Pre-action considerations and steps - Practice direction - p...

Learning Outcomes

This article outlines the requirements and objectives of pre-action conduct as governed by the Practice Direction on Pre-Action Conduct and Protocols (PDPAC). It explains the steps parties are expected to take before commencing proceedings, the importance of considering Alternative Dispute Resolution (ADR), and the potential consequences of failing to comply with the Practice Direction. It also clarifies when urgent or protective action may be taken despite the pre-action framework, and the tools available to obtain essential information before issue. The coverage includes how specific pre-action protocols interact with the PDPAC, the role of experts, and early disclosure and preservation of documents (including electronic disclosure). Your understanding of these pre-action requirements will enable you to advise clients appropriately and apply the relevant principles to SQE1-style single best answer questions.

SQE1 Syllabus

For SQE1, you are required to understand the pre-action steps required before commencing litigation, including the purpose and general requirements of the Practice Direction on Pre-Action Conduct and Protocols (PDPAC), the court's emphasis on attempting to settle disputes without issuing proceedings, and the potential sanctions for non-compliance, with a focus on the following syllabus points:

• The objectives of the Practice Direction on Pre-Action Conduct and Protocols.
• The general steps expected of parties before commencing proceedings under the PDPAC.
• The requirement to consider Alternative Dispute Resolution (ADR).
• The consequences of failing to comply with the spirit and requirements of the PDPAC.
• How limitation and protective issue interact with pre-action steps.
• Pre-action disclosure and inspection of property to obtain key information before proceedings.
• Document preservation and proportionate early exchange, including electronic disclosure.
• The relationship between the PDPAC and specific pre-action protocols (e.g., debt, professional negligence), and when urgent applications justify departing from the usual pre-action steps.

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 objective of the Practice Direction on Pre-Action Conduct and Protocols (PDPAC)?
   1. To ensure all disputes proceed to trial efficiently.
   2. To encourage early settlement and avoid unnecessary litigation.
   3. To mandate the use of mediation in all civil disputes.
   4. To prescribe fixed costs for the pre-action stage.
2. Which of the following is generally NOT a step required by the PDPAC?
   1. Claimant sends a detailed letter before claim to the defendant.
   2. Defendant provides a full response within a reasonable time.
   3. Parties exchange all potentially relevant documents under standard disclosure rules.
   4. Parties consider whether Alternative Dispute Resolution (ADR) is appropriate.
3. What is a potential consequence of unreasonably refusing to consider ADR during the pre-action stage?
   1. The claim being automatically struck out.
   2. A mandatory referral to arbitration.
   3. An adverse costs order, even if the party wins at trial.
   4. An extension of the limitation period.

Introduction

Before formal court proceedings are initiated, the Civil Procedure Rules (CPR) expect prospective parties to engage in certain pre-action conduct. The aim is to encourage communication, understanding, and settlement, thereby avoiding unnecessary litigation. The framework for this is primarily set out in the Practice Direction – Pre-Action Conduct and Protocols (PDPAC). Where a specific, approved pre-action protocol exists for a particular type of claim (e.g., Personal Injury, Professional Negligence, Debt Claims), that protocol takes precedence. However, the PDPAC applies to all disputes where no specific protocol is applicable. Compliance with the spirit, if not the letter, of the PDPAC or relevant protocol is essential, as failure to do so can lead to sanctions later in the proceedings.

Key Term: Practice Direction on Pre-Action Conduct and Protocols (PDPAC)
A part of the Civil Procedure Rules setting out the general steps the court expects parties to take before commencing proceedings in cases not covered by a specific pre-action protocol.

Key Term: Pre-Action Protocol
A set of steps, tailored to a particular class of claim, that the court expects parties to follow before proceedings are issued, designed to facilitate early exchange of information and settlement.

