Pre-action Conduct in the English Courts

This guide provides an overview of the pre-action conduct requirements applicable to any matter where there is a possibility of proceeding to litigation in the English courts.

The Civil Procedure Rules (CPR) set out detailed rules and guidance governing the conduct of litigating parties' behaviour during the course of litigation. In addition, there are rules which set out how the courts expect parties to behave prior to commencement of any claim ("pre-action rules"). Non-compliance with these pre-action rules can result in a party being penalised at a later stage in the proceedings. Consequently, if you are considering commencing litigation, or you are aware that a counterparty may be considering commencing litigation against you, it is important to be familiar with the pre-action rules.

This guide aims to explain the importance of the pre-action rules and what they entail. It also sets out the circumstances in which you would be excused from complying with the rules and provides practical tips.

Why is pre-action conduct important?

The importance of pre-action conduct is best summarised by the update that was made to the Practice Direction on Protocols in April 2006:

"the Courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still being actively explored. Parties are warned that if the protocol is not followed then the Court must have regard to such conduct when determining costs."

The idea that litigation should be commenced only as a last resort is fully supported by the judiciary; parties and their lawyers have a positive duty to try and settle cases pre-action. The pre-action rules are specifically intended to encourage early settlement and, therefore, if complied with, ensure that litigation is only commenced as a last resort. Non-compliance is taken seriously, particularly if the courts consider that compliance would have resulted in the avoidance of litigation. The range of sanctions is dealt with in more detail below.

Aims and objectives of the pre-action rules

The objectives of the pre-action rules are to:

• understand each other's position;
• make decisions about how to proceed;
• try to settle the issues without proceedings;
• consider a form of alternative dispute resolution (ADR) to assist with settlement;
• support the efficient management of proceedings where litigation cannot be avoided; and
• reduce the costs of resolving the dispute.¹

The Practice Direction emphasises that pre-action conduct should not be used to secure an unfair advantage for one party and parties should take reasonable and proportionate steps to identify, narrow and resolve any legal, factual or expert issues.²

The rules governing pre-action conduct

The rules with regard to pre-action conduct can be found in the following:

• the pre-action protocols; and
• the Practice Direction on pre-action conduct and protocols (PDPACP).³

The pre-action protocols

The pre-action protocols outline the steps that parties should take to exchange information about a prospective legal claim. There are currently 13 official pre-action protocols under the CPR. These exist for:

• construction and engineering;
• defamation;
• personal injury;
• clinical disputes;
• professional negligence;
• judicial review;
• disease and illness;
• housing disrepair;
• possession claims based on rent arrears;
• possession claims based on mortgage or home purchase plan arrears in respect of residential property;
• claims for damages in relation to the physical state of commercial property at termination of a tenancy (the "Dilapidations Protocol");
• low value personal injury claims in road traffic accidents; and
• low value personal injury (employers' liability and public liability) claims.

PDPACP

PDPACP came into force on 6 April 2015. It replaced the Practice Direction on Pre-action Conduct 2009 and is a guide to pre-action conduct. The PDPACP is not mandatory – it specifies what should be done if reasonable, not what must be done. Having said that, the courts do have the discretion to order sanctions against a party that does not comply with the PDPACP when it should.

The PDPACP is structured as follows:

• paragraph three sets out the objectives;
• paragraphs four to five look at proportionality;
• paragraph six sets out guidance on pre-action procedure when no protocol applies;
• paragraph seven sets out the requirements in relation to expert evidence;
• paragraphs eight to 12 set out the guidance on settlement and ADR;
• paragraphs 13 to 16 look at the approach of the courts (namely how they will determine compliance and sanctions for non-compliance); and
• paragraph 17 addresses limitation. 

Relationship between the pre-action protocols and PDPACP

If a particular pre-action protocol applies then it should be followed rather than the PDPACP.⁴   For those cases which fall outside the protocols, PDPACP is the only source with regard to the pre-action conduct that should be adopted.

Overriding objective

All pre-action requirements should be interpreted in the context of the overriding objective which is to deal with cases justly and includes: minimising unnecessary expenditure, conserving court resources, making sure the parties are on an equal footing, and ensuring that cases are dealt with fairly, expeditiously and proportionately, having regard to the complexity, importance, value of the claim and the respective financial positions of the parties.

