The amendment to ‘The Pre-Action Protocol for Professional Negligence’ came into force on 30 April 2018. This follows a lengthy pilot scheme offering adjudication of professional negligence claims that were not construction contracts.
The Adjudication Pilot for Professional Negligence Claims was originally launched in February 2015. See our previous blog post detailing this.
Ramsey J set out in the foreword, that
“…..adjudication is particularly appropriate in resolving disputes in professional negligence cases where without some fundamental view on the merits, the parties may not be able to resolve their dispute….”
Adjudication is a formal method of ADR (Alternative Dispute Resolution) already used extensively in construction disputes. This was introduced as a compulsory step for construction cases by the Housing Grants Construction and Regeneration Act 1996. It is now being rolled out for Professional Negligence disputes.
The change to the protocol covers what information should be included in a letter of claim, especially whether the claimant wishes to refer the dispute to adjudication.
If they do, the claimant should propose three adjudicators OR seek a nomination from the nominating body. If they do not wish to refer the dispute to adjudication, they should give reasons.
The aim is for certain claims, adjudication will provide a cheaper alternative to issuing proceedings.
Pros & Cons
Key advantages of Adjudication
- It is possible to obtain a reasoned judgment enforceable in Court for much lower cost than using Court proceedings.
- The scheme can work with the pre-action protocol claim and response letters as submissions from the parties.
- The PNBA (Professional Negligence Bar Association) appointed a panel of adjudicators for the pilot. They all hold many years of experience in this type of claim on standard terms of business and cost.
- The pilot scheme itself was designed as a precedent which can be adapted by agreement for individual cases.
- Interlocutory points/preliminary issues could be adjudicated if a barrier to other forms of ADR like mediation and/or as a cheaper and quicker alternative to Court hearings.
- There is the chance of full recovery for damages in successful claims, as well as no payment for defendants if the claim fails.
- The traditional ‘temporarily binding’ adjudication procedure allows dissatisfied parties to continue with the litigation afresh without the need for an appeal.
- An adjudicator can be chosen with expertise in the type of claim concerned.
- There is likely to be scope for costs sanctions for unreasonable failure to engage in adjudication similar to those applied in mediation cases after Halsey v Milton Keynes NHS Trust  EWCA Civ 576 and the wider obligation referred to in PGF II SA v OMFS Company 1 Ltd  EWCA Civ 1288 (23 October 2013).
- There is considerable flexibility for parties to be creative in the procedure and scope to suit their particular case.
- The determination of the costs of the action and/or adjudication can be limited, included or excluded altogether from the scope of the adjudication. This may make attractive terms for “After the Event” insurance possible as well as potentially being able to limit costs to the amount insured by “Before the Event” cover.
- On the positive side it is hoped that this obligation will now encourage use of adjudication as an ADR option with a view to resolving disputes more cheaply and quickly, especially those of lower value where funding for litigation to trial is likely to be prohibitive.
Shortcomings to the Revisions
There are obvious shortcomings which the PNLA (Professional Negligence Lawyers Association), are pursuing with the Civil Procedure Rules Committee, notably:
- The amendment is likely to cause considerable anxiety as things stand for those drafting claim letters, especially litigants in person.
- It is difficult for claimants to address the question of adjudication and weigh up the pros and cons without even having seen the Response Letter.
- It is disappointing that there is no corresponding requirement for defendants to address adjudication at all in the Response Letter.
- There is no reference to the Pilot Pack which includes guidance, precedent documents and also a list of PNBA member adjudicators who have agreed to standard terms of appointment and fees. The links for the Pilot pack are:
(NB the 25 May 2016 Pilot Pack supercedes the 1 February 2015 version, and claims are no longer limited in value to £100,000 as was previously the position.)
With the recent and ongoing substantial increases in Court issue fees and application fees, and delays in court proceedings, parties are looking widely at Alternative Dispute Resolution. Options include Mediation and Early Neutral Evaluation, which could be utilised before the alternatives to Court proceedings such as Arbitration and Adjudication. The latter has proved successful in construction disputes, where it can be imposed at the election of one party. This is because Adjudication is implied in to construction contracts by statute. However, early procedures for negotiated settlement are usually a first choice, before incurring costs of formal proceedings, whether Adjudication, Arbitration or Court.
Given the support of the judiciary and the high calibre of the Adjudicators involved, it is surprising that take up of the initial pilot scheme was low. Reasons may include:
- Adjudication isn’t common outside of the construction industry. Both lawyers and their clients may be reluctant to engage in an unfamiliar process.
- Adjudication is suited to issues where the facts aren’t widely disputed, and where only two sides are involved.
- Adjudication is subject to tight time scales and is concluded relatively swiftly.
- Adjudication is often seen as providing a rough and ready result.
- Opportunities to challenge the Adjudicator’s decision are limited.
- Often, insurers are representing one of the parties in a professional negligence dispute. Insurers may be unwilling to bind themselves to Adjudication.
- With its accelerated decisions, “mission fatigue” for the Claimant isn’t a significant factor in Adjudications, (unlike Court proceedings).
- An unsuccessful Defendant has to pay what the Adjudicator awards. The Court would be unlikely to grant any stay of execution.
- If a Claimant wins on Adjudication, the Defendant has to start proceedings to reclaim the money paid whilst also paying for costs of the Adjudication (if awarded) and carrying the costs and delay of Court proceedings.
It may be that with the revised fee scale for the Adjudicator’s fees, delay and increased expense of Court proceedings (including imposition of “costs budgeting”), and increasing awareness, adjudication could become more attractive to parties considering an alternative. This is especially so because any “opting out” of adjudication in professional negligence claims now need to be justified from the start in professional negligence claims.