Construction Litigation: Consequences of Non-Compliance with Pre-Action Protocol

In modern litigation, the emphasis is very much upon trying to settle a dispute (where possible), rather than running off to court first, and trying to settle the day before the trial is due to start. One of the means by which the courts try to encourage parties to settle their disputes first - or at least narrow the issues in dispute - is through “Pre-Action Protocols”. There are several of these, and one in particular which applies specifically to construction and engineering disputes.

In broad terms, what the construction and engineering Protocol contemplates is a would-be claimant writing to a would-be defendant before proceedings are commenced, setting out the basis upon which the claimant says it has been wronged and is owed money. The would-be defendant then writes back, setting out whether he agrees or disagrees with the claim, and if he disagrees the reasons for disagreeing. Then the parties are physically to meet, to see whether there is any realistic possibility of settling the dispute, and if not what steps should be taken to ensure that the litigation is conducted efficiently. There are limited circumstances in which the Protocol does not apply, e.g. where the parties have already adjudicated the claim that is to go before the court, and presumably know each other's respective positions.

What happens if a claimant fails to follow the Protocol, and commences litigation? One potential consequence is that the court will make an adverse costs order against the claimant. Another is that the court will stop the proceedings, to allow the Protocol to be complied with (i.e. to allow an exchange of information etc). This latter consequence followed in a recent case before Mr Justice Jackson.

• The claimant was a firm of consulting engineers, who sued a hospital trust for fees that were alleged to be outstanding for work performed.
• The claimant wrote to the defendant before commencing proceedings, but little information was given as to why it was said the amount claimed was owing.
• The defendant requested further details concerning the claim, but these were not provided.
• The claimant then commenced court proceedings, in the TCC.
• The defendant applied to the court to have the proceedings halted, to allow the Pre-Action Protocol to be complied with.

Jackson J allowed the application and stopped the proceedings. His Lordship held that on the facts of this case more details of the amount claimed ought to have been provided. He described part of the claim as being “obscure” until court proceedings were commenced. One of the reasons given for stopping the proceedings was “It is unfair on the defendant to proceed immediately with litigation, when a proper summary of the claim has not been notified in advance”.

The claimant also argued that the construction and engineering Protocol did not apply at all, because the nature of the dispute was not a "construction and engineering" dispute, it was a straightforward debt recovery action. Jackson J took little time in dismissing this argument. The claim by the engineers for their fees was an "engineering dispute", and that was enough to enliven the Protocol.

This case emphasises two points. First, it is imperative for a claimant to spell out its case to its opponent - in sufficiently clear terms - before commencing proceedings. Secondly, non-compliance with the Pre-Action Protocol in a substantial way (as opposed to mere technical non-compliance) is likely to lead to the court stopping the proceedings, and possibly making a costs order adverse to the claimant.

Reference: Cundall Johnson & Partners LLP v Whipps Cross University Hospital NHS Trust [2007] EWHC 2178 (TCC) http://www.bailii.org/ew/cases/EWHC/TCC/2007/2178.html

Click here to view the Pre-Action Protocol for Construction and Engineering Disputes