Litigation in the Technology and Construction Court

Adam Constable KC; Lucy Garrett and Calum Lamont

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CHAPTER 2 An overview of a claim in the TCC

2.1 While there are countless variations on a theme, the general shape of litigation in the TCC forms a well-trodden path. This is as follows:

The pre-action phase
Commencement of proceedings
Pleadings
The first Case Management Conference
Disclosure
Witness statements
Expert reports (joint and individual)
Pre-Trial Review
Trial
Judgment
Appeal

Pre-action phase

2.2 There is a published Pre-Action Protocol1 for Construction and Engineering Disputes. This is the most obviously relevant Pre-Action Protocol applicable to work in the TCC, and while there is also a Professional Negligence Pre-Action Protocol, it is prevailed over by the Construction and Engineering Disputes one if the claim is one against architects, engineers or quantity surveyors. The purpose of the Pre-Action Protocol is to encourage the exchange of early and full information about the prospective claim, to enable parties to avoid litigation by settling prior to the commencement of proceedings and to support the efficient management of proceedings if they cannot be avoided. The pre-action process must be complied with in relation to any prospective litigation which falls within the ambit of the protocol, save in limited circumstances (which include where the same issues have just been adjudicated). The basic structure of the pre-action phase is the provision of a letter of claim, a letter of response and a meeting. 2.3 As explained in the TCC Guide, the protocol does not contemplate an extended process and it should not be drawn out. The letter of claim should explain the proposed claim in sufficient detail to enable the potential defendant to understand and investigate the allegations. While the guide states that only essential documents need be supplied, in practice defending parties often make relatively broad requests for documentation at the pre-action stage. It is clear that the claimant will usually be well justified in refusing broad requests; the claimant will need to balance the proportionality of agreeing to such requests with the

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fact that, unless satisfied, the defendant may be unwilling to enter meaningful commercial negotiations. It is not necessary as part of the letter of claim to provide an expert report, although it must identify the name of any experts who have already been instructed. In relation to certain types of claim, however, there will potentially be a strategic advantage to the provision of a report. For example, in professional negligence actions, it is improbable that a claim will settle until the defendant has seen a report supporting the allegations of negligence. The disclosure of such a report at an early stage in a strong case is likely therefore to be beneficial to the claimant’s prospects of swift settlement. 2.4 The defendant has two weeks to acknowledge the letter of claim and then a further two weeks (i.e. 28 days from the date of the letter of claim) to provide a response. As recognised by the TCC Guide, it is usual in complex cases for an extension of time to be agreed between the parties, and the protocol sanctions this up to a period of three months. The meeting is to be a without prejudice meeting. Often, parties will agree to hold a mediation in lieu of the pre-action meeting. 2.5 Ordinarily, costs incurred during the pre-action phase are not recoverable if the matter is resolved without the need for litigation. Section 51 of the Supreme Court Act 1981 provides that ‘the costs of and incidental to the proceedings. . . shall be in the discretion of the Court’. While pre-action costs can be costs ‘incidental to’ any subsequent proceedings,2 if there is no litigation, there are no costs of litigation.3 The requirement that the parties engage in pre-action correspondence was deliberately imposed, at least in part, with a view to extending the period during which each party would conduct its case on the basis that it was not incurring a liability to pay the other party’s costs if no action was commenced. The Courts have observed that cost shifting tends to increase costs, because parties feel able to incur costs in the expectation that the other party will pay them.4 Therefore, should the claiming party decide that it will not proceed having seen the content of the defendant’s response, the erstwhile prospective defendant will not be able to obtain any order from the Court requiring its costs to be paid. Similarly, where proceedings are started, but in doing so, the claimant abandons some of those claims, it will only be in exceptional circumstances that the claimant would be required to pay the costs of the defendant in relation to those abandoned claims.5 2.6 Where the Claim Form has been served, the costs incurred pre-action in relation to claims which ultimately form part of the litigation are costs incidental to that litigation and are likely to form part of the pot of costs recoverable in principle. In Webb Resolutions Ltd v Countrywide Solicitors Ltd,6 once the Claim Form had been issued, the jurisdiction of the Court over the costs, which could include pre-action costs, was triggered. In Webb, the Court considered that it would be wrong to ignore the considerable expense that the defendant had incurred in dealing with the claim, and the disproportionate nature of the costs incurred by both parties. 2.7 Once proceedings have been issued, a party who has failed to comply with the Pre-Action Protocol can be penalised by the Court. This might take the form of particular case management directions, or in costs, or in terms of the interest rate payable on any sum of money payable. The Court will be concerned with substantive rather than technical

