Pre-action steps

Question 1

what is Alternative Dispute Resolution?

Answer 1

collective term which refers to any means of settling disputes outside of the tradition litigation process

Question 2

the main types of ADR…

Answer 2

• negotiation
• mediation
• arbitration

Question 3

nature of ADR - mediation

Answer 3

a means of resolving disputes with the assistance of an independent third party who may help the parties to reach their own solution - but this third party cannot impose a solution

this is voluntary, unless ordered by the court, and is confidential
- therefore, if mediation 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 awarded damages

the parties choose the process and are permitted to 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

Question 4

nature of ADR - arbitration

Answer 4

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 where one party commences court proceedings, the other should acknowledge service and, if they wish to enforce the arbitration agreement, apply to the court to stay/suspend the proceedings

Question 5

nature of ADR - litigation

Answer 5

litigation is not voluntary

once the case has 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

Question 6

failure to engage with ADR

Answer 6

if a client has agreed to participate in ADR, it should be used unless:
- it is obviously inappropriate (eg -: because an injunction is required)
- the other party is unlikely to co-operate in the process
- the other party cannot be trusted to comply with an award

any party not engaging in any such means proposed by another must serve a witness statement giving reasons within 21 days of that proposal
- such witness statement must not be shown to the trial judge until questions of
costs arise

Question 7

failure to engage in ADR - cost penalties

Answer 7

if a party decides not to engage in ADR - cost penalties have been imposed

when determining if these should apply, the court will take into account various factors:
- 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
- whether the ADR had a reasonable prospect of success

Question 8

the case of Churchill

Answer 8

following the case of Churchill, the court can now lawfully stay/suspend proceedings for, or order the parties to, engage in a non-court based dispute resolution process
- provided that:
- the order does not impair the very essence of the claimants right to proceed to a judicial hearing
- it is proportionate to achieving the legitimate aim of setting the dispute fairly (at a reasonable cost)

Question 9

directions questionnaire

Answer 9

during the course of the court proceedings the parties complete a directions questionnaire
- this is a form used to gather information from both parties so that the court can give instructions on how the case should proceed

solicitors are required to confirm they have explained to their client:
- the need to try to settle
- the options available
- the possibility of costs sanctions if they refuse to attempt to settle
this is to ensure that clients are fully aware of the importance and implications of ADR

Question 10

the independent third party

Answer 10

essential feature of ADR - a third party involved in the process must be independent, and cannot impose a solution

because of this:
- the parties are more likely to be open in their decisions
- the parties are less likely to be aggressive towards each other

the independent third party will be trained to act as neutral and should also 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

Question 11

mediation - procedure

Answer 11

parties will agree an independent third person/body who will act as a go-between - the mediator

the mediator will be sent written statements from both parties and, thereafter, will discuss the case with them on a ‘without prejudice’ basis

any future judge in the proceedings will not be made aware of the discussions, so the parties should feel free to engage in frank exchanges with both the mediator and each other
- the aim of these conversations would be 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
- however, there are other forms of mediation in which the dispute is dealt with by correspondence (phone conversations/online)

Question 12

advantages of mediation

Answer 12

costs and speed
- quick process, can be significantly cheaper
privacy
- clients, customers, and the public are unaware of the circumstances or the outcome of the dispute
- may be important where the party’s reputation is an issue, or where there may be possible future claims from other litigants
ability to withdraw
- client can withdraw at any time if unhappy with the progress
preserving a business relationship
- ideal for cases where the parties will need to continue to deal with each other
commercial reality
- a third party would be able to assist the parties in arriving at a realistic and workable agreement. eg: discounts on future orders, which the court could not order
flexibility
- parties are allowed to choose the procedure that will be followed. there are no legal requirements and therefore no need to comply with any statutes, rules of court, or case law

Question 13

disadvantages of mediation

Answer 13

disclosure
- because there are no formal procedures for disclosure of documents and evidence, there is a risk that the parties may resolve the dispute without knowing all the facts (this can lead to a decision that is found to be unjust)
privacy
- if the client requires public vindication (for example, to ensure that any damage to their reputation is repaired) then the privacy element of mediation is a disadvantage as they will lose the opportunity to demonstrate they were not at fault
ability to withdraw
- 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 side

Question 14

mediation - enforcement

Answer 14

an agreement reached at mediation is not automatically binding - as the client cannot enforce this like a court judgement

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, then they may be sued for the breach

