The week that was - 19 January 2024

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

Strategic approach to dehumidification required to avoid long-term issues on construction projects

Following the recent flooding caused by Storm Henk, Aggreko has advised that solely relying on heaters or using the wrong equipment to dry sites could cause issues. An increased level of humidity can cause damage to building materials and structures on construction sites, which is particularly prevalent during periods of excess rainfall. By relying on heating systems, there is an increased risk of mould growth, which can cause irreparable damage to critical assets.

To reduce project costs and maintain reliability, the construction industry should create a complete solution by combining power, dehumidification and heating.

To read more, see here.

Commercial property experts predict regeneration projects to rise

Rather than building brand-new properties, there is a shift towards working with what is already on a site in the commercial and buy-to-let residential market. By regenerating existing buildings, firms can expect a quicker turnaround for completing the sale and a reduction in the properties' carbon footprint. Furthermore, there has been an increase in the number of properties purchased with change-of-use planning permission already in place, due to the backlog in the planning system causing the progress of applications to slow.

Purchasing properties of this nature will increase throughout 2024 and will likely increase further if the cost of borrowing comes down.

To read more, see here.

ONS shows construction growth

New data from the Office for National Statistics (ONS) shows that construction output returned to its pre-COVID levels for the first time in 2022.  The value of new work in 2022, measured in current prices, increased by 15.8% to £133bn. This record high was due to substantial growth across the public and private sector, particularly within private new housing and public infrastructure. These areas were the biggest contributors to growth and grew by 22.8% and 12.8% respectively.

The number of construction firms in Great Britain also grew by 5.9% and the number of employees by 3.3%, particularly within London and the South-East. However, this was combined with a 59.4% annual increase in the number of recorded company insolvencies in 2022, with the construction sector being the biggest contributor to total insolvencies across the overall economy in 2022, accounting for 18.8% of total insolvencies.

More data is available here.

LIDL Great Britain Ltd v Closed Circuit Cooling Ltd t/a 3CL [2023] EWHC 3051 (TCC)

Background & Facts

Lidl (C) is a national retailer and Closed Circuit Cooling (D) is a refrigeration and air conditioning contractor.  D commenced an adjudication seeking payment of a notified sum following an interim payment application.  The adjudicator found in D's favour, which was enforced in a previous TCC judgment.

However, prior to enforcement, C commenced 3 adjudications.  D raised jurisdictional challenges to these, based on S&T(UK) Ltd v Grove 2018, contending that these adjudications were commenced without jurisdiction as C had not paid the notified sum before commencing a "true value adjudication".

Judgment

The Court held that the Grove principle did not entail a blanket prohibition on all adjudications commenced without payment of the notified sum.  If the subject of an adjudication could have been the subject of a pay less notice, then that adjudication would have been commenced without jurisdiction.  It was also clarified that, where defects occurred after the pay less notice deadline, they could be adjudicated on without paying the notified sum.

The full judgment is here.

Large Panel Buildings under the spotlight

Construction News and its sister title, Architect's Journal, have both reported that the Building Safety Regulator (BSR) is going to investigate large panel systems (LPS) buildings with piped gas systems which are more than 18m in height and which were constructed between 1957 and 1973 where it could not be confirmed that remediation work had been carried out. 
In 1968, an LPS building called Ronan Point in Newham, London, partially collapsed after a gas explosion, and in November 2023 an LPS building in

Bristol called Barton House was evacuated due to fears that a gas explosion could pose a risk to the structure of the building. Some structural engineers have expressed concerns in the press about the ability of these types of building to withstand gas explosions.

For more information, see here.

TCC declines to enforce adjudication provision.

In Lancashire Schools SPC Phase 2 Limited v Lendlease Construction (Europe) Limited and Others [2024] EWHC 37 (TCC), the Court declined to enforce a contractual requirement that all disputes must first be determined by adjudication, even though the judge accepted that the adjudication provision was a valid condition precedent to litigation.

Lendlease applied for an order pursuant to CPR 11(1)(b) and CPR 11((6)(b), to set aside Lancashire Schools' claim form, alternatively for an order striking out the claim pursuant to CPR 3.4(2)(a). Although the judge concluded that the adjudication provision in the parties' contract was a valid condition precedent to litigation (paragraph 97), he nevertheless declined to enforce the provision because, inter alia, the dispute was a multi-party dispute and a bilateral adjudication of a contingent dispute between Lancashire Schools and Lendlease would probably achieve little, and a stay for adjudication would probably interfere with litigation that was already underway against other defendants.

For more information, see here.

Authors for this week's edition: Josh Ovens, Rebecca Phipps, Jonathan Carrington.

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.