Here are our top five for this month:
1. The 2024 edition of the JCT Intermediate Contract suite was published by the Joint Contracts Tribunal. For a list of general revisions to the JCT suite, please see our May 2024 top five.
2. In the King’s Speech delivered in the House of Lords on 17 July, there was little specific mention of construction other than to ‘get Britain building through planning reform… to accelerate the growth of high-quality infrastructure and housing’. Themes complementary to construction were included: securing sustainable and economic growth, raising living standards and a commitment to transition to clean energy and to strengthen the powers of the water regulator.
3. In readiness for the King’s Speech, the Construction Industry Council published ‘Building A Safer, Healthier and More Sustainable Future for All’ a list of 56 recommendations click here. These include encouraging the government to protect urban spaces, make public transport more infection resilient and to use the Design Quality Indicator (DQI) on all new and refurbishments of public buildings. Information about the DQI click here. DQI is founded on the principles of a Roman architect and engineer, Marcus Vitruvius Pollio, that a building should have beauty, utility and durability.
4. In a judgement by Mrs Nerys Jefford handed down on 16 July, there is a reminder of the difference between a company voluntary arrangement (CVA) and the insolvency regime (IR) in relation to set-off. A CVA may be used to steady the company ship in stormy financial waters. A CVA must be approved by 75% or more in value of creditors voting on the decision to accept or reject the CVA. The CVA sets out the company’s obligations to its creditors and the parts of the company assets (including rights to make claims) that are available to the creditors.
An insolvency covers all the company’s assets. Insolvency Rule 14.25 provides that where – as in this case – pre-liquidation there have been mutual dealings between the company and a creditor of the company proving or claiming to prove for a debt in the liquidation, an account must be taken of what is due from the company and the creditor to each other in respect of their mutual dealings and the sums due from the one must be set off against the sums due from the other. If there is a balance owed to the creditor then only that balance is provable in the winding up. If there is a balance owed to the company, the balance must be paid to the liquidator as part of the assets. This rule does not automatically apply to a CVA.
We will call the company with the CVA Company A. In this case, a creditor bound by the Company A CVA was ‘astounded’ to receive a claim by Company A for over £800,000. It was held that the wording of this CVA did not prevent this claim and the court ordered summary judgement of an adjudicator’s decision in favour of Company A. By the time the judgement was handed down, the paying party, Henry Construction Projects Ltd, was in administration. Link to case.
As an aside, the UK government’s 19 July 2024 publication of insolvency statistics tell us that construction is at the top of the top five industries that experienced the highest number of insolvencies in the 12 months to May 2024: Commentary here.
5. On a brighter note, at least for UNESCO and the thousands of opponents of the Stonehenge tunnel scheme, the scheme was cancelled on 30 July. Traffic issues demand some sort of solution, but the tunnel has now been ruled out. The scheme has been on and off and in the courts for years but is now off the drawing board/CAD screen.
If you have any questions about these or other construction matters, please contact Jan Grimshaw on 07702 846850 or jan.grimshaw@daviesandpartners.com
