Since the introduction of the Civil Procedure Rules in 1998, anyone hoping to resort to litigation must first consider settling out of Court (a process known as Alternative Dispute Resolution). However, in the wake of the Jackson Reforms on Civil Litigation Costs, the Civil Procedure Rule Committee has amended the guidelines (the ‘Practice Direction on Pre-Action Conduct’ [PDPAC]) to include further requirements that prospective litigants must consider relating to pre-litigation Alternative Dispute Resolution. This is important for litigants involved in general debt recovery, to which the PDPAC will always apply.
ADR requirements: What does the new Practice Direction mean for us?
The new PDPAC came into force on 6 April 2015. This provides an outline of the steps that the Court expects to be taken by prospective litigants before proceedings begin. The purpose of the new PDPAC is evidently to enable parties to settle the issue between themselves without the need to start costly proceedings.
So what does this mean going forward?
Paragraph 3 of the new guidelines states that the Court expects the parties to exchange all the sufficient information required to be able understand one another’s position and to make decisions as to how they wish to continue. It is only by disclosing and sharing information about the prospective claim that the parties will be fully up to speed with the case that will greet them in Court. This will clearly encourage open and frank discussion to facilitate settlement. Or so the theory goes!
By considering Alternative Dispute Resolution (ADR), both parties are expected to make tangible efforts to reach a settlement. You will be expected to show evidence that you have made attempts at settlement and will be required to show compliance with the PDPAC guidelines, should you reach trial. In order to comply, we must consider, attempt and retain evidence of any attempt to conduct ADR.
If your opposition offers ADR, you must seriously consider your options before ignoring or refusing. Unreasonably refusing or ignoring offers could be seen as unreasonable conduct (see Halsey v. Milton Keynes NHS Trust and PGF II SA v. OMFS Company 1 Ltd.).
The PDPAC guidelines must not be used by either party as a tactical device (or, put another way, as a stick to beat your opponent with). The parties should take “only reasonable and proportionate steps” for them to “identify, narrow and resolve the legal, factual or expert issues” (see Paragraph 4 of the guidelines).
To put it simply, the PDPAC guidelines try to encourage the parties to work together through being honest, open and translucent about all aspects instead of prematurely proceeding.
Failure to comply
The Court may take the view that the Direction has not been complied with if:
• Either party provides insufficient information about their case to the opposition prior to issue
• Acted outside of relevant time limits set out in the PDPAC, or
• Unreasonably refused or failed to respond to an invitation to use a form of ADR.
Should the Court believe any of the above has taken place, it can apply a sanction. This usually means that the party at fault is ordered to pay costs, or have their own significantly reduced.
Where do we go from here?
Taking the above points into consideration, it is in the best interests of all parties to prospective litigation to follow the PDPAC guidelines, including pursuing any appropriate form of ADR prior to issue, should they not wish to suffer the costly consequences.
If you have any matters you want to discuss please contact us.
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