Quarterly Bulletin – December 2022

In this edition of the Projects & Construction team’s Quarterly Bulletin, the Clyde & Co team discuss holiday pay, strikes, fire safety and implied novation. If you have any questions, please get in touch with your usual Clyde & Co contact or reach us at Infrastructure@clydeco.com.

A holiday pay pile up: construction companies – beware!

There are no two ways about it – holiday pay is complex and calculating it can be burdensome for employers, big or small.

In the recent case of Harpur Trust v Brazel, whilst providing some clarity, the Supreme Court has added to employers’ woes having unanimously decided that the holiday pay of part-year workers should be calculated in the same way as full-time workers.

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Is there such a thing as implied novation? and what does “such consent not to be unreasonably withheld” actually mean?

We are all used to seeing novations in construction projects but they are usually limited by express contractual terms requiring them to be effected through written novation agreements. However, the judgment in Gama Aviation (UK) Ltd & International JetClub Ltd v MWWMMWM Ltd [2022] EWHC 1191 is a reminder that conduct may amount to both an implied novation and the other party being estopped from relying on express contractual provisions excluding the operation of such implication.

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Construction Contracts: What to do if a strike affects you?

This year has been a challenging year for many reasons.  With significant hikes in inflation over recent months, the UK is seeing an increase in industrial action across numerous sectors.  Given the present climate, employers and contractors alike may be wondering just how their contract would respond if a strike was to impact a party’s ability to perform its obligations.  While current UK industrial action may not have a direct impact on construction projects, it is a timely reminder for parties to familiarise themselves with those contractual mechanisms that may operate in such circumstances. 

Considering some of the most common standard form contracts used in the construction industry, the issue of industrial action is generally dealt with in one (or both) of two ways: (i) by way of a specific entitlement via an extension of time / additional cost mechanism; or (ii) by way of a force majeure clause.

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St James’s Oncology SPC Limited v Lendlease Construction (Europe) Limited & Another [2022]

Fire safety defects: what remedial works can be claimed for and what remedial costs and indemnities can be recovered?

Since the Grenfell Fire tragedy, the fire safety of buildings (particularly hospital buildings) has rightly been brought under the spotlight. Immediately following the tragedy, the fire safety of the external cladding systems was frequently the main focus of attention, but now it is increasingly common for the fire safety of internal elements of buildings to come under scrutiny. Where fire safety defects are found, questions arise as to what remedial works ought to be undertaken, and what remedial costs can be recovered.

The St James’s Oncology case raised these issues. It concerned alleged fire safety and electrical engineering defects in the basement plantroom (“the Plantroom”) of an oncology centre (“the Centre”), which had been designed and built at a hospital, as part of a PFI project. The defects allegations mainly related to the compartmentation and fire safety of the plant and equipment in the Plantroom, and the electrical systems which served them. The case was heard in the Technology and Construction Court (“TCC”), and the TCC’s judgment is noteworthy, not only because of how it determined the defects allegations, but also because of how it decided what remedial works could be claimed for and what remedial costs and indemnities should be awarded.

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Clyde Commentary: Thoughts on FIDIC

We recently released Clause 13 of our FIDIC series, Clyde Commentary: Thoughts on FIDIC, which focuses on both the 1999 and 2017 editions of the Red, Yellow and Silver Books (the FIDIC Suite). The series explores each of the Clauses in the FIDIC Suite and will contribute incrementally to a guide to the whole Suite. This guide aims to provide clients with a nuanced and in-depth understanding of the main FIDIC contracts.

Download our FIDIC guide here

Projects & Construction Podcasts

Our team of specialist projects and construction experts discuss the latest legal and market developments in the infrastructure sector.

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Other trending updates

Construction and engineering professionals in Australia will feel inflation squeeze

Rising costs for materials and goods will affect construction and engineering market, but insurance rates will continue to soften

Cost inflation, caused in large part by the effects of the conflict in Ukraine, will continue to have an impact on construction and engineering professionals in Australia as we head into 2023.

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Navigating the geopolitical risk landscape at a time of heightened tensions

Geopolitical risk is always present, but today, the range and severity of issues it presents is creating extremely significant challenges for businesses to grapple with. From cybercrime and technology risks to the climate crisis, energy security, Russia’s war in Ukraine, trade tensions with China, and the threat from North Korea, companies today must prioritise attention and resources across a seemingly ever-growing roster of geopolitical risk areas.

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