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Litigation Case Note: Parties Seeking Stays of Proceedings to Conduct Negotiations

Friday, 18 May 2012

The litigation process can be exceedingly costly for both parties in a dispute. The civil procedure rules (CPR) which have applied to all civil cases in England and Wales since 1999 were designed to improve access to justice by making legal proceedings cheaper, quicker and easier to understand.

A recent application to stay proceedings in Higginson Securities (Developments) Limited & Another v Hodson [2012] has highlighted the importance of these priorities in the context of parties’ and their advisors’ behaviour prior to court proceedings.

The Overriding Objective

Set out in Part 1 of the CPR is the Overriding Objective which emphasises the court’s responsibility to deal with cases justly. This includes: saving expense; dealing with the case in ways which are proportionate to the amount of money involved, the importance of the case and the financial position of each party; and ensuring that it is dealt with expeditiously and fairly.

Pre-Action Protocols

In addition to the Overriding Objective, particular areas of litigation have Pre-Action Protocols to guide litigants prior to proceedings arriving in court. In the Higginson case the Pre-Action Protocol for Construction and Engineering Disputes applied; clause 1.5 emphasises proportionality:

"The overriding objective (CPR rule 1.1) applies to the pre-action period. The Protocol must not be used as a tactical device to secure advantage for one party or to generate unnecessary costs. In lower value claims such as those likely to proceed in the county court, the letter of claim and response should be simple and the costs of both sides should be kept to a modest level. In all cases the costs incurred at the Protocol stage should be proportionate to the complexity of the case and the amount of money that is at stake."

Clause 5 of the Protocol advocates a Pre-Action Meeting between the parties to try and settle the issues in dispute.

Higginson Securities (Developments) Limited & Another v Hodson

In Higginson the claimant issued a claim for £70,000 against an architect for negligence and over-payment of fees in relation to a property development. In the early stages of the dispute the parties were uncooperative. The defendant’s solicitor brought an application to stay proceedings on the basis that the Pre-Action Meeting had not taken place in accordance with the Protocol.

The court was not satisfied that the application conformed to the Pre-Action Protocol because the process leading up to it had not been conducted with appropriate expedition. Mr Justice Akenhead held that the Claimants could have done better producing further information requested more quickly and the Defendant could have done measurably better in producing its response much earlier than it did. Furthermore he considered the actions of the Defendant disproportionate regarding time and cost and that it had not taken a pragmatic approach to resolving the dispute. He concluded that the application should not have been brought or pursued and it was dismissed.

Rollingsons recommends seeking professional advice at an early juncture in any dispute to ensure that procedural and cost implications are properly assessed; for more information please contact James Crighton on 0207 611 4848.