Question 15

arbitration

Answer 15

governed by statute - the Arbitration Act 1996
- this only applies if the agreement to arbitrate is in writing

this is a substitute for litigation and, once a party has agreed to be subject to it, they cannot take advantage of the normal court processes

arbitration may arise in two ways:
- the parties may be contractually bound to use arbitration
- the parties may agree to arbitration once a dispute has arisen

Question 16

arbitration - procedure

Answer 16

the dispute is referred to an independent arbitrator

the person, professional/trade body may be specified in the original contract
- alternatively, the parties may choose their own arbitrator with the relevant experience.

there will be an arbitration process - but this will be less formal than the court procedure

once the arbitrator has reached their decision, this is binding on both parties to the dispute

Question 17

advantages of arbitration

Answer 17

• likely to be quicker than going to court and may be cheaper
• procedures are less formal
• decision is made by an impartial third party with expertise in the matter
• takes place in private, therefore retaining confidentiality (maintains business relationships & ensure unawareness of the dispute or the outcome)
• solutions reached are often more practical than court orders
• the decision is binding on the parties

Question 18

disadvantages of arbitration

Answer 18

• the dispute may not receive the depth of investigation it would receive in the courts (depends on the procedures that are adopted)
• certain remedies are not available (such as, injunctions)
• unlikely to be a cheap alternative as parties will need to pay the arbitration expert or panel, and possibly solicitors costs too - a lot of costs to be covered
• the decision is binding but with very limited rights of appeal

Question 19

arbitration - enforcement

Answer 19

once a decision has been reached..

the winning party can apply to the High Court under s66 of the Arbitration Act 1996 for permission to enforce the arbitration award as if it were a court judgement

Question 20

litigation

Answer 20

only option left if the parties cannot or will not engage in ADR
- once they have proceeded by way of litigation, neither party can withdraw without paying the opponents 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

civil disputes between individuals and/or companies and they may arise in many different contexts:
- contractual disputes
- negligence claims

Question 21

litigation - the Civil Procedure Rules

Answer 21

civil litigation is governed by the Civil Procedure Rules 1998 (CPR)

The CPR:
- dictates the procedure that must be adopted when pursuing a claim through the courts
- aim of the CPR is to provide a more ‘user-friendly’ system of resolving such disputes

Question 22

litigation - civil courts

Answer 22

In England and Wales, most civil disputes are dealt with either by the County Court or the High Court

Question 23

litigation - court personnel

Answer 23

to ensure the civil system operates effectively, the courts are supported by various personnel:
- judges
- court manager
- ushers
- enforcement officers

Question 24

an overview of a civil claim

Answer 24

there are 5 stages of litigation:
1. pre-commencement of proceedings
2. commencement of the claim
3. interim matters
4. trial
5. post trial

Question 25

stage : pre-commencement of proceedings

Answer 25

there are a number of steps to take before issuing proceedings: - the client - what are their objectives - evidence - gathered to confirm the viability of the claim and the prospects of success - costs - ADR pre-action protocols govern the steps parties should take before commencing a court case: - parties must establish what issues are in dispute - they must share information that is available to the concerning these matters - they must endeavour to resolve the issues failure to follow a protocol step, without good reason, will usually incur a sanction (such as a reduction in the costs recovered by that party if litigation is successful) 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

Question 26

stage 2: commencement of the claim

Answer 26

proceedings are commenced by a claim form - the form must be served on the defendant together with full details of the claim (the 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 - higher value cases being given greater attention and resources

Question 27

stage 3: interim matters

Answer 27

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 & 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 which impact the case (whether they assist or not) - evidence the parties wish to rely on must then be exchanged (witness statements, expert reports) - costs will also be scrutinised in addition, the parties may apply to the court for any specific order that might be required (eg: to compel an opponent who has neglected to take a required step in accordance with the timetable to do so)

Question 28

stage 4: trial

Answer 28

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 - if fixed costs do not apply, the judge will determine how much

Question 29

stage 5: post-trial

Answer 29

a party who is unhappy with the judgement may decide to appeal all/part of the trial judges decision if the damages and/or costs are not paid as required - the party will have to apply to the court to enforce the judgement - this commonly involves instructing court officials to attend the debtor’s premises and to take their belonging to bee sold at public auction. the proceeds are then paid to the appropriate party.

Question 30

before issuing proceedings, there are a number of factors to be considered...

Answer 30

the factors: - can the claim be brought at all? - who are the parties? - does the defendant have the means to pay a judgement? - what are the merits of the case? - what steps must be taken before proceedings are issued?

