Pre-action Conduct in the English Courts
All courts have rules and procedures in the UK the Courts are apply The Civil Procedure Rules (CPR) which set out detailed rules and guidance governing the conduct of litigating, parties and behaviour during the course of litigation.
In addition, we have the practice directions. These rules 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 and often do result in a party being penalised at a later stage in the proceedings. Consequently, if you are considering or facing commencing litigation, or you are aware that an opponent parties may be considering commencing litigation against you or your family, it is very important to be familiar and submit to the pre-action rules.
This guide aims to explain the importance of the pre-action rules in timeshare 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.
Why pre-action matters are important?
Pre-action conduct is best explained by the updated additions 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 initiative and view is that legal action should only be commenced as a last resort. This view gained the full support of the judiciary; parties and their legal counsel. Everyone now has a positive duty to try and settle cases pre-action. The pre-action rules are intentionally targeted to encourage early settlement and therefore, if embraced, ensure that litigation is only commenced as a last resort.
If a party takes the view that it will not comply then Non-compliance is taken seriously, particularly if the courts consider that compliance would or could have resulted in the avoidance of litigation. The range of sanctions available to the court is dealt with below.
Aspirations and objectives of the pre-action rules
The objectives of the pre-action rules are:
- to encourage the exchange of early and full information about a prospective claim;
- to enable parties to avoid litigation by settlement before proceedings are commenced;
and
- to support the efficient management of proceedings where litigation cannot be avoided.
The rules make it clear that pre-action conduct is specifically not to be used as a weapon or tactical device to secure an unfair advantage for one party or to generate unnecessary and higher cost claims.
The rules governing pre-action conduct
The rules with regard to pre-action conduct can be found in the following:
- the pre-action protocols; and
- the Practice Direction on pre-action conduct (PDPAC).21 Paragraph 6.2 of the Pre-action Conduct Practice Direction.
The pre-action protocols set out the steps that litigants and they advisors ought to take to exchange information about a possible legal claim. There are currently thirteen official pre-action protocols under the CPR.
PDPAC
PDPAC came into force on 6 April 2009. It replaced the Practice Direction on Protocols and is a guide to pre-action conduct. The PDPAC is not a mandatory obligation it specifies what should be done, if reasonable to do, not what must be done.
Having said this, courts do have the discretion to order sanctions against any party who does not comply with the PDPAC when it should have or decides to act in contravention of reasonableness.
The PDPAC is formulated as follows:
- Section 1 sets out the aims and scope;
- Section II looks at the approach of the courts (namely how they will determine compliance and apply sanctions for non-compliance to the overriding objectives);
- Section III sets out guidance on pre-action procedure when no protocol applies; and
- Section IV sets out requirements that apply in every case.
Relationship between the pre-action protocols and PDPAC in timeshare
All pre-action requirements should be interpreted in the context of the overriding objective which in short is to deal with cases justly, proportionally and reasonably. This will include: reducing wasteful expenditure, preserving court resources, ensuring the proposed litigants are on an equal footing whilst having regard to the complexity, importance, value of the claim and the respective financial positions of the parties.
Circumstances in which the pre-action rules will not apply
Pre-action conduct will not be appropriate in all cases. Circumstances where it will not be appropriate include:
- applications where telling the other party in advance would defeat the purpose of the application, for example, an application for a freezing order;
- where there are statutory or contractual time limits for starting proceedings and compliance with the pre-action conduct requirements would mean that the defendant can rely on a limitation defence; and
- where there was a real concern that the other party would commence proceedings in another jurisdiction in breach of a contractual jurisdiction clause.
If you have a need to issue proceedings without reference to the pre-action requirements it is wise to proffer your reasons in correspondence once proceedings have been served and try to agree with the appropriate pre-action steps in stayed proceedings.
Pre-action behaviour and what it entails
What flows (as a general guide) to pre-action conduct is requirements (in most cases). It is important to remember that the courts only expect parties to comply in substance. If a letter before action sets out your position that could comply.
Exchange of information
Parties are expected to exchange good information which permits your opponent to understand each other’s position and make reasoned and informed decisions about settlement and/or how to proceed. In the main, this will embrace the following:
- Claimant dispatches the defendant a letter setting out its claim. That communication should be short but detailed, providing enough information so as to assist the defendant to understand and investigate the issues without needing to request further from the claimant
It should also attach any the key documents.
- Upon receipt the defendant will then provide a full written response and within a reasonable period. As a general rule and subject to complexities of issues, the acknowledgement should be responded to within 14 days of receipt of the claimant’s letter.
- The claimant replies providing any requested documents (by the defendant) within as short a period as reasonable or amplifying in writing why such documents cannot be provided. If a counterclaim is considered by the defendant, the claimant ought to respond with the same information equivalent to a defendant’s full response. After these pre action letters have been exchanged and the matter has not been settled, both litigants legal advisors ought to seek to reduce the issues which remain outstanding so as the court can deal with the proceeding proportionally. The parties should then review their position again to see if proceedings can be avoided.
Consideration of Alternative Dispute Resolution (ADR)
Potential litigant 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 before embarking of any litigation.
The pre-action rules suggest that ADR may not be appropriate in all cases: parties (in short parties cannot be forced to mediate).
That said, in circumstances where the court lends a view that a form of ADR would have been appropriate in the case and, in particular where one of the parties is pressing for the matter to be mediated or otherwise resolved by ADR, the courts often impose costs sanctions if they detect unreasonable refusal.
Proportionality
Parties are expected to act in a reasonable and proportionate and all the time. Further they are expected to act in a line with good manners and the costs of compliance considerations within the PDPAC. Moreover litigants should be proportionate to the sums at stake in the action.
One of the main faults of the pre-action applications is that they add to the expense of civil litigation. The requirement of proportionality is intended to ensure that parties do not expend too much time and effort in dealing with pre-action steps which will not gain an expected benefit.
PDPAC also makes it abundantly clear that litigants ought not to use pre-action conduct requirements tactically. Examples of such behaviour would include fishing expeditions.
Sanctions for non-compliance
In considering whether there has been a lack of compliance, the court will look at whether the parties have complied in substance therefore minor lapses will be ignored. Consideration will also be given to proportionality and at what level of compliance is required, (given the size and nature of the claim being actioned) as well as the level of urgency of the matter
In deciding whether to impose sanctions courts tend to look at the overall effect of non-compliance. If after just consideration and in the opinion of the court, non-compliance has resulted in a claim being started which might otherwise have been avoided the court will consider imposing cost sanctions.
The sanctions imposed are many and varied including, making case management directions, making orders and interest rates on sums due and owing. In addition and is extreme cases, the court may order a party to pay a sum of money into court. This usually is applied if that party has, without good reason, failed to comply with a pre-action protocol and 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 are taken
Tips
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.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk