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The Week That Was - 27 August 2021

27 August 2021. Published by Ben Goodier, Partner and Sarah O'Callaghan, Senior Associate

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Review of architect's regulation launched
The Ministry of Housing, Communities and Local Government (MHCLG) has called for evidence on the regulation of architects in the UK.  Evidence is being sought in respect of access to the profession, building safety considerations and sustainability and energy efficiency issues.

Issues arising from recent developments are already being addressed in the Building Safety Bill and Professional Qualifications Bill, which are currently proceeding through Parliament.  

The call for evidence closes on 8 November 2021 and MHCLG intends to consider the result alongside expert evidence, desktop research and stakeholder workshops before announcing its next steps, which is likely to be in summer 2022.

To read further, please click here.

Issues for Disclosure
On 16 July 2021, Judge Keyser QC handed down his judgment in the case of Curtiss v Zurich Insurance Plc [2021] EWHC 1999 (TCC), ordering certain Issues for Disclosure pursuant to PD 51U.
 
The underlying claim concerns the Meridian Quay Development in Swansea ("the Development"), which was constructed between 2006 and 2010.  It is alleged that the Development suffers from significant structural defects.  The Claimants are the leasehold owners of flats in the Development who acquired a New Home Warranty Insurance Policy issued by Zurich upon purchase of the leasehold interest in each flat from the Developer.  The Claimants allege that Zurich acted fraudulently when issuing the Cover Notes and that this caused the Claimants to purchase flats that were considerably less valuable than the purchase price.
 
Amid this factual context, the Court was requested to review and approve certain Issues for Disclosure pursuant to PD 51U, which would influence the extent of Extended Disclosure.  Judge Keyser QC noted that the parties are only required to provide disclosure of documents that are necessary for a fair determination of the issues at Trial, and that such disclosure must be directed to the issues in dispute in the parties' Statements of Case.  This approach is consistent with that of Mr Peter MacDonald Eggers QC sitting as a Deputy High Court Judge in Lonestar Communications Corporation LLC v Kaye [2020] EWHC 1890 (Comm), where he noted that Issues for Disclosure must be key crystallised issues in the parties' Statements of Case (i.e. the relevant Issue of Disclosure must relate to a pleaded issue).  Judge Keyser QC struck out the majority of the Claimants' proposed Issues for Disclosure on the basis that they did not relate to key issues in dispute and as such were a "mere fishing expedition."
 
The judgment is helpful in highlighting that Issues for Disclosure need to be of direct relevance to key issues in dispute.  If a party is unable to justify Issue for Disclosure without detailed particulars in support, then it can be susceptible to challenge if it is construed to be a "mere fishing expedition."
 
To read the judgment, please click here.
 
Balfour Beatty facing £50m liability for London tower scheme

Infrastructure group Balfour Beatty is facing liability of up to £50m to fix façade problems on a tower scheme in London.
A structural assessment in June 2021 indicated that stone panels on the high-rise development need to be modified, reinforced or replaced to meet performance requirements.

The issue has prompted Balfour Beatty to pull out of bidding for fixed price residential property projects in central London.

To read the full article, please click here.

40% increase in construction equipment safety breaches
Construction equipment breaching the Provision and Use of Work Equipment Regulations 1998 (PUWER) increased by 40% during the first half of 2021.
PUWER Regulations place duties on those who own, operate or have control over work equipment and are enforced by HSE inspectors.  PUWER Regulations require a competent person to inspect each piece of work equipment periodically to ensure it is fit for use, and to record their findings for future reference.  Potential safety issues and instructions as to how to use the machinery may also be required in some cases.   

The Building Safety Group (BSG), which carried out the site inspections, said the increase in breaches is an indication that some machines may have degraded due to periods of inactivity during the pandemic.

To read the full article, please click here.

Brick Supply Crisis
The construction industry is suffering from a brick supply shortage, which is being exacerbated due to a decrease in cancellation rates.  Consequently, brick suppliers are quoting lead times into 2022, which may lead to construction delays.

The average brick cancellation rate was 24% earlier this year, typically because of planning rejection or projects being postponed or cancelled, but this is now running at an average of 6%.  This decrease in cancellation rates is attributed to an overall construction materials shortage in the UK, possibly as a result of the ongoing COVID-19 pandemic. Read more here.

Could materials shortages change the way contracts are negotiated in the UK?
A shortage of key construction materials such as steel are contributing to a significant increase in the value of construction disputes.
With the cost of construction projects varying so greatly, contractors and developers are being left in untenable positions, leading to an increasing amount of adversarial situations.

It has been suggested that a US style model whereby contracts are agreed with built-in cost flexibility could be viable in the UK.

To read the full article, please click here.


With thanks to Zack Gould-Wilson and Sharona Zovich for contributing to this week's edition.