Practice Direction - Pre-Action Conduct and Protocols Update
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| Manchester Civil Justice Centre |
Jane Lambert
The Practice Direction - Pre-Action Conduct and Protocols has been updated with effect from 9 Oct 2019. It was last updated on 29 April 2015 and I wrote about the changes in What to do about the new Practice Direction - Pre-Action Conduct on 6 May 2015. I explained the importance of the Practice Direction in Pre-Action Correspondence - Not Just a Box to be ticked or a Hoop to be jumped through 2 Aug 2017.
The updated Practice Direction contains the following paragraphs:
| Title | Number |
|---|---|
| Introduction | Para. 1 |
| Objectives of pre-action conduct and protocols | Para. 3 |
| Proportionality | Para. 4 |
| Steps before issuing a claim at court | Para. 6 |
| Experts | Para. 7 |
| Settlement and ADR | Para. 8 |
| Stocktake and list of issues | Para. 12 |
| Compliance with this practice direction and the protocols | Para. 13 |
| Limitation | Para. 17 |
| Protocols in force | Para. 18 |
The key provision of this Practice Direction is the first sentence of paragraph 8: "Litigation should be a last resort." The object is to resolve disputes through negotiation or an alternative method of dispute resolution wherever possible. Paragraph 9 adds:
"Parties should continue to consider the possibility of reaching a settlement at all times, including after proceedings have been started. Part 36 offers may be made before proceedings are issued."
Paragraph 11 warns that if proceedings are issued, the parties may be required by the court to provide evidence that ADR has been considered. A party’s silence in response to an invitation to participate, or a refusal to participate, in ADR might be considered unreasonable by the court. It could lead to the court's ordering that party to pay additional court costs.
In order to reach a settlement, the parties must understand each other's position (see paragraph 3 (a)). Accordingly, the parties are expected to exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. Paragraph 6 (a) requires a claimant to set out its case in a letter with concise details of its claim. In previous versions of the Practice Direction, such a letter was known as a "letter before claim". It is not referred to as such in this version. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated.
The defendant is required by paragraph 6 (b) to reply within a "reasonable time", that is to say, 14 days in a straightforward case and no more than 3 months in a very complex one. The reply should state whether or not the claim is accepted. If it is not accepted, it should set out the reasons why it is not expected, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim.
Both parties are required by paragraph 6 (c) to disclose key documents relevant to the issues in dispute in their correspondence.
A new requirement in the updated Practice Direction (although it was implied in the previous one) is the "Stocktake and List of Issues" provision of paragraph 12:
"Parties should continue to consider the possibility of reaching a settlement at all times, including after proceedings have been started. Part 36 offers may be made before proceedings are issued."
Paragraph 11 warns that if proceedings are issued, the parties may be required by the court to provide evidence that ADR has been considered. A party’s silence in response to an invitation to participate, or a refusal to participate, in ADR might be considered unreasonable by the court. It could lead to the court's ordering that party to pay additional court costs.
In order to reach a settlement, the parties must understand each other's position (see paragraph 3 (a)). Accordingly, the parties are expected to exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate. Paragraph 6 (a) requires a claimant to set out its case in a letter with concise details of its claim. In previous versions of the Practice Direction, such a letter was known as a "letter before claim". It is not referred to as such in this version. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated.
The defendant is required by paragraph 6 (b) to reply within a "reasonable time", that is to say, 14 days in a straightforward case and no more than 3 months in a very complex one. The reply should state whether or not the claim is accepted. If it is not accepted, it should set out the reasons why it is not expected, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim.
Both parties are required by paragraph 6 (c) to disclose key documents relevant to the issues in dispute in their correspondence.
A new requirement in the updated Practice Direction (although it was implied in the previous one) is the "Stocktake and List of Issues" provision of paragraph 12:
Sometimes a dispute can be resolved by expert evidence as paragraph 7 acknowledges. That paragraph warns that the court must give permission before expert evidence can be relied upon and that the court may also limit the fees recoverable. If it is necessary to obtain expert evidence, particularly in low-value claims, parties are advised to consider using a single expert, jointly instructed by the parties, with the costs shared equally.
