Problem: What should a letter of claim include and what my response should be?
I am the MD of a painting and decorating contractor. In 2013, we were awarded the contract for carrying out repairs, painting and decorating to a historic seventeenth-century stately home in the Midlands. Part of the works was for hanging expensive hand-printed wallpaper and we decided to employ a company that was an expert in this.
However, the standard of the so-called expert company’s workmanship was very poor and after a few weeks, we removed them from the site and completed the work using our own in-house employees. We also had to replace a lot of the expensive wallpaper that the company had hung which was quite a considerable sum in itself. This meant that we refused to pay the company any monies it had claimed.
We subsequently heard nothing from the company until May this year, when we received a letter of claim from the company’s solicitors. They are claiming just over £18,000.00, but because it should be relatively easy to defend, I wish to avoid employing a solicitor and manage the case in-house. I would, therefore, appreciate if you could explain the Protocol, including what a letter of claim should include and what my response should be.
Response: Pre-Action Protocol explained
I have previously written about the Pre-Action Protocol (“Protocol”), but because it is so important, it is always worth further mention.
The Pre-Action Protocol (“Protocol”) came about as a result of the Lord Woolf law reforms back in the late nineties, which introduced the Civil Procedure Rules (“CPR”). These rules now include several protocols for different kinds of dispute such as professional negligence, personal injury, defamation and construction and engineering. These protocols set out how a dispute is to be conducted before a claimant issues any proceedings. It is vitally important for both a claimant and defendant to follow the rules otherwise there is a substantial risk that a successful party’s costs may not be recoverable.
The objectives of the Protocol are:
(i) to encourage the exchange of early and full information about the prospective legal claim;
(ii) to enable parties to avoid litigation by agreeing a settlement of the claim before commencement of proceedings; and
(iii) to support the efficient management of proceedings where litigation cannot be avoided
Under the Protocol for construction and engineering disputes, section 3 requires that the claimant (or its solicitor) send to the proposed defendant a copy of what is called a letter of claim. Such a letter of claim must include such information as a summary of the facts on which each claim is based, the basis on which each claim is made, the nature of the relief required (i.e. damages) and the names of any experts.
Providing you are satisfied that the letter of claim is set out correctly, as the proposed defendant, you must acknowledge the letter of claim within 14 days of receipt and within 28 days of receipt you must respond (although this period can be extended).
Your response should include information such as what facts are agreed, which claims are accepted and those that are rejected, the basis of the rejection. If you are making a counterclaim (ie for replacing the wallpaper that was hung poorly), you should also include this in the response, and the claimant then has 28 days to respond to the counterclaim following receipt of your response.
If you continue to dispute the matter, the Protocol requires a pre-action meeting between the parties and their representatives. The aim of the meeting is for the parties to agree such matters as what are the main issues in the case and to identify the root cause of disagreement in respect of each issue, and to consider (i) whether, and if so how, the issues might be resolved without recourse to litigation, and (ii) if litigation is unavoidable, what steps should be taken to ensure that it is conducted in accordance with the overriding objective.
The Protocol is available online from the Ministry of Justice website.
© Michael Gerard 2015
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.