The importance of consistency

Author: Michael Mendelblat, Professional Support Lawyer, Construction and Engineering, London

 

In a construction project, how a builder and/or designer's potential liability is classified in the contract and technical documentation can be crucial to recovery of any costs associated with remedying a defect in design. In some cases, liability arises from failure to comply with a specified level of output, or because the design is otherwise unfit for purpose. If this is the measure of liability, all that matters is the result achieved and not merely whether reasonable care and skill were applied. In other cases, there will be no liability if reasonable care and skill were applied, irrespective of the outcome.

 

Some recent cases have highlighted the problems that can arise if the contract terms and the technical documentation conflict and prescribe different tests of liability. In the recent SSE case, the Court of Session in Scotland decided that a building contract, when looked at as a whole, provided for an obligation to exercise reasonable care and skill, rather than to achieve a particular result. An earlier case (Hojgaard) had come to the same conclusion but is now being appealed to the Supreme Court.

 

The lesson of these cases is that consistent drafting is necessary to avoid complications further down the line, but they do also indicate that the courts will not readily read technical documentation in such a way as to override contract terms. A priority of documents clause may also assist.

 

To read our e-bulletin on the SSE case please click here, and click here for our e-bulletin on the Hojgaard case.

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IPF Non-Disclosure & Exclusivity Agreements

Author: Richard Forsdyke, Partner, Real Estate, London

We find this interesting and so thought we would share.

To save unnecessary time and resources drafting bespoke agreements, the Investment Property Forum ("IPF") has published a standard form Non-Disclosure Agreement ("NDA") for parties to a potential property transaction wanting to review marketing material and/or begin due diligence.  They have also published a standard form of Exclusivity Agreement ("EA") and guidance notes for each agreement.

Both agreements and the guidance notes can be found on the IPF website.

For more information please contact:

Richard Forsdyke
Richard Forsdyke
Partner, Real Estate, London
Email | Profile
+44 20 7466 2856

 

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Successful sub-sales – being a good middle man

Author: David Evans, Senior Associate, Real Estate, London

Negotiating the purchase of a property while simultaneously negotiating the sale of the same property can be difficult, especially where the sub-sale element is confidential. But a sub-sale can be a very attractive way to structure a transaction for a middle man. Provided substantial performance or completion of the contracts to purchase and sell the property occur more or less simultaneously, the middle man will not be liable for SDLT on the purchase (subject to satisfying the conditions in the pre-completion transactions rules) and can potentially walk away from the transaction with a profit and limited residual liability in respect of the property. It can be a useful tool for developers who are keen to develop but not hold a long-term interest in the property – a developer middle man could sub-sell property but at the same time agree with the ultimate purchaser to develop the property on their behalf. However, careful consideration should be given to how the due diligence process is managed and what is included in the sale contract.

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Comfort and joy

Author: Alex Rhodes, Senior Associate, Planning, London

While this may feel like yet another winter with warmer than usual temperatures, the harsh reality is that not everyone will be celebrating the season of goodwill with a roof over their heads. It's an issue bothering local and central government alike. We're still waiting for the government's Housing White Paper, now due to be published in January. However, the Mayor of London published his draft SPG on affordable housing and viability on 29 November, and this has been followed by a government consultation on a new housing costs model for supported housing, "Ensuring new supply of supported housing", concerning housing for the most vulnerable people such as those with learning difficulties, older people with support needs, young people leaving care, and crisis and emergency accommodation.

The government is expressly seeking the views of developers on its supported housing costs model, the consultation for which runs until 13 February 2017, and the Mayor's draft SPG consultation closes on 28 February. Wouldn't it be good if progress can be made on closing the housing gap; perhaps these consultations may result in some comfort and joy for affordable and supported housing occupiers.

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When quiet enjoyment means just that

Author: Julian Pollock, Partner, Real Estate, London

Earlier this year, the courts decided that, even if there is an express right to carry out works in a lease, a landlord cannot ride a coach and horses through a quiet enjoyment covenant or the obligation not to derogate from grant.  They must take all reasonable steps to minimise disturbance to their tenants, including:

  • notifying the tenant as part of lease negotiations of any intended works;
  • keeping the tenant notified of the programme of works, how long they will last and, how disturbance is proposed to be minimised;
  • ensuring that all practical measures are implemented by the contractor and project manager; and
  • bearing in mind that a higher standard of reasonableness may be required where the landlord is carrying out works for its own benefit.

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Air quality – further developments this week

Authors: Julie Vaughan, Senior Associate, Environment and Helena Thompson, Associate, Planning and Environment, London

There have been a number of developments in relation to air quality since our blog post last week:

  1. Revision of the National Emissions Ceilings Directive was agreed at EU level.
  2. The Committee on Climate Change queried the Government's ability to meet future carbon targets if the Heathrow expansion is allowed to proceed.
  3. Courts have given the Government 8 months to produce a new national air quality plan.

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Getting ready for high speed broadband

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Author: Michael Mendelblat, Professional Support Lawyer, Construction and Engineering, London

From 1st January 2017, all new buildings and many renovations will be required to incorporate provision for infrastructure to connect to high speed electronic communications networks. This is the effect of the Building (Amendment) Regulations 2016 implementing an EU Directive to the same effect. The regulations apply to works in respect of which Building Regulations approval is sought after 1st January 2017. From that date, they apply to all new building works (with certain exceptions) and also apply to major renovation works affecting wired or wireless network access infrastructure, unless the cost of compliance would be disproportionate to the benefit gained.

The requirements set out in the Regulations are supplemented by an Approved Document giving guidance on how to comply with a new Part R of the Building Regulations. The effect of the new Regulations and the Approved Document is that building work must be carried out so as to ensure that a building is equipped with high speed-ready physical infrastructure up to a network termination point for electronic communications networks. This is in order to reduce future connection costs, even if actual super-fast connectivity is not immediately available.

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Autumn Statement – a tax ticking time-bomb for developers?

Author: Neil Warriner, Partner, Real Estate Tax, London

From a real estate tax perspective, the Autumn Statement was a bit of a damp squib, but confirmation of a couple of well-trailed changes to restrict relief for interest costs and the use of carried-forward losses for corporation tax purposes, together with one apparently innocuous announcement of (yet another) consultation relating to non-UK companies, could potentially have a much bigger impact for developers of UK property in the not-too-distant future.

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Air quality update

Authors: Julie Vaughan, Senior Associate, Environment and Helena Thompson, Associate, Planning and Environment, London

This blog gives an overview of the current position on air quality following the recent ClientEarth (No.2) court decision regarding DEFRA's air quality plan. In this blog we will consider:

  1. the ClientEarth (No.2) decision
  2. Sadiq Khan's approach
  3. new domestic legislation?
  4. impact on Heathrow expansion
  5. impact on development
  6. Brexit

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How to protect your development site from squatters

Author: Rhian Arrenberg, Professional Support Lawyer, Real Estate Dispute Resolution, London 

Following the creation of a criminal offence of squatting in residential premises* punishable with up to six months in prison and/or a fine of up to £5,000, there is a real concern that squatters are turning their attention towards occupying commercial buildings instead. Typical development sites such as empty office, retail and industrial premises are often seen as prime targets for travellers, protestors and squatters, particularly where there is a relative lack of security and ease of entry.  In our third in a series of posts relating to vacant possession, this post sets out some tips for landowners on how to avoid trespassers entering onto land or into buildings in the first place.

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