2016 Roundup – Construction Law

12/01/2017

Now that 2017 is here, we take a look back at some of the key developments that changed UK construction law in 2016.

Cases

Grove Developments Ltd v Balfour Beatty Regional Construction Ltd [2016] EWHC 168 (TCC), 165 ConLR 153

The Technology and Construction Court (TCC) considered whether a contractor had the right to make an interim payment application after the latest date set out in an agreed payment schedule, in circumstances where practical completion had been delayed (and, if so, whether the employer had given a pay less notice in time). 

The court stated that a contractor had no such right.  It was not possible to construe the contract (an amended JCT Design and Build Contract 2011) as including an implied term that interim payments would continue to be made after the latest date in the schedule.  The court also rejected the argument that as the payment schedule did not cover all of the works, the payment provisions of the contract did not comply with section 109(1) of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996). 

This case serves as a reminder to contractors to consider whether they would be able to apply for an interim payment after the dates (or stages) set out in the contract and plan accordingly.

Bouygues (UK) Ltd v Febrey Structures Ltd [2016] EWHC 1333 (TCC), [2016] All ER (D) 165 (Jun)

Mr Jonathan Acton Davis QC in the Technology and Construction Court (TCC) considered the payment terms under a subcontract based on the terms of GC/Works Subcontract. The claimant argued that the court should reject a payment schedule which did not comply entirely with the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) or, alternatively, incorporate a number of amendments in order to make the schedule compliant.  However, the court preferred instead to amend the schedule to make it consistent with the parties’ other payment processes and, if there was any need to replace non-compliant provisions with those from the Scheme for Construction Contracts, confirmed it would do so only to the extent necessary without overriding binding contractual arrangements that remained operative.

Cofely Ltd v Bingham and another [2016] EWHC 240 (Comm), 164 ConLR 39

In a rare decision, The Rt. Hon. Lord Justice Hamblen held that under section 24(1)(a) of the Arbitration Act 1996 (AA 1996) an arbitrator should be dismissed on grounds that circumstances existed that showed apparent bias.

Transocean Drilling UK Ltd v Providence Resources plc (The Arctice III) [2016] EWCA Civ 372, 165 ConLR 1

The Court of Appeal confirmed that the starting point for interpretation of exclusion clauses between parties of equal bargaining power is the natural and ordinary meaning of the language chosen by the parties, and where the wording is clear, it is not appropriate for the court to apply interpretive principles such as the 'contra proferentem' rule.

Legislation and protocols

The Insurance Act (IA) 2015 came into force in August, radically overhauling many areas of UK insurance law, for example by updating and replacing the existing duty to disclose every material circumstance known to the insurer with a new 'duty of fair presentation'.

It is important to note that from 4 May 2017 the Enterprise Act 2016 will insert sections into IA 2015 which will imply terms into insurance contracts allowing insureds to claim damages against insurers for late payment of insurance claims if not paid within a reasonable time.

The long awaited second edition of the Pre-Action Protocol came into force in November.  It brought in a number of changes, including allowing parties to agree to contract out of the Protocol. and providing that the court is only likely to sanction a party in costs for ‘flagrant or very significant disregard’ of the terms of the Protocol.  It also introduces the role of a Protocol Referee.

This highly-anticipated Act came into force in August. It makes it easier for a third party to issue proceedings directly against the insurer of an insolvent company, and modernises and simplifies previous legislation.

In summary

2016 saw a number of updates in cases law, protocols and legislation designed to simplify and clarify many areas of construction law.

Forecasters have predicted a significant slowdown in many sectors in 2017.  Manufacturing and construction face a tough year as uncertainty and higher costs begin to bite.  There are also serious concerns throughout both industries regarding the ability to recruit enough skilled labour once Britain formally leaves the EU. 

However, we must remember; most economists– including the likes of the Bank of England and International Monetary Fund – were wrong in 2016 when they predicted a sharp slowdown in the event of a vote for Brexit.  Although the pound plummeted and inflation rose, the economy as a whole did not tank abysmally, and enters the New Year in reasonably good shape.  On another positive note, The U.K. government recently published its infrastructure-investment pipeline, detailing a record £500 billion of projects scheduled to be undertaken in the coming years, with government investment behind 40% of the funding required.

2017 may turn out to be a year of opportunities as opposed to hardship.

We will wait and see.

Fisher Scoggins Waters are a London based law firm who are specialise in construction, manufacturing and engineering law.  To make an appointment, please phone us on 0207 993 6960.