Circumstances in which the pre-action rules will not apply

Pre-action conduct will not be appropriate in all cases. Circumstances where it will not be appropriate include:

• applications where telling the other party in advance would defeat the purpose of the application, for example, an application for a freezing order;
• where there are statutory or contractual time limits for starting proceedings and compliance with the pre-action conduct requirements would mean that the defendant can rely on a limitation defence; and
• where there was a legitimate concern that the other side would commence proceedings in another jurisdiction in breach of a jurisdiction clause.

If you need to commence proceedings without reference to the pre-action requirements it is sensible to explain your reasons in correspondence once proceedings have been issued and try to agree with the other side to go through the appropriate pre-action steps. If not, the defendant could apply for a stay of proceedings to ensure that you take steps to comply with the relevant pre-action requirements.⁵

Pre-action conduct: what it entails

What follows is a general guide to pre-action conduct requirements in most cases.⁶ It is important to remember that the courts only expect parties to comply in substance.

Exchange of information

Parties are expected to exchange sufficient information to allow them to understand each other's position and make informed decisions about settlement and how to proceed. The parties should bear in mind that any compliance in doing so should be proportionate. Generally, this will comprise the following:

• Claimant sends the defendant a letter of claim. The letter should be concise, providing enough information so as to enable the defendant to understand and investigate the basis of the claim, the claimant's objective, and, where money is claimed, how that sum has been calculated.⁷
• The defendant provides a full written response within a reasonable period. As a general rule, the response should be provided within 14 days of receipt of the letter before claim in a straightforward case, and no more than three months in a very complex case. The defendant's reply should confirm whether the claim is accepted or disputed, and detail any counterclaim.
• Both parties disclose any key documents that are relevant to the issues in dispute.

Expert evidence

The PDPACP recommends that where expert evidence is necessary, particularly in low value claims, the parties should consider instructing a single joint expert, with costs shared equally.⁸

Obligation to consider alternative dispute resolution (ADR)⁹

Parties are expected to make appropriate attempts to resolve the matter without recourse to litigation and consider the use of ADR. The court may require evidence that the parties considered some form of ADR.

The pre-action rules recognise that ADR will not be appropriate in all cases: parties cannot be forced to mediate. However, in circumstances where the court considers that a form of ADR would have been appropriate and, in particular where one of the parties is pressing for the matter to be mediated or otherwise resolved by ADR, the courts may impose costs sanctions if they consider that the relevant party was unreasonable in refusing to consider ADR. ¹⁰

Proportionality

Parties are expected to act in a reasonable and proportionate manner and the costs of compliance with the PDPACP should be proportionate to the sums at stake. Where this is not the case, those costs will not be recoverable as part of the costs of the proceedings.¹¹ One of the main criticisms of the pre-action rules is that they have added to the expense of civil litigation. The requirement of proportionality is intended to ensure that parties do not spend too much time dealing with pre-action steps.¹² PDPACP also makes it clear that parties should not use pre-action conduct to secure an unfair advantage over another party.

Sanctions for non-compliance¹³

In considering whether there has been non-compliance, the court will look at whether the parties have complied in substance with the pre-action rules; minor lapses will be ignored. Consideration will also be given to proportionality – what level of compliance is required given the size and nature of the claim – and the urgency of the matter. Examples of non-compliance would include providing insufficient information to enable the other party to understand the issues, not acting within a time limit, unreasonably refusing to take part in ADR.¹⁴

In deciding whether to impose sanctions the court will look at the overall effect of non-compliance. If, in the opinion of the court, non-compliance has led to a claim being started that might otherwise have been avoided, or has led to costs being incurred that would otherwise not have been incurred, the court will consider imposing sanctions.

