Reflections on the new Pre-Action Protocol

A new Pre-Action Protocol for construction and engineering disputes came into effect on 14 November 2016. The aim of the new Protocol was to reduce costs and time spent at the pre issue stage, by reducing the level of detail and/or investigation required.

The parties no longer need to provide “full” information in their letter of claim and response, but only enough information so that the parties can understand the case they have to meet. The response to the counterclaim should be a brief and proportionate summary. The Defendant should state in its response whether there are any third parties it wishes to add to the pre action procedure. There were criticisms of the previous pre-action protocol as being too front loaded in time and costs, so the idea behind reform is that just enough information is provided so that the parties are able to proceed to consider (and participate in) ADR, but costs are not unnecessarily incurred. A further costs saving is borne out of the fact that expert reports are now longer necessary, although they are encouraged where they may assist the parties. A meeting between the parties is no longer mandatory, although it will be the case that parties should “usually” meet. The time periods are also shortened, with any meeting between the parties being 21 days from the date of the letter of response (or the response to the counterclaim). There is new provision for the Protocol action to be concluded automatically at the completion of the pre-action meeting, or 14 days after expiry of the period within which the meeting should have taken place (at paragraph 10).

Some parties have not taken the new protocol on board and continue to complain in correspondence about insufficient detail at the pre action stage with threats of complaint to the court and costs threats. This is misguided: paragraph 4 of the Protocol states that only in exceptional circumstances, such as a flagrant or very significant disregard of the Protocol, will a Court impose costs consequences in respect of pre-action conduct. It remains to be seen in practice what sort of level of detail the courts will be critical of, but it is currently thought that only a basic level of detail need be provided.

The parties should also state in their pre action correspondence whether they want the Protocol Referee procedure to apply: this is a new and voluntary procedure which the parties may enter into, and is a form of dispute resolution which is run by TeCSA. Parties who agree to enter into the procedure each provide written submissions to the Referee, which is followed by a decision by the Referee. Although the decision is described as “binding” on the parties, it is not final, and in any subsequent proceedings the Court is required merely to give “due weight” to it. As there is no express provision for enforcement of the decision, it is not yet clear what ability (if any) any party has to enforce the decision, other than referring the Court to the decision in subsequent proceedings.

Although the parties may now consent not to use the Protocol (if all the parties agree), in the majority of cases, if not all cases, the Protocol will still be appropriate and helpful to the parties. Claimants are more likely to want to disregard the Protocol than Defendants. Moreover, in a case with multiple parties (which is the usual situation in the TCC) it is even less likely that all the parties will consent not to use the Protocol.

Rebecca Drake, 39 Essex Chambers