Information Relating To Contentious Matters

Litigation, arbitration or other types of contentious matters give rise to important issues, especially on costs and the disclosure of documents.

We will advise you throughout, but the following information may be useful and there are certain matters to be aware of from the very outset.

1  The Stages of the Proceedings

1.1  There are many different sorts of civil proceedings, but generally they include the following stages over a period of one to two years, in the absence of earlier settlement or other termination.

1.2  Pre-action protocols: designed to ensure that parties understand each other’s position in the hope that an agreement can be reached to avoid litigation. Certain types of claims have specific protocols, but for other claims parties are required to act in the same spirit.

1.3  Issuing proceedings: this involves the filing and serving of the relevant initiating document which sets out the claim or gives a summary and explains what remedies are sought from the court.

1.4  Statement of case: the parties will serve on each other documents setting out the claim, defence and reply respectively together with further information that may be requested.

1.5  Directions: at an early stage in the proceedings there will usually be a hearing at which the court will give directions which in effect sets out a timetable for the stages of the action. There may be several other interim hearings on the application of the parties during the various stages.

1.6  Disclosure and inspection: the parties disclose their relevant documents which are inspected by the other side, normally by the provision of copies.

1.7  Witness statements: the parties produce witness statements from their witnesses which are exchanged. If the witnesses are called at trial, their witness statements stand as their evidence on which they are cross-examined.

1.8  Expert evidence: in some cases the court requires expert evidence. The parties might be ordered to produce their own experts, and in other cases the court appoints a single expert.

1.9  Trial: this is the final hearing which determines the case.

1.10  Enforcement: if the unsuccessful party fails to comply with the order of the court, the successful party can take various steps through the court to enforce the judgment or order.

1.11  Costs: If the amount to be paid by one party to another cannot be agreed, there is a detailed assessment process conducted in a specialist section of the court.

2  Orders for Costs

2.1  In any litigation you should note that there is always an element of irrecoverable costs, irrespective of the outcome of the proceedings conducted on your behalf. If proceedings are successful then the court may make an order for costs in your favour which is usually on a basis which represents recovery in the order of one half to three quarters of your total costs. There is however a risk that your opponent will be in no position to pay your costs if you are successful.

2.2  Regardless of any order for costs, we shall look to you for full payment of our bills and account to you subsequently for any recoveries made.

2.3  If you are unsuccessful in the proceedings then it is likely that you will be liable for the costs of your opponent(s) as well as your own.

2.4  Orders for costs are discretionary and may be reduced by a proportion or, particularly where there has been a mixed result, one party may be awarded its costs for certain issues and the other party for the other issues.

2.5  Costs Orders can be effected by “Part 36 offers” and other offers made “without prejudice save as to costs”. A successful or partly successful party may be ordered to pay the other party’s costs if that successful party would have been better off accepting an earlier offer. Such offers are not disclosed to the Court until after the issues have been determined.

2.6  In certain types of proceedings (including claims in the Employment Tribunal and small claims) orders for costs are not usually made. This means that in such proceedings you are usually responsible for your own costs (but not those of the other party) whether you win or lose.

3  Special Costs Arrangements

3.1  In certain circumstances, it is possible for solicitors to act in litigation on a “conditional fee” basis. Whether or not we would be able to offer you a service on this basis will depend on the circumstances of the case.

3.2  “After the event” costs insurance is available. However, it is most commonly used for small routine claims, such as personal injury, rather than complicated commercial disputes where it can be difficult to obtain insurance at all or the premiums quoted are unrealistic. However, underwriters are becoming more sophisticated in this field and, if you would like to explore this further, please let us know.

3.3  After the event insurance premiums and any increase in costs as a result of a “success fee” under a Conditional Fee Agreement are included in the costs that may be recovered by one party from another.

3.4  Do check whether you have any existing insurance for legal costs or, if you are an individual, whether your employer, company (if the matter relates to your directorship) or any association or Union in which you are a member, will pay your legal costand if so notify us and your insurers or other payer immediately.

3.5  We reserve the right to charge for time spent in relation to the matters set out in this Section 3, whether or not a special costs arrangement is concluded.

4  Disclosure

4.1  As solicitors we are under an obligation, both as a matter of professional conduct and as a duty to Court, to ensure that you understand the rules relating to disclosure of documents, and comply with them.

4.2  The purpose of disclosure is to provide evidence and to enable the parties to evaluate the strength of their case in advance of the trial and with a view to possible settlement. The main rules relating to disclosure which you should be aware of from the outset of the dispute are set out below.

Duty to Disclose

4.3  As a party to proceedings you are likely to be ordered by the court to give “standard disclosure”. This is a very important step in any court action and is the process whereby every party to the litigation must disclose to the other parties all documents which are or have been in the party’s control, whether or not they are favourable to that party.

