This article was published in the October 2009 Edition (No. 81) of Perimiter Systems – The UK Fencing Industry’s Premier Publication.
As a general rule the Pre-Action Protocol for Construction and Engineering Disputes (“Protocol”) applies to all construction and engineering disputes and sets out the steps to be taken by parties before involving the Court through the issue of proceedings.
Is this just another layer of cost?
- the downside to the Protocol is that it does arguably front load costs, with parties giving more information about their claim and defence, before proceedings have been started.
- the upside is that court proceedings (often slow, time consuming and expensive) may be avoided by the parties being in a position to understand their strengths and weaknesses,
- assess the risk of proceeding and do a deal to reach an out of court settlement.
The purpose of the protocol is straightforward:
- avoid litigation which could have settled at an earlier stage without court proceedings;
- support efficient management of proceedings where litigation cannot be avoided; and
- provide an incentive (with cost sanctions) to discourage unreasonable behaviour.
What is involved?
- a letter of claim containing: summary of the facts, basis for the claim, details of the remedy sought, (i.e. breakdown of sums claimed) and details of any expert.
- the defendant must acknowledge the letter of claim within 14 days and send a letter of response within 28 days stating: which claims are accepted, which are rejected and why, any counterclaim and provide the details of any expert.
- the parties then meet on a “without prejudice” basis to define and agree issues, and explore the possibility of reaching a settlement without court proceedings. Discussions can be frank – the content cannot be referred to the court unless the parties agree.
If proceedings are commenced without compliance, the courts have a discretion to halt the proceedings. Though, if the defendant does not acknowledge or respond, the claimant can commence proceedings. The courts also have wide powers to make costs orders against a party who has unreasonably failed to comply with the Protocol.
Good or bad?
Used pragmatically the Protocol can certainly be a valuable tool in resolving disputes and reducing, or even better avoiding, the costs of litigation. Ignore it at your peril.