The Pre-Action Protocol for Construction and Engineering Disputes sets out a timetable for the exchange of information about a claim prior to the issuing of Court Proceedings.
The protocol states that within 28 days of the defendant’s substantive response “the parties should normally meet”.
The purpose of the meeting is to explore settlement options or to agree the steps to be taken so that litigation can be conducted in accordance with the overriding objective (i.e. saving expense, keeping cost proportionate and dealing with the dispute fairly).
The Court has generally adopted a pragmatic approach to enforcing the Protocol.
In Higginson Securities v Hodson Higginson engaged Hodson (an architect) in relation to the development of a new church and a block of flats.
The claim was for professional negligence and reimbursement of fees. The value of the claim was around £70,000.
Higginson sent a 4 page Protocol claim letter; Hodson requested further information, which took some time to be provided, so that Hodson’s 6 page response letter was not sent until some 8 months later.
The response letter denied liability and suggested the claim was so weak that it required Higginson to confirm the claim was withdrawn.
Neither party proposed a meeting.
Higginson issued (but did not serve) Court proceedings 2 months later. Hodson argued that the Protocol had not been exhausted, and that the parties should meet. It threatened to apply for a stay of the Court proceedings if they were served.
Higginson said that given the contents of the response letter there did not appear to be much merit in holding a meeting, but offered to meet if Hodson so wished.
The parties were unable to agree terms, so Hodson made the application for a stay.
The Court commenced that a meeting was not a mandatory requirement, but the parties should normally meet until there was good reason not to.
The Court said that it was not surprising that Higginson thought a meeting was unlikely to result in a settlement and that if Hodson thought a meeting was a good idea he could have suggested it.
In the circumstances, Higginson’s approach had been pragmatic, whereas Hodson’s was not given its insistence on Higginson, making various concessions in respect of costs before a meeting could take place.
Hodson’s application was therefore dismissed with an order for Hodson to serve a Defence, followed by a 28 day stay to allow the parties to meet. Hodson was also ordered to pay most of Higginson’s costs of the application.
Comment: From the Judgement, it is clear that the Protocol is not to be used tactically or as a weapon; its primary purpose is to further the overriding objective. In following the Protocol the parties should co-operate, and in lower value claims they should seek to minimise costs. As a general rule the parties should meet, unless there is good reason not to.
The Court also commented that from a commercial point of view fighting the case was pointless as both parties’ costs were likely to outweigh the value of the claim and that unless indemnity costs were ordered even the winning party would have to bear a significant proportion of its own costs.
Author: James Coppinger, Head of Construction and Engineering.
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