This guide is to help someone understand what is a letter before action.
In this article you’ll learn about:
- What is a letter before action.
- Why they are important.
- What to expect from their use.
Let’s get cracking.
Letter Before Action Overview
A letter before action is sometimes referred to as a letter of claim.
A letter before action is not intended to be some sort of scary legal document that is sent out to intimidate people. It should not be deployed in such fashion.
It is part of the procedures required before a party issues legal proceedings against another party as set out in the Pre Action Conduct and Protocol which says:
… the parties should exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. The steps will usually include—
(a) the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated;
(b) the defendant responding within a reasonable time – 14 days in a straight forward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and
(c) the parties disclosing key documents relevant to the issues in dispute.
Why Is A Letter Before Action Required?
A letter before action is part of the pre action phase that requires parties before they issue legal proceedings to have notice of the proposed issues that a Claimant (the party launching the action) wants the Court to order the Defendant to comply with.
Crucially a letter before action must set out in sufficient detail the case that the Claimant is asking the Defendant to meet.
The objective of the pre action phase is as follows:
Before commencing proceedings, the court will expect the parties to have exchanged sufficient information to—
(a) understand each other’s position;
(b) make decisions about how to proceed;
(c) try to settle the issues without proceedings;
(d) consider a form of Alternative Dispute Resolution (ADR) to assist with settlement;
(e) support the efficient management of those proceedings; and
(f) reduce the costs of resolving the dispute.
Why Is A Letter Before Action Important?
It is the first indication that a part intends to start legal proceedings.
A letter before action is important because it is an essential part of the pre action process before parties formally start legal proceedings. The pre action phase is not a trivial optional procedure; it is a mandatory requirement before a party can issue legal proceedings.
However, if a party does not fully comply with the pre action conduct phase by say issuing legal proceedings without first sending out a letter of claim then when the case comes before a judge there can be cost consequences suffered by the party that has failed to properly comply with the process.
The Overriding Objective
So expensive and time consuming has litigation become that the Courts have tried to encourage people to settle their differences without the need to trouble the Court.
The rationale for this position is that it will reduce costs, speed up dispute resolution and free up the Courts to deal with other disputes if parties can reach an agreement through other means.
However, the Court system appears to recognise that without reasonable transparency so that each party knows the case of the other, matters will be less likely to settle early on before litigation has formally commenced.
The overriding objective is as follows:
(1) These Rules are a procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.
(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence;
(b) saving expense;
(c) dealing with the case in ways which are proportionate –
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly;
(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and
(f) enforcing compliance with rules, practice directions and orders.
What To Expect From Using A Letter Of Claim?
Whilst the attempt to encourage parties to settle their differences early is a reason for the transparency required from a letter before action, it nevertheless is very hit and miss in terms of its effectiveness.
Many parties do not settle prior to issuing legal proceedings. Given parties will often have aired their difference repeatedly in the build-up to issuing a letter of claim, if there appears no prospect of a settlement then the letter before action can become perfunctory and something done so you do not suffer an avoidable adverse litigation costs risk. In such cases, it can be simply a stage in the litigation process.
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Disclaimer: What Is A Letter Before Action?
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