How often does a practitioner come across a litigant who is satisfied with the time and cost that it takes to obtain a resolution of their dispute in the court system? Not often. The chances are that most litigants (and their solicitors) would not be adverse to a move that would encourage early settlement of disputes. The encouragement of early dispute resolution has been a focus in various jurisdictions for some time and this article considers, in light of reforms of civil procedure in England (known as the Woolf reforms), whether settlement of disputes could be facilitated in Victoria by the exchange of information and documentation before proceedings are even issued.
Pre Action Protocol to encourage settlement
A mediation that takes place after proceedings have been issued is not considered in England to be an effective way to encourage settlement. Parties in some types of dispute in England now have a statutory requirement to 'put their cards on the table' even before litigation has commenced. Fundamental changes to the rules of civil procedure introduced in 1999 by Lord Woolf, the Master of the Rolls, include a process intended to encourage early settlement of disputes and to avoid recourse to the courts. This process is set out in the 'Pre Action Protocol', which forms part of the Civil Procedure Rules 1999 and requires disclosure of information and evidence at the outset of any claim being made in writing against another party.
The Pre Action Protocol currently specifically applies to clinical disputes, personal injury, defamation, construction and engineering, professional negligence and judicial review cases. There is also a general Pre Action Protocol Practice Direction (Practice Direction), which makes it clear that the courts expect litigants to follow the spirit of the Practice Direction and behave reasonably in the exchange of information and the disclosure of documents where a specific Pre Action Protocol does not apply.
The Pre Action Protocol is designed to promote an open approach. In summary, it requires each party to prepare and exchange information about its case prior to the issue of proceedings. The claimant (the term 'plaintiff' is no longer used) is required to give concise but sufficient details of the claim to the defendant and to enclose copies of essential documents on which the claimant relies. In the same correspondence, the claimant must request copies of essential documents that they require. The type of document required will depend on the nature of the case but these documents cannot be used for any other purpose other than resolving the dispute unless the disclosing party agrees. In addition, the claimant is required to include in the correspondence a request to enter into mediation or another form of alternative dispute resolution and must state that proceedings will be issued within a reasonable time unless a full response is not received within the time limit stipulated.
All these measures are intended to inform the defendant at the earliest stage possible of the case against them. The defendant must respond to the claimant's allegations within a strict timetable stating that parts if any of the claim are admitted and where it is not admitted identifying which of the claimants contentions are in dispute by giving detailed reasons. The defendant must also produce essential documents on which they intend to rely and must indicate whether they will agree to mediate. If proceedings are subsequently issued, the judge in England is entitled to exercise discretion to apply sanctions where parties have failed to comply with the Pre Action Protocol. These sanctions include making orders for costs and awarding interest. Where parties settle the main points of dispute in a case but are not able to agree on the question of costs, then an application can be made to the court seeking an order to direct that the costs of the dispute be assessed by a judge.
This pre action process allows both parties to be better informed as to each other's position and to review the merits of their respective claims and defences, all of which is directed towards encouraging early settlement of cases prior to issuing proceedings.
A disadvantage of the Pre Action Protocol is, of course, that significant costs are likely to be incurred by the parties in preparing the information to provide to each other. This disadvantage is seen in England as being justified by the fact that by the early exchange of information and documents, the parties have a greater likelihood of reaching settlement of the case themselves before embarking on even more costly litigation. While practitioners in England are still assessing the success of the measures introduced in 1999 to encourage early settlement, early evidence shows a reduction in the issue of writs as a result of the reforms.
Applying a protocol in Victoria
Would such a Pre Action Protocol be appropriate in Victoria? The formal framework for alternative dispute resolution as part of the litigation process in Victoria in the Supreme Court and the Federal Court is the court ordered mediation process that can take place at any time after proceedings have been issued. Mediation can and often does occur at an early stage in the proceedings in the Federal Court (and there is no bar in either jurisdiction to a consensual mediation taking place at any time) but in the Supreme Court mediation will often be directed to take place shortly before trial. While the looming costs of the trial can provide the necessary incentive to settle, the legal costs will have already mounted significantly by the time the mediation is held. If no agreement as to those costs can be reached by the parties as part of a settlement of the claims, then the parties may have little choice but to take the matter to trial.
In formulating the Pre Action Protocol, Lord Woolf identified cost, delay and complexity as being problem areas of English civil litigation. The fact that writs were often issued within just 14 days of a letter before action or letter of demand, did not give the defendant a fair chance to assess the case made against them and left little time for any serious consideration of the merits of the claim before both parties found themselves embroiled in a costly process. Parties also rarely collated or reviewed supporting evidence before proceedings were issued.
In most cases in Victoria, practitioners are a little more generous with the amount of time that is allowed to pass between the delivery of a letter of demand and the commencement of proceedings. However, the problems identified by Lord Woolf in the English system are not uniquely English; they apply equally in Victoria. In Victoria, litigants reassess their positions after discovery, and the concept of an exchange of evidence and supporting documents prior to the issuing of proceedings would therefore assist in focusing the parties' minds at an earlier stage on the merits of the case. This could keep a number of disputes out of the courts (although it is unlikely that this would be effective in complex litigation involving multi parties).
In conclusion, there is much to be gained in Victoria from the system that has been adopted in England of requiring parties to exchange information prior to the commencement of proceedings.
- A Pre Action Protocol such as exists in England would help parties to avoid delay and to keep costs down by the early disclosure of documents.
- A Pre Action Protocol would serve to clarify issues and, as long as it takes place within a statutory framework providing the parties with the necessary protections concerning confidentiality of documents, it should encourage parties to at least fully assess the merits of their case before proceeding to litigation.
- A Pre Action Protocol could also ensure that parties take into account at an early stage the interests of all of those who may be affected by the dispute and focus on whether any application needs to be made for relevant documents from a third party.
- If proceedings are subsequently commenced, then the court could be invited by any party to treat the standards set out in a protocol as the normal reasonable approach to pre-action conduct.
This article provides a summary only of the subject matter covered, without the assumption of a duty of care by Freehills. The summary is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.