Client accountability and involvement in the process of litigation, shorter statements of case, shorter trials, use of court-endorsed lists of issues, early judicial view on issues and summary assessment of costs under £250,000 are among the changes coming into force in the Commercial Court from 1 February 2008. Parties and their advisers will be expected to be familiar with the changes and to conduct litigation accordingly.
The changes are not just "procedural". Some will impact directly upon businesses and in particular senior management, who will be required to take a pro-active role in cases and show a greater degree of demonstrable responsibility for the litigation being carried out in a business's name. Focus on "the day job" will not be an excuse and could lead to adverse costs consequences.
The aim is to simplify litigation, reduce cost and bolster the Commercial Court against attacks that it is too expensive. Such criticism has led to concern that some (particularly international) litigation is moving to other jurisdictions or methods of dispute resolution such as arbitration.
The changes are for a trial period until November 2008 and, if successful, are likely to inform the way all litigation is carried out in the High Court. These steps can be seen as a natural progression of the Woolf Reforms and the Civil Procedure Rules. The move recognises that one effect of the earlier reforms has been to front load the incurring of costs, that the reforms have not achieved the objective of reducing costs and that in some cases they have operated to increase costs.
Following the collapse of the BCCI/Bank of England and the Equitable Life cases the Commercial Court set up a Long Trials Working Party. This working party considered how to improve the management of heavy and complex litigation in the Commercial Court.
All the recommendations and proposals made in the Working Party's report will be put into practice for a trial period from 1 February to 30 November 2008.
Importantly (despite its title) the report is not about only long or particularly complex or heavy cases. Most of the recommendations apply to all cases in the Commercial Court.
Although the report is some 80 pages long, with a number of recommendations and proposals, there are some key changes of which businesses and their advisers should be aware.
Key changes for businesses
Parties are now expected to comply with the minimum expectations of the existing pre-action protocol regimes. The pre-action letter of claim should be concise and do no more than explain the proposed claim sufficiently to be understood by the potential defendant. Similarly, the potential defendant need only provide a concise response. Only essential documents need to be provided with the letter of claim. The potential defendant should provide a response within one month and the maximum periods between the letter of claim and the response must not be more than three months.
Generally at this stage there is no need for the parties to appoint experts before writing a letter of claim, or responding to one. This will save costs if followed, although there are tactical considerations as to how a letter before action is best phrased and supported.
Client accountability and responsibility for litigation
Senior client representatives will be required to sign a fresh statement of truth shortly before trial verifying statements of case to ensure they are understood and remain accurate.
At appropriate stages - usually the case management conference (CMC) and the pre-trial review (PTR) - those representatives will also be required to sign a statement indicating to the court whether ADR has been considered internally within the client organisation. Judges may also ask the question at any oral hearing, where appropriate. They will have the power to require senior representatives to be present in court, by video link if necessary, if it will assist with case management or resolution of the dispute.
Finally, the court will have to be provided with costs updates from the parties for consideration at each CMC or PTR so that issues of proportionality are taken into account. The court will ask for written confirmation that the senior representative has seen the estimate for both sides.
This can be a significant administrative and costly burden for businesses, often disproportionate to the benefits gained.
The starting point will remain that of "standard" disclosure, i.e. those documents on which a party relies, which adversely affect either party's case, or support another party's case. However, if the court decides that the size or complexity of the case demands it, the parties will be required to produce a Disclosure Schedule, in a specified format. This will assist the court in deciding whether (and where) disclosure should be restricted or whether it should order disclosure beyond "standard disclosure", or whether disclosure should be advanced or delayed in whole or part. The List of Issues (see below) will be central to this process.
Key changes for advisers
Statements of case
Statements of case should not exceed 25 pages in length without permission of the court. Where the number of pages exceeds 25, it should include a short summary (five pages maximum). We can perhaps expect font sizes and line spaces to reduce!
List of Issues
The List of Issues will be the key working document in all Commercial Court cases. The early creation of a judicially settled List of Issues will take case management precedence over statements of case and will be used to set the parameters for disclosure of documents and the content of witness statements and expert reports. Ultimately, it will shape the trial.
Judges will be encouraged to exercise their powers of summary judgment/strike out more pro-actively. Where such an application fails, judges should consider making more favourable costs orders which do not penalise the party making the application.
They will also be encouraged to give provisional views on the merits of particular issues if it is appropriate to do so either during the course of the trial or at an earlier stage in the proceedings.
Judges should be prepared to make a summary assessment of costs in all instances where the gross sum of costs claimed is £250,000 or less. If the sums claimed are too high for summary assessment the court should always consider ordering a payment on account.
The court will also be encouraged to make more use of its power to award costs to discourage the parties from behaving unreasonably, for example by awarding costs on an indemnity basis where a particular allegation is abandoned. If possible, these costs will be assessed summarily and be made payable forthwith.
Witness statements must be as short as possible and cover only those issues on which the witness can give relevant evidence. The parties should use headings in the witness statements to identify which paragraphs of the statements relate to which of the issues in the List of Issues. In appropriate cases the court will impose a limit on the length of witness statements.
Parties should be aware that costs sanctions may follow if they serve unduly lengthy witness statements or statements which contain material which is not relevant.
Possible expert disciplines should be identified at the first CMC but permission for expert evidence should not be given until after the List of Issues has been formulated and judicially settled.
The List of Issues should identify the expert issues, either when it is first produced or subsequently when they have been properly identified. Experts' reports should be framed by reference to those issues. They should be as short as possible. Again, the court will always consider limiting the length of expert reports.
No trial should be listed for more than 13 weeks. To put that in context, the BCCI trial had the two longest opening speeches in English legal history - 80 days for the BCCI liquidators and 119 days for the Bank!
Provisional time limits will be set for every component of the trial, for example, openings, the examination-in-chief (if any), cross-examination of all witnesses and closing speeches.
After the conclusion of the trial period, the court will then decide whether the recommendations should be adopted permanently, either in whole or in part. Any necessary changes to the Commercial Court Guide will then be made. If it is a success, expect there to be changes across the board in other courts.
Here are some useful action points.
Are you ready to rumble?
- Familiarise yourself with the changes being made. This will allow you to address them with senior management within the organisation.
- Review your pre-action protocol procedure for cases likely to proceed in the Commercial Court. Parties are now only required to comply with minimum expectations of the existing pre-action protocol regimes.
- Allocate a senior representative within the organisation to take ownership of each case. This should be someone in a senior management role. Consider creating an internal procedural code to ensure this happens. If you already have such a code in place, consider amending it if appropriate.
- Ensure that the senior representative is fully apprised of every material aspect of the case and made aware of any significant developments. Provide periodic updates at appropriate intervals.
- Arrange a meeting with the senior representative to ensure that he/she is made aware of their role in the litigation and the commitment they will need to give. The role must be taken seriously.
- Be objective about the issues you wish to pursue/defend. The court will use its power to award costs to discourage the parties from behaving unreasonably, for example by awarding costs on an indemnity basis, where a particular allegation is abandoned.