Construction Newsletter February 2016

Posted by Rachel Gwilliam on
A brief update on recent news and developments in construction law

NEW EDITIONS OF THE JCT SUITE OF CONTRACTS TO BE PUBLISHED IN 2016

New features and upgrades will include:

  • Amendments intended to improve the JCT suite's "functionality and user-friendliness", such as:
  • Clarification of the intellectual property provisions; and
  • The incorporation of the provisions of the JCT 2012 Named Specialist Update.
  • The incorporation of provisions from the JCT Public Sector Supplement relating to fair payment, transparency and building information modelling (BIM)
  • Reflecting the requirements of the Public Contracts Regulations 2015 (SI 2015/102) with provisions for use by public bodies, contractors and sub-contractors on public sector projects
  • The incorporation of provisions relating to the Construction (Design and Management) Regulations (SI 2015/51). The JCT had already published separate amendments sheets to update and amend the JCT suite. These amendments will be captured in the 2016 editions.
  • Various changes to the payment provisions intended to simplify the payment provisions and capture fair payment principles. These will include:
  • establishing, for fair payment purposes, interim valuation dates which will operate at main contract, sub-contract and sub-subcontract levels.
  • allowing the monthly payment cycle for due dates for interim payments to continue after practical completion up to the due date of final payment;
  • a new procedure for prompt assessment of loss and expense;
  • greater flexibility in relation to fluctuations; and
  • consolidating the notice requirements for the service of payment and pay less notices
  • Provisions for granting performance bonds and parent company guarantees, and allowing for sub-contractors to grant third party rights under the Contracts (Rights of Third Parties) Act 1999. (The JCT 2011 editions provide for collateral warranties from sub-contractors, but not third party rights.)
  • Extending Insurance Option C so that it allows alternative solutions to the problem of obtaining existing structures insurance for a contractor. Generic provisions that apply to Insurance Options A, B and C (evidence of insurance, insurance claims and reinstatement work) will also be consolidated within the main text.

A cautionary tale: Professional consultant owed a duty of care in tort for gratuitous services she had performed for her friends

Case: Burgess and another v Lejonvarn [2016] EWHC 40 (TCC)

The Claimants (a married couple) were the owners of a property in Highfields Grove, London. The Claimants sought to undertake a significant landscape gardening project to their property, which involved substantial earthworks (the site of the property was steep).

The Claimants obtained a quote from a well-known landscape gardener to carry out the work at a cost in excess of £150,000 plus VAT. Believing this to be too expensive, they decided to ask for professional assistance from their friend and former neighbour, Mrs Lejonvarn. Mrs Lejonvarn provided assistance, on a gratuitous basis, to the Claimants in connection with the project.

By spring 2013 Mrs Lejonvarn secured the contractor to carry out the earthworks and hard landscaping. The works involved the relevelling of the steep slopes, the formation of terraces and banks supported by railway sleepers, and the creation of paths and lawns. Paving and drainage works were also to be carried out. In July 2013, the parties sent each other emails, bringing Mrs Lejonvarn's involvement in the project to an end. The Claimants alleged that much of the work done during the period of Mrs Lejonvarn's involvement was defective and that she was legally responsible for it. Criticisms were also made in respect of procurement, project management, budgeting and cost control.

Alexander Nissen QC, sitting as a Deputy High Court Judge, determined as a preliminary issue, that Mrs Lejonvarn owed the Claimants a duty of care in tort notwithstanding the fact that she had provided her services on a gratuitous basis:

" a duty of care may be found to arise even in circumstances where services are performed gratuitously and in the absence of a contract."

The case highlights the need for any professional who offers informal advice to exercise a degree of caution. However, the Court emphasised that

"This was a significant project, albeit in a residential setting, and was being approached in a professional way. This was not a piece of brief ad hoc advice of the type occasionally proffered by professional people in a less formal context. Instead, the services were provided over a relatively lengthy period of time and involved considerable input and commitment on both sides. They also involved significant commercial expenditure on the part of the Burgesses. It would be wrong to categorise this as akin to a favour given without legal responsibility."

