Resolving UK construction disputes – our round-up of practice and procedure

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Our latest Resolving Construction Disputes newsletter reviews a broad range of litigation, alternative and international dispute resolution developments and is aimed at in-house lawyers in the construction industry.

Litigation procedure update (construction focus)

New Pre-Action Protocol for Construction and Engineering Disputes

  • The Technology and Construction Solicitors' Association (TeCSA) and the Technology and Construction Bar Association (TECBAR) launched a second edition of the Pre-Action Protocol for Construction and Engineering Disputes at the Rolls Building on 2 November. You can read more about the new protocol here.

Civil Procedure Rules

  • The 86th update to the Civil Procedure Rules (CPR) came into force on 3 October following a last-minute correction to The Civil Procedure (Amendment No 3) Rules 2016. It deals mainly with the appeals process under CPR 52 but also introduces a revised Precedent H form for filing costs budgets. (If you have not been involved in any litigation for a while, remember that new rules for costs budgeting were introduced in April, including new timescales for filing your costs budgets.)
  • The 86th update also extends the Shorter and Flexible Trials Pilot Schemes governed by PD 51N for another year to September 2018 and confirms that cases transferred to the schemes but not tried as at September 2018 will continue to be subject to the relevant scheme's rules. In addition, statements of case on the Shorter Trial Scheme will not need to be repleaded after transfer to the scheme. You can read more about the schemes in our article "Shorter and flexible trials for some construction disputes – and why we need them" by Gurbinder Grewal.
  • Court fees were increased during the summer. See HMCTS leaflet EX50 "Civil and Family Court Fees", of 25 July 2016, and Statutory guidance, Court fees for the High Court, county court and family court, Updated 2 August 2016.
  • On 10 October, Lord Justice Jackson gave a lecture on disclosure at The Law Society’s Commercial Litigation Conference. He addressed disclosure issues and considered whether more effective use should be made of the "new" rules which have been in place since 2013. He referred to the TeCSA/SCL/TECBAR e-disclosure protocol, which encourages parties to consider all forms of disclosure rather than "mechanistically agree[ing to] 'standard disclosure'". He expressed the hope that practitioners and the courts will make fuller and more effective use of the menu option, that disclosure choices will be made in keeping with the agreed budgets and/or that budgets will be set to reflect the cost of the disclosure method chosen.

Draft of the Delay and Disruption Protocol

  • In 2002, the Society of Construction Law (SCL) published the Delay and Disruption Protocol (Protocol) for determining extensions of time and for calculating compensation for delay and disruption. As a result of technical advances, a review of the Protocol was needed and a consultation on the draft second edition of the Protocol ended in July 2016. Publication of the final version is expected shortly.

Concerns about rising court fees – results of Litigation Trends Survey

  • Concerns have been raised about the effect of higher court fees and ever-increasing disclosure costs both on London's position as an international destination for legal services and on smaller UK businesses: see, for example, the report on the Litigation Trends survey published by The New Law Journal and the London Solicitors Litigation Association (LSLA). Based on a survey of the LSLA's members in spring 2016, the survey reports that parties are being deterred from starting court proceedings because of the high court fee. This concern is supported by statistics from the Registry Trust that showed a 19 per cent drop in county court judgments against businesses in the first half of 2016. (Source: Bar Council press release.) The Bar Council has also warned that the higher fees are denying access to justice for small businesses that cannot afford to take debtors to court.

Law reform

  • Brexit implications for the justice system: the Justice Committee has launched an inquiry into The implications of Brexit for the justice system. The Committee requested written submissions by 11 November from experts and those parties affected to enable it to make recommendations to the government on the questions it will need to address in the eventual Brexit negotiation process. The terms of reference for the inquiry can be accessed here.
  • Civil Court Structure reform: Lord Briggs published his final report on Civil Courts Structure in July. (The interim report was published in January and Lord Briggs has recommended that both should be read together to fully understand the background and his proposals.) His key recommendations include:
    • setting up an Online Solutions Court to deal with claims potentially up to £25,000 in a three-stage process;
    • increasing the minimum value for starting a claim in the High Court (up, potentially, to £500,000);
    • the County Court to be responsible for the enforcement of judgments and orders of all civil courts (alternatively, if that enforcement option is not accepted, as a second-best solution, to centralise, harmonise, rationalise and digitise enforcement procedures); and
    • easing judicial workloads by transferring some work to legally qualified, judicially trained, "case workers". These case workers would also deal with the conciliation stages of the online court process.

