Reversing the roles in litigation

Posted on: April 9th, 2015

Effective litigators like to be in the driving seat wherever possible. If there is a choice we would generally wish to be the claimant, dictating the agenda and driving the litigation forwards. This is particularly the case when an opponent would otherwise wish to string-out matters to suit their own agenda.

Where each party to a dispute threatens litigation against the other it will be clear to both that each could go on the offensive in terms of commencing legal proceedings. However, when a client is on the receiving end of threats of litigation to which they would have no counterclaim, the opportunity to take the initiative in litigation can be less obvious. Where this is the case their solicitors may need to be more creative.

It is at times like this when serious consideration should be given to seeking declaratory relief. This is an order by the court confirming a legal or factual finding which is binding on the parties to the action. For the brave, this equitable remedy will refresh the parts that other remedies cannot reach. It has the power to turn most potential defendants into claimants, with all the legal and tactical advantages such a reversing of roles can bring.

We have considerable experience within the Dispute Resolution team in seeking and obtaining declaratory relief in both commercial and property litigation.

On an interesting recent case we secured a negative declaration in relation to the sale of a property for our clients. The offending party in this case was an adjoining landowner who had made a number of allegations and threats of litigation against our clients, including in relation to encroachment, but never acted on them. This party was aware that our clients’ property was on the market. It was our clients’ case that they were seeking to engineer artificial disputes to stymie a sale and thereby extract a ransom payment. When asked to “put up or shut up” by our clients’ then solicitors, the offending party’s response was that they could take as long as they liked to consider their options at law and that there was nothing which our clients could do about it.

Following the transfer of the file to this firm that assumption proved to be an expensive mistake. We sued for a declaration that our clients had no potential liability to the adjoining land-owner in relation to the matters they had raised in pre-action correspondence. Given the fluid nature of the allegations made we also sought a ruling that there were no other extant disputes between the parties in relation to the property.

The court granted the declarations sought, thus enabling our client to give good title to a potential purchaser. It did this following a successful strike-out/summary judgment application we brought on behalf of our clients.

As with all equitable remedies, the jurisdiction to award declaratory relief is discretionary. In past years there was a suggestion in the authorities that negative declarations are particularly racy and need to be treated with caution. Judges were reluctant to sanction a procedure that effectively hauls a party into court, against their will, to tell them that they would not succeed with a claim which they have not chosen to bring.

More recent case law has clarified that the exercise of this discretion should be entirely pragmatic and that the courts should not be reluctant to grant the relief if that is what justice requires.

The wider use of declarations, both positive and negative, is an area we will explore in a subsequent article. For now, we hope the above example serves as a useful reminder that being creative and taking the initiative in litigation can reap dividends.