Litigation in the Technology and Construction Court

Adam Constable QC, Lucy Garrett QC, Calum Lamont

• Publisher: Informa Law from Routledge
• Year: 2018
• ISBN:
  9781317243984
• Edition: 1
• Topic: Law
• Subtopic: Construction Law
• Index: Law

The Technology and Construction Court ("TCC") deals with legal cases that often require specialist technical expertise. This can lead to complex and sometimes lengthy proceedings. In light of the Jackson reforms and developments in cost controls in the TCC, the manner in which claims are handled is of paramount commercial importance to lawyers and lay clients alike.

This book provides a practical, but intellectually informative guide to dealing with proceedings in the TCC. Looking at the different types of claims which are commonly, and not so commonly, brought in this court, it considers different potential approaches to such claims depending on the circumstances in which parties find themselves.

This is a genuine practitioners' guide, with the principal focus on expeditious, cost-effective case management. Construction practitioners at the Bar, solicitors, adjudicators, arbitrators, and in-house counsel alike, will all find it an invaluable reference for their practice.

CHAPTER 1
Introduction to litigation in the TCC

What is the TCC?

1.1 The Technology and Construction Court, or TCC as it is regularly referred to, took over the work previously known as ‘Official Referees’ Business on 9 October 1998. The TCC now forms part of the Business and Property Courts, which were launched in July 2017 and became operational on 2 October 2017. They have been created as a single umbrella for specialist civil jurisdictions across England and Wales.

1.2 The Official Referees were created in 1873 in order to try cases involving technical or detailed issues which it was deemed should no longer be left to judge and jury. By the early part of the twentieth century, much of the workload of the Official Referees related to construction and engineering matters, and this is also the case with the TCC. However, although the core of the work relates to the construction industry, the TCC deals with a broad spectrum of work, including: professional negligence disputes relating to surveyors, engineers, project managers, architects, accountants and other specialist advisers in the construction, engineering and technology fields, as well as allegations of lawyers’ negligence arising in connection with planning, property, construction and other technical disputes; claims relating to the supply and provision of materials, goods, plant and other services; claims relating to the design, supply and installation of computers, software and related network systems; dilapidation claims as between landlord and tenant; environmental issues, including pollution and reclamation; nuisance claims relating to land use; claims arising out of fires and explosions, often including issues of insurance coverage; the enforcement of or challenges to adjudicators’ decisions arising out of the Housing Grants, Construction and Regeneration Act 1996; challenges to decisions of arbitrators in the construction, engineering and technology fields; disputes involving oil and gas installations, onshore and offshore, and shipbuilding.

1.3 Recently, the variety of work in the TCC has become broader. The types of factually or technically complex cases which have been heard in the TCC have included group actions for personal injury and public nuisance, and procurement disputes arising in connection with the Public Contracts Regulations 2006, quite irrespective of whether the underlying contract is related to the construction industry. However, with the exception of claims to enforce adjudicators’ decisions or other claims with special features that justify a hearing before a High Court Judge, the TCC in London will not usually accept cases with a value of less than £250,000 unless there is good reason for it to do so. The TCC Guide sets out a non-exhaustive list of special features which will usually justify listing the case in the High Court.¹ These include: international cases whatever their value (international cases will generally involve one or more parties resident outside the UK and/or involve an overseas project or development); cases involving new or difficult points of law; any test case or case which will be joined with others which will be treated as test cases; complex nuisance claims brought by a number of parties, even where the sums claimed are small; and claims for injunctive relief.

1.4 There are ten regional centres around the country at which the TCC operates: Birmingham, Bristol, Cardiff, Chester, Exeter, Leeds, Liverpool, Newcastle, Nottingham and Manchester. There are full-time TCC Judges at Birmingham, Manchester and Leeds. At the regional centres, both High Court Judges and County Court Judges hear claims. Since 2004, the Judges of the TCC in London have been exclusively High Court Judges. The TCC in London is situated in the Rolls Building on Fetter Lane, which as part of the Business and Property Courts now forms the largest specialist centre for financial, business and property litigation in the world.

