UK: Energy Efficiency Regulations And Recovery Of Lost Staff Time

Last Updated: 25 January 2008
Article by David Thomas QC

The Keating Chambers update in this issue covers a significant legislative development on energy performance of buildings and recent case law on recovery of lost management time as damages.

Energy Efficiency Regulations

The aim of the Kyoto Protocol 1997 was to address climate change and set quantified emission limits and reduction obligations with respect to greenhouse gases. As a result of the Protocol, in 2003 the EU brought into effect the Energy Performance of Buildings Directive (EPBD) and the UK published the Energy White Paper, Our Energy Future – Creating a Low Carbon Economy, which set a target of a 60 per cent reduction in carbon emissions by 2050.

Now, the UK Government has introduced the Energy Performance of Buildings Regulations 2007 and the Home Information Pack Regulations 2007 (the ‘Regulations’) to implement the EPBD. They will create a number of new duties for commercial and residential property owners affecting construction, sales and rentals. The Regulations come into force in stages from 1 August 2007.

Three of the key matters in the Regulations are:

  1. energy performance certificates (EPCs);
  2. display energy certificates (DECs); and
  3. the inspection of air-conditioning systems.

The purpose of an EPC is to provide prospective vendors/tenants with a certificate that sets out the energy efficiency levels of a building. Under the Regulations, EPCs arfe required where a new building is to be built or where an existing building is to be sold or let. The responsibility for provision of the EPC will rest with the vendor, landlord or builder (in the case of new-build) who will make it available, at its own cost, to ‘any prospective buyer or tenant’. A valid EPC must be issued by an accredited energy assessor and have both the asset rating of the building (which measures the intrinsic performance potential of the building) and a report containing recommendations for the improvement of the energy performance of the building; however, neither vendor/landlord nor buyer/tenant is obliged (as yet) to implement the recommendations.

Under the Regulations, ‘buildings with a total useful floor area of over 1,000m2 occupied by public authorities and by institutions providing public services to a large number of persons ands therefore frequently visited by those persons’, must display a DEC. The DEC shows the ‘operational rating’ (the actual CO2 emission per m2 of floor area).

Whoever ‘has control over the operation of’ of an air-conditioning system of over 12kW of output must ensure that an energy assessor inspects the system at least every five years. However, the scope of definition of a person with ‘control over the operation of’ an air-conditioning unit is unclear. The energy assessor will make a written report to be retained by the person controlling the system. It must deal with the efficiency and sizing of the system and contain advice on possible improvements, replacement and alternative solutions.

The scope of the Regulations is at times unclear. EPCs are not required for a broad and ill-defined category of buildings. The types of buildings for which DECs are required are simply ‘public buildings and institutions’; the meaning of ‘frequently visited’ by a number of persons is unclear, as is ‘institutions’. What happens where a public authority is one of several occupiers of a multi-let property is not covered.

It may be that the property and construction market is such that participants can come to terms with the Regulations. However, judicial decisions – mainly, no doubt, as a result of enforcement proceedings – are likely to be necessary to resolve a number of questions of interpretation inherent in the Regulations.

Recovering lost staff time

In the last few months, the English courts have clarified the position on this financially significant issue with two major decisions.

Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] EWCA Civ 12 arose from damage caused by water escaping from a burst pipe. The Court of Appeal stated the important general principle that, where a claimant can show that staff were diverted from normal activities to deal with the disruption to its business consequent on the tortious act, it should normally be able to recover compensation for the cost of their services. Furthermore, it will usually be accepted that the damages awarded should include the loss of revenue the employees would have generated, at least to the extent of the cost of employing them for a non-productive period.

In Bridge Ltd v Abbey Pynford plc (2007) CILL 2465, the breach consisted in Abbey Pynford’s delay in constructing adequate foundations for Bridge’s printing press. This case is important beyond amplification of the Court of Appeal’s statement of the general principle. As a breach of contract case, where the breach concerned was delay in construction, it applies the principle in contract as well as in tort and extends it from exceptional incidents to relatively commonplace circumstances in the construction process.

In addition, the court seemed to adopt a somewhat relaxed approach to quantification of the staff time wasted, allowing assessment based not on records but on estimates, although this was said to be subject to a 20 per cent discount to take account of the inherent uncertainty of that process.

These cases do not depart from established principles of quantum of damages in English law. However, they are of importance in clarifying what has been a difficult area and can be characterised as sympathetic to the position of claimants, especially the Bridge case in relation to proof of the loss sustained.

First published in Construction Law International, November 2007

The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

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