The Week That Was - 29 September 2023

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

RICS Whole Life Carbon Assessment 

RICS introduced the 2nd edition of the Whole Life Carbon Assessment (WLCA) standard which allows assessors to estimate the amount of carbon emitted throughout the life cycle of a constructed asset, including production, construction, operation, end of life, and beyond.  It gives visibility to embodied carbon, operational carbon, and user carbon which is a unique feature of the RICS standard.  As a result, the RICS WLCA is set to become the world leading standard.

The intention is to provide visibility to the carbon cost of different design choices to enable better management of carbon budgets, reduce lifetime emissions and help deliver a net-zero future for the built environment.

Justin Young, RICS Chief Executive had this to say: “The second edition of whole life carbon assessment for the built environment encapsulates RICS' role as a global leader in the built environment and its duty to steer the industry towards decarbonisation.  This second edition is a truly global standard for a global problem.  I want to thank our members from every world region, our staff, partner specialists and the Department for Transport and Net Zero Waste Scotland for their hard work and crucial support, which made this a reality.”

The WLCA standard takes effect on 1 July 2024.  RICS will not regulate against the assessments produced or verify the actual results delivered, but instead RICS will require that a WLCA is undertaken by RICS members in accordance with the RICS professional standard.

Read more here.

Parent Company Guarantees as security

Pepperall J in Alun Griffiths (Contractors) Ltd v Carmarthenshire County Council [2023] EWHC 2269 (TCC) rejected an application by an employer to stay enforcement of an adjudicator's decision pending a true valuation of the works.  As part of that decision, the Judge assessed the Parent Company Guarantee which had been offered by the contractor so as to protect the employer's position in the event the true value adjudication resulted in monies having to be repaid to the employer. 

The guarantor was not the group's ultimate parent but a holding company which the employer argued was an inadequate guarantor due to little incoming cash flow. It was accepted that the holding company did hold assets of £1.5billion.  In determining that the holding company was an adequate guarantor, Pepperall J held that there was no evidence that the ultimate parent company would not support the holding company if it experienced cash flow issues.  

Further, Pepperall J did not accept the employer's arguments that the guarantor may divest itself of its investments to another group company at an undervalue, on the basis that was "neither commercially realistic nor correct in law" as it would amount to a breach of the Insolvency Act 1986.

For more information, please see here.

RPC's non-contentious construction team review the first remediation order under section 123 of the Building Safety Act 2022

Our non-contentious construction team were this week published in Practical Law considering the first remediation order made by the First-tier Tribunal under section 123 of the Building Safety Act 2022 in Waite and others v Kedai Ltd (2023) LON/00AY/HYI/2022/0005 & 0016.  The team analysed the Tribunal's approach to applying section 123 of the BSA 2022 and the content of the remediation order. 

The Tribunal provided guidance on its assessment of when a defect will be considered a "relevant defect" for the purpose of the BSA 2022, providing a party the opportunity to apply for a remediation order.  The article assesses the required scope, time and standard of the remediation works required to be undertaken pursuant to s123 of the BSA which will assist leaseholders, landlords and practitioners alike.  Further points reviewed in the article include the right to vary the order and pre-conditions to both commencement and completion of the remedial works, providing an analysis of the process and outcomes in respect of remediation orders issued by the First-tier Tribunal.   

The Practical Law article can be found here (subscription required). 

What the fix?! Get up to speed in 10 minutes with our new video

The first video in our new Getting Up To Speed series is now available online here.  Watch a discussion between Scott Robins, Chris Gower, Shauna Giddens and Aimee Talbot about the new fixed recoverable costs reforms coming in on 1 October 2023 at your convenience.  We discuss what the new reforms are and what they mean for insurers and show off some of our new resources prepared for clients to help understand the new regime.  Fixed recoverable costs will be applicable to simpler claims for £100,000 or less issued on or after 1 October 2023, including solicitors' negligence claims.  

You can also read our articles explaining the new rules here and here. 

Construction Contracts: Final date for payment cannot be dependent on VAT invoice submission (Lidl Great Britain v Closed Circuit Cooling [2023] EWHC 2243 (TCC)) 

A significant judgment recently delivered by the TCC provides valuable guidance on several aspects of construction law. 

The judgment included a comprehensive overview of how the court should address competing Part 7 and Part 8 claims, including the relevant procedural steps, the court's priority when addressing such claims, and the court's commitment to hearing all arguments within the same day where feasible. 

A key issue centred on a contractual clause tying the final payment date to a VAT invoice submission date.  The court found the clause was inconsistent with the Housing Grants, Construction and Regeneration Act 1996 requirements, and the clause was replaced by the relevant provision of the Scheme for Construction Contracts 1998. This decision follows Rochford Construction Ltd v Kilhan Construction Ltd [2020] EWHC 941 (TCC), where it was held that while a due date may be tied to an invoice (such as a VAT invoice, or notice), a final payment date cannot be tied in this way.  

The case provided valuable insights into contractual interpretation, such as whether certain contractual requirements (e.g. notice provisions) constitute a condition precedent to payment, and whether parties' conduct during interim applications may allow for estoppel by convention. 

For more information, please see here.

RICS comments on UK Government's changes to net-zero strategy

The Royal Institution of Chartered Surveyors (RICS) has responded to the latest UK Government's net-zero strategy changes. 

RICS felt the Government's abandonment of the 'Domestic Minimum Energy Efficiency Standard (MEES)' was not entirely surprising given the industry's continued calls for greater clarity on dates, and for additional support.  RICS noted the ongoing indecision surrounding MEES is not filling the sector with confidence. In lieu of implementing MEES, RICS looks forward to the Government providing an alternative solution for improving energy efficiency, commenting that a "much-needed reform of EPC methodology" should be undertaken during this time.

RICS welcomes the additional support for the boiler upgrade scheme but emphasises the importance of a holistic strategy in promoting energy efficiency and decarbonisation, beyond "energy products."  RICS highlighted the 2nd Edition of Whole Life Carbon Assessment for the Built Environment as a powerful tool for achieving national and international net-zero targets. 

For more information, please see here.

Mayor of London calls for “urgent action” on impending fire safety rules

Sadiq Khan has demanded that Housing Secretary Michael Gove take 'urgent action' to clarify fire safety rules for developers.  In a speech made in July, Gove committed to regulations requiring a second staircase in new tall buildings.  New City Hall data shows that there are 34,000 homes in major developments being delayed due to a lack of clarity around these rules.  Local authorities and housing developers are seeking guidance on the 'transition period' Gove described in his speech, as well as any technical requirements needed to satisfy the new rules.

For more information, please see here.

Authors for this week's edition: Rakesh Pandit, Joshua Green, Aimee Talbot, Hannah Kendall and Ava Mathias.

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.