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The greatest potential benefit in taking your opponent to court is of course if you win at trial or achieve a satisfactory settlement. However, win or lose, there are various factors that you should consider carefully before commencing Court proceedings.
This guide is intended to set out the most important of these, in order to allow you to make an informed decision on how to proceed. Obviously, we hope that you will find it of assistance. However, you will appreciate that litigation is a complex area and no guide can ever set out all of the factors relating to a particular case. THIS GUIDE IS NOT THEREFORE A SUBSTITUTE FOR DETAILED ADVICE ON YOUR CASE. If you would like further explanation of any points in this Guide, please do not hesitate to contact us.
This Guide is not a substitute for and does not replace the Client Care letter that you will, if you are a client, already have been sent, or will be sent, which will have set out such matters as how our fees are calculated.
This Guide only relates to Court proceedings in the Courts of England and Wales, and not to proceedings in Scotland or abroad, or indeed to arbitration proceedings.
THE BASIC COURT PROCESS
Beginning the Claim
In very brief terms, Court Proceedings will be begun when you lodge with the Court:
- a Claim Form (setting out the amount and type of your claim) and
- Particulars of Claim (explaining the background to your Claim; the relevant facts; the basis of the Claim and the amount that you are claiming or remedy that you are seeking). These can follow after you have begun the Court proceedings but generally have to be served within 14 days of the service of the Claim Form.
The Claim Form and Particulars of Claim are then served on the other side (the Defendant), either by us or by the Court. If they are being served in England and Wales, they have to be served within 4 months of issue.
If the Defendant is going to defend the Claim, they will need to:
- lodge with the Court an Acknowledgement of Service form, saying that they intend to defend the Claim (which they must generally do within 14 days of the service of the Claim on them), and/or
- serve a Defence to the claim, setting out the grounds on which they will resist the claim (which they must generally do within 28 days of the service of the Claim on them or within 14 days of the service of the Claim Form if they have not lodged an Acknowledgment of Service form within that period).
The Court can in certain circumstances shorten the above periods.
Challenge to the Court's Jurisdiction
The Defendant can also challenge the jurisdiction of the Court, for example by arguing that, if the dispute has an international element, the Courts of another Country have or should have jurisdiction, or that there is a binding agreement between the parties that the dispute should go to arbitration. If this point is argued, there will be additional costs and delay while the point is decided by the Court, usually at a special hearing to decide the issue.
The Process En Route to Trial
In brief, once the Claim and Defence have been served, there are a number of steps that need to be taken before the matter gets to trial.
Once a Defence has been lodged the Court will allocate the case to:
- the Multi-Track (usually for cases worth more than £25,000 or of complexity).
- the Fast Track (usually for cases worth between £10,000 and £25,000); or
- the Small Claims Track (usually for cases worth up to £10,000);
The financial value of the claim is the main factor in deciding which Track a case is allocated to, but the Court will also consider factors such as the complexity of the issues, the value of any Counterclaim (see below) and the amount and nature of witness or expert evidence that may be required.
Although the exact steps will depend on the Track selected by the Court, the type and value of the claim and the approach taken by the Court, the following are common features in most litigation (although they are unlikely all to apply if the case is allocated to the Small Claims track):
- Disclosure (where each party tells the other side what documents they have - whether helpful or not - that relate to the points in dispute, and allows the other side the opportunity to see those documents)
- Exchange of Witness Statements (where each side has to serve on the other written statements of the factual evidence to be given by its witnesses)
- Service of Expert Evidence (if the Court needs expert evidence to decide the case). This may be by way of each side appointing its own expert, or by the appointment of a joint expert.
Various additional steps may also be necessary before trial, and it is common for there to be applications made to the Court by the parties before trial to deal with procedural matters (these are known as interim applications or hearings).
The Trial or Hearing
The exact structure of the trial or final hearing will depend on the particular case and the Track that the case is allocated to.
In the Fast and Multi track the process is more formal and barristers are often used. Witnesses will give evidence and be cross-examined and each side has the opportunity to make its case to the Court. Fast Track trials should last no more than 5 hours, although this can be spread over 2 days, whereas Multi-track trials might last considerably longer than this.
