Emma Carr
Partner
Commercial litigation and litigation funding partner
Co-chair of ThinkHouse
Article
7
What are the pre-action steps you need to consider before issuing a court claim and why does it matter?
We set out the key points you need to know in order to avoid costly delays and sanctions.
In simple terms, yes, but if you have not followed the required procedures and acted in a way that the court considers to be reasonable and proportionate, you may be penalised, even if your claim is successful.
Potential sanctions are an adverse costs award (for example, an order that you pay your opponent's costs incurred as a result of you failing to comply with the prescribed rules), a stay of proceedings until relevant pre-action steps are completed and/or awards of interest up to 10% above base rate.
In some cases, your contract will specify a process for dispute resolution and if that is the case, you need to follow the specified process in order to avoid a breach of contract. As an example, your contract may provide for arbitration, rather than litigation through the courts; equally, there might be a stepped process requiring the parties to engage in negotiations and/or alternative dispute resolution (ADR) (such as mediation) before commencing formal proceedings.
There is the possibility that you will need to issue proceedings because the limitation period is due to end. In that case, you may be able to then agree a stay of proceedings with your opponent (or obtain an order from the court) to enable both parties to undertake pre-action steps, as described below.
You need to comply with the pre-action rules that apply to your dispute in accordance with the Civil Procedure Rules (CPR) which apply to all civil court proceedings, and set out the steps that must be taken before an action is commenced.
There are specific protocols for certain areas of dispute (for example construction and engineering, professional negligence and certain debt claims); otherwise, the Practice Direction on Pre-Action Conduct and Protocols (the PD) will apply. Check which rules will apply to your claim before proceeding.
The CPR prescribe the steps that should ordinarily be taken before proceedings are commenced, by reference to the pre-action protocols or the PD. There are certain exceptions to the requirement to follow these rules, but in most cases, they will apply.
Overall, the intention behind the pre-action protocols and PD is to ensure that parties give full consideration to the strengths and weaknesses of their position before proceedings are commenced, leading (hopefully) to more resolutions at the pre-action stage and a reduction in legal costs that will be incurred.
The rules aim to ensure that:
As is evident from the steps listed above, you will need to have a clear understanding of your claim at the pre-action stage, including the amount of the claim and what you consider to be the basis of the entitlement. You will also need to have collated relevant documents and information.
Remember throughout that in due course, you may need to evidence the fact that you have acted reasonably and proportionately in relation to your claim.
Failure to follow the prescribed actions and steps before starting proceedings can end up needlessly costing your business both time and money.
The pre-action process may appear cumbersome but use it to your advantage by pro-actively seeking an advantageous resolution. Even if you end up having to issue a claim, you will have taken steps to protect your position on costs as you will be able to evidence your committed attempts to reach a settlement, or at least narrow down the issues in dispute at an early stage.
If you have any queries on this or related topics, please contact Emma Carr.
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