U.K. Civil Procedure Rules – 15 Months On …

(Sea Venture Volume 19)

In ''Sea Venture'' Vol.18 the article ''New Civil Procedure Rules in the UK'' set out the overriding objective of the new rules, namely ''to deal with cases justly.'' Some 15 months on after the Civil Procedure Rules (''CPR'') came into force, this article considers the extent to which this objective has been met in the Commercial Court where the majority of members' disputes will be heard.

Old authorities:

The CPR were heralded as a huge change in the English litigation system, and it was emphasised that the authorities from the old Rules of the Supreme Court (''RSC'') which applied before the CPR came into force were no longer of any application. It was held that in view of the overriding objective of the CPR to deal with cases justly, interpretations of the RSC could not necessarily be followed when considering the meaning of the equivalent new rule even where the two provisions were identically worded¹. The latest trends, however, indicate that where the CPR have not changed the law substantially the courts will at least consider cases decided under the RSC, even if they then also consider how best to ''deal with matters justly''.

Pre-action protocols2:

The main difference under the CPR is approach – the days when a party could commence proceedings as a means of forcing the other party's hand have now gone. The pre-action protocols apply to all cases, even those for which there is no direct protocol, and mean that you must be ready to proceed with an action when you commence it and that, as a defendant, you must respond immediately to proceedings brought against you. The court will place weight on whether a party has been heavy-handed in starting litigation and unwilling to consider settlement when awarding costs and will impose penalties as it considers appropriate. In the past a ''protective writ'' was often issued to comply with the Hague/Hague-Visby one year time limit for commencement of cargo claims but the proceedings would lie dormant, sometimes for years, while the parties negotiated. This approach will no longer be tolerated under the CPR due to the impact of the pre-action protocols coupled with strict timetables and the court's power to strike out (see below). Costs will be front-loaded but the result is that information will be available at an earlier stage. Both of these factors should help parties to focus on bringing disputes to an earlier resolution.

Amendment/Extensions of time:

Tighter timetables and stricter adherence to the rules do not mean that the court will never allow a party to amend its statement of case (as pleadings are now known) or extend time. For example, if an application is made to allow evidence to be adduced late, the court will consider whether its inclusion or exclusion will cause prejudice to either party and will proceed in whatever way leads to the most fair solution³. The CPR do provide greater guidance for the courts in all such cases: CPR 3.9 sets out examples of circumstances the court should consider when granting relief from sanctions and it appears that CPR 3.9 is a compulsory checklist which must be followed in every case⁴. The courts will not only apply a rigid formula, however, but will view each application on the basis of what justice requires.

Case Management Conference:

The Case Management Conference (''CMC''), which comes before the parties have completed disclosure (formerly discovery), was considered to be a major change under the CPR. In fact, in the Commercial Court, where a directions hearing was standard after discovery under the RSC, the difference has been almost indiscernable and the initial concerns over the CMC's have proved to be unfounded. The main difference is that the judge will set a timetable with more rigidity than previously. The parties' autonomy to fix their own timetable and to vary this at will has been removed. The judge is also likely to make an order for Alternative Dispute Resolution (''ADR''). Even where one of the parties is against the idea of dealing with the dispute in this way, the court will nonetheless consider making an order for ADR if it might provide a viable means of settlement and avoid the cost of litigation⁵. Recent statistics show that the number of commercial cases commenced dropped by over 16% in 1999 when compared with the previous year and that High Court proceedings overall dropped by 40% since the rules came into force in April 1999. The Centre for Dispute Resolution (''CEDR''), an ADR organisation, has reported that it has mediated over 450 cases referred by the Commercial Court between April 1999 and March 2000 (approximately 3% of these were shipping related).

Disclosure:

The rules on disclosure have also changed, as referred to in the previous article on the CPR. The rules have been challenged, though, in a number of respects, and the courts have shown a willingness to reconsider the provisions of the CPR where they do not work in practice. For example, as drafted, CPR48.7(3) allowed solicitors to disclose confidential client information to the court and opponents on an application for wasted costs. When challenged the court accepted that such disclosure would contravene the client's right to privacy and to a fair hearing under articles 6 and 8 of the European Convention on Human Rights and that legal professional privilege is a common law right which can only be overturned by a specific act of parliament⁶. An amendment was subsequently made to the CPR to reflect this.

In the Commercial Court, the rules have also been changed so that it is no longer necessary for the client to sign the disclosure statement in the list of documents as it was realised that this was impractical given the types of disputes which are referred to the Commercial Court.

Experts:

There is no presumption in favour of a single expert in the Commercial Court but in all cases the Commercial judges will consider whether a single expert is appropriate and it appears that they are more likely to favour this when the amount in dispute is not large. Similarly, there has been an example of an Admiralty Judge refusing to allow the parties to call separate experts to deal with an issue of navigation and instead insisting on being advised by a Nautical Assessor, in effect, a single expert.