Objectives of the Practice Direction on Pre-Action Conduct and Protocols (PDPAC)

The PDPAC aims to achieve several key objectives consistent with the overriding objective of the CPR (CPR 1.1), which is to deal with cases justly and at proportionate cost. These objectives are:

1. Encourage communication and information exchange: Parties should provide sufficient information to understand each other's position and clarify the issues in dispute early on.
2. Facilitate settlement: The PDPAC encourages parties to try and settle their dispute without resorting to litigation, using negotiation or Alternative Dispute Resolution (ADR).
3. Enable efficient case management: If litigation proves unavoidable, the pre-action steps should ensure the case is managed efficiently by the court.
4. Reduce costs: By enabling early resolution and narrowing the issues, pre-action conduct aims to reduce the overall costs of resolving the dispute.

Litigation should always be viewed as a last resort. The PDPAC also emphasises proportionality: steps taken should be reasonable and proportionate to the dispute in both scope and cost. After following pre-action steps, parties are expected to take stock of their positions to see if proceedings can be avoided, or at least the issues narrowed, before any claim is issued.

Steps Under the PDPAC

Where no specific protocol applies, the PDPAC outlines the general steps parties should normally take before commencing proceedings. These steps are flexible and should be adapted to the circumstances of the case, with proportionality in mind.

Letter Before Claim

The process typically begins with the prospective claimant sending a letter before claim (sometimes called a letter before action) to the prospective defendant.

Key Term: Letter Before Claim
A formal letter sent by a potential claimant to a potential defendant outlining the basis of the claim, summarising the facts, indicating the remedy sought (including how any sum is calculated), and requesting a response, before court proceedings are issued.

This letter should contain concise details of the claim, including:

• The basis of the claim (e.g., breach of contract, negligence).
• A summary of the relevant facts.
• What the claimant wants from the defendant (the remedy sought).
• If claiming money, a calculation of how the amount has been arrived at.
• Reference to key documents relied upon.

The letter should be a genuine attempt to initiate dialogue and settlement, not merely a threat of litigation. It is good practice to identify any relevant ADR options (e.g., mediation or early neutral evaluation) and propose a timeframe for an ADR discussion. Where appropriate, the claimant should request that the defendant notifies its insurer. Many specific protocols include template letters; where no protocol applies, the PDPAC expects the letter to be clear, proportionate, and to include or offer disclosure of key documents to assist understanding and settlement.

Defendant's Response

The defendant should provide a full written response within a reasonable time. The PDPAC suggests:

• 14 days in straightforward cases.
• No more than 3 months in very complex cases (e.g., complex construction disputes).

Key Term: Letter of Response
A formal letter sent by a potential defendant in reply to a Letter Before Claim, confirming whether the claim is accepted in whole or part, and if not, explaining the reasons why and identifying disputed facts or issues.

The Letter of Response should:

• Confirm whether the claim is accepted, in whole or in part.
• If the claim is not accepted in whole, explain why.
• State which facts and parts of the claim are disputed.
• State whether the defendant intends to make a counterclaim and provide details.
• Identify and provide copies of key documents relevant to the dispute.

An early acknowledgement followed by a substantive response within the indicative period encourages cooperation and reduces the risk of adverse costs consequences.

Disclosure of Information and Documents

Parties are expected to disclose key documents relevant to the issues in dispute. This early exchange helps clarify positions and supports potential settlement. The level of disclosure should be proportionate to the claim and focused on key issues. Parties should also ensure preservation of relevant documents and data, notably electronic documents, to avoid spoliation and later disputes about missing evidence.

The CPR encourages early discussion of electronic disclosure, particularly in substantial cases. Parties should consider categories of electronic documents, relevant custodians, date ranges, search methods (e.g., keyword searches), deduplication, and formats for exchange.

Key Term: Pre-Action Disclosure
An application under CPR 31.16 for disclosure of specific documents before proceedings are issued, available where both parties are likely to be parties to subsequent proceedings, the documents would fall within standard disclosure if proceedings had started, and early disclosure would help fairly dispose of the anticipated proceedings, resolve the dispute without proceedings, or save costs.