Dispute resolution

1.5 In virtually all construction projects, the question is not whether a dispute will arise, but how the dispute will be resolved. The three key variables are time, cost and quality, and it is the relationship between these variables that drives every disagreement. There is a wide range of tools available to resolve disputes in the modern world. Some of these tools – such as dispute review boards – are designed to resolve disputes as they arise during the course of the project. Adjudication, a statutorily mandated process in which disputes are to be heard and temporarily determined within 28 days, was also intended to be used primarily during the course of a project to maintain cash flow and while it is commonly utilised in this way, it has also become a vehicle for large final account disputes after the project has been completed. Adjudication has rendered ‘expert determination’ a rarity nowadays, but it is still contractually available or required in some types of standard form, particularly in the shipbuilding context, for particular types of technical dispute. Arbitration is a private and binding alternative to litigation for finally determining disputes. Alongside each of these methods, there sit numerous creative alternatives aimed more at achieving consensual resolution: mediation, conciliation and early neutral evaluation.

Arbitration v litigation

1.6 Arbitration has had a long history as the most common method of determining disputes in the construction industry, and was the default contractual mechanism within the most commonly used standard forms for construction projects (the ‘JCT’ form) and engineering projects (the ‘ICE’ form). However, over the past decade or so, there has been a move away from what is called ‘domestic’ (i.e. non-international) arbitration, as the TCC has grown in popularity. Arbitration’s success grew from the perception of having significant advantages over litigation. However, over time, nearly every advantage has been worn away. The first perceived benefit was the experience of the individual who was to decide the case. Arbitrators, often non-lawyers, would be drawn from the industry and were familiar with first-hand experience of the disputes which they were required to decide. However, the TCC Judges are generally drawn from a pool of solicitors or barristers who have worked principally or largely in the field of work in which the TCC specialises, with many years’ technical and legal experience. Moreover, the pool of Judges is small and the quality high and therefore litigation presents a considerably less variable alternative than relying upon an institution to nominate an arbitrator from a range of individuals whose abilities may vary significantly. This becomes less of an issue where the parties agree on the identity of their chosen arbitrator, but this leads to the second perceived advantage: speed.

1.7 Litigation was traditionally perceived (and perhaps rightly so) as being slow compared with arbitration. However, the case management techniques introduced by the TCC (and now largely adopted across the Court system) have meant that litigation is extremely efficient, with even the most complex cases concluded to judgment within a year to 18 months from service of a Claim Form. While many arbitrations will be similarly processed, arbitrators are usually less forthright than Judges in demanding a swift timescale in the face of opposition from one or more of the parties. Access is readily available to the Courts, which can usually hear urgent applications quickly in front of one of the team of Judges; by contrast, the ability of an arbitrator to determine an urgent application will depend on his or her availability, and there is no option for another arbitrator to step in at short notice. Furthermore, the timing of a final hearing is likely to be as dependent upon the availability of the individual arbitrator as it is on the needs or wishes of the parties; by contrast, while the final hearing in Court will be set by reference to the availability of the Court, it is rare for the Court not to be able to accommodate a swift overall procedure as the availability of a particular Judge (as opposed to one of the pool) is not a necessary consideration. While it will of course vary from case to case, in general terms the TCC will expect to hold the final hearing within about a year of the matter first coming before the Court, which is usually shortly after the defence has been served. Sometimes it can be considerably quicker. The overall time period in which a dispute can be resolved is then, obviously, linked to the third consideration: cost.

1.8 While historically it was generally the case that arbitration was more efficient and less expensive, this too is no longer the case. At best, the arbitration and litigation are likely to be comparable, once the cost of the arbitrator is removed. However, this of itself can be a significant cost when compared with Court fees (even given the recent increases). Traditionally, one area in which parties have considered that arbitration offers potential cost savings relates to disclosure. ‘Standard’ disclosure, in which in broad terms a party has to make efforts to search for all relevant documents whether helpful or unhelpful to its case, is the default position in litigation, but in arbitration it is more common that parties are in the first instance only required to provide those documents which they rely upon, and thereafter to provide categories of documents requested (and if disputed, ordered by the arbitrator). This is often considered less burdensome than standard disclosure. However, while it is now common for the Court to be more sensitive to the burden of disclosure and will in the appropriate case (and particularly where the parties agreed) order disclosure by reference to time periods, and issues, and so this perceived benefit is also being eroded.

