What is litigation?
Litigation is probably the most widely recognised dispute resolution procedure. Broadly, litigation means the taking of legal action in a Court to determine or enforce a party’s rights. There are several High Court trial centres and over 100 County Courts in England and Wales which can determine a wide range of disputes. Certain disputes may only be determined by specialised Courts – for example, some employment related disputes may only be determined by an Employment Tribunal. The references in this guide to Courts are to Courts in England and Wales only. More information about the Court systems in Scotland and Northern Ireland is available at www.scotcourts.gov.uk and www.courtsni.gov.uk, respectively.
The Civil Procedure Rules
Litigation in England and Wales is governed by a set of rules known as the Civil Procedure Rules (the “CPR”), which parties (and their legal representatives) must comply with throughout the litigation. The CPR also contain guidelines that parties should follow before starting Court proceedings: these are set out in the “Pre-action Protocols”.
Pre-action steps
Generally, anyone wanting to start a claim at Court should first follow the pre-action steps in the protocol most appropriate for their case. For example, someone with a debt claim should use the guidelines in the Pre-Action Protocol for Debt Claims. Where the claim is not covered by a specific protocol, the “Practice Direction on Pre-action Conduct and Protocols (“Pre-action PD”) applies. A contract dispute, for example, would be governed by the Pre-action PD.
Although the protocols vary, all are aimed at encouraging parties to exchange early and full information about a claim. The hope is that parties will resolve their dispute without starting Court proceedings, or where that can’t be avoided helping the efficient management of the litigation going forwards.
Under the Pre-action PD, for example, the Court expects the person with a claim (a Claimant) to write to the Defendant before a claim is issued with concise details of the claim, setting out the basis of the claim, a summary of the relevant facts, what they are seeking from the Defendant and, where money is being sought, how it is calculated. This usually takes the form of a Letter before Claim.
The Defendant is then expected to provide a written response indicating whether the claim is accepted and if not, why not, and whether any facts are disputed. They should also let the Claimant know if they have their own claim (a counterclaim). Defendants are expected to reply within a reasonable time frame – that’s not set in stone but for a straightforward case the Pre-action PD suggests replying within 14 days, and within no more than 3 months in a complex case. These protocols should assist parties to understand each other’s position and make decisions about how to proceed.
Do I have to comply with the Pre-action Protocols?
Unless your claim is at risk of becoming “time barred” (which we discuss below) in most cases you will need to comply with the relevant protocol. The Court expects parties to comply with the guidelines and can sanction a party for non-compliance. This could take the form of a costs order not being made in their favour or even being made against them, or the Court could order the non-compliant party to pay a higher rate of interest on any sums due to the other side.
When should I commence legal proceedings?
It depends on the circumstances. Generally, a claim will only be issued once the pre-action steps in the Pre-action PD have been followed and the dispute has still not been resolved. However, in any case, most claims must be commenced (i.e. issued at Court) within a certain period of time (known as a ‘limitation period’) or they will become time barred and the claim is likely to fail. For example, most contractual claims will need to be commenced within 6 years from the date of the breach of contract, whereas most personal injury claims need to be commenced within 3 years of the date of injury.
Issuing proceedings
Starting the claim
Legal proceedings are formally commenced by the Claimant issuing a Claim Form at the appropriate Court, which must then be served on (i.e. formally brought to the attention of) the Defendant. The Claim Form is usually accompanied by a separate document containing specific details of the claim, which is known as the Particulars of Claim. The Claimant needs to set out their case clearly and logically and may need a lawyer to assist in preparing the relevant documents.
Which Court should I issue in?
Which Court to issue the claim in will depend on the nature and value of the claim. If the value of your claim is for £100,000 or less it would usually be issued in the County Court, unless there is reason to believe it should be heard by a High Court judge (for example, if the facts, legal issues or remedies being sought are complex). Generally, only claims with a value of over £100,000 may be issued in the High Court. If the nature of the claim involves the Court considering technical or complex evidence then it may be preferable to issue it in a specialist Court such as the Commercial Court, which deals with disputes arising out of banking and financial services and the export and import of goods.
What fees am I likely to pay?
