Pre-Action Protocol for Construction and Engineering Disputes
14 November 2022
The Pre-Action Protocol for Construction and Engineering Disputes applies to all construction and engineering disputes (including professional negligence claims against architects, engineers and quantity surveyors).
Its objective is to encourage the early exchange of information to help narrow the issues and assist the parties to resolve the dispute using appropriate Alternate Dispute Resolution (ADR) methods such as mediation, without the need to litigate to potentially avoid substantial legal fees. Whilst the intention behind the protocol for construction claims is the same as the Pre-Action Protocol for Professional Negligence, it is important to understand there are subtle differences, especially with regards to the strict time frame for acknowledging and responding to claims made under the protocol.
Where does it apply?
The Pre-Action Protocol applies to all construction disputes, except for when they:
- are for the enforcement of the decision of an adjudicator to whom a dispute has been referred pursuant to section 108 of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”),
- include a claim for interim injunctive relief,
- will be the subject of a claim for summary judgment pursuant to Part 24 of the Civil Procedure Rules,
- relate to the same or substantially the same issues as have been the subject of recent adjudication under the 1996 Act, or some other formal alternative dispute resolution procedure, or
- all parties expressly agree in writing that the claimant shall not be required to comply with the Protocol.
Key Steps in the Protocol
The protocol lays out a timeline for actions required by both parties with strict deadlines. This step allows for clarification and for both parties to be precise in their claims.
Letter of Claim
The claimant is responsible for sending a Letter of Claim to the defendant. The letter must include:
- The claimant’s details (name and address)
- Details of each proposed defendant
- A summary of the claim. The principal contractual/ statutory provisions relied on and, where applicable, the value of any claim
- Details of any experts already instructed and, whilst not a requirement, any expert reports where they are central to the claim
- The claimant’s confirmation as to whether they wish to apply the Protocol Referee Procedure (an independent individual to give a view on any failure to comply with the Protocol and provide directions to assist the parties in complying with the Protocol)
After the Letter of Claim has been received the proposed defendant(s) has 14 calendar days to respond with a simple acknowledgement to confirm its receipt. Failure to do so will entitle the claimant to commence court proceedings without any further need to comply with the terms of the Protocol.
The defendant can, within 28 days of receiving the letter of claim, raise objections on the grounds that; they have been wrongly identified as the defendant, the court does not have the jurisdiction or that the matter should be referred to arbitration.
If there are no grounds to raise objections the defendant has 28 days from receipt of the Letter of Claim to respond, unless both parties agree to extend the deadline by up to 3 months. The Letter of Response should contain:
- a brief and proportionate response to the claim has certain criteria it must fulfil (set out in the Protocol) and should refer to the facts laid out by the claimant in the letter of claim
- any Counterclaim the Defendant intends to make (such as the pursuit of unpaid fees). If a counterclaim is made the Claimant has 21 days to provide their response
- details of any experts already instructed
- the names of any third parties the Defendant intends to submit to the Protocol process
Once again, failure to respond within the stated time will entitle the claimant to commence proceedings without further adherence to the Protocol.
The parties should meet within 21 days of the claimant receiving the Letter of Response, or in cases where the Defendant makes a counterclaim, within 21 days of receiving the Claimant’s response to the Defendant’s counterclaim. The Pre-Action meeting is a chance for both parties to agree the main issues, pinpoint the root cause of the disagreement and how the claim might be resolved without recourse to litigation.
The Protocol sets out who should be present at the meeting, including legal representatives where instructed and insurers (and/or their legal representatives). Those attending should have the necessary authority to settle the dispute if the opportunity arises (and in the case of a corporate entity, a representative who will be authorised to settle or recommend settlement on behalf of the entity).
Parties to a claim should be mindful that the courts are wary of wasting resources on a claim that can be resolved between the parties. However, if litigation is unavoidable, steps should be agreed to ensure that the dispute is conducted in accordance with the overriding objective of the Civil Procedure Rules, namely to enable the court to deal with cases justly and at proportionate cost
The Protocol states that anything discussed at the Pre-Action meeting will be treated as “without prejudice”. In other words, any discussion around attempts to settle the dispute cannot be disclosed to the court as evidence at a later date.
Useful information From Howden’s Construction PI Claims Team
Put in place measures and training to help colleagues recognise the importance of referring a Letter of Claim so it can be acknowledged within 14 days and sent swiftly to your Insurer(s) so they can appoint a legal adviser (panel firm) to defend.
The acknowledgement should be kept to a minimum, it really only needs to confirm receipt of the Letter of Claim. Most importantly, no admissions of liability or offers to settle should be made.
Insurer(s) will expect you to assist the panel firm so they can gain a good early understanding of the issues and possible defences. This will include meetings with relevant personnel and access to all previous correspondence and file notes. From experience, it can take firms a number of days to collate the information so the sooner you start to pull together the papers/emails/files notes etc. the sooner the panel firm can start working on the Letter of Response.
Depending on the size of the claim (alleged loss) and its complexity, it could lead to certain personnel having to spend a number of hours assisting the panel firm in addition to their usual day to day responsibilities. This can effect an individual’s ability to earn fees and bring income into the firm.
If you are not sure whether a letter you have received qualifies as a Letter of Claim under the Pre-Action Protocol for Construction and Engineering please contact a member of the Howden claims team so we can assist you and confirm what the next steps are.