1.9 The final advantage is considered to be the confidentiality associated with arbitration, which is private. Litigation is public. However, there are limits on the confidential nature of arbitration: for example, if there is an appeal, then the appeal will be in Court and the arbitration will no longer be private. Moreover, the fact that litigation is public, and any judgment openly available, itself can have advantages and in the right case itself may present leverage in reaching a negotiated settlement. It is therefore a matter of legitimate debate as to whether confidentiality presents any real benefit at all.

1.10 In the context of the types of case with which the TCC is concerned, there is particular benefit to litigation: the ability to have multi-party disputes. Many of the disputes in the construction industry involve a number of parties: while the kernel of the dispute may lay between the employer and the contractor, the real dispute may relate to the activities of a sub-contractor, or a designer or engineer. In Court proceedings, it is generally straightforward to involve all the relevant parties – a contractor bringing its sub-contractor into the litigation via its contract, or a party responsible for design issues by contribution proceedings, for example. However, absent the consent of all the parties, this is rarely possible in arbitration. A contractor may therefore find itself facing a claim in arbitration and then having to bring separate proceedings in front of a different Tribunal (for example, a different arbitrator, or in Court in front of a Judge). This brings with it the additional time and cost and, of most concern, an inherent risk of different or inconsistent findings. It is obvious to see that the ability to bring others into the proceedings is advantageous to a party facing a claim and wishing to divert the allegations in a different direction. Primarily, therefore, it is advantageous to contractors who are most likely to want to pass a claim on; it is less obviously advantageous to an employer who may prefer the simplicity of a single claim against a ‘one stop’ contractor rather than the inevitable increase in time and cost of multi-party proceedings. It may be, therefore, that the limited bilateral nature of arbitration is a sufficient perceived advantage to employers, and this is the reason that arbitration clauses still exist in domestic construction contracts. However, the practical reality of dispute resolution is that an employer is most likely to be advantaged by a mechanism that increases the prospect of reaching a commercial resolution to the matter. In practical terms, the inability for a contractor or engineer to bring other parties into an arbitration may well make the overall dispute more difficult to settle, and therefore even this advantage is questionable.

1.11 It is therefore fairly easy to see why domestic arbitration in the domestic construction industry has significantly fallen away, replaced by a combination of adjudication and litigation in the TCC. This has been reflected in the JCT’s removal of arbitration as the default dispute resolution mechanism, although it remains so in the ICE and NEC contracts, and in most shipbuilding contracts. While arbitration still has an important role in international dispute resolution, it is difficult to see why a party to a domestic project would choose to arbitrate rather than litigate in the TCC.

The TCC Guide

1.12 HM Courts and Tribunals Service publishes a guide to litigation in the TCC. The second edition of the guide, now in its third revision, was published in 2015. The purpose of the document is to provide ‘straightforward, practical guidance on the conduct of litigation in the TCC’. It describes the main elements of the practice that is likely to be followed in most TCC cases, and indeed which forms the subject matter of this book. The document is useful and those intending to commence litigation in the TCC should become familiar with its guidance.²

1 See also West Country Renovations Ltd v McDowell [2012] EWHC 307, in which Akenhead J transferred a case from the TCC to the Central London County Court, notwithstanding the parties’ representations that the matter should be dealt with in the TCC, saying: ‘The case under consideration is a very standard construction case, namely a disputed final account with issues about proof of cost, recoverability of certain types of work, the reasonableness of various rates and the applicability and impact of a possible cap. Without in any way belittling the importance of the case to the parties themselves, there is nothing of general public importance, such as some novel point of law or construction of a standard building contract. There is no good reason to think that the Central London County Court TCC designated Judges will not effectively case manage and then try this case within a reasonable time.’

2 See Appendix 1.

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 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 ...