The Week That Was - 8 July 2022

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

Ban on combustible cladding to be extended

The Government has introduced the Building etc. (Amendment) (England) Regulations 2022, which came into force on 15 June 2022. These regulations extend the ban of the use of combustible materials in the external walls to residential houses, hotels, hostels, and boarding houses. Essentially, all buildings constructed in England from 1 December 2022 will be affected unless full plans were deposited with a local authority before that date and the construction commences within six months.

The regulations will also:

1. Ban "specified attachments" including curtains, slats and solar shading devices;
2. Expand the list of exempted materials to include fibre optic cables and insulation up to 30 cm from ground level; and
3. Amend Approved Document B to cover external walls and balconies for residential buildings between 11-18 meters tall.

Whilst this is not a retrospective ban, it is an advancement towards improving industry standards in relation to fire and building safety.

Your can read more here.

NKD Maritime Ltd v Bart Maritime (No. 2) Inc [2022] EWHC 1615 (Comm) (24 June 2022)

In NKD Maritime Limited v Bart Maritime (No. 2) Inc, the High Court held that COVID-19 restrictions did not trigger a force majeure clause.  The court found it could not be said that a party was "unable" to perform when performance was only temporarily delayed.

The Defendant was selling a ship to the Claimant.  The ship could not reach its intended delivery location by the contractually agreed date after lockdown restrictions were imposed on 25 March 2020. On 14 April 2020. it was announced that the lockdown restrictions would be extended until 3 May 2020. Later, on 14 April 2020, the Claimant sent a Notice of Termination, invoking the force majeure clause. The clause provided that:

"Should the Seller be unable to transfer title of the Vessel or should the Buyer be unable to accept transfer of the Vessel … due to … restraint of governments … then either the Buyer or the Seller may terminate this Agreement."

The Hon Mr Justice Butcher considered the construction of the clause, including (i) what the proper construction of 'transfer of title in accordance with this contract' is; (ii) whether there was a requirement that the delivery should have been at a particular place, and if so, was the Defendant unable to affect such delivery?; (iii) whether there was an inability on the part of the Defendant to transfer title due government restrictions; and (iv) whether there was any inability by the Defendant due to lack of cooperation from the Claimant.

After considering this, and other issues, the Hon Mr Justice Butcher considered that the Claimant was not entitled to terminate the contract and invoke the force majeure clause.

You can read the full judgment here.
 
Building Safety Act 2022: Regulations made to protect leaseholders from costs of remedying defects

The Building Safety (Leaseholder Protections) (England) Regulations 2022 (SI 2022/711) came into force on 28 June 2022. The leaseholder protections in the Building Safety Act means that qualifying leaseholders in England can no longer be charged for cladding remediation, and there are legal protections in place for non-cladding costs.

Qualifying leaseholders can only be asked to share capped non-cladding costs in certain circumstances. The protection applies to leaseholders whose property is in a building above 11m (or 5 storeys), and where, on 14 February 2022 (i) the property was the leaseholder’s main home, or (ii) the leaseholder owned no more than 3 UK residential properties in total.

If this criterion is met, the building owners and landlords are now liable to pay to fix historical fire safety defects if they are (or are linked to) the developer of a building with fire safety defects, or they meet a certain wealth threshold.

If the building owners and landlords do not meet these tests, they will only be able to pass on non-cladding costs up to a cap. The cap is normally £10,000 (£15,000 in Greater London). However, the cap may be higher or zero, depending on how much was paid for the property.

A copy of the Regulations can be found here.

Energy investment could save construction industry from storm

The Office for National Statistics' comparison of April 2022 with the pre-pandemic 2020 suggests a stormy forecast for the construction industry.  With falls of 0.7%, 14.1% and 27.2% in new, public, and private commercial projects, respectively, is there any light at the end of the tunnel?

Yes.  Well, at least for firms able to capture it via their solar farms.  With the shift from hydrocarbon to renewable energies being branded as impactful to society as the industrial revolution and the discovery of steam power; it is no surprise that the focus has been on expanding the renewable energy sector. This is shown by Glenigan's report that estimates the value of UK renewable energy projects will rise by 70% to £5bn in 2021 (500% from 2019). Imperial College London has also found that that investments in UK renewable energies had a 75.4% return on investment over five-years compared to 8.8% from fossil fuels.

Find out more here. You can also read the Glenigan report here and the Imperial College London report here.

Planning issues preventing housebuilders from meeting government targets

In 2019, the Government set a target of building 300,000 new homes per year by mid-2020 in England.  However, housebuilder, Vistry have spoken out about issues with the planning process preventing the industry from meeting this target.  The Chief Executive, Greg Fitzgerald, has said that local authorities taking longer to approve planning applications and environmental challenges means that they have begun factoring longer lead time into site forecasting.

Mr Fitzgerald has said “Planning remains the single most significant constraint on the business, from continuing capacity issues within local planning authorities, to the increasingly challenging political and regulatory environment around issues such as nutrient neutrality…”

However, on a positive note, Vistry have reported that labour availability is good and there have been improvements in the supply of materials.  

You can read more here.

Authors for this week's edition: Georgie Haynes, Chris Wilkie and Ella Ennos-Dann.

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.