Construction newsletter - August 2017

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Welcome to the August edition of our construction newsletter. 

Transport investment is driving apprenticeship opportunities

With a potential skills gap forming, likely to be exaggerated by Brexit, the need for investment in new skills is now more important than ever.

Transport and infrastructure is likely to be one of the main areas this need is evident, and major recent investment in the road, rail and technology infrastructure is expected to create up to 35,000 apprenticeship opportunities by 2022. So says the Department for Transport in its report 'Transport Infrastructure Skills Strategy: One year on', which explains that "there is even more imperative to redouble efforts as we develop our plans for productivity and growth in a post-Brexit Britain".

The report, released 12 July 2017, explains that the Strategic Transport Apprenticeship Taskforce will continue to drive the delivery of apprenticeships through the supply chain. The report can be found here.

Notting Hill and Genesis to merge to produce one of the largest housing associations in the country.

The two housing associations claim the merged organisation will be the largest shared ownership provider in the country, and will deliver around 2,700 new homes per year (which is 400 more than would have been provided separately).

Take notice!

In Glen Water v Northern Ireland Water (Northern Ireland), Glen Water was responsible for upgrade works at a sewage treatment plant (including a new incinerator before taking over the operation of the existing plant, which included the existing incinerator) under a PFI contract.

The issue here concerned the point at which a 'compensation event' was notified, the event being the alleged failure of NI Water to maintain the pressure stream system of the existing incinerator.

Notification was a pre-condition to compensation, and Glen Water relied upon a letter written in connection with a separate but related compensation event relating to the EPC sub-contract works. The pressure stream claim could not be inferred into the letter, particularly because the letter formed part of wider correspondence relating to a different event. The judge noted that the parties had clearly been discussing a variety of issues at the time, but that did not equate to contractual notification of a new compensation event. The error resulted in the claiming party being barred from bringing the £4.4m claim.

Notification of compensation events should be clear and unambiguous, and where the parties have agreed notification to be condition precedent to a claim the court will have difficulty relieving the claiming party from the consequences of failure to fulfil that condition.

Bank's Surveyor's Duty Monitored

The role of the monitoring surveyor (advising a lender in relation to development finance) is becoming increasingly central.  In Governors & Co of The Bank Of Ireland (2) Bank Of Ireland (Uk) Plc V Watts Group Plc (2017) the court considered the extent of a monitoring surveyor's duty in negligence when reporting on a proposed development for a bank. 

Bank of Ireland instructed its surveyor (Watts) to carry out an appraisal of the borrower's cost estimates for the proposed development. This was to form part of the bank's initial appraisal ahead of funding the development.

The borrower became insolvent and the partially completed property was sold at a loss of £750,000. The bank looked to recover its losses from Watts, alleging that its appraisal of the borrower's cost estimates was negligent and that the bank would not have allowed drawdown if Watts had advised properly.

In the judgment, Coulson J restated the principle that the duty of a surveyor will be lower where its instruction was to provide information to aid a decision than where a surveyor was providing advice on what course of action should be taken.

Watts had reviewed the borrower's cost and time estimates using 'comparables' and advised that they appeared to be reasonable, a conclusion that was supported by expert evidence. Watts' fee for doing so was £1,500. The bank's expert, by contrast, had incurred costs of around £45,000 fully analysing the borrower's costings. This, combined with the fact that the report was only a part of the bank's initial appraisal, led to the court concluding that a lower duty was owed. On the evidence, Watts had advised accordingly and its duty had not extended to recalculating the borrowers costings.  

Anyone considering a claim against a surveyor must first consider the extent of the duty owed before assessing whether they believe that the surveyor is in breach of duty. The full reasoning of the judgment can be accessed here.

Government establishes the Building Safety Programme

In response to the Grenfell Tower disaster, the Department for Communities and Local Government has announced that it is setting up the Building Safety Programme (BSP).

The BSP will work with housing providers, schools, hospitals and the industry generally to identity buildings which are of concern through a thorough checking and testing process. It aims to encourage a co-ordinated approach and help develop building solutions with the assistance of the Government appointed Industry Response Group.

It will work with the Government's already appointed Independent Advisory Panel to provide advice to landlords regarding initial steps to protect residents and to assist decision making on longer term remedial works.

The Building Safety Programme's press release and mailing list can be accessed here.