Top Ten FAQs About Civil Litigation Proceedings in England and Wales

Boodle Hatfield LLP | 240 Blackfriars Road, London SE1 8NW | 6 Grosvenor Street, London W1K 4PZ | 6 Worcester Street, Oxford OX1 2BX | | +44 (0)20 7629 7411 | [email protected] | www.boodlehatfield.com | Top Ten FAQs About Civil Litigation Proceedings in England and Wales May 2016 1 Contents Q1 What methods are there for the resolution of disputes in this jurisdiction?...................... 2 Q2 Which court is likely to hear large commercial disputes?..................................................... 2 Q3 What are pre-action protocols?................................................................................................ 3 Q4 How are proceedings commenced?.......................................................................................... 3 Q5 Is a party to a dispute obliged to disclose all documents in its possession whether helpful or adverse to its case?................................................................................................... 4 Q6 Are any documents privileged (that is, they do not need to be shown to another party)? 4 Q7 What remedies are available? Are any of these available at an interim stage (that is, before the full trial).................................................................................................................... 5 Q8 How much does litigation cost?................................................................................................ 6 Q9 How does a trial work?............................................................................................................... 6 Q10 Is the loser liable to pay the winner’s costs?........................................................................... 6 2 Top Ten FAQs About Civil Litigation Proceedings in England and Wales To assist our clients and friends in other jurisdictions, we have identified the questions which are most frequently asked regarding civil litigation proceedings in England and Wales. Please note that Scotland and Northern Ireland are separate jurisdictions and different rules apply. This document is intended to provide a first point of reference for current developments in aspects of the law. It should not be relied on as a substitute for professional advice. If you would like to discuss any of the questions in this guide or if you would like to receive more information about any issues regarding litigation in England and Wales, please contact: Simon Fitzpatrick Head of Litigation t: + 44 (0)20 7079 8162 e: [email protected] Rebecca Foden Solicitor t: + 44 (0)20 7079 8340 e: [email protected] What methods are there for the resolution of disputes in this jurisdiction? The main methods of dispute resolution are: • Litigation – The use of the Courts and legal process. • Arbitration – The use of an impartial, independent third party to decide the outcome of a dispute. Many complex commercial contracts will specifically require disputes to be resolved by arbitration. • Alternative dispute resolution (“ADR”) (principally mediation) – The use of methods other than the Courts, or arbitration. The most common form of ADR is mediation; the use of an impartial third party (a mediator) to facilitate the resolution of a dispute through a confidential process. ADR can be undertaken during the litigation process on a ‘without prejudice basis. • Negotiation – The parties attempting to reach a settlement (usually through their legal representatives) without the use of the Courts or any form of intermediary. Which Court is likely to hear large commercial disputes? The Court rules may specify that a certain type of case must be commenced in a certain Court. The High Court encompasses the Chancery Division, the Queen’s Bench Division and the Commercial Court. High Court jurisdiction is normally reserved for important, higher value or complex litigation or where the dispute gives rise to issues of general public importance. 3 Generally claims for £100,000 or less must be commenced in the County Court; claims for more than £100,000 may be started in the High Court. Subject to that, where a claim falls within the jurisdiction of the County Court the claimant may start it in the High Court if there is a special reason (for example complexity) to believe it should be dealt with by a High Court judge. In the absence of a special reason, claims worth less than £50,000 commenced in the High Court will generally be transferred to the County Court. What are pre-action protocols? The pre-action protocols set out the best practice that should be adopted by parties to a dispute, and their legal advisers, before any proceedings are issued. The protocols set out the steps which should be taken by the parties and broadly aim to: • Encourage the exchange of early and full information about a prospective claim. • Enable parties to avoid litigation by agreeing a settlement before proceedings are commenced. • Support the efficient management of proceedings where litigation cannot be avoided. Specific pre-action protocols are in force for disputes concerning particular categories of case (for example, defamation or personal injury). If a case is not covered by a specific pre-action protocol, the parties should aim to comply with the Practice Direction on Pre-action Conduct and Protocols (“Pre-action PD”); the essence of which is to encourage parties to exchange information and make appropriate attempts to resolve the claim without issuing proceedings. If a party fails to comply with relevant specific pre-action protocols, or with the Pre-action PD, the Court may impose sanctions and may take the non-compliance into account when making case management directions and/ or when making orders as to costs and interest rates on sums due. How are proceedings commenced? In this jurisdiction parties are encouraged to avoid proceedings at all costs. This is emphasised by the pre-action protocols and Pre-action PD, as stated above. Pursuant to the Pre-action PD, a claimant should send a “letter of claim” to the potential