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Building Mediation

If you have a disagreement with a builder over work they have done for you, the pre-action protocol for building and construction disputes could be what you need to reach a suitable compromise without going to court.

The pre-action protocol for building and construction disputes is a piece of legislation that dictates the manner in which disputes surrounding building and construction work should be handled before legal action is resorted to. The pre-action protocol encompasses a number of guidelines and standards that the parties are expected to adhere to before they take the step of going to court. The supposed goal of the protocol is for an alternative dispute resolution (ADR) to be used rather than court action, which can often be unnecessarily expensive and emotionally draining.

The claimant following the steps of the protocol allows the defendant to fully understand the nature of the claim made against them, and based on that information, to decide at any early stage how to react. The protocol aims to ensure that the parties thoroughly explore all the methods alternative to legal action and that they meet at least once in an attempt to iron out their differences without entering formal legal proceedings.

The pre-action protocol, as hard as it might try, cannot prevent legal action being taken in all cases, but even in cases that do eventually end up in the court room, the following of the protocol can set down a solid framework to ensure court proceedings advance swiftly.

The protocol is applicable to all construction and engineering disputes, whether they derive from claims against builders, architects, surveyors or engineers. A claimant in a building or construction dispute is expected to abide by the protocol in all cases, with the following notable exceptions:

  • when court proceedings are required in order to enforce a decision of an adjudicator to whom a dispute has been referred pursuant to section 108 of the Housing Grants, Construction and Regeneration Act 1996
  • when court proceedings include a claim for an interim injunction
  • when the Claimant is seeking a summary judgment pursuant to Part 24 of the Civil Procedure Rules
  • when the dispute is in relation to identical or substantially similar issues as to those that have been the subject of a recent adjudication under the Housing Grants, Construction and Regeneration Act 1996, or another formal alternative dispute resolution ADR procedure.

The protocol comprises 3 main steps, which are:

  • the letter of claim
  • the defendant’s response
  • the pre-action meeting

More information on these is available below.

Letter of claim

The first action to take in a building dispute, according to the pre-action protocol, is to strike up a correspondence with the other party in the form of what is known as a letter of claim. The protocol clearly stipulates what should be included in this missive, but there may be terms in the contract of service between you and the builder relating to complaints, which could take precedence over the protocol, so be careful.

Contents of letter of claim

The claimant, i.e. the customer who hired the builder, who can be aided by a solicitor if necessary, should inform all the defendants (the builders) in writing of the facts upon which the claim is based. It is mandatory for this letter to include full details (i.e. name and address) of both the claimant and the defendant(s) as well as the explicit details of the claim.

These details include the breaches of contract which are purported to have occurred, or statutory rights which form the foundation of the complaint, the type of compensation that is requested, i.e.‘relief'. If a sum of money is demanded as compensation, it should be clearly indicated how this sum has been arrived at.  The names of any experts whose evidence will be called on during the case must also be provided. In the event that a previous claim has been rejected, the claimant can state his or her reasons why he or she believes the original claim was wrongly rejected.

Defendant’s acknowledgement of receipt of the letter of claim

The defendant must acknowledge his receipt of the letter of claim within 14 calendar days of its receipt. This is done by way of a letter of acknowledgement, in which they should state when a formal response will be sent.  If they fail to do this then the claimant is free to commence court action, and will no longer be bound by the terms of the pre-action protocol. They could also ask for an extension to the normal specified time for sending a response. It is prudent to think carefully before you agree to this.

Defendant's response

Once the defendant has acknowledged receipt of a pre-action letter, he or she must decide what what response they wish to issue.

Objections to the Court’s jurisdiction or the named defendant

The recipient of the letter of claim may object to the claim on any of three grounds:

  • The court lacks jurisdiction on the matter
  • The matter should be referred to arbitration
  • The wrong defendant(s) have been named.

If anyone of these applies in the mind of the recipient of the letter of claim, they must send back a letter of objection, clearly identifying the reason for the objection. Where there is a case of mistaken identity regarding the defendant, all the necessary details of who is believed to be the correct defendant should be included. This letter must be sent within 28 days of the reception of the letter.

Defendant’s response

If the defendant has lodged an objection as described above, this letter is not required.

