UK: Litigation And ADR Procedure News For In-House Lawyers: UK Construction Focus

Round-up of Technology and Construction Court (TCC) practice and procedure news

Pilot of the new disclosure regime – update

Work on the proposed new disclosure regime continues. As mentioned in our Autumn 2017 briefing, ( Proposals for new disclosure rules in the offing), proposals have been made to introduce a new disclosure pilot scheme, which will run in the Business and Property Courts. A new Practice Direction, a new Disclosure Review Document and related guidance were published in early November 2017. Since then, informal consultations have taken place and the pilot is expected to be approved in the next month.

New electronic bill of costs now mandatory (J Codes are in!)

It is now compulsory for parties to use the new electronic bill of costs in detailed costs assessments in the English and Welsh courts instead of the traditional paper bill. The changes, which came into force on 6 April 2018, are intended to make it easier to produce bills of costs and costs budgets and to improve the robustness of challenges to costs.

Litigators must now record their time using the new time recording codes known as "J Codes". The Steering Committee behind the changes believes that J Codes will "provide the foundation for a system allowing contentious [legal] work to be recorded electronically and reports to be produced automatically and at minimal cost for budgeting, summary assessment, detailed assessment and client billing".

J Codes are a list of very specific tasks and activities which litigators will use to categorise every period of time recorded electronically when working on the various different phases of a court case:

  • There are 15 Phases in total from "Initial/pre-action protocol [(PAP)] work" to "Costs management conference" and "Costs assessment".
  • Each Task then has its own allocated tasks. So, for example, for "Initial/pre-action protocol work", the choice of tasks is: "1. Factual investigation; 2. Legal investigation; and 3. PAP or similar work.
  • There are then 10 Activities, which cover all that a legal representative might undertake in relation to a particular task (for example, "Appear for/attend", "communicate" (with counsel) and so on).
  • There is also a list of expenses.

In total, there are 39 categories under which time can be recorded. So, for example, if a solicitor spends time drafting a witness statement, his/her time will be recorded as follows:

Phase: Witness statements
Task: Preparing own side's statements
Activity: Meeting witness

Why was this change needed?

Drawing up the traditional bill of costs is a time-consuming and often trying process. In 2010, Lord Justice Jackson recommended a new, more transparent, system that would make it clear who had done what, when and why and also make it easier to take an overview of the costs position.

Technology was proposed as the solution and in particular the use of J Codes. A two-year, voluntary, pilot followed to test the use of J Codes but there was little take-up of the new approach. A new Practice Direction (PD47) was issued in November 2017 with an optional new format electronic bill and slimmed down J Codes.

PD47 sets out the transitional provisions for using the new bill. In short, the new electronic bill must be used for detailed assessments of costs for work done after 6 April 2018 (either in the form of Precedent S as attached to PD47 or in a format which complies with PD47).

As with all new systems and the implementation of new rules, we will monitor them – and future detailed costs assessments – to see how they work in practice.

Claiming legal professional privilege after inadvertent disclosure

In Belhaj and another v. Director of Public Prosecutions [2018] EWHC 514 (Admin), the Director of Public Prosecutions (the defendant) applied to assert legal professional privilege over certain passages in three documents it had disclosed in error. Those documents should have been disclosed in a way that concealed the relevant passages (redacted) but this exercise was inadvertently omitted.

The inadvertent waiver of privileged documents is covered by Civil Procedure Rule (CPR) 31.20, which provides: "Where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court."

The case law on this issue does not entirely reflect CPR 31.20 but the key principles were usefully set out by the Court of Appeal in Mohamed Al Fayed et ors v. The Commissioner of Police for the Metropolis et ors [2002] EWCA Civ 780.

In summary, a solicitor has ostensible authority to decide on whether to waive a client's privilege in a document when disclosing documents in legal proceedings. The receiving party is entitled to assume that privilege in those disclosed documents has been waived. By the time those documents are inspected, and once the error is discovered, it is normally too late for the disclosing party to then claim privilege. A court will not intervene and stop the receiving party from using the documents in the claim unless the inspection was obtained by fraud – or, in the circumstances, there has been an obvious mistake.

To establish an obvious mistake, the disclosing party must show either that the recipient solicitor appreciated that a mistake had been made before using the document or that it would be obvious to a reasonable solicitor that a mistake had been made. To assert privilege after inadvertent disclosure, it must also be fair for the court to grant the relief in the circumstances.

In Belhaj, on the facts, the court found that a reasonable solicitor in receipt of the inadvertently disclosed documents would have concluded that the defendant's partial disclosure had been made in error. Further, the defendant had not been "cherry-picking", in other words making a tactical disclosure of only part of the privileged material for its presumed advantage. It was only fair, therefore, that the passages in question be restored to their privileged nature.

Comment

Clearly, recipient lawyers might well [have to] read documents before realising that they have been disclosed in error. They will therefore gain some knowledge of the contents and the privileged legal advice given to their opponent. The reassertion of privilege over the documents cannot wipe the recipient's memory clean. It does, however, mean that the contents of those documents cannot be relied on by the recipient's client in proving or disproving the claim.

