Tony refers to a recent report, Civil Justice Reform Evaluation, in which there is anecdotal evidence that in some areas the use of the protocol has had some impact on the amount of litigation going through the courts. However, the report goes on to state that "a worryingly high percentage of the respondents" to surveys observe that judges are failing to apply cost sanctions against those that do not comply with the protocol.
Bearing in mind that the use of cost sanctions by the courts is the only factor that gives these pre-action procedures teeth, those concerns strongly suggest that the system is neither working particularly well nor indeed is likely to do so.
Not only that, the procedures themselves have very real downsides. First, they are going to result in unproductive front-end loading of costs.
Second, they provide ample opportunity for defendants' representatives, whose spots have not changed, to drag out matters, thereby further increasing the cost to the claimant of securing justice. I have also seen the procedures used as fishing expeditions by parties that had no intention of reaching settlements.
I have seen the protocol used as a fishing expedition by parties that had no intention of reaching a settlement
One can only speculate why it is that the judges are apparently reluctant to apply cost sanctions against claimants that fail to comply with these procedures. One reason may be the considerable uncertainty about how these sanctions are to be applied in practice. The theory is that the innocent party should be indemnified from the costs it incurs as a result of the other party's failure to apply the protocol. But how can a judge be sure that those costs would not have been incurred in any event?
As far as methods of improving how the pre-action protocol works in practice, one possibility might be to provide a mechanism for filtering those cases for which the procedures would be appropriate from those in which it would be unlikely to assist. The same mechanism could be used to resolve arguments that arise along the way over compliance. Could not such a function be performed by judges or other court officials? Alternatively, what about a system for referring such matters to a senior member of the Technology and Construction Solicitors' Association for instance, or the barristers' association, TECBAR?
Turning to other methods for achieving the objectives behind the protocol, there are a number of possibilities. Although they involve the intervention of a third party, and therefore would perhaps result in extra cost, I believe that early neutral evaluation, or mediation, would provide a much more effective method of keeping cases out of court. Any extra cost would be more than offset by the improved prospects of success.
Another possibility lies much closer to home. Why not introduce adjudication, on the lines of the statutory model introduced by the Construction Act, as a mandatory requirement before court proceedings are issued? Such a process would combine the strength of early neutral evaluation with the making of a binding decision by a third party, albeit on a provisional basis. The huge success of the statutory adjudication process suggests that the value of a decision cannot be underestimated.
Dominic Helps is a partner in solicitors Shadbolt & Co. He can be contacted on Dominic_Helps@shadboltlaw.com or alternatively by telephone on 01737 226277.