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What Should You Consider Before Issuing A Claim?

Preparation And Alternative Strategies

We always encourage our clients to use the full range of the legal recovery options available to them if they need to. The effectiveness of a letter before action that has been sent, or any deadlines you have given a debtor will be seriously compromised if you are not willing to take things further.

With all of that in mind, Lovetts are always happy to discuss the options available with their clients before they arrive at the claim stage. If a debt can be dealt with in a matter more appropriate to the circumstances at an earlier stage then we are happy to put it forward as a strategy. So what are the areas you should consider prior to claim and what preparation should you make?

1. Do I Have The Evidence?

Always be aware that a case may be defended. If a case is defended you will need the evidence to support it. Do you have the people and the documents to support yourclaim?

2. Do I Need To Take Advice?

Consider getting advice before starting proceedings if there is a serious dispute, or, you have doubts about your case. Remember you may have to pay the other party’s costs if you later want to stop the case.

3. Consider ADR (usually mediation)

If there is a real dispute, the court requires the parties to consider whether the dispute should be settled. If negotiations fail you should consider ADR (Alternative Dispute Resolution) before going to court.

The options here are:-

In many cases, you may not know there is going to be a real dispute until proceedings are issued.

However, generally, if there is a dispute, then unless summary judgment is possible, you should consider suggesting mediation before proceedings are issued.

It’s worth bearing in mind the following observations:-

“Megarry J once described the law reports as charts of the wrecks of unsinkable cases. Because of its uncertainty and expense, prudent parties usually try to avoid litigation where possible. It has to be borne in mind that the “settlement value” of a claim is not an objective fact (or something which can be assessed by reference to an available market) but a matter of subjective opinion, taking account of all relevant variables. Often parties may have widely different perceptions of what would be a fair settlement figure without either being unreasonable. The object of mediation or negotiation is then to close the gap to a point which each finds acceptable” (Supershield Ltd v Siemens Building Technologies FE Ltd [2010] EWCA Civ 7 per Toulson LJ at para 28)

Mediation is the normal form of ADR. Mediation is designed to a solution which is mutually commercially acceptable at the time rather than work out the strict legal rights and wrongs of a situation.

“In so many cases? the best time to mediate is before the litigation begins. It is not a sign of weakness to suggest it. It is the hallmark of commonsense. Mediation is a perfectly proper adjunct to litigation. The skills are now well developed. The results are astonishingly good. Try it more often.” (Ward LJ in Egan v Motor Services (Bath) Ltd [2007] EWCA Civ 1002)

4. Consider A “Part 36 Offer”

This also applies where there is known to be a real dispute. If the debt is more that £5000, you should consider making an offer that complies with Part 36 of the Civil Procedure Rules. The offer says how much you will accept, including interest but excluding costs. If the offer is not accepted and:-

you would normally recover around 80-90% of your costs from then on. If you don’t make a part 36 offer, the rule of thumb for costs is that you normally do well to recover two thirds of your actual costs.

You could also be awarded interest at up to 10% over base on both the money you recover and your costs.

A well pitched offer can therefore put some pressure on the late paying client to think very carefully before refusing it and forcing you to go to trial.

5. Is All In Order?

6. Terms Of Business

Some people are under the impression that a contract has to be in writing. It doesn’t.

Every order involves the parties making a contract. For example, a contract is created when someone places an order over the telephone. Where your company has printed terms and conditions they don’t just apply automatically to every order. They have to be part of the contract. They will be part of the contract if:-

It is not enough for the terms to be on the invoice, your debtor has to have been told of them before the order was placed. However, the fact that your terms were on invoices for previous orders may possibly be enough to incorporate them into later orders.

If you are satisfied that you have duly considered all alternatives and have done the necessary preparation, than you can rest assured that you have done your best to ensure any claim issued is a success.

Note

This briefing paper is intended only as an indication of points you could consider and take advice on. You should always take professional advice on any particular situation or the drafting of your terms of business. This note is not legal advice so please don’t treat it as such.

29 October 13 4:00:00 Europe/London
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