The Week That Was - 5 July 2024

Welcome to the week that was, a round-up of key events in the construction sector over the last seven days.

The country has awoken to discover the results of the UK General Election with a victory declared for the Labour Party, winning 412 seats, at the time of publication, to obtain an overall majority. Take a look back at our previous editions where we reported on the party's policy pledges in the construction industry to see whether and how these are implemented in the course of the next Parliament.

Indemnity costs ordered following defendant's failure to take part in adjudication enforcement 

 The courts expect litigants to meet a certain standard of reasonableness when conducting litigation;  indemnity costs may be awarded when litigants' actions fall below that threshold.  

This is exactly what happened in Alandale Plant and Scaffolding Ltd v Ilford (Jersey) Ltd [2024] EWHC 1484 (TCC) where a claimant sought to enforce a construction adjudication decision against a defendant.  While the defendant initially indicated its intention to defend the enforcement, it then failed to comply with an order to serve and file evidence and played no further part in the proceedings, despite multiple reminders from the claimant's solicitors.  The TCC granted summary judgement on the enforcement of the adjudication and awarded costs on an indemnity basis due to the highly unreasonable way in which the defendant had conducted the proceeding.  The defendant put the claimant to unnecessary costs by indicating its intention to oppose the enforcement and subsequently failing to engage with either the claimant or the TCC, generating wholly avoidable costs. 

The full decision can be found in here.

Peabody invests over £60m in fire safety upgrades

 Peabody, a major London housing association, spent over £60 million on fire safety in the past year, totalling more than £120 million on remediation in the last two years. The recent expenditure of £64 million follows £66 million spent in the year to March 2023.  In a trading update for the year ending March 2024, Peabody reported an additional £175 million spent on planned maintenance and responsive repairs. The association completed 1,381 new homes and initiated 1,157 new projects, investing £533 million in new housing.

Turnover for 2023/24 was £992 million, with £855 million from core operations, including £774 million from social housing lettings.  Despite significant cost pressures, Peabody's operating margin is expected to remain at 23%, similar to the previous year.  CEO Ian McDermott highlighted the progress made and the ongoing efforts to improve services and invest in sustainable homes. This marks Peabody's second year incorporating Catalyst Housing into its operations. The annual report will be released later this year.

For more details, read the full article here.

Construction starts expected to surge post-election

 The UK construction industry is set for a significant increase in new projects following yesterday's general election, according to recent forecasts. Industry experts predict a rise in construction starts as political stability and investor confidence return. This surge is expected to positively impact key sectors such as infrastructure, residential, and commercial construction. The pre-election period has seen a slowdown due to uncertainty, but the anticipated post-election environment is likely to foster favourable policies and economic conditions, encouraging investment and project initiations.
Forecasts indicate that the stabilisation of the political climate will alleviate investor concerns, leading to a renewed focus on long-term projects. The increased activity is also expected to address some of the backlog caused by the election-induced slowdown. This positive outlook highlights the industry's resilience and its critical role in the broader economic recovery post-election.

For more details, read the full article here.

2022 mini-budget blamed for Osborne collapse

 A new report by administrators of Geoffrey Osborne Ltd (Osborne) has blamed the 2022 mini-budget for hindering the company's development plans, leading to Osborne's administration in April 2024.

Osborne had previously experienced financial issues during the Covid-19 pandemic, when JCT contracts did not allow for compensation for project delays, preventing the firm from achieving expected settlements.  Osborne was able to survive with the sale of its infrastructure business, but directors state that the 2022 mini-budget and subsequent market turmoil "torpedoed" its build-to-rent development business.  The mini-budget worsened market sentiment, slowed housebuilding, and led to increased insolvencies in Osborne's supply chain.

Osborne was unable to secure funding and began to fail to secure new contracts due to its financial travails.  A deal to sell parts of the business fell through in April 2024, and Osborne entered administration shortly afterwards, owing £25.9m to trade creditors at the time of its collapse.

To read more, please click here.

New Building Safety Act guidance made available

 A new Building Safety Wiki page has been launched to "boost awareness and understanding of new fire safety regime" and is part of the Designing Buildings Wiki backed by industry bodies including the CIOB, BSRIA and the CIAT.  The site is free and contains links to most of the new building safety legislation and standards, and articles on dutyholders and competencies, regulators, fire safety and other material. The idea is to provide a platform where information on building safety can be freely shared.

Elsewhere, on 21 June 2024 the Welsh Government published a Building Safety Act 2022 Handbook for Wales Design and Construction Phase.  The handbook can be downloaded for free and contains guidance on the implementation of the new Building Safety regulations and regime in Wales; including how to register as a Registered Building Inspector in Wales.

The BSA wiki can be found here and the guidance in Wales can be found here.

RIBA Principal Designer appointment

On 1 July 2024, RIBA published a standard form professional services contract for the appointment of a Principal Designer under Part 2A of the Building Regulations 2010 (BRPD).  Under the new regime, the BRPD must plan, manage and monitor design work during the design phase (i.e. where the design work is that of all designers on the project). Similarly, the BRPD must take ‘all reasonable steps’ to ensure that a project built in accordance with the design will be compliant with all relevant requirements of the Building Regulations.  The appointment is for commercial projects and is not suitable for non-commercial/domestic projects. The appointment is also not suitable for the appointment of a CDM Principal Designer. In March 2024, RIBA also published a guide on the role and duties of the Principal Designer under the Construction (Design and Management) Regulations 2015 and Part 2A of the Building Regulations 2010.  The new contracts can be obtained from the RIBA store.

The contract is available here with further guidance from RIBA available here.

This Week's Authors: Jonathan Carrington, Saskia Mautner, Sam Holloway, Sikander Azam

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.