The point of targets…

Construction is all supposed to be by BIM by 2016 and yet half of contractors are not yet using it. Does it help to set unrealistic deadlines for implementation? Sir John Egan set some very challenging targets back in the 1990’s which ultimately were not met. This puts me in mind of the old saying about better to be a pessimist and be pleasantly surprised than a disappointed optimist…

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In a Pickle with Planning

The government, in the shape of Eric Pickles, has made what some are calling a humiliating climb-down over planning proposals allowing single storey extensions of up to 26 feet without planning permission.  The government had hoped the plans, which would involve a relaxation of the planning rules for a limited period, would kick-start the economy through construction.  However, in the face of growing unease among conservative and lib dem backbenchers, who believed the moves would “pit neighbour against neighbour”, Mr Pickles backed down and conceded that people would still have to get the agreement of their immediate neighbours.

Clarification of how the revised regime will work is still required, however, and Clive Betts Labour MP and Chair of the Communities and Local Government Select Committee, has written to Mr Pickles with a number of concerns.

In his letter, Mr Betts asks the Secretary of State to answer the following questions as a matter of urgency:

  • Has an impact assessment been carried out to support the new proposals?
  • How will the environmental and social impact of the proposals will be assessed?
  • Are the proposals are time-limited?
  • How can the proposals be reconciled with the Government’s policy that the planning system should be financially self-sufficient?
  • Why has the Government not adopted the proposal from the 2007 submission to the Shadow Cabinet for a conciliation service staffed separately from local authority planners?
  • What is the Government’s revised range of the financial benefits of the new proposals?
  • Will the revised arrangements be any quicker at determining planning applications than the current system?
  • What arrangements will there be for appeals?
  • Will householders be able to submit a planning application if they are refused under the new arrangement?
  • Will the arrangements the Government proposes apply to all permitted development?
  • Will local authorities be able to object to notified development under the new proposals?
  • In the absence of the need for a certificate of Lawful Development what will happen if somebody plans an extension just over the new permitted development limit and no one objects?

The government is claiming that the revisions are an “addition” to the policy and not a U-turn.  The new changes will mean councils will have to notify neighbours who will then have the chance to object if they are unhappy with the proposed works next door.

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Chancellor delivers “Budget for Housing”

The Chancellor, in his Budget Speech on 21 March, reiterated the Government’s commitment to encouraging home ownership and announced a number of new measures intended both to support the housing market and those who want to get on or move up the housing ladder, and also to encourage the building of new homes now and in the future.

Support for home ownership

Since the financial crisis in 2007, the combination of lenders’ requirements for larger deposits coupled with falling house process has meant that many people have found themselves unable to get a mortgage, or to move from their existing homes.  With a view to supporting these individuals, the Government has announced a new scheme – Help to Buy: equity loan – intended to increase the supply of low-deposit mortgages for credit-worthy households.

For a 3 year period beginning on 1 April 2013, the Government will therefore provide buyers of a new-build home with a loan worth up to 20 per cent of its value, repayable only when the home is sold.  The maximum home value will be £600,000 and there will be no cap on the maximum income which a borrower can have.  The scheme will be available to all buyers, not just first-time buyers.

In addition, a second scheme – the Help to Buy: mortgage guarantee – will be introduced which it is hoped will increase the availability of mortgages on new or existing properties for those with small deposits. The scheme will run for three years from January 2014, and will give a government guarantee to lenders who offer mortgages to borrowers with a deposit of between 5 per cent and 20 per cent.  As with the Help to buy: equity loan scheme, it will be open to both first-time buyers and  existing homeowners, have no income cap constraint, and be available on homes with a value of up to £600,000.

Support for new development

The £200 million Build to Rent fund announced in the Autumn Statement 2012 was significantly oversubscribed.   The Chancellor today therefore announced that this fund will be expanded to £1 billion to support the development of more homes in England. The fund will provide equity or loan finance to support the development finance stage of building new homes for private rent.

In addition, the Chancellor announced reforms to the planning system intended to increase housing supply by ensuring that the planning regime is simple to access, supports growth and is responsive to housing need.  The Government will, as a result, this summer publish significantly simplified and reduced planning guidance, and will make greater use of information on prices to ensure that sufficient land is allocated to meet housing and employment need; ask local areas to put in place bespoke pro-growth planning policies and delivery arrangements; consult on allowing further flexibilities between use classes to support change of use from certain agricultural and retail uses to residential use.

In addition, a public sector land auctions scheme is being progressed, plans will be announced in the Spring to shorten the time limits for bringing a planning judicial review, and the Government will also develop further measures to streamline the process for planning judicial reviews by summer 2013.

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Successful challenge to adjudicator’s jurisdiction

Challenges to an adjudicator’s decision in the courts are rarely successful. The adjudicator must have acted without or in excess of his jurisdiction or in serious breach of the requirements of natural justice. If the adjudicator has no jurisdiction then his decision will be invalid and the successful party will be unable to enforce it in the courts. Often in adjudications, the responding party will, as a matter of good practice, generally reserve the right to challenge the adjudicator’s jurisdiction to determine the dispute. They should ensure that they do this throughout the process so that they cannot be said to have acquiesced at a later stage. Parties are usually advised that they must specify the grounds for their challenge.

In a recent Scottish case, Specialist Insulation Ltd v Pro-Duct (Fife) Ltd [2012] Scot CS CSOH 79, concerning enforcement of an adjudicator’s decision, however, the responding party in an adjudication effectively challenged the adjudicator’s jurisdiction despite the fact that it had relied on a different reason for doing so throughout the adjudication itself.

