Preliminary Considerations. This chapter will enable you to achieve the following learning outcomes from the CILEx syllabus:

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1 Chapter 2: Preliminary Considerations Outline 2.1 Introduction 2.2 Limitation 2.3 Calculating limitation periods 2.4 Viability 2.5 Financing litigation 2.6 Summary Aims of this Chapter This chapter will enable you to achieve the following learning outcomes from the CILEx syllabus: 2 Understand how civil actions are funded 3 Understand how to commence and defend actions in civil proceedings 2.1 Introduction Although the public perception is that most cases proceed to a trial, this is far from the reality and many cases fall at the first hurdle. Indeed, if a case has no real prospect of succeeding, a client will not thank his solicitor for pursuing it. Lawyers too must be aware of commercial considerations to ensure the future of their own business. Thus, before commencing an action, certain questions must be answered. Can the claim be brought at all? Who are the parties and is the defendant worth suing? How will the case be funded? In this chapter, these issues are discussed in turn. 2.2 Limitation Before commencing action, the lawyer must check that the case is not timebarred. In other words, the client has left it too late to bring a claim a concept known as limitation. The Limitation Act 1980 (LA 1980) sets down strict time limits relating to the time between the cause of action (e.g. the date of the accident in a personal injury claim) and the commencement of the litigation relating to that event. This is known as the limitation period. It prevents a potential defendant from remaining under a constant threat of litigation for events that happened years ago and recognises the difficulties each party may have in bringing or defending a claim once memories of witnesses have faded. UQ09 CLS 11

2 Limitation made headline news as a result of A v Hoare [2008]. One of the victims of lottery-winning convicted rapist Lorworth Hoare wished to claim for the injuries (including psychiatric injury) she suffered as a result of his attack on her. Unusually, she was allowed to bring her claim many years after the expiry of the limitation period. The general rule Limitation periods operate to provide a defendant with a technical defence to a claim that is issued a long time after the events in question took place. The general rule is that actions commenced outside the limitation period will not be allowed to proceed, although extensions may be available in exceptional circumstances. Allowing a case to be lost on limitation grounds could lead to a professional negligence claim and so it is vital that the solicitor operates an efficient diary system. 2.3 Calculating limitation periods The main limitation periods are as follows. Personal injury claims Most other tort claims Contract claims 3 years 6 years 6 years Time starts to run for limitation purposes when the cause of action occurs, that is, the date on which the claim could have been brought. This is usually: in negligence cases, when the claimant suffers damage as a result of the alleged negligent conduct, for example, the date of the road traffic accident; in contract claims, when the contract was breached. Thus, in a claim for damages for late delivery it will be when the goods should have been delivered under the terms of the contract. A road traffic accident occurred on 6 October. The limitation period would start running on 7 October, with the last day for issuing being on 6 October three years later. 12 UQ09 CLS

3 2.3.1 Extending limitation For most types of claim the limitation periods laid down by LA 1980 are final. In personal injury cases, however, this is not the case. Actual knowledge In personal injury claims, you have three years from the date of the cause of action to bring your claim. However, not everyone will know, at the date of the cause of action, that they can bring a claim. Therefore time may not start running in personal injury cases until a later date known as the date of knowledge, that is, when the claimant first became aware that his injury was linked to the original accident perhaps as a result of seeking medical advice. This is particularly relevant in personal injury cases involving exposure to asbestos, where it may be many years later that the claimant discovers he has contracted an asbestos-related disease. Constructive knowledge On occasion, the defendant insurers may seek to argue that the claimant had knowledge at an earlier date than that of his actual knowledge to try to defeat his claim. Constructive knowledge is knowledge which the claimant ought to have from the facts available to him, either from his own observations or as a result of expert advice, medical or otherwise. Discretion to extend limitation If the claimant has failed to meet the limitation date, the court has discretion to extend it, but will rarely do so. In Collins v Secretary of State for Business, Innovation and Skills [2014] the claimant was diagnosed with lung cancer in 2002 and successfully treated. He attributed the illness to exposure to asbestos between 1947 and 1967 but only instructed solicitors to pursue a claim in 2012, aged 90, after seeing a newspaper advertisement. The court considered that a reasonable person would have enquired about the possible causes of the cancer by mid This meant that limitation had expired in 2006, three years after the date of constructive knowledge. The proceedings issued in 2012 were six years out of time. In this instance, the court refused to exercise its discretion to extend the primary limitation period as the claim had low value and the litigation costs would be disproportionately high. UQ09 CLS 13

4 2.4 Viability Before launching into litigation, it is important to check whether it is worth doing so. In particular: Who is the defendant? In addition to identifying the correct defendant, you must ensure that he is sued in the correct capacity, whether it be as an individual, a partnership or a limited company. We shall be considering this in more detail in Chapter 5. Where is the defendant? Such information is required to ensure that the proceedings can be served effectively. Will the defendant be able to pay any judgment? There is little point in suing a defendant who is on the verge of bankruptcy or liquidation as enforcement of the judgment would be impossible. If there is any doubt about a defendant s ability to pay, further enquiries should be made such as a search of Companies House or by instructing an inquiry agent. 2.5 Financing litigation How a case will be financed is of crucial importance, both to the solicitor (as the method may influence how much and how quickly the firm will be paid) and to the client. There are a number of alternative ways through which litigation may be financed. At the outset of the case the solicitor must discuss the issue of costs with the client. She should give the client the best information possible about the likely overall costs and explain the client s potential liability not only for his own costs but also for those of the other party if he were to lose the case. General costs rule in civil litigation Although costs are awarded at the court s discretion, the usual rule in civil litigation is that the unsuccessful party in proceedings is ordered to pay the successful party s costs (r44.2). It simply means that the losing party pays the winning party s costs in addition to his own solicitor s costs. This gives rise to the expression that the loser pays twice. There are a number of methods of funding a civil litigation claim and these are considered below Private funding Some clients will have no alternative but to fund the case privately or may choose to do so. This is sometimes referred to as the retainer. Usually, this would be the final option for a client to be taken only when not covered by insurance or where alternative no win, no fee arrangements are not available. In this traditional method, the client pays the solicitor s costs of conducting the case at an agreed hourly rate. Charge-out rates are based on the salaries of the staff and fee-earners working at the solicitor s office together with an element 14 UQ09 CLS

5 2016 Copyright CILEx Law School Limited All materials included in this CLS publication are copyright protected. All rights reserved. Any unauthorised reproduction or transmission of any part of this publication, whether electronically or otherwise, will constitute an infringement of copyright. No part of this publication may be lent, resold or hired out for any purpose without the prior written permission of CILEx Law School Ltd. WARNING: Any person carrying out an unauthorised act in relation to this copyright work may be liable to both criminal prosecution and a civil claim for damages. This publication is intended only for the purpose of private study. Its contents were believed to be correct at the time of publication or any date stated in any preface, whichever is the earlier. This publication does not constitute any form of legal advice to any person or organisation. CILEx Law School Ltd will not be liable for any loss or damage of any description caused by the reliance of any person on any part of the contents of this publication. Published in 2016 by: CILEx Law School Ltd College House Manor Drive Kempston Bedford United Kingdom MK42 7AB British Library Cataloguing in Publication Data A catalogue record for this manual is available from the British Library. ISBN

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