The Pre-Action Protocol for Construction and Engineering Disputes sets standards which parties to a construction or engineering dispute are expected to observe before court proceedings are issued. It encourages parties to exchange information early and consider using alternative dispute resolution (ADR).
When does the Protocol apply?
The Protocol applies to all construction and engineering disputes, including professional negligence claims against architects, engineers and quantity surveyors. However, a claimant is not required to comply with the Protocol where:
- court proceedings are for the enforcement of the decision of an adjudicator to whom a dispute has been referred under s 108 of the Housing Grants, Construction and Regeneration Act 1996;
- court proceedings include a claim for an interim injunction;
- the claimant seeks summary judgment under Pt 24 of the Civil Procedure Rules; or
- the dispute relates to the same or substantially the same issues as have been the subject of a recent adjudication under the Housing Grants, Construction and Regeneration Act 1996, or some other formal ADR procedure.
A claimant can start court proceedings without complying with the Protocol if, by complying with it, their claim may be time-barred. In such circumstances the claimant should apply to the court for directions when asking for proceedings to be issued. The court may order a stay of proceedings pending compliance with the Protocol.
What are the requirements of the Protocol?
Letter of claim
The claimant should send each proposed defendant (if appropriate to his registered office) a letter of claim before commencing court proceedings. The Protocol specifies what information the letter of claim should contain.
Defendant’s acknowledgment of the letter of claim
The defendant should acknowledge receipt of the letter of claim in writing within 14 calendar days of receiving the letter of claim. If the defendant is insured he may provide the name and address of his insurer to the claimant at this stage.
If the defendant fails to acknowledge receipt of the letter of claim within 14 days the claimant is entitled to commence court proceedings without further compliance with the Protocol.
Objections to the court’s jurisdiction or the named defendant
The defendant has 28 days from receipt of the letter of claim to raise an objection on the grounds that:
- the court lacks jurisdiction;
- the matter should be referred to arbitration; or
- the defendant named in the letter of claim is the wrong defendant.
The objection should be made in writing and should specify the parts of the claim to which the objection relates. It should also set out the grounds relied on and identify the correct defendant, if known.
If the defendant fails to raise an objection at this stage, he is not precluded from raising an objection later. However, the court may take such failure into account when assessing costs.
If the defendant raises an objection he is not required to send a letter of response in relation to the claim or those parts of it to which the objection relates.
The defendant can withdraw any objection at any stage. Any withdrawal should be in writing. If the defendant does withdraw an objection before court proceedings are commenced the parties must comply with the Protocol. In such circumstances the letter of claim will be treated as having been received on the date the defendant withdraws his objection.
Defendant’s response to the letter of claim
The defendant has 28 days from the date of receipt of the letter of claim to respond to it. This deadline can be extended by the consent of the parties for up to three months.
The letter of response should outline:
- which facts in the letter of claim are agreed and which are not. Where the defendant does not agree with the facts set out in the letter of claim, he should explain why;
- which claims are accepted or rejected by the defendant. If the defendant rejects a claim he should explain why;
- if the defendant accepts a claim in whole or part, the letter of response should state whether the damages, sums or extensions of time claimed are accepted or rejected. If rejected, the defendant should explain why;
- if the defendant alleges contributory negligence against the claimant, the letter of response should contain a summary of the facts relied on;
- whether the defendant intends to make a counterclaim. If so, he should provide the information required to be given in a letter of claim;
- the names of any experts already instructed by the defendant and on whose evidence he intends to rely, identifying the issues to which that expert’s evidence will be directed.
If the defendant fails to respond to the letter of claim within 28 days (or such period agreed between the parties) the claimant can commence court proceedings without having to comply with the remainder of the Protocol.
Claimant’s response to counterclaim
The claimant has 28 days from the date of receipt of the defendant’s response to respond to any counterclaim raised by the defendant. This period of time can be extended by the consent of the parties to up to three months.
The parties are normally required to meet within 28 days after receipt by the claimant of the defendant’s letter of response (or after the claimant’s response to the counterclaim, where there is one) to try to agree the main issues, identify the root cause of disagreement in respect of each issue, and to consider if the issues might be resolved without the need for court proceedings. If court proceedings are unavoidable the parties should consider what steps are required to ensure they are conducted in accordance with the ‘overriding objective’ (as defined by r 1.1 of the Civil Procedure Rules).
The following people will usually be expected to attend the meeting:
- where the party is an individual, that individual;
- where the party is a corporate body, a representative of that body who has authority to settle or recommend settlement of the dispute;
- the legal representatives of each party, if instructed;
- a representative of the insurer or its legal representative where the insurers’ involvement has been disclosed; and
- where a claim is made or defended on behalf of another party, for example where a claim is made by a main contractor who has a contractual obligation to pass on the claims of its subcontractors, the party on whose behalf the claim is made or defendant and/ or his legal representatives.
The parties must consider whether an ADR procedure would be more suitable than court proceedings, and if so, which form. The protocol recognises that parties should not be forced to enter into any form of ADR procedure.
If the parties cannot resolve the dispute they must try to agree on:
- where expert evidence is likely to be required;
- how the relevant issues are to be defined;
- how expert evidence is to be dealt with (eg, should a jointly instructed expert be appointed);
- the extent of disclosure of documents and the conduct of the court proceedings with a view to saving costs;
The Protocol provides that everything said at a pre-action meeting shall be treated as ‘without prejudice’. However, any party who attended such a meeting can disclose to the court and may be required to disclose:
- that a meeting took place, when and who attended;
- the identity of any party who refused to attend, and their reasons for refusing;
- if the meeting did not take place, why not;
- any agreements made between the parties; and
- whether ADR was considered or agreed.
Proportionality of costs
The Protocol expects the parties to act reasonably to keep costs proportionate to the complexity of the case and the amount of money at stake. The Protocol must not be used as a tactical device to secure an advantage for one of the parties or to generate unnecessary costs.
Not acting in accordance with the Protocol
When determining costs the court will take into account the conduct of the parties including whether they have complied with the Protocol.
When considering whether a party has complied with the Protocol the court will be concerned about whether the parties have complied in substance and is unlikely to be concerned with minor or technical shortcomings. The court will also consider the proportionality of the steps taken compared to the size and importance of the matter, f the urgency of the matter and the effect of non-compliance on the other party.
A single minor breach by one party will not exempt the other party from following the Protocol.