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breach. It is to be remembered that the need to comply with the Pre-Action Protocol does not affect statutory limitation periods, so if a party finds itself against time limits it should issue and if necessary serve the Claim Form to preserve its rights and seek (by consent or otherwise) a stay of proceedings to then allow the Pre-Action Protocol to be complied with. As noted above, in these circumstances, however, the Court will have a discretion to award costs to the defendant if the matter is resolved during the protocol process.

Commencement of the proceedings

2.8 All proceedings must be started using a Claim Form under the relevant part of the Civil Procedure Rules (CPR). Part 7 claims are for most claims; Part 8 (considered further in the context of adjudication enforcement in below) is intended for disputes which are unlikely to involve a substantial dispute of fact;7 Part 62 (considered in ) relates to an ‘arbitration’ Claim Form, used in circumstances where orders ancillary to arbitrations are sought. The Claim Form should be marked ‘Technology and Construction Court’ in the appropriate place. 2.9 In the most straightforward of claims (for example, perhaps a claim for moneys unpaid pursuant to an invoice), Particulars of Claim can be provided with the Claim Form, but if they are not they must be served within 14 days after the service of the Claim Form. The Claim Form, as with all statements of case, must be served with a statement of truth. If the Claim Form has been issued by the TCC in the Rolls Building in London, it is then generally to be served on the defendant by the claimant. This contrasts with the procedure in some other Court Centres where the Court Centre itself effects service of the document. A Claim Form must generally be served within four months of its issue. If the Claim Form has not been served within that time, it expires and a further Claim Form has to be issued. This is not of itself a problem unless the claimant’s case is on the cusp of the limitation period. In such circumstances, it is obviously inadvisable for the claimant to leave service to the last minute. 2.10 The defendant, when receiving the Claim Form, will be provided with a form for the Acknowledgement of Service. This has to be done within 14 days. If the defendant is going to dispute the jurisdiction of the Court, it must comply with Part 11 of the CPR. However, claims that the dispute in question should be decided by some other contractually required form of dispute resolution (such as arbitration) is not generally regarded as a matter which ousts the jurisdiction of the Court in the sense intended by Part 11:8 instead, it is for the receiving party to apply to the Court for a stay of proceedings. The stay is mandatory if there is a valid arbitration agreement in place, pursuant to section 9 of the Arbitration Act 1996. If there is some other sufficiently clear dispute escalation clause (for example, a requirement that the parties attempt to settle the matter by a defined process prior to the commencement of proceedings), the Court will generally give effect to such clauses and, again, stay the proceedings pending compliance.9 However, the stay is, in these circumstances, discretionary rather than mandatory.

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Pleadings

2.11 Pleadings in TCC litigation can be voluminous. Noticeably, the TCC does not adopt the same position as the Commercial Court, where the guidance requires that pleadings be limited to 25 pages unless there are good reasons. However, the fact that the Judges are experienced in understanding and assimilating large and complex pleadings should not be a licence for unnecessary complexity and verbiage. 2.12 A good Particulars of Claim should be well structured. It is likely that, particularly in the case of a lengthy document, there will be an introduction or overview that sets out at a high level the nature of the claim. Ordinarily, a pleading in a TCC case will then deal with the following:

