Pre-action Conduct in the English Courts
18 June 2019
18 June 2019
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.
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.
The objectives of the pre-action rules are to:
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 with regard to pre-action conduct can be found in the following:
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:
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:
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.
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.
Pre-action conduct will not be appropriate in all cases. Circumstances where it will not be appropriate include:
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
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.
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:
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
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
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.
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.
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:
Potential defendants should therefore ensure that they comply with the pre-action requirements but think carefully before incurring substantial legal expenses pre-action.