Legal Developments In Construction Law: March 2024

MB
Mayer Brown

Contributor

Mayer Brown is a distinctively global law firm, uniquely positioned to advise the world’s leading companies and financial institutions on their most complex deals and disputes. With extensive reach across four continents, we are the only integrated law firm in the world with approximately 200 lawyers in each of the world’s three largest financial centers—New York, London and Hong Kong—the backbone of the global economy. We have deep experience in high-stakes litigation and complex transactions across industry sectors, including our signature strength, the global financial services industry.
An adjudicator ruled that a contractor had been overpaid on an interim payment cycle and should repay the overpayment to the employer.
UK Real Estate and Construction
To print this article, all you need is to be registered or login on Mondaq.com.

IN THIS ISSUE:

  1. Negative certificate and overpayment: can an employer get its money back?
  2. Loss and expense claim under a JCT contract: is lack of a notice fatal?
  3. Accountable person; could that be a tribunal-appointed manager?
  4. New competence framework for project managers
  5. Competence Steering Group 2024 final report: "A Higher Bar"
  6. Biodiversity 10% net gain requirement in force

1. NEGATIVE CERTIFICATE AND OVERPAYMENT: CAN AN EMPLOYER GET ITS MONEY BACK?

An adjudicator ruled that a contractor had been overpaid on an interim payment cycle and should repay the overpayment to the employer. In proceedings brought by the contractor, however, the court had to decide whether or not there was a proper legal basis for the adjudicator to make that ruling.

In deciding that the adjudicator was entitled and right to make his ruling, the court said that textbook observations and case law supported the proposition that both a court and a (validly appointed) adjudicator may, subject to any contrary contract provision, undertake a true valuation assessment of sums included in an interim payment, whether specifically in relation to that interim payment or in relation to a subsequent interim payment, and, to the extent that they conclude that the interim payment was overstated and that the employer has overpaid, order or decide repayment of that overpayment, either under the contract terms, express or implied, or by way of restitution applying the principle of apportionment or the decision in Aspect v Higgins.

The case law considered made it clear that, unless there is something in the contract or some particular feature of the case militating against it, the general principle is that there is a right to repayment in these circumstances, whether by way of express or implied term or restitution, and whether there has already been a notified sum and/or a true value adjudication or not, and whether the issue arises within the same interim payment cycle or a later interim payment cycle.

This was consistent with the general principle, implicit in the typical building contract even if not express, that interim payments are only payments on account and any overvaluation can and should be corrected and any overpayment reclaimed, either in subsequent interim payment cycles or at final account stage including, if necessary, by a true value determination by any tribunal with jurisdiction, which includes a validly appointed adjudicator and a court.

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269

2. LOSS AND EXPENSE CLAIM UNDER A JCT CONTRACT: IS LACK OF A NOTICE FATAL?

Clause 4.20.1 of the 2016 Standard Building Contract with Quantities 2016 Edition, prepared by the Scottish Building Contract Committee, which has exactly the same wording as clause 4.20.1 of the JCT 2016 standard form, gives a contractor an entitlement to loss and expense, subject to compliance with clause 4.21, which requires notice to be given in respect of a loss and expense claim. But what if no notice is given? Is that fatal to a claim?

Noting that the standard form clause fell to be regarded as one which has been negotiated and drafted by skilled professionals, the Scottish court said that, on its face, the language used in clause 4.20.1 was clear and straight-forward. It indicated that the contractor's entitlement to reimbursement was "subject to... compliance with clause 4.21". It was difficult to construe this language other than as creating a condition precedent. To construe the clause as the contractor contended would involve deleting or ignoring this critical phrase.

The contractor's entitlement was dependent on compliance. Overall, in the court's opinion, clauses 4.21.1 to 4.21.3 set out a practical and workable set of steps for notification and provision of information by the contractor and the obligation to comply with clause 4.21 was not an unduly onerous one. Benefits, in the form of timely and well administered contract administration, can reasonably have been anticipated as accruing to both parties from compliance.

The court also noted that constructions of differently worded clauses were of limited assistance in construing the clause but considered the approach taken to the notification of loss and expense claims in earlier editions of the JCT standard form to be a useful aid to construction in this case. The pre-existing position in respect of JCT 63 and 98 was that the notification provisions created a condition precedent to the contractor's entitlement. The material clauses were worded differently in both the JCT 63 and JCT 98 standard forms but there appeared (according to the guidance notes published by the Scottish Building Contract Committee for Standard Building Contract) to be no suggestion that any significant change was intended in the 2016 edition.

https://www.scotcourts.gov.uk/docs/default-source/cos-general-docs/pdf-docs-for-opinions/
2024csoh20.pdf?sfvrsn=1b7731c1_1

3. ACCOUNTABLE PERSON: COULD THAT BE A TRIBUNAL-APPOINTED MANAGER?

A manager of an estate of higher-risk buildings was appointed in 2016 under a Management Order made by a tribunal under s.24 of the Landlord and Tenant Act 1987. But did that make the manager an Accountable Person under the Building Safety Act?

