Lawyers must fix the problems with gagging orders before it is too late
The Ministry of Justice has published the Pre-Action Protocol for Debt Claims (the “Protocol”), which comes into force on 1 October 2017. The Protocol applies to any business (including sole traders and public bodies) claiming payment of a debt (the “creditor”) from an individual (including a sole trader) (the “debtor”). It does not apply to business-to-business debts unless the debtor is a sole trader.
Aims of the Protocol
The aims of the Protocol are to:
Letter of Claim
The Protocol requires the creditor to send by post a letter of claim to the debtor, which should contain the following information:
After the Letter of Claim
Can the creditor bring court proceedings?
If the debtor does not reply to the letter of claim within 30 days of the date of the letter, the creditor may start court proceedings, provided that it has given 14 days' notice to the debtor of its intention to do so.
The creditor should not start court proceedings until 30 days from receipt of the completed Reply Form, or 30 days from the creditor providing any documents requested by the debtor, whichever is later.
The court will expect the parties to have complied with the Protocol if the matter proceeds to litigation and will consider any non-compliance when giving directions for case management. This could mean that even if successful a creditor who has not complied with the Protocol could be penalised on costs.
If the debtor responds to the letter of claim but an agreement is not reached, the creditor can commence court proceedings but should give the debtor at least 14 days' notice of their intention to do so (unless urgent action is required).
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