Mills & Reeve: Practical Completion

Beware of the Undertaker

The job at 150 Loudoun Road, Camden has caused much angst between the employer, Fenice Investments, and its contractor, Jerram Falkus Construction and this has led to a number of legal skirmishes. In the latest skirmish, the judge commented on the phrase, “Statutory Undertaker”. He suggested that given the patchwork of companies which provide and maintain utilities, perhaps we ought to revisit the traditional definition. Where the term is used, maybe it should also refer to a “private utility or undertaking”.

Jerram Falkus Construction Ltd v Fenice Investments Inc [No.4] [2011] EWHC 1935 (TCC)

Presumption in favour of sustainable development

Caroline Bywater, a senior solicitor in the firm’s planning team writes:

“As you will no doubt have seen from the news coverage, the National Planning Policy Framework ("NPPF") was published yesterday and came into effect immediately. 

http://www.communities.gov.uk/publications/planningandbuilding/nppf

The NPPF replaces all Planning Policy Statements and Planning Policy Guidance notes, as well as Circular 05/2005 and a number of letters from CLG to Chief Planning Officers. The premise of the NPPF is that it distills all policy guidance in those many documents to a mere 50 (or so) pages.

The draft NPPF had been subject to a huge amount of scrutiny, not least from organisations such as the National Trust and CPRE who were concerned about the lack of protection given to the countryside. The final published version has gone some way to address these and other concerns, and the inflammatory statement about 'the default answer to planning applications is yes' has been removed, although the principle in favour of sustainable development remains, and is referred to as the 'golden thread' running though the document.

No definition of 'sustainable development' is given in the NPPF. Rather, it confirms that the document as an entirety constitutes the Government’s view on what this means in practice for the planning system. It is said that there are 3 dimensions to sustainable development: economic, social and environmental. Specific reference is made to the need for good quality design.

The NPPF does not change the statutory principle that planning applications must be determined in accordance with the development plan unless material considerations indicate otherwise. The NPPF is one of those material considerations. As such, the local plan is still the starting point for decision making.

The published NPPF includes transitional provisions, which were not included in the draft. These provide that if a planning authority has in place a local plan that was adopted after 2004 (ie in accordance with the Planning and Compulsory Purchase Act 2004), full weight can still be given to those policies for a period of 12 months. After that time, or if no such adopted plan is in place, weight can be given to the any relevant policies but only in accordance with their degree of consistency with the policies in the NPPF. When new Local Plans are drawn up, they should be consistent with the principles in the NPPF and include the principle in favour of sustainable development.

It is worth noting that regional strategies have not yet been revoked, although the Government's intention remains to do so."

Adjudication enforcement - no breach of natural justice

A claim of breach of natural justice failed recently as a contractor sought to avoid enforcement of an adjudicator's decision in favour of its piling sub-contractor.  The contractor claimed that the adjudicator had breached natural justice by relying on a line of argument formed by the adjudicator while watching a video. 

The contractor said that the adjudicator had reached its decision because of an argument he raised for the first time in his decision. This has previously been adjudged to be a breach of natural justice (Primus Build v Pompey Centre).  However, the court found in this case that the adjudicator had reached its decision because of the contractor's failure to prove that delays to the project were caused by the sub-contractor's default.  It was therefore irrelevant whether the adjudicator's conclusions based on the video would amount to a breach of natural justice as those conclusions were peripheral to his decision.

This is the latest in a long line of adjudication enforcement cases in which the party seeking to avoid enforcement has been unsuccessful.  The courts have made it clear that breach of natural justice will only be a bar to enforcement where an alleged breach is material to the decision.

Berry Piling Systems v Sheer Projects Limited [2012] EWHC 241 (TCC)

Are claims consultants' documents privileged?

The employer engaged the claims consultant Knowles Ltd for "contractual and adjudication advice". Later there was litigation between the contractor and the employer (Walter Lilly & Co Ltd v Mackay). When the time came for document disclosure, the employer claimed privilege over most of Knowles’ documents. On the first day of the trial the contractor asked the court to order their release and succeeded. The documents were not covered by legal professional privilege or legal advice privilege. The people at Knowles may have qualified as barristers, but this made no difference because Knowles were not engaged to provide legal advice as such, but claims and project handling advice. However the judge was careful to say: “I should point out that this decision relates only to legal profession or legal advice privilege. It does not deal with litigation privilege and there remains an outstanding possible issue as to whether or not advice and other communications given by claims consultants in connection with adjudication proceedings are privileged. There is little authority on this latter issue and consideration might have to be given to issues of policy if and when this argument arises on another case”.

Working at height with electricity

A recent successful prosecution by the Health and Safety Executive ("HSE") highlights the dangers of working in the construction industry and the comparatively low fines handed down by the courts for those that breach health and safety legislation.

Krzysztof Jabczanik ended up hospitalised in an induced coma.  He also received serious burns to his left hand and suffered memory loss after receiving an electrical shock whilst attempting to repair an external flood light. 