The First-Tier Tribunal, Property Chamber, said that it did not. It was common ground that as the manager did not hold a legal estate in any part of the estate buildings, he could only be an Accountable Person if he was under a "relevant" repairing obligation in relation to any part of the common parts. Under the Management Order the manager was under a repairing obligation in relation to the common parts but, to be under a "relevant" repairing obligation, as defined in the Building Safety Act, the manager would need to be required under a lease, or by virtue of an enactment, to repair or maintain any part of the common parts.

The Tribunal ruled that the manager had no obligations "under a lease" because his powers and duties derived from the Management Order and not under a lease. It also concluded that the manager was not under a repairing obligation in relation to the common parts "by virtue of an enactment". These words, according to the Court of Appeal, are directed to cases in which specific provision is made in legislation. No primary or secondary legislation obliged the manager to repair or maintain any part of the common parts and he was therefore not required to do so "by virtue of any enactment".

The Tribunal also referred to the views, expressed in correspondence, of the Department for Levelling Up, Housing and Communities. It said that it did not attach any weight to those views; the views of civil servants as to the meaning of a statute are not a useful aid to construction.

COMPOSITION OF TRIBUNALS (publishing.service.gov.uk)

4. NEW COMPETENCE FRAMEWORK FOR PROJECT MANAGERS

Working Group 10 (Project Managers) of the Competence Steering Group has developed a competence framework to establish core competence criteria for project managers working in the built environment in England.

The framework is intended to be complementary to the British Standards Institution suite of documents, BSI Flex 8670 and PAS 8671, 8672 and PAS 8673, and is for use by:

  • professional institutions, regulators, enforcing authorities, licensing bodies and awarding organisations to assess the competence of project managers;
  • individuals to determine their own competence limitations and to identify areas of development; and
  • construction organisations undertaking new build, refurbishments, repairs, maintenance and improvements to buildings, in identifying individuals competent to undertake the role of site supervisor.

It is expected that existing professional vocational, education and technical training will take into account the competence requirements of the framework when designing or reviewing education and training syllabuses.

See: https://www.apm.org.uk/v2/media/a1rnnoz0/apm-competence-framework-for-project-managers-in-the-built-environment-in-england.pdf

5. COMPETENCE STEERING GROUP 2024 FINAL REPORT: "A HIGHER BAR"

"A Higher Bar - Achieving a competence-led built environment", the third report published by the Construction Industry Council on behalf of the Competence Steering Group, is the final report in the CSG's trilogy and should be read in conjunction with its 2019 and 2020 reports.

In discussing the Building Safety Act and the new competence duties the CSG says that it recognises "that the sector is not ready for the significant changes and continued support will be needed."

See: https://builduk.org/wp-content/uploads/2024/02/A-Higher-Bar-Report.pdf

6. BIODIVERSITY 10% NET GAIN REQUIREMENT IN FORCE

Biodiversity net gain, aimed at ensuring development will result in more or better quality natural habitat than there was before development, is now mandatory (see Schedule 7A of the Town and Country Planning Act 1990 (added by Schedule 14 of the Environment Act 2021)). Developers must deliver a BNG of 10%.

Developers, local planning authorities and land managers wanting to sell in the BNG market will need to understand the new requirements.

See: https://www.gov.uk/government/collections/biodiversity-net-gain

Visit us at mayerbrown.com

Mayer Brown is a global services provider comprising associated legal practices that are separate entities, including Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England & Wales), Mayer Brown (a Hong Kong partnership) and Tauil & Chequer Advogados (a Brazilian law partnership) and non-legal service providers, which provide consultancy services (collectively, the "Mayer Brown Practices"). The Mayer Brown Practices are established in various jurisdictions and may be a legal person or a partnership. PK Wong & Nair LLC ("PKWN") is the constituent Singapore law practice of our licensed joint law venture in Singapore, Mayer Brown PK Wong & Nair Pte. Ltd. Details of the individual Mayer Brown Practices and PKWN can be found in the Legal Notices section of our website. "Mayer Brown" and the Mayer Brown logo are the trademarks of Mayer Brown.

© Copyright 2024. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Legal Developments In Construction Law: March 2024

UK Real Estate and Construction

Contributor

Mayer Brown is a distinctively global law firm, uniquely positioned to advise the world’s leading companies and financial institutions on their most complex deals and disputes. With extensive reach across four continents, we are the only integrated law firm in the world with approximately 200 lawyers in each of the world’s three largest financial centers—New York, London and Hong Kong—the backbone of the global economy. We have deep experience in high-stakes litigation and complex transactions across industry sectors, including our signature strength, the global financial services industry.
See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More