The Second Edition of Pre-Action Protocol for Construction and Engineering Disputes where the Claimant's intention is to issue proceedings in the Technology and Construction Court ("the Protocol") came into force on 14 November 2016.
The original protocol, like other pre-action protocols came into force with the aim of resolving disputes before they came to Court; it required the parties to follow a set procedure before instituting proceedings, including a timetable for the claiming party to write a letter of claim, to which the defending party was required to respond. Uniquely among the various protocols, the construction and engineering protocol also provided for a pre-action meeting.
The protocol started to attract criticism, as practitioners felt that it had led to the front loading of litigation costs and was being used by some defendants as a tactical way of delaying a claim, with claimants often facing threats of high cost orders in the eventual action if they had not complied with the long timetable envisaged by the Protocol. This was especially frustrating to those in the construction industry, accustomed to the speed of adjudication, but who had a legal issue to be resolved for which the court process was more appropriate. With this in mind, following a number of reports and surveys from various interested stakeholders, the second edition was drafted by construction practitioners (rather than the court rules committee).
The new edition seeks to address some of the criticisms of its predecessor, and therefore envisages a shorter pre-action protocol period and crucially states that "only in cases of flagrant or very significant disregard for the protocol, will the court impose cost consequences for non-compliance" (paragraph 4). The key changes are as follows:
- The parties may consent not to use the Protocol (paragraph 2).
- The aggregate maximum extension to any period set in the Protocol is 28 days (paragraph 10).
- The deadline for a Defendant to respond to a Letter of Claim remains at 28 days, subject to a 28 day extension, but it is no longer open for parties to agree to a 3 month extension of this timetable (paragraph 8.5).
- The Claimant's response to a Defendant's Letter of Claim is set at 21 days (rather than being allowed a corresponding extension to the Letter of Response) (paragraph 8.7).
- The meeting is no longer mandatory, with the Protocol stating that the parties should "usually" meet within 21 days of the Letter of Response (or Response to Counterclaim) (paragraph 9).
- The Protocol envisages briefer, less detailed Letters of Claim, Letters of Response and Responses to Counterclaim than previously, with a number of references to this approach in the new Protocol (paragraphs 3, 6, 7, 8.5 and 8.7).
- There is a new requirement for the Defendant to refer to any party which it is considering submitting to the Protocol process (paragraph 8.5).
- The Protocol ends automatically on the conclusion of the Pre-Action Meeting, or 14 days after such meeting should have been held (paragraph 10).
- There has been the introduction of a new Protocol Referee Procedure (paragraph 11).
The Protocol Referee Procedure is a completely new part of the protocol, allowing parties to appoint a Referee, who has a procedural role overseeing compliance with the Protocol; including reviewing allegations of non-compliance, making directions for the parties and cost orders regarding non-compliance that will be persuasive to judges in the action. At a cost of £3,500 payable by the losing party if the case progresses to court, it is cheaper than mediation. It is hoped that by assisting the parties to engage with the pre-action process in a meaningful way, the Referee will aid faster resolution of more cases. Time will tell.
It remains to be seen, how the new protocol will work and in particular whether the Referee will prove a useful tool for parties.
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