DR – WS1 Pre Action Steps TIFF LIAO
Chapter 13.2 Pre Action Settlement and 13.3 Page 241
13.2 PRE-ACTION SETTLEMENTS
COSTS AND INTEREST - Where a settlement is reached PRIOR to the issue of proceedings, the prospective C will NOT BE:
entitled to recover their legal costs UNLESS this has been agreed.
entitled to interest on any sum agreed under s 69 of the CCA 1984, or s 35A of the SCA 1981.
- There may, however, be an entitlement to interest under
contract OR
the Late Payment of Commercial Debts (Interest) Act 1998,
and such should be taken into account during any negotiations and as part of any settlement.
RECORDING A PRE- - Once settlement terms have been AGRED, they are clearly and accurately recorded in writing, so
ACTION SETTLEMENT that the agreement can be enforced if one of the parties defaults.
- It may be sufficient for a settlement reached BEFORE the issue of proceedings to be recorded in an
exchange of correspondence.
- Commonly, there will be a letter from the potential defendant setting out the terms being offered
‘in full and final settlement’ of all claims which the prospective claimant may have, and a reply
accepting these terms.
- More complicated settlements should normally be recorded in a formal settlement agreement.
- Care should be taken to ensure that all necessary terms are included in any offer to settle.
In Evans v Trebuchet Design Ltd [2020] EWHC 3037 (IPEC), a letter sent to a litigant in person and
marked ‘Without Prejudice Save as to Costs’ included an offer to settle the claim in full and final
settlement. The claimant sent an email accepting the offer followed by an invoice for the agreed
amount. The defendant’s solicitor then sent a standard form settlement agreement which included
a non-disclosure clause. Neither party signed the agreement and the court held that there was a
BINDING agreement to settle when the offer was accepted by the claimant. The standard form
settlement agreement was an attempt to modify that agreement, but it was ineffective because it
was never signed.
13.3 SETTLEMENTS REACHED
AFTER
THE ISSUE OF PROCEEDINGS
- It is preferable for the settlement to be recorded in a court order or judgment, since this will make enforcement easier if the
agreement is not honoured.
- In particular, enforcement proceedings may be commenced to recover any money due under the settlement (including costs).
- The date by which payment of any debt or damages is due must, however, be specified in the judgment or order.
- UNLESS the settlement provides otherwise, interest is NOT payable on costs UNTIL judgment is entered
CONSENT ORDERS OR - Where NONE of the parties is a litigant in person -
JUDGEMENT it will often be possible to avoid an application to the court by drawing up a consent order or
judgment for sealing by a court officer under r 40.6.
The formalities for a consent order are set out in r 40.6(7) as follows:
(a) the order agreed by the parties must be drawn up in the terms agreed;
(b) it must be expressed as being ‘By Consent’;
(c) it must be signed by the legal representative acting for each of the parties to whom the order
relates.
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TIFF LIAO
Chapter 13.2 Pre Action Settlement and 13.3 Page 241
13.2 PRE-ACTION SETTLEMENTS
COSTS AND INTEREST - Where a settlement is reached PRIOR to the issue of proceedings, the prospective C will NOT BE:
entitled to recover their legal costs UNLESS this has been agreed.
entitled to interest on any sum agreed under s 69 of the CCA 1984, or s 35A of the SCA 1981.
- There may, however, be an entitlement to interest under
contract OR
the Late Payment of Commercial Debts (Interest) Act 1998,
and such should be taken into account during any negotiations and as part of any settlement.
RECORDING A PRE- - Once settlement terms have been AGRED, they are clearly and accurately recorded in writing, so
ACTION SETTLEMENT that the agreement can be enforced if one of the parties defaults.
- It may be sufficient for a settlement reached BEFORE the issue of proceedings to be recorded in an
exchange of correspondence.
- Commonly, there will be a letter from the potential defendant setting out the terms being offered
‘in full and final settlement’ of all claims which the prospective claimant may have, and a reply
accepting these terms.
- More complicated settlements should normally be recorded in a formal settlement agreement.
- Care should be taken to ensure that all necessary terms are included in any offer to settle.
In Evans v Trebuchet Design Ltd [2020] EWHC 3037 (IPEC), a letter sent to a litigant in person and
marked ‘Without Prejudice Save as to Costs’ included an offer to settle the claim in full and final
settlement. The claimant sent an email accepting the offer followed by an invoice for the agreed
amount. The defendant’s solicitor then sent a standard form settlement agreement which included
a non-disclosure clause. Neither party signed the agreement and the court held that there was a
BINDING agreement to settle when the offer was accepted by the claimant. The standard form
settlement agreement was an attempt to modify that agreement, but it was ineffective because it
was never signed.
13.3 SETTLEMENTS REACHED
AFTER
THE ISSUE OF PROCEEDINGS
- It is preferable for the settlement to be recorded in a court order or judgment, since this will make enforcement easier if the
agreement is not honoured.
- In particular, enforcement proceedings may be commenced to recover any money due under the settlement (including costs).
- The date by which payment of any debt or damages is due must, however, be specified in the judgment or order.
- UNLESS the settlement provides otherwise, interest is NOT payable on costs UNTIL judgment is entered
CONSENT ORDERS OR - Where NONE of the parties is a litigant in person -
JUDGEMENT it will often be possible to avoid an application to the court by drawing up a consent order or
judgment for sealing by a court officer under r 40.6.
The formalities for a consent order are set out in r 40.6(7) as follows:
(a) the order agreed by the parties must be drawn up in the terms agreed;
(b) it must be expressed as being ‘By Consent’;
(c) it must be signed by the legal representative acting for each of the parties to whom the order
relates.
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TIFF LIAO
