Pre-Action Protocol: Construction Disputes

pre-action protocol

Update: The new Pre-Action Protocol is now in force

The court expects parties to follow a series of steps before starting proceedings for certain types of civil claims. Pre-Action Protocols set out and explain these steps.

The Pre-Action Protocol for Construction and Engineering disputes applies to all construction and engineering disputes. This includes professional negligence claims against architects, engineers and quantity surveyors.

This Protocol has recently been reviewed, following concerns about ‘front-loading’ of costs. A new Protocol will come into force on 9th November 2016 (see here).

New Pre-Action Protocol

The new Protocol brings several key changes. These include:

  • Parties can now agree, in writing, not to follow the Protocol
  • The objectives are now for parties to exchange ‘sufficient’ information to allow them to broadly understand each other’s positions. Also, to make appropriate attempts at alternative dispute resolution (ADR)
  • The aim is now for the parties to be able to settle their cases early, fairly and inexpensively – without litigation
  • The requirements for information to be included in Letters of Claim and Response have changed. The Letter of Claim should include a ‘brief summary of the claim’. The Response should include a ‘brief and proportionate summary’
  • The parties can agree extensions of up to 28 days for the relevant party to comply with a stage of the Protocol
  • The parties must now hold a Pre-Action meeting within 21 days after receipt of the Letter of Response (or response to Counterclaim). This can take the form of ADR
  • The Protocol will automatically conclude at the Pre-Action meeting. Or, 14 days after the meeting should’ve taken place
  • The Court will only impose cost consequences for non-compliance with the Protocol in exceptional circumstances.

Protocol Referee Procedure (PRP)

There is also a new Protocol Referee Procedure (PRP) to help parties to comply with the Protocol.

From time to time, Technology and Construction Solicitors’ Association (TeCSA) and Technology and Construction Bar Association (TECBA) will publish the PRP. The current version can be found here.

The PRP states that:

  • Once the parties agree that the PRP will apply, one of them must apply to the Chairman of TeCSA to appoint a Protocol Referee. This will start the process.
  • The application must be made using a pro-forma application. It must set out:
    • brief details of the directions sought by the Applicant
    • the nature of the non-compliance (no more than 4 sides of A4) and other documents the Applicant intends to rely upon (no more than 1 lever arch folder, single sided copying)
  • An application fee of £3,500 plus VAT must accompany the application.
  • The Chairman will nominate a Protocol Referee no later than 2 working days from receipt of the Application.
  • Assuming the Referee is able to act, they’ll write to the parties and notify them
  • No later than 5 working days from the date of Referee being appointed, the responding party can submit a response to the application. The Applicant can also reply to this response, no more than 2 working days later
  • The Protocol Referee will reach a written decision no later than 10 working days after they’re notified of their appointment, setting out:
  • any appropriate directions for future conduct of the process
  • whether there has been non-compliance with the Protocol and, if so, whether it is a flagrant or significant disregard and to what extent.
  • The Referee can direct the Respondent to reimburse the Applicant the Application fee. In any subsequent proceedings, this fee will be costs in the case. No reference is made to the other costs associated with this process.

The decision will be binding and must be complied with until the dispute is determined by legal proceedings or by agreement.

It will be interesting to see how the Protocol works in practice, and whether it achieves its aim of tackling the front loading of costs and the interaction of this objective and the new PRP.

Stacey Birchard, Solicitor