Lord Briggs' two reports are part of a wider review of the court system: other recommendations relating to the civil courts are also under consideration or being implemented (such as the updating of court IT systems in the Rolls Building). Lord Briggs did not take into consideration the ramifications of Brexit on the basis that no one yet knows what effect it will have on the reforms to the judicial system. He does, however, believe his recommendations will be even more necessary in the light of Brexit.

  • Overworked courts: a key issue dealt with by Lord Briggs is the "grave overload" of work on the Court of Appeal such that it threatens the quality of the civil justice system. The report describes the court as being seven Lord Justices short of the number needed to complete the workload. More on this issue can be found in Tim Constable's article "Lord Justice Briggs' Report: change to the appeal process is coming soon".
  • Digitising the courts: those interested in what the government is doing to bring new ways of working and new technology to digitise the courts system and improve and streamline court processes may be interested in reading Kevin Gallagher's A speech on modernising the justice system. Mr Gallagher is the Digital Director for HM Courts & Tribunals Service.
  • Law reform consultation: the Law Commission opened the consultation for its 13th Programme of law reform on 14 July. The responses will inform the majority of the Law Commission’s work from 2017 to 2020. If you want to find out more or to help in identifying areas of the substantive law of England and Wales that need reform, and to prioritise those reforms, click here.
  • Court reform update: the Lord Chancellor, Lord Chief Justice, and Senior President of Tribunals have issued a statement: Transforming our justice system: summary of reforms and consultation, which explains how they are reforming the courts system to provide the public with a justice system that is just, proportionate and accessible.
  • New Appeal Court judges: on 3 October, Sir Terence Etherton succeeded Lord Dyson as the new Master of the Rolls and Head of Civil Justice and automatically became chairman of the Civil Procedure Rule Committee and the Civil Justice Council. At the same time, six new judges were appointed to the Court of Appeal, namely: Mrs Justice Thirlwall, Mr Justice Flaux, Mr Justice Henderson, Mr Justice Hickinbottom, Mr Justice Irwin and Mr Justice Moylan. (Source: New Law Journal.)

Case highlights: litigants in person, judicial bias and predictive coding

Litigants in person

In the last few years, there has been such a surge of litigants acting for themselves as "litigants-in-person" (LiPs) that various bodies have published guidelines to help both LiPs and those that face them in court. See, for example, the guide by The Bar Council, the Chartered Institute of Legal Executives (CILEx) and The Law Society. Despite the proliferation of guidance, there continues to be uncertainty about how LiPs should be treated by the courts. Should a judge treat an LiP with some leniency when it comes to complying with the Civil Procedure Rules? Back in 2015, the judge in Jones v. Longley [2015] EWHC 3362 (Ch) made clear that those without legal representation could not expect any special treatment. A different approach however, was taken in Barons Bridging Finance 1 Ltd and others v. Barons Finance Ltd (In liquidation) [2016] EWCA Civ 550. Here, the trial judge had refused to admit evidence that the LiP had served late. The LiP appealed the subsequent judgment arguing that he had not received a fair trial. The Court of Appeal agreed: they thought the trial judge's decision had been harsh.

Perhaps the best approach for legal representatives that face LiPs in court proceedings on their clients' behalf is to be courteous and helpful in so far as that is in keeping with lawyers' duties. There should also be some expectation of extra work from the judge, who might consider it more fair and equitable to ask represented parties to carry out certain procedural tasks.

Guidance on apparent judicial bias

As the government navigates the simmering constitutional crisis created by the Brexit vote, it is reassuring to note that the means exist – as well as the will – to test the independence of our judiciary.

It is perhaps understandable from a human point of view that unsuccessful parties might, in some cases, conclude that a judge must have been biased when exercising judgment. Those who want to appeal their judgment on that basis would be well advised to read the decision in Harb v. HRH Prince Abdul Aziz Bin Fahd Bin Abdul Aziz [2016] EWCA Civ 556 which provides a useful reminder of the legal test for apparent bias (see paragraph 69 and Porter v. Magill [2002] 2 AC 357): "The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the [judge] was biased."

In Harb, the Court of Appeal was called on to assess whether there were signs of judicial bias. While the court concluded there was no apparent bias, it did go on to find that the judge had not examined the evidence and arguments properly. This failure had led to deficiencies in the judgment so serious that a retrial was ordered.

