Issue 124

Welcome to the August issue of Construct. I hope the release of this newsletter finds you both healthy and busy. Once again the effects of Covid-19 loom over the wider construction industry, and the cases that we are currently working on.

Since the last issue, the construction industry has reopened, albeit with some restrictions that are affecting the progress of operations on site. The latest version of the Construction Leader Ship Council’s Site Operating Procedures (“SOP”) document (version 5, issued 4 July 2020) reiterates the Government’s “one metre plus” social distancing guideline. Measures to mitigate operatives working within two metres of each other can include erecting screens or increasing handwashing facilities. Whilst most contractors and sub-contractors appear to have got to grips with these measures practically, the effect of them on contractual entitlements for additional time and money appears variable.

Construction companies have also benefitted greatly from the Government’s furlough scheme, and at the start of July just under one in five construction employees remained furloughed. Whilst this number has been gradually dropping since May, the true picture of state of the industry will be revealed in October when the job retention scheme ends.

More positively, on 30 June 2020 the Prime Minister stated his intention to “build, build, build” to escape the expected post-lockdown economic slump. This included relaxation to planning rules in order to allow developers to convert vacant resident units to residential premises more easily.

The Housing Secretary, Robert Jenrick, has also recently mooted further reforms to the planning system. Noting the sluggishness of the current system, Mr. Jenrick proposes that land be designated into three categories, “for growth”, “for renewal” or “for protection”. In land “for growth”, development of new homes and schools for example, is automatic. Whilst, in Mr. Jenrick’s words, this allows developers to “get going”, critics have said that the reforms will lead to poor-quality housing.

The Government has also announced a delay to the introduction of reverse VAT charging for construction services, to 1 March 2021. This enables constructions companies affected by Covid-19 some breathing space in order to prepare, including better planning their cash flow.

Whilst there will be some short-term hardship, and perhaps even a “second wave” of Covid-19, it is clear the Government recognise the importance of construction to the wider economy, and are therefore keen to stimulate it.

Unsurprisingly, many recent instructions to the development and construction team at Prettys have focused on disputes arising as a result of the Covid-19 lockdown. These have included scenarios where the employer no longer wishes to continue with the project, or where the contractor is seeking an extension of time to the contract completion date following a shutdown period.

We have been involved in various forms of alternative dispute resolution (“ADR”), including mediation and adjudication. Commercial mediations can be carried out online, avoiding the need for parties and their representatives to meet. This also provides a cost-effective alternative to physical mediation, which require a venue to be rented and associated travel costs. Adjudication was lauded as a fast and cost-effective method of ADR by Lord Briggs in Bresco v Lonsdale [2020] UKSC 25, which is the subject of one of this issue’s articles. Being mainly paper-based and asynchronous, adjudication is well-suited to lockdown. The courts will not accept arguments against adjudication proceedings whilst lockdown restrictions are in place, which was demonstrated in Millchris v Waters [2020] 4 WLUK 45.

We have also been developing our “fixed price products”, which are a suite of standard form contracts that developers, contractors and sub-contractors can use on their projects. As the name suggests, these documents will have a set fee and can be used repeatedly. They can also be tailored to the needs of your developments or projects.

This issue of Construct contains a guest article from Louise Plant, Senior Associate in the Insurance and Personal Injury team, on returning to the office after lockdown. Whilst many professional services businesses remain working at home, developers and construction companies often have physical operations at their premises and may be keen to migrate back to the office faster. Louise’s article sets out the steps that employers should take to accommodate this.

This issue also considers the landmark Supreme Court case of Bresco, which considered the inherent tension between insolvency and adjudication under construction projects. This tension is likely to become more prominent as the Government’s furlough scheme winds down. The case was also discussed in detail in a Developers Club webinar featuring our Partners Peter Blake and Graham Mead, which can be found here.

I hope you find this issue of Construct to be of assistance. If you have any queries on the content or issues raised, please contact the writer, whose details will be on the article.

Expert
Peter Blake
Partner
Graham Mead
Partner
Louise Plant
Senior Associate
Fiona Galloway
Associate
Michael Booth
Solicitor
Liam Hendry
Legal Assistant