Best Foot Forwards – the new pre-action protocol for debt claims


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Luke Patel of Blacks Solicitors

The courts are constantly refining the process under which claims are brought and managed, and one of the major motivations since the introduction of the Civil Procedure Rules in 1998 has been the idea of fair dealing between parties in the interest of justice.

This is partly enshrined within the rules themselves, starting with the “overriding objective” of allowing the courts to deal with cases “justly and at proportionate cost,” and includes encouraging parties to settle matters through alternative dispute resolution methods such as mediation.

Another way the courts encourage reasonable conduct is the imposition of pre-action protocols, set courses of action that parties are expected to follow before the claim reaches the court.

Some areas of law already have such guidance, including construction disputes, defamation and professional negligence claims but since 01 October 2017 a new protocol has been in place to cover debt claims, perhaps the widest reaching protocol yet imposed.

The new protocol applies only to claims seeking repayment of a debt owed by an individual to a business. In this case, a sole trader (an individual who is also a business) would be covered both when pursuing a debt or when being pursued. The protocol does not apply to debts owed by partnerships or limited companies, nor does it apply to debts that are entirely personal between two individuals (such as a loan between family members).

There is already a generally accepted procedure for bringing debt claims including an initial “letter before action” requesting payment and warning of legal consequences. However the new protocol imposes stricter requirements on a claimant to provide the debtor with all necessary information regarding the debt and how it can be paid and requires the provision of a statement of account and interest calculation together with a set of reply forms and an information sheet.

Previously, letters before claim might require payment or response in 14 or even 7 days, but the protocol allows a full 30 days for response, after which the creditor can take matters to court. The debtor’s response should use the set reply form and enclose supporting documents, and may state that they are seeking debt advice, for which the creditor must allow them additional time. In any event, if a response has been received, the creditor must wait at least 30 (more) days from response – or from the provision of any documents requested by the debtor – before issuing proceedings.

In cases where the protocol applies and is not followed, the Court will take this into account when making directions, and may well effectively require the parties to go through the various stages above before the case can be advanced, or may impose costs sanctions. It is likely that non-compliance by the creditor will be considered a far more serious breach than non-reply by a debtor who subsequently seeks to raise a defence, so any business looking to recover debts after 01 October should be very aware of what steps to take.

Blacks Solicitors have a dedicated team who are experienced in dealing with all types of debt collection and enforcement for individuals and businesses. Please contact Luke Patel on 0113 227 9316 or email him “LPatel@LawBlacks.com”.