THE WOOLF REFORMS

Updated: Jun 3


CONSIDER THE CIVIL LITIGATION LANDSCAPE PRIOR TO THE INTRODUCTION OF THE CIVIL PROCEDURE RULES (CPR) IN 1999.


IDENTIFY THE FUNDAMENTAL DIFFERENCES BETWEEN THE ‘OLD’ SYSTEM AND THE ‘NEW’. IN ADDITION, CRITICALLY EVALUATE THE IMPACT OF THE CPR IN RESPECT OF THE RISK AND COST TO BOTH LITIGANTS AND LAWYERS UNDER THE NEW REGIME.


INTRODUCTION The first part of this assignment compares the fundamental differences between the old and the new civil justice system. In conducting a comparison it asks why the reform was necessary. The paper conducts an analysis of the old system thus highlighting its shortcomings. This paper highlights excessive cost, delay and complexity as the defects that were seen as impairing the old system. This paper then proceeds by presenting the new civil procedure system and a focus on the key strategic changes the Woolf reform package introduced, namely, judicial case management, pre-action protocol and alternative dispute resolution. This paper critically examines the old system against the new system in an attempt to determine whether it is an achievement of Lord Woolf’s objectives. In doing so, this paper also gives some focus to the issue of costs and risk on both litigants and lawyers. THE OLD SYSTEM The Civil Procedure Rules (CPR) 1998 came into force in April 1999. They were part of a strategy formulated by Lord Woolf to overhaul the operation of the civil justice system. Prior to the Woolf Inquiry there was a general dissatisfaction with the quality of the civil justice system. The Heilbron Hodge Report described the system as being infused with ‘Dickensian antiquity’ something that was built in the Victorian age and remained ‘unmodernised’.[1] The report further went on to state the procedures under the system were ‘unnecessarily technical’, inflexible, rule-ridden’, and often incomprehensible to the litigant for whom they are ultimately designed’.[2] Slapper & Kelly outline a survey by the National Consumer Council[3] found that three out of four people in serious legal disputes were dissatisfied with the civil justice. Out of a 1,019 litigants surveyed, 77% maintained that the system was too slow, 74% said the system was too complicated and 73% said that it was unwelcoming and archaic.[4] In March 1994, Lord Woolf was invited by a conservative government to review the work of the civil courts. In determining the problems with the old landscape of civil procedure Lord Woolf in his Interim Report[5] highlighted a set of principles a civil justice system must deliver to ensure ‘access to justice’. The system should: be just in the results it delivers; be fair in the way it treats litigants; offer appropriate procedures at a proportionate cost; deal with cases with reasonable speed; be understandable and responsive to the needs of those who use it; it should provide as much certainty as the nature of particular cases allows; and be effective: adequately resourced and organised. Lord Woolf identified the ‘key problems’ facing the old system were that it was ‘too expensive, too slow and too complex’.[6] These problems were interrelated and caused by the uncontrolled nature of the litigation process.[7] Lord Woolf blamed the ‘unrestrained adversarial culture’ of the old system.[8] He noted that without effective judicial control, the ‘adversarial process is likely to encourage an adversarial culture and to degenerate into an environment in which the litigation process is too often seen as a battlefield where no rules apply’. [9] Lord Woolf described the cost of litigation as ‘unpredictable’, ‘excessive’ and ‘disproportionate’. The reason costs were unpredictable was because costs would follow the (uncertain) outcome of litigation. Second the management of the case being in control of the parties made cost an uncertainty.[10] Lastly the adversarial system encouraged excessive work[11] and the solicitors charging on a daily or hourly basis fuelled this uncertainty.[12] The excessive cost of litigation under the old system deterred people from making or defending claims. It has been highlighted there was a culture ‘to pay up, irrespective of the merits, than to defend an action’.[13] The burden on litigants was not confined to their adviser’s fees, but they were further deterred by having to pay compensation to the other side if they lost, along with having to pay the oppositions legal costs.[14] The problem of disproportionate cost was inherent, where the cost of the case often outweighed the potential benefit in bringing an action.