Court fees for issuing proceedings are usually based on a sliding scale depending on the value of the claim. For example, in the High Court commencing proceedings to recover a sum between £5,000.01 and £10,000 requires a fee of £455 to be paid. Further Court fees will be payable during the course of the proceedings.
Issuing claims online
In some circumstances claims can also be issued electronically, online. For example, Money Claims Online (“MCOL”) is an internet based service where parties can issue and respond to claims for a specified sum. Currently, the service is only suitable for claims worth less than £100,000 where there are no more than two defendants who themselves are based in England or Wales. Similarly, the Damages Claims Portal (“DCP”) is an online portal which solicitors can use to start proceedings for county court claims where the remedy being sought is financial compensation for loss suffered (known as damages).
What happens once proceedings have been issued?
Filing a defence
Once a Claim Form and Particulars of Claim have been served, the next step is usually for the Defendant to file a Defence. The general rule is that the period for filing a Defence is 14 days after service of the Particulars of Claim or, if the Defendant formally acknowledges the claim (by filing a Court document called an “Acknowledgment of Service”), 28 days after service of the Particulars of Claim. The parties can agree to an extension of time for submitting a Defence, or the Defendant may apply to the Court for an extension of time.
The Directions Questionnaire
Once the parties have exchanged formal documents setting out their respective cases (normally a Claim Form and Particulars of Claim for the Claimant and Defence/Counterclaim for the Defendant), the Court will usually send the parties a ‘Notice of Proposed Allocation’ setting out which Court ‘track’ the claim is likely to be allocated to. This Notice also sets out a deadline for the parties to complete a Directions Questionnaire. The Directions Questionnaire is designed to enable the Court to gather preliminary information about the case to enable the Court to make an informed decision about which track to allocate the case to.
The Directions Questionnaire sets out a series of questions for each of the parties to answer relating to the likely next step in the proceedings and the anticipated timetable for completing them (the “directions”). The parties are encouraged to agree the directions between them, for the Court to approve in the form of a Directions Order. If the parties can’t agree the directions, and in any case in larger claims, the Court may list a hearing to consider and decide on the next steps and to make a Directions Order.
What are the three tracks a claim may be allocated to?
Small Claims Track
Claims that are worth not more than £10,000 are generally allocated to the Small Claims Track. The main features of the Small Claims Track are that hearings are informal and won’t normally last for more than a day, the strict rules of evidence don’t apply, and parties aren’t generally able to recover their costs from the other side, irrespective of whether they’ve won or lost the case, (save for the Court fee and occasionally certain fixed costs). However, costs may be awarded against a party who has acted unreasonably.
Fast Track
The Fast Track is generally for claims worth between £10,000 and £25,000 and for cases where the trial is not likely to last longer than one day.
Multi Track
The Multi Track is for more complicated cases, often with a claim value of £25,000 or more and where trial is likely to go on for more than a day.
In both the Fast Track and Multi Track, the winner’s legal costs will generally be recoverable from the loser, though the costs recoverable in Fast Track cases can be restricted.
Changes to the Tracks system
Since 1 October 2023 important changes have been made to the tracks system. A new “Intermediate Track” has been created for claims which are valued at over £25,000 and up to £100,000 in damages, and where trial will last for 3 days or less. Claims which are deemed to be more complex by the judge, and claims worth more than £100,000 will continue to be allocated to the Multi Track.
What is disclosure?
After the claim has been allocated to one of the three tracks the next step, in most cases other than Small Claims Track cases, will usually be for the parties to provide disclosure of documents.
“Disclosure” means formally stating that documents or classes of documents that are or have previously been in a party’s possession and control exist or have existed.
There is no one size fits all approach to disclosure and the approach to it will depend on a number of factors, including what track the claim has been allocated to, which Court the claim is in and whether electronic documents are likely to be disclosed.
In Fast and Multi Track claims the parties will usually be required to provide “standard disclosure” which requires each party to disclose documents that they rely on, which adversely affect their own case or another party’s case, or which support another party’s case. However, the approach to disclosure in the Business & Property Courts is different: here parties will generally be required to give early “initial disclosure” of key documents at the same time as serving their statements of case and the Court may then make an order for “extended disclosure” in relation to a particular issue or issues in the case.
