FREE BOOK CHAPTER: The Pre-Action Protocols (From ‘A Practical Guide to Alternative Dispute Resolution in Personal Injury Claims: Getting the Most Out of ADR Post-Jackson’ by Peter Causton, Nichola Evans, James Arrowsmith)
08/02/17. The 6th April 2015 saw the introduction of new protocols for personal injury and clinical negligence claims dovetailing with increases in Court fees. The terms of the updated protocols are important for practitioners, whether acting for claimants or defendants, as there are some important changes and the protocols now have added "teeth".
The Pre-Action Protocols, which need to be followed before starting Court proceedings, have been amended to actively encourage ADR. The new Pre-Action Protocol Practice Direction, setting out the best practice that the Courts expert parties to follow pre-proceedings makes it clear that parties must consider ADR, respond to offers and those failing to do so should expect to face sanctions.
It identifies one of its aims as being to enable parties to settle issues without recourse to the Courts, including the use of ADR, and the failure to consider, or to propose, or respond to proposals, for pre-action ADR may become relevant when considering orders in case-management, as well as to costs orders. It explains that Court proceedings should be a last resort. The parties should consider whether some form of alternative dispute resolution procedure might enable them to settle their dispute without commencing court proceedings, and if so, endeavour to agree which form to adopt. The Protocol explains that parties may negotiate to settle a dispute or may use a form of ADR including:
mediation – a third party facilitating a resolution;
arbitration – a third party deciding the dispute;
early neutral evaluation – a third party giving an informed opinion on the dispute;
adjudication – a process by which an independent adjudicator provides the parties with a decision that can resolve the dispute either permanently or on a temporary basis, pending subsequent court determination; and
The Pre-Action Protocol Practice Direction makes it clear that:
"If proceedings are issued, the parties may be required by the court to provide evidence that ADR has been considered. A party’s silence in response to an invitation to participate or a refusal to participate in ADR might be considered unreasonable by the court and could lead to the court ordering that party to pay additional court costs." and "The court may decide that there has been a failure of compliance when a party has "unreasonably refused to use a form of ADR, or failed to respond at all to an invitation to do so."
So, the goal posts have moved in that parties are now very much expected to have tried ADR before starting proceedings, rather than during them.
Paragraph 4.6 of the Practice Direction specifically identifies sanctions the court may impose which include:
(1) "staying (that is suspending) the proceedings until steps which ought to have been taken have been taken;
(2) an order that the party at fault pays the costs, or part of the costs, of the other party or parties (this may include an order under rule 27.14 (2) (g) in cases allocated to the small claims track);
(3) an order that the party at fault pays those costs on an indemnity basis (rule 44.3 (3) sets out the definition of the assessment of costs on an indemnity basis);
(4) if the party at fault is the claimant in whose favour an order for the payment of a sum of money is subsequently made, an order that the claimant is deprived of interest on all or part of that sum, and/or that interest is awarded at a lower rate than would otherwise have been awarded;
(5) if the party at fault is a defendant, and an order for the payment of a sum of money is subsequently made in favour of the claimant, an order that the defendant pay interest on all or part of that sum at a higher rate, not exceeding 10% above base rate, than would otherwise have been awarded."
The message running throughout the new protocol is that proceedings should be the last resort. Nearly every Pre-Action Protocol now says:
"The parties should consider whether some form of alternative dispute resolution procedure would be more suitable than litigation, and if so, endeavour to agree which form to adopt. Both the Claimant and professional may be required by the Court to provide evidence that alternative means of resolving their dispute were considered. The Courts take the view that litigation should be a last resort"
The penalties which can now be imposed on parties failing to engage with the new protocol are as follows:
Those who default can be ordered to pay the costs of the proceedings, or a significant proportion of them on the indemnity basis.
If a claimant is at fault and is awarded monetary damages, the claimant’s entitlement to interest can be withdrawn or interest awarded at a lower rate and for a lesser period. If the defendant is the offending party then they can be ordered to pay interest on the damages awarded to the claimant at a higher rate, capped at 10% above base rate.
If proceedings are started the claimant, to comply with para.9.7, should state in the claim form or particulars of claim whether the Practice Direction, and protocol, have been complied with.
