Pre-Action Protocol

© Daniel Atkinson 2007 30 September 2007

Pre-Action Protocol

The Pre-action Protocol for Construction and Engineering Disputes came into force in October 2000. The Protocol is a procedure for the exchange of information between the parties followed by a meeting. The requirement is that each party makes a clear and concise summary of their respective cases.

In Daejan Investments Ltd v The Park West Club Ltd [2004] 1BLR223 HHJ Wilcox described the nature and objective of the Pre-action Protocol in relation to dispute resolution.

1. The Civil Procedure and the Protocol provided a system where recourse to the courts and to the expense and consequences of the litigation process was a final resort. Open handedness as to information and documentation was to be encouraged together with the opportunity for realistic discussion leading to solutions that enabled parties to compromise or settle their differences.
2. The pre-action protocol required a claim letter with a clear summary of the facts on which each claim is based. The object of the protocol was not to bind one party unilaterally but a a reciprocal obligation. It was meant to get people to put their cards on the table and to honestly and rationally discuss matters.
3. The settlement could be on a strictly legalistic basis or on a commercial basis, but they should not be deprived of the opportunity to resolve their difficulties.

In order to deal with possible use of the Protocol in an oppressive manner including extensive requests for detailed information or evidence in April 2007 a paragraph 1.5 was added dealing with proportionality. The  overriding objective at CPR rule1.1 was expressly stated to apply to the pre-action period. The amendment provides that the Protocol did not impose a requirement on the parties to marshal and disclose all the supporting details and evidence that may ultimately be required if the case proceeded to litigation.

Stay of Proceedings for Non-Compliance

There have been a number of cases where the Court has considered non-compliance with the Pre-action Protocol in relation to costs in the action. Although that provides some compensation it does not fully compensate for the loss of a real opportunity to settle the issues and avoid the expense and disruption to business of litigation proceedings.

In Cundall Johnson and Partners LLP v Whipps Cross University Hospital NHS Trust [2007] EWHC 2178 (TCC) the NHS Trust applied for a stay of the action by Cundall for outstanding fees on the grounds of non compliance with the Pre-action Protocol.  The NHS Trust was aggrieved that Cundall had failed to set out its case properly in pre-action correspondence and that was the reason for the application.  the purpose of the application was to allow the parties to attempt settlement.

Mr Justice Jackson found that Cundall did not comply with the Protocol. The contractual basis of one of the claims was obscure and a letter of claim had not been sent. As to another claim an expert report had been sent but that in itself was not compliance with the Protocol.  There was never a letter summarising the contractual basis of that claim.

Mr Justice Jackson observed that the grant of the stay was a matter for the Court's discretion to be exercised in the light of all the circumstances. In the instant case there were three reasons why he considered that a stay should be granted.

1. There was a real possibility of settlement if the parties went through the Protocol processes.
2. As a consequence a stay would be in the best interests of both parties and could save both parties from incurring unnecessary litigation costs. It might also lead to an earlier resolution of the dispute between the parties.
3. It was unfair on the NHS Trust to proceed immediately with litigation, when a proper summary of the claim has not been notified in advance.

In the result Mr Justice Jackson granted the stay on 19th September 2007.  It was observed that the NHS Trust should be in a position to send its letter of response within one month and that the meeting between the parties, envisaged by section 5 of the Protocol, should be held during November. This meant that the process might lead to settlement before 1st December. If not, the litigation would resume.