defendant, which sets out the concise details of their claim and provide copies to the other side of the key documents that are relevant to the case. This is to encourage discussion and the exchange of information at an early stage. The Court will look unkindly on a party who simply commences proceedings without sending a letter of claim first. If a satisfactory response is not received within a reasonable time (the Pre-Action PD states within 14 days - 3 months, depending on the complexity of the case) proceedings will be prepared, issued at Court and formally served. The defendant then has 14 days in which to file an acknowledgment of service and a further 14 days to file a defence. If the defendant requests additional time to serve a defence, it is normal practice for the claimant to agree. The Civil Procedure Rules allow for an extension of up to 28 days to be agreed in writing between the parties. Assuming the defendant files a defence the Court will provisionally allocate the claim to one of the three tracks (small claims track, fast track and multi-track). Factors that influence the allocation include the monetary value of the claim and the complexity of the legal issues involved. Parties will agree case management directions or there will be a case management conference in which the Court will set a timetable for the case to go to trial. The directions will, amongst other things provide for the following steps: • Disclosure and inspection of documents • Exchange of witness statements 4 • Exchange of expert reports • Trial In terms of timing, one would expect to get a trial date sometime between 12 and 18 months from issue of the proceedings. As stated above, the Court encourages parties to try to settle their disputes without going to trial and this allows some room for a stay of the proceedings to allow the parties to negotiate through informal or formal mediation. Is a party to a dispute obliged to disclose all documents in its possession whether helpful or adverse to its case? Subject to some very narrow exceptions, all parties to civil proceedings in England and Wales must give disclosure. Pursuant to the Civil Procedure Rules, “disclosure” is formally stating that a document exists or has existed. This does not necessarily mean that the other side is entitled to inspect the document (for example, privileged documents). The obligation is to search for, and disclose, documents currently or formerly in a party’s control. The general rule is that a party must carry out a reasonable search for documents and must generally disclose to its opponent: • Documents on which it relies • Documents which adversely affect its or another party’s case • Documents which support another party’s case • Documents which it is required to disclose by a relevant Civil Procedure Rule What is deemed a reasonable search is dependent on the number of documents involved, the nature and complexity of proceedings, the ease and expense of retrieving a document and the significance of any document likely to be located. The litigant must certify the extent of the search carried out and that, to the best of its knowledge, it has complied with its duty of disclosure. The duty of disclosure continues until proceedings are concluded. A “document” includes anything in which information of any description is recorded - it includes electronic information, and can, in principle, extend to deleted data and metadata. There are specific provisions in the rules for electronic disclosure. Disclosure may also be obtained against a non-party to the litigation to allow the court to do justice between the parties or, in special circumstances, to disclose a cause of action against a third party. Are any documents privileged (that is, they do not need to be shown to another party)? Privilege entitles a party (or his successor in title) to withhold evidence from production to a third party or the court. There are various forms of privilege, including: • Legal professional privilege which can be sub-categorised into legal advice privilege and litigation privilege: •Legal advice privilege means that a party is not required to permit inspection, if a document is a confidential communication between a lawyer and his client made for the purpose of seeking or giving legal advice or assistance in a relevant legal context (which includes both contentious and non-contentious matters). This would include an attendance note made by a solicitor after giving legal advice on the telephone to his client. This privilege would not apply to attendance notes for meetings between opposing parties, or in court, as these are not confidential conversations. 5 •Litigation privilege is available if a document is a confidential communication which is passed between the lawyer (acting in their professional capacity) and his client or between one of them and a third party, where the dominant purpose in creating the document is to obtain legal advice or evidence or information for use in litigation which was at the time reasonably in prospect and to which the client is or reasonably anticipates being a party. This would include communication between a lawyer and a witness or a lawyer and an expert (unless the court considers the instructions inaccurate or incomplete). This would also include internal memos between lawyers in the same firm working on a case or instructions to a barrister. • Without prejudice communications would cover documents whose purpose is a bona fide attempt to settle a dispute. Without prejudice save as to costs means a court will not see the document’s contents unless it is considering costs. • Common interest privilege is available for communications between parties that have a common interest in the action or the privileged document. • Privilege against self-incrimination is available for documents that would expose a party to criminal penalties. What remedies are available? Are any of these available at an interim stage (that is, before the full trial)? The type of remedy which is available will depend on the nature of the