Why contractors will always need the courts

There’s something to be said for the contracting sector’s desired conciliation service because such a channel for negotiation or mediation is what one-man bands are increasingly expected to turn to as a way to resolve disputes now that court fees have risen, writes business solicitor Gary Cousins.

However, while negotiating and mediating are great ways to resolve disputes, they are actually best used in conjunction with court proceedings, rather than as alternatives.

The main reason to issue court proceedings is when the other party either ignores your claim or fails to deal with it appropriately. What is then needed is some form of compulsion to force them to engage. Without this, any request to negotiate or mediate is likely to fall on deaf ears.

Once a party is served with court papers, they cannot simply ignore them. If they do, they will end up with a court judgment against them which will be based just on what the claimant says.

This judgement can lead to a CCJ being registered (which can affect their ability to raise credit). In addition, they could find their goods being seized by High Court Enforcement Officers, being made bankrupt or being wound up or, in some extreme cases, being arrested and facing the possibility of imprisonment if an injunction order has been ignored.

So, there is no better way of ensuring that the other party takes your claim seriously than issuing court proceedings. Issuing court proceedings has other advantages too. One of the most important is the court’s ability to require a party to disclose documents. Commercial cases are usually won or lost according to what the documents say. Therefore getting hold of documents that help your case or harm your opponent’s case are usually of crucial importance.

Under the English legal system, disclosing documents is done at a relatively early stage, soon after each party has set out details of its case, so it is often the case that the best time to go to mediation, or commence serious negotiations, is after documents have been disclosed.

So, it does seem to me that that issuing court proceedings will still be necessary unless your opponent can be persuaded to engage with serious negotiations before action is taken. There are various tactics that can be employed to try to achieve this -- not the least of which is that the courts can order them to pay more costs if they do not engage in pre-litigation exchanges of information. Otherwise, there will still be no alternative other than issuing court proceedings. There is some good news, however: should you win your case, you can expect these fees to be added to the costs that the defendant will have to pay.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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