Responding to the claim

Early steps available

What steps are open to a defendant in the early part of a case?

A defendant should first scrutinise the claim to identify the issues in dispute and the supporting evidence, with the aim of making it as hard as possible for the claimant to get over the hurdles for each issue. This will also enable the defendant to plan and structure its defence strategy, and to marshal the necessary evidence to meet the case against it.

Depending on the outcome of that exercise, the defendant can consider tactical steps such as making a request for further information pursuant to CPR Part 18. This is often a useful way of applying early pressure on a claimant to make its case good, and (depending on the responses received) it can be used as a platform for strikeo ut of all or part of the claimant’s claim.

A defendant may also consider admitting part of a case, particularly if it has no answer to that part of the case and an admission would make little or no overall difference to the case. This may also allow the defendant to avoid having to disclose documents that may otherwise harm its case.

If a defendant believes that a third party is liable for some or all of the claim made against it, it can seek to join that party to the proceedings.

Defence structure

How are defences structured, and must they be served within any time limits? What documents need to be appended to the defence?

The CPR require a defendant to serve a defence, which must either admit, deny or require the claimant to prove each of the matters set out in the particulars of claim. The CPR sets strict time limits, but in complex commercial litigation the parties will often agree to vary these. If the defendant considers it has its own claim, this can be included in the defence (typically under the heading counterclaim).

Changing defence

Under what circumstances may a defendant change a defence at a later stage in the proceedings?

Once a defence has been served, the defendant will need the consent of all other parties to the claim to change it. If it is unable to obtain consent, the court can grant permission to a party to amend its statement of case. Typically, defendants amend their defences either following disclosure (where the defendant becomes aware from that disclosure of facts that it intends to rely upon) or following the claimant amending its particulars of claim (where the defendant has new allegations to answer). The current trend is to discourage amendments made very late in proceedings, particularly those that threaten the trial date.

Sharing liability

How can a defendant establish the passing on or sharing of liability?

If a defendant to a negligence claim can show contributory negligence on the part of the claimant, or that the claimant’s action or inaction furthered the harm it complains of, then this ought to reduce its liability accordingly.

If joint and several liability has been contractually pre-agreed between defendant parties, then each defendant would be liable for the entire performance of the agreement irrespective of blame, so the claimant could choose to proceed against the most resourced defendant.

A defendant can seek to join other parties (see question 23) or, following a final award against it, bring its own proceedings against co-defendants for a contribution to the damages payable.

Avoiding trial

How can a defendant avoid trial?

A party can apply to strike out the entire claim under the summary judgment procedure at any stage in the case. However, the threshold for strike out is high: the claimant must convince the court that the statement of case shows no reasonable grounds for bringing the claim. Since most complex commercial disputes turn on disputed evidence, which can only be tested and determined on a full trial, very few of these cases are struck out on this basis.

The only other ways to guarantee avoiding trial are settlement or admitting the claim in full. Many complex commercial cases in England settle before actual trial. There are numerous reasons why this happens. First, the CPR front load some of the costs of litigation by requiring that the parties narrow down and focus on the issues between them. Secondly, the fact that the parties’ witnesses will be cross-examined and scrutinised in public and before a highly qualified judge acts as a catalyst to achieve a settlement. Thirdly, the court will periodically remind the parties of their ongoing obligation to consider ADR. Finally, the parties may consider settlement is in their commercial interests, either for mutual or for wider reasons (eg, reputational risk).

Unless it causes the claimant to discontinue, a counterclaim would not avoid trial (as the counterclaim would be heard at the same time as the claim).

Case of no defence

What happens in the case of a no-show or if no defence is offered?

If a defendant fails to file an acknowledgement or defence within the requisite time limit then the claimant can apply for judgment in default. The defendant can seek to reverse this by applying to set the default judgment aside, but it will have to show that it has a real prospect of successfully defending the claim or demonstrate to the court that there is some other good reason to allow it to attempt to defend the claim.

If a defendant does not appear at trial, the court has the power to strike out its defence. Generally this will not happen, and the case will instead be heard without the party present (and therefore the defendant will be unable to present its case or respond to novel matters or evidence raised during trial).

Claiming security

Can a defendant claim security for costs? If so, what form of security can be provided?

Once proceedings have formally commenced, a defendant (or those in the position of a defendant, such as a respondent to an appeal) can apply for security for costs. A claimant can also claim security for costs for its defence to any counterclaim. It can be a highly effective weapon against a claimant.

The application must be made promptly. There are a number of grounds for ordering security. The most common is that there is reason to believe that the respondent will be unable to pay the applicant’s costs if ordered to do so. If the security is not deposited, the claim is stayed. It should be noted that the practice of the Commercial Court is to make the defendant compensate the claimant in the event that the claimant is successful at trial. Compensation will cover any losses the claimant suffered from having funds tied up in security. Typically, the court orders that the claimant pay money into court or provide a third-party guarantee. In practice, applications for security for costs are typically settled.