Question 31

limitation

Answer 31

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 imposing these deadlines is meant to prevent a potential defendant remaining under constant threat of litigation for events that happened many years before & to recognise that the passage of time results in evidence being lost and witness accounts becoming less reliable

Question 32

effect of limitation

Answer 32

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

Question 33

what are the limitation periods?

Answer 33

in contract or tort claims: - the claimant has six years from the date of the cause of action to commence their proceedings - when calculating, usually the day on which the cause of action accrues is excluded - in contract - cause of action accrues as soon as the breach of contract occurs - question of fact to be determined by the court - in tort - 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 in personal injury matters: - the limitation period is three years - this runs from the date on which the cause of action accrued, or (if later) the date of the claimants knowledge - date of knowledge = the first date when the claimant knew, or might reasonably be expected to have known, certain specific facts - the facts include -: the seriousness of the injury, its cause, and the identity of the defendant - this does not apply to children, the time limit does not start to run until their 18th birthday 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: - six years from the date of the cause of action, or - three years from the date of knowledge of the damage, whichever is later, but - no later than 15 years after the date of the negligent act omission in a contract case, it is important to check whether a different limitation period is specified in the contract - this is usually shorter than the statutory limitation periods

Question 34

can the limitation period be extended?

Answer 34

general rule is that actions commenced outside the limitation period where the defendant has raised the issue as a defence will not be allowed. - extensions may be available in exceptional circumstances

Question 35

parties to a claim

Answer 35

claimant + defendant

Question 36

parties to a claim - the claimant

Answer 36

the claimant is the party who starts the case whilst the party against whom proceedings are brought is the defendant

Question 37

who is the defendant?

Answer 37

identifying the defendant early on is very important to avoid incurring costs later on (eg to amend court documents) identifying the defendant is often straightforward, as usually there will only be one defendant - there are occasions when it will be less straightforward: - if an employee commits a tort when acting in the course of their employment, both the employee and the employer should be sued (employer is vicariously liable for the employee) - a consumer may have a cause of action against both the retailer and the manufacturer of a defective product

Question 38

a litigation friend

Answer 38

there are special safeguards in place for children and unprotected parties - this is because these individuals are considered to be unable to make the decisions required of a party to court proceedings, so they must have a litigant friend to act on their behalf 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 protected party will only be valid if approved by the court

Question 39

where is the defendant?

Answer 39

clearly, the defendant needs to be traceable and their whereabouts known in order to communicate the claim and (if necessary) serve proceedings an inquiry agent may be able to assist if this is an issue

Question 40

how should defendants be sued?

Answer 40

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 ways. equally, a tort may have been committed or suffered by different legal entities the solicitor should confirm whether the defendant is: - an individual - a sole trader - a partnership - a limited liability partnership - a limited company

Question 41

is the defendant worth suing?

Answer 41

suing a defendant who is on the verge of either bankruptcy or liquidation is pointless - enforcement of any judgement obtained would be impossible if the client has any concerns about the prospective defendants ability to pay, then further enquiries should be made. - these could include -: - a search at Companies House to ascertain information about the financial position of a company - a bankruptcy search of an individual - instructing an inquiry agent - the use of various internet search engines to see if there is any relevant information if the outcome of these investigations is that the defendant is struggling financially, although making a claim is possible, it would not be viable

Question 42

types of claims

Answer 42

when pursuing litigation, the claimant must be aware of the type of claim they are issuing as this impacts upon how certain court documents are drafted and also the procedure the types of claims: - specified claims - unspecified claims

Question 43

specified claims

Answer 43

claims that are for a fixed amount of money - normally a claim for a debt owed because the amount is known already (maybe an invoice) the figure owed can be calculated calculated easily eg -: the price of goods sold and commission due under express contractual terms

Question 44

unspecified claims

Answer 44

claims where the court will have to conduct an investigation to determine the amount of money payable - even if the claimant puts forward some figures. - eg -: damages claims

Question 45

case analysis

Answer 45

the solicitor needs to be able to extract relevant information from the client in order to give preliminary advice on issues such as liability and quantum.

