The pre-action protocols are an important part of the Civil Procedure Rules. Their aim is to prompt and encourage correspondence between the parties prior to any action being taken. This could ultimately lead to some agreements being made about facts or a compromise being settled before litigation is considered. In addition, the protocol aims to encourage an exchange of information at an earlier stage in proceedings. A crucial document could be exchanged which could prompt a settlement or compliance with the contract. It will also encourage better investigation into the facts as alleged by both sides in order to correspond with each other. Ultimately, the aim is to try and settle before litigation is required, but if it is required, it can enable the litigation proceedings to run to the courts timetable efficiently.
In order to get litigants to comply with the protocol, the courts have the power to impose sanctions on the parties in default. Where non-compliance has led to proceedings which otherwise might not have been commenced, or has led to unnecessary costs being incurred, the courts may decide to impose the sanctions.
The Defaulting Party Pays Some Or All Of The Opponents’ Costs
The party which doesn’t comply with the rules could end up paying for any costs incurred as a result of the non-compliance. If further applications or further particularisation is required which is as a result of lack of communication prior to commencement of proceedings, the costs of the extra work could be awarded to the opponent of the party in default. It is important to ensure that the pre-action protocol is carefully followed, because if litigation is commenced which could have been resolved by compliance with the protocol, then the defaulting party could be ordered to pay the whole of their opponents’ costs. It is vital that advice is sought at the very early stages of litigation, as your conduct at this stage could have a massive effect on any award of costs moving forward.
A Claimant In Default Being Denied Interest On Their Award
If a Claimant is successful in their claim, but they did not comply with the pre-action protocol, they could be denied some or all of the interest which they have requested on their subsequent award. This could be a significant amount of money if the monies being claimed have been outstanding for a long time.
A Defendant In Default Being Ordered To Pay Interest On The Award
On the other side of the coin, a Defendant who is at fault and ultimately loses the claim could be penalised by being ordered to pay interest on some or all of the damages which are awarded to the Claimant. The interest could be as high as 10% per annum above base rate. At the time of writing, February 2019, base rate is 0.75%. Therefore, a Defendant could be ordered to pay 10.75% in interest on top of the award. In some cases, the court might stay proceedings in order to facilitate compliance with the pre-action protocol. This will be to save both sides costs. An example of this is in the case of Cundall Johnson and Partners LLP v Whipps Cross University Hospital NHS Trust . In this case, there was a real possibility of settlement and by staying the claim, it saved both sides valuable costs in litigation.
It is important that if you have a dispute which has arisen, that you seek advice immediately, as your conduct during this stage is important for later in proceedings. If you have a dispute and you would like to discuss it with one of our experts, give us a call on 01133 50 40 30 or email email@example.com to request a call back.