Settling at the court's door

As anyone who has attended a full trial of a matter will know, discussions between the parties frequently take place outside the court in an effort to reach a last-minute resolution. The catalyst for such discussions can be any number of issues. Maybe new evidence has been adduced which changes the balance of the arguments or reduces the quantum claim. Or maybe the prospect of the costs of the trial pressurise the parties into talking seriously with each other about settlement. Or maybe a key witness is not available to prove an essential piece of the argument.

A lack of a witness triggered such settlement decisions in Dunhill v. W Brook & Co (a firm) and another [2018] EWCA Civ 505, a decision which arose originally from a personal injury claim. On the morning of the trial, a key witness had not turned up. Without that witness, and on the basis of the available material before him, the barrister concluded that settlement was the best option. It turned out that the settlement figure was at an undervalue of the claim. The claimant took action against both the barrister and the instructing solicitors, claiming they were negligent.

However, the claimant was unable to show that the advice to settle was, given the circumstances and available evidence, such that no other competent and experienced practitioner would have given it. (This is a high, evidential bar to reach.) The Court of Appeal dismissed the claim of negligence.

There were added complications in that the barrister had only been instructed a couple of weeks before and instructing solicitors had sent a trainee to attend the trial. The court, however, confirmed that a trainee's attendance at trial in itself could not amount to negligence on the part of the solicitors. The court added that, if a trainee attends a trial alone, they must always have a direct line to the instructing solicitor with detailed knowledge of the matter.

Comment

Matters that reach trial will have gone through several preparatory phases. The costs will have mounted and a lot will be riding on what happens at court. It is important to have representatives present or available who understand the issues, the history of the claim and what is at stake. Those representatives will have the understanding and knowledge needed to make a careful evaluation of the issues, the evidence and the client's instructions and to decide on the reasonableness of a last-minute offer in the context of the costs already expended and the potential trial costs. These key legal representatives do not necessarily have to be in court every day – but they do need to be available in case of scenarios such as that in Dunhill.

Limitation issues

Given the drastic consequences for claimants who miss a limitation deadline for starting an action, a couple of recent cases are worth bearing in mind.

When does time start running for a contribution case?

In R.G. Carter Building Ltd v. Kier Business Services Ltd (formerly Mouchel Business Services Ltd), the time limit in question related to a contribution claim. The claimant had settled a construction dispute with a local authority, which included making a settlement payment. It had then sought to recover some of the damages from the defendant, who it regarded as liable for or to make a contribution to the damages. The defendant argued that the claimant's claim was issued out of time and that time should run not from when the claimant made a binding settlement agreement with the local authority but when it first reached the compromise. The court had to consider the proper construction of section 10(4) of the Limitation Act 1980 and, in particular, when the time for bringing a contribution claim under the Civil Liability (Contribution) Act 1978 started.

The judge set out the key statutory provisions and the issue as follows:

16. "Section 1 of Civil Liability (Contribution) Act 1978 provides that ...
"A person [who is liable for damage and] who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of [that] damage ... shall be entitled to recover contribution [from any other person liable in respect of the same damage] in accordance with this section ..."

17. Section 10(1) of the Limitation Act 1980 provides that no action to recover a contribution pursuant to the 1978 Act shall be brought after the expiry of a period of two years from the date on which such right accrued. The right to a contribution is treated for the purpose of limitation as accruing on the date of any judgment or award against the party seeking the contribution (section 10(3) of the 1980 Act) or upon agreement to pay compensation in the case of a settlement (section 10(4)).

18. Section 10(4) provides:
"If, in any case not within subsection (3) above, the person in question makes or agrees to make any payment to one or more persons in compensation for that damage (whether he admits any liability in respect of the damage or not), the relevant date shall be the earliest date on which the amount to be paid by him is agreed between him (or his representative) and the person (or each of the persons, as the case may be) to whom the payment is to be made."

The issue in this case is whether time runs under section 10(4) only once the parties have entered into a binding agreement for the payment of compensation, as [the claimant] submits, or whether something short of a binding agreement is sufficient to start time running, as [the defendant] submits."

Crucially, for the claimant, if the defendant was right and the claimant's initial agreement in principle was sufficient to trigger the two-year limitation claim, then its claim was issued too late.

In this case, the judge agreed with the claimant that the proper construction of section 10(4) is that time only starts to run "from the date of a 'binding' agreement as to the amount of the compensation payment". Agreement on the amount of the payment was crucial. Consequently, the claimant's claim for a contribution from the defendant, following the claimant's settlement of a construction dispute with a local authority, was not statute-barred. The defendant's limitation defence failed.

Must a solicitor flag up procedural errors when the limitation deadline is near?

Another limitation issue arose in Woodward v. Phoenix Healthcare Distribution Ltd [2018] EWHC 334 (Ch). In this case, there had been a defect in the claimant's service of the claim form but the defendant's solicitors had failed to flag up the issue – despite knowing that the limitation date for the claimant's claim would soon expire. The judge found that this failure was a breach of their duty to further the overriding objective. They had been playing "technical games". As a result, the master validated the claimant's service of the claim form retrospectively.

