The Week That Was - 20 December 2024

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

Reduction in affordable housing targets for grey belt site

The Government has recently announced that it will no longer require housebuilders to provide 50% affordable housing on "grey belt" sites as part of the National Planning Policy Framework ("NPPF").  Instead, homebuilders will be required to provide 15% more affordance homes than local housing policies mandate with a cap of up to 50%.

This change aims to make development on grey belt land, which includes previously developed green belt areas, more viable.  The decision follows lobbying from the Home Builders Federation and the Land, Planning and Development Federation, who argued that the 50% requirement would render many projects unfeasible.

The revised NPPF also introduces mandatory housing targets, with local councils expected to meet a combined annual target of 370,000 homes.  The Government hopes these changes will accelerate the planning process and help achieve its goal of building 1.5 million homes during this Parliament.

You can read more here.

Government report on high streets incorporate RICS recommendations

The House of Lords Built Environment Committee has published a report titled "High Streets: Life beyond retail?" following an enquiry.

The report examines the future of high streets in towns and small cities, highlighting the need for a diverse range of services beyond retail, such as restaurants, leisure activities, and public services.  It also addresses issues such as accessibility, parking, Business Improvement Districts, and business rates reform.

The report supports several recommendations from the Royal Institution of Chartered Surveyors (RICS), including the importance of accessibility and green spaces.  Additionally, it endorses the new High Street Rental Auction (HSRA) powers, which allow local authorities to auction vacant premises to revitalise high streets.  The HSRA powers were introduced in the Levelling Up and Regeneration Act 2023 and came into force on 2 December 2024.

You can read the report here and RICS' response to the report here.

TCC holds that adjudicators have jurisdiction to determine DPA claims

On 16 December 2024, the Technology and Construction Court handed down the judgment in BDW Trading Ltd ("BDW") v Ardmore Construction Ltd ("Ardmore") [2024] EWHC 3235 (TCC), in which Mrs Justice Joanna Smith held that an adjudicator had jurisdiction to determine a claim under section 1(1) of the Defective Premises Act 1972 ("DPA").

Practical completion for the relevant development occurred between December 2003 and June 2004, so until the Building Safety Act 2022 extended the limitation period for DPA claims from 6 years to 30 years, the contractor Ardmore had a complete limitation defence to any claims under s 1(1) of the DPA, which imposes a duty on a person "taking on work for or in connection with the provision of a dwelling" to carry out that work in a "workmanlike" or "professional manner" with "proper materials so that as regards that work the dwelling will be fit for habitation when completed".

This legislative change and subsequent correspondence between the parties ultimately led to BDW issuing a Notice of Adjudication asserting a dispute regarding Ardmore's liability for fire safety defects at the relevant development.  The adjudicator declared that Ardmore had breached its duties under the Building Contract and was also liable under the DPA.

Ardmore sought to resist enforcement, including on the grounds that the adjudicator did not have jurisdiction to determine the claim for liability under the DPA.  After a review of existing authorities and commentary, the judge concluded that the principles set out in the case of Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 did apply to adjudication clauses, and that Ardmore's breach of the DPA was eligible for adjudication.

For more information, please click here and here.

"Relevant Liability" for building liability orders under the BSA 2022

On 11 December 2024, the Technology and Construction Court handed down the judgment in 381 Southwark Park Road RTM Co Ltd v Click St Andrews Ltd (In Liquidation) [2024] EWHC 3179 (TCC), in which Mrs Justice Jefford held that various breaches of contractual obligations to carry out works "with due diligence and in a good and workmanlike manner", "[i]n accordance with all statutory or other legal requirements and the recommendations or requirements of the local authority or statutory undertakings", and "in compliance with all British Standards, codes or practices and good building practice", which breaches resulted in fire safety defects, gave rise to a "relevant liability" for the purposes of 130(3)(b) of the Building Safety Act 2022.

Section 130 relates to building liability orders ("BLOs"), which were introduced to address the possibility that certain developers might escape civil liability for fire safety defects because they carried out projects through subsidiaries, shell companies or special purposes vehicles with little or no assets and/or which may have been wound up before the defects came to light.  The High Court can make a BLO to extend specific liabilities of one body corporate to any of its associates and make them jointly and severally liable, where the Court considers it is just and equitable to do so.  BLOs may be made in relation to any "relevant liability", which is defined in s 130(3) as a liability incurred either (a) under the Defective Premises Act 1972 or section 38 of the Building Act 1984, or (b) as a result of a "building safety risk".  Building safety risk is defined in s 130(6) as a "risk to the safety of people in or about the building arising from the spread of fire or structural failure".

This is the first authority that comments on whether there was a relevant liability in the context of a potential future Building Liability Order.  As a result of this judgment, it may be possible to argue that breaches of similar contractual obligations (such as a 'strict' contractual obligation to comply with Building Regulations) resulting in fire safety defects give rise to a relevant liability for the purposes of 130(3)(b) of the Building Safety Act 2022, where appropriately supported by evidence.

You can read the judgment here.

Merits of claim irrelevant to Denton criteria for relief from strike-out sanctions

In Bangs v FM Conway Ltd [2024] EWCA Civ 1461, the Court of Appeal reversed the decision of the first-instance judge, concluding that the merits of a claim did not fall to be taken into account when considering an application for relief from sanctions under CPR rule 3.9 after a claim had been struck out.

The judgment of Lord Justice Males did caveat this, acknowledging that an exception existed where the merits of the claim were so strong as to entitle the applicant to summary judgment; but that where this was the case, giving sufficient notice to the other parties that this argument would be pursued was a matter of 'basic fairness'. He concluded that notice was a threshold requirement, such that an applicant who failed to give sufficient notice ought to have their application declined. This was the case despite the applicant's claim appearing to be very strong indeed (liability having been previously admitted).

You can read the judgment here.

Project costs expected to increase following Budget's National Insurance hike

Construction consultancy Arcadis has projected that the increase in employers' National Insurance contributions ("NICs") to 15% will result in an increase in construction costs of between 0.75 and 1 per cent.

The specifics for each sub-sector and project are expected to vary depending on a number of factors, including the rate of self-employment (which would take the work done by the self-employed contractor outside the scope of employer NICs), the procurement process adopted, and the parties' respective bargaining power and its impact on pricing pressure.

Arcadis' report also references Office of National Statistics data indicating that the volume of new orders has suffered a 9.4% year-on-year decrease. Noting that new order volume tends to be a reasonable proxy for market size in the subsequent year, the report suggests that "many contractors will be challenged to maintain levels of workload next year".

You can find the report here.

The week that was will be taking a break for Christmas and will be back in 2025. We wish you a very Merry Christmas and a Happy New Year.

With thanks to Ella Green, Kasia Ginders and Joe Towse

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.