(1) The contractual (or other) relationship between the parties, and key relevant clauses of the contract or other obligations (for example, statutory) on which the claim will rely. In defects cases, there are often a number of relevant sections from the main body of the agreement, the conditions and the specifications. It is often convenient that these are relegated to an appendix to the pleading.
(2) In delay claims, the identification of the main programme obligations and those activities which the claiming party alleges are critical to completion of the project will usually be essential, and if not included within the claim can be the subject of legitimate requests for further information.
(3) A narrative or chronological statement of the key events giving rise to the claims. Again, in a delay claim, this might be lengthy and is likely to draw on the content and structure of expert evidence which has been prepared for the purposes of pleading the claim. For example, it might be that the pleading itself breaks up the overall chronology into mini-periods or ‘windows’, which is commonplace in delay analysis (see generally ), at the end of each of which will be the additional and aggregate delay caused. By contrast, in a defects claim, it is likely that the key information will be a description of what has gone wrong, the investigations undertaken and the findings. Again, this would involve pleading the key elements of expert evidence which will in due course be relied upon (for example, the surveys of water ingress, the concrete test results, the measured movement and cracks in a building).

(4) A section on breach which interrelates the content of the two preceding sections (i.e. it explains how the facts set out in the statement of key events constitute a breach of obligation, whether contractual, tortious or statutory). This is a critical element of the pleading and will often constitute the heart of any agenda for an ultimate trial. While it is sometimes tempting to elongate the list of failings by characterising the same underlying issue in numerous different ways, this is not likely to assist either clarity or simplicity and will almost certainly not improve the claim; it is a temptation that should be resisted.

(5) Causation. It is necessary to include a statement of what loss or damage has been caused by the breach. In many cases, causation is straightforward to articulate; in other cases, the linkage between cause and effect may be more opaque. In an ideal world, a breach leads to a discrete and identifiable consequence which can then be quantified. In the real world, breaches often interrelate and interact, so

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that an aggregated effect cannot sensibly be pinned to a single cause. This can be particularly true for the main types of cases grappled with in the TCC: arguments about causation are very often at the heart of TCC litigation. Where there are a number of defects, potentially the responsibility of different parties (or to different degrees), questions will inevitably arise about their relationship with the loss. Do they interact sequentially, consecutively or concurrently? Would the loss said to be caused by Defect B have been caused by Defect A in any event? Similarly, in cases for extensions of time or loss and expense, the competing causes of delays will usually be central. The pleading needs to get the balance right in terms of the amount of information provided: it is today generally regarded that causation is a matter of evidence and for the Court to decide having heard that evidence, so that a skirmish on the pleadings is unlikely to get traction unless the claimant has failed to articulate, in the most basic way, the case the defendant has to answer.10 However, the basics would generally include, as suggested above, the identification of the contended critical path and how periods of claimed delay arise through the project. Similarly, in a defects claim, the pleader should ideally identify which claimed sums relate to which breaches, and if the case is ultimately one where an aggregation of defects causes an aggregated loss, this should be stated.
(6) Quantification of loss. The pleading must then quantify the losses which have been caused. Actual losses incurred should be capable of precise identification; future losses will by definition be estimates. However, it is usually only in circumstances where a future loss is dependent upon a third-party action that the Court would consider granting an indemnity in respect of future losses: generally, the Court will estimate the future loss and award damages (discounted for early receipt).

2.13 The stereotypical TCC claim is that in which a Scott Schedule features in the pleadings. This is a document in which elements of the claim or counterclaim are set out by way of a table, often in landscape format, in which the case on breach, causation and loss is set out item by item, and to which the responding party sets out its case in the adjacent columns. The last column is commonly for the Judge to set out its decision. As explained in the TCC Guide, the secret of an effective Scott Schedule lies in the information that is to be provided and its brevity. Thus, the parties should agree the column headings (and if there is a dispute about this, the Court can give guidance). Brevity, however, must be tempered to some degree by the need for detail. It is often useful for the parties to sub-number points within the columns and in terms of formatting, align related points across the page. 2.14 It is open to a party to serve on the other a Request for Further Information, pursuant to Part 18 of the CPR. This often, but not always, arises in relation to pleadings. Pre-CPR, it was almost a matter of course for a party to serve very lengthy requests for ‘further and better particulars’ (as they were then called). These could run to hundreds of pages and many hundreds of questions were said to arise, somewhat formulaically, out of a lack of clarity in the pleaded case. Happily, it is rare for such documents to form part of case strategy nowadays, and it is unlikely that the Court would look too kindly upon such an approach.

