Some sources, meanwhile suggest a combination of the two options, by
first protectively issuing the claim, and then agreeing an extension
or standstill agreement with the defendant.
I'd be interested to see the source for this suggestion. To me the bolded part makes no sense. As soon as the court issues a claim, the limitation clock is stopped retrospectively from the date that the court received the claim form (with the caveat that depending on the timing, a document might be deemed as received the next day after you deliver it e.g. see CPR PD 5B para 4.2).
CPR PD 7A paragraph 6.1 sets out the above rule:
Proceedings are started when the court issues a claim form at the
request of the claimant (see rule 7.2) but where the claim form as
issued was received in the court office on a date earlier than the
date on which it was issued by the court, the claim is “brought” for
the purposes of the Limitation Act 1980 and any other relevant statute
on that earlier date.
Once the limitation clock is stopped, a standstill agreement is of no effect. You can't stop something that is already stopped. If you want to further postpone proceedings after the claim has been issued, you must do so by extending court deadlines (e.g. the deadline for service of the claim form) or by staying the proceedings. This is done within the mechanisms of the Civil Procedure Rules and/or court applications rather than via standstill agreements. For example, see CPR 7.6 (extension of time for serving a claim form), CPR 2.11 (time limits may be varied by parties), CPR 3.8(3) and (4) (restrictions on time limit variations by parties), and CPR 3.1(2)(g) (court's power to stay proceedings).
As a corner case, a standstill agreement (if carefully worded) could be useful to protect the claimant against purporting to protectively file a claim form but making a mistake which causes the court to reject it. The standstill agreement would then enable the claimant to correct the error and re-submit the claim form.
If a "standstill agreement" has been agreed, then will that not
definitely be honoured by a court, such that if the claim is later
filed within time according to the standstill agreement (but out of
time by the usual statutory limitation period), it will be treated by
the court, by virtue of the standstill agreement, as nonetheless in
good time?
Yes. Limitation periods do not act as an automatic bar to proceedings. The court will not ordinarily proactively consider whether there is a limitation period unless the defendant raises the point in their defence. The effect of a standstill agreement is threefold: (1) it estops the defendant from raising a limitation defence, (2) it places the defendant in breach of contract if they raise a limitation defence (for which they can be sued for damages, effectively equivalent to the value of the original claim which has been "lost"), and (3) it can trigger in some cases the court's power to extend limitation periods where it is "equitable" to do so (e.g. see Section 33(1) of the Limitation Act 1980 or Section 118(1)(b) of the Equality Act 2010).
One consequence of this question, and another way of putting it, is:
in this way, can the parties still have an added incentive of avoiding
incurring of further legal costs in the form of the filing fee by
settling amicably without necessitating the filing of the claim before
negotiations are engaged in?
Yes, this is the primary motivation for standstill agreements. It isn't only the filing fee at play. As soon as a claim is issued, the parties risk being ordered to pay increased legal costs to the other side depending on the outcome of the case. Here are a few examples under the fixed costs regime (see tables 12 and 14 in CPR PD 45):
Fast track costs (damages < £5000, complexity band 1):
- Pre-action = £0
- Post-issue but pre-allocation = £2168
Fast track costs (damages > £10,000, complexity band 3):
- Pre-action = £3097 + 10% of damages over £10,000
- Post-issue but pre-allocation = £3303 + 20% of total damages
Intermediate track costs (complexity band 4):
- From pre-issue to service of defence = £9601 + 8% of total damages
- Post-service of defence but pre-directions = £13,420 + 14% of total damages
The above examples don't include disbursements (such as court fees), claim form issue fees, or VAT. As you can see, costs can very quickly escalate once you issue the claim and that's just for the fixed costs regime. On the multi-track costs are unbounded.
A potential method of gaining cost protections without using a standstill agreement is to have a post-issue cost agreement in place. For example, you could agree that if the parties settle between the date of issue and the date of service of the claim, costs will be calculated on the same basis as if settlement had been reached pre-issue (being careful to selectively disapply fixed costs under CPR 45.1(3) where appropriate). However, if the parties are co-operating to this extent then presumably they could just agree a standstill.
If a standstill agreement has been mutually signed with a proposed
defendant, must a claim still be protectively issued before the
limitation period?
No. Provided that the standstill agreement has been carefully worded, there is no need to protectively issue. Beware of traps such as confusing extensions and suspensions (the former changes the limitation end date to another end date, while the latter stops the limitation clock running for a particular period) and of off-by-one errors (e.g. conflating words such as "by [date]" and "after [date]"). Since a limitation period can conclusively put an end to a claim it's important to make sure you get it right. Personally I prefer to use a template standstill agreement from a respected source such as Practical Law, and I make sure to read it very carefully and double and triple check my calculations for the end date.
