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Issuing a TCC claim before complying with the Protocol: “extreme peril”?

On numerous occasions the courts have emphatically stressed the need to comply with the Pre-Action Protocol for Construction and Engineering Disputes (the Protocol). Sometimes, however, a claimant is hard up against the expiry of the limitation period and, as the lesser of two evils, has to issue proceedings without complying with it. In such circumstances the claimant needs to steer a careful course.

The TCC Guide and the Protocol

Both the TCC Guide and the Protocol set out the steps a limitation-pressed claimant ought to take. At paragraph 2.3.2, the TCC Guide provides that:

“a claimant need not comply with any part of the Protocol if, by so doing, his claim may become time-barred under the Limitation Act 1980. In those circumstances, a claimant should commence proceedings without complying with the Protocol and must, at the same time, apply for directions as to the timetable and form of procedure to be adopted.”

Similarly, the Protocol provides at paragraph 6 that:

“If by reason of complying with any part of this protocol a claimant’s claim may be time-barred … the claimant may commence proceedings without complying with this Protocol. In such circumstances, a claimant who commences proceedings without complying with all, or any part, of this Protocol must apply to the court on notice for directions as to the timetable and form of procedure to be adopted, at the same time as he requests the court to issue proceedings.”

Both provisions were considered by Stuart-Smith J in Lincolnshire County Council v Mouchel Business Services Ltd and another.

Lincolnshire CC v Mouchel

In Lincolnshire CC v Mouchel, the claimant had issued a claim form close to the expiry of the limitation period. To comply with the Protocol, the claimant sought and obtained (without notice), an order to extend time for service of the claim form and particulars of claim. The claimant was then slow in prosecuting its investigations, albeit some of the Protocol steps were carried out. The claimant required more time and obtained (again without notice), a further order to extend time for service of the claim form and particulars of claim. Mouchel applied to set aside the second order and for the claim against it to be struck out.

Stuart-Smith J’s judgment started with a warning about the precarious situation such a claimant is in:

“Where a party issues protective proceedings hard up against expiry of the limitation period, it is expected to pursue those proceedings promptly and effectively; and if it subsequently seeks and obtains orders extending time for the service of the Claim Form or Particulars of Claim without notice to the other party, it dices with procedural death. This simple proposition should be known to all professionals.”

Importantly, he noted that, while an application for an extension of time for service of the claim form can be made without notice, an application for directions (as required by paragraph 6 of the Protocol) cannot. Such an application:

  • Enables the court to review the position in light of any relevant submissions made by affected parties.
  • Promotes the overriding objective by providing the court with information on which to make its case management decisions and provides “a level playing field from the outset”.

Both factors avoid the risk of further costly and time-consuming satellite litigation.

Stuart-Smith J considered guidance from authorities under the “earlier, more tolerant regime” on how the court should exercise its discretion when proceedings were started late. In particular, he drew on the well-rehearsed guidance in Hashtroodi v Hancock, in which the Court of Appeal stated that:

“It has often been said that a solicitor who leaves the issue of a claim form until almost until the expiry of the limitation period, and then leaves service of the claim form until the expiry of the period of service is imminent courts disaster.”

It was against this background that Stuart-Smith J commented that paragraph 6 of the Protocol and paragraph 2.3.2 of the TCC Guide “complement the normal and well established principles”. Notably, he stated that the importance of such an application “cannot be over-emphasised” and a party who fails to obtain directions on notice “does so at extreme peril”.

Applying these principles, the claimant’s failure to seek directions on notice, coupled with the slow prosecution of the Protocol process during the first time extension, led Stuart-Smith J to set aside the second order and strike out the claim.

“Extreme peril”?

The courts take a dim view of failing to comply with the Protocol. Where limitation is close to expiry, necessitating issue of the claim form without complying with the Protocol, not only is there a heavy burden to get on with the proceedings, it is now clear that parties will have to lay their cards on the table before the claim form has been served by making an on notice application for directions. The effect of paragraph 6 of the Protocol and paragraph 2.3.2 of the TCC Guide makes an unserved claim form very different to the “unposted letter” (contrary to Aktas v Adepta).

Further, when exercising its general powers of case management, the court will take into account any failure to make an on notice application at the time of issue. Claimants have lucent forewarning of the “extreme peril” they may face if such an application is not made. The risk is not only of adverse cost consequences (such as in Charles Church Developments Ltd v Stent Foundations Ltd), but that the court will not grant an extension of time for service of the claim form and/or previous extensions might be overturned, such that the claim is doomed to fail before it has even begun.

Practitioners should take care to avoid dicing with this “procedural death” by ensuring an on notice application for directions is made at the same time as issuing proceedings.

Keating Chambers Jennie Wild

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