We have raised the importance of complying with the Pre Action Protocol (the “Protocol”) on many occasions, (for example see the Charles Church case in Issue 84). This was the issue before Mr Justice Jackson here. CJP agreed to provide engineering services to the Trust in respect of two preliminary projects. The first was for enabling works and the second was for the construction of a new energy centre ("the EC Works"). CJP claimed that it was owed outstanding professional fees on both projects.
In respect of the enabling works, in March 2006 CJP sent a letter to the Trust requesting payment of five invoices totalling some £305k. The parties' solicitors entered into correspondence and the Trust requested details of CJP's appointment documentation to verify the unpaid invoices. CJP did not produce any documents and subsequently alleged that there was an oral contract. CJP also requested a meeting. The Trust unsurprisingly requested proper details of the oral contract and added that they did not think a meeting could sensibly take place until proper details had been provided, and they had been given an opportunity to investigate them. In August 2007 CJP commenced proceedings to recover the fees.
In respect of the EC works, in July 2006 the Trust made a claim against CJP intimating negligent design, for some £4million. In October 2006, CJP responded with a claim for outstanding fees of £153k. After further correspondence including on whether there was an entitlement to adjudicate, CJP commenced proceedings to recover the outstanding fees. The Trust applied for an order that the action be stayed to enable the parties to attempt settlement, on the ground that CJP had failed to comply with the Protocol. A key issue was the amount of detail that needs to be provided in the Protocol correspondence. In a comment of some importance, Mr Justice Jackson noted that:
"The Protocol sets out a procedure for the exchange of information between the parties followed by a meeting. Neither the letter of claim nor the defendant's response are required to resemble pleadings either in their length or in their detail. What is required from each side is a clear and concise summary of their respective cases."
He reinforced this by noting that as a consequence of the concern that had been expressed in some quarters that the Protocol could be used in an oppressive manner, a new paragraph 1.5 had been added to the Protocol which made it clear that both parties must take a proportionate approach. Mr Justice Jackson stressed that the intention of the changes to the Protocol was this:
"If both the letter and the spirit of the Protocol are complied with, many disputes can be resolved at proportionate cost without the need for proceedings. Furthermore, disputes which are litigated can be more sharply focused at the outset."
The Judge made it clear that claims for professional fees fell within the Protocol. The claim made by CJP was a substantial one, and one that the Trust, as a public authority, was entitled and obliged to seek to verify. The Judge concluded that CJP had not complied with the requirements of the Protocol. In particular, in relation to the enabling works, the contractual basis of CJP's claim remained "obscure until proceedings were issued". In other words, CJP's lawyers had not sent out a claim which complied with the requirements of paragraph 3 of the Protocol. Had they done so, the basis of the contractual claim would have been clear. With the EC project, CJP's solicitors had forwarded a copy of their expert report to the Trust's solicitors. The Judge accepted that this was "helpful" but said that this in itself was not sufficient to comply with the requirements of paragraph 3 of the Protocol.
The Trust could not be criticised for refusing to meet as a defendant's obligations are only triggered once it has received a proper letter of claim. A meeting is not required until there has been a proper exchange of information between the parties. Mr Justice Jackson concluded that there would be a real possibility of an early settlement if the parties went through the Protocol process. Finally, he remarked that it was unfair to proceed with litigation, when a proper summary of the claim had not been notified in advance. Accordingly, he ordered that the action be stayed for 10 weeks. Whilst Mr Justice Jackson has made it clear that he does not expect that letters of claim and responses be so detailed as to resemble pleadings, the courts will still expect parties to set out their positions clearly. If they do not, the Court may well exercise its discretion to stay proceedings in order that the parties comply. And do not forget that this may, in the end, result in adverse cost consequences for the party in default. International Arbitration