The Health and Safety Executive ("HSE") presented evidence that the routine job was flawed in a number of ways.  A ladder had been placed on top of storage boxes underneath the junction box unit and the cover of the junction box was removed before the electrical circuit within was isolated.

Mr Jabczanik's employer pleaded guilty to breaching regulation 4(1) of the Work at Height Regulations 2005.  His supervisor pleaded guilty to breaching regulation 14 of the Electricity at Work Regulations 1989.

In total the fines imposed amounted to £2,500 plus costs of £2,000.

 

Recent case: Duty of consultant to arrange performance bond

A building contract contained an obligation on the contractor to provide a performance bond in the form attached to the building contract.  The contractor did not provide the bond and became insolvent.  The employer blamed its quantity surveyor/employer's agent (the “consultant”).  The employer argued that the consultant had failed in its duty to “prepare contract documentation and arrange for such documents to be executed by the parties thereto”.  The Court said that this obligation was not absolute but was subject to a duty to take reasonable skill and care and that the consultant had in fact exercised reasonable skill and care in continuing to push and cajole the contractor on the performance bond point.  In the circumstances it would not have been reasonable for the consultant to advise the employer to withhold interim payments from the contractor (on the basis that the performance bond was still outstanding) because:

• The contractor was in financial difficulties and to do so may have pushed it over the edge.
• The contractor had said that it was going to provide the bond.
• The contractor was already being underpaid due to confusion between the payment schedules in the contract and those provided by the financier.

I took away from this case two useful points:

1. For employers. Be careful how the services are drafted.  Often they have to be carried out subject to the duty of reasonable skill and care.  If you want to make an obligation absolute you need to say so.
2. For consultants.  The Judge took a very sensible and reasoned approach and looked at the acts of the consultant in all the circumstances to decide that it was not negligent in this case.  This is however a reminder that you should always provide the entire range of options to the employer and then help the employer to decide which is best in the circumstances.

The case is available on BAILII: Sweett (UK) Limited v Michael Wight Homes Limited

And we're off! The first update to the JCT 2011

Just as the dust settles on the hiatus caused by the introduction of the 2011 form of JCT building contracts, the first update has already been released.  The update allows the employer to name specialist domestic sub-contractors in the three standard form building contracts (with quantities, without quantities and with approximate quantities).

The update does give the contractor the right of reasonable objection in the case of replacement specialists and specialists named at a later date.  If the contractor does object or the specialist becomes insolvent, the contractor is entitled to claim for an extension of time and any loss or expense claim that arises.  That being said, it is likely that employers legal advisers will tweak the drafting to shift the risk of the specialist sub-contractor onto the contractor.

Mind your Ps and QQs

The Cabinet Office recently released a procurement policy note on the use of PQQs by central government departments, their executive agencies and NDPBs.  Essentially, the note:

1. Prohibits the use of a full PQQ on below threshold procurements.

2. Provides that under a framework, performance bonds should be a condition of the award of the first contract under the framework (rather than a condition of being awarded the framework itself).

3. Provides that the new core PQQ questions are to be used on all procurements of goods and services (over threshold) and confirms that PAS91 should continue to be used for construction procurements. 

Now then…hands up if you currently use PAS91…

Which court?

It has been confirmed, in the recent case of West Country Renovations Limited v McDowell that, subject to a few exceptions, claims for less than £250,000 should be commenced in County Courts or other High Court centres outside London, which have TCC designated judges. For details of those courts click here.  In West Country the Judge confirmed that this is likely to be the new practice in the Technology and Construction Court in London.

It is open to a claimant to issue in any court it chooses but if it issues in an inappropriate court the case may well be transferred, and it runs the risk of picking up any costs involved.

The exceptions (which are not exclusive) are quite wide ranging so it is worth checking them.  They are:

• Adjudication or arbitration enforcement
• International cases
• Cases invovling new or difficult points of law which issues of technical complexity
• Test cases
• Public procurement
• Part 8 claims or other declarations
• Complex nuisance cases
• Injunctions
• And finally, a bit of a catch all, claims which cannot readily be dealt with effectively in a County Court or Civil Justice Centre

Guilty Pleas in MoD Contracts Bribery Case

Four people, two of whom worked for the Ministry of Defence, have pleaded guilty in a high-level bribery and corruption case in Belfast. The case centred on the award of contracts worth £16.2 million for the supply of  CCTV services and equipment to the MoD through the payment of bribes. William Marks (55), who was MoD deputy senior commercial officer at the time, admitted accepting £66,500 in bribes from James McGeown (73), the owner of VIS Security Solutions. John Symington (56), a senior quantity surveyor for the MoD, pleaded guilty to four counts of corruption after accepting £18,000 from McGeown. Carol Kealy (53) admitted obstructing a police investigation by using a bank account in her name to process Marks's funds. She was given a conditional discharge. The other three defendants will be sentenced later this month.