LAYING DOWN THE LAW

by Martin Fleetwood

How a Straightforward Legal Case Can Fail

While businesses enter into contracts expecting that they will deliver the goods or services on the agreed terms and to the agreed standards, this does not always happen

Martin Fleetwood is a Consultant at Addleshaw Goddard’s Transport practice. The Rail Team has over 30 lawyers who advise clients in both the private and public sectors across a wide range of legal areas. As well as contractual issues, the team advises on operational matters, franchises, concessions, finance, regulatory, property, employment, environmental and procurement issues.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

Generally, attempts to resolve the issues take place between the parties, but unfortunately these attempts are not always successful and legal action may need to follow. For a relatively straightforward claim a business may decide to save costs and start legal proceedings itself. In such cases, ensuring that the correct processes for making the legal claim are followed is particularly important. A couple of recent cases have highlighted the effects of not following some of these processes, one of which was particularly costly for the claimant.

Use of electronic processes

During the Covid pandemic, businesses began to make greater use of electronic processes to conclude contracts and manage correspondence between each other. Documents were signed using e-signatures and email was used for many aspects of business transactions. However, the courts have taken a strict view of the rules relating to claims processes, including requiring a clear intention from both of the parties if they are to use email for the electronic service of documents.

In the recent case of McAlpine Ltd v Richardson Roofing Co Ltd, the claimant had sent particulars of its claim to the defendant's solicitor by email. While the defendant's solicitor had used an email address in correspondence, they had not indicated that they would accept email as a method of service for legal documents. A week after the initial service by email, the claimant served a further hard copy of the particulars by hand on a without prejudice basis. The claimant argued that the original attempt at service was valid, but in the event that it was not, an extension of time should be granted to validate the second attempt.

The judge considered that although the defendant's solicitor had included an email address in the notice of acting this was not a "response to the claim" for the purposes of the relevant court rules. He took the view that there needed to be a clear agreement to accept such service by email. Indeed, the fact that email had earlier been used by the claimant to serve a stay of application earlier in the proceedings was not explicit enough for the judge. There needed to be a clear statement of intent to accept service, given the importance of service in the proceedings. The judge also noted the need to serve documents in good time in order to ensure that service could be properly effected if there was an error in the original service process.

Before using emails in a legal process, businesses should: • Clarify with the other side the level to which using email for correspondence and court documents is acceptable. • Check expressly whether email service is acceptable and the requirements for such service before actually serving any formal court documents by email. • Ensure that all relevant time limits are known and diarised. • Not leave responses or submissions to the last minute.

Missing a deadline to serve relevant documents risks service being deemed by the court to be out of time, potentially ending the claim. To the extent that late service is permitted, there is often a cost associated with such permissions, which can be significant.

Getting the detail right

Where a claimant is seeking to recover a sum of money, they must not only (a) establish the defendant's liability, but also (b) provide evidence of the sum of money claimed (including how the sum has been calculated). Just because a defendant has not challenged the amount claimed, this is not deemed to be an acceptance of the amount. Civil Procedure Rule 16.5 (CPR) provides that, unless a defendant to a money claim expressly admits an allegation regarding a sum, they are taken to require it to be proved by the claimant.

In the case of Emery Planning Partnership v Bevan, decided earlier this year, the defendant (Bevan) had engaged Emery Planning Partnership (Emery) to obtain planning consent for a property that Bevan wished to develop. When the planning application was rejected by the local council, Bevan instructed Emery to challenge the Council's rejection. Bevan paid some but not all of Emery's invoices for the work it had carried out, so Emery brought a claim for the payment of those outstanding invoices, which amounted to some £50,000 plus interest.

In response to the claim Bevan denied that the monies were owed, arguing, amongst other things that Emery had acted negligently in challenging the Council. While Bevan challenged Emery's entitlement to the sums being claimed, there was no express challenge to Emery's calculation or request for evidence of the invoice amounts.

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While Bevan was unable to establish that Emery had acted negligently, the court decided that Emery had not adequately provided its costs. Just because Bevan in his defence, had not expressly disputed Emery's calculations of the invoice sums, this did not mean that Bevan could be taken to have admitted to their accuracy. In making this determination, the court relied in particular on CPR 16.5(4), which says: ‘Where the claim includes a money claim, a Defendant shall be taken to require that any allegation relating to the amount of money claimed be proved unless he expressly admits the allegation.’

Accordingly, the court decided that apart from an award of £1,650 for professional costs incurred by Emery in instructing Counsel (for which the corresponding Counsel’s fee note was disclosed in evidence), Emery was not entitled to any of the sums claimed.

As part of any claim for monies owed, businesses should: • Keep records of payments due from customers/clients, including how any invoice sums have been calculated. • Where invoices are for professional fees, ensure that the underlying data (ideally entries showing who conducted the work, what the work involved and applying the relevant individual’s hourly rate) supports the sums claimed. • Disclose all details of the relevant calculations to the other party as part of the evidence in the matter.

Prudent record-keeping (and joined-up finance, commercial and legal teams within a business) should make this element of a claim relatively straightforward. Failing this, an otherwise clear-cut claim for unpaid fees could well come unstuck.

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