Pre-action considerations and steps - Principles and purpose of pre-action protocols and consequences for non-compliance

Learning Outcomes

This article outlines the purpose and principles behind pre-action protocols and the Practice Direction on Pre-Action Conduct and Protocols (PDPAC). It details the court's expectations regarding pre-action behaviour and explains the potential consequences if parties fail to comply. For the SQE1 assessments, you will need to understand the aims of pre-action rules, the general steps involved, and the sanctions the court can impose for non-compliance. This knowledge will enable you to advise clients appropriately and identify relevant issues in SQE1-style multiple-choice questions.

SQE1 Syllabus

For SQE1, you are required to understand the importance of pre-action conduct as part of the dispute resolution process. You should be able to identify the objectives of the pre-action rules and the steps parties are expected to take before commencing proceedings. Understanding the potential sanctions for non-compliance is also essential.

As you work through this article, focus on:

  • The fundamental principles and purpose of the Practice Direction on Pre-Action Conduct and Protocols (PDPAC) and specific pre-action protocols.
  • The steps the courts expect parties to take before commencing proceedings, including information exchange and consideration of ADR.
  • The consequences for failing to comply with the spirit or letter of the PDPAC or relevant protocols, such as costs sanctions.
  • How pre-action conduct relates to the overriding objective of the Civil Procedure Rules (CPR).

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. What is the primary aim of pre-action protocols and the Practice Direction on Pre-Action Conduct and Protocols?
    1. To ensure claimants always win.
    2. To increase the costs of litigation.
    3. To encourage early settlement and avoid unnecessary litigation.
    4. To provide judges with less work.
  2. Which of the following is a potential sanction for failing to comply with pre-action requirements?
    1. Automatic strike-out of the claim.
    2. A costs order against the non-compliant party.
    3. Imprisonment of the non-compliant party's solicitor.
    4. An order for the claim to be heard in a different jurisdiction.

  3. True or False: The Practice Direction on Pre-Action Conduct and Protocols applies only when there is no specific pre-action protocol for the type of dispute.

  4. Are parties generally required to consider Alternative Dispute Resolution (ADR) before commencing proceedings under the pre-action rules?
    1. Yes, always.
    2. No, never.
    3. Yes, unless there are good reasons not to.
    4. Only if the claim value exceeds £100,000.

Introduction

Before commencing formal court proceedings, the Civil Procedure Rules (CPR) require parties involved in a dispute to engage in certain pre-action steps. These steps are guided by specific Pre-Action Protocols tailored to different types of claims (e.g., personal injury, professional negligence) and, where no specific protocol applies, by the general principles set out in the Practice Direction on Pre-Action Conduct and Protocols (PDPAC). The core purpose is to facilitate communication, information exchange, and settlement discussions, thereby avoiding unnecessary litigation and adhering to the overriding objective of dealing with cases justly and at proportionate cost.

Principles and Purpose of Pre-Action Conduct

The court views litigation as a last resort. The pre-action rules are designed to ensure that parties make genuine efforts to resolve their dispute before involving the court. Key principles supporting this stage include:

  • Information Exchange: Parties should provide each other with sufficient information about their respective positions to understand the dispute and make informed decisions about settlement.
  • Settlement Focus: The primary goal is to encourage early settlement, thus saving time and costs for both the parties and the court system.
  • Considering ADR: Parties are expected to consider whether Alternative Dispute Resolution (ADR), such as mediation, is appropriate. Unreasonable refusal to consider ADR can lead to sanctions.
  • Proportionality: Steps taken pre-action should be reasonable and proportionate to the value and complexity of the claim. Excessive pre-action costs may not be recoverable.
  • Cooperation: Parties are expected to act reasonably and cooperatively in their pre-action dealings.

Key Term: Pre-Action Protocol
A specific set of steps and guidance, approved under the CPR, that parties in certain types of disputes (e.g., professional negligence, debt claims) should follow before commencing court proceedings.

Key Term: Practice Direction on Pre-Action Conduct and Protocols (PDPAC)
A Practice Direction supplementing the CPR which outlines the general conduct the court expects of parties in all disputes before they start proceedings, especially where no specific Pre-Action Protocol applies.