The message is clear, if you don't take part in ADR, you risk sanctions. With respect to the revised Personal Injury Protocol, it even states that if a party to the claim does not have a legal representative, and so is a litigant in person, they should still, in so far as reasonably possible, fully comply with the Protocol.
Failure to Comply with the Pre-Action Protocols
There are authorities for the proposition that failure to comply with the Pre-Action Protocol can lead to costs consequences, similarly to failure to undertake ADR and/or mediation. Compliance with the Protocol is one of the factors that the Court takes into account when it comes to consider the issue of costs, as it is relevant to the issue of conduct.
The most recent decision on this is that of Jane Laporte v The Commissioner of Police of the Metropolis. In this case, the claimants lost, but sought to argue that there should be no order for costs because the defendant refused to engage in ADR.
The general rules about costs are to be found in CPR Part 44. CPR 44.2(1) provides that decisions relating to costs are in the discretion of the court:
(1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
CPR 44.2(2) establishes the general rule that costs will follow the event:
(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
CPR 44.2(4) identifies the circumstances to which the court is to have regard when exercising its discretion in making decisions about costs:
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
The term "alternative dispute resolution" ("ADR") is defined in the glossary to the CPR as a "collective description of methods of resolving disputes otherwise than through the normal trial process". One such process is mediation, but ADR forms part of the pre-action protocols.
The claimants pointed out that the defendants never provided a practice direction response to the letter of claim, in spite of its express agreement to do so and two chasing letters from the claimants' representatives. When no response was received by the agreed second extended deadline, the claimants sought a response by a further date. No response was received on this date or on any date thereafter.
Having considered each of the factors listed in Halsey and having regard to other circumstances and arguments raised in addition, the Court have formed the view that the defendant failed, without adequate (or adequately articulated) justification to engage in ADR which had a reasonable prospect of success. In addition, the Court needed to look at the matter in the round as a result of which it had to consider the separate issues arising from the criticisms raised of the defendant's failure to respond to the letter before action. The Court found that:
“the defendant undoubtedly ought to have responded to the letter before action more timeously and it is unsurprising that the claimants eventually lost patience and proceeded to plead their case formally. Had this been the only valid criticism of the procedural failings of the defendant I may well have concluded that it did not justify any substantive costs consequences. However, I have reached the view that the failure to respond in time was to prove to have been symptomatic of a sustained inability to prioritise the progress of this case thereafter and, in particular, to allocate sufficient time, attention and/or resources to dealing with ADR in parallel to substantive preparation. This lends further corroboration to my view that the defendant stumbled past ADR on the way to the hearing rather than engaging with it with proportionate commitment and focus. To this limited extent only, therefore, do I take the non-compliance with the pre-action protocol into account.”
Failure to comply with the Protocol on its own may not justify a costs penalty or sanction, but it contributes to the overall picture of a party’s conduct of proceedings. Had the Defendant complied with the Protocol, in this case, maybe the Court would have been more understanding about the failure to mediate?
In Webb Resolutions Limited v Needham & Green (a firm), following settlement of a professional negligence claim, the Court was asked to consider the position on costs and the defendant argued that the Court should depart from the normal order for costs because the claimant had failed to comply with the Professional Negligence Pre-Action Protocol (the Protocol) by its unreasonable conduct in relation to disclosure.
The court had to make the normal order unless it considered it unjust to do so and in deciding whether it was unjust, it had to take into account all the circumstances of the case including the four matters expressly set out in Rule 36.14(4).
The defendant argued that the Practice Direction for Pre-Action Conduct applied and in particular paragraph 4.2 (which provides that the court expects the parties to have complied with this Practice Direction or any relevant pre-action Protocol), paragraph 4.4 (which provides that the court may decide there has been a failure of compliance because a party has, without good reason, not disclosed documents requested to be disclosed) and paragraph 4.6(2) (which provides that if, in the opinion of the court there has been non-compliance, the sanctions which the court may impose include an order that the party at fault pays some or all of the costs). Paragraph 4.5 is also relevant (it provides that the court will look at the overall effect of non-compliance on the other party when deciding whether to impose sanctions).
In cases where a party wants to settle a dispute at an early stage there is a tension between that party wanting to settle with minimum cost and inconvenience to himself and that party having to incur expense and effort in providing information to the other party so that other party might better inform himself about the dispute and his potential liability thereunder. Pre-Action protocols address that tension. CPR 36 also addresses that tension and provides a regime which prescribes an allocation of risk.
