Here are our top five for this month.
1. September saw the publication of the Grenfell Phase 2 Public Inquiry report: CCS0923434692-004_GTI Phase 2_Report Overview_E-Laying_0.pdf (grenfelltowerinquiry.org.uk): Quotations from the report in this article are shared under an open licence: Open Government Licence (nationalarchives.gov.uk)
The question for Phase 2 was: “how was it possible in 21st century London for a reinforced concrete building, itself structurally impervious to fire, to be turned into a death trap that would enable fire to sweep through it in an uncontrollable way in a matter of a few hours despite what were thought to be effective regulations designed to prevent just such an event?”
The Inquiry wanted witnesses to give evidence without holding back for fear of prosecution. The Attorney General gave an undertaking that witnesses oral evidence in modules 1,2 and 3 of the Phase 2 would not be used to inform prosecution decisions or in any prosecution against individuals but would not prevent prosecution of corporations. The executive summary the report includes: “the fire at Grenfell Tower was the culmination of decades of failure by central government and other bodies in positions of responsibility in the construction industry to look carefully into the danger of incorporating combustible materials into the external walls of high-rise residential buildings and to act on the information available to them.”
As of 4 September 2024, the CPS Special Crime and Counter Terrorism Division said that it is considering evidence and decisions on prosecution are unlikely to be made before late 2026. CPS statement on Grenfell | The Crown Prosecution Service
We know that time, resources and care are needed to prepare cases to give them the best chance of success, but nearly 10 years between the Grenfell tragedy and prosecution decision does seem on the long side, even allowing for the pandemic.
We welcome the changes made to building safety and regulation by the Building Safety Act 2022 (BSA) and the associated regulations. They are a challenge to all parts of the construction industry, including the lawyers getting to grips with the 288 pages of the BSA which is surely one of the longest statutes in the history of Parliament. It seems that the BSA is not the longest Act of Parliament, however; that is the 348 meters long Land Tax Act of 1821 made on animal skin: The Longest Act | UK Parliamentary Archives – YouTube.
2. Decided in August, but important enough to include this month is the Court of Appeal decision in Providence Building Services Ltd v Hexagon Housing Association Ltd [2024] EWCA Civ 962 (15 August 2024) (bailii.org). Hexagon was the Employer and Providence the Contractor. The issue was whether the Contractor had terminated its appointment under the contract in accordance with JCT Design and Build 2016 edition termination provisions.
The Employer was late making a payment (Late Payment 1). The Contractor gave a default notice under the termination provisions (Notice 1). Notice 1 told the Employer it was in default. The Employer paid within the 28 days given to rectify Default 1. When the Employer was late paying again (Late Payment 2), the contractor terminated its employment under the contract (Notice 2) . The Employer argued that:
a. it had paid Late Payment 1 before the date the Contractor could have issued a termination notice for the payment default;
b. as no right to terminate arose for Late Payment 1, a termination notice could not be given for Late Payment 2.
The case came to the Court of Appeal after an adjudication substantially in favour of the Employer and a decision in favour of the Employer in the Technology and Construction Court, so before the Court of Appeal decision the score was 2-0 in favour of the Employer i.e., there was wrongful termination by the Contractor. The Court of Appeal took a different view. Why?
a. The court is to focus on the words of the contract. For an industry standard form such as a JCT form of contract: “the interpretation is unlikely to be affected by the context in which the parties concluded their particular contract: rather the process of interpretation will ultimately depend upon an intense focus on the words used”;
b. Previous editions of the standard form are unlikely to be relevant unless the clause was changed in response to case law or statute or a widely publicised event. Archaeological digs into previous editions are generally discouraged as they add to the time and expense of a case.
c. A notice of immediate termination for a repeated default can be given even if the Employer remedied the first default before the Contractor had a right to terminate for it.
There will undoubtedly be some additions to schedules of amendments to the JCT standard forms in response to this case. The Court of Appeal did not consider the JCT provision exhorting the parties not to terminate unreasonably or vexatiously. This provision is rarely amended in our experience. Reading the Court of Appeal judgement, we suspect that if late payers try to argue that termination for repeated late payment is unreasonable, they may well get short shrift.
3. The Late Payment of Commercial Debts (Interest) Act 1998 (the Act) was considered in A & V Building Solution Limited -v – J & B Hopkins Limited. On the facts, the contractual interest of 2% above base rate was held not to be a substantial remedy under the Act and was replaced with the 8% above base rate provided for by the Act. A & V Building Solution Ltd v J & B Hopkins Ltd [2024] EWHC 2295 (TCC) (06 September 2024) (bailii.org)
4. CE marking on products will now be permitted beyond the government’s intended deadline of June 2025: Written statements – Written questions, answers and statements – UK Parliament
5. The House of Lords debated a motion by Lord Moylan, chair of the House of Lords Built Environment Committee, to move that the House of Lords takes note of the role of modern methods of construction (MMC) in the housing construction sector. The note prepared for the debate is here: Modern methods of construction in the housing industry – House of Lords Library (parliament.uk). The note contains an interesting history of action and inaction on MMC.
If you have any questions about these or other construction matters, please contact Jan Grimshaw on 07702 846850 or jan.grimshaw@daviesandpartners.com
