Pictured above: Richard Anderson
When making a claim against another company or individual, it is
important to try to resolve this at the earliest opportunity
without the expense and aggravation of having to take it to
court.
In fact, parties are encouraged to avoid litigation under rules
introduced by the court, known as pre-action protocols. These
require you and the debtor to take steps to exchange information
and documentation prior to issuing court proceedings. This allows
each party to understand the other's position and to make informed
decisions about settlement and how to proceed, in a reasonable and
proportionate manner.
Under the practice direction on pre-action conduct, you will
need to send a letter of claim to the defendant, setting out the
following:
• all documents in support of the claim, including terms
and conditions (signed), copy invoices, copy statements, copy
letters or e-mails demanding payment;
• details of any admissions made or undertakings given;
• confirmation of how the debtor can contact you to make
full payment or to agree a repayment schedule;
• requesting the defendant to give a full response within a
reasonable period, say 14 days;
• if the debtor is an individual, you will need to provide
a full list of where they can obtain free independent advice and
assistance.
If the debt is disputed, it may also be appropriate to refer the
action to some form of alternative dispute resolution such as
mediation.
The practice direction should also be forwarded to the debtor
under the letter of claim, as this sets out what the defendant can
do by way of replying to the claimant.
There is an obligation on the defendant to reply to you.
The penalties for failure to comply
If either side fails to comply with the practice direction, then
the court will take this into account when deciding whether to
impose sanctions. The sanctions which the court may impose
include:
• staying the proceedings until such steps which ought to
have been taken have been taken;
• ordering the party at fault to pay costs, or part of the
costs;
• ordering the party at fault to pay those costs on an
indemnity basis.
If you are the party at fault, then you may be deprived of
interest on all or part of your claim.
If the party at fault is the defendant, they may be ordered to
pay interest on all or part of that sum at a higher rate, not
exceeding 10% above base rate, than would otherwise have been
awarded.
It is therefore vitally important to have all your documentation
in order when making a claim for debt recovery - or if you have
received a pre-action letter from one of your suppliers chasing
payment.
The Beswicks debt recovery team can help you at every stage of
the debt recovery process. We can also ensure that your credit
control systems and procedures do not put you at risk of bad
debtors.
For more information on the pre action protocol procedure or
advice on a particular troublesome debt, please contact Richard
Anderson on 01782 404722 or email richard.anderson@beswicks.com
For more information on Beswicks Solicitors, view their website
here: www.beswicks.com