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The importance of complying with pre-action protocol

Compliance with the Practice Direction on Pre-Action Conduct (PD PAC) remains important for litigants. The delays that may otherwise be incurred whilst a matter is stayed or the sanctions that are applied may be substantial.

If a dispute proceeds to litigation, the Court will expect the parties to have complied with a relevant pre-action protocol or, where no protocol has been approved by the Master of the Rolls, the PD PAC. 

Essentially, the Court will expect the parties to exchange sufficient information in correspondence to allow them to understand each other’s position, settle the issues without proceedings or support the efficient management of any proceedings, thereby reducing the costs of resolving the dispute.

Where there has been a non-compliance, the Court may either stay proceedings or apply sanctions.  When deciding whether to impose any sanctions, the Court will consider the effect of the non-compliance and may impose:

  • An order that the party at fault pays the costs of the proceedings, or part of the costs, possibly on an indemnity basis; and / or
  • In a claim where a party has been awarded a sum of money, depending on the party at fault the Court may impose an order either awarding interest on that sum at a higher rate (not exceeding 10% above the base rate) than the rate which would otherwise have been awarded, reducing the award for interest or depriving that party of interest entirely.

In matters where no pre-action protocol applies, such as debt recovery and rent actions for private landlords, the sanctions in respect of costs and interest may be particularly powerful.

Case Studies

In one matter where we have been acting for a commercial client in a defended matter allocated to the Small Claims Track, our client was not hopeful of recovering their true costs.  The usual rule for costs on this Track is that Court may not award costs beyond the Court Fees incurred in the Claim, the Part 45 – Fixed Costs applicable, witness expenses, loss of earnings and expert’s fees.  The District Judge at Hearing not only asked the Advocate to pass on their compliments to our fee earner, who had done an “excellent job” on the witness statements filed but also went on to award full costs as a consequence of the steps taken to settle the issues without proceedings. Indeed, they stated that if we had asked for double the award they would have granted that.  Our client stated:

‘That is unusual of the judge, he sounds very impressed and rightly so, well done to all. Excellent result and your plan moving forward sounds a good one …’

In another recent matter, where we are acting for a private landlord in a possession claim on grounds of rent arrears, our ‘best practice’ approach and efforts to take all reasonable steps to engage with the tenant were again commended by the District Judge at Hearing.  We had taken steps to provide relevant ‘signposting’ to the tenant as to methods of making payment, discussing possible repayment options and providing direction to free, independent advice and assistance that could be obtained.  In this instance, our client was awarded an increased rate of interest, being the maximum award of 10.5% rather than the contractual rate, which was only 4.5%.  Our client agreed:

‘It couldn’t have gone any better! Very positive news an excellent result - now to take back possession!!’

Whilst the PD PAC is clear to say that it ‘must not be used by a party as a tactical device to secure an unfair advantage over another party’, where ‘reasonable and proportionate steps’ are taken to identify, narrow and resolve the legal, factual or expert issues and the other side are simply not willing to engage, it is pleasing to see that the Courts will apply sanctions and make an extraordinary award in favour of creditors.  Such awards may be significant.

As the old saying goes: ‘every little bit helps’!

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Jeffersen Gledhill

Legal Recoveries & Operations Manager

I am Legal Recoveries and Operations Manager, working on the recovery of volume and 'niche based' commercial and consumer debts.