What is a Statement of Claim?
A statement of claim is issued when an unresolved commercial dispute has been escalated to the court. The dispute may be over a perceived breach of contract or unpaid debt.
The statement of claim will detail the basis of the claim, including documentation such as invoices and correspondence. It will explain why the plaintiff has resorted to taking legal action. This makes it clear to the defendant and the court what is being claimed.
The statement of claim specifies the desired outcome from the court action. A Common outcome is the award of compensation, or damages, on top of the outstanding debt. The compensation may cover the costs of bringing the legal action, ensuring the plaintiff is not left out of pocket.
The defendant (you or your business) has the opportunity to respond to the statement of claim.
How to respond to a Statement of Claim
There is a notice period for your response to the statement of claim. The period is normally 28 days. The defendant could respond in several ways:
- Pay the demanded amount
If you believe the claim is fair, you could pay the full amount requested, including any damages. You should file a ‘notice of payment’ to the court. This ends the court proceedings and means there will be no court judgement recorded against you.
- Negotiate payment termst
Negotiate with the applicant. Try to come to an agreement to pay the debt, including the compensation. This might mean paying in the future or paying in instalments. If you reach an agreement the statement of claim may be withdrawn. Again, this means there will be no judgement against you.
- Ask for more information
It may be that you don’t recognise some of the documentation issued with the statement of claim. You are, therefore, unable to respond without understanding all of the facts. There are formal documents you can lodge to request clarification or more information. A ‘request for further and better particulars’ is sent directly to the plaintiff. A ‘notice to plead facts’ is a formal document file with the court.
- File a defence
If you believe that you don’t owe the full amount demanded you should file a ‘defence’ document. This details why you don’t agree with the claim.
- Do nothing
You should not ignore the statement of claim. If you don’t respond, in any way, within 28 days the court may issue a default judgement.
A default judgement will lead to further stressful and costly legal action and potentially having a liquidator appointed over your company. This may impact your credit score and affect your ability to trade profitably.
Avoid legal action – Contact Corporate Lifeline before it’s too late!
It’s very common for businesses to suffer financial problems, particularly in the current trading environment. You may spot the early warning signs that you are beginning to struggle but ignore the signs. This is a poor business decision. As soon as you believe that your company may be struggling with finances, contact Corporate Lifeline.
We have rescued hundreds of businesses. We are experts at helping struggling companies return to profitable, competitive trading. Contact us for free advice and avoid the cost and stress of legal proceedings.