Pre-action considerations and steps - Practice direction - pre-action conduct

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. 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 need a practical understanding of the pre-action steps required before commencing litigation. This includes knowing the purpose and general requirements of the Practice Direction on Pre-Action Conduct and Protocols (PDPAC) and appreciating the court's emphasis on attempting to settle disputes without issuing proceedings. You should be familiar with the potential sanctions for non-compliance.

As you work through this article, remember to focus on:

  • 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.

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 PPPAC?
    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), 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.

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.

Steps Under the PDPAC

Where no specific protocol applies, the PDPAC outlines the general steps parties should normally take before commencing 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.

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.

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.

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.

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.

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, or early neutral evaluation. Arbitration is sometimes included but is often considered a distinct alternative to litigation.

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 be forced to mediate or engage in ADR, but an unreasonable refusal to consider or engage in ADR can lead to costs sanctions.

Reasonable Refusal to Engage in ADR

Whether a refusal to engage in ADR is reasonable depends on the circumstances. Factors identified in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 include:

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

Silence in the face of an invitation to participate in ADR is generally considered unreasonable.

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.

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.

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) 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.

Exam Warning

Do not assume that minor or technical breaches of the PPPAC 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. This evidence will be essential if the opponent later alleges non-compliance or if the court considers costs sanctions.

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.
  • Parties must exchange key information and documents relevant to the issues.
  • Considering Alternative Dispute Resolution (ADR) is a mandatory step, and unreasonable refusal can lead to sanctions.
  • Non-compliance with the PDPAC can result in adverse costs orders, interest penalties, or a stay of proceedings.
  • Litigation should always be treated as a last resort.

Key Terms and Concepts

  • Practice Direction on Pre-Action Conduct and Protocols (PDPAC)
  • Letter Before Claim
  • Letter of Response
  • Alternative Dispute Resolution (ADR)
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