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12th July, 2018 by Satnam Chayra
On 1 October 2017, the Pre-Action Protocol for Debt Claims (“the Protocol”) came into force. The Protocol sets out the pre-action conduct which the Court expects the parties to have followed. The stated aims of the Protocol are to encourage early engagement and communication between the parties, enable resolution of the matter without the need for court action, encourage the parties to be reasonable and proportionate in their dealings with each other and, where litigation is unavoidable, to support the efficient management of proceedings. Those aims are achieved by specifying what type of information pre action correspondence (your “Letter of Claim) in debt claims should contain and specifying how long you must wait in different scenarios before issuing proceedings.
Before the Protocol came into force it was standard practice to send a 7 day letter to individuals and businesses alike warning that if payment was not made in that period, court action would be initiated. Since 1 October 2017 where you are acting in the course of a business and your debtor is an individual, you must give them at least 30 days or more, depending on how they respond, before issuing a claim. If you fail to do so, the Court will take that into account when considering case management. How the Court treats failure to comply is at its discretion so every case will be different but it could mean a stay of the claim until you have complied with the Protocol or a costs order against you even if you win.
So, how do you know what sort of letter of claim to send?
Produced by Howes Percival’s litigation expert, Phillippa Summerlee, this handy flowchart provides guidance on the Pre-Action Protocol for Debt Claims and when it applies.
Click here to download the flowchart.
This is the fifth flowchart in our Litigation Maze series which provides free legal and practical guidance for directors and owner-managers of businesses.
Click here to see the full Navigating the Litigation Maze series.
If you would like any further information or an initial conversation regarding your dispute, please contact Satnam Chayra.