I have returned from holiday to find a High Court claim from a former agent. We dismissed him over a year ago so I had assumed he had decided not to take matters any further. At the time, we dismissed him with immediate effect for his failure to carry out his obligations under the agency agreement. He is now claiming that the immediate termination was unjustified and that he is entitled to compensation under the Commercial Agency Regulations. What should we do to respond to this?
It is important that you deal with this matter promptly and effectively. High Court claims are governed by special court rules called the Civil Procedure Rules (“CPR”). Here are some top tips for dealing with High Court litigation.
Stage 1: Right parties, right jurisdiction, correct service?
The court generally expects parties to comply with the ‘pre-action conduct’ requirements set out in the CPR. This involves the agent (or its representatives), writing to the principal to notify it of their prospective claim and the principal responding. The purpose of this process is to allow the parties an opportunity to reach a resolution without recourse to court.
Often, the dispute is not resolved and the agent issues their claim at court.
When a claim is commenced, you will receive a claim form and (or followed by) particulars of claim.
Immediate points to check:
- Is the agent suing the right company?
The agent needs to sue its principal as named on the contract. You don’t want to accept service of a claim when there is no relationship between you and the agent (for example, the agent commences a claim against the parent company but is in fact engaged by a subsidiary).
- Has the claim been commenced in the correct jurisdiction?
Agency contracts generally provide for the jurisdiction in which a claim should be commenced. You are entitled to challenge the jurisdiction of a claim, if it is issued in a different court to that provided in the contract. If the contract does not include a jurisdiction clause, the position is more complicated, but that may not prevent you from challenging the court’s jurisdiction.
- Has the claim been properly served?
If the agent has tried to circumvent the formal service procedures under the CPR, do not let them get away with it – accepting service generally ‘cures’ their errors!
Stage 2: Preserve documents, instruct your legal team
Do not destroy any documents relevant to the agent and their claim.
Do not create any documents either – this means, avoid discussing the claim internally over email, as you risk those documents falling to be disclosed (such documents might be protected by litigation privilege, but not always).
It may sound self-serving, but ideally you should instruct a legal team early on to handle the proceedings – claims are time consuming and can be complex (both on the law and the court procedure), lawyers are trained to deal with them and you, probably, are not. So, whilst you may want to do it yourself to save costs, it could cost you more in the long run.
Stage 3: Acknowledge service and defend – any counterclaim?
All proceedings work to a timetable for each stage and with timetables come deadlines. Put them in your diary straight away.
The first deadline is to acknowledge service of the claim within 14 days of service of the claim (assuming no issues arise under stage 1). You will then need to file your defence within 28 days of the claim.
Consider whether you have a counterclaim – did the agent’s breach of contract (resulting in the termination) cause you loss or damage?
Stage 4: Disclosure and witness statements
A party must disclose all documents in its possession or control which (1) support their case, (2) support the other party’s case, or (3) adversely affect their case.
The parties are expected to discuss and try to agree early on:
- What and how searches should be conducted (hard copy and electronic); and
- what categories of documents either party expects to see.
As most documents and communications are now electronic, disclosure of documents via electronic means is generally the most cost effective, particularly where the disclosure could be voluminous.
Make sure you have also decided early on who you will need to give witness statements, that they have agreed to do so, and are available to attend trial to give oral evidence: little weight is added to statements if the witness is not available to give evidence at trial.
Stage 5: Pressure tactics – Requests for Further Information, specific disclosure
Always be alert to ways of keeping pressure on your opponent, which are useful tools in driving settlement.
Examples are:
- Formal Requests for Further Information on any of the agent’s statements of case (such as, Particulars of Claim, Reply to Defence or Defence to Counterclaim).
- Raising disclosure enquiries and/or applying for specific disclosure of documents you consider to be within the agent’s possession or control, which it hasn’t disclosed and which you consider to be relevant to the proceedings.
Stage 6: consider settlement options, or proceed to trial?
Most cases settle – only a small percentage make it to trial.
Preparation for and attendance at trial is the most expensive part of the process, so try to avoid them. It often makes more commercial sense to use the money you would have to spend on the lawyers to make an offer of payment to the agent (if appropriate) to settle the proceedings.
Although, sometimes, particularly when it involves the enforceability of covenants (so a non-money claim), it makes more commercial sense to go to trial in order to protect the business.
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