Staying ahead of the curve: Understanding the proposals for Pre-Action Protocols

Part 1 of the CJC’s final Report follows the working group’s fundamental review of the role of PAPs that began in 2020 and follows an interim report in 2021. The latest report highlights the importance of providing sufficient notice and information to parties to enable them to meaningfully engage in formal or informal dispute resolution processes and to narrow the issues between them, potentially avoiding litigation altogether.

What needs to change?

The CJC recognises the importance of PAPs.

The Report states that: “there is always a balance to be struck between, on the one hand, flexibility in procedure and a concomitant risk of vagueness as to the steps required of parties, and on the other hand, clear and precise procedural rules that may become overly technical and costly to comply with.”

Changes are needed to increase accessibility and to endorse the overriding objective set out in CPR Part 1. The CJC has made the following recommendations:

• Formalising the role of PAPs by adding a reference to them in the overriding objective
• Making compliance mandatory
• Digitisation of the PAPs
• Introduction of a new General PAP to replace the current Practice Direction – Pre-Action Conduct (PD-PAC)
• Introduction of an Ultra-low value PAP, and
• Sanctions for non-compliance

We look at some of these recommendations in more detail below.

Mandatory Compliance

The CJC highlighted that PAPs help advance fair dispute resolution and facilitate more proportionate litigation. For PAPs to satisfy these goals, they need to be:

• Accessible to all
• Set out clear, proportionate steps towards dispute resolution and effective case management, and
• Be consistently followed by parties and enforced by the courts

The report recommends that compliance with the PAPs should be mandatory unless there is an urgent need to issue proceedings. Examples of this would include an imminent expiry of a limitation period or the need for an urgent injunction.

Digitisation

The report recommends that the PAPs be digitised using online portals. Online portals make communication and file storage easier and they can provide real time information to parties about the processes, what each stage consists of, the timelines involved and where the case is currently at.

The CJC see “harnessing the potential of pre-action protocols to promote greater access to more affordable justice, especially through the use of digital portals” as a priority.

General Pre-Action Protocol

The CJC propose the current Practice Direction – Pre-Action Conduct be replaced with a new General Pre-Action Protocol. This new Protocol would reiterate that litigation should be a last resort and include further guidance on the meaning of key documents that must be disclosed by the parties.

Exchange of information - The working group has scaled back proposals to truncate the timeframes for defendants to respond to letters of claim. The Report now proposes the following two-stage process:

• Acknowledgment of the letter of claim within 21 days
• Full response within 90 days of the letter of claim

Contents of defendant’s acknowledgment - If the defendant intends to defend the matter, they must include the following in their acknowledgment:

• Whether it believes it’s the right defendant in the matter
• Whether the defendant believes it is insured for the claim
• The identity and the contact details for their insurer
• Any additional information it needs to provide its full defence

Joint stocktake report - The new protocol would introduce a “joint stocktake“ requirement to focus the minds of the parties. Before issuing proceedings, they will have to produce a report summarising the parties’ positions on the issues in dispute and the status of pre-action disclosure.

ADR obligation - The CJC working group has removed the term “good faith” from the obligation on parties to engage in a dispute resolution process with each other prior to proceedings being issued. This could include mediation, early neutral evaluation, an ombudsman scheme or a pre-action meeting between the parties.

Disclosure - The working group decided against recommending the inclusion of formal CPR disclosure standards. The requirement would be to disclose and attach “key documents”. The Report suggests including additional guidance on the meaning of key documents and a reminder that documents disclosed as part of the information exchange process should only be used for the dispute at hand.

Sanctions

The Report proposes a new “Notice of Failure to Comply” which one party could serve on the other to raise any complaint of non-compliance. There would be a seven-day timeframe to respond. The court would take this into account when deciding whether or not to impose sanctions for non-compliance with the PAP. On the assumption that compliance with the PAPs will become mandatory as proposed, we can expect to see a dramatic increase in sanctions for breaching a PAP. These could include orders for the party at fault to pay the costs of the proceedings, payment on the indemnity basis or a lower damages payment.

What next?  

The CJC has not said when it expects to publish part 2 of its final report. This will consider the role of bespoke area-specific PAPs and proposed changes to the current 15 area-specific PAPs. There is also a suggestion that there should be a new PAP for commercial disputes. The CJC has also said that it favours a staged approach to implementing its recommendations, in contrast to a “big bang”, so watch this space.