Pre-action protocol
The law
As from 1 April 2003, changes to Court Rules impose on all parties in a dispute an obligation to comply with various procedures aimed at avoiding the commencement of litigation.
If proceedings are issued, the court has power to impose financial sanctions on any party that has failed to comply with these pre-action procedures. The old practice of sending a seven-day letter before action quickly followed by delivery of proceedings has finally been consigned to the history books.
The pre-action procedures require the claimant to:
Send a letter of claim, giving sufficient detail to enable the other party to understand and investigate the claim. Claimants should include all essential supporting documents and indicate any additional essential documents that he requires the defending party to disclose.
Indicate whether he is prepared to enter into mediation or some other form of Alternative Dispute Resolution (ADR).
The defending party must respond to the letter of claim within a reasonable time, and state either that the claim isn't accepted or confirm that all or part of the claim is admitted, in which case the response should set out proposals for settlement. The response should be accompanied by all essential documents upon which it relies, and indicate any additional essential documents that it wishes the claimant to disclose. The response should also indicate whether a defendant is prepared to enter into mediation or some other form of ADR.
In the event that the parties remain in dispute following the above exchange of letters, both parties are placed under an immediate obligation to engage in appropriate negotiations with a view to settling the dispute.
The objective of the above requirements is to encourage early resolution of claims by way of negotiation, use of mediation, or some other form of ADR, thereby reducing litigation. There are, however, a number of pitfalls for the busy or inexperienced party.
If any part of a claim is going to be admitted, make sure that the admission won't prejudice your available defences to other parts of the claim or issues of quantum.
Careful thought will be needed in relation to the requirement that the parties engage in efforts to resolve the dispute by negotiation or some other form of ADR. It's a brave litigant that rejects ADR outright but, given the range of ADR procedures now available, making the right choice to get the best outcome isn't always easy.
Beware!
Parties who don't comply with the procedures risk potentially heavy sanctions should the dispute later go to court.
The range of powers that the court may exercise includes the power to order the defaulting party to pay all or part of the costs of the case (in an appropriate case, on an indemnity basis) and penalise the defaulting party by varying or not applying the rules which normally govern the award of interest on costs and monetary awards from which it would otherwise benefit.
Contacts
David Parkin
Berwin Leighton Paisner
020 7760 1000
The problem
The supplier of your new kitchen equipment tells you that delivery is going to be delayed by 12 weeks, which will consequently put back the reopening date of your restaurant.
The plans to reopen were well advanced, and you had already arranged to relaunch the restaurant with celebrity guests, friends in the trade, and journalists. Not only will you lose three months' trade, you stand to lose your reputation.
You think you have a case, and believe you have a claim worth between £30,000 and £50,000, but you're reluctant to incur legal costs and would like to deal with the claim yourself on the basis that if it gets difficult you can send it to a lawyer later.
