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Responding to a claim when your business is at fault

When a business receives a claim form from a plaintiff that has raised an action against them, they can either:

  • Defend the claim, in whole or in part, within 14 days of receipt;
  • Admit the claim alleged against them, in whole or in part, by filing an admission; or,
  • Bring a counterclaim against the claimant.

If your business is at fault, then the usual course of action is going to be a full or partial admission. Failure to adhere to the Civil Procedure Rules in relation to how to respond to a claim can result in a possible defence failing from the outset. Even if your business is at fault, this may not cover the whole claim and so you must respond to the service of a claim form. If your business is issued with a claim form, it is crucial that you take urgent legal advice so that all deadlines are correctly met.

Consequences of an admission

Under the Civil Procedure Rules, where a defendant makes a full admission, the claimant has the right to enter judgment against the defendant. The defendant then must either pay the money claimed or can request a time period to pay the required sums claimed. If the claimant objects to the defendant paying in instalments, the matter will be referred to the Courts so that the issue of payment can be resolved.

Even if a defendant only admits to part of the case against them, they still need to file this admission. They must do this along with the filing of a defence in relation to that part of the claim.

It is possible for a defendant to withdraw an admission if the other party then issues proceedings. If the other party agrees to the withdrawal, then this is permissible. Alternatively, (and more likely), where the claimant does not agree to the withdrawal the claimant can apply to the court for judgment on the admission and the defendant can apply to have it withdrawn. The court will take into account various issues when considering whether or not to withdraw the admission. This includes:

  • The conduct of the parties;
  • The prejudice that could be caused if the admission is withdrawn;
  • How far into the proceedings has the application to withdraw been made;
  • Why the party wishes to withdraw the admission (this would include whether there is new evidence);
  • How successful the claim is likely to be; and,
  • What is in the interests of the administration of justice.

Has Alternative Dispute Resolution been considered?

Before court proceedings are commenced, the courts encourage parties to consider alternatives to litigation in some form of alternative dispute resolution (ADR). This tends to be more cost-effective, flexible and quicker than proceeding with the matter to court. 

There are several different types of ADR, such as:

  • Negotiation
  • Arbitration
  • Conciliation
  • Adjudication
  • Mediation
  • Early Neutral Evaluation
  • Expert determination

Where a business is at fault, this particular process is likely to be beneficial since the parties can determine a solution between themselves. This is commercially viable compared to the other solutions that are possible via litigation.

Mediation after service of a claim

Even if mediation has not been considered before the filing of a claim, there is still the option to use mediation. For example, if the defendant files a partial defence admitting some - but not all - of the aspects of the claim, the court could use mediation to try and reach an agreement. For small claims (below £10,000), the court can offer the use of the small claims mediation service. This is a free service that allows the parties to consider their options without the need to proceed with the matter going to court.

The service is offered after the defence to the claim is filed. If the defendant is admitting their business is at fault but still putting forward a defence in relation to some or all of the claim, then this will be relevant. The court will proceed to send the parties direction questionnaires, with one question asking whether the parties wish to consider this mediation service. Both parties have to agree and the court should set a trial date that allows for the mediation to occur.

If the service is to be used, the court will set a date for an appointment and the mediation will usually occur by telephone. The mediator is not a judge but a trained court employee. The mediator's role is to act as a middle man in the dispute to aid in the negotiations. Where the claim is settled then the matter can be finalised without going to court. The mediator will generally assist the parties to write down the terms and a copy will be placed on the court file of the agreement. The claim is stayed for three months and can be reinstated by either party that breaches the terms of the agreement. If no such breach occurs, then the claim is struck out automatically once three months has passed.

If an agreement cannot be reached then the matter can still proceed to trial, however, the issues will have been discussed between the parties already so both sides will be aware of the issues.

Anything discussed during the mediation is privileged and confidential and the parties cannot use it later at a trial if an agreement is not reached. The service is generally aimed at litigants in person to keep costs low, however, it is possible for parties to use a legal representative where they are not confident about dealing with the matter themselves.

For fast-track (claims between £10,000 and £25,000) and multi-track (claims over £25,000) claims, the court will also encourage mediation, although it should be noted that this is not a free service. The parties share the cost of the mediation and will mutually agree on a venue and mediator. The court can postpone proceedings to allow time for the mediation to take place. 

Contact our Dispute Resolution Solicitors in London

Lewis Nedas Law holds over 25 years of corporate litigation experience with both domestic and international clients in a broad range of matters, from preliminary trial proceedings through to post-trial.

For expert advice from our Dispute Resolution Solicitors, please call us on 02073872032 or complete our online enquiry form.

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