Providing there is no objection, the defendant must send their response no more than 28 days after receiving the letter of claim, or a longer period if the two parties can agree on this. The protocol also sets out clearly what should be included in this letter:

  • An indication of which of the facts in the letter of claim have been agreed to, and which have not been agreed to, with an explanation of why in the latter case.
  • Whether or not the defendant wishes to make a counterclaim against the claimant and details thereof, such as the basis and the type of compensation expected and how much.

If you are dealing with an honourable adversary you should not have any problems receiving the acknowledgement and response in the required time. If a response is not forthcoming then you are entitled to initiate court action.

Pre-action meeting

Legal action should always be looked upon as a last resort, even when you are locked into a construction, engineering or building dispute. A Pre-action meeting represents one last opportunity to try and reach an accord with another party before the proceedings drift into litigious territory.

Once letters of claim and response have been exchanged, the Pre-action meeting is the next step, a chance for both parties to discuss their grievances before beginning any formal legal action. This gives both parties a chance to air their grievances, with the hope of settling matters before anything needs to be taken through an expensive court case.

A meeting should be held between the two parties no more than 28 days after the defendant’s letter of response has been received by the claimant. If the defendant has issued a counterclaim then the claimant needs to respond to this (acknowledgment within 14 days and substantive response with 28 days).

If the response you have received is unsatisfactory or evasive, you could take court action. It would be wise to seek legal advice from a solicitor at this stage. However, if they have written a properly considered response you must proceed to the pre-action meeting stage.

Purpose of a pre-action meeting

Whatever points the two parties may dispute, neither side is likely to view litigation as a preferable option. The preaction meeting can be the first step in ensuring that litigation can be over and done with as quickly as possible, or even avoided altogether.

The purpose of a pre-action meeting is for the parties to discuss the dispute and identify its genesis, aiming towards finding a resolution that does not involve the courts. If this objective is not met, then the meeting can also serve as a platform for discussing details of any litigation that might take place in order for it to be conducted properly.

More than one meeting may be necessary if the first proves unsuccessful. It must also be considered whether alternative dispute resolution would be a preferable option.

Who should attend the meeting?

The parties involved in the building or engineering dispute should both have a representative at the preaction meeting - if the party is a single individual, he or she would be the respresentative. If a party is a larger group, such as a company, the representative should be someone from that company who has the authority to agree to a resolution or settlement.

There may be a third party who would be affected by the outcome of the dispute - if this is the case, a representative from that party should also be present.

If either side in the dispute has already sought legal representation regarding the dispute, said legal representation should also be present. This is not a strict requirement, although if you are deep into a dispute with a construction company or an aggrieved customer, you could greatly benefit from the guidance of a solicitor.

If an insurance company has been involved in the circumstances that caused the dispute, a representative from the insurance company may also attend. This may be a legal representative of the insurer.

Other parties may be present at the meeting(s) to facilitate the discussion. These are often experts on the type of dispute which is taking place. If either side requires an expert to attend the meeting then they should first acquire the consent of the other party.

Going to court

The purpose of the Pre-Action Protocol for Construction and Engineering Disputes is to exhaust all other avenues of complaint, dispute and recompense before resorting to taking the case to court. This is designed to save on court time and legal expenses for both of the parties by solving cases without litigation.

However, this approach is not meant to suggest that there is never a case which should go to court. There are many cases in which the other party is unhelpful, refuses to budge, or even does not respond to your claims in any way. In these cases, you are justified in taking your case further and dealing with the issue through litigation - it is sometimes the only option which remains.

If the job was relatively small then you may be able to use the small claims court. If not, the legal costs will be much steeper. Whichever the case may be, we strongly urge you to take legal advice before proceeding - particularly if the issue at hand is of a value of more than £50,000, in which case it should definitely be handled by a solicitor.

Necessary documentation

You will need to acquire and fill out an N1 Claims Form. You will need to send enough copies of this form for every party involved to have a copy, including yourself and the court), along with a cheque to HMCS to cover the court issue fee.

If your case is especially complicated, you may need to also fill out a Particulars of Claim form to detail the specific nature of your case. If it is fairly simple in nature, you may be able to cover this aspect of the paperwork in the original N1 form.

Going further

The Court will return a stamped copy of the documents to you along with a Notice of Issue, which states how long the defendant has to respond. If they fail to do so within the designated time frame then you will be able to apply for a default judgement. If a defence is filed then you should hire a solicitor to take the case further, especially if the value of the claim is over £5,000.