[15] Lord Woolf was of the view it would impossible for the ordinary litigant to claim or defend small cases in the absence of legal aid, insurance backing or a guaranteed win of their case and costs.[16] Zuckerman argues the indemnity principle[17]tends to erode resistance to cost’. [18] However, under the old rules if a litigant had more financial means than the person they were suing, they would be able to use the rising cost of litigation oppressively as a weapon. For example prior to the reforms the parties would dictate how long proceeding would take.[19] If the person bringing the action delayed the proceedings, this would cost the other litigant defending the action more, in terms of money, time and worry. This caused the poorer litigant ‘unable to meet the opponent procedural stakes’ to settle on unfavourable terms.[20] Lord Woolf agreed with Sir Thomas Bingham M.R. who in Rastin v. British Steel Plc [21] pointed out that ‘delay has long been recognised as the enemy of justice’.[22] Lord Woolf observed that delays were a cause of distress to the litigant[23] and a factor, which increased the cost of litigation.[24] He further highlighted delays were beneficial to legal advisers who carry excessive caseloads with minimum possible action over maximum possible timescale. Under the old system a culture of delay developed where the parties’ legal advisers became over-indulgent to each other’s transgressions.[25] The uncertainty in determining the timescale of litigation under the old system was apparent in firstly, the delay in progressing the case. There was a general tendency by litigants to neglect progressing the case effectively, wasting time on secondary issues, over indulgence in procedural hostility to wear down an opponent.[26] Secondly, there was a widespread trend of late settlements throughout the system, ultimately this resulted in the increased cost for the litigant and wasted judicial time. Thirdly, there were delays in obtaining a hearing date because the high rate of late settlement on the day of the trial, which ‘led to overlisting by the courts in an attempt to ensure full use of judges’ time’.[27] Fourthly, there was unpredictability of the time to be taken by the hearing; this was due to no effective planning of hearings. This approach was wasteful for all concerned.[28] Furthermore, the system was incomprehensible to the layman litigant, making it impossible for them to represent them self. This presented a closed door to justice. The complexity of the system was attributable to different court rules.[29] Prior to 1999 civil cases in the County Court and the High Court were subject to different rules,[30] procedures, practices, forms and the language used was different.[31] THE NEW SYSTEM Lord Woolf's proposals were accepted by the conservative government of the day, which passed the Civil Procedure Act 1997 [32] shortly before it gave up power. Sir Peter Middleton[33] was then asked by Lord Chancellor Lord Irvine of Lairg,[34] to review of the existing reform proposals on civil justice. His report largely endorsed the Lord Woolf’s civil reform package.[35] On 26th April 1999, a unified set of rules called the CPR 1998 came into force. These have been supplemented with new practice directions and pre-action protocols. There are three main aspects to the reforms.[36] The first principle at the heart of Lord Woolf’s reports was one of judicial case management (JCM).[37] Under the new rules the judge actively plays the role of a case manager at the ‘centre-stage’ of the proceedings.[38] In carrying out this new case management function, the court must apply what is characterised in the Rules as the ‘overriding objective’. [39] Rule 1.4(2) CPR 1998 puts the court under an obligation to ‘actively’ manage cases. This includes: encouraging parties to co-operate with each other;[40] identifying issues in the dispute at an early stage;[41] disposing of summary issues which do not need full investigation;[42] helping the parties to settle the whole or part of the case;[43] fixing timetables for the case hearing and controlling the progress of the case;[44] and considering whether the benefits of a particular way of hearing the dispute justify its costs.[45] Rule 3.1(2) CPR 1998 gives the court general powers of management, which the court can call upon when seeking to reach their case management aims. Some of these include: extending or shortening the time for compliance of any rule or order;[46] adjourning or bring forward a hearing;[47] consolidating proceedings;[48] or excluding an issue from consideration.