Disclosure is usually carried out by the parties exchanging lists setting out their documents or classes of documents. Once disclosure lists have been exchanged, the parties will usually ask each other for copies of, or to inspect, the documents they wish to see.
The parties’ duty of disclosure (including the duty to preserve relevant documents) continues throughout the life of the case (until judgment or settlement), and if any relevant documents come to a party’s attention after exchanging lists of documents the party must immediately notify all other parties.
Disclosure Statement
Parties are also required to give a statement certifying that they have carried out their duty of disclosure; proceedings for contempt of Court may be brought against a person if they make, or cause to be made, a false disclosure statement without an honest belief in its truth.
Witness statements
Once the disclosure stage has been completed, the next step is usually for the parties to exchange witness statements. Witness evidence is usually crucial. A witness statement will usually give a full and detailed account, in the witness’s own words, of a person’s knowledge of the factual issues in question – they aren’t allowed to give opinion evidence.
During the proceedings, witnesses may need to give additional evidence in a further written statement (for example, in support of an application to force a party to comply with its disclosure obligations).
Attendance at trial
A witness will be expected to attend the trial and give oral evidence where they may be cross examined by their opponent or their opponent’s legal representatives.
Expert Evidence
Will expert evidence be necessary?
It depends on the issues in dispute. In some cases, the Court will need to be guided by expert evidence on technical or specialist issues (for example, by medical experts, accountants, surveyors, architects and so on).
Experts can either be appointed jointly by the parties, or the parties may each appoint their own expert in a particular field (usually with the Court’s permission). The experts may meet to try to narrow the issues and reach some common ground so that the Court only has to determine the unresolved areas of difference. Expert’s will usually be expected to attend the trial and give evidence.
What if I require the Court’s urgent assistance?
In some cases, it may be necessary to restrain certain activities of the other party or require them to take certain steps by obtaining an interim (i.e. temporary) injunction from the Court until a full trial or judgment has been given.
An injunction is an order requiring a party to take, or prohibiting a party from taking, specified action. These may be given in a variety of circumstances. For example, where there is a real risk that funds or other assets will be dissipated, the Court may make an order to freeze the bank account or other assets of the other party. Or, where one party fears that the other will destroy or dispose of documents, the Court can order the search and seizure of relevant documents to preserve evidence or prevent an ongoing breach of contract or other infringement of a party’s rights.
Interim injunctions can be obtained both prior to and following the commencement of proceedings. In the case of freezing orders and search orders, the application can often be made without notice to the other side. Where that’s the case, the party making the application must submit a sworn affidavit setting out the facts they are relying on and produce compelling evidence to support the application. Because injunction orders are draconian by their nature since they restrict a party’s rights, the Court will need to be persuaded that there is good reason for making the order. The costs of making an application for an injunction can be significant, and the cost of obtaining freezing and/or search and seizure orders can be even greater. The Court will usually make an order which provides that the costs of either bringing or defending the application will be awarded to the successful party when the dispute is determined at a full trial.
When will a trial take place?
This depends on a wide range of factors. Figures from the Ministry of Justice suggest that claims in the Small Claims Track are heard within one year, and that Fast Track claims are being heard a year and six months or so from the date of issue of the Claim Form. Many cases can be disposed of sooner, but they can also take much longer to come to trial. Once the trial has taken place, judgment will be pronounced either immediately, or usually within a few weeks of trial.
Do we have to have a trial?
Some cases are determined by the Court without the need for a full trial and many others are settled by agreement before trial. It is also open to a claiming party to bring the proceedings to an end before trial by serving a notice of discontinuance, though in that scenario the party discontinuing would normally be liable for all of its opponent’s legal costs. A party issuing proceedings should therefore generally be prepared to see the matter through to a trial.
Recovery of legal costs
Currently, for all claims on the multi-track the general rule is that the losing party has to pay the winner’s legal costs.
