The Week That Was - 28 April 2023

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

"Serious consequences" threatened for failure in Grenfell remediation

Housing Secretary Michael Gove has written to major investors in cladding companies involved in the Grenfell Tower blaze, warning them they face “severe consequences” if they do not agree “a comprehensive financial package” to fix unsafe buildings.  

The precise nature of the consequences is not yet known.  Gove wrote to investors in Northern Ireland’s Kingspan, US-based Arconic, and France’s Saint-Gobain and urged them to use their “position of influence” to reach “a just resolution for all concerned”.  The Government says the three construction firms were responsible for manufacturing the majority of cladding used in the Grenfell tragedy, which killed 72 people in 2017, but so far have not contributed to fixing other unsafe UK buildings in which their products are used.  Gove said: “I have always been clear that those responsible for the building safety crisis must pay".  So far 46 firms have agreed to the Government’s Developer Remediation Contract, which sets up a £2bn fund to fix fire-safety defects in English buildings over 11 metres they had a role in developing or refurbishing.  

To read more, click here.

An explosive exclusion: Allianz Insurance Plc v University of Exeter [2023] EWHC 630 (TCC)

The University of Exeter sought insurance cover for physical damage and related business interruption losses following the deliberate detonation in 2021 of a World War II bomb which had been dropped by the Luftwaffe in 1942.  The issue was whether the “proximate” cause of the losses suffered was either the dropping of the bomb in 1942 which would be excluded under a war exclusion as having been “occasioned by war”  or the detonation of the bomb in 2021 which would be covered.  The Court (His Honour Judge Bird) found that the “proximate” cause was the dropping of the bomb in 1942 and not its controlled detonation in 2021 and that losses were excluded from cover under the policy.  The test of what constitutes "a" or " the"  “proximate cause” is a matter of judgement based on “common sense”. A loss may have more than one cause and the proximate cause should not necessarily be treated as the cause nearest in time to the loss.  

Determining whether a cause was the proximate cause of the loss involves making a judgement as to whether that cause made the loss inevitable.  Generally, intended human actions (such as the deliberate detonation of the bomb) are not regarded as new causes, provided at least that the action was not wholly unreasonable.

To read more, click here.

Update on Fast Track Wind Schemes

Following onshore wind projects losing their nationally significant infrastructure classification in 2016, the National Infrastructure Commission (or "NIC") has called for the government to re-instate its classification.  Since 2016, onshore wind installation has dropped by 80% when its classification was removed.  Further, the NIC has also identified the need to reduce the time it takes for a decision to be made as presently it takes more than four years for the government to approve such applications.  The NIC has said: “Improving the speed of the planning system for major infrastructure does not need to come at the expense of good decisions which take communities and the environment into account”.  These changes are driven by the goal to reach net zero and Energy UK deputy policy director Marta Krajewska said the planning system would play a “crucial role” in delivering the “transformational change” required to achieve net zero.

Read more here.

London falls a place to be the second most expensive city in which to build

Arcadis's international construction costs report detailed that London is no longer the most expensive city to build and now ranks behind Geneva.

Peter Hogg, UK cities director at Arcadis, has said: “Despite the relatively high construction costs seen over the year, the UK – and the London market in particular – remain really good places to invest and construct, offering the potential for strong long-term returns for investors" and that “competitive sustainability credentials make our capital a desirable city and continue to attract talent from across the globe.”  Bristol, Manchester, Dublin, Birmingham, Edinburgh and Glasgow all feature in the top 20 most expensive cities to build. 

The report also found that there was high inflation across all markets as a result of the war in Ukraine, which had a particularly significant impact in Europe. 

To read more, click here.

Government to procure litigation support worth £5m for pursuit of companies it claims are avoiding responsibility to pay to fix unsafe buildings

The Department of Levelling Up, Housing and Communities (DLUHC) is procuring specialist litigation support for its Recovery Strategy Unit (RSU).  The RSU was set up to pursue the companies aiming to avoid their responsibility to fix unsafe buildings.  The specialist support will set up a framework agreement of up to seven suppliers, who will take Government action against the companies in question.  The DLUHC is looking to work with "innovative and experienced litigators" in the commercial, property, construction and tax compliance sectors.  The outcome of the RSU action is likely to establish a precedent of powerful new legal remedies. 

For more information, click here.

Thank you to Jonathan Chambers, Rakesh Pandit and Ava Mathias for contributing to this week's edition.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.