In this article, we look forward to some of the construction industry themes that are likely to dominate 2023, both in terms of the underlying causes and the legal issues that arise out of them.
In our horizon scanning article for 2022, we predicted that disruptions to the global supply chain, high demand for globally traded products and a significant shortage of skilled labour in the industry would result in an increase in disputes, and — combined with the unexpected war in Ukraine — this is what happened.
Whilst the downturn in tenders did not come as early or bite as hard as most predicted, that downturn has now arrived (albeit London’s status as a separate, more resilient economy than the rest of the UK bubble, is still evident), and will continue throughout 2023, and when combined with the wider economic picture (stalled UK economic growth, declining confidence, public sector spending restraint (save for major infrastructure projects) and private housing starting to weaken), the new year promises yet more disputes, with many of those issues that bubbled under in 2022 likely to boil over in the new year, with claims likely arising at every point in the supply chain.
For new contracts, employers seem more willing now to grant additional routes to extensions of time, albeit those all-important clauses granting contractors money remain elusive (save for the occasional fluctuations clause).
Cladding and fire safety was another issue that both dominated the news 2022 and will do so again in 2023.
Whilst in the longer term, we are hopeful that the regime imposed on new higher risk buildings by the Building Safety Act (BSA) will assist the construction industry with general regulatory compliance, hopefully leading in the longer term to a restoration of trust at every level (including importantly from the insurance market), for now the industry is still getting to grips with the coming into force of the BSA.
By reference to the government’s previously provided timetable, 2023 will mark the coming into force of:
(1) the golden thread (being both:
(a) the information about a building that allows someone to understand a building and keep it safe; and
(b) the information management to ensure the information is accurate, easily understandable, can be accessed by those who need it and is up to date); and
(2) the Gateway regime for higher risk buildings, with the current government timetable indicating that this will take effect from October 2023 onwards, and there is some evidence of a rush to break ground before that date, with contractors and employers seeking to avoid being guinea pigs of the new requirements and the new Building Safety Regulator.
It’s also likely that we will see the long awaited report on Phase 2 of the Grenfell inquiry, focused on establishing how the Grenfell Tower came to be in a condition that allowed the tragedy to occur, which is likely to be hugely important not only in terms of the liability of those involved in the construction of the Tower itself, but also many others in the wider industry, by reference to the Report’s findings about the relevant standards existing at the time of construction, and what responsible professionals knew or should have known (with the result that it may ‘unlock’ at least some of the many currently stayed claims).
We will also see a focus on issues in relation to medium rise buildings (11—18 metres), in relation to which the government has established a remedial scheme, leading to those responsible for such buildings starting to investigate their portfolio, and initial signs are that — as many feared — historical failures to comply with building regulations were not limited to the 18m+ buildings, with the result that insurers are already receiving notifications of circumstances, with formal action likely to follow in due course.
Whilst there was speculation that the government might alter the threshold of ‘higher-risk buildings’ to 11 metres or 4 storeys, it recently confirmed that ‘higher- risk buildings’ would remain as buildings that are
We still await the details of the rest of the secondary legislation that will put the meat onto the bones of the BSA, for example in relation to the duty holder regime and the role of the “accountable person”, and like everyone else in the industry we will keep a close eye on this.
Finally, 2022 saw the first applications for Remediation Orders under the BSA, requiring a landlord to remedy what are called “relevant defects” at a Property, along with Remediation Contribution Orders (designed to ensure that landlords, developers and “associated” persons contribute towards the cost of remediation work in relation to relevant defects) — 2023 will likely see the first applications for Building Liability Orders as claimants seek to recover monies from the companies ultimately responsible for the SPVs that built faulty buildings.
2023 will continue the trend of lots of new technology being introduced to the market, arising out of most obviously
However, as many of us know from experience, new technology does not always work, either as well as it should or in the timetable promised (or sometimes at all…), leading to legal issues impacting both new contracts and existing ones.
As a result, for new contracts for demonstrator projects, parties will need to consider if they want their contracts to resemble traditional forms, with employers having the usual rights and remedies — such as liquidated damages for delay — or to adopt a different approach to risk, removing traditional levers, with contractors incentivised in other ways (see e.g., the FIDIC Green Book — whilst it adopts a fairly traditional approach to risk, the 2021 edition applies liquidated damages not only to delay, but also to termination and prolongation costs).
For existing projects, delays can lead to employers getting frustrated, and — in the absence of an altered risk profile — starting to look at their rights and remedies under their contracts, ranging from obvious matters such as liquidated damages, through de-scoping work from a contractor, to rights of termination, all of which is going to create a lot of project management, with employers needing to consider carefully issues arising in relation to waiver by election, the extent to which any de-scoped work can be carried out by third parties (bearing in mind the difficulty created by implied terms in English law in this area), through to the considerable risk termination of any contract carries, including most obviously that the party terminating a contract has no right to do so.
Specific issues may also crop up in relation to new technology — by way of example, the National Fire Chiefs Council have raised concerns regarding what they believe is “significant uncertainty” over the fire performance of modular construction / factory-built homes, in particular over the lack of large-scale fire-test research and data surrounding this form of construction, and this is already generating notifications to insurers as specific problems crop up on some projects.
