Further developments on the Pre-Action Protocol

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Following the news last Autumn that a TCC working party is reviewing the Pre-Action Protocol for Construction and Engineering Disputes (the “Protocol”) (see my post from September 2011), does the recent decision of Higginson Securities (Developments) Ltd and another v Hodson [2012] EWHC 1052 (TCC) offer any insight into the TCC’s thinking on the issue?

In this case Akenhead J refused to order a stay of proceedings following the Claimant’s apparent failure to comply with the Protocol. The dispute concerned the development of a church and flats on the Isle of Wight.  The Claimant developer issued proceedings against the Defendant architect for £70,000 on the basis of alleged overpayment and professional negligence.  The Claimant issued proceedings without a meeting having taken place between the parties, as suggested at paragraph 5.1 of the Protocol. The Defendant applied for a stay of the proceedings pending a meeting taking place. 

The stay was refused on the basis that a meeting under the Protocol is not “absolutely mandatory” (paragraph 5.1 of the Protocol states that “the parties should normally meet“). The TCC interpreted this to mean that a meeting should take place unless there was a reasonably good reason for it not to.  This would seem to be a fairly high hurdle as the judge also said that a sufficiently good reason for a meeting to take place is if one party makes a request to meet.  In this case the Defendant had not suggested a meeting prior to proceedings being issued and in fact had refused the Claimant’s suggestions of having a meeting during the litigation process.

It is clear from the judgment that the fact that the claim was low value also had an impact on the Court’s decision and it was suggested that the claim be transferred to the County Court (in line with the latest TCC guidance that claims with a value of less than £250,000 should be issued in the County Court).  Above all, the need for proportionality was emphasised. 

The TCC working party review is ongoing and it is not clear when the results of that will be published, but judgments such as this suggest that the TCC considers it more important that parties to construction disputes comply with the ‘spirit’ of the Protocol than its letter and that proportionality is the significant factor to be borne in mind.