 14-day period, they extend the deadline to file a defense to 28 days after the service of the particulars of claim. However, if the defendant misses this extended deadline, the claimant can still request a judgment in default.
• Exceptions to Default Judgment: Default judgment may be prevented if there is a pending summary judgment application or a motion to have the claimant’s statement of case struck out. These applications must be resolved before default judgment can be granted.

Question 13

Default Judgment

Answer 13

A default judgment is entered when the defendant takes no action in response to proceedings.

It allows the claimant to secure a judgment without any consideration of the facts, ensuring that defendants cannot evade liability by doing nothing.

It is a simple process, where the claimant requests judgment under CPR Part 12, showing that the particulars of claim were served and the defendant did not file an acknowledgment of service or defense within the required time.

Question 14

Procedure for Obtaining Default Judgment

Answer 14

To obtain a default judgment, the claimant must file an application under CPR Part 12, demonstrating that:

1. The particulars of claim were served.
2. The defendant failed to file an acknowledgment of service or a defense within the relevant time limit.
   The application process varies based on the type of claim:

• For specified claims, the claimant must indicate the payment due date, calculate the interest up to date, and provide the daily interest rate.
• For unspecified claims, the judgment is granted but the case returns to court to assess damages at a disposal hearing.

Question 15

Setting Aside a Default Judgment

Answer 15

If a default judgment has been entered, the defendant may seek to have it set aside under CPR Part 13. There are two grounds for setting aside:

1. Mandatory Ground: The court must set aside the judgment if it was wrongly entered, such as if the defendant’s time to respond had not expired or if the claim was paid in full before judgment was entered.
2. Discretionary Ground: The court may set aside the judgment if the defendant has a real prospect of defending the claim or there is another good reason (e.g., illness or being away) why the defendant should be allowed to defend the claim.

Excuses such as the pressure of work or the documents being misplaced would not be sufficient.

Question 16

Types of Default Judgment (Specified and Unspecified Claims)

Answer 16

• Specified Claims: For debt claims, the claimant must provide details such as the payment due date, up-to-date interest, and the daily interest rate. This allows the court to calculate the exact amount owed. Payment is usually required within 14 days of the judgment.
• Unspecified Claims: In claims where the amount is unspecified (e.g., damages), the claimant is granted default judgment, but the exact amount owed is determined later at a disposal hearing.

Question 17

Mandatory Ground for Setting Aside Judgment

Answer 17

The court must set aside a default judgment if it was wrongly entered, which occurs if the defendant’s time to file an acknowledgment of service or defense had not yet expired, or if the claim had been paid in full before the judgment was entered. This is a mandatory ground under CPR Part 13, and the judgment will be reversed without any discretion from the court.

Question 18

Discretionary Ground for Setting Aside Judgment

Answer 18

The court may set aside a default judgment at its discretion if the defendant:

1. Has a real prospect of successfully defending the claim, or:
2. There is some other good reason to allow the defendant to defend the claim, such as illness or absence during the time of the proceedings.
   The defendant must file their application as soon as they become aware of the default judgment to comply with the overriding objective of handling cases expeditiously and fairly.

Question 19

Orders When Setting Aside Judgment

Answer 19

When a defendant applies to set aside a default judgment, the judge may issue one of the following orders:

1. Set Aside Judgment: If the defendant succeeds, the judgment is set aside, allowing them to continue defending the case.
2. Maintain Judgment: If the claimant wins, the judgment remains in place, and the claimant can proceed to enforcement.
3. Conditional Order: The judgment is set aside on the condition that the defendant pays money into court (e.g., the claim amount), used when the court suspects the defense is merely a delaying tactic. This is the least likely outcome.

Question 20

Costs of Setting Aside Judgment Applications

Answer 20

The costs of setting aside a default judgment depend on the outcome of the application:

• If the judgment is set aside on a mandatory ground, the claimant must pay the defendant’s costs for entering judgment when they should not have.
• If the judgment is set aside on a discretionary ground (e.g., good reason), costs are typically in the case (shared responsibility).
• If the judgment is set aside because the defendant has a real prospect of success, the defendant generally pays the claimant’s costs.
• If the application fails, the defendant is liable for the claimant’s costs of the application.

Question 21

What happens were a claim includes both specified and unspecified amounts?

Answer 21

The entire claim is treated as unspecified.

Question 22

How are interest and damages calculated in Wessex’s claim against Alpha, and how does the inclusion of both specified and unspecified amounts affect the default judgment process?

Answer 22

a) Interest Calculation for a Specified Claim:
In Wessex’s claim against Alpha for non-payment of an insurance premium, the premium of £37,000 was due before 1 January. Under the contract, interest is also due at a rate of 10% per annum, resulting in a daily interest rate of £10.14 (£37,000 x 10% ÷ 365). Wessex can claim interest from 1 January to 9 February (the date the proceedings were issued), a total of 40 days. Multiplying the daily interest rate by 40 days gives a total of £405.60 in interest. Additionally, Wessex can claim £10.14 per day from 9 February until the date of judgment.

(b) Unspecified Claim for Loss of Profits:
If Wessex had included a claim for loss of profits, default judgment would have been entered on liability, with the damages to be determined by the court at a later date. This is because, when a claim involves both specified and unspecified amounts, the entire claim is treated as unspecified, requiring a later assessment of damages.

