Paul Tonkin considers ways to shorten or avoid court proceedings
Anyone who has been involved in a dispute that has gone to court will know that it can be a long, costly and sometimes stressful process.
It is not unusual for years to pass between the first letter of claim and the dispute being finally and conclusively determined by the courts. While one party will have the satisfaction of being the winner, that satisfaction may be short lived when they come to reflect on the costs and hours that have been spent on the litigation process.
In some cases, there may simply be no option but to accept that, in the absence of settlement, the parties are in for the long haul. However, it is always worth considering at an early stage whether there is a way of shortening, or even circumventing, the court process to secure a faster and cheaper resolution.
Summary judgment
Summary judgment is a court process whereby a party to a claim (either the claimant or the defendant) can apply for an early judgment without a full trial.
In order to succeed on an application for summary judgment, the party applying needs to show that the other party’s case has “no real prospect of success” and that there is no other reason why the case should proceed to trial. If that test can be satisfied then the case will be decided on that basis, without the need to incur the costs of going to a full trial.
The hurdle of showing no real prospect of success is a relatively high one and therefore summary judgment will not be appropriate in cases where there is genuine dispute about the facts or the law. However, it can be a quick and cost effective way of dealing with unmeritorious claims or defences.
For example, a landlord’s claim for rent arrears may be suitable for summary judgment where the tenant purports to defend the claim but has no real grounds for doing so. By contrast, summary judgment is less likely to be appropriate for a service charge dispute where there is genuine disagreement as to the nature of the services provided and their reasonable cost.
A summary judgment application should not be made lightly. Not only will an unsuccessful applicant be liable for the costs of the application, but the satisfaction of a successful applicant may be short-lived if the summary judgment is reversed on appeal and the case is then back to square one, many months later.
Expedited trial
Expedited trial (also referred to as “speedy trial”) is a process whereby a party can apply to court for permission to fast-track a case to trial. While an average case might normally take nine to 12 months to get to trial, an order for speedy trial could result in a trial date within just a couple of months or less.
By definition, the process enables the claim to jump the queue, ahead of other litigants who have been waiting patiently for their day in court. As such, it is not surprising that the court’s discretion to order an expedited trial is exercised very sparingly.
Either party can apply, but the court will generally only grant an expedited trial where there is “real urgency”. The court must weigh up the prejudice suffered by the applicant in having to wait for trial in the normal course of events against its responsibility to other litigants and court users to ensure that their cases are processed fairly and expeditiously.
It might be thought that the court’s discretion will only be exercised in life-or-death cases. However, an order for expedited trial can sometimes be appropriate in the commercial arena. For example, it could be appropriate where a developer would be prevented from proceeding with its scheme until a rights of light dispute is resolved, or where the parties to a lease need to know before a break date how the break conditions in the lease should be applied.
Therefore, despite the very high threshold, expedited trial may be an option worth considering where a party will suffer real prejudice unless the dispute is resolved quickly.
Interim injunctions
In some cases, the need for a resolution may be so urgent that even an expedited trial will not be quick enough. For example, where one party is about to sell a property but the other party claims that it is entitled to the property and so needs to stop the sale, or where environmental protestors are threatening to take occupation of a building against the wishes of the owner.
In such circumstances, the applicant may need to ask the court for an interim injunction. This is an order of the court requiring a party to do something (or not to do something) pending a full determination by the court in due course. In the examples above, the court could, for instance, grant an interim injunction requiring the party not to sell the property or requiring the protestors not to occupy the building.
The purpose of the interim injunction is often to maintain the status quo until the court has a chance to fully consider the matter. An interim injunction can, if necessary, be obtained at any time of the day or night and within just a matter of hours.
However, because of the prejudice that an interim injunction can cause (if, for instance, in the first example, the court were to ultimately decide that the seller should have been free to sell the property after all) they will only be granted where the court is satisfied that the applicant has a good arguable case, that monetary damages would not be an adequate remedy if an injunction is refused and that the balance of convenience lies in favour of granting an injunction.
Where an interim injunction is granted, the court will often require the party seeking the injunction to give a cross-undertaking in damages, meaning that they will be required to compensate the other party for loss suffered if it later turns out that the injunction should not have been granted.
Expert determination and arbitration
The three options above all involve going through the court process, albeit in a truncated fashion. Expert determination or arbitration, however, involves side-stepping the court process altogether. Rather than going to court and having the dispute determined by a judge, the parties appoint an expert or an arbitrator to resolve their dispute for them.
Expert determination is an entirely contractual form of dispute resolution in which the expert’s powers and ability to determine the dispute arise purely out of the agreement of the parties. By contrast, where the parties agree to go to arbitration, the arbitrator will have the wider powers set out in the Arbitration Act 1996. There are also differences in the grounds on which the decision of an arbitrator or an expert can be challenged.
One of the main advantages to these processes is that the parties can, to a large extent, dictate the timetable themselves. For example, the parties could agree to follow an expert determination procedure whereby each party has just a matter of days or weeks to make submissions to the expert, who then has a similarly short period in which to make his binding decision.
The process also has the advantage of being private, avoiding the publicity that can come with having a dispute heard in open court. It can also enable the parties to select their own expert or arbitrator – for example, a valuer to deal with a rent review dispute or a leading property lawyer to deal with a question of interpretation of a lease. Once the expert or arbitrator has made their decision, the options for challenging it are limited, meaning that there is often more finality than with the court process, where appeals can add many more months to the overall timetable.
The use of expert determination and arbitration will be familiar to anyone involved with rent review work. However, they are often suitable as an alternative to court proceedings in other areas. For example, the RICS’ Professional Arbitration on Court Terms (“PACT”) process allows landlords and tenants to resolve lease renewal disputes (relating to rent or other lease terms) through arbitration rather than court proceedings.
In some cases, a pre-existing agreement between the parties may require the dispute to be resolved by expert determination or arbitration but, even where there is no such agreement, there is nothing to stop the parties agreeing to refer a dispute to an expert or to arbitration as an alternative to going to court.
Why this matters
Litigation can be costly and time-consuming. The obligations placed on parties by the litigation process can often be an unwelcome distraction from their core business. Parties become increasingly entrenched in their positions, doing considerable damage to relationships that may need to continue once the dispute has been resolved (for example, landlord and tenant).
The uncertainty created by unresolved claims can also result in deals falling through. Consider, for example, a proposed assignment of a lease where there is a dispute over whether the landlord has unreasonably withheld consent, or the proposed sale of a development site where there is an ongoing rights of light dispute.
It is therefore important for parties, and those advising them, to consider at all stages of the dispute resolution process whether there are options available to bring about a speedier and more cost-efficient resolution to the dispute. This is also consistent with the obligations placed on parties and their advisers by the overriding objective in the Civil Procedure Rules (“CPR”), which requires litigation to be dealt with expeditiously, fairly and at proportionate cost.
Parties and their advisers should also consider whether there are means of resolving a dispute before embarking on a formal litigation process. This could involve consideration of consensual dispute resolution processes such as mediation, where the parties seek to resolve their dispute in a negotiation assisted by a qualified mediator; or could be simply having a without prejudice meeting at which key decision makers are present.
These processes can often enable a dispute to be resolved on truly commercial terms that are not constrained by the limited remedies available through the court process and which can allow relationships to survive.
Parties should also not overlook the need to comply fully with pre-action protocols under the CPR – for example, the Dilapidations Protocol – which encourage a full exchange of information and attempts at settlement by alternative dispute resolution before court proceedings are commenced.
Paul Tonkin is a senior associate in the real estate litigation team at Hogan Lovells