In the Small Claims track, there will be a relatively informal and quick hearing before a District Judge (usually lasting no more than a couple of hours). The process is designed to allow parties to represent themselves if they wish. Witnesses will need to attend and each side will have the opportunity to explain their case to the Court, show the Court the relevant documents, ask their witnesses the questions they want and ask questions of the other side and their witnesses.
If your case reaches trial in open court, it may conceivably be reported in the press or receive press attention.
The losing party can in certain circumstances appeal against decisions of the Court. If this happens it can result in significant additional expense and delay for both sides.
THE LIKELY TIME-SCALE OF COURT PROCEEDINGS
Court proceedings can be a time consuming and drawn-out process. If your claim is defended, the proceedings may, depending on the Track that is selected and the approach of the Court and the other side, last many months or even a number of years.
The likely time-scale depends on the Track to which the case is allocated, which affects how (and the speed at which) the case progresses.
- In The Multi Track, there is more flexibility in the time-scale and the Court will consider the nature of the case (usually at a preliminary hearing called a Case Management Conference); decide how best to deal with it, and issue Directions accordingly, including directions in relation to the disclosure of documents (due to recent changes in the law disclosure of documents is now considered by the Court at an early stage). The trial can take place within as little as 40 weeks of the claim being allocated to the Multi Track, but the timetable can vary significantly according to the nature and complexity of the issues and the decisions of the Court handling the case. You may also find that the Court orders extra hearings, for example a Listing Hearing to assess the position before a trial date is fixed and possibly even a Pre Trial Review to check the position and readiness of the parties before the date of the trial.
- In The Fast Track, the Court will fix a strict timetable for progress to trial and the trial will usually take place approximately 30 weeks of the claim being allocated to the Fast Track. A typical Fast Track timetable, from the date of allocation,
- In The Small Claims Track, cases are generally heard within 6 to 10 weeks of allocation, although it can take considerably longer.
PROSPECTS OF SUCCESS AND RISK
Whilst we will advise you as to our views as to your prospects of success, you must appreciate that the outcome of any litigation is uncertain; there can therefore be no guarantee of success, and that there is therefore always an element of risk involved in embarking on litigation. Also, cases almost invariably evolve as they progress, and the prospects of success can also vary significantly as the case progresses (and at trial) depending on such factors as what documents emerge; what the witnesses of fact and expert witnesses say, how they perform at trial and which witnesses the Court chooses to believe.
DOCUMENTS AND WITNESSES
Please make sure that you keep safely any documentation (including documents held electronically, which may otherwise be deleted as a matter of course) that may be relevant to the proceedings. As mentioned above, during the Disclosure stage of the litigation you will have to disclose not only the documents that we will be relying on, but also any relevant documents that adversely affect your case. In Multi Track cases the issue of disclosure of documents will need to be considered at an early stage in the proceedings. We will need to see all documents that may be relevant (whether helpful or not).
You should also keep safe any physical items that may in any way be relevant to the dispute.
It is also important to keep details of any potential witnesses, including details of where they can be contacted if there is any risk that you may lose contact with them. You may have to pay for the services of an expert witness, if evidence on a technical matter is needed.
Costs are obviously an important factor. Some of the important points of which you should be aware in relation to the likely level of your legal fees are:
- Whilst the likely level of costs will depend on the nature of the case, litigation is in general a time-intensive (and hence expensive) process. The more complex the claim (and hence the greater the amount of documentation, witnesses and the need for expert opinion), the more expensive it is.
- You will need to pay a Court fee to begin the Court proceedings. The amount of the fee varies between £25 and £10,000 and depends on the size and nature of the claim. We will advise you on the exact amount. Further Court fees (for example for interim applications) are also likely to be payable as the case progresses, and a Court fee of up to £1,090 is payable by the Claimant before the case is listed for trial.
- It is always very difficult to give meaningful estimates of the likely overall costs of litigation, because so much depends on how the case progresses (and hence the approach taken by the Court and the other side), and it is almost impossible to predict at the outset what approach they will take.
- If you win at trial (although it is always at the Court's discretion; there are a number of factors that the Court can take into account (including settlement offers made by the parties) and there can therefore never be any guarantee that the Court will make such an order) the loser is usually ordered to pay the winner's costs.