The aim of the Protocol (expressed in paragraph A2) is to establish a framework in which there is an early exchange of information so that the claim can be fully investigated and, if possible, resolved without the need for litigation. Paragraphs A4 and A5 make clear that the courts expect the parties to act reasonably and that sanctions will be imposed only if there is substantial non-compliance. The parties are urged to disregard minor departures from the Protocol and it is plain why that is so - the Protocol is urging a common sense approach to potential litigation, one that is practical and expedient and directed to an early resolution of the dispute at a proportionate cost.
The Court found that a claimant acting reasonably would, in the circumstances of this case, have supplied copies of the files at an early stage and not merely extracts therefrom. Instead of doing that the Claimant either refused without giving any good reason to supply the documents requested or failed to respond at all to the letters of request. Such conduct was not n accordance with the Protocol. It was not helpful or conducive to an early disposal of the case.
The Court was therefore satisfied that the claimant's non-compliance with the Protocol did make it unjust for the normal order under CPR 36.(10)(4) to flow. The claimant therefore had to pay the defendant’s costs after the period when the disclosure should have been made.
However, in the case of Lincolnshire County Council v (1) Mouchel Business Services Limited (2) R.G. Carter Building Services Limited 13 February 2014 (a construction case), the Court rejected an application to extend time for service of a claim form on the basis that the parties had not complied with the Pre-Action Conduct Practice Direction and the Pre-Action Protocol for Construction & Engineering Disputes. The Claimant could have applied for directions. A party issuing proceedings to which the Pre-Action Protocol for Construction & Engineering Disputes applies without complying with the Protocol because his claim may become time barred is obliged under the Protocol to apply to the Court on notice for directions as to the timetable and form of procedure to be adopted. An application for directions on notice enables the Court to review the position in the light of any relevant submissions made by each affected party.
The Court accepted that the Protocol shows the importance attached by the Court to compliance with its requirements, but not that the Court's wish to ensure compliance with the Protocol is of paramount importance or in any way "trumps" the principles that are generally applicable to applications for extensions of time for the service of proceedings.
Pre-Action Protocol for the Resolution of Clinical Disputes
The original Clinical Negligence Protocol was introduced in 1998 ahead of, and anticipating, the CPR. The reason for the protocol was identified in para.1.1 of that protocol which stated:
"The number of complaints and claims against hospitals, GPs, dentists and private healthcare providers is growing as patients become more prepared to question the treatment they are given, to seek explanations of what happened, and to seek appropriate redress. Patients may require further treatment, an apology, assurances about future action, or compensation. These trends are unlikely to change. The Patients’ Charter encourages patients to have high expectations, and a revised NHS Complaints Procedure was implemented in 1996. The civil justice reforms and new Rules of Court should make litigation quicker, more user-friendly and less expensive."
The protocol continued:
"It is clearly in the interests of patients, healthcare professionals and providers that patients’ concerns, complaints and claims arising from their treatment are resolved as quickly, efficiently and professionally as possible. A climate of mistrust and lack of openness can seriously damage the patient/clinician relationship, unnecessarily prolong disputes (especially litigation), and reduce the resources available for treating patients. It may also cause additional work for, and lower the morale of, healthcare professionals."
On this basis the protocol went on to observe:
"If that mistrust is to be removed, and a more co-operative culture is to develop healthcare professionals and providers need to adopt a constructive approach to complaints and claims. They should accept that concerned patients are entitled to an explanation and an apology, if warranted, and to appropriate redress in the event of negligence. An overly defensive approach is not in the long-term interest of their main goal: patient care; patients should recognise that unintended and/or unfortunate consequences of medical treatment can only be rectified if they are brought to the attention of the healthcare provider as soon as possible."
The protocol then set out a process, with timescales, which provided for disclosure of health records, obtaining expert evidence, a letter of claim and a response. Subsequently, some minor modifications were made to the protocol, in particular extending time for the healthcare provider to respond to the letter of claim from three months to four months.
