PROCEDURE
This article provides guidance on a number of procedural matters that will be of importance to parties in a dispute at the pre-action stage but which are not dealt with in the second edition of the Pre-Action Protocol for Construction and Engineering Disputes (the "CED Protocol"). The CED Protocol can be accessed here.
The CED Protocol, as stated in its first paragraph, applies to all construction and engineering disputes (including professional negligence claims against architects, engineers and quantity surveyors). However, one must read on to the second paragraph to discover the exceptions to which the CED Protocol need not apply. Surprisingly, it is not stated in the CED Protocol whether it must apply for proceedings destined for particular courts. One must look to the court guides for further direction.
In The Technology and Construction Court Guide, accessible
here, it states that the CED Protocol must apply to construction and engineering disputes that are brought to the Technology and Construction Court (the “TCC”). This is fairly intuitive for construction disputes but the situation is less clear for technology disputes, or for construction and engineering disputes that are brought instead to the Commercial Court. This is important because there are differences (such as time limits) between the CED Protocol and the Practice Direction - Pre-Action Conduct and Protocols (the “Practice Direction”, accessible
here, the latter being the default for cases in the Commercial Court.
The Pre-action Protocol generously allows the Defendant up to three months (for a very complex case - the threshold for which is not defined) to respond to the Letter before Action, whereas in the CED Protocol there is a strict 14 days to acknowledge receipt and 28 days to substantively respond. The Commercial Court Guide, accessible
here, offers some guidance in paragraph B3.1 (see below) as to the application of other protocols, but it is not definitive. It is therefore advisable for the Claimant to communicate to the Defendant whether it expects the Pre-action Protocol or the CED Protocol to be followed.
B3.1 The Practice Direction – Pre-Action Conduct and Protocols applies to cases in the Commercial Court and usually it should be observed, although it is sometimes necessary or proper to start proceedings without following the procedures there contemplated: for example, where delays in starting proceedings might prompt forum shopping in other jurisdictions. Cases in the Commercial Court are sometimes covered by an approved protocol because of the subject matter, such as the Professional Negligence Pre-Action Protocol.
It is sometimes said that the parties can agree in writing not to comply with the CED Protocol, for example if the parties cannot comply with the time limits. This is not strictly true because the CED Protocol only permits the Claimant to be excused from compliance where all the parties to the proposed proceedings expressly so agree in writing (see paragraph 2.2 below). This of course can lead to the bizarre outcome where the Claimant has been excused but the Defendant has not.
2.2 A Claimant shall not be required to comply with this Protocol before commencing proceedings if all the parties to the proposed proceedings expressly so agree in writing.
The Protocol deals with the possible involvement of the parties’ insurers only very briefly (see paragraphs 8.1 and 9.2.3 below).
This unfortunately tends to understate the importance of insurers in the grand scheme of things. All parties that find themselves in circumstances which could result in a claim being made should immediately read their insurance policies in order to remind themselves of their duties under the policy concerning notification of a possible claim to the insurer. Where the duties of the insured have not been fulfilled then this may result in the insurance becoming invalid.
8 The Defendant’s Response
The Defendant’s acknowledgment
8.1 Within 14 calendar days of receipt of the letter of claim, the Defendant should acknowledge its receipt in writing and may give the name and address of his insurer (if any).
9 Pre-Action Meeting
9.1 Within 21 days after receipt by the Claimant of the Defendant’s letter of response, or (if the Claimant intends to respond to the Counterclaim) after receipt by the Defendant of the Claimant’s letter of response to the Counterclaim, the parties should normally meet.
9.2 It is not intended by this Protocol to prescribe in detail the manner in which the meeting should be conducted. However, the Court will normally expect that those attending will include:
9.2.3 where the involvement of insurers has been disclosed, a representative of the insurer (who may be its legal representative); and
9.2.4 where a claim is made or defended on behalf of some other party (such as, for example, a claim made by a main contractor pursuant to a contractual obligation to pass on subcontractor claims), the party on whose behalf the claim is made or defended and/or his legal representatives.
Most contracts will have a clause that deals with dispute resolution. Some contracts will stipulate that certain methods of alternative dispute resolution such as mediation or adjudication must take place before court proceedings can be commenced. Failure to abide by what the contract requires can result in proceedings being stayed by the court and an order being made for specific performance of the respective contractual provision. An attempt to bypass the contract may therefore end up prolonging the case and increase costs in the long run.
There is a consistent thread of proportionality (cost reduction) running through the CED Protocol in terms of the level of detail the parties should go into in setting out their respective positions. However, unhelpfully the CED Protocol does not set any page or word limits for the letter of claim and letter of response which leaves the matter of drafting vague. It is interesting to note that the CED Protocol requires the letter of claim to include not a summary of the claim but a “brief” summary of the claim. The double emphasis on brevity is in practice likely to make it difficult to justify drafting more than a few pages in correspondence. The decision whether to instruct an expert at the pre-action stage is another matter which impacts on proportionality but is similarly left to the parties to decide without any hard rules.
