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Construction Disputes

There is a new Pre-Action Protocol (PAP) for Construction Disputes which came into force on the 9th November 2016.

Background

The new protocol will govern the actions and conduct of parties before formal Court proceedings begin and applies to construction and engineering disputes and professional negligence claims by or against architects, engineers, and quantity surveyors; claims typically heard by the Technology and Construction Court (TCC) division of the High Court.

The Pre-Action Protocol, developed jointly by the Technology and Construction Bar Association (TECBAR) and the Technology and Construction Solicitors’ Association (TeCSA), replaces the previous protocol, in force from October 2000, amended in 2007.

 

Key changes include:

  • Parties may now agree not to use the Protocol (paragraph 2).

 

  • The parties no longer need to provide “full” information, merely exchange sufficient information to allow each other’s position to be understood, make informed decisions and attempts at settlement, and consider how to proceed (paragraph 3).

 

  • The Court will only impose costs sanctions for non-compliance in exceptional circumstances such as a blatant or very significant disregard of the new protocol (paragraph 4).

 

  • The general aim has been modified so that the “outline” of parties’ cases must be made known and, in addition, the parties should only “usually” meet (paragraph 6).

 

  • The aim of defining and agreeing the issues between the parties has been removed.

 

  • Parties need to be put in a position where they may be able to settle not just early and fairly, as before, but also now inexpensively (paragraph 6).

 

  • The requirements for the Letter of Claim have been slightly modified so that it contains a brief summary of claims and relief sought, proportionate to the claim (paragraph 7).

 

  • The brief summary applying also to the Letter of Response and any Response to Counterclaim (paragraph 8).

 

  • The parties are required to confirm in the Letter of Claim (paragraph 7) and Acknowledgement (paragraph 8) whether they wish the newly introduced Protocol Referee Procedure to apply (paragraph 11).

 

  • The parties should now meet within 21 days after the Letter of Response (or Response to Counterclaim) and the meeting may take the form of an ADR process such as mediation (paragraph 9).

 

  • The parties may agree longer periods of time to comply with any of the various steps, up to an aggregate extension for each step of 28 days (paragraph 10).

 

  • The protocol process will conclude automatically on completion of the pre-action meeting or, if no meeting takes place, 14 days after expiry of the period within which the meeting should have taken place (paragraph 10).

 

  • A new consensual Protocol Referee Procedure where a nominated referee assists the parties in the pre action protocol process giving appropriate directions as required on compliance with the new protocol. The procedure attracts a fee of £3,500.00 plus VAT (paragraph 10.2).

 

Conclusion

The Pre Action Protocols have historically assisted parties in attempts to resolve disputes at an early stage without recourse to issuing Court proceedings.  The new protocol will continue to facilitate this and appears to strike a balance between assisting the parties avoid litigation and, at the same time, ensure strict compliance with the hope that costs are kept at modest levels.

The lack of clear guidance relating to pre-action disclosure may result in meetings or mediations called prematurely with insufficient information to fully understand or assess the claim, resulting in potentially fewer pre-action settlements and consequential litigation.

The Pre-Action Protocol can be downloaded here.

construction-team

DTM Legal’s Construction team advise on the full range of commercial legal services for the construction and engineering industries, in both contentious and non-contentious matters. For further information on how we can help you, call the team on 01244 354000.

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