This usually means that a winning party can expect the Court to order the losing party to pay a large proportion (usually somewhere between 50% and 80%) of the costs which the winner has paid to their legal representatives. However, there are circumstances where more or less is recoverable and other circumstances where no costs are recoverable. Costs are ultimately at the discretion of the Court, which will actively encourage the parties to try to resolve their dispute by other means, such as mediation. If a party unreasonably refuses to participate in alternative dispute resolution procedures the Court may penalise them on costs – for example it could even order the winning party to pay the loser’s costs if the winning party unreasonably refused to mediate. The conduct of the parties both prior to and during the proceedings may also affect the level of damages (i.e. compensation for loss suffered) recoverable.
However, new costs recovery rules which came into force from 1 October 2023 have an impact on the legal costs a winning party will be able to recover, in certain cases. For a while now the Small Claims Track and trial costs on the Fast Track have been subject to what is known as “fixed recoverable costs”, which means that the amount a winning party is entitled to recover from the other party is fixed in accordance with prescribed rules, no matter how much the winning party has actually incurred by way of their legal costs.
The new rules extended the fixed recoverable costs regime to all costs incurred in Fast Track cases issued after 1 October 2023 and will also pave the way for the introduction of fixed recoverable costs to most cases issued after that date which are allocated to the new Intermediate Track (which will be the new track for claims worth between £25,000 and £100,000).
How this will work in practice is that, in essence, once a claim is allocated to the Fast or Intermediate Track the Court will assign the claim to one of four “complexity” levels, with less complex cases assigned to level one, working up to the most complex cases at level 4. Under the new regime, the amount of costs a winning party will be able to recover will be fixed in accordance with prescribed tables set out in the civil procedure rules. The exact level at which costs are fixed will depend on whether the claim is allocated to the Fast or Intermediate Track, the complexity level it is assigned and how far the claim progresses in the life cycle of the litigation.
This is a big step change because it means that from 1 October 2023 only the winners in claims worth more than £100,000, or claims which are deemed to be sufficiently complex, can expect the court to order the losing party to pay a large proportion of the the most of their legal spend – for all other claims worth £100,000 and under the fixed costs regime is likely to mean the winning party will receive far less than the legal costs they have actually incurred.
What can I do if my opponent fails to comply with a Court order?
If a party does not comply with a Court order then steps may need to be taken to enforce it. A number of options may be available depending on the terms of the order.
Appeals
If a party wishes to appeal a decision or judgment and did not ask for permission to do so at the original hearing (or their request was refused by the judge at that hearing), then they will need to obtain permission from the Court to appeal. Regardless of whether permission has already been granted, a form called an Appellant’s Notice must be filed at Court. Most appeals will be on a point of law or procedural irregularity only. Findings of fact can only be appealed if they form part of the determination, order or judgment of the court below. To do so, the findings must be crucial to the determination of the case as a whole or be subject of a declaration within the order. This means many errors of fact cannot be appealed.
Where permission has not already been granted, or where permission has been granted but a time limit has not been stipulated by the Court, the Appellant’s Notice must be filed within 21 days of the date of the decision being appealed. The Court in which to issue the Appeal Notice will depend on the level of the judge who made the original decision, and the nature of the order being appealed. Depending on the circumstances, an appeal may be heard in a County Court, the High Court, the Court of Appeal, or the Supreme Court.
A party will have to pay a fee when they appeal, and if they lose the appeal they may be ordered to pay the other party’s costs. Permission to appeal will only be given if the Court considers that the appeal would have a real prospect of success or that there is some other compelling reason why the appeal should be heard.
Minimising disruption
Litigation can be a lengthy and intensive process, which can be disruptive to a party’s business and/or to their usual daily routine. Parties will often be required to dedicate a lot of management time and other resources to meet the deadlines and other demands of the case, and inevitably these pressures can place practical and emotional challenges on those involved. It is always worth thinking carefully about these issues at the outset so that if litigation cannot be avoided, appropriate measures can be put in place to minimise the impact of the proceedings on your people and your business.
About us
Our experienced lawyers regularly represent clients in litigation in all Courts.
If you have any questions about this guide or any other matters please do not hesitate to contact one of the following members of our Dispute Resolution Team at [email protected] or contact
Robert Oakley [email protected]