The Courts expect would-be litigants to comply substantially with the Pre-Action Protocol for the Construction and Engineering Disputes before proceedings are commenced. But this is not an absolute position, and the difficulties faced by defendants, in existing proceedings, who wish to bring in new parties may be accommodated notwithstanding that the Pre-Action Protocol has not been complied with.
Construction disputes which are heading towards the courts are subject to the operation of the “Pre-Action Protocol for the Construction and Engineering Disputes”. In broad terms, the purpose of the Pre-Action Protocol is to encourage would-be litigants to exchange information about their respective cases before proceedings are commenced, and to explore opportunities for settling their dispute. The underlying rationale is that if parties do follow the Pre-Action Protocol, they may well settle their dispute and avoid spending time and money in litigation. If they cannot settle their dispute, then at least they should better understand their opponent’s case, in which case any litigation between them should be less protracted due to the reduced need for further particulars, or amendments to pleadings. The stick which the court may wield if parties fail, in a substantial way, to comply with the Pre-Action Protocol involves the court staying the proceedings until the Pre-Action Protocol has been complied with, or making an adverse costs and interest order against a party for non-compliance with the Pre-Action Protocol, or both.
A situation where compliance with the Pre-Action Protocol may not be entirely straightforward is where a defendant to existing proceedings wishes to bring in a third-party as a defendant. An example may be where an owner has sued a main contractor for damages due to defective works, and the main contractor, in turn, wishes to bring into the proceedings the subcontractor who was ultimately responsible for the alleged defects. Part 20 of the Civil Procedure Rules permits defendants to bring in new parties to existing litigation, and claims made by defendants against third-parties are referred to as “Part 20 claims” (although under impending reforms they will, from April 2006, be called “additional claims”).
The issue of compliance with the Pre-Action Protocol in circumstances where a Part 20 claim is brought arose in Alfred McAlpine Capital Projects Ltd v SIAC Construction (UK) Ltd [2005] EWHC 3139 (TCC), which concerned existing proceedings between a main contractor and a subcontractor over responsibility for defects in an office building. It emerged through pre-action communications between the main contractor and the subcontractor that a key aspect of the subcontractor’s defence was that if there were defects in the building as alleged, then they were the responsibility of the architects and structural engineers engaged by the main contractor, and not the subcontractor’s responsibility. Once proceedings were commenced, both the main contractor and the subcontractor looked to join the architects and structural engineers as parties to the proceedings. There were a number of issues before the Court, but one of them was whether the subcontractor, as a Part 20 claimant, was entitled to proceed against the architects and structural engineers as Part 20 defendants, given that the Pre-Action Protocol had not been followed as between the subcontractor and the Part 20 defendants. A trial date for the hearing had been set by the time the Court considered the various submissions concerning compliance with the Pre-Action Protocol.
The complaint of the architects, as Part 20 defendants, was in substance that as new parties to the existing litigation, they ought not be required to proceed with the litigation, as there had been insufficient information provided by the subcontractor concerning its claim before it commenced proceedings against the architects. The architects sought a stay of the Part 20 proceedings until such time as there had been compliance with the Pre-Action Protocol.
Jackson J held that there would not be a stay of the Part 20 proceedings. Significant to his Lordship’s decision was the fact that:
- the architects had received a certain quantity of information concerning the subject matter of the claim before proceedings were brought; and
- moreover to stay the proceedings would jeopardise the trial date which had already been set.
The position which the architects found themselves in could be remedied by the subcontractor providing further information concerning its Part 20 claim, or if there was prejudice suffered by the architects then a costs order could be made against the subcontractor at the end of the proceedings to reflect the fact that it had not complied with the Pre-Action Protocol.
What this decision demonstrates is that the Court, in the exercise of its case-management powers, will not, for the purposes of Part 20 claims, insist upon compliance with the Pre-Action Protocol at all costs. The Court will, in endeavouring to comply with the overriding objective of the Civil Procedure Rules, attempt to strike a balance between ensuring that new parties to existing litigation have the benefit of substantial compliance with the Pre-Action Protocol, and on the other hand the undesirability of losing a trial date should proceedings be stayed to permit compliance with the Pre-Action Protocol. It may be noted that in another recent decision, the TCC has indicated that it may view sympathetically the position of Part 20 claimants who have genuine difficulty in complying with the Pre-Action Protocol: Wates Construction Ltd v HGP Greentree Allchurch Evans Ltd [2005] EWHC 2174 (TCC) at [14], per HHJ Coulson QC.
The Department of Constitutional Affairs has recently been reviewing the various Pre-Actions Protocols with a view to encouraging parties to engage in Alternative Dispute Resolution procedures. The TCC has initiated a consultation of the application of the Construction and Engineering Pre-Action Protocol, which will include a review of the position in repsect of Part 20 claims. A copy of the consultation document may be found on the TeCSA website at www.tecsa.org.uk.
This article first appeared in our Construction and development legal update Spring 2006. To view this publication, please click here to open it as a pdf in a new window
