Construction Update: A more proportionate pre-action protocol?
29th March, 2017
The Pre-Action Protocol for Construction and Engineering Disputes ('the Protocol') has been in force since October 2000. Its new incarnation came into force on 9 November 2016 and was welcomed by many in the industry who had found its predecessor wanting in some respects.
The main criticism of the old Protocol was that it often lead to the front-loading of costs which could became disproportionate in smaller disputes. This, arguably, acted as a barrier to justice for parties with limited means.
Whilst it is also argued that following the full disclosure and meeting requirements did help parties to reach agreements, sometimes secondary disputes arose about whether the Protocol had been followed.
In these instances, if the dispute did progress to Court, and the Protocol had not been followed, the party at fault would be subjected to costs consequences.
Previous reviews of the old Protocol concluded there was a fine line between whether its existence was cost-effective, and could be improved, or whether it should be abandoned entirely.
What has changed?
- Parties can now agree not to use the Protocol.
- Parties only need to provide “sufficient information” to allow the other to understand their position and make an informed decision as to how to proceed. This is a step back from the previous requirement of “full disclosure”.
- Parties can agree to extend deadlines within the Protocol. However, the maximum extension is 28 days in the aggregate. This may negatively impact the responding party, who previously could extend their deadline to provide a Letter of Response by 28 days without impacting the rest of the process.
- An expert report is now neither expected nor required unless it is “succinct and central” to the claim.
- The inter-party meeting should now happen 21 days after the Letter of Response. This can take the form of mediation or another ADR process.
- The meeting will automatically conclude the Protocol procedure. If the parties fail to meet, the conclusion will be 14 days after the period in which the meeting should have occurred.
- Use of cost sanctions by the Court will be limited to significant breaches of the Protocol.
Protocol Referee Procedure
The new Protocol has also introduced a Referee Procedure which aims to address secondary disputes, which may arise as a result of the Protocol itself.
The Referee Procedure will only be applicable if both parties agree, by stating in their Letter of Claim or Letter of Response, as appropriate. The referee is appointed by application to the Chairman of the Technology and Construction Solicitors’ Association (TeSCA), and incurs a fee of £3,500 plus VAT.
Essentially the Referee will review the evidence and issue a decision as to whether the Protocol has been breached, and to what extent.
It will be interesting to see what effect the introduction of the Referee Procedure will have, and how much it will be used. However, with the associated fee, it is difficult to imagine it will be used on anything but high value, complex disputes.
Will it improve things?
Overall, the Protocol has a greater focus on proportionality and it is hoped that the above changes will make the Protocol more accessible and cost-effective for lower value claims.
Many practitioners are hopeful it will lead to increased use as it is simpler and easier to follow. However, whether this happens now that it is optional remains to be seen.
How can Ward Hadaway help?
For more information on how the changes could affect you or on any other aspect of construction law, please get in touch with Tim Craig.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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