Pre-action disclosure is not routine. It is appropriate where informal requests fail and where targeted disclosure would materially assist in resolving or narrowing the dispute. Similarly, pre-action inspection of property may be sought (e.g., to examine a machine alleged to be defective) where inspection is desirable in the interests of justice before issue. The court will exercise discretion and consider proportionality and necessity.

Experts

If expert evidence is required to resolve an issue, the parties should consider, where appropriate, instructing a single joint expert rather than separate experts for each party. This can save costs and time, and aligns with the court’s duty to restrict expert evidence to what is reasonably required to resolve the proceedings. Even at pre-action stage, cooperative selection of an expert may facilitate early settlement.

Key Term: Single Joint Expert
An expert instructed jointly by both parties to give an independent opinion on a technical issue, often used as a cost-effective alternative to each party instructing separate experts.

Alternative Dispute Resolution (ADR)

An essential element of pre-action conduct is the requirement for parties to consider ADR.

Key Term: Alternative Dispute Resolution (ADR)
Methods of resolving disputes outside of the formal court process, such as negotiation, mediation, early neutral evaluation (ENE), or ombudsman schemes. Arbitration is contractual and separate from court proceedings but may also be considered where appropriate.

The PDPAC explicitly states that litigation should be a last resort and that parties should consider whether negotiation or some form of ADR might enable them to settle. Parties cannot generally be forced to settle, but the court increasingly expects serious engagement with ADR. Silence in the face of an invitation to mediate has been treated as unreasonable conduct resulting in costs sanctions. Courts may also order a stay to allow ADR, and in suitable cases may direct non-court dispute resolution procedures.

Current case law has clarified the court’s powers and parties’ obligations. While Halsey v Milton Keynes General NHS Trust [2004] remains relevant for factors when assessing the reasonableness of refusal, later authorities endorse a more active judicial role in encouraging ADR, including ENE without consent, and confirm there is no absolute bar on ordering non-court-based ADR where appropriate.

Reasonable Refusal to Engage in ADR

Whether a refusal to engage in ADR is reasonable depends on the circumstances. Factors identified in Halsey include:

• The nature of the dispute (e.g., need for an urgent injunction).
• The merits of the case (a very strong case may justify refusal, but relying solely on perceived strength is risky).
• The extent to which other settlement methods have been attempted.
• Whether the costs of ADR would be disproportionately high relative to the claim.
• Whether ADR would cause prejudicial delay (e.g., nearing limitation).
• Whether ADR had a reasonable prospect of success.

Silence in the face of an invitation to participate in ADR is generally considered unreasonable. Judicial guidance now emphasises that reasoned engagement is expected: a party declining ADR should explain promptly why ADR is unsuitable at that stage. Courts can stay proceedings to facilitate ADR and may impose costs sanctions for unreasonable refusal or non-engagement.

Worked Example 1.1

BuildCo Ltd believes Trade Supplies Plc supplied defective materials, causing BuildCo significant loss. BuildCo's solicitor sends a detailed Letter Before Claim. Trade Supplies Plc does not respond for six weeks, despite reminders. BuildCo issues proceedings. At the first case management conference, Trade Supplies Plc argues that BuildCo acted prematurely. How is the court likely to view Trade Supplies Plc's conduct?

Answer:
The court is likely to view Trade Supplies Plc's failure to respond within a reasonable time (well beyond the usual 14 days for a straightforward matter, and potentially approaching the 3-month limit for complex cases without explanation) as a breach of the spirit and requirements of the PDPAC. This failure to engage pre-action could lead to costs sanctions against Trade Supplies Plc later in the proceedings, regardless of the ultimate outcome of the claim.

Worked Example 1.2

Alpha Insurance receives a letter before claim proposing mediation in a professional indemnity dispute worth £250,000. Alpha replies that mediation is “pointless” and refuses to engage, giving no reasons. Proceedings are later issued and Alpha wins at trial. The claimant applies for a costs order against Alpha on the basis of its pre-action refusal to mediate. What is the likely outcome?

