We have a new Pre-Action Practice Direction. The catchily titled 'Practice Direction Pre-Action Conduct and Protocols' (the PD) came into force on 6 April 2015. It replaces the Practice Direction – Pre-Action Conduct (the PDPAC), although it currently goes by the old name on the Ministry of Justice website. The question is – what, if anything, has changed?
While the PD has seen considerable rationalisation in its form, its substance is largely unaltered. The PD is admirably succinct, and gone are annexes A to C (on pre-action procedure, debt claims and instructing experts). The steps to be taken before issuing a claim and (brief) guidance on expert advice and evidence are now contained in paragraphs 6 and 7 respectively.
Annex B set out the information a business claimant should provide to an individual defendant to a debt claim. This has not been replaced. Technically therefore it is arguable that claimants need no longer provide this information. In reality, it may still be preferable to appear co-operative rather than unnecessarily unhelpful.
As before, the PD applies to disputes where there are no other pre-action protocols (paragraph 2). The current pre-action protocols are listed in paragraph 18 (and practitioners should be aware that several of these were also amended on 6 April 2015).
Under the PDPAC, the objectives of the pre-action protocols were to enable parties to settle the issue between them without the need to start proceedings; and support the efficient management of proceedings where litigation cannot be avoided. The objectives remain broadly the same under the PD, although they are more detailed in their description.
Paragraph 3 states that before commencing proceedings, the court will expect the parties to have exchanged sufficient information to understand each other’s position; make decisions about how to proceed; try to settle the issues without proceedings; consider a form of ADR to that end; support the efficient management of those proceedings, and reduce the costs of resolving the dispute.
In other words, we are encouraged to play nicely even at the earliest stage. Openness and transparency are the buzz words here, and should inform your tactical decision making.
However, compliance with these objectives need only be 'proportionate' (paragraph 6). Indeed, a pre-action protocol or the PD must not be used 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 4).
Unsurprisingly, there is also a strengthened requirement that the costs incurred in this compliance should be proportionate. Disproportionate costs will not be recoverable. Equally unsurprisingly, there is no guidance as to how to gauge when you are passing out of proportionate waters into the darker realms of disproportionality.
It is evident from the new PD that the courts will survey our pre-action efforts with a critical eye. Contemplating instructing an expert? Bear in mind that 'many disputes can be resolved without expert advice or evidence'; that the court’s permission is required to rely on expert evidence, and the court may limit the recoverable fees (paragraph 7).
Feeling bullish about your client’s case? Don’t refuse point blank to consider ADR. Parties should consider whether negotiation or some other form of ADR might enable them to settle without commencing proceedings. They are also required to consider settling 'at all times, including after proceedings have been started” (paragraph 9). This must be taken seriously: we are reminded that Part 36 offers may be made before proceedings are issued, and given a list of potential forms of ADR and some useful links.
Practitioners must also keep a clear paper trail to prove that ADR has been considered. Failing to respond to an ADR request or refusing to participate might be considered unreasonable by the court, with predictable costs consequences (paragraph 11).
Happy you have complied with the PD? Even then, if the dispute is still live, the parties are required to review their positions, and consider the papers and the evidence. The aim is to avoid proceedings – or at least seek to narrow the issues in dispute before issuing (paragraph 12).
The court is expected to take a firm but fair approach to non-compliance. The emphasis is on compliance 'in substance' with the protocols or PD; the court is 'not likely to be concerned with minor or technical infringements' (paragraph 13). Sanctions still include costs orders, potentially on an indemnity basis, and the power to award lower or higher rates of interest on awards, or no interest at all.
In summary, and in the words of the PD itself: 'litigation should be a last resort'. Compliance with the spirit of the PD is the best way to protect your clients.
This article was published in Commercial Litigation Journal in June 2015.