The Week That Was – 26 April 2024

Published on 26 April 2024

Welcome to the week that was, a round-up of key events in the construction sector over the last seven days.

Scotland to get its own Building Safety Levy 

Scotland is seeking to use newly devolved powers to raise taxes for housebuilders by implementing a tax on the construction of new residential buildings.  Following a joint consultation, the UK Government has agreed to allow the Scottish Parliament to legislate for the new tax, as the Scottish Government cannot legislate for new national taxes without devolved powers.  The Scottish Government can now table the Scottish Building Safety Levy to finance cladding remediation efforts in the region.  The levy will somewhat mirror the regulations and taxes now in place in England under the Building Safety Act 2022, although the exact framework is not yet known.  The main concern for stakeholders will be the potential complexity and administrative burden if the Scottish scheme departs significantly from the proposed English Building Safety Levy.

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Judge rules a final determination unsuitable for Part 8 claim

In ISG Retail Ltd v FK Construction Ltd [2024] EWHC 878 (TCC), ISG Retail claimed that an adjudicator's decision that FK Construction was entitled to an extension of time was subject to a condition precedent of the underlying contract.  Under the CPR 8, the Part 8 procedure is to be used where a decision is sought on a question that is unlikely to involve a substantial dispute of fact (CPR 8.1(2)).  Neil Moody KC, sitting as a Deputy Judge of the High Court, determined that, while there was no reason why Part 8 proceedings would be unsuitable for final determination of one part of an adjudicator's decision, Part 8 was unsuitable for these proceedings as there were likely to be substantial disputes of fact between the parties.  The Judge reminded the parties of the Court's discretionary powers to order a claim to continue under Part 8 and invited the parties to consider how the claim should proceed.

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Northern Ireland to extend time limit for defective-building claims

Northern Ireland is introducing legislation on defective buildings which will extend the time limit for compensation claims to 30 years with the intention of combating an “unfair disparity” with the rest of the UK.  This will be achieved by establishing a retrospective period of up to 30 years and a prospective period of up to 15 years during which defective premises are actionable and allowing a building consisting of over two dwellings to be treated as a single dwelling.

This follows current legal inconsistencies under which claims must be made within six years of a building’s completion.  This inconsistency was demonstrated by the structural faults in the Victoria Square residential development in Belfast where, in 2019, residents were forced to evacuate their apartments after a structural column in one of the flats failed.  As the scheme was completed in 2008, compensation from contractors and architects was denied by the High Court in Belfast last month.  

This new legislation, however, plans to bring the time limit in line with that of England and Wales.

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High Court allows legal challenge to Government’s energy efficiency policy

A judicial review challenging the Government’s policy of limiting councils from surpassing minimum energy efficiency standards for new buildings has been allowed by the High Court.

The original policy aimed to simplify planning processes for housebuilders by combating increasing inconsistencies between different local standards, which historically could have increased development costs and undermined economies of scale.  The policy's announcement has caused uproar amongst net zero campaigners, who argue that the policy harms the fight against climate change and may in fact mean homes will need to be retrofitted in the future to comply with increasingly strict standards arriving in 2025.

The two groups bringing the review (Rights Community Action and the Good Law Project) are arguing that the Government's statement is unlawful because it contradicts the aims of the Climate Change Act 2008 and may also be in violation of the Environment Act 2021.  The High Court has said that the hearing must take place “on the earliest available date after 20 May”. 

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Science Museum displays world's first hydrogen-fired brick

London's Science Museum has this week put on display the world's first hydrogen-fired brick, also known as the HyBrick.  The HyBrick produces 81-84% fewer carbon emissions in the manufacturing process than conventional kiln-fired bricks.  Produced by Michelmersh with expert insight from the Greater South East Net Zero Hub (GSENZH), the process uses green electrolytic hydrogen to fire the kiln rather than natural gas (methane) by separating water into hydrogen and oxygen through electrolysis.  The power to carry out the electrolysis is derived from renewable electricity.  Whilst it is only at the project stage, it is hoped that the HyBrick could be one of several methods to rapidly decarbonise the production of clay bricks as the construction industry looks to reach net zero.

To read more about the project, click here.

Hope for suppliers as Henley Construct administration extended

The administration period for Henley Construct, a contractor based in South London specialising in residential developments, has been extended until April 14, 2025.  The 221 companies, including, suppliers, trade creditors, and subcontractors, who were owed at the time of liquidation are said to be unlikely to recoup their losses. 

The suppliers with the largest outstanding claims were Travis Perkins (owed £797,000), London Tower Crane Hire (owed £223,000) and BTR Building Services (owed £337,000).  Taxpayers can also be added to the list of those negatively impacted by the news, due to the £33,927 relating to a bounce-back loan taken out by Henley during the pandemic.  Having said this, payments are expected to be made to former employees and potentially HMRC.

The firms' downfall is said to have been due to a variety of consequences of the financial climate, such as Brexit, the pandemic, and rising costs. 

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Authors for this week's edition: Tarek Elmanharawy, Abigail Pipkin and Tom Butterfield

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.

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