The Week That Was - 28 March 2024

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

TCC provides clarity on the parameters of a Defective Premises Act 1972 claim

In Mr and Mrs Vainker v (1) Marbank Construction & Ors [2024] EWHC 667 [TCC], the TCC has provided further guidance on the circumstances in which the Defective Premises Act 1972 applies, and the potential consequences of breaching it. Key points include:

1. The Court will consider the end purpose/specification of the house.  The measure of damages take into account what would have happened had the services been supplied in a professional manner. In this claim, consideration was given to the fact that the claimants wanted a designer home.
2. Less severe defects may be combined to deem a house uninhabitable.  However, individual defects cannot be purely aesthetic or inconvenient as such defects would not result in damages under the Act. 
3. Whilst a Court can make awards for distress and inconvenience, (a) this will be assessed factually and (b) a Claimant is to be assumed to be a reasonably robust person. 
4. Section 6(3) of the Act can supersede any party's attempt to rely on 'net contribution clauses' as is standard in many forms of contract.  

For more information, the full judgment can be found here.

Government to pilot AI use in infrastructure project management

The Infrastructure and Projects Authority (IPA) has published a new framework on the utilisation of AI in the delivery of public projects. 

The Data Analytics and AI in Government Project Delivery framework, which has received input from the Government's Data Science Team, outlines 5 key priorities to improve the effectiveness and efficiency of projects using AI.  The first and second priorities include building data skills to train procurers of smart services and ensuring that this data is held in a standardised, modern format so it is accessible, interoperable and reusable.  The third and fourth priorities consist of using Government resources for project data and experimenting with the IPA on use cases of AI respectively.  The fifth priority is to develop data partnerships to broaden collaboration. 

The framework aims to improve productivity in project delivery in order to save on tax payer contributions. 

To read more, please click here. 

New peak of 38,000 homes in London gridlocked by lack of fire safety guidance

 The building of approximately 38,000 new homes has stalled due to the absence of guidelines requiring two staircases in buildings over 18 meters tall. Despite promises to issue the necessary guidance to increase fire safety in tall buildings by Autumn 2023, the Government has not yet issued this, which has resulted in a backlog of housing projects.  These figures only reflect major planning applications referred to London's City Hall, indicating that the actual number of delayed homes could be higher. London Assembly spokesperson for planning, Sakina Sheikh, welcomes the new safety measures but worries about the delay's impact on London's housing supply with recent data showing a 20% increase in housing completions in London compared with the rest of the UK.  Despite these challenges, the implementation of the Affordable Housing Programme remains on track to deliver 116,000 homes for Londoners. 

To read more, please click here.

Mace warns against aggressive cuts to bid prices

Mace has warned that some contractors are likely to aggressively cut bid prices in response to a drop in material and labour costs. 

In its latest report, Mace has predicted a tender-price growth of 2.5% nationally and of 2% in London for this year, with figures to rise further in 2025. Whilst material costs have fallen significantly, they remain considerable higher than they were before supply chains were disrupted by the war in Ukraine.  Likewise, whilst wage growth has been lower in the construction industry than the economy average, wage pressure may return if firms continue to encounter recruitment difficulties.  Therefore, any reduction in bid prices should be manageable rather than a price squeeze that will not be achievable in the long term.

Whilst falling costs could encourage some contractors to offer unrealistically low prices for some projects this risks hurting supply chains further and potentially causing insolvencies down the line.

Further information on the report can be found here.

South East Water Limited v Elster Water Metering Limited [2024] EWHC 620 (TCC)

South East Water (SEW) sought to recover losses incurred due to a failure of automated meter reading units supplied by Elster, pursuant to a 5-year framework agreement.  SEW alleged that, in breach of contract, the batteries provided with the units did not have a life of at least 10 years. 

Elster subsequently made an application for strike out and/or summary judgment of SEW's claim on the grounds that it could not succeed due to contractual provisions stipulating that (i) SEW could not recover anything more than the modest individual cost which Elster would incur in providing replacement units; and (ii) certain of SEW's losses were excluded. 

The TCC decided that SEW's claim contravened the contractual provisions with Elster, and that whilst Unfair Contract Terms Act 1977 (UCTA) did not apply, even if it did, the contractual provisions were reasonable.  Elster's strike out application was granted.

You can read the judgment here.

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.