6 Step summary for Pre-Action Protocol for Construction Disputes and Engineering Disputes

Step 1 - The Contract

The single most major hurdle a customer will have in seeking to bring a claim against a builder is a lack of knowledge of the essentials of contract law. Building contracts are a pure form of contract law. This means that a contract will contain express terms (i.e. they are stated) and implied terms (i.e. they are not stated but are deemed to be in there anyway). Implied terms are also overruled by anything expressly dealing with the issue in the contract.

Customers often shy away from having a lengthy contract. You may think there is no contract if nothing has been signed. However, if you have employed a builder to do work for you, then a contract has been formed. This may either be verbal, in which case it may be very hard to prove what was agreed, or in writing. If it is in writing it may range from 1 line on a page to over 100 pages.

Whether there is a written contract or not, there are almost always terms allowing the builder to enter the customer's property, requiring the customer to allow the builder to proceed without interference and allowing the builder to do the whole job. If you act in contravention of these, by (for example) throwing the builder off site for doing a bad job you may find that you are automatically in breach of the contract.

The contracts themselves are normally whole contracts. This means that the builder is entitled to do the whole job and you cannot decide part-way through that you wish someone else to do some of it.

If the builder quoted for the job then you should have a fixed price, although this can vary if things change. If you only received an estimate, the builder may be entitled to charge as much or as little as they like.

If all else fails you should revert to the Protocol for guidance on how to conduct yourself.

Step 2 - Letter of Claim

The first thing you need to do in any construction dispute is send a Letter of Claim to the other side. However, it is important you do so in accordance with your contract. The contract may have specific terms about raising issues during the course of a project or development which would override the protocol.

In absence of anything in the contract to the contrary, the letter must contain the following information:

  • Your name (or that of your business) and address
  • The full name and address of the building firm/company you are claiming from
  • A summary of the claim or complaint that you are bringing
  • Details of what you are claiming for
  • When you wish to have a response by - this is usually 14 days to acknowledge receipt and 28 days for a substantive response.

Once the initial letter of claim has been sent you may be obliged to wait for the requisite period before going to court. However, this will depend on the circumstances and a shorter timescale than the usual 14/28 days may be appropriate, for example when the builder is still on site and part of your argument is that they should stop work and leave immediately.

Should you receive a response then you need to consider how to deal with this and should go to Step 3 for further guidance on this.

Step 3 - Acknowledgement/Response

A good builder will respond well in advance of the deadlines and make a Letter of Claim response. However, should you not receive either an Acknowledgement of the Letter of Claim within 14 days or a substantive Response within 28 days, then you are entitled to issue Court proceedings immediately. It is important you understand that issuing Court proceedings is likely to incur legal costs for the builder, even if you do not use a solicitor yourself. Should you lose then the builder would be entitled to recover these costs on top of any money owed.

You are generally in a more vulnerable position at this stage. The first thing any litigator tries to find out is what assets the other side has. There is no point in taking a case to Court if the other person does not have the money to pay in any event. This is just throwing good money after bad.

The builder will know the address of your property and this is likely to be your main asset. The builder may also know the details of your bank account from any payments received. Both of these are items of information that the builder may be able to use later to help obtain payment.

If your builder is self-employed or runs his own business, then they may have assets too. However, if it is a limited company it is always open to the builder to shut the business down to avoid having to pay you. The builder should also be insured against the work, but the chances are you will have never seen an insurance policy and if the builder does not provide details of this you will not know how to contact the insurer to claim on the policy.

Any Acknowledgment should confirm receipt of the Letter of Claim and set out when a substantive Response will be provided. They may ask for more time than the standard 28 days and you should consider whether to agree to this.

The substantive Response should set out:

  • Whether it is agreed the works have been done defectively and, in the event this is not agreed, stating the reason for any disagreement and putting their case forward in support of this
  • If part of the claim is accepted, specifying which claim or part of the claim is accepted and whether or not they agree to the amounts being asked for. If they are not agreeing the amounts then they should state why not and what, if anything, they are offering.

If they respond alleging the works were done properly or to standard then you will need to respond, stating whether you agree and if not why not. You need to respond within a further 14 day (acknowledge) and 28 day (substantive response) period. You should also consider having a site meeting within this period.

If there is substance in their response then you will have to deal with it and should proceed to Experts/Pre-action Meetings. If it is meaningless bluster with a view to avoiding paying then it may be appropriate to issue Court proceedings, but if you do, you should write putting on record why you are doing this. We also strongly recommend you seek legal advice first.

Step 4 - Experts/Pre-action Meetings

As soon as possible once a substantive Response is received raising issue with the amount payable (usually within 28 days of receipt), there should be a meeting between the parties adhering to the Pre-Action Meeting Protocol on Construction.

The first thing you should consider is whether expert evidence needs to be obtained. This may be from an architect, surveyor or other building professional. Expert evidence can be obtained on a sole (you instruct the expert on your own) or joint (both sides instruct the expert) basis.

If you do wish to instruct an expert, you should tell the other side first and give them a chance to agree. Where you are to have a site meeting you may need expert advice first and the expert may also need to attend the meeting.

The aim of the meeting is to see if the matter can be settled and/or to reduce the issues between the parties. These can be highly emotive affairs, particularly for the property owner whose house cannot be lived in in the meantime. More than one meeting may be necessary and you must also consider whether Alternative Dispute Resolution (such as mediation) may be appropriate.

Step 5 - Issuing Proceedings

If the builder fails to respond or you cannot reach agreement then your only remaining alternative may be to begin county court proceedings. This is something you are unlikely to have done before. In contrast, the builder may have been to Court lots of times.

The following is intended to apply to all claims up to £15,000. However we must repeat our earlier advice that even on smaller claims you should seriously consider obtaining early legal advice. Good legal advice can save you £1,000's.

To issue proceedings you firstly need to check your claim is within the application "limitation period" and then you need to send the following documentation to the Court:

  • N1 Claim form (enough copies for every party and you to have one and the Court to keep one) with copy invoices attached
  • Particulars of Claim (in complicated cases this should be a separate document to the N1 - in simple cases it can form part of the N1);
  • Cheque made payable to HMCS for the Court issue fee.
  • Court addresses can be obtained by clicking here.
  • Court fees can be checked by clicking here.

The Court will send you a copy of the documents stamped and dated and with a Notice of Issue telling you how long the other side have to respond. If they fail to respond within that timescale you should apply for Default Judgment straight away.

If they file a defence and the claim is for £5,000 or more we recommend you instruct a solicitor to deal with the matter from that stage forwards.

Step 6 - Instructing Solicitors

We try to keep things as simple as possible; however, as with all other things legal, instructing a solicitor in a building dispute is not a simple process.

There are a number of options available to you as to the basis on which you can instruct a solicitor. Before doing so you should check your house insurance policy to see if it covers the dispute in question and whether there is legal expenses insurance attached. You should have a copy of the policy to hand to provide to the solicitor in any event.

If you have insurance, the solicitor may be able to act under it. If not, then you are probably looking at either paying privately (you pay win, lose or draw) or a conditional fee agreement (CFA - also known colloquially as "no win, no fee").

We can be instructed at any stage of the case. We will generally agree to accept instructions at any stage up to 1 month from trial, but seek to encourage earlier instruction as the sooner we are instructed, the more assistance we can give. You may think you are saving money by leaving things to the last minute, but the reality is this may turn into a false economy and it may end up costing you more.

If you have a dispute with your builder and would like to discuss it with us, call now for a no-obligation chat and see if we can put you on the right path.

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