Question 46

causes of action

Answer 46

this is the legal basis of a claim, such as breach of contract or negligence to determine whether a client has a cause of action & the likelihood of success, it is essential at the outset that a solicitor analyses all the available evidence eg of the most common types of causes of action -: - contract: breach of express or implied terms - tort (negligence): breach of duty of care - tort (nuisance) - misrepresentation

Question 47

case study of breach of contract

Answer 47

must follow these steps: - existence of a contract - terms relied on (express/implied) - breach of those terms - consequences - damage and loss

Question 48

pre-action procedure

Answer 48

before issuing court proceedings, the parties are required to comply with various pre-action rules these are annexed to the CPR and, over time, a number have been developed 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

Question 49

the objective of the PDAC and the protocols

Answer 49

the objective is to initiate and increase pre-action contact between the parties - particularly, to encourage better and earlier exchange of information - so that the parties are in a position where they may be able to settle cases fairly and early without litigation - also, to enable proceedings to run to the courts timetable and efficiently if litigation does become necessary

Question 50

practice direction and the pre-action protocols: principles

Answer 50

- litigation should be a last resort - the parties should exchange sufficient information in order to: 1. understand each other’s position 2. make decisions about how to proceed 3. try to settle the issues without proceedings 4. consider a form of ADR to assist with settlement 5. support the efficient management of those proceedings 6. reduce the costs of resolving the dispute - the steps taken should usually include: 1. the claimant writing to the defendant with concise details of the claim 2. the defendant responding within a reasonable time 3. the parties disclosing key documents relevant to the issues in the dispute - only reasonable and proportionate steps should be taken by the parties to identify, narrow, and resolve the legal, factual and/or expert issues - where a dispute has not been resolved after the parties have followed the Practice Direction, they should review their respective positions to see if proceeding can be avoided and at least seek to narrow the issues in dispute before the claimant issues proceedings - if a dispute proceeds to litigation, the court will expect the parties to have complied with the Practice Direction - a party might be sanctioned for failing to do so

Question 51

PDAC: steps

Answer 51

the PDAC provides a safety net ensuring that no civil claim escapes the requirement to follow the pre-action procedures the steps -: - the Practice Direction is clear that parties must exchange information so they can understand the issues, consider ADR and attempt to settle the dispute without legislation - 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 - thereafter, the defendant must provide a response within a reasonable time to include confirmation of whether all or part of the claim is accepted (14 days in straightforward claims, and a max of 3 months in complex cases) -: and if not accepted, then the reasons why, together with details of any other counterclaim should be included - key documents relevant to the issues in dispute should also be disclosed

Question 52

consequences for failure to follow the terms

Answer 52

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 penalties can include an order: - that the party at fault pays some or all of their opponents costs (perhaps on the penalty, indemnity basis) - depriving a claimant who is at fault of some or all of the interest they may subsequently be awarded on any damages recovered - 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

Question 53

pre-action protocol for debt claims

Answer 53

debt claims are covered by the Pre-Action Protocol for Debt Claims (PPDC): - this applies to any business including sole traders and public bodies (creditor) that brings a claim against a debtor who is either an individual or a sole trader - it does not apply to business to business debts (unless the debtor is a sole trader) 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 - Standard Reply Form, Information Sheet, and Financial Statement forms should 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 - 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

Question 54

pre-action protocol for professional negligence

Answer 54

this applies when a claimant wishes to make a claim against most types of professionals as a result of alleged negligence 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 - the steps are the same as the Practice Direction on Pre-Action Condition, but there are some additional requirements: - a party is encouraged to notify the professional in writing of any intended claim (the professional should be instructed to inform their insurers immediately and to acknowledge the notice in writing within 21 days of receipt) - 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, and then they have three months to investigate and 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 this letter, 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 Acknowledgement - 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

Question 55

Practice Direction - preliminary considerations for the use of the Welsh language in civil proceedings

Answer 55

this Practice Direction applies to civil proceedings in or having a connection with Wales, and its purpose is to ensure that the Welsh and English languages are treated equally measures include that, provided the court is informed, hearings in Wales may be conducted entirely in Welsh if all the parties and witnesses consent, and documents placed before the court may also be in Welsh

Question 56

foreign element

Answer 56

in the modern world with its global economy, business and trade are international to ensure that disputes which take place outside the confines of England and Wales may be litigated, mechanisms are in place to determine the law that applies to these

Question 57

foreign element - which country's laws apply?

Answer 57

the starting point for a claim with international implications is to decide which country’s laws apply the effect is that each country will apply its own domestic rules to cases where the UK is involved the UK’s exit from the 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

Question 58

foreign element - choice of law

Answer 58

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: - 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 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 of England and Wales, the procedure will vary significantly - therefore, 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 in Scotlan and Norther Ireland: - they 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 - 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