CJC Pre-Action Protocol Report Review
The first phase CJC Review of Pre-Action Protocols (PAPs) has landed. If there was an intentional phrase that stands it out, it must be, “Harnessing the potential of pre-action protocols to promise greater access to more affordable justice.”
More affordable. This principle underpins much of the Review.
Or perhaps it is the reference to unintended consequences which ‘are what they are’, so strap in.
So, what does the Review say?
Well conduct is vital.
There will be a need to comply with General PAPs in a proportionate and reasonable manner, and potential costs consequences for taking disproportionate steps. The general guidance states that, “the parties should behave reasonably and proportionately”, note this applies to all parties, which leads us down a lane of what steps or behaviours could be deemed unreasonable or disproportionate, and what costs consequences could be applied, and to what extent?
Is the answer within this Review?
Not really. The Review does, however, recommend that these principles are tied much more closely to the overriding objective (itself possibly to be amended to reflect the PAPs), which opens the door to dealing with cases justly and at proportionate cost, which includes ensuring that the parties are on an equal footing, saving expense, and dealing with the case in ways which are proportionate.
Some other interesting takeaways include that the PAPs run sequentially and cannot proceed where one step is not completed (the Review is thinking about non-compliant parties here), and the sanctions for non-compliance are in s.5. These include encouraging, where appropriate, the Court to make costs orders flowing from PAP non-compliance before the proceedings are even resolved…yes you read that right. The Review states,
“There is no jurisdictional barrier that would prevent [the above]”.
It is not clear if these are interlocutory Orders, one assumes so, and thus the intention is that you lose pre-action costs but not costs at large…the Review is not clear at all on what it means. There is also a back handed slap regarding proportionality, with the Review stating that punishing PAP non-compliance at the end has no more effect on encouraging compliance as punishing proportionality at the end does for that…ouch.
The slap continues when the Review states,
“We know detailed costs assessments at the end of litigation are not effective either at keeping costs proportionate or even their stated objective of ensuring the successful party recovers their reasonable costs”, which is a damning statement of intent, and in the context of this Review understandable, albeit debatable.
And, just in case the nail has not been driven deeply enough,
“…given the deleterious effects that dealing with costs at the end of proceedings has had on the administration of justice – a phenomenon recognised in virtually every review of the civil justice system – we think there is a strong case to be made for courts being prepare to make more costs orders at an early stage of proceedings due to PAP non-compliance and its likely impact on litigation”
We wonder when these Orders could be made. Is this another layer of debate to be applied to a CCMC, or perhaps a standalone application. Will we see satellite litigation yet again orbiting the primary case as parties seek early costs wins? The Review steps back from that.
Turning to the powers available when applying a sanction, the Review veered from striking out via CPR 3.4 (bearing in mind the new relationship with the Overriding Objective), through orders to stays and the use of notices to warn of non-compliance. In effect, comply or risk a sanction (subject to Denton, on which the Review’s thoughts on applying Denton away from CPR 3.9 and within the web of the new and untested PAPs is interesting, and optimistic) that could well go beyond costs and is, as always, up to the Court.
Interestingly there is a stark reminder that an unreasonable failure to engage in ADR, here pre-action ADR, attracts costs sanctions, and the Working Group did not accept that the various obligatory conduct provisions (which are process based) were the same as compulsory ADR (albeit there is an obligation to engage in a dispute resolution process…). There is, however, a compulsory default dispute resolution process that the parties must engage in if they cannot agree on a dispute resolution process….yes…that is what it says…and what is this compulsory process? It is a pre-action meeting between the parties, or as we might call it, ADR.
Be aware too of the MOJ consultation on mandatory post-issue mediation, which is flagged from 4.26 and from this it seems you may well escape that, should it bite, if you comply with the pre-action obligation.
Lastly, the meat of this when we look at costs, the summary costs procedure. It appears Part 8 has been deemed too cumbersome (Seemingly not by the Association of Senior Costs Judges however, which is interesting).
The intention is to implement a straightforward mechanism for both pre-action costs disputes relating to (1) liability and (2) quantum. Whilst recognising the detailed and practical complexities implementing a new procedure the Review identified two separate issues:
- Streamlining the existing Part 8 procedures for costs quantum disputes.
- Introducing a new procedure for determining pre-action costs liability disputes.
Dealing with (i) the Review explored strapping the assessment procedure into a Part 8, essentially condensing it and cutting out much of the delay, and launching this at a Judge, albeit seemingly without any Points of Dispute and Replies (leaving that and the finer points such as appeals etc. for the CPRC to resolve)…
Dealing with (ii) this was largely deferred to the next report, noting that certain areas of law required a generic costs procedure, and there were obvious needs for primary legislative amendment when it comes to pre-action costs. The Review pitched some general observations, such as the Part 8 procedures obviously need amended to reflect its use where there is no existing costs agreement, and only those claims where the relevant PAP expressly allows claims for pre-action costs can use this procedure.
What does this all mean?
Parties must take every step to cooperate and avoid court action. ADR is mandatory, but it isn’t, but it is. Sanctions will apply, you could face early costs orders, but it is unclear how or when, or to what extent. Comply with the pre-action protocol, embrace ADR, do not play games, and when you settle pre-action, Part 8 may well be able to offer a fast-track route to an assessment (quite how this will happen we watch with bated breath suspecting that, arguably, any issue is in CPR 47, not Part 8).
The meatier Review will follow, focusing on potential reforms to litigation specific PAPs and the creation of new litigation specific PAPS. Watch this space.
If you wish to discuss any aspects of this, please contact us.
Lee Dixon, Senior Costs Consultant
24.08.2023