- However, you are always primarily liable for our costs and even if you are awarded your costs, you will almost certainly not recover all of your costs from the other side. The amount of any costs payable by the other side is (if they cannot be agreed) decided by the Court either at a separate assessment hearing or immediately following the trial. Due to recent changes in the way that costs are managed it is difficult to say what level of costs you may recover, although under the previous regime one would expect to recover approximately 75% of costs (it is too soon to determine what level of recovery one should expect under the new regime). It is likely that there will be a shortfall between the level of costs incurred and the amount payable by the other side and you will have to bear the shortfall yourself. Also, if costs are assessed at a separate hearing, you will incur further costs in preparing a formal bill of costs (which we need to pay a costs draftsman to do), and preparing for and attending at the assessment hearing. Again, only a proportion of those costs will be payable by the other side.
- The amount of your costs that you are able to recover is restricted further if your claim is allocated to the Small Claims or Fast Track, in that:
- In the Fast Track, there are specific restrictions that apply to the amount of costs that are recoverable from the other side.
- In the Small Claims Track, you will in general, even if you win, not be awarded more than the Court fee you pay; witness expenses and fixed costs (between £50 and £260 depending on the size of the claim), and will have to pay the rest of your legal fees yourself. You should therefore always consider the commerciality of pursuing a small claim using lawyers, as, even if you win, the legal costs will effectively have to be deducted from any winnings (and indeed may well exceed those winnings).
Expenses are likely to be incurred on such matters as barrister's fees and expert witness fees (if these are used).
If the Other Side Should Qualify for Legal Aid
If the Defendant is at any stage entitled to receive Legal Aid, you are unlikely to recover any of your costs from them even if you win.
If You Should Lose
If you lose your claim, you will almost certainly have to pay the winner's (assessed) costs as well as your own.
Costs of Interim Hearings or Applications
If there are any interim hearings or applications, the Court is likely to order the loser of each application to pay the winner's costs of the application. These are usually assessed there and then and the loser will usually have to pay these costs within 14 days of the hearing in question. Again, however, if you are the winner, you are unlikely to recover all of your costs incurred in connection with that application and will have to bear the shortfall.
Your Time and the Time of Your Employees
Bringing Court proceedings may take up a lot of your time, time which could obviously otherwise be spent on other things. You are unlikely to receive compensation for this time or the time spent by employees or management of your business in connection with the litigation.
Security for Costs
The Defendant can in certain circumstances ask the Court for Security for Costs, particularly if you are abroad, insolvent, or of limited means. The Court can then order you to pay funds into Court or into a deposit account to cover the Defendant's likely costs of defending your claim. If the Defendant brings a Counterclaim against you (see below) you may be able to seek security for your costs of defending that Counterclaim.
You should check your existing insurance policies and check with your brokers to see whether you have litigation cover. Such cover can be attached to other policies such as business or household insurance. If you have (or may have) such cover, you should make sure that you get your insurer's approval for the intended litigation before you start proceedings, provided that you are not thereby going to miss the Limitation Period (see below), or you may find that your policy is invalidated.
It is also possible to take out 'After the Event' legal expenses insurance, which can, depending on its terms, cover our costs and the other side's costs if the litigation is unsuccessful. The premium depends on the likelihood of you being successful at trial. If you succeed at trial the premium can not be recovered from the other side and would be payable by you. Please let us know if you would like to explore this possibility.
Conditional Fee Agreements
Solicitors are free to act on the basis of a formal Conditional Fee or "No Win, No Fee" type of agreement, although this is in general more suitable to simpler, debt recovery type actions or actions where the amount of compensation, rather than the question of liability itself, is in issue, and whether or not we are prepared to act for you on a Conditional Fee basis will depend on various factors. Please contact us if you would like to discuss this issue further. It is also possible to take out 'After the Event' legal expenses insurance, which can, depending on its terms, cover our costs and the other side's costs if the litigation is unsuccessful. The premium depends on the likelihood of you being successful at trial. If you succeed at trial the premium can not be recovered from the other side and would be payable by you. Please let us know if you would like to explore this possibility.
Solicitor are also free to act on the basis of Damages Based Agreement. If we were willing to act on that basis we would be paid a share of your damages. Please let us know if you would like to explore this possibility.
ENFORCING A JUDGMENT OR COSTS ORDER
A judgment or favourable costs award may, in some circumstances, only be worth the paper that it is written on, as it may be necessary to enforce that award, which may be impossible if the Defendant has insufficient assets. You should therefore always consider, before embarking on litigation, whether the Defendant is worth suing. Also, you may incur further costs and time trying to enforce a judgment or favourable costs award, and are unlikely to be able to recover more than a small proportion of those costs from the other side.
If you consider that the Defendant may be, or is likely to, hide or dissipate their assets, please tell us a matter of urgency, as it is in certain circumstances possible to get a Court Order preventing them from doing so.
Whilst there is no guarantee that a case will settle, the majority of cases do settle before they reach trial.
You can make the Defendant an offer to settle at any stage up to the trial itself, and please let us know at any stage if you would like to do this. Any offer would be made on a "Without Prejudice" basis and would not therefore be seen by the Court at trial until it comes to decide who should pay the costs of the case.
Part 36 Offers
An offer can be formulated as a "Part 36 Offer", which can put the Defendant at risk as to costs and interest if they continue with the proceedings and you beat the offer that you have made. It is well worthwhile giving serious thought at the outset to what would represent a satisfactory outcome for you, and for this to be formulated into a formal Part 36 Offer to the other side, and please let us know is you would like us to do this. Because of the potential costs and interest implications of a Part 36 offer, its terms need to be considered carefully before it is made.
Similarly, the Defendant can also make a Part 36 Offer at any stage. If this happens, you would have 21 days to decide whether to accept the offer. We will obviously discuss such an offer with you in detail if it is made, but in brief there would be significant costs and interest consequences if you do not accept a Part 36 Offer and fail to beat it at trial.
Mediation and Alternative Dispute Resolution
Mediation is a way of attempting to achieve a settlement, and is increasingly encouraged by the Courts. Mediation is without prejudice (and therefore the Judge would not know about it until after deciding the outcome of the trial, although he or she might be told about the mediation before deciding the costs of the proceedings) and both parties essentially meet with a mediator to see whether a resolution can be found. Again, please let us know at any stage if you would like to explore this possibility. Please let us know if you would like to see our client guide to mediation.
In English law there are various time limits for starting Court proceedings or taking steps to enforce a judgment. If these limits are missed it may make it impossible to pursue the claim or difficult to enforce the judgment. There are numerous different limitation periods. The limitation period for some claims may be as little as 3 months, but the general period is 6 years from the date that the claim arose. In a negligence claim, this may be 6 years from the date of the negligent act; in a breach of contract claim, it will be 6 years from the date of the breach of contract. In the case of enforcing a judgment, it will be 6 years from the date of the judgment.
Therefore, if you consider that there is any possibility that you may be approaching the end of the limitation period, you should inform us immediately.
We are only able to advise on English law. If foreign law may apply to your claim, you should check what the limitation period is under that foreign law. Certain foreign law limitation periods are considerably shorter than their English law equivalents. We have contacts with a number of foreign law firms, and therefore if you would like us to make enquiries on your behalf, please let us know.
If you are already a party to legal proceedings, strict time limits may apply for you to take steps in the proceedings. You should therefore send all Court papers and orders to us immediately.
If you start Court proceedings, the Defendant may file a counterclaim (also known as a Part 20 Claim) against you, and the amount of the Counterclaim could, for example, exceed the amount of your claim. You should therefore consider the likelihood of this happening before commencing proceedings. If a Counterclaim is lodged, this may significantly increase costs (as well obviously as risk) and you would need to defend the Counterclaim fully to trial or risk judgment being entered against you on the Counterclaim.
If a Counterclaim / Part 20 Claim is served, you must serve a defence to the Counterclaim / Part 20 Claim by the applicable deadline, or risk judgment being entered against you for the Counterclaim / Part 20 Claim. The deadline is usually 14 days from the date that the Counterclaim / Part 20 Claim is served on you.
Once you have begun Court proceedings, you cannot simply withdraw from or stop them, as you would then, unless a settlement could be agreed with the other side, almost certainly have to pay the Defendant's costs of defending the proceedings, and also meet any Counterclaim. Therefore, it is important to ensure that, before bringing proceedings, you are prepared if necessary to follow them through all the way to trial.
The intention of this guide is not to dissuade you from bringing a claim. However, it is obviously important that you are aware of the basic process and the potential pitfalls of litigation, in order to allow you to consider the commerciality of the intended proceedings; to balance the potential risks and advantages accordingly, and to make an informed choice.