Consequences of Non-Compliance

Consequences of Non-Compliance

Compliance with the applicable Pre-Action Protocol or, where no specialist protocol exists, the Practice Direction – Pre-Action Conduct and Protocols ("PD–Pre-Action Conduct"), is not optional. Although a failure to comply will not ordinarily invalidate a claim or prevent proceedings from being issued, the Civil Procedure Rules empower the court to take non-compliance into account when exercising its broad case management and costs jurisdiction.¹

The underlying principle is straightforward. Civil litigation should be conducted fairly, efficiently and proportionately. Where a party disregards the pre-action regime without reasonable justification, the court may conclude that unnecessary costs have been incurred or that judicial resources have been wasted.²

Importantly, the court's assessment is not confined to whether a party has complied mechanically with every procedural requirement. Rather, it considers the substance of the parties' conduct, asking whether they genuinely attempted to achieve the objectives of the pre-action process, including exchanging sufficient information, narrowing the issues in dispute and exploring settlement before commencing proceedings.³

Costs Consequences

The most significant consequence of non-compliance is an adverse costs order.

Whilst costs generally follow the event under CPR Part 44, the court retains a broad discretion to depart from the usual rule where a party's conduct justifies doing so.⁴ Pre-action behaviour forms part of that assessment.

Paragraph 16 of the Practice Direction expressly provides that, where there has been non-compliance, the court may:

• order the defaulting party to pay costs;
• deprive a successful party of part or all of its recoverable costs;
• order costs on the indemnity basis where appropriate; or
• award or disallow interest on damages or costs.⁵

Accordingly, a claimant who succeeds at trial may nevertheless recover substantially less in costs if the court concludes that proceedings were commenced prematurely or that reasonable settlement opportunities were ignored.

Likewise, a defendant who adopts an obstructive approach during the pre-action stage may find that procedural conduct significantly increases its ultimate costs liability.

Stay of Proceedings

The court could also order a stay in proceedings until each party has satisfied its pre-action duties ⁶

A stay is not intended as a punishment. Rather, it is consistent with the court's goal of seeing that litigation does not commence until the parties have exchanged enough information to evaluate their positions and determine whether the dispute can be resolved without a judicial determination Lewis Silkin.

In proceedings that have been commenced too early (in particular, in disputes where little or no correspondence has taken place), a temporary stay may help prevent unnecessary applications later on which would only incur duplicated costs and avoidable delay.

Interest Consequences

Although less frequently discussed, the court may also adjust interest where a party has behaved unreasonably before proceedings were commenced.⁷

Interest is often treated as compensation for being kept out of money or property. However, where one party's unreasonable conduct has prolonged the dispute or unnecessarily increased litigation, the court may reflect that behaviour when exercising its discretion regarding both pre-judgment and post-judgment interest.

Judicial Criticism

Modern judges increasingly expect parties to cooperate before invoking the court's jurisdiction.

Correspondence demonstrating hostility, tactical obstruction or complete disregard for the pre-action process may attract judicial criticism during case management hearings and, ultimately, when determining costs.

Whilst criticism alone does not determine liability, experienced litigators recognise that credibility matters. A party who has behaved reasonably throughout the pre-action stage is generally better placed to persuade the court that subsequent procedural applications have also been conducted proportionately.