23/01/2025

Part two of the proposed changes to pre-action protocols for debt and other claims was published by The Civil Justice Council at the end of 2024.

The recommendations in the report are the result of a thorough review of the steps necessary before resorting to legal action in a variety of different claim types.

As well as covering debt claims, which is, of course, my area of interest, the report considers:

  • personal injury claims,
  • clinical disputes,
  • disease and illness claims,
  • travel claims,
  • housing,
  • judicial reviews,
  • construction and engineering disputes,
  • professional negligence,
  • media and communications claims and
  • the protocol for the multi-track litigation in the business and property court.

 

How Do the Proposed Changes to Pre-Action Protocols Affect Debt Claims?

At present, the pre-action protocol for debt claims requires creditors to send a letter of claim to debtors before applying to court. The letter must contain certain information relating to the claim and the debtors are given the opportunity to respond.

The aim is to encourage communication between parties to increase the chance of matters being resolved without the need to go to court.

The proposed changes to the debt claims pre-action protocol include:

  • The pre-action protocol (PAP) letter from creditors should be more prescriptive.
  • There should be greater disclosure.
  • There should be greater general information about potential defences.
  • Creditors should have a positive obligation to take reasonable steps to identify a debtor’s current address in certain circumstances.
  • It was suggested that there should be further research into how the debt claim PAP can be made more user-friendly.
  • The debt claim PAP should also be incorporated into Money Claim Online, which creditors should be required to use in certain circumstances.
  • The PAP should be amended to refer to the fact that the court will consider compliance with the PAP when giving directions.

It is always good to review and update systems. However, having read and digested the proposed changes, I personally feel the Civil Justice Council are going a bit far!

Taking each recommendation in turn, it is my view that:

  • The PAP letter presently contains the right amount of information to allow a debtor to make a valid decision.
  • There is already disclosure of all documents that a creditor will reply upon if a matter goes to court. For example, signed contracts, terms and conditions, purchase orders, invoices, statements, letter and emails chasing payment.
  • I totally disagree there should be greater general information about potential defences. A debtor can take their own legal advice and deal with the claim on that basis. It is not for a creditor to point them in the right direction!
  • As to the debtor’s current address, if this is endorsed upon contract, invoices and so on, then this is the last known address and service of the PAP letter and any proceedings are valid. The courts must understand that if an individual leaves a property, they should take responsibility for placing a ‘forward’ of all post to their new address through Royal Mail for at least six months.
  • I believe the PAP letters used are already very user-friendly.
  • I agree that the debt claim PAP should be incorporated into Money Claim Online. I issue all proceedings for debt claims through this system.
  • I also agree that the PAP should refer to the court giving consideration to compliance. However, non-compliance is already referred to setting out clearly what happens if a party fails to comply with the protocol.

 

Final Thoughts on Debt Claims

Doing this job for 40 years I have seen it all from the small claims court limit in 1984 being £300 and now in 2024 it sitting at £10,000!

I have always been an advocate for recovery of all costs in small claims cases. For example, if I lend you £1 and it takes me £1 to recover my original loan, then it must follow you owe me £2. I honestly believe that if there was a cost penalty in small claims cases, these cases would be halved overnight. Claimants would not take action for unrealistic cases if there was a possibility that they had to pay the other sides’ costs. Yes, it is possible to get a costs order on the basis of unreasonable conduct, but judges do not often make these orders and they are made on a case-by-case basis.

 

Need help with a debt claim?

It would be great to hear your thoughts on the proposed changes to pre-action protocols for debt claims and whether you agree with my views and comments. Perhaps you feel that The Civil Justice Council hasn’t gone far enough with their recommendations.

Of course, if you need advice on any debt recovery matter, please don’t hesitate to get in touch by phoning our Stoke-on-Trent team on 01782 205000, our Altrincham solicitors on 0161 929 8494, or by emailing enquiry@beswicks.com