2016: A construction year in review

2016 will be remembered as a year of untimely celebrity deaths and monumental political decisions.  It has also been an eventful year for the world of construction, particularly here in the UK.  Anna Wood reflects:

Construction’s own celebrity deaths

Arguably the most high profile loss in 2016 for UK construction was Dame Zaha Hadid, two-time winner of the RIBA Stirling Prize.  The design prowess of other architects who passed away in 2016 should also not be overlooked.  These included: Gareth Hoskins (many high profile museum projects in Scotland and England), Sir Andrew Derbyshire (most notable Hillingdon Civic Centre), Michael Manser (president of RIBA 1983-1985), and Eric Kuhne (Bluewater Shopping Centre, Kent). 

Sadly the year was not without its losses for the engineering community either with Tony Gaffney (President of ICE 1983-1984) and Peter Jost (founder of the discipline of tribology) amongst those who died.

A year in numbers

Statistically, 2016 was not a fantastic year for our sector with growth slowing.  However, here are a few of the cheerier figures from the year:

• 15 - of the Virgin Fast Track 100 Companies for 2016 were construction companies.

• 33% - The Federation of Master Builders Q3 survey showed that 33% of firms were still reporting a higher workload then the previous quarter.

• 189,000 - additional homes were created in 2015/2016

• £64.40bn – The number to which the total revenue of the UK’s largest contractors rose (a  6.6% rise)

• 16% - According to Randstad, the number of women in senior roles in Construction leapt from 6% in 2005 to 16% by early 2016.

Key cases

• Jawaby Property Investment Limited –v- The Interiors Group Limited

• In January Neil Mason reported on Jawaby, a case which considered once again the application of the Construction Act to situations where the parties had not followed payment notice requirements to the letter. 

• COD Hyde Ltd v Space Change Management Limited

• Payment issues came up again in the Spring – this time the High Court considered the suitability (or otherwise) of using insolvency proceedings to obtain payment of an interim payment application. Once again, Neil provided a useful commentary. 

• Grove Developments Limited v Balfour Beatty Regional Construction Limited

• Continuing with the hot topic of payment, Grove v Balfour Beatty was arguably the shock decision of the year and certainly one that generated much debate amongst lawyers.  In this case, the parties attempted to avoid any confusion on dates for payment notices by appending a schedule of payment dates to their contract.  Unfortunately for Balfour Beatty, they failed to include any mechanism for additional instalments/dates to be impliedly added to the schedule in the event of delay to the works.  Anna Wood looked at the case in May, which was the subject of an unsuccessful appeal in October. 

• MWB Business Exchange Centres Limited v Rock Advertising Limited

• Another key case for construction in 2016 was not actually handled by the TCC as it didn’t concern a construction dispute: but its implications are important for our sector.  The Court of Appeal considered “anti-oral variation” clauses in June and concluded that they are non-binding – i.e., notwithstanding such a clause, a contract can still be varied orally.  It is vital that contractors and employers take note of the decision, summarised by Anna Wood in July.

• Broadhurst v Tan

• Our readers should all be aware of the importance of making settlement offers during a dispute.  We frequently advise on “Part 36 Offers” and the particular rules that govern the impact of such offers when it comes to the recovery of costs.  Emilie Sclater looked at a trio of cases (Broadhurst v Tan, Bolt Burdon v Tariq and Pawar v JSD Haulage – links in the main article) where the Court of Appeal looked at these rules in detail.  A fourth key case on settlement offers, Jockey Club Limited v Willmott Dixon Limited, looked at a Part 36 offer to accept liability for part of the claim (damages to be assessed). 

• Lulu Construction Limited v Mulalley & Co Limited

• Lulu, whilst widely reported by claims consultants as a “clever trick” arguably wins the award for “red herring of the year”.  In this case, Lulu successfully recovered its costs of an adjudication (where usually, of course, each party bears their own).  Even more interesting is that Mulalley was actually the referring party and original scope of the adjudication was simply assessment of Lulu’s final account.  Lulu then introduced the debt recovery element in their response.  There was a catch of course: they were only entitled to recover the costs of the adjudication as the contract had failed to include a substantial remedy for late payment, and so the Late Payment of Commercial Debts (Interest) Act 1998 kicked in. Neil explained how this could, in rare cases, benefit others. 

• Bouygues & Febrey

• This is another case concerning a payment schedule. The contract wording set out payment terms which were compliant with the Construction Act. The contract also incorporated a payment schedule which diligently set out an assessment date, due date for payment, payment notice deadline, final date for payment and pay less notice deadline. Unfortunately, the timetable provided did not comply with the Construction Act because the date for the payment notice issued by Bouygues was more than 5 days after the due date and the pay less notice deadline fell before the date for service of the payment notice. Somewhat unexpectedly, the Court did not simply decide to apply the Scheme or to have the payment notice stand in place of the pay less notice. Instead, it was decided that the date for service of the payment notice had been entered in error and the correct date was substituted. This resulted in the payment notice being served out of time and being invalid. It is worth being aware of two key factors in this decision: (1) the other payment dates set out in the payment schedule were consistent with the corrected date determined by the Court and (2) the Court decided that to apply the Scheme would fail to respect the parties’ agreement that the Final Date for Payment would be 21 days after the Due Date. This is the second reminder of the year of the importance of ensuring contractual payment dates and schedules are correct and comprehensive (the first being Grove Developments Limited v Balfour Beatty Regional Construction Limited).

In other news

• JCT 2016

• The JCT started rolling out the 2016 suite in July.  We reviewed some of the most commonly used forms, namely: Minor Works, Design & Build, and most recently, Intermediate. 

• Insurance Act 2015 also came into force on 1 August 2016. 

• The new Pre-Action Protocol for Construction & Engineering Disputes came into force on 14 November 2016. 

• Third Parties (Rights Against Insurers) Act 1930 came into force on 1 August 2016.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.