6 January 2009 00:02

Pre Action Protocol for Construction and Engineering Disputes

A new Pre Action Protocol for construction and engineering disputes comes into force on 6th April 2007.

This Protocol has been amended to take into account some of the criticisms which have been raised by parties dealing with claims under that Protocol.  There are not many changes and the wording stays substantially the same. 

The main alteration relate to the insertion of a new clause 1.5 entitled “Proportionality”.  

Clause 1.5 states

The overriding objective (CPR Rule 1.l) applies to the pre action period.  The Protocol must not be used as a tactical device to secure advantage for one party or to generate unnecessary costs.  In lower value claims (such as those likely to proceed in the county court), the letter of claim and the response should be simple and the costs of both sides should be kept to a modest level.  In all cases the costs incurred at protocol stage should be proportionate to the complexity of the case and the amount of money which is at stake.  The Protocol does not impose a requirement on the parties to martial and disclose all the supporting details and evidence that may ultimately be required if the case proceeds to litigation.

This clause has been introduced to counter the criticism that following the Pre Action Protocol is a costly business and for which neither party will recover its costs. This clause emphasises that the costs of the Pre Action Protocol process must be proportionate to the complexity and the amount involved in that claim.

Interestingly, the Protocol also states that it is not necessary to disclose all of the supporting details and evidence that may be raised should the case proceed to litigation.  Whilst it is essential to air all of the issues known at that time, the courts intend to take a sensible view of the claims as they proceed based upon the overriding objective of proportionality.

The next change relates to the fact that under the old Protocol a defendant could agree an extension of time in which to send a letter of response up to a period of four months.  That has now been reduced to three months which is a point practitioners must bear in mind.

Under the Protocol at present, it is necessary for the parties to consider whether an alternative dispute resolution should be adopted.  The new Protocol re-emphasises the fact that no party can or should be forced to mediate or enter into any form of alternative dispute resolution.  Even though no party can be forced to mediate or engage in ADR, the court now require under clause 5.6 (v) that they should be advised whether alternative means of resolving the dispute were considered or agreed.  This is a new.

The Protocol has shown that it does work in reducing the number of claims that reach the courts and all those engaging in construction disputes must be aware that the Protocol process has to be followed before litigation can be commenced.  The new Protocol has not changed in substance save that the amount of the claim and the costs being incurred in engaging in the Protocol must always be in proportion to the sums involved.

 

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