The 2015 Clinical Negligence Protocol
The updated Clinical Negligence Protocol came into effect on April 6, 2015. This version preserves the basic structure, and timescales, of the existing protocol but brings it up to date, reflecting other procedural changes, and makes some other modifications. Whilst not changing the context in which the protocol was first introduced the updated version, sensibly, omits much of that background and focuses more on the detail of the information that should be exchanged between the parties.
The scope of the protocol is confirmed by para.1.1 which states:
"This Protocol is intended to apply to all claims against hospitals, GPs, dentists and other healthcare providers (both NHS and private) which involve an injury that is alleged to be the result of clinical negligence."
The protocol still expressly recognises the parties, as patient and healthcare provider, may well have an ongoing relationship and hence para.1.3 states:
"It is important that each party to a clinical dispute has sufficient information and understanding of the other’s perspective and case to be able to investigate a claim efficiently and, where appropriate, to resolve it. This Protocol encourages a cards-on-the-table approach when something has gone wrong with a claimant’s treatment or the claimant is dissatisfied with that treatment and/or the outcome."
It would appear that the word "perspective" was chosen to emphasise the importance of trying to clarify exactly what each party is actually trying to achieve (for example whether an apology and/or an explanation is going to be just as important as financial compensation) and to identify any misunderstandings that might prevent resolution (for example, a patient’s interpretation of an entry in the medical records may be completely different to that of the clinician who wrote it)".
Paragraph 2.2 identifies specific objectives of the Protocol.
Openness, transparency and early communication of perceived problems between patients and healthcare providers.
To help healthcare providers identify whether notification of a notifiable safety incident has been, or should be, sent to the claimant in accordance with a duty of candour under s.20 of the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014.
Prompt disclosure of information to encourage early resolution or narrowing of the issues in dispute so healthcare providers can identify cases whether an investigation is required and involve the NHSLA or relevant defence organisation at an early stage.
Exploring mediation before issue of proceedings.
Identifying issues that may require a preliminary hearing.
Supporting efficient management of proceedings where litigation cannot be avoided.
Discouraging the prolonged pursuit of unmeritorious claims.
Discouraging the prolonged defence of meritorious claims.
Encouraging an early apology where appropriate.
Compliance and sanctions
The protocol now expressly reflects the importance attached to compliance with its terms and deals with sanctions that may be imposed in the event of default.
“This Protocol is now regarded by the courts as setting the standard of normal reasonable pre-action conduct for the resolution of clinical disputes."
Consequently, para.1.7 explains:
"Where either party fails to comply with this Protocol, the court may impose sanctions. When deciding whether to do so, the court will look at whether the parties have complied in substance with the Protocol’s relevant principles and requirements. It will also consider the effect any non-compliance has had on any other party. It is not likely to be concerned with minor or technical shortcomings (see paragraph 4.3 to 4.5 of the Practice Direction on Pre-Action Conduct)."
Section 5 of the protocol deals with ADR, identifying the need to consider a number of different potential methods which are listed:
discussion and negotiation;
early neutral evaluation; and
Paragraph 5.4 provides that if court proceedings are issued the parties may be required to provide evidence that ADR has been considered and that, whilst recognising a party cannot be forced to enter any form of ADR, silence in response to an invitation to participate in ADR may be considered unreasonable and lead to the court ordering that party to pay "additional court costs".
The Pre-Action Protocol for Personal Injury Claims
The Personal Injury Protocol, like the Clinical Negligence Protocol, was introduced in 1998 anticipating the introduction of the CPR. The protocol, as it originally read, had a number of key features including the following.
A letter of claim, providing the defendant with information necessary to decide liability.
A time limit for the defendant to make a decision on liability.
Provision, where liability was admitted, for the defendant to be given information on quantum and then have a window in which to settle the claim, so as to avoid court proceedings.
Better provision of information, where liability was not admitted, so the claimant could properly assess the merits of any defence before incurring the costs of court proceedings, including reasons for any denial as well as any alternative case
The provision of documents relevant to liability.
Joint selection of experts (reflecting the intention of the Practice Direction—Pre-Action Conduct that the parties should try to agree a single expert, even if not a joint expert, wherever possible).
Clear timescales which if not met by the defendant would justify the claimant issuing court proceedings.
The revised PI Protocol, effective from April 6, 2015, contains a number of important changes to the original protocol.