[49] The new system allocates cases to one of three ‘management tracks’[50] (known respectively as the small claims, fast and multitrack), depending upon the complexity and value of the dispute. The small claims track deals with the undemanding cases,[51] the fast track deals with more substantial disputes,[52] and the multitrack system allows a court to use a variety of procedures.[53] These changes by the standards of the old regime are quite radical, i.e. litigation is now to proceed on a timetable fixed and controlled by the courts. Under the old scheme parties would agree extensions with each other and the courts would permit them to battle continuously over what documents and information should be disclosed and at what stage. Moreover, the notion that parties should be open and co-operate towards the early and cost effective resolution of their dispute would have been seemed ridiculous under the pervious civil justice system. The ‘adversarial culture’ envisaged by Lord Woolf has been somewhat restrained by the new rules. As May L.J. stated in Burt v. Montague Wells [54] ‘[t]hose who conduct litigation really must embrace the new culture so as to avoid by co-operation the sort of useless and wasteful gladiatorial contest which has occurred here.’ If the parties fail to act in accordance with the new rules, practice directions or a relevant pre-action protocol,[55] the judge will have available several disciplinary powers. The courts will be able to refuse to grant extensions of time.[56] The court will be able to impose costs sanctions i.e. ordering a certain party to pay costs for causing delays.[57] It may also debar documents not previously disclosed to the court.[58] The courts are able to make a ‘unless’ orders[59] and the sanction of striking out a pleading.[60] The Court of Appeal in Biguzzi v. Rank Leisure plc [61] recognised that under the new CPR the courts had much wider powers (than under earlier rules) to impose sanctions and these should be used fairly without resorting to the ‘draconian step of striking the case out’.[62] There are problems with JCM principle. A recent study of court management in the United States by the RAND Corporation shows that JCM tends to proliferate costs for the litigant.[63] Second, Zander has argued JCM especially increases discretionary decisions therein creating incongruous judgments throughout the system.[64] It has been argued that the JCM in order to function effectively will need complex IT systems (i.e. software such as QB Masters’ Computer Diary).[65] The availability of such equipment along with the trainability of personnel has been criticised as a dependable ‘shortcoming’.[66] However, the Civil Justice IT Strategy Development Group have been charged with the task of exploring long term possibilities and making recommendations for the use of IT in civil justice over the next five to fifteen years.[67] The second key feature of the new system is the introduction of the ‘pre-action protocol’. These are ‘statements of understanding between legal practitioners … about pre-action practice and which are approved by a relevant practice direction’.[68] Under the old system courts could only start supervising the progress of a case and the way it was conducted once proceedings had been issued. Before the courts were invited to supervise, lawyers were free to prolong correspondence with lawyers on the other side of the dispute, at the expense of the litigants. Currently, the rules allow new pre-action requirements to be enforced. Various protocols have been provided for the largest areas of litigation, for example, in construction and engineering disputes, defamation claims, professional negligence, clinical negligence and personal injury cases. The aims of pre-action protocols are: to open channels of contact between the parties at the earliest opportunity; to generate the best exchange of information; to generate beneficial pre-action investigation; and to encourage a settlement before proceedings reach the court.[69] The new rules also introduce the feature of early settlement or alternatives to going to court. For example part 36 offers are designed to induce settlements.[70] Moreover the court, as a part of its ‘active case management’ is obliged to encourage and facilitate the use of Alternative Dispute Resolution (ADR).[71] The court is permitted to stay proceedings to permit the parties to employ ADR, either where the parties themselves request it or where the court considers it would be appropriate.[72] The downside of this is if more people turn to ADR (i.e. arbitration instead of litigation) this means we will have less disputes going through the courts. Thus our common law system would not represent the true state of the law because the courts would be dealing with less important cases. The English legal system will become divorced from the issues, which will be dealt with in private under arbitration. Lord Woolf recognised the reduction of cost was paramount to the reform efforts.