The CPR emphasise that the expert's primary duty is to the court and the interests of justice, rather than to the party instructing him. A Guidance Note for experts has been introduced and must be followed closely. The court will bar an expert's evidence if it shows that he has not understood the requirements of an expert under the CPR, either as to his responsibilities or as to the requirement to give details of his qualifications and the other matters set out in the Guidance Note⁷.

CPR 35.10 provides that an expert's report must state the substance of all material instructions, whether written or oral, pursuant to which the report was written and that these instructions shall not be privileged from disclosure unless the court is satisfied that there are reasonable grounds to consider the instructions were inaccurate or incomplete. An application was made to challenge the provision but it failed at first instance and the appeal to the Court of Appeal did not proceed⁸. The provision therefore remains as originally drafted for the time being.

Part 36 offers9:

The CPR offer the claimant as well as the defendant the opportunity to make an offer in settlement of the dispute with costs and interest consequences. The provisions were thought to be quite harsh but the courts have taken the approach that where the claimant is awarded a sum greater than his own Part 36 offer, enhanced interest of 10 % above base rate should be awarded on the whole of the judgement, excluding interest, from the latest date on which the defendant could have accepted the offer without needing the permission of the Court. The court will then evaluate whether this would create an injustice or result in a disproportionate advantage to the claimant or a disproportionate disadvantage to the defendant. The rational is that the CPR have teeth but if the courts do not exercise the powers they have been given the CPR will be redundant¹⁰.

Strike out:

The CPR are designed to prevent delays in the conduct of litigation. The courts have indicated that although they will still strike out claims for want of prosecution, the effect of their new wider range of powers means that they will not do so in every case. Instead, orders can be made concerning which issues can be dealt with in the action, what evidence can be adduced, and costs generally. In appropriate cases, however, the court will still strike out claims for want of prosecution and will not necessarily allow new actions to be commenced even where they are within the limitation period¹¹.

Courts' time:

The courts are also very protective of their time and resources and will give no leeway when to do so would delay a trial date or waste their time. It is therefore important to ensure that witnesses and experts are available for the time fixed for the trial. If they are not, the court will not allow an adjournment and is likely to proceed without the evidence you wish to call.

Arbitration:

Although the CPR have no direct application to arbitration, the LMAA arbitrators have set out new guidelines for their arbitrations which accord with the CPR insofar as they encourage tighter timetables, greater compliance with directions and the reduction of costs wherever appropriate (for example, no unnecessary applications to tribunals or copying in of correspondence to the tribunal unless required).

Admiralty Claims:

Practice Direction 49F under the CPR has given certain new powers to the Admiralty Court. For example, in an action in rem, once an acknowledgement of service has been filed the court can determine the amount and form of any security sought¹². It may also, at any later stage, reduce the amount of security to be provided¹³ or allow a claimant to re-arrest a vessel in order to obtain further security¹⁴ (in contrast with the previous position under Article 3 of the 1952 Arrest Convention).

Summary:

The CPR have lived up to expectations. They have been put into effect with enthusiasm by the judges and have certainly altered the system of litigation although it is still early days to calculate whether the front-loading of costs in making sure that an action is ready for trial and that all evidence is available at an early stage is compensated for by a speedier and overall cheaper resolution of disputes. Certainly the next 12 months will see more disputes being referred to one form of ADR or another and with the introduction of the Conditional Fee Agreement regulations, which make success fees and insurance premiums recoverable from a losing opponent, we are still in the midst of change rather than in a position to review its final effects. Hopefully, though, members are seeing a quicker turn around in the resolution of their disputes and the consequent advantages to their business and ongoing business relationships that this can bring.

 

With thanks to Sally-Ann Underhill of Richards Butler for preparing this article.

 

¹ Natwest Lombard Factors Ltd v Arbis - The Times 10.12.99
² This subject was detailed in the Club's October 1999 circular which can be seen on the Steamship website or is available in hard copy from the Club
³ Scott William Jenkins v (1) Anthony Grocott (2) Michael John Hoyle LTL 1999
⁴ Bansal v Cheema - Civil Prcoedure News 24.5.00
⁵ Kinstreet Ltd v Balmargo Corporation Ltd - Civil Procedure News 3/2000 21.3.00
⁶ General Mediterranean Holdings SA v Patel - LSG 96/29 21.7.99
⁷ Stevens v Gullis [2000] 1 All ER 527
⁸ Burt and Anor v Greer (unreported)
⁹ Also discussed in Club's October 1999 circular
¹⁰ Little and Ors v George Little Sebire and Co - The Times 17.11.99 and All-In-One and Build Ltd v Motcomb Estates Ltd and Anor [2000] All ER (D) 180
¹¹ Security Finance Ltd v Ashton & Another - LSG 6.7.00
¹² Paragraph 6.7(2) of Practice Direction 49F
¹³ Paragraph 6.7(3)(a)
¹⁴ Paragraph 6.7(3)(b)