Building Disputes – A New Way of Doing Things

Lawyers are sometimes accused of “playing games” when exploiting tactics to gain an advantage for their client. Litigation, like chess or monopoly, has a set of rules. These must be complied with if the lawyer’s client, or indeed the lawyer himself, is not to be penalised in the form of an adverse costs order.

These rules can apply even before the Court becomes involved through the issue of proceedings. In certain types of disputes, and these include construction and engineering, the rules require the parties to comply with a pre-action protocol. This protocol was comprehensively amended in April 2007.

The express purpose of the protocol is to encourage the early and full exchange of information about any claim to help the parties avoid litigation, if possible, and to support the efficient management of proceedings where litigation cannot be avoided.

Whilst the intention is sensible, complying with the protocol in properly preparing a claim in a way that the proposed defendant can deal with it may be expensive for both the claimant and the proposed defendant. It often involves the instruction of experts to advise on the facts of the case, including quantification, and often there are a large number of documents to consider.

Of course, the claimant may be mistaken and through the exchanges of information and correspondence between the parties it may emerge that the claim has no basis after all. The question then is who pays the innocent party’s costs for all the effort put into dissuading the claimant from pursuing a baseless claim against him?

The courts recently decided on this issue that a party who successfully persuaded the claimant that there was no case against them were not entitled to recover from the claimant the substantial expenses they had spent in proving their point.

The recent changes to the rules try to eliminate the obvious potential injustice in these circumstances. The rules now state that the protocol must not be used as a tactical device to secure advantage for one party, or to generate unnecessary costs. Prior to the change it was not unknown for a party facing a perfectly legitimate claim, but who simply wanted more time for his own reasons to exploit the protocol, to obtain up to two months’ further grace.

In such circumstances now, the claimant can make representations to the Court in the event of being accused of issuing proceedings prematurely.

The Courts have a very wide discretion to take each parties’ approach to the litigation at all stages into account for the purposes of allocating the litigation costs at the end of a case. The old principle of “winner takes all” no longer applies to the rules of the game of litigation.

Published 12/06/2007. The author of this article is Jim Gorrod