Last month, the Civil Justice Council closed its consultation on potential changes to the pre-action protocols (PAPs), the rules governing the conduct and steps that are expected of parties to seek to resolve or narrow a dispute before commencing civil litigation in England and Wales. Although amendments to the PAPs are still a way off, any party that values flexibility in how it approaches disputes outside of a courtroom will be interested to learn of the more prescriptive expectations that may, in time, apply.
The Civil Justice Council’s interim report, published late last year, took a fresh view of the role of PAPs in modern-day litigation, setting out possible reforms on which it invited thoughts and opinions.
There are various proposals for a General PAP to replace the Practice Direction on Pre-Action Conduct (PDPAC), which currently operates where there is no individual subject-specific PAP that applies to the dispute. A standout characteristic of the proposals is the more prescriptive nature of the requirements.
By way of example:
- The proposed General PAP would contain “more concrete time frames and disclosure standards”, with the obvious advantage of creating more certainty for parties, along with a corresponding greater ability to hold their opponent to task.
- Whereas, under the current PDPAC, noncompliance has, in practice, minimal consequences until it comes to deciding who should pay the costs of the proceedings, the General PAP would also have an increased emphasis on sanctions. The process by which sanctions are imposed may be formalised, with a broader range of options for judges (potentially including the power to strike out a defaulting party’s case altogether).
However, such changes would inevitably bring with them additional time and cost for parties — particularly at an early stage of a dispute.
The interim report is lengthy with a number of notable themes. The below focuses on some of the perceived costs implications of what is being canvassed.
The Civil Justice Council’s suggestions for stricter pre-action requirements include the following:
- It is proposed that parties would have a good faith obligation to try to resolve or narrow the dispute. Examples of the necessary actions are listed and consist of making formal settlement offers, or initiating an affirmative step such as participating in a meeting, mediation, early neutral evaluation, an Ombudsman Scheme or an alternative dispute resolution scheme. These are much more onerous than current expectations.
- One suggestion would require parties to complete a joint stocktake report containing a list of issues still in dispute, as a final step before proceedings are commenced. Claims should be fairly well thought through by the end of a pre-action stage, with parties already being expected to conduct their own review of the position under the current PDPAC, but are more forms necessary or helpful?
- Online pre-action portals, with “information exchanged through the PAP portal … automatically accessible to the court (except for those designated as without prejudice)”, are being considered.
- Another idea (which seems to lack support for now) is to require pre-action letters of claim and response to be verified by a statement of truth.
Additional layers of forced bureaucracy may be a significant and costly imposition for a business or individual seeking to resolve a dispute. Moreover, to the extent that they increase feelings of irritation, they do not inspire a collaborative approach that will settle a disagreement.
More prescriptive pre-action requirements may limit the creativity and strategy that can be brought to the pre-action stage. As acknowledged by the Law Society, “[s]olicitors already do much to keep disputes out of the courts by engaging with PAPs and other dispute resolution mechanisms”, but there are situations where alternative dispute resolution isn’t workable. Free from the burden of a more detailed PAP, which must try to cater for a multitude of disputes, solicitors are in a position to assess a case by reference to its particular facts, parties and circumstances. They often are best placed to establish what sensibly can be done by way of pre-action negotiation and what, on the other hand, would be a waste of effort and costs at that early juncture.
Many of the proposals would require specific and relatively extensive action to be taken. But shouldn’t pre-action requirements focus minds on seeking to resolve (or at least narrow the scope of) a dispute, before instigating a more time-consuming and costly process? Front-loading too much would reduce the motivating effect — there is less disincentive to make the jump from pre-action to action if only small amounts of extra time, effort and cost are needed to do so. If the case has to be fully pleaded and argued pre-action, little is left to do before commencing proceedings except for payment of the court fee. And settlement may be pushed further out of reach if substantial legal costs already need to be factored in at such an early stage.
In an attempt to balance these issues, the Civil Justice Council suggests that guidance could be issued to the courts to streamline directions and the litigation timetable where the parties have made progress through compliance with the relevant PAP. While it can only be sensible for formal litigation to make use of what has been achieved through a pre-action stage, that does not in itself justify shifting burdensome stages to an earlier point.
If a key purpose of PAPs is to avoid litigation where possible, what reason is there to accelerate significant parts of the dispute resolution process, bringing forward the incurrence of legal costs? Although early gains may be well utilised later in the process, if there is no ‘later’, such expenditure would be lost to the extent that it was not essential to the successful pre-litigation outcome.
More stringent requirements and sanctions also increase the risk of satellite litigation — with parties arguing over whether there has been compliance and incurring costs in doing so.
Finally, the wisdom of making such changes falls to be considered in the context of the widespread view that the current PAPs “work reasonably well in general”, as noted by the Law Society. This does not appear to be an area that is in desperate need of reform.
The Civil Justice Council’s consultation is an early stage of the process — the interim report did not set out any recommendations, just options for consideration. It therefore remains to be seen what will happen to pre-action correspondence and negotiations as we know them.
If the proposals were to be implemented, one wonders whether parties wanting to explore settlement before embarking on the detailed and expensive General PAP process might seek to explore the dispute in general terms before commencing the formal pre-action stage. This would effectively create a new ‘pre-pre-action’ stage, preserving benefits of the current approach.
The Civil Justice Council’s Review of Pre-Action Protocols Interim Report dated November 2021 is available for download.