Answer:
Even though Alpha succeeded at trial, the court may impose adverse costs consequences because the refusal to mediate without reasons is likely to be deemed unreasonable under the PDPAC and costs case law. The court could reduce or disallow Alpha’s costs recovery or order Alpha to pay a proportion of the claimant’s costs, reflecting the failure to engage sensibly with ADR when invited.

Worked Example 1.3

Before issuing proceedings, a claimant seeks copies of specific quality-control reports that the prospective defendant refuses to provide informally. The claimant believes targeted disclosure of those reports would likely resolve the dispute without litigation. What mechanism can the claimant use and what must be shown?

Answer:
The claimant can apply for pre-action disclosure under CPR 31.16. The applicant must show both parties are likely to be parties to subsequent proceedings, the requested documents would fall within standard disclosure if proceedings had started, and early disclosure is desirable to fairly dispose of anticipated proceedings, assist resolution without proceedings, or save costs.

Worked Example 1.4

Limitation on a negligence claim expires tomorrow. The claimant has exchanged correspondence and key documents under the PDPAC, but a full response has not arrived. Can proceedings be issued to protect the position and what should be done about pre-action conduct?

Answer:
Yes. To avoid the claim becoming statute barred, the claimant can issue proceedings protectively and then seek a stay to allow ongoing compliance with the PDPAC steps. The claimant should explain to the defendant and, if needed, to the court why protective issue was necessary, continue to exchange information, consider ADR, and, by agreement or order, extend time for service (if appropriate under CPR 7.6) so the pre-action process can be completed proportionately.

Relationship with Specific Pre-Action Protocols

As mentioned, specific pre-action protocols exist for certain types of claims (e.g., personal injury, debt claims, professional negligence). Key points regarding their relationship with the PDPAC are:

• Precedence: If a specific pre-action protocol exists for the relevant type of claim, parties must comply with that protocol. The specific protocol takes precedence over the general PDPAC.
• PDPAC applicability: The PDPAC applies to disputes where no specific pre-action protocol is applicable.
• Spirit: Even where a specific protocol applies, the general principles and objectives outlined in the PDPAC (proportionality, communication, considering settlement/ADR) remain relevant.

Two examples illustrate differences in approach:

• Debt claims protocol: Applies to a business (including sole traders and public bodies) pursuing a debt against an individual or sole trader. The creditor must provide full information on the debt and an up-to-date statement of account, and include standard forms (Information Sheet, Reply Form, Financial Statement). The debtor is given 30 days to respond and proceedings should not be issued before that deadline. Time may be extended to allow the debtor to seek advice or engage in payment discussions.

• Professional negligence protocol: Encourages an early Preliminary Notice to the professional with brief details and an indication of value, followed by a detailed Letter of Claim with key documents. The professional acknowledges within 21 days and then has three months to investigate and respond (and may send a Letter of Settlement). If matters cannot be resolved, the parties should conduct a final stocktake to review positions or narrow issues. ADR should be considered at all stages.

The details of other protocols vary (e.g., housing disrepair, disease and illness), but all share core PDPAC features: early, proportionate information exchange and serious consideration of ADR.

Consequences of Non-Compliance

Failure to comply with the PDPAC or a relevant pre-action protocol can have significant consequences if the matter proceeds to litigation. The court has wide discretion regarding costs (CPR 44.2–44.4) and will consider the parties' pre-action conduct. Sanctions for non-compliance (which the court may impose unless the non-compliance was reasonable) include:

• Costs Orders: Ordering the defaulting party to pay all or part of the other party's costs, potentially on the more punitive indemnity basis. A successful party might be deprived of some or all of their costs if they failed to comply pre-action.
• Interest Penalties: Depriving a successful claimant of interest on their damages for a specified period, or ordering an unsuccessful defendant to pay a higher rate of interest (up to 10% above base rate) on damages awarded.
• Stay of Proceedings: The court may stay (halt) the proceedings until the defaulting party takes the required pre-action steps, causing delay and further cost.
• Contempt Risks: A person who knowingly makes a false statement in a pre-action letter or other document prepared in anticipation of litigation may face proceedings for contempt of court.

