THINKING OF ISSUING WITHOUT A LETTER BEFORE ACTION? THINK AGAIN IT MAY BE BAD FOR YOUR HEALTH(CARE)

In Baxter Healthcare UK Ltd -v- Fresenius Kabi* (17/09/14) Judge Hacon set out the dangers of issuing proceedings without sending a letter before action.

THE ISSUES

The claimant issued proceedings without sending a letter before action. The dispute was resolved. The defendant contended that the same result would have followed without the need for proceedings.

THE JUDGE’S DILEMMA: THE COURT NOW HAD TO SPECULATE

• The court was now required to speculate as to what would have happened if a letter before action had been written.
• The fact that the claimant had not written a letter meant that it was not possible to say how matters had been resolved.
• On the facts of the case if a letter had been written it was possible that the matter would be resolved, it was equally possible they would not and proceedings would have to be issued in any event.
• The defendant was ordered to pay 50% of the claimant’s costs.

THE DANGERS OF NOT SENDING A LETTER BEFORE ACTION

It is worth remembering the strictures of the Pre-Action Practice Direction and the sanctionsopen to the court if there is no compliance.

“SECTION II – THE APPROACH OF THE COURTS

4. Compliance

4.1  The CPR enable the court to take into account the extent of the parties’ compliance with this Practice Direction or a relevant pre-action protocol (see paragraph 5.2) when giving directions for the management of claims (see CPR rule 3.1(4) and (5)) and when making orders about who should pay costs (see CPR rule 44.2(5)(a)).

4.2  The court will expect the parties to have complied with this Practice Direction or any relevant pre-action protocol. The court may ask the parties to explain what steps were taken to comply prior to the start of the claim. Where there has been a failure of compliance by a party the court may ask that party to provide an explanation.

Assessment of compliance

4.3  When considering compliance the court will –

(1) be concerned about whether the parties have complied in substance with the relevant principles and requirements and is not likely to be concerned with minor or technical shortcomings;

(2) consider the proportionality of the steps taken compared to the size and importance of the matter;

(3) take account of the urgency of the matter. Where a matter is urgent (for example, an application for an injunction) the court will expect the parties to comply only to the extent that it is reasonable to do so. (Paragraph 9.5 and 9.6 of this Practice Direction concern urgency caused by limitation periods.)

Examples of non-compliance

4.4  The court may decide that there has been a failure of compliance by a party because, for example, that party has –

(1) not provided sufficient information to enable the other party to understand the issues;

(2) not acted within a time limit set out in a relevant pre-action protocol, or, where no specific time limit applies, within a reasonable period;

(3) unreasonably refused to consider ADR (paragraph 8 in Part III of this Practice Direction and the pre-action protocols all contain similar provisions about ADR); or

(4) without good reason, not disclosed documents requested to be disclosed.

Sanctions for non-compliance

4.5  The court will look at the overall effect of non-compliance on the other party when deciding whether to impose sanctions.

4.6  If, in the opinion of the court, there has been non-compliance, the sanctions which the court may impose include –

(1) staying (that is suspending) the proceedings until steps which ought to have been taken have been taken;

(2) an order that the party at fault pays the costs, or part of the costs, of the other party or parties (this may include an order under rule 27.14(2)(g) in cases allocated to the small claims track);

(3) an order that the party at fault pays those costs on an indemnity basis (rule 44.3(3) sets out the definition of the assessment of costs on an indemnity basis);

(4) if the party at fault is the claimant in whose favour an order for the payment of a sum of money is subsequently made, an order that the claimant is deprived of interest on all or part of that sum, and/or that interest is awarded at a lower rate than would otherwise have been awarded;

(5) if the party at fault is a defendant, and an order for the payment of a sum of money is subsequently made in favour of the claimant, an order that the defendant 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.”

*The case is reported on Lawtel. This note is based on the Lawtel summary.