To Pursue Or Not To Pursue?
Published January 2010
The Pre-Action Conduct Protocol (“PDPAC”)
The PDPAC, which became effective from 6th April 2009, has incorporated new guidelines into the Civil Procedure Rules. They affect anyone who has a dispute with another over money or otherwise.
The guidelines apply to all types of claims, particularly those not already subject to a Pre-Action Protocol.
They detail and dictate certain standard requirements of conduct from parties before Court proceedings are initiated. They have a specific effect upon businesses involved with debt recovery against an individual by requiring certain information to be given to the debtor before proceedings are commenced.
Their objective is to allow the debtor the opportunity to investigate the alleged claim against them prior to any commencement of Court proceedings. The PDPAC is not mandatory however parties should comply unless it would be inappropriate to do so.
The PDPAC provides guidance on pre-action procedure where no pre-action protocol or other formal pre-action protocol applies. For example the Letter Before Action (now called Letter Before Claim) must allow a “reasonable” period of time for the debtor to respond. It used to be normal practice to allow 7 days for the debtor to respond, however the PDPAC now recommends a minimum of 14 days, providing the matter is straightforward. If the matter is complex and specialist advice is required, it may be that the reasonable period is considered to be 30 days rather than 14. In exceptional cases, 90 days may be considered reasonable.
Where it is known that the debtor disputes the claim, the Letter Before Claim should refer to documents on which you intend to rely, offer the opportunity to explore Alternative Dispute Resolution (“ADR”) in an attempt to resolve the matter and refer specifically to the Court’s powers to impose sanctions for failure to comply with the PDPAC.
Specifically the Letter Before Action needs to:
- Specify what the Claimant wants from the Defendant,
- Provide details of any funding arrangement available,
- List essential documents on which the Claimant intends to rely,
- Detail the form of ADR the Claimant considers most suitable, if any, and invite the Defendant to agree to this,
- State the date by which the Claimant considers it reasonable for a full response to be provided by the Defendant,
- Ask for copies of relevant documents not in the Claimant’s possession but which the Claimant wishes to see,
- Unless legally represented, the letter should refer the Defendant to the Court’s powers to impose sanctions for failure to comply, and
- Inform the Defendant that failure to respond may lead to the Claimant commencing proceedings against them and this may increase the Defendant’s liability for costs.
Also, for debt claims where the Claimant is a business and the Defendant is an individual the Claimant is required to:
- Provide the debtor with details of how the monies due can be paid,
- State that the Debtor can contact the Claimant to discuss repayment options, and
- Inform the Debtor about organisations from whom they can obtain free advice and assistance.
The Defendant’s response should state whether the claim is accepted in whole or in part or that the claim is not accepted. Where the Defendant disputes all or part of the claim the response should include reasons why the claim is not accepted, and/or whether the Defendant intends to make a counter claim.
The PDPAC stipulates what the Court must consider and provides examples of non-compliance.
Essentially the guidelines stipulate that proceedings should only be issued as a last resort and the Court can apply the following sanctions if there has been non-compliance;
- Stay of proceedings until steps which ought to have been taken, have been,
- An order that the party in default pay the costs, or part of the costs of the other party,
- If the party at fault is the Claimant in whose favour an order for the payment of the money is subsequently made, an order that that Claimant be deprived of interest of all or part of that sum and/or interest is awarded at a lower rate, and
- If the party at fault is the Defendant, and an order for payment of a sum of money is subsequently made in favour of the Claimant an order that the Defendant pay interest on all or part of that sum at the higher rate, not exceeding 10% above the base rate.
In conclusion, parties to potential Court proceedings must therefore take note of the new regime to avoid the risk of potentially substantial financial consequences being imposed by the Courts.
Should you have any questions or queries or require further information please do not hesitate to contact Sam Pedley on 0845 55 55 321 or samuel.pedley@mfgsolicitors.com.