We have also heard rumours of a new JCT suite — and perhaps a new JCT form — as with many other things, watch this space…
On 2 November 2022, the Supreme Court handed down its judgment in the much awaiting case of Hillside Parks Ltd v Snowdonia National Park Authority  UKSC 30. The Court’s judgment suggests that the long established practice of using drop-in applications is in fact much more restricted than previously thought. This judgment therefore has significant implications for both the developers and local planning authorities.
National law firm Browne Jacobson has advised long standing retail client, Wilko on the sale and leaseback of its Nottinghamshire distribution centre in Worksop to logistics specialist DHL for £48m.
Logistics company Eddie Stobart has been fined £133,000, after a series of failures which took place whilst excavation work was carried out, exposing its staff to asbestos.
Browne Jacobson has appointed Amy Chapman, the former Group Legal Director of global built environment experts Mace Group, as its first Non-Executive Director (NED) of its Construction & Real Estate sector strategy board.
Across the UK, homelessness is an urgent crisis, and one that is set to grow amid the rising cost of living. Local authorities are at the forefront of responding to this crisis, but with a lack of properties that are suitable for social housing across the UK, vulnerable individuals and families are often housed in temporary accommodation.
Two directors of a construction company were fined after failing to ensure the safe removal of asbestos from a plot of land. On 14 and 15 November 2021, Directors Anthony Sumner and Neil Brown, of Waterbarn Limited were involved in the uncontrolled removal of asbestos material from a plot of land in Grasscroft, Oldham.
An engineering company in Tyne and Wear was fined £20,000 after a worker fractured his pelvis and suffered internal injuries after falling through a petrol station forecourt canopy, whilst he was replacing the guttering.
Since the beginning of the pandemic, landlords and tenants have experienced significant limitations in the way rent arrears could be pursued. We first saw the moratorium on the recovery of Covid related arrears, and more recently we’ve experienced the implementation of the Covid arrears arbitration scheme.
The focus on the Levelling Up agenda and the availability of grant funding, means there are numerous important regeneration schemes actively being pursued across the country. With ever-escalating project and building costs, in many cases, applications that were made for grant funding were based on costs contingencies that have already been exceeded.
Browne Jacobson’s private equity (PE) dealmakers have advised Palatine Private Equity backed CTS Group (Construction Testing Solutions Limited) on its latest acquisition of Concept Engineering Consultants Limited, a leader in geotechnical, structural and geo-environmental services for an undisclosed amount.
Rolls-Royce has shortlisted six locations for its first factory for small nuclear power stations. We look at the impact on regions & local businesses
Recent reports of flat roofs constructed using RAAC planks collapsing without warning prompted the SCOSS alert.
Conservation Covenants come into force on 30 September 2022. We look at the impact on landowners, developers and responsible bodies.
The Building Safety Act 2022 received Royal Assent on 28 April 2022 (“Act”). The government has described the reforms introduced by the Act as “the biggest changes to building safety regulation in a generation”. For once the hype is justified.
The Federation of Small Businesses (FSB) has released a report setting out the impact of new and changing regulations arising from the pandemic on small businesses across the UK.
We have created a summary of the recommendations and consistent themes which we are now starting to see becoming more embedded in public sector procurement practices.
The climate emergency has reached a point where real and substantial damage is being caused to both the planet and society. There has been a shift from planning and theorising the most effective solutions, to a phase where practical, efficient, and sustainable solutions are required at speed.
As the Grenfell Inquiry continues, how have the Phase 1 recommendations changed the fire safety and building safety landscape?
Browne Jacobson has successfully advised Nottingham based developer Charterpoint on the sale of a 1.2 acre care home development site in Thurnby (Leicestershire) to care home operator Cinnamon.
On 4 May 2022, the Court of Appeal handed down judgment in the joint case of R (Elkundi and others) -v- Birmingham City Council and R (Imam) -v- London Borough of Croydon  EWCA Civ 601.
The Levelling-up and Regeneration Bill was introduced to Parliament on 11 May 2022. In this Bill, and in accordance with earlier reports, the government intends to replace section 106 agreements and the existing Community Infrastructure Levy (CIL) with a new Infrastructure Levy.
In anticipation of the adoption of the Building Safety Bill, our specialist compliance and regulatory team will give an overview of the measures proposed in the Bill.
The new regime introduced by the Act will take shape over the next 18 months, but those who design, build or manage high rise buildings are being urged to get ready for the changes to be introduced through the act.
On 14 February 2022, Secretary of State of the Department for Levelling Up, Housing and Communities, Michael Gove, announced proposals designed to pressure building developers and materials manufacturers to fund the remediation of unsafe properties.
Improvement to the planning system has arrived in the form of new digital tools which will make it easier for the general public to have their say on shaping and regenerating their communities.
In March the government proposed a number of changes to the Building Safety Bill. The new amendments propose additional protection for leaseholders to prevent them from being charged for cladding work if they own up to three properties.
From 6 April 2022, right to work checks on all migrant or settled prospective employees must be online and checks on British or Irish nationals will be manual (free) or digital (charged for).