Back to basics: The Pre-Action Protocol for Construction and Engineering Disputes

The Pre-Action Protocol for Construction and Engineering Disputes governs parties' conduct before the issuing proceedings. The aim is to encourage parties to a dispute to set out their respective cases and exchange sufficient information in order that they understand each other's position. In turn, this should allow the parties to try and narrow the issues in dispute, make an informed decision about the potential for settlement or how they might seek to resolve the matter without starting proceedings; for example, through the use of alternative dispute resolution (ADR). 

Different types of disputes are governed by different specific protocols. The Pre-Action Protocol for Construction and Engineering Disputes applies to exactly what it says "on the tin": construction and engineering disputes. This also encompasses professional negligence claims against engineers, architects and quantity surveyors. The protocol should be read alongside section 2 of the "Technology and Construction Court Guide".

If a party does not engage or comply with the protocol, there is a risk of costs imposed by the court later down the line – that is, having costs awarded against them for not attempting to narrow the issues or settle at the beginning of the dispute. This is, however, rare and the court will generally only impose costs sanctions "in exceptional circumstances, such as a flagrant or very significant disregard".

Protocol timeline

• Day 1: Claimant serves pre-action protocol letter of claim.
• By day 14: Defendant acknowledges receipt. 
• By day 28: Defendant serves letter of response.
• By day 49: Claimant serves response to counterclaim. 

Or, if no counterclaim, parties attend a pre-action meeting, then:

• Dispute settles or claimant issues proceedings or parties can agree to take other steps (for example, use of ADR)

This timeline is indicative only and the parties can agree to extensions to the deadlines between themselves. As a general rule, the longest time for response to a letter of claim is considered to be 3 months for a very complex dispute. 

Letter of claim 

A high-level summary of what a letter of claim should include, would be:

• The full details of the names and addresses of the relevant parties to the dispute.
• Reference to the key contractual or statutory provisions that the claimant is relying upon.
• A "proportionate breakdown" of the relief claimed.
• The names of any appointed experts and what they will opine on.
• Confirmation as to whether the claimant wishes the protocol referee procedure to apply.

Importantly, this letter will not be without prejudice or confidential so it can be referred to in any later litigation. It should include sufficient information to outline the nature of the case including a brief summary of the claim or claims. The overriding requirement is for the letter to be proportionate to the complexity and value of the claim. 

Letter of response

The letter of response should be similarly proportionate. It should:

• State which claims are accepted, which are rejected and on what basis.
• Set out any counterclaim.
• Provide the names of any appointed experts and what they will opine on.

The defendant does not have to share the name and address of its insurer but it is common for the claimant to request confirmation that the defendant has notified its insurers. 

If the defendant does not acknowledge or provide a response within an agreed or reasonable time, the claimant can opt to commence proceedings without further compliance with the protocol. 

Pre-action meeting

As set out in the timeline above, the parties should meet within 21 days of the claimant receiving the defendant's letter of response. The form of the meeting is not prescribed and can include mediation. 
The overall aims of the meeting should be:

• To narrow down the issues in dispute.
• Identify the root cause of disagreement in respect of each issue.
• Seek to find a route to settlement without litigation.
• If settlement is not possible, agree the next steps to ensure the parties comply with the overriding objective in the Civil Procedure Rules 1.1; that is, dealing with the case justly and at proportionate cost.
• If the parties are unable to agree on a means of resolving the dispute other than by litigation then they should seek to agree: areas where expert evidence is likely required and how that might be dealt with; the extent and nature of disclosure, with a view to saving costs; and the conduct of litigation, with the aim of minimising cost and delay.    

Everything said at a pre-action meeting is treated as without prejudice apart from certain matters may be required to be disclosed to the court at a later date, including: that the meeting took place; when and who attended; the identity of any party who refused to attend and the grounds for this; if the meeting didn't take place, why not; any agreements concluded between the parties; and whether alternative means of resolving the dispute were considered or agreed.

The protocol process ends at the end of that meeting or, if there is no meeting, 14 days after it should have taken place.