The facts

Pro-Duct (Fife) Ltd was employed as a subcontractor at Edgbaston cricket ground. It invited Specialist Insulation Ltd to supply the required ductwork. The parties contracted (although the sub-contract was never signed by Specialist) around October 2010, but by July 2011 a dispute over payments due to Specialist had arisen. Specialist referred the dispute to adjudication. Pro-Duct challenged the adjudicator’s jurisdiction on the grounds that the contract was a supply only contract, not a construction contract within the meaning of section 104 and 105 of the Construction Act (The Housing Grants, Construction and Regeneration Act 1996) and that therefore the Scheme for Construction Contracts did not apply.

The adjudicator made an award of £85,000 plus VAT to Specialist and Pro-Duct refused to pay. Specialist issued enforcement proceedings to enforce the decision. In those proceedings, Pro-Duct continued to challenge the adjudicator’s decision, but instead of their previous grounds for doing so, they now argued that the sub-contract (which contained the adjudication clause) was not part of the contract between the parties because Specialist had not executed it. The sub-contract had been provided by Pro-Duct and was stated to be subject to Scottish law and jurisdiction.

The court agreed with Pro-Duct: the parties had not executed the sub-contract, the sale was on Specialist’s standard supplier terms, there was no adjudication clause and so the adjudicator did not have jurisdiction to decide the dispute. Lord Malcolm held that Pro-Duct had made a “full and express reservation of its position and reserved the right to challenge the legality of any award in the current enforcement proceedings”. It was not barred from relying a different legal argument in the proceedings and had not waived its right to make such a challenge.

The judgment is interesting (not least because each party wanted to rely on the other’s terms and conditions of contract rather than their own). However, parties remain well advised to think carefully about the specific reason for challenging jurisdiction. Although, the court here found a general reservation can suffice, if a specific reservation fails, that party might still be prevented from raising new grounds that were available to it at the time (GPS Marine Contractors Ltd v Ringway Infrastructure Services Ltd [2010] EWHC 283 (TCC)).

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Contaminated Land – will the new regime work?

The new contaminated land regime came into force on 6th April 2012 with new guidance following shortly afterwards from Defra..The government has promised a simpler, clearer approach “more focused towards achieving optimum results in terms of dealing with sites most in need of remediation.” Will the new regime deliver?

The starting point of the new regime is that land should not be identified as contaminated unless there is a reason to consider otherwise. Clearly, where significant harm or significant pollution is already being caused, the land will be designated as contaminated. The more difficult exercise is determining the significant possibility of significant harm (or now significant pollution of water). The new guidance introduces a new four category test, with Category 1 and Category 2 sites constituting contaminated land, whereas Category 3 and Category 4 sites will not be considered contaminated land and will not require remediation action. Defra maintains that the revised statutory guidance “while still taking a precautionary approach, allows regulators to make quicker decisions about whether or not land is contaminated … preventing costly remediation operations being undertaken unnecessarily.”

Developers will welcome anything which brings clarity to the issue of what is contaminated land, as well as the potential freeing-up of sites which are low risk and where local authorities have previously been erring on the side of caution. The requirement for the local authority to publish a written determination of no contamination will also release land owners from the devaluing effect of uncertainty and the blight of a suspect site. But critics argue that the “more qualitative approach” to risk assessment, with toxicology playing little part, will result in fewer, not more, sites being remediated, thereby putting human health at risk.

Certainly, it is generally accepted that change was called for. But the shortcomings of the previous regime must be attributable in no small part to Defra’s failure to properly tackle the issue of technical guidance. The new guidance sidesteps the same issue. Will the new regime succeed where the former fell down? The guidance is certainly clearer, easier to read and simpler. However, the lack of scientific criteria in the form of objective SGVs or some similar tool is likely to result in, as before, some confusion, at least until the technical guidance follows. In the meantime local authorities may well resolve any uncertainty by taking their lead from the message that permeates the guidance that the default position is “no contamination”.

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Green Deal delayed for businesses

The Department for Climate Change (DECC) has confirmed that secondary legislation designed to deliver the Green Deal may not now be laid before parliament until just before the summer recess, rather than the previously proposed “early 2012”. Will the October 2012 launch now also be delayed?

Even if the launch goes ahead, it looks likely that the introduction will be phased with the Green Deal going ahead as planned for domestic properties, but delayed for non-domestic buildings, although the business launch will apparently be not far behind.

This is a concern for businesses (in a time of double-figure price rises for energy), who will now have to wait longer before investing in energy-saving improvements at no up-front cost. However, property lobbyists have been arguing for a phased introduction, to allow for better clarification of the plans for business properties and many will welcome the proposed phasing. Commercial properties involve additional complexities which need to be addressed, such as obtaining consent to carry out improvements.

The Green Deal is a real step forward for energy efficiency and will be a job creator. The government hopes to see 14 million homes insulated by 2020 and it is estimated that 2.8 million businesses will also benefit.  It is a worthwhile scheme and it is worth getting it right.


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NEC3 Delivers Olympics on time and on budget

The NEC people have secured another positive piece of PR by delivering the olympics on time and to budget. In my lectures at UWE and work for Mogers Construction team I have chartered the progress of the NEC and its challenge to the dominance of the JCT in providing construction contracts to the industry. The challenge is now being taken to the next level. Hats off to the NEC people who certainly know what they are doing in terms of project managing their own success.

Read more at:

 By Jim Mason, Construction Consultant Solicitor at Mogers

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