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Domestic Construction Disputes and Covid-19

Posted on 28th May, 2020

Coronavirus has crashed into our lives and railroaded normal life, as we know it, since March 2020.  The impact is seen on a day to day basis throughout all elements of our lives socially and professionally.  I am considering in this article what the impacts might be within the Construction Industry but specifically in terms of what the impact might be on disputes and resolution of these.

The starting point has to be the contractual position and the rest of this article ought to be read in light of the fact that one must always consider what contractual terms apply to a particular contract and that all parties ought to do their utmost to comply with those terms when it comes to payments and delays.

On 7 May 2020, the Cabinet Office released some guidance on what they suggested the responsible contractual behaviour ought to be.  This is available in full at:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/883737/_Covid-19_and_Responsible_Contractual_Behaviour__web_final___7_May_.pdf

This broadly speaking encourages fair conduct by all contracting parties in terms of performance and enforcement and for the impact of Covid-19 to be borne in mind when deciding if and how to proceed and generally encourages co-operation.

The overall ethos of this guidance has been taken on board and reflected in the CLC Covid-19 Contractual Best Practice Guidance also published on 7 May 2020, specifically directed towards Construction Contracts.  This can be located in full at:

https://www.constructionleadershipcouncil.co.uk/wp-content/uploads/2020/05/Construction-Leadership-Council-Covid-19-Contractual-Best-Practice-Guidance-7-May-2020.pdf

This encourages co-operation, including potential variations to programmes, agreements to extension of time and the sharing of additional costs to take into account delays caused by the current pandemic.

It quite correctly notes that unless and until an agreement is reached the contractual provisions will continue as initially agreed – this will extend to timescales, payment dates, notice provisions, etc.  It should not be assumed that there will be variations, all parties will need to be proactive and alive to the contractual provisions until such an agreement is reached.

With it looking like construction sites will start to prepare to reopen shortly it is also important that additional safety requirements are discussed to ensure that this is catered for in any variations to the contractual terms that might be agreed, or in terms of any notices issued relating to additional cost or time requirements.  This relates not only to the immediate site but of course also to the supply chain.

The guidance quite correctly observes the importance of without prejudice and subject to contract discussions.  It is vital to assist in finding a way forward for all parties to be able to speak freely and discuss possible resolutions with a bit of give and take.

I would agree that from a time, cost and practicality position, that negotiated resolutions and cooperation are absolutely the best way to resolve a dispute. If you can manage to do this before an issue even becomes live then, you are doing extremely well.  However, inevitably this is not going to be achieved across the board, and so the future of the construction industry is highly likely to be riddled with disputes for the foreseeable future as a backlash of covid-19.

In terms of resolution options, in addition to the suggested co-operation and negotiation, what can you do and how has this been, and how is it likely to continue to be, impacted by Covid-19? Well, as a starting point I am writing this from a makeshift home office and not from my desk – as with most solicitors, those of us who have continued to operate are doing so remotely.  Even when things start to relax it is more likely than not that face to face meetings are off the cards for the foreseeable future.  We will therefore require documents to be sent to us electronically where possible, we will need to conduct meetings remotely, and even the admin is impacted in terms of ID checks for AML. Rest assured that this does not prevent you from obtaining advice.

The Court systems are continuing to operate, but hearings are now mostly conducted remotely and of course this will inevitably have a knock-on effect as how long matters will take to be resolved via the Courts. Parties are encouraged to agree sensible time extensions and other adjusted working.  In most construction contracts this will not be an issue as there is likely to be a requirement to either Adjudicate or Arbitrate rather than proceed to court in the first instance.

Arbitration proceedings will see similar impacts requiring flexibility in terms of when and how documents are filed and exchanged and in terms of timescales for directions and decisions.

In terms of Adjudication it is very much business as usual, subject to a few minor tweaks in process.  In fact, in April 2020 the impact of Covid was tested when an application was made to the TCC for an injunction restraining adjudication proceedings from continuing in light of Covid-19, and this was dismissed (Millchris Developments Ltd v Waters [2020] 4 WLUK 45).

There are routes to advice and to resolution available and, as always, it is better to take advice at a an early stage in any dispute to avoid costly mistakes.

If you would like to speak to speak to someone about any of the issues in this blog, please email apapprill@jacksons-law.com or call 01642 356509/0191 2322574.

Angie Papprill, Associate Solicitor

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