The sanctions that can be imposed are many and varied. The courts can take non-compliance into account when making case management directions or when making orders as to costs and interest rates on sums due, including: making a costs order against the non-compliant party; where the defendant is non-compliant, award interest on the amount awarded to the claimant at a higher rate than would normally be the case; and where the claimant is in default, but is successful in being awarded a sum of money, refuse to award interest for a specified period, or at a lesser level than would otherwise be awarded. The court can take into account any non-compliance when considering an application for relief from any sanction imposed for failure to comply with any rule, practice direction or court order. If non-compliance is brought to the attention of the court at an early stage in the proceedings then it can order a stay of proceedings until steps that ought to have been taken have been taken.

Practical tips

If it does become necessary to issue proceedings without having gone through the pre-action conduct requirements, ensure that when you serve the claim form, you make it clear to the other side that you intend to request a stay so that the pre-action obligations can be complied with and the parties can endeavour to seek a settlement of the dispute. This will fend off any subsequent applications for costs penalties or sanctions in light of the non-compliance.

Pre-action conduct is not intended to be used as a tactical device – the protocols are flexible and it is more important to follow the spirit rather than the letter. If it is clear that the other side is trying to use the rules to gain a tactical advantage, make sure that this fact is pointed out to them.

If you are the defendant and the claimant has not complied with the pre-action requirements, ensure that you document this fact and inform the other side of this fact as soon as possible. This will strengthen any future arguments for imposition of sanctions for non-compliance.

The legal costs incurred pre-action only become recoverable once proceedings are commenced and only those costs referable to the claims actually pursued are recoverable. The practical implications are as follows:

• If a case settles and proceedings are not issued, the court will not have any jurisdiction over costs. In those circumstances it is sensible to deal with costs in any settlement agreement.
• If, as a potential defendant, you manage to persuade the claimant to drop certain claims and proceedings are issued on the other claims, if ultimately successful, you will not be able to recover the pre-action legal costs referable to the abandoned claims.¹⁵
• If, as a potential defendant, you manage to persuade the claimant to completely abandon its claim, the legal costs you incurred in doing so will not be recoverable. This may seem unjust but is a result of the desire to create a cost-effective way of resolving disputes without litigation.

Potential defendants should therefore ensure that they comply with the pre-action requirements but think carefully before incurring substantial legal expenses pre-action.

1. Paragraph 3 of the Pre-action Conduct and Protocols Practice Direction.
2. Paragraph 4 of the Pre-action Conduct and Protocols Practice Direction.
3. These are available on the court service website at http://www.justice.gov.uk/civil/procrules_fin/menus/protocol.htm.
4. Paragraph 18 of the Practice Direction on Pre-action Conduct and Protocols.
5. Cundall-Johnson & Partners v Whipps Cross University Hospital NHS Trust [2007] EWHC 2178 (TCC) where the TCC stayed proceedings which had been commenced before the claimants had sent a pre-action letter of claim as required by the applicable pre-action protocol.
6. This guide does not specify the particular requirements of each pre-action protocol or the PDPACP. The relevant protocol (if one applies) or the PDPACP should be consulted in every case to see which particular requirements apply.
7. The pre-action protocols and PDPACP set out in detail the information that should be provided. They are available on the court service website: http://www.justice.gov.uk/civil/procrules_fin/contents/practice_directions/pd_pre-action_conduct.htm.
8. Paragraph 7 of the PDPACP.
9. ADR provides contracting parties with alternatives to arbitration and litigation offering faster, less expensive and more flexible methods of dispute resolution. The main types include mediation, arbitration, early neutral evaluation and ombudsmen schemes.
10. Whether costs sanctions will be appropriate will be decided in line with the principles set down in the Court of Appeal decision in Halsey v Milton Keynes General Trust [2004] EWCA Civ 576.
11. Paragraph 5 PDPACP.
12. This is particularly true of the Commercial Court: the revised Commercial Court Guide (March 2016) makes it clear that parties are not expected to engage in elaborate or expensive pre-action procedures and encourages restraint (section B3).
13. Guidance on the court's attitude to compliance and the sanctions available can be found in paragraphs 13 to 16 of the PDPACP: http://www.justice.gov.uk/civil/procrules_fin/contents/practice_directions/pd_pre-action_conduct.htm.
14. These are set out in paragraph 14 of the PDPACP.
15. McGlinn v Waltham Contractors Limited [2005] EWHC 1419.