Pre-action protocols outline the steps parties should take to seek information from, and provide information to, each other about a prospective claim. There are a variety of pre-action protocols covering personal injury claims, dilapidations claims, construction disputes and so on.
Complying with a pre-action protocol can take up to four months. What happens is a letter of claim is sent and the other side has 21 days to acknowledge receipt. There is then a further three months in which to investigate the claim and any allegations made. Understandably, parties may sometimes wish to try and speed the process up but bypassing the protocol process can have dire consequences.
The aim of a pre-action protocol is to encourage the exchange of early and full-information about the prospective claim to enable the parties to avoid litigation by agreeing a settlement of the claim before proceedings are commenced. Costs penalties can be imposed at the end of a case if a pre-action protocol has not been followed.
In the case of Charles Church Developments Limited v Stent Foundations Limited  EWHC 855, the claimant issued a claim despite the fact that no attempt had been made to comply with the relevant pre-action protocol. The one that applied here was the pre-action protocol for construction disputes. Once a defence had been filed, the claimant’s solicitors wrote to the defendant suggesting a stay “akin to that of the protocol”.
The defendant persuaded the Court that disclosure and exchange of experts’ reports should take place before a short stay. After both sides incurred further costs dealing with the directions, the defendant made an application that the claimant should pay its costs to date as it had been dragged into Court proceedings due to the claimant’s failure to comply with the pre-action protocol.
The Court found that there was a serious breach of the pre-action protocol and that it was a case which probably would have settled had proceedings not been issued. Unusually, the Court felt it was appropriate to deal with costs at an early stage, rather than leaving it open for debate at any subsequent mediation. The Court ordered the claimant to pay 50% of the defendant’s costs and further ordered that it should bear 50% of its own costs. As already mentioned, it is common for parties to be penalised at the conclusion of a matter but not at such an early stage.
The lesson here is an obvious one. Do not rush in and issue proceedings. Always provide time for the defendant to investigate the claim before serving proceedings, subject of course to any pressing limitation period.
If you are a defendant, then again the lesson is an easy one. If the claimant just serves you with a claim then consideration should be given to making an application such as the one made by the defendant in the Charles Church case. If successful, an early adverse costs order may assist with negotiations as it means that part of the claimant’s potential claim has disappeared early on.