4.4  It is important that information about your disclosure obligations is given to every individual who may be holding documents or information relating to the litigation and which are under your control. Steps should be taken now to avoid destruction or loss of documents, including those in electronic form and to assemble them.

Duty to search for documents

4.5  In order to give standard disclosure a party must make a reasonable search for all documents which could adversely affect his own or another’s party’s case. A search should be proportionate to the value and/or significance and/or complexity of the issues in the case.

4.6  It is essential that the parties comply fully and honestly with the requirements of disclosure and it is for this reason that the list of documents by which you give disclosure includes a disclosure statement. This statement sets out the extent of the search that has been made to locate documents, certifies that you understand your duty and that the search has been carried out to the best of your knowledge.

4.7  If in doubt as to the proportionality of the search or relevance or significance of any piece of information or document, we advise you to allow us to make that judgment, rather than become the victim of surprises that may surface in court at the behest of the other party.
Failure to Disclose

4.8  The requirement to disclose documents is a strict one with serious sanctions for non-compliance. Failure to disclose or to permit inspection of documents will mean that a party may not rely on that document unless the court permits. The court is likely to form an adverse impression of the honesty of a party who withholds documents. A party may also find that is case is dismissed by the court as a result of failure to comply with its obligations.

What is a Document?

4.9  A document is defined as “anything in which information of any description is recorded”. This definition however is not restricted to something written or printed on paper, but includes anything in which information is recorded.

4.10  Although the following list is not exhaustive, if relevant to the dispute and within a party’s control, a document includes:-

• all correspondence, whether formal or informal;
  
• internal or external memoranda;
  
• correspondence passing between you and your other advisers, e.g. accountants;
  
• minutes and company documents and records, share registers and certificates;
  
• accounting ledgers, cheques, bank statements, bills of exchange etc including where these are stored in the form of electronic data;
  
• invoices, orders, confirmation of orders, receipts and delivery notes;
  
• information contained on tape, video tape, servers;
  
• electronically held documents on computer disks and portable devices, etc;
  
• photographs, graphics, etc;
  
• brochures, publicity material, leaflets etc;
  
• any notes, diaries or personal note books including those of employees involved at any time (whether or not they have left the organisation concerned in the litigation);
  
• any notes, drafts or photocopies of any of the above documents, whether or not annotated.
  

4.11  A party need not disclose more than one copy of the same document, unless a copy contains a marking or other feature which in itself falls into one of the disclosable categories, eg a marginal note.

Previously held documents

4.12  The duty to disclose extends to relevant documents which you no longer have or control. For these documents, you must explain when you last had them and what became of them.

New Documents

4.13  The obligation to give disclosure is a continuing one. A party is under a duty to notify immediately every other party of disclosable documents which come to his/her notice at any time during the proceedings. The duty does not rest solely with you, but with all relevant employees and advisers. Accordingly, care should be taken with all communications between your advisers other than your lawyers.

4.14  Should you wish to commit anything to writing concerning the claim other than by letter or other communication to this firm, we suggest that you consult us first.

Privilege

4.15  Certain documents are “privileged” and do not need to be disclosed. Generally, they include legal advice and matters relating to the conduct of the litigation. The law on privilege is complicated and you should allow us to decide whether privilege applies to any documents.

4.16  Documents that you consider the to be confidential or commercially sensitive are not privileged. If it can be justified, irrelevant parts of such documents may be blanked-out.

Confidentiality

4.17  Parties give an implied undertaking to the court to keep all disclosed documents confidential. This is a serious obligation and parties should ensure that all their relevant staff understand that.

5  Statements of Truth

5.1  Various documents served and filed by parties are required to be endorsed with a statement of truth in which the party states “I believe that the contents of this [document] are true”. That is required on the claim, defence, reply, further information, witness statements and applications. To give a false statement can amount to contempt of court for which a party can be penalised, including imprisoned. Solicitors can give statements of truth on behalf of their client, and it remains important that the client understands the potential consequences.

6  Settlement and ADR

6.1  In most commercial disputes the aim should be to achieve a settlement on favourable terms rather than incurring the substantial costs and inevitable risks of a trial. In the meantime, everything needs to be done to maximise the likelihood of success at trial, in case settlement cannot be achieved.

6.2  The strategy and tactics of achieving a settlement, and the timing and stage of proceedings when it might best be achieved will depend on the circumstances of the case. It is a matter that must be addressed at an early stage and kept under review as the case develops, and it might even be possible before any proceedings commence.

6.3  In addition to traditional forms of negotiation, there are a number of other methods of facilitating an agreement. These have become known as “alternative dispute resolution” or “ADR”. The most common form of ADR is mediation. It is time consuming, and therefore costly, but can often be successful. The courts are keen for parties to mediate and may direct the parties to do so. Parties who unreasonably refuse a proposal to mediate may be penalised by an adverse costs order.

If you would like to discuss any of these matters, please do not hesitate to let us know.