Responding to a claim - Discontinuance and settlement

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Overview

In civil litigation, understanding the strategies of discontinuance and settlement is vital for resolving disputes effectively and succeeding in the SQE1 FLK1 exam. These methods offer ways to conclude disputes without the unpredictability of a trial, aligning closely with the exam's focus on practical legal skills. This guide details the procedures, strategic considerations, and consequences of these options, equipping candidates with essential tools for both the exam and real-world practice.

Discontinuance of a Claim

Discontinuance occurs when a claimant decides to halt their claim, governed by Part 38 of the Civil Procedure Rules (CPR).

Procedural Requirements

  1. Filing and Service: The claimant must submit a notice of discontinuance (Form N279) to the court and serve it on all parties.

  2. Timing Considerations:

    • Pre-defence: Discontinuance can occur without court permission.
    • Post-defence: Court approval is needed if a defence has been filed or if there are multiple defendants and not all agree.

  3. Judicial Intervention: Court permission is required in specific cases, including:

    • When an interim injunction has been granted.
    • Involving a child or protected party.
    • In representative actions under CPR 19.7.

Costs Considerations

Generally, a claimant who discontinues is responsible for the defendant's costs up to the discontinuance date, though this can vary:

  1. Standard Position: The claimant typically covers the defendant's costs unless the court decides otherwise.

  2. Exceptions: The court might deviate from the standard in unusual situations.

  3. Assessment of Costs: If there's disagreement, costs may undergo detailed assessment.

Strategic Considerations

When considering discontinuance, legal professionals should evaluate several aspects:

  1. Merits Assessment: Re-examine the claim's likelihood of success.
  2. Cost-Benefit Analysis: Weigh potential costs against probable outcomes.
  3. Reputational Impact: Consider effects on the client's reputation.
  4. Future Litigation: Consider impact on future claims.

Settling a Claim

Settlement provides an efficient, risk-averse way to resolve disputes, minimizing potential costs and safeguarding interests.

Methods of Settlement

  1. Consent Order: A court order reflecting agreed terms, enforceable by the court.

  2. Tomlin Order: Allows confidentiality around settlement terms, ideal for sensitive issues. It usually includes:

    • A brief order staying proceedings.
    • A confidential schedule with detailed settlement terms.

Part 36 Offers

Part 36 of the CPR enables a formal mechanism for settlement offers with notable cost effects:

  1. Formal Requirements:

    • Must be written and state it's made under Part 36.
    • Specify a relevant period of at least 21 days.

  2. Cost Consequences:

    • If a claimant doesn't exceed a defendant's offer, they may pay the defendant's costs from the offer's expiry.
    • If a defendant doesn't match a claimant's offer, they may incur extra costs and interest.

  3. Strategic Considerations:

    • Timing and amount are key for maximizing cost advantages.

Alternative Dispute Resolution (ADR)

ADR methods complement traditional settlements, offering more flexible options:

  1. Mediation: A neutral party assists in negotiations. Non-binding until agreements are formalized.

  2. Arbitration: Provides a binding decision from an appointed arbitrator, regulated by the Arbitration Act 1996.

  3. Early Neutral Evaluation: An expert gives a non-binding case evaluation.

Courts increasingly expect parties to consider ADR before trial, with possible cost penalties for unreasonable refusal.

Practical Application and Exam Relevance

Knowing about discontinuance and settlement is essential for SQE1 FLK1 exam success and practical use:

  1. Case Analysis: Assess when discontinuance or settlement is suitable.
  2. Procedural Knowledge: Understand requirements for various procedures.
  3. Cost Considerations: Understand consequences of strategic decisions.
  4. Ethical Considerations: Address issues related to negotiations and ADR advice.
  5. Drafting Skills: Know key components of settlement agreements and orders.

Conclusion

Proficiency in discontinuance and settlement strategies is essential for future legal professionals. These methods offer efficient dispute resolution, aligning with the CPR's goal of handling cases fairly and cost-effectively. For SQE1 FLK1 exam candidates, thorough knowledge of these topics forms the basis of effective civil litigation practice. By understanding the procedures, strategic aspects, and practical consequences, candidates set themselves up for success in exams and future legal careers.

Key points to remember:

  • Know the procedural requirements and cost implications of discontinuance.
  • Understand different settlement methods, including Consent and Tomlin Orders.
  • Utilize Part 36 offers strategically for cost advantages.
  • Recognize ADR's role in modern dispute resolution.
  • Be ready to apply this knowledge practically in the SQE1 FLK1 exam.