[73] As a result, JCM decisions concern reducing the scale of costs by controlling the conduct of proceedings.[74] Paradoxically because costs are inextricably linked to JCM, costs have become an issue of prominence.[75] As with the previous rules, the court has discretion in determining cost orders to reflect its approval or disapproval with the way parties have conducted litigation.[76] The major change is the emphasis that the courts now place on all of the circumstances of the case when making such orders.[77] The perceived conduct of the parties both before and during the litigation will therefore be of greater importance,[78] as will the reasonableness of the issues raised by the parties.[79] The courts available discretion in determining cost orders renders the question of cost paradoxically unpredictable to the litigant. It therefore makes it difficult for legal representatives to advise litigants of the cost risks in litigation. If this uncertainty becomes prevalent, the CPR would make litigation more hazardous than before. The CPR attempts to make costs more predictable, it has done this by introducing fixed costs to a limited extent.[80] Moreover, the overriding objective entails a requirement of proportionality, which is applied to the old system of calculating recoverable costs.[81] The CPR has attached the requirement of proportionality to the standard basis of calculating recoverable costs. Further, solicitors are required under their own rules of conduct, to provide litigants with information as to costs so that they can exercise greater control of the expenses, which is incurred by their lawyers on their behalf.[82] This was the position under the old system and it is submitted, litigants do not need information as to the cost of litigation. They need sound advice of the likely outcome of their case, so that they can decide whether the proposed investment in litigation is worthwhile. The court may also govern the costs payable by a client to his solicitor. The court has a supervisory jurisdiction to review fee arrangements made by solicitors to ensure the clients are treated fairly.[83] Rule 48.7 CPR allows the court to make an order under s. 51(6) of the Supreme Court Act 1981 which bars a legal representative from recovering a ‘wasted costs’ which has resulted from his unreasonable or negligent act or omission. Under the old rules the presumption was a lawyer’s conduct would have to amount to an oppressive and improper nature. The new CPR makes it clear simple negligence is required. If a lawyer is sloppy and slow in conduct, he runs the risk of having to pay the opposition’s costs. CONCLUSION The pitfall outlined in the old system of parties using ‘using the rising cost of litigation oppressively’ has not effectively been addressed by the new rules. Disputes are adversarial in character and in procedure litigation is used discordantly. The court can discipline parties through its JCM and condemn such practice with a cost order.[84] Moreover, Burns has argued that the new system has been more expensive than the old system for some litigants. He argues the imposed timetable compels the parties to spend time and money processing their cases regardless of whether they are going to settle or not.[85]A survey, which sought the views of heads of legal departments of UK companies and public sector bodies, has confirmed a divided view on costs under the new system.[86] Virtually half of the litigants surveyed were of the view costs had not been affected. Furthermore, 19 per cent of the respondents claimed costs had risen. But a conference on Woolf held by CEDR found that although costs had increased at the start of litigation the overall cost was lower due to the new rules inducing early settlement. [87] Part of the motivation behind the new rules was to expedite the procedure and induce more disputes to be settled early through negotiation between the parties or ADR. The evidence has shown some success in this respect. However, there is some evidence that the new unified system of rules and procedure are being subject to diverse interpretation by judges across all civil courts.[88] Two recent Papers published by the Lord Chancellor's Department[89] have noted an overall drop in the number of clams and increase in the number of early settlements, general satisfaction with the new rules but some lingering concerns over cost.


