The second edition of the Construction & Engineering Pre-Action Protocol (‘the Protocol’) has now been approved. It has a facelift to make it more user-friendly and less expensive. So the big question is whether this will make a difference?
Key changes are:
- parties only have to give an outline or summary of their claim and defence
- there are shorter timeframes for compliance
- there is no expectation of expert evidence
- meetings can take the form of a mediation
- a protocol Referee to assist the parties
The most defining change is the introduction of a Protocol Referee but with a flat fee of £3,500 plus VAT for the appointment I am already questioning whether the Protocol does have any cost advantage over the old regime.
There is definitely a streamlining of procedure so I would welcome these new changes, although Construction Insurers are concerned that the absence of the need to give full information in the initial Letter of Claim/Response (usually allowing parties to understand and re-evaluate their positions), may lead to increased costs and work for the Courts if the dispute cannot be settled in the Protocol phase.
It is more user friendly with less technical information and meetings required, but what of the Referee? This is the only pre-action protocol which has a Referee so no parallels can be drawn and the essence of his adoption is both optional and consensual. There are pre-requisites for the appointment in terms of paperwork and timeframes but what does he actually do? As I understand it, the Referee can give directions for the future conduct of the Protocol process to help the parties settle their dispute but also to find out whether there has been non-compliance and, if so, whether that non-compliance demonstrates a flagrant or significant disregard for the Protocol (for costs purposes). His decision is also binding on the parties and must be complied with until the dispute is determined by legal proceedings or by further agreement.
What I am struggling with is if one party is reluctant to engage in Protocol fully, then that party is unlikely to agree to the appointment of the Referee in any event. Conversely, if the parties were to disagree as to the actual progress of the Protocol phase then there could be an advantage to the Referee (if appointed) giving his decision on this. This is a fine line: sometimes parties can comply with the ‘spirit of protocol’ rather than the specific terms and so the question will come back to whether its compliance is thought to be flagrant or significant in the eyes of the Referee and how that will impact on the dispute resolution process moving forward and costs sanctions.
The Protocol has a green light from me in theory but in practice I see parties to smaller building disputes may give the Referee a red card due to cost as they may prefer to take their chance with the Court with the financial resources available to them. Only time will tell.
If you require any further information or assistance with this or any aspect of construction law, please call Karen Elder on 01782 205000 or firstname.lastname@example.org