This example illustrates the distinction between specified claims (where the sum owed and interest can be calculated) and unspecified claims (where damages are assessed by the court).

Question 23

What are the grounds and outcomes when a defendant (D) applies to set aside a default judgment, and how are costs determined?

Answer 23

When a defendant (D) applies to set aside a default judgment, there are two main grounds and corresponding outcomes:

1. Mandatory Ground:
   * The judgment was entered too early or the claim was already paid in full.

• In these cases, the judgment must be set aside.
• Costs: The claimant (C) will be responsible for paying D’s costs.
  2. Discretionary Grounds:
• D has a real prospect of successfully defending the claim, or
• There is some other good reason why the judgment should be set aside (e.g., illness or being away).
• D must apply promptly, submitting an application form along with a witness statement.
• The judgment may be set aside at the court’s discretion.

3. Possible Outcomes of the application:
   * If D’s application succeeds:
   * Good reason: Costs are “in the case” (handled later in the proceedings).

• Real prospect of defense only: D must pay C’s costs.
• If D’s application fails: D is responsible for paying C’s costs.

Question 24

Can a claimant discontinue all or part of a claim, and what is the procedure?

Answer 24

Yes, a claimant can discontinue all or part of a claim at any time during the proceedings. The procedure involves the claimant filing and serving a notice of discontinuance to all parties involved.

If the consent of another party is required, it must be attached to the notice.

The effect of discontinuance is that the proceedings end for the defendant when they are served with the notice.

The claimant will usually be liable for the costs of the proceedings, unless the court orders otherwise. This emphasizes the importance of claimants considering their chances of success carefully before initiating proceedings.

Question 25

Is permission required for discontinuance in all cases?

Answer 25

No, permission is not usually required for a claimant to discontinue a claim. However, permission must be obtained in certain circumstances, such as when the court has granted an interim injunction. Additionally, if there is more than one claimant, all claimants must consent in writing, or the court must grant permission for discontinuance to proceed.

Question 26

What happens if there is more than one defendant in a discontinuance?

Answer 26

If there is more than one defendant, the claimant may choose to discontinue the claim against all or any of the defendants. The process remains the same: the claimant must file and serve a notice of discontinuance, and the proceedings will end for the specified defendant(s) on the date they are served.

Question 27

What are the cost implications for the claimant when discontinuing a claim?

Answer 27

When a claim is discontinued, the claimant is generally liable for the costs of the proceedings up to the point of discontinuance, unless the court orders otherwise. This is a significant consideration for claimants, and they must be advised of this potential cost liability before deciding to discontinue a claim.

Question 28

What is the process for settling a case before issuing proceedings, and how are legal costs handled?

Answer 28

When a settlement is reached before the issue of proceedings, the prospective claimant is typically not entitled to recover legal costs unless it is specifically agreed.

The settlement terms must be clearly recorded in writing, either through correspondence or a formal settlement agreement, to ensure enforcement if one party defaults on the agreement.

Question 29

How are settlements recorded after proceedings have started, and why is a court order preferred?

Answer 29

If a settlement is reached after proceedings have begun, it is preferable to record the settlement in a court order or judgment. This is because a court order allows for enforcement proceedings if the terms of the settlement, including costs, are not honored. Recording the settlement in a court order helps avoid future disputes about the settlement terms.

Question 30

What is a consent order, and what formalities must be followed?

Answer 30

When 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.

A consent order is a court order agreed upon by the parties, used to record the terms of a settlement. The formalities include:

• The order must be drawn up in the terms agreed by the parties.
• It must be expressed as being “By Consent”.
• It must be signed by the legal representatives of all parties involved.

If any part of the settlement includes confidential terms or conditions beyond the powers of the court, a Tomlin order should be used instead of a standard consent order.

Question 31

What is a Tomlin order, and when is it used?

Answer 31

A Tomlin order is a special type of consent order that stays the proceedings on agreed terms, which are typically set out in a schedule attached to the order or a separate document.

It is used when the parties want to include terms that are either confidential or beyond the court’s power to order (e.g., the payment of a sum of money).

The schedule or separate document is usually held by the parties’ solicitors, and only the core terms of the order, such as staying the proceedings and payment of costs, are visible in the public court record.

Question 32

What happens if a defendant disputes the court’s jurisdiction, and what is the procedure?

Answer 32

If a defendant wishes to dispute the jurisdiction of the court, they must state this in their acknowledgment of service. The defendant then has 14 days from filing the acknowledgment to make a formal challenge. If successful, the service of the claim form is set aside, and the proceedings are terminated. If the court rejects the application, the original acknowledgment ceases to be valid, and the defendant must file a new one within 14 days, after which the proceedings will continue as usual.

Question 33

What are the key components and their explanations in a consent order?

Answer 33

1. ‘By consent’: This term confirms that the parties have reached an agreement.
2. Stay of proceedings: Indicates that the proceedings are paused.
3. Liberty to apply: Allows any party to request that the stay be lifted and enables the court to enforce the settlement without needing new proceedings.
4. Payment of costs or detailed assessment of costs: When one party must pay another’s costs, or the parties request a court-assessed calculation of costs, this must be included in the order.
5. Signed by the parties’ solicitors: A formal requirement showing that the solicitors consent to the agreement.