Pre-action conduct in commercial disputes

Pre-action conduct in commercial disputes


The introduction of the pre-action protocol has significantly reduced the prospect of being ‘ambushed' by proceedings in Northern Ireland, explains Amanda Wylie

Neither the Woolf reforms nor the Jackson reforms have been extended to Northern Ireland, where civil procedure continues to be governed by the Rules of the Court of Judicature (NI) 1980, unbound by costs budgets and iron-fisted sanctions. That is not to say, however, that litigating commercial disputes in Northern Ireland is the same today as it was in the 90s.

In particular, there continues to be a shift in focus to the overriding objectives: that the parties should be on an equal footing, that litigation is dealt with expeditiously and fairly, and that costs are proportionate to the size of the claim and complexity of the issues.

In an attempt to promote the overriding objectives and to ensure the exchange of information at an early stage, the Northern Irish courts have been introducing pre-action protocols applying to various types of claim.

Following the introduction of pre-action protocols for personal injury claims in 2008, for clinical negligence claims in 2009, and for defamation claims in 2011, the courts further revolutionised pre-action conduct in Northern Ireland by introducing a pre-action protocol for commercial actions in 2013.

Pre-action protocol

As the name suggests, this protocol applies to ‘any cause relating to business or commercial transactions’, including most, if not all, actions arising from professional negligence. These are cases included in the commercial list, a specialist list with a designated commercial judge within the Queen’s Bench Division of the Northern Ireland High Court.

A plaintiff (aka claimant) will not be required to comply with the protocol in certain exceptional circumstances (for example, a claim for enforcement of an adjudicator’s award, or a claim for interim injunctive relief).

The protocol sets out various requirements in respect of the plaintiff’s letter of claim, which should set out a clear summary of the facts on which each claim is based, the nature of the relief claimed, and the names of any experts already instructed. The defendant is required to respond to the plaintiff within 21 days, setting out the facts which are agreed or not agreed, the basis for any rejection of the allegations and claim for contributory negligence, and the names of any experts already instructed on their behalf. The plaintiff must then provide a letter of response to any counterclaim within 21 days.

The parties are also required to consider a pre-action meeting with a view to narrowing the issues and considering some form of alternative dispute resolution. Failure to comply with the protocol may be taken into account by the court when it comes to consider the issue of costs. It is unlikely, however, that the court will stay proceedings to allow the steps set out in the pre-action protocol to be completed.

Cost penalties

The introduction of the pre-action protocol has significantly reduced the prospect of being ‘ambushed’ by proceedings in Northern Ireland. However, proceedings continue to be issued in circumstances where there has been little or no attempt to comply with any relevant pre-action protocol and the court continues to exercise its discretion when considering the issue of costs in those circumstances.

In Monaghan v Graham [2013] NIQB 53, the High Court made it clear that parties who fail to comply with the pre-action protocol may face cost penalties.

Stressing that sanctions could apply equally to the plaintiff and the defendant, Mr Justice Stephens stated: ‘At a fundamental level the pre-action protocol is an articulation of fairness. Before proceedings are issued the plaintiff should give proper information to allow a view to be formed by the defendant. A similar obligation rests on the defendant.’

The courts have also suggested that pre-action protocols may be introduced to other types of proceedings. In Lunny v McGivern [2013] NIQB 49, although the pre-action protocol for commercial actions did not apply, Stephens J encouraged consideration to be given to extending the protocol to cases arising from property disputes, and penalised the plaintiff for failing to comply with the spirit of the protocol by awarding only half of the costs claimed.

Amanda Wylie is managing partner of Kennedys’ Belfast office