Dispute Resolution Chapter 2

2.2 Professional Conduct - How it applies

Conflicts of Interest

• para 6.2 CoC for solicitors prevents a solicitor from acting for two or more clients where this would cause a conflict of interest

• para 6.1 CoC also provides that a solicitor should not act where there is an own interest conflict

Sham Litigation

• Solicitors have to be able to spot sham litigation - which is where a fake dispute is manufactured so that the judgement/settlement can be used to disguise the movement of money or assets

• Dispute Resolution solicitors are targeted by criminals aiming to give fake legitimacy to their laundering

• Key indicators of sham litigation;

  • unusual client information and IDV, such as inconsistent names across platforms and documents

  • a client who is unusually familiar with internal law firm processes

  • a client instructing firms far from their home address where it would be more logical for the solicitor to be local

  • unsolicited contact, particularly from the opposing party

  • a claimant insisting on settling the matter very quickly - especially if the defendant is also eager

  • claimant attempting to recover a debt significantly out of date

  • a client who prefers payments to third parties through the law firm, or uses multiple payment addresses

  • a client who consistently misses appointments without prior notice

• If sham litigation is suspected or the transaction risks laundering the solicitor must involve the compliance officer or money laundering reporting officer

Strategic Lawsuits against Public Participation (SLAPPs)

• Claimant brings or threatens a claim with no merit, or other oppressive action to intimidate, harrass or financially or psychologically exhaust their opponent - usually for the purpose of preventing the target from publishing information about them

• Whilst SLAPPs are more common in defamation or privacy matters - before taking on dispute resolution a solicitor must consider whether action could be considered SLAPP - and if so, decline to work with the client

• SLAPP conduct will usually see clearly overstates claims or speculative/misleading claims for costs

• Even if a claim has some legal or factual basis it can still be considered SLAPP

• Oppressive conduct may include;

  • sending correspondence that is aggressive or threatening in tone which is likely to deter the recipient from defending their rights or seeking legal advice,

  • sending correspondence that is disproportionate in length, frequency, or volume or repeats the same points unnecessarily,

  • advancing a case using vage or unexplained terms to take advantage of the opponent’s lack of legal knowledge, or

  • making unnecessary procedural applications or seeking inappropriate disclosure with the intent to increase costs or cause delay

2.3 Case Analysis

• Solicitors must engage in case analysis from the start to assess whether the client has a genuine cause of action and its likelihood of success

• If a solicitor encourages a client to move forward if there is small likelihood of success or no genuine cause then this would breach the requirement to act in the client’s best interest

• Solicitor should also analyse the potential defences to the claim

• Causes of Action = This is the legal basis of a claim e.g negligence or breach of contract

• Although a solicitor will always perform case analysis at the beginning of the case, this should be continually reviewed through the dispute

• Calculating loss and damage

  • For this, its important to consider the type of dispute - as different legal issues (causes of action) have different remedies in law

2.4 Parties to a Claim - Children and Protected Parties

• When starting a claim, it is important to check the status of all parties;

Safeguards for children and protected parties;

• Children and protected parties (those without mental capacity) cannot bring or defend proceedings - so must have a litigation friend to act on their behalf

• r 21.4(3) - a person may act as a litigation friend if they are able to fairly and competently conduct proceedings on behalf of the party and have no adverse interest in acting

  • If litigation friend for a child, they must pay any costs that may be paid for proceedings

  • When a child reaches 18, the role as litigation friend ends, unless the child is a protected party

• Any settlement involving a child or protected party must be approved by the court to ensure their needs are protected

2.4 Parties to a Claim - The Defendant

Identifying the Defendant

• All potential defendants should be identified at an early stage as you will incur extra costs if you have to add or amend court documents with defendant details

• Often easy to identify, however there are some circumstances where more thought is required e.g;

  • if an employee commits a tort whilst acting in employment - consider whether the employer is vicariously liable

  • a consumer may have cause of action against both retailer and manufacturer for a defective product

Locating the Defendant

• Needs to be traceable for the claim to begin - as the details of the claim must be communicated, or if gone through court serve proceedings

• Enquiry agents may be able to assist if locating is difficult

Establishing the Defendant’s status

• Defendants must be sued in the correct capacity so it is important to decipher their status e.g to confirm whether they are a;