The Steps Involved

While specific protocols detail precise requirements, the general approach outlined in the PDPAC involves:

  1. Letter Before Claim: The potential claimant should send a letter to the potential defendant outlining the claim clearly and concisely. This includes the factual basis, legal grounds, quantification of loss (if possible), and what the claimant seeks. Key supporting documents should ideally be enclosed or identified.
  2. Defendant's Response: The potential defendant should acknowledge the letter promptly (e.g., within 14 days for straightforward cases) and provide a full written response within a reasonable period (e.g., 14 days to 3 months, depending on complexity and any applicable protocol). The response should state whether the claim is accepted in whole or part, and if not, give reasons for denial, identify disputed facts, and mention any counterclaim. Key documents supporting the defence should be provided.
  3. Disclosure of Documents: Parties should exchange key documents relevant to the issues in dispute to help narrow the issues and facilitate settlement discussions.
  4. Experts: If expert evidence is likely to be required, the parties should consider how this will be dealt with, including potentially instructing a single joint expert.
  5. ADR Consideration: Throughout the pre-action phase, parties should consider negotiation or ADR.
  6. Stocktake: Before issuing proceedings, parties should review their positions and attempt to narrow the issues or resolve the dispute entirely.

Worked Example 1.1

Company A believes Company B owes it £15,000 for services rendered. Company A's solicitor sends a brief email demanding payment within 7 days, threatening court action, but provides no details of the services or breakdown of the amount claimed. Company B ignores the email. Company A issues proceedings immediately after 7 days. Could Company A face consequences for its pre-action conduct?

Answer: Yes. Company A's pre-action communication likely falls short of the requirements. The email lacked concise details of the claim, a summary of facts, and potentially key documents, failing to comply with the spirit of the PDPAC which encourages information exchange to facilitate settlement. Issuing proceedings so quickly without providing adequate information or allowing a reasonable time for response could lead to costs sanctions later, even if Company A ultimately wins.

Consequences of Non-Compliance

Failure to comply with the PDPAC or a relevant Pre-Action Protocol can lead to significant consequences once proceedings are issued. The court has wide discretion to impose sanctions, focusing on the impact of the non-compliance on the litigation process.

Possible Sanctions

The court may impose sanctions if it deems that non-compliance has led to proceedings being commenced unnecessarily or has resulted in wasted costs. These sanctions, outlined in the CPR, include:

  • Costs Orders: The non-compliant party may be ordered to pay some or all of the other party's costs, potentially on the more punitive indemnity basis. This can apply even if the non-compliant party wins the case overall.

Key Term: Costs Sanctions
Penalties, typically relating to the payment of legal costs, imposed by the court on a party for failing to comply with rules, practice directions (including pre-action rules), or court orders.

  • Interest Penalties:
    • If the non-compliant party is the claimant, the court might deprive them of interest on any damages awarded, or award interest at a lower rate.
    • If the non-compliant party is the defendant, the court might order them to pay interest on any damages awarded at a higher rate (up to 10% above base rate).
  • Stay of Proceedings: The court can pause (stay) the proceedings until the non-compliant party takes the steps required by the protocol or PDPAC. This causes delay and increases costs.

Exam Warning

Remember that the court looks at the substance of compliance, not just whether boxes were ticked. A party might technically follow steps but still be sanctioned if their conduct was unreasonable or obstructive (e.g., providing minimal information, refusing ADR without good reason). Proportionality is key – overly aggressive or costly pre-action steps can also be criticised.

Worked Example 1.2

BuildCo Ltd sends a detailed Letter Before Claim to Homeowner Ltd regarding defective construction work, complying fully with the relevant Pre-Action Protocol. Homeowner Ltd replies denying liability but provides no reasons or supporting documents, simply stating "We deny your claim". Homeowner Ltd also refuses an offer to mediate without explanation. BuildCo Ltd issues proceedings. What might the court do regarding Homeowner Ltd's pre-action conduct?

Answer: The court is likely to view Homeowner Ltd's response as non-compliant with the spirit and requirements of pre-action conduct. Failing to provide reasons for denial, withholding relevant documents, and unreasonably refusing ADR without explanation could lead the court to impose costs sanctions on Homeowner Ltd later in the proceedings, regardless of the final outcome on liability.

Revision Tip

When analysing scenarios, always consider if the parties' pre-action steps furthered the overriding objective. Did they exchange information? Did they genuinely consider settlement or ADR? Was their conduct reasonable and proportionate? This helps predict potential court sanctions.

Key Point Checklist

This article has covered the following key knowledge points:

  • The CPR requires parties to take certain steps before commencing court proceedings, governed by the PDPAC and specific Pre-Action Protocols.
  • The primary purpose of pre-action rules is to encourage information exchange, early settlement, and the consideration of ADR, supporting the overriding objective.
  • Key steps usually involve sending a detailed Letter Before Claim, the defendant providing a full response, exchanging key documents, and considering ADR.
  • Litigation should be a last resort.
  • Failure to comply with the spirit or letter of pre-action rules can lead to sanctions, including adverse costs orders, interest penalties, or a stay of proceedings.
  • The court assesses compliance based on reasonableness and proportionality, not just technical adherence.

Key Terms and Concepts

  • Pre-Action Protocol
  • Practice Direction on Pre-Action Conduct and Protocols (PDPAC)
  • Costs Sanctions
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