dispute. The claimant will seek a specific remedy, for example, an injunction to forbid the defendant from making excessive noise, or a declaration – an order specifying the precise boundary between two properties about which the parties disagree. If the matter proceeds to trial, the judge will decide on what is the appropriate remedy, if any, and on the precise terms of it. The main remedies available in commercial disputes are: • Damages (for financial and non-financial loss) • Injunctions • Declarations • Possession orders (orders seeking possession of land or property) Injunctions may take various forms. The most common type is a prohibitory injunction, preventing the defendant from taking certain steps. There are also mandatory injunctions, requiring the defendant to do something (although the Courts are more wary of granting such an injunction), and “quia timet” injunctions, requiring the defendant to take steps to stop harm occurring. At trial the Court has the power to grant final relief by way of a perpetual injunction. Interim injunctions (provisional measures made prior to commencement of or during proceedings, which remain in force until discharged by the court) are also available, including: • Freezing Injunctions - these prevent or restrict a defendant from disposing of or otherwise dealing with his assets until judgment can be enforced. • Search Orders - these allow claimants’ representatives (usually solicitors) to enter and search the defendant’s premises (supervised by an independent solicitor) to remove specified material to preserve evidence or property. They are being used particularly in the intellectual property field, to seize material produced in breach of copyright. It should be noted that these are difficult instruments to wield as the Court considers them a draconian remedy, and they are not intended as a way to obtain evidence. Therefore the evidence in support has to be very strong and there are significant sanctions for abuse. 6 How much does litigation cost? This is entirely dependent on the circumstances of the case (i.e. the value of the claim, the complexity of the issues). The cost of taking a typical commercial case to trial in England and Wales is likely to cost more than in most other jurisdictions. Indeed the cost may well run into hundreds of thousands of pounds. This is largely the result of the adversarial procedure and the structure of the litigation process. There is no scale fee for litigation. A party only pays for the work done. English lawyers on the whole deal on the basis of hourly rates. It is sometimes possible to enter into “conditional fee agreements”, whereby some or all of the lawyers’ fees are payable only in specified circumstances (i.e. upon ‘success’). It may also be possible to obtain litigation funding in respect of a claim. This is where a third party (with no prior connection to the litigation) agrees to fund part or all of the legal costs, in return for a fee payable from the proceeds recovered by the Claimant. However, there are strict rules governing both conditional fee agreements and third party funding and your lawyer will advise you whether these options are available. Under new rules introduced on 1 April 2013, subject to some exceptions, parties engaged in litigation must file and exchange cost budgets, setting out their incurred and estimated costs for each stage in the proceedings. The Court may then control the parties’ budgets in relation to the costs which can be recovered from the other side at the conclusion of the dispute. How does a trial work? The vast majority of civil cases tried in court do not have a jury (libel and slander trials are the main exceptions) and they will be presided over by one Judge. This Judge decides a case by finding facts (that have not already been agreed between the parties), applying the relevant law to them and then giving a reasoned judgment. In the adversarial system each party in turn presents its evidence (witnesses of fact and expert witnesses) and legal arguments to the Judge. Witnesses may be crossexamined by the opposing party and the Judge may also ask questions. Each party is also given an opportunity to sum up at the end of the trial. When this has been done, the Judge will deliver his judgment. Usually a Judge will require time in which to consider his judgment and the trial will be adjourned until a convenient date when the judgment will be given. There are limited grounds on which an appeal can be made. The appeal court will allow an appeal where the decision of the lower court was one of the below: • Wrong, which includes: •An error of law; or •An error of fact; or •An error in the exercise of the court’s discretion. • Unjust because of a serious procedural or other irregularity in the proceedings in the lower court. Is the loser liable to pay the winner’s costs? The general rule is that the unsuccessful party in the litigation will pay part of the costs of the successful party. If such an order is made, costs are agreed between the parties or assessed by the Court and as a rule of thumb the loser will pay about half to three quarters of the successful party’s legal costs. You should therefore be aware that even if you win you may still have legal fees to pay. 7 Boodle Hatfield LLP | 240 Blackfriars Road, London SE1 8NW | 6 Grosvenor Street, London W1K 4PZ | 6 Worcester Street, Oxford OX1 2BX | | +44 (0)20 7629 7411 | [email protected] | www.boodlehatfield.com | © Boodle Hatfield LLP 2015. Boodle Hatfield is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services under the supervision of and regulation by the Solicitors Regulation Authority. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. However, the court may make a different order to take account of the conduct of the parties, and whether the successful party has succeeded on all the issues in dispute. There are ways in which a party can protect their position against the risk of paying the costs of the successful party, for example, by making a formal offer to settle the proceedings. May 2016