  • Individual, who should be sued under their own name

  • Sole Trader, who should be sued under their trading name

  • Partnership, which should be sued in the name of the firm

  • A limited Company or Limited Liability Partnership, which should be sued under its registered name

Considering the Defendant’s means

• Suing a defendant on the verge of bankruptcy or liquidation is pointless as there will be no means to enforce any judgements

• If there are concerns about a defendant’s ability to pay, solicitors should make enquiries such as;

  • Bankruptcy search on the individual

  • Search at Companies House to find out information about the financial position of the company

  • Instructing an enquiry agent

  • General online searches to find any relevant information

2.4 Parties to a Claim - Types of Claim

• Claimant’s solicitor must decide whether the claim is specified or unspecified as this affects how certain court documents are drafted and the procedure for case handling

• Specified Claim -

• This is if the claim is for a fixed amount of money

• All figures are certain when the cause for action arises

• Unspecified Claim -

• This is where a court will have to conduct an investigation to determine the amount of money payable

• A claim will still be unspecified if a claimant puts some figures forward, as these are not definite and it will be up to court to decide if this figure is reasonable

2.5 Limitation - What are they?

• Before issuing proceedings, a solicitor should check that a claim is within the given limitations (provided by The Limitation Act 1980)

• This provides a time limit within which the claim must be brought, unless there are exceptional circumstances

• These deadlines are to prevent looming threats of litigation and to recognise that after a certain period witness and evidence testimonies will be less reliable

• If the solicitor helps bring a claim outside the time limitation, then a claim could be brought against the solicitor for negligence

• Once a claim is brought, the time limitation no longer applies (because litigation can take a while)

  • Claim is considered brought when the claimant’s form is received at the court office

2.5 Limitation - Periods

• For contract or tort claims, the time limits are in ss 2 and ss 5 LA 1980

• Basic rule is that the claimant has 6 years from the date of the cause in action to commence proceedings (corresponding date rule - the time limit ends on the 6th anniversary of the event)

• When calculating the date which the limitation period expires, the day of the cause of action is excluded

• However, 6 years is not definitive for every type of cause in action, it can vary

Breach of Contract

• Cause of Action is as soon as the breach of contract occurs

• Time limitation expires 6 years later

• However a different time limitation can be specified within the contract - because a contractual limitation is allowed to be shorter than the statutory limit

Misrepresentation

• The cause of action will accrue on the date the contract was entered into or the date the loss was suffered (whichever was later)

• For fraudulent misrepresentation, the cause of action accrues on the date the fraud was discovered or could have been discovered with reasonable diligence

• Time limitation expires 6 years later

Tort

• Except for actions relating to personal injury, product liability and latent damage the cause of action accrues when the tort is committed

• In negligence the date is when the loss or damage occurs as a result of breach of duty

• In claims for private nuisance the cause of action accrues when a quantifiable or ascertainable loss is suffered - if it is a continuing nuisance the cause of action resets each day

• Time limitation expires 6 years later

Personal Injury

• In personal injury matters including clinical negligence, the limitation period is 3 years

• Cause of action accrues the date the damage occurs or on the date of knowledge of the person injured (whichever is later)

  • Knowledge is defined as the date on which the claimant first gas knowledge of all the following facts;

    • that the injury was ‘significant’

    • that the injury was attributable in whole or in part to a wrongful act or omission that is alleged to constitute negligence, and

    • the identity of the defendant

Product Liability under the Consumer Protection Act 1987

• Actions involving defective products under the CPA 1987 the limitation period will expire 3 years from;

  • the date the damage occurred,or

  • the date on which the claimant first had the knowledge required to bring an action (if later), but

  • no later than 10 years from the date on which the defective product was supplied

Latent Damage

• In a non-personal injury claim based on negligence, were the damage is latent (hidden) at the date when the cause of action accrued, s14A LA 1980 provides that the limitation period expires either

  • 6 years from the date of the cause of action, or

  • 3 years from the date of knowledge of the damage (whichever is later), but

  • no later than 15 years after the date of the negligent act or omission

• Issue of latent damage only arises for building and construction

For children and protected parties

• Under s 38(2) of the LA 1980, children and protected parties are treated as having a disability