Linkage with the RTA Protocol and the EL/PL Protocol
The PI Protocol remains significant even with the subsequent introduction of the Portal protocols, namely the RTA Protocol and the EL/PL Protocol. These new protocols are collectively now described in the PI Protocol as the "low value protocols" (although it is important to remember where claims start will not just depend on value but also the type of claim). Claims may enter the PI Protocol in a number of ways:
Claims which enter, but then leave a low value protocol will usually go into the PI Protocol.
Claims which might be suitable for a low value protocol in terms of value but are otherwise excluded will enter the PI Protocol from the outset.
Clams which are likely to exceed the relevant upper limit of a low value protocol (that is potential multi-track claims) will go straight into the PI Protocol.
Paragraph 1.1.1 of the PI Protocol makes clear that its terms do not apply while a claim is proceeding under a low value protocol.
The claim may have left the RTA Protocol or the EL/PL Protocol in circumstances where that protocol confirms Part 7 proceedings can be issued, which is reflected by the terms of para.1.2 of the PI Protocol. In other circumstances the claimant will need to have regard to the terms of the PI Protocol and the Practice Direction—Pre-Action Conduct to determine the stage at which Part 7 proceedings can be commenced.
Starting the claim
How the claim starts within the PI Protocol will depend on whether the claim is an ex-low value protocol claim or a non-low value protocol claim.
Links with the Low Value Protocol
Paragraph 1.3.1 of the PI Protocol confirms that where a claim exits a low value protocol because the defendant considers there is inadequate mandatory information in the claim notification form ("CNF") the claim will proceed on the basis the claimant must send a letter of claim in accordance with the PI Protocol.
In other circumstances para.1.3.2 confirms the claim will proceed under the PI Protocol on the basis the CNF will be treated as the letter of claim. The claimant may wish, even if a letter of claim is not required, to raise matters with the defendant that would have been raised in the letter of claim including disclosure, if liability is not admitted, and arrangements for expert evidence.
Paragraph 1.2 of the PI Protocol confirms that claims which exit a low value protocol prior to stage 2 will proceed on the basis of the terms of the protocol from which the claim has exited as well as the terms of the PI Protocol. The low value protocols specifically identify circumstances in which Part 7 proceedings can be commenced, and nothing in the PI Protocol should be seen as undermining those provisions.
Where the low value protocol does not expressly provide for Part 7 proceedings to be issued, the terms of the PI Protocol will determine when that is appropriate (important in such cases as these are likely still to be subject to fixed costs and hence a very important consideration is when the next stage in the costs matrix can be reached).
Starting the claim: Non-low value protocol
If a claim is not within the scope of either the RTA Protocol or the EL/PL Protocol, but is covered by the scope of the PI Protocol, a letter of claim, complying with the terms of the PI Protocol, should be sent at the outset.
Paragraph 8.2 states that the parties should always consider whether it is appropriate to make a Pt 36 offer before issuing. As with the earlier version of the protocol the requirement is to "consider", rather than necessarily make, a Pt 36 offer at this stage.
Paragraph 9 deals specifically with ADR expressly identifying potential methods, and explaining what these mean, as the following:
Discussions and negotiation (which may or may not include making Pt 36 offers).
Mediation (a third party facilitating a resolution).
Arbitration (a third party deciding the dispute).
Early neutral evaluation (a third party giving an informed opinion on the dispute).
The protocol recognises that if proceedings are issued the parties may be required by the court to provide evidence that ADR has been considered.
Compliance and sanctions
Paragraph 1.5 of the PI Protocol confirms that where either party fails to comply with the terms of the protocol the court may impose sanctions and express reference is made to the terms of the Practice Direction—Pre-Action Conduct. Accordingly, as with the Clinical Negligence Protocol, sanctions may be applied by the court in the event of non-compliance. A defendant who ignores a claim or fails to respond in accordance with the terms of the relevant protocol is now clearly at risk of sanctions being imposed.
The added emphasis on the role of ADR in the protocols and accompanying practice direction is a further step towards the promotion of ADR over litigation, and the courts’ use of sanctions where that approach is not followed
The pre-action protocols are, therefore, of real importance to both claimant and defendant personal injury practitioners.
The pre-action protocols and the practice direction have been beefed up.
Practitioners should follow the Protocols and engage in ADR or risk costs sanctions.