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The Court, instead, will consider whether the information really is necessary to permit one party to understand the case being advanced; and it will also be conscious of the distinction between the summary of facts which the pleading requires, and more detailed evidence. Similarly, requests for documentation prior to disclosure might well be considered inappropriate. However, where a party raises a limited number of pertinent questions genuinely arising, and which should be relatively straightforward to answer, modern Judges are likely to be unimpressed with a failure to provide a constructive response. Often, the Judges in the TCC may adopt a practical approach to the provision of such information through expert discussions, rather than strictly through pleadings, and will expect of the parties a similarly constructive approach to sensible case management.

The first Case Management Conference

2.15 The parties are expected to complete the case management information sheet. In this, the parties set out various details relating to the claim and the draft directions sought. Ideally, the parties should cooperate in advance of the service of these forms so that agreed directions (or areas of disagreement) can be identified. The parties are also required to serve a disclosure report not less than 14 days before the first Case Management Conference (CMC), and no fewer than seven days before, the parties should discuss and seek to agree proposals for disclosure and to file cost budgets. (In relation to cost budgeting, see generally below.) It is usual in larger cases that advocates will prepare notes for the hearing which set out the remaining issues and briefly summarise the arguments being advanced to support the parties’ positions. 2.16 The standard matters which are discussed, agreed or directed at the first CMC are as follows:

(1) The addition of other parties. If the first CMC takes place before the service of the defence, which is sometimes necessary but not usually ideal, the defendants ought to be candid about whether they plan to serve any additional claims as part of their defence. This is likely to affect the remaining timetable; it may well be that the Court would simply wish to adjourn the CMC until the relevant additional claims have been served and, potentially, defences in those matters completed.
(2) The completion of pleadings. A CMC is often heard after the service of defences, but before the ‘close’ of pleadings. If this is so, dates for the service of a Reply, or a Defence to Counterclaim, and sometimes further pleadings (such as a Rejoinder), are set down. It may be, in addition, that if a party has served a Part 18 Request for Further Information, any disputes relating to whether or to what extent such a document requires a response will be dealt with.
(3) Preliminary issues or split trial. Whether there should be any preliminary issues, or whether the trial should be split (for example, between liability and causation, followed by quantum). Preliminary issues are where the Court considers and delivers a binding judgment on particular issues in advance of the main trial. As pointed out in the TCC Guide (Section 8), preliminary issues can be an extremely cost-effective and efficient way of narrowing the issues between the parties and, in certain cases, of resolving disputes altogether. Generally, an issue would only be considered suitable for a preliminary issue if: (1) it was capable of resolving

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the whole of the proceedings or a significant element of it; an example of this might be a limitation point, where, if correct, the claim fails (although note the warning at 8.4.1 of the TCC Guide that limitation points can often require considerable evidence); (2) it was capable of significantly reducing the scope and therefore the costs of the main trial; an example of this is where it is alleged that there was an oral agreement resolving the final account dispute, such that if correct, substantial factual and quantum evidence would be unnecessary; or (3) it was capable of significantly improving the possibility of a settlement of the whole proceedings; an example of this is the construction and application of a limitation of liability clause, the resolution of which would substantially alter the financial dynamic of the litigation. A preliminary issue is normally only ordered if there would be limited oral evidence; and the TCC guidance suggests that it is generally considered that a preliminary issue hearing would not take more than four days even in a larger and more complex matter. While, obviously, a preliminary issue in the correct case can unlock a dispute, it is suggested that some caution ought to be exercised in determining whether a preliminary issue is sensible. For example, strategically it might be that not deciding a discrete point will make the overall case more, rather than less, likely to settle. Also, it may be that deciding a particular issue which is not determinative of the whole matter at an early stage allows the party which has lost the point to recast its case, or at least change the emphasis, whereas allowing the point to run to trial deprives the party of the opportunity to regroup in this way.

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