• Irregardless of when the cause of action was, the limitation period does not start to run until they cease to be under a ‘disability’

  • For children, when they turn 18

  • For protected parties, when they regain mental capacity

2.5 Limitation - Extending Limitation Period

• Court does not have the power to extend the limitation period before it has expired - but claimant could reach an agreement with defendant to extend it for a specific period

• Parties could agree a ‘standstill agreement’ where the limitation period is suspended from the date of agreement until notice is served by one party that time is running again

  • This can be helpful to allow ADR without worry

• Defendant could also waive the right to rely on limitation as a defence in any future proceedings (however this is rare because who the hell would do that)

Court’s discretion to disapply limitation period:

• The court can allow a claim that is past the time limitation even where the defendant has raised limitation as a defence in exceptional circumstances

• Main exception is to do with personal injuries - in these claims under s33 LA 1980, the court can allow the matter to continue after considering the circumstances of the case and balancing the needs of the parties whilst considering any potential prejudice against claimant if the claim weren’t to go ahead

2.6 Pre-Action Procedure -

• Before issuing court proceedings, the parties must comply with various pre-action rules (pre-action protocols)

• There are different protocols for different claims

• Some claims have no relevant pre-action protocols, such as breach of contract claims

• There is a Practice Direction on Pre-Action Conduct and Protocols that gives general guidance on what to do in cases where there are no protocols

• The PDPAC and pre-action protocols are important elements of civil litigation - they aim to increase pre-action contact between parties

2.6 Pre-Action Procedure - Common principles between PDPAC and Pre-Action Protocols

• Some elements of both are shared: e.g

  • Litigation should be a last resort

  • The parties should exchange sufficient information to;

    • understand each other’s positions,

    • make decisions about how to proceed,

    • try to settle issues without proceedings,

    • consider a form of ADR to assist with settlement,

    • support the efficient management of those proceedings,

    • reduce the costs of resolving the dispute

  • The steps taken should usually include;

    • The claimant writing to the defendant with concise details of the claim in a document aka the letter of claim

    • The defendant responds within a reasonable time with a letter of response,

    • the parties disclose key documents

  • Only reasonable and proportionate steps should be taken by the parties to identify, narrow and resolve the legal/factual issues

  • Where a dispute has nit veeb resolved after the parties have taken steps under PDPAC or pre-action protocol - they should review their positions to see if proceedings can be avoided or at least narrow the issues in the dispute before claimant brings proceedings

  • If a dispute leads to litigation, the courts will expect the parties have complied with PDPAC or pre-action protocols

2.6 Pre-Action Procedure - Consequences for failure to follow the relevant protocol

• Failure to comply with PDPAC or pre-action protocols can lead to cost sanctions

• Where non-compliance has led to proceedings that may have otherwise not had to happen, or unnecessary costs the court may impose penalties

• Examples of penalty orders;

  • Claimant at fault must pay some or all of defendant’s costs

  • depriving a claimant who is at fault some or all of the interest they may be awarded on any damages recovered

  • requiring a defendant who is at fault to pay additional costs to the claimant

  • Requiring a defendant who is at fault to pay interest on any damages awarded to the claimant at a rate up to 10% over the Bank of England Base Rate

• Also if either party knowingly makes a false statement in a pre-action protocol letter or other document then they could be subject to proceedings for contempt of court

2.7 Governing Law

• All contracts will have a clearly worded clause stating the law that will govern the contract

• If there is not governing law clause, the parties will not be able to choose which law is applicable

  • In a contract for sale of goods, the laws of the country where the principal place of business for the seller will apply

  • In a contract for services, the laws of the country where the principal place of business for the service provider will apply

• The law applicable in tort will be the law of the country in which the damage or harmful physical impact occurs - this may be different to the country in which losses are suffered

• In product liability cases, step-by-step approach needed;

  • The applicable law will be the country where the injured party habitually resides, provided the product was marketed in that country

  • Otherwise, the applicable law will be that of the country where the product was acquired, provided the product was marketed in that country

  • Otherwise, the applicable will be the law of the country in which the damage occurred, provided the product was marketed in that country