The Week That Was - 28 January 2022

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

Building Safety Bill proceeding through the Houses

The Building Safety Bill (the Bill) has passed its third reading in the House of Commons.  Various amendments to the Bill have been considered, including the government's proposal for a retrospective extension to the limitation period for claims under section 1 of the Defective Premises Act 1972 (DPA 1972) to 30 years (as first announced on 10 January 2022). 

This extension raises the prospect of claims relating to buildings completed as far back as 1992.  There are, of course, various practical issues arising from the pursuit of claims relating to work that completed 30 years ago, most notably the fact that documents may no longer exist and witnesses (even if they are still alive) will have no memory of the relevant events.

The Bill will receive its second reading in the House of Lords on 2 February 2022.

For further information, please click here.

JCT payment regime following contractor insolvency clarified (High Court)

In Levi Solicitors LLP v Wilson and another [2022], Fancourt J held that an employer under a JCT Minor Works Building Contract (2011) (MW 2011) was entitled to submit a proof of debt in the contractor's company voluntary arrangement (CVA), claiming that the contractor had been overpaid during the course of the works.  This judgment touches on the payment regime that applies on termination of MW 2011, which is similar to that in other JCT contracts, and may therefore interest construction practitioners.

It was also held that where a creditor challenges the proof of debt of another creditor in a CVA, the burden of proof is on the creditor who submitted the proof to show that it is established, not on the creditor challenging it. 

A copy of the judgment can be found here. 

Building safety funding inquiry launched

The Levelling Up, Housing and Communities (LUHC) Committee has launched a new inquiry into building safety and issues relating to funding and remediation.  They will examine the announcements made by Michael Gove on 10 January, which included offering statutory protection to leaseholders from non-cladding costs, opening up the next phase of the £5.1 billion Building Safety fund and looking for developers to provide financial contribution to cover the cost to remediate unsafe cladding on buildings 11-18m tall (remediation of high-rise buildings of over 18m having already been announced). 

The committee will consider whether the plans are effective enough and how developers will be impacted by the Government's planned measures. The government expects clear commitments from developers to agree financial commitments to a dedicated fund to remediate unsafe cladding on 11-18m residential buildings (currently estimated at £4 billion). They will also examine what the funding arrangement with the industry should look like and the risk to the Department's budget if they're unable to secure sufficient funds.
The Chair of the Committee has welcomed the steps that have been taken by the Government to ensure that leaseholders are not liable for the costs of removing hazardous cladding to their buildings.

For further information, please click here.

Court of Appeal considers "one source or original cause" aggregation wording in liability policy

In Spire Healthcare Ltd v Royal & Sun Alliance Insurance [2022], the Court of Appeal allowed an appeal by liability insurers in relation to the correct application of an aggregation clause in a combined liability insurance policy. 

The insurers had issued a combined liability insurance policy to the insured, which included an aggregation clause providing that the total amount payable by insurers for loss arising out of "all claims during any Period of Insurance consequent on or attributable to one source or original cause" would not exceed £10 million. The Court held that the relevant claims all arose out of the same "source or original cause" and that several claims against the insured could be aggregated as one claim so that the £10 million policy limit applied, instead of the aggregate policy limit of £20 million.

A copy of the judgment can be found here. 

Judgment considers correct approach to applications to amend claim forms 

In Cameron Taylor Consulting Ltd v BDW Trading Ltd [2022], the original claim form had been issued on 6 March 2020 against the first defendant. However, on 17 March, prior to service, the claimant made amendments to include the second defendant and on 18 March re-amended to include additional claims against them.  

The defendants applied to disallow these amendments.  They argued that the dates of the amendments (17 and 18 March 2020) fell outside the longstop period for the purposes of limitation arguments.  In response, the claimants argued that the only claims that would be made concerned drawings issued after 18 March 2005.  At the initial hearing, the decision went in favour of the claimants. The defendants appealed.

The courts allowed the appeal and determined that the amendments should have been refused on the basis that the limitation period started on the last date on which the defendant was responsible for a negligent act or omission.  In a case about the design of defective buildings that happened when the relevant defective design was incorporated into the building.  This usually occurs when the drawing was issued to the contractor for constructing purposes.  This was before 18 March 2005 and therefore the amendments had been made outside the limitation period.

For further information, please click here.

Thank you to Tom Westford, Fiona Engledow and Joshua Ovens for contributing to this weeks edition.