This decision highlights a potential conflict of interest for solicitors between their duties to the court on the one hand (to give notice of a potential procedural issue) and to their client on the other (to make tactical use of the procedural error). It is an issue on which further judicial guidance will be needed.

Revised guidance for judges on judicial conduct

A revised version of the Guide to Judicial Conduct was issued at the end of March 2018 by the Courts and Tribunals Judiciary. Last updated in July 2016, the guide sets out core principles to help judges, magistrates and coroners reach their own decisions. The revisions seek to help judges, in this era of social media, when they and the legal process face increased scrutiny from the public. Lord Burnett of Maldon, Lord Chief Justice of England and Wales, emphasised that the basic set of principles guiding judicial conduct remains the same: "Judicial independence, impartiality and integrity provide judges with a guide, not only as to the way they discharge their judicial functions, but also as to how they conduct their private lives and the way that this affects their judicial role".

Reforms to modernise the courts

Lord Burnett of Maldon also talked about the reforms under way to modernise the courts in his recent speech to the Association of District Judges Annual Conference. He focused on three things in the context of reform: improving the efficiency of the administration of justice, improving access to justice and improving the conditions for those who use and work in our courts. To find out more, you can read his speech here.

Expert evidence

LCIA recommendations on how to maximise the use of experts in arbitration proceedings

The London Court of International Arbitration (LCIA) has issued a note reviewing the various ways in which experts are used in international arbitration proceedings and the opportunities those methods present for more effective and efficient decision-making. You can read more here: LCIA recommendations on how to maximise the use of experts in arbitration proceedings.

Alternative dispute resolution news

Expert determination set aside

In Griffin v. Wainwright and another [2017] EWHC 2122 (Ch), the High Court set aside an expert determination on the grounds of procedural unfairness. After completing her original determination, but before releasing it, the expert had communicated with one of the parties (G) but not informed the other party, W, of those communications. The expert later revised her determination and then released it. The court held it was unfair given that she had not given W a chance to make submissions on the issues raised in her communications with G.

Parties who appoint an expert to determine a [usually technical] dispute, should remember that any approaches to the expert must be shared with the other party to ensure fairness and transparency in dealing with the disputed issues.

Also, be aware that an expert has power to change her/his decision up until the point it is released to the parties. At that point, she/he becomes "functus officio" and has no further powers to act in relation to the expert determination.

Resolving consumer disputes and the effectiveness of ADR and the courts

The Department for Business, Energy & Industrial Strategy (BEIS) has issued its final report on "Resolving Consumer Disputes: Alternative Dispute Resolution and the Court System". ICF Consulting Services Limited carried out a study for BEIS into the impact and effectiveness of ADR and the courts in resolving consumer disputes with traders.

While Dentons' clients deal mainly with other traders and business organisations rather than direct with a consumer, it is interesting to note the reasons why the traders and consumers involved in the study did not use ADR to solve their disagreements. Reasons included: consumers' lack of confidence that ADR would be effective (13 per cent); traders refusing to participate (70 per cent of consumers who had not used ADR before); ADR providers not responding (7 per cent); or the parties being unaware that ADR was available (5 per cent).

Clearly, there is much work still to be done to persuade people of the benefits of ADR.

Further reading

If you are struggling to persuade another party to engage in ADR, take a look at our article: Just get on with it – more reasons to mediate (and a look at some of the excuses people use to avoid ADR). It sets out some of the common responses that are received to requests to mediate and sets out some suggestions on how to deal with those who are unwilling to engage.

We considered the construction industry's gradual embrace of ADR procedures as well as conflict avoidance schemes in this article: How to tackle disputes: Conflict avoidance and ADR (which was first published in Construction News, 20 March 2018).

The future role of ADR: Law Society and Bar Council responses

In that last article ( How to tackle disputes ...), we reported on the Civil Justice Council's (CJC) ADR consultation into the future role of ADR in the civil justice system. The CJC's interim report was published in autumn 2017 and various bodies have now published their responses.

The Law Society supports the CJC's work on ADR issues and agrees with the CJC that: the take-up of ADR is patchy and inadequate; there should be better signposting for ADR to increase its take-up; and, notably, ADR should not be mandatory before the issue of court proceedings.

The Bar Council advocates making ADR culturally normal. It believes that the focus of any reform needs to be on continuing education and improving communication with professionals and the public – with a view to enabling disputing parties to be better served by settling a case without having to go to court.

Other groups and bodies have expressed their views and these can be viewed on the CJC website here.

Adjudication review

Click on the links below to read our reviews of recent adjudication cases:

Restoring fairness to the adjudication process: another episode in the smash and grab adjudication saga: in his final case in the TCC before taking up his new position as a Court of Appeal judge, Coulson J has tipped the balance away from contractors in smash and grab adjudications. (A case review of Grove Developments Ltd v. S&T (UK) Ltd [2018] EWHC 123 (TCC).)

Adjudication procedure: case round-up: in our latest round-up of TCC decisions dealing with adjudication procedure, we look at the importance of complying with the adjudication timetable, the problems caused by oral contracts when it comes to adjudicating a dispute and the judiciary's latest call to seek declaratory relief under CPR Part 8 only when appropriate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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