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FOOTNOTES

[1] Heilbron & Hodge, Report by the Independent Working Party set up jointly by the General Council of the Bar and Law Society “Civil justice on Trial: The Case for Change (London: 1993), at Para 1.7. (i), p. 4. [2] Ibid. at Para 1.7. (ii), p. 4. [3] National Consumer Council, Seeking Civil Justice: A survey of people's needs and experiences (London: National Consumer Council, November 1995). [4] Slapper & Kelly, The English Legal System, 6th edn., (London: Cavendish Publishing Ltd, 2003), p. 263 [5] Lord Woolf M., R., Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (London: HMSO, 1995), at the Department of Constitutional Affairs website at http://www.dca.gov.uk/civil/interim/woolf.htm Chapter 1, Para. 3 [6] Ibid. Chapter 2, Para 1 [7] Ibid. Chapter 3, Para 1 [8] Ibid. Chapter 4, Para 1 [9] Ibid. Chapter 3, Para 4 [10] A party to the action could protract proceedings and this would have a bearing on the other party’s costs. [11] In that every aspect of a case be fully investigated. [12] Lord Woolf M., R., Interim Report, Chapter 3, Para 22 [13] Ibid. Chapter 3, Para 13 [14] Zuckerman, ‘A Reform of Civil procedure – Rationalising Procedure Rather than Access to Justice’, [1995] 22 JLS 155 [15] Symphony Group plc v. Hodgson [1993] 4 All ER 143 involved a supplier of fitted kitchens who stopped a £10,000 a year employee from taking up a job with a competitor, this cost the employer £100,000. [16] Lord Woolf M., R., Interim Report Chapter 3, Para 18 [17] The loser in litigation pays the winners costs. [18] Zuckerman, ‘Lord Woolf’s Access to Justice: Plus ca change…’, [1996] 59 MLR 773 at p. 778 [19] Zuckerman argues lawyers had an economic incentive to protract proceedings. Zuckerman, ‘Lord Woolf’s Access to Justice: Plus ca change…’, op cit. at p.775 [20] Ibid. [21] [1994] 1 WLR 732 at 739F [22] Lord Woolf M., R., Interim Report, Chapter 3, Para 29 [23] Ibid. Chapter 3, Para 30 [24] Ibid. Chapter 3, Para 32 [25] Ibid. Chapter 3, Para 31 [26] Ibid. Chapter 3, Para 36 [27] Ibid. Chapter 3, Para 40 [28] Ibid. Chapter 3, Para 42 [29] Ibid. Chapter 3, Para 44 [30] The green book contained the rules relating to the County Court and the white book referred to the rules in the High Court. [31] i.e. in the county court a summons would be issued, but in the High Court a writ would be issued. [32] The CPR 1998 was given effect by the Civil Procedure Act 1997. [33] He was appointed in May 1997 and asked to produce a report in 4 months. [34] As part of the Labour Governments plans to reform civil justice. [35] Sir Peter Middleton GCB, ‘Review of Civil Justice and Legal Aid’, (September, 1997) at the Department of Constitutional Affairs website at http://www.dca.gov.uk/middle/ [36] This paper for the sake of brevity will only discuss key changes, hence avoiding discussion of change of language in the rules etc. [37] Lord Woolf M., R., Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (London: HMSO, 1996), at the Department of Constitutional Affairs website at http://www.dca.gov.uk/civil/final/ Chapter 1, Para. 1 [38] Gladwell, David, ‘Are you ready for Woolf?’, [1999] 149 NLJ 90 [39] This means to deal with cases justly. Rule 1.1(1) CPR 1998 [40] Rule 1.4 (2)(a) CPR 1998 [41] Rule 1.4 (2)(b) CPR 1998 [42] Rule 1.4 (2)(c) CPR 1998 [43] Rule 1.4 (2)(f) CPR 1998 [44] Rule 1.4 (2)(g) CPR 1998 [45] Rule 1.4 (2)(h) CPR 1998 [46] Rule 3.1(2)(a) CPR 1998 [47] Rule 3.1(2)(b) CPR 1998 [48] Rule 3.1(2)(g) CPR 1998 [49] Rule 3.1(2)(k) CPR 1998 [50] Part 26 CPR 1998 [51] Small Claims: value not more than £5,000 and personal injury not more than £1,000. [52] Fast Track: for cases valued between £5,000 and £15,000. [53] Multi Track: anything above £15,000. [54] [1999] Unreported, 26 July, CA. [55] Discussed below. [56] Rule 3.1(2)(a) CPR 1998 [57] Rule 44.3 CPR 1998 [58] Rule 31.21 CPR 1998 [59] These specify the consequence (sanction) of failure to comply with the order, Rule 3.1 (3)(b) CPR 1998 [60] Rule 3.4(2) CPR 1998 [61] [2000] C.P. Rep. 6 [62] per Lord Woolf, under the heading ‘The position under the CPR’ (Westlaw did not provide page number). [63] Zander, M., ‘How does judicial case management work?’, [1997] NLJ 353 and p 539 [64] Zander, M., ‘The Government’s Plans on Civil Justice’, [1998] 61 MLR 382 [65] Turner, R., L., ‘Middleton – the cloud with the silver lining?’, [1997] 147 NLJ 1727 [66] Zander, M., ‘The Government’s Plans on Civil Justice’, [1998] 61 MLR 382 at p. 387 [67] A Lord Chancellor's Department Consultation Paper, Resolving and Avoiding Disputes in the Information Age, September 1998 at the Department of Constitutional Affairs website at http://www.dca.gov.uk/consult/itstrat/civindex.htm [68] Glossary, CPR 1998 [69] Gladwell, David, ‘Are you ready for Woolf?’, [1999] 149 NLJ 90 and Elliott and Quinn, English Legal System, 4th Edn., (London: Longman, 2002), p.370 [70] If a party fails to accept the part 36 Payment and at trial fails to obtain a judgment exceeding the Part 36 Payment the court can make a ‘split cost order’. (Rule 36.20 CPR 1998) [71] Rule 1.4(2)(e) CPR 1998 [72] Rule 26.4 CPR 1998 [73] Lord Woolf M., R., Final Report to the Lord Chancellor on the Civil Justice System in England and Wales, op cit. Chapter 7, para 5 [74] Zuckerman, A., Civil Procedure, (London: LexisNexis, 2003), Chapter 10 [75] Morland J felt this trend is ‘wasteful’ of professional time and resources, in Giambrone v. JMC Holidays Ltd [2003] 1 All ER 982 at 983 [76] Rule 44.3 CPR 1998 [77] Rule 44.3 (4)(5) CPR 1998 [78] Rule 44.3 (5)(a) CPR 1998 [79] Rule 44.3 (5)(b) CPR 1998 [80] Part 45 CPR 1998 [81] Under the old system costs were determined on the standard basis or the indemnity basis. Both of these bases only allowed for the recovery of reasonably incurred expense or reasonable amount. Rule 44.5(1)(b) The indemnity basis is the more favourable to the receiving party because any doubt about reasonableness is decided in his favour. [82] Rule 15: Guide to the Professional Conduct of Solicitors, 7th ed., (London: Law Society, 1996) [83] Rule 43.2 (2)(a)(iii) CPR 1998 [84] Under Rule 44.3 (5)(b) CPR 1998 [85] Richard Burns, ‘A view from the ranks, [2000] 150 NLJ 1830 [86] Gibb, Frances, ‘Verdict on Woolf shake-up: it's a qualified success’, The Times, May 2 2000 [87] Ibid. [88] Richard Burns ‘A view from the ranks, [2000] 150 NLJ 1830 [89] Department of Constitutional Affairs, Emerging Findings: An early evaluation of the Civil Justice Reforms, (March 2001) at http://www.dca.gov.uk/civil/emerge/emerge.htm and Department of Constitutional Affairs, Further Findings - A continuing evaluation of the Civil Justice Reforms, (August 2002) at http://www.dca.gov.uk/civil/reform/ffreform.htm

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