Specific Performance: Professional consultant ordered to provide a collateral warranty in line with its contractual commitment

Case: Kier Construction Ltd v WM Saunders Partnership LLP [2016] CSOH 17

In 2006, Dumfries & Galloway Council appointed Kier Construction Limited in connection with the construction of a new leisure centre in Dumfries comprising a swimming complex, a multi-purpose sports hall, several health and fitness suites, and a car park.

Under the terms of its contract, Kier undertook to provide a collateral warranty in favour of the Council from all the design consultants and sub-contractors it employed on the project.

Kier appointed WM Saunders Partnership LLP ("WMSP") as a consultant responsible for providing the services of architect, civil engineer and structural engineer during the construction of the leisure centre.

Under the terms of its appointment, WMSP acknowledged receipt of a copy of the main contract and agreed to perform its services so as not to cause a breach of that contract. It also undertook to provide a signed collateral warranty in favour of the Council within 14 days of a formal request from Kier. A form of collateral warranty was annexed to WMSP's appointment, although the net contribution clause and amount of professional indemnity insurance were incomplete.

The leisure centre was completed in May 2008. Kier only requested the provision of a collateral warranty from WMSP in favour of the Council over six years after practical completion. WMSP failed to provide the requested warranty.

Kier issued proceedings against WMSP for "specific implement" (the Scottish legal equivalent of specific performance) to compel the provision of a warranty.

The Outer House of the Scottish Court of Session ordered specific implement and required WMSP to provide a collateral warranty in favour of the Council, deciding that:

  • WMSP had agreed to provide the collateral warranty in correspondence with Kier where it stated that the collateral warranty would be forthcoming if its alleged outstanding fees of £36,275 were paid by Kier.
  • In any event, the Court would have granted the same order on the basis of the terms of the underlying professional appointment between Kier and WMSP.

Blake Morgan listed as top legal adviser

High standards of client service have seen Blake Morgan LLP named one of the UK’s top legal advisers in a respected end-of-year list.

The list produced by the law profession publication Legal Week lists Blake Morgan as one of 25 to receive the accreditation “Best Legal Adviser” after it scored highly across a range of categories.

Blake Morgan is ranked number one for value for money, fee arrangements and value-added services and second for billing practice and transparency and partner-level contact.

The firm is also named one of the 10 Most Innovative Law Firms in a category which ranks firms for the use of innovations such as automation and e-billing.

Legal Week surveyed 900 general counsel, senior in-house lawyers and procurers of legal services and asked them to rate the law firms they instruct against a range of criteria, including the standard of client service.

The Best Legal Adviser table is made up of the 25 law firms which scored most highly, and feedback from a minimum of 15 clients is required for a firm to qualify for this ranking.

Walter Cha, Managing Partner at Blake Morgan, said: “I am very proud that Blake Morgan has achieved such good results in this survey.

“Client service is the driving force behind everything we do at Blake Morgan. This recognition is particularly welcome because it is based on the feedback that comes directly from our clients.”

Our Construction and Engineering Team

“Blake Morgan is very strong in construction. ”

The Legal 500 UK 2015

Our Construction team provides expert advice on procurement strategies, construction disputes, and contract drafting and negotiation for stand-alone and complex property agreements. Our work covers a range of commercial, residential and mixed projects in both public and private sectors.

Non-contentious (transactional)

The team gives specialist advice to a wide range of clients across the whole of the construction sector supply chain. Our highly knowledgeable lawyers advise in relation to all major industry standard forms of documentation (JCT, NEC, FIDIC, GC/Works) in addition to a wide spectrum of bespoke agreements.

Contentious (disputes)

Our Construction team also specialises in the resolution of construction disputes. Our extensive experience means we can find the most efficient and cost-effective means by which to resolve any such dispute, whether by negotiation, litigation, arbitration, adjudication or ADR.

We also understand careful planning and investigation can avoid costly delays and disputes. Our legal team will ensure that you are in the strongest position to take a dispute or project forward by assessing risk and subsequently advising on the best strategy for any particular problem.

About the Authors

Rachel specialises in construction and engineering matters, dealing with contentious, non-contentious and professional negligence issues.

Rachel Gwilliam
Email Rachel
029 2068 6129

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Richard heads Blake Morgan's Construction group. Specialising in construction law, Richard’s practice combines both non-contentious work and dispute resolution.

Richard Wade
Email Richard
01865 254244

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