Litigants who believe the judge might have been biased should remember that they often lack the objectivity needed to act as fair-minded observers in assessing whether there has been a real possibility of bias in the circumstances (see paragraph 69 of the judgment).

Predictive coding (and the TCC e-disclosure protocol) promoted by the High Court (again)

Since the courts approved the use of computer–assisted reviews (or predictive coding) in Pyrrho Investments Limited and another v. MWB Property Limited and others [2016] EWHC 256 (Ch) (see E-disclosure: to use or not use computer assisted reviews?), the courts have again confirmed its suitability in a Companies Act 2006 case: Brown v. BCA Trading Ltd [2016] EWHC 1464 (Ch) (as reported by Westlaw).

Applying the guidance set out in Pyrrho, the judge in the Brown case identified several reasons why predictive coding was a more reasonable and proportionate option for the disclosure exercise as compared to a traditional keyword approach: the claim was large (over £20 million) and the case had been listed for a 10-day trial; most of the relevant documents were in the respondent's possession; the cost of the process was a relevant and persuasive factor provided only that predictive coding could successfully effect the required disclosure; in this case, predictive coding would be significantly cheaper being half the cost of the traditional keyword approach (£132,000 to £250,000); and there was no reason to believe it would be less effective than the keyword method.

An important part of the court's decision was the judge's instruction to the parties to do their best to obtain reasonable and proportionate results. In particular, they were to discuss the process to be adopted and the criteria before the process began. The consequent court directions stipulated that the parties were to identify the issues and narrow down the search borders as well as identify the relevant issues and related documents. It was also important to comply with CPR PD 31B, which deals with the disclosure of electronic documents. The judge also gave further support to the TCC e-disclosure protocol – which greatly assisted in the e-disclosure process – and asked the parties to return to court if any problems arose. As with many things in life, communication is the key!

Expert determinations, expert evidence and hot-tubbing

Experts play an important role in helping to resolve the technical disputes common to the construction and engineering industry: their evidence can make or break a claim and can contribute to an early settlement. Civil Procedure Rules (CPR) Part 35 has been evolving over the last few years to give judges more flexibility over how expert evidence is delivered in court – and judges are adapting to the change of approach as we explain in this briefing. We also include a tip for those approaching an expert determination process with no belief in the expert's jurisdiction.

At all costs – a round-up of recent costs-related developments

We are all familiar with the general proposition that, in High Court and specialist court litigation, the losing party is typically responsible for paying the winning party's costs. However, there are a number of particular rules that are relevant to costs recovery at the conclusion of litigation. Click here to read our review of recent cases touching on these rules and what they mean for parties engaging in litigation and other forms of dispute resolution.

Arbitration update: UK construction focus

In our latest Arbitration Update, we reviewed a number of recent decisions focusing on: recovery of the costs of third party funding; ensuring you serve arbitration notices on the right party and making sure your arbitration agreement is in writing and clearly drafted. Click here to read the update.

International dispute resolution update (Middle East)

An arbitrator's pet peeves: some pragmatic guidance

  • In the latest market update from our Qatar office, Peter Shaw, a senior consultant in our Dubai office, has published eight key insights into the preferred course of an arbitration by parties. Peter provides some pragmatic guidance for those contemplating arbitration proceedings. To read it, click here: "An arbitrator's pet peeves".

Decennial liability creates unfamiliar risks

  • The State of Qatar's construction market is attracting a lot of interest with a large programme of work related to hosting the 2022 World Cup. Andrew Jones of Dentons explains in this article what contractors and consultants need to look out for under Qatar's unfamiliar decennial liability regime. (This article was first published in the August 2016 edition of Construction Law, for which subscriptions are available at www.constructionlaw.uk.com.)

The Competition and Markets Authority report on legal services

The Competition and Markets Authority (CMA) has issued an interim report on its market study into legal services. It deals, for example, with legal services pricing and with regulation including a new regulatory model and its potential risks. Comments from various interested parties, including The Law Society, were submitted on the interim report and can be read on this gov.uk website. The Law Society stressed the need to take into account of the wide range of services provided by the legal services sector and to ensure that comprehensive research and analysis is carried out on proposed remedies before changes are imposed. The CMA's final report is due by 12 January 2017.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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