Another possible solution could be ADR. Paragraph 10 suggests:
"(a) mediation, a third party facilitating a resolution;
(b) arbitration, a third party deciding the dispute;
(c) early neutral evaluation, a third party giving an informed opinion on the dispute; and
(d) Ombudsmen schemes."
It also refers to the Jackson ADR Handbook published by the Oxford University Press and the Civil Mediation Council website.
Of course, mediation and other forms of ADR, expert opinions and even pre-action correspondence carry a cost which could pressure parties into making unnecessary concessions. For that reason, paragraph 4 provides that a pre-action protocol or the Practice Direction must not be used by a party as a tactical device to secure an unfair advantage over another party. Only reasonable and proportionate steps should be taken by the parties to identify, narrow and resolve the legal, factual or expert issues. Paragraph 5 adds that the costs incurred in complying with a pre-action protocol or this Practice Direction should be proportionate. Where parties incur disproportionate costs in complying with a pre-action protocol or the Practice Direction, those costs will not be recoverable as part of the costs of the proceedings.
As in previous versions of the Practice Direction, there are sanctions for non-compliance. Paragraph 13 provides:
"If a dispute proceeds to litigation, the court will expect the parties to have complied with a relevant pre-action protocol or this Practice Direction. The court will take into account non-compliance when giving directions for the management of proceedings (see CPR 3.1(4) to (6)) and when making orders for costs (see CPR 44.3(5)(a)). The court will consider whether all parties have complied in substance with the terms of the relevant pre-action protocol or this Practice Direction and is not likely to be concerned with minor or technical infringements, especially when the matter is urgent (for example an application for an injunction)."
The following examples of non-compliance are listed in paragraph 14:
(a) not providing sufficient information to enable the objectives in paragraph 3 to be met;
(b) not acting within a time limit set out in a relevant protocol, or within a reasonable period; or
(c) unreasonably refusing to use a form of ADR, or failed to respond at all to an invitation to do so.
As in previous versions of the Practice Direction, there are sanctions for non-compliance. Paragraph 13 provides:
"If a dispute proceeds to litigation, the court will expect the parties to have complied with a relevant pre-action protocol or this Practice Direction. The court will take into account non-compliance when giving directions for the management of proceedings (see CPR 3.1(4) to (6)) and when making orders for costs (see CPR 44.3(5)(a)). The court will consider whether all parties have complied in substance with the terms of the relevant pre-action protocol or this Practice Direction and is not likely to be concerned with minor or technical infringements, especially when the matter is urgent (for example an application for an injunction)."
The following examples of non-compliance are listed in paragraph 14:
(a) not providing sufficient information to enable the objectives in paragraph 3 to be met;
(b) not acting within a time limit set out in a relevant protocol, or within a reasonable period; or
(c) unreasonably refusing to use a form of ADR, or failed to respond at all to an invitation to do so.
Where there has been non-compliance, the court may order that
(a) the parties be relieved of the obligation to comply or further comply with the pre-action protocol or the Practice Direction;
(b) the proceedings be stayed while particular steps are taken to comply with the pre-action protocol or the Practice Direction;
(c) sanctions be applied.
Such sanctions can include
"(a) an order that the party at fault pays the costs of the proceedings, or part of the costs of the other party or parties;(a) the parties be relieved of the obligation to comply or further comply with the pre-action protocol or the Practice Direction;
(b) the proceedings be stayed while particular steps are taken to comply with the pre-action protocol or the Practice Direction;
(c) sanctions be applied.
Such sanctions can include
(b) an order that the party at fault pay those costs on an indemnity basis;
(c) if the party at fault is a claimant who has been awarded a sum of money, an order depriving that party of interest on that sum for a specified period, and/or awarding interest at a lower rate than would otherwise have been awarded;
(d) if the party at fault is a defendant, and the claimant has been awarded a sum of money, an order awarding interest on that sum for a specified period at a higher rate, (not exceeding 10% above base rate), than the rate which would otherwise have been awarded."
Paragraph 17 makes clear that this Practice Direction does not affect any limitation period, If proceedings are started to comply with the statutory time limit before the parties have followed the procedures in this Practice Direction or the relevant pre-action protocol, the parties should apply to the court for a stay of the proceedings while they so comply.
Anyone wishing to discuss this article or pre-action conduct generally may call me on 020 7404 5252 during office hours or send me a message through my contact page.
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