Key Term: Indemnity Basis
A basis for assessing costs more favourable to the receiving party, where proportionality is not required and any doubt on reasonableness is resolved in their favour.

Key Term: Stay of Proceedings
A pause in the litigation directed by the court, often to allow compliance with pre-action requirements or to enable ADR or other steps that may narrow or resolve the dispute.

When deciding whether to impose sanctions, the court will consider proportionality and the overall reasonableness of the parties’ conduct, and is unlikely to penalise minor or technical breaches. Conversely, a complete failure to engage or an unreasonable refusal to consider ADR is likely to attract sanctions.

Exam Warning

Do not assume that minor or technical breaches of the PDPAC will automatically lead to sanctions. Courts are concerned with substantial compliance and the spirit of the pre-action requirements. However, a complete failure to engage or an unreasonable refusal to consider ADR is likely to attract sanctions.

Revision Tip

When advising a client pre-action, always document the steps taken to comply with the PDPAC or relevant protocol, especially attempts to negotiate or mediate. Record reasons if ADR is considered unsuitable at a particular stage. Preserve relevant documents (including electronic data), and consider whether targeted pre-action disclosure or inspection would help resolve the dispute. This evidence will be essential if the opponent later alleges non-compliance or if the court considers costs sanctions.

Additional Practical Points

Pre-action conduct is linked to other early-stage considerations:

• Limitation: Ensure proceedings are issued within the relevant limitation period. If limitation is imminent, protective issue may be necessary, followed by a stay to complete pre-action steps. By agreement, parties can extend time for service of the claim form (CPR 7.6) to facilitate ongoing pre-action compliance once proceedings are issued.

• Case management preparation: If proceedings are issued, the directions questionnaire asks parties to confirm compliance with pre-action protocols/PDPAC and to explain any non-compliance. Early steps taken pre-action will inform proportionate case management directions.

• Pre-action settlements: If settlement is reached before issue, costs are generally recoverable only if agreed. Record terms clearly (e.g., settlement agreement) and address any confidentiality or enforcement needs.

• Electronic disclosure: For substantial claims, parties should discuss e-disclosure parameters pre-action, including preservation steps, custodian scope, date ranges, and search methodologies, to reduce burden and cost.

• Experts: If technical issues are central, aim to agree a single joint expert where suitable; a jointly instructed report often facilitates early settlement or narrows issues markedly.

Key Point Checklist

This article has covered the following key knowledge points:

• The Practice Direction on Pre-Action Conduct and Protocols (PDPAC) applies where no specific pre-action protocol covers the dispute.
• The main objectives are to encourage communication, early settlement, proportionate steps, and the avoidance of unnecessary litigation.
• Key steps include sending a Letter Before Claim and the defendant providing a Letter of Response within a reasonable time, together with proportionate early exchange of key documents.
• Parties should preserve relevant documents and, where appropriate, discuss and manage electronic disclosure at the pre-action stage.
• Pre-action disclosure and inspection of property are available in defined circumstances to assist resolution or narrow issues before proceedings.
• Considering Alternative Dispute Resolution (ADR) is a mandatory step in spirit; silence or unreasonable refusal can lead to sanctions, and the court may stay proceedings for ADR.
• Non-compliance with the PDPAC can result in adverse costs orders, interest penalties, or a stay of proceedings; knowingly false pre-action statements risk contempt proceedings.
• Litigation should be treated as a last resort, with parties taking stock after pre-action steps to avoid issuing where possible.
• Where limitation is imminent or urgent relief is required, protective issue or urgent applications may justify proceeding before all pre-action steps are completed, followed by a stay to complete them.

Key Terms and Concepts

• Practice Direction on Pre-Action Conduct and Protocols (PDPAC)
• Pre-Action Protocol
• Letter Before Claim
• Letter of Response
• Alternative Dispute Resolution (ADR)
• Pre-Action Disclosure
• Single Joint Expert
• Indemnity Basis
• Stay of Proceedings