Legal developments in construction law: June 2024

1.  Supreme Court says "but for" test knocks out knotweed claim

Japanese knotweed is a problem, and it can cause trouble for neighbours. Which is what it did in Bridgend, in Wales, where it encroached from the council's land on to a neighbouring property at some date "well before 2004".  An actionable private nuisance only arose, however, in 2013 when the council was, or ought to have been, aware of the risk of damage and loss of amenity to the neighbour's land, as a result of publicly available information about knotweed, but not until 2018 did the council implement a treatment programme and it was held by the court at first instance (and not challenged) that the council was in continuing breach of the relevant duty in private nuisance between 2013 and 2018.

The neighbour claimed, amongst other heads of damages, £4,900 as damages for residual diminution in the value of his land which, it was said, would exist despite treatment which would result in the knotweed no longer actively growing on his land.  This was said to be because its value had been adversely affected by stigma in the current property market "fuelled by media articles and internet discussion".  The litigation reached the Supreme Court where the main issue was one of causation, whether the residual diminution in value was caused by the council's breach of duty, from 2013, in private nuisance.

The tort of private nuisance is committed where the defendant's activity, or a state of affairs for which it is responsible, unduly interferes with the claimant's use and enjoyment of its land.  This will nearly always be caused by an activity or state of affairs on the defendant's land so that the tort is often described as one dealing with the respective rights of neighbouring landowners or occupiers. Private nuisance is only actionable on proof of damage where the damage is the undue interference with the claimant's use and enjoyment of land. That includes physical damage to the land itself but commonly there will be an undue interference with the use and enjoyment of land. In the case of a natural hazard, such as knotweed, it has been held, or indicated, that, generally, the defendant is liable in the tort of private nuisance only where it is at fault, taking into account the defendant's individual circumstances, including financial resources.

This case involved a pure issue of factual causation, for which the standard approach in tort is to apply the "but for" test. This requires asking whether the damage would have been suffered but for the breach of duty.  There can, however, be situations, especially involving more than one sufficient event (ie an event sufficient in itself to bring about the damage), where application of the "but for" test is inappropriate but there was no good reason not to apply the standard "but for" test in this case.

Applying the "but for" test to this case, the breach of duty from 2013 did not factually cause the residual diminution in value of the land.  The claimant had not proved that the residual diminution in value would not have been suffered but for the breach of duty. The knotweed was already present on the claimant's land before 2013 so that the residual diminution in value had already been brought about by the natural, non-actionable, encroachment of the knotweed.  The cost of treatment would have had to be incurred irrespective of the breach of duty and the neighbour had therefore not established that there was an actionable tort of private nuisance.

Davies v Bridgend County Borough Council [2024] UKSC 15

2.  How to spot a condition precedent

Conditions precedent can be rather important, particularly if there is said to have been a failure to comply.  Knowing whether a contract requirement is such a condition is consequently also rather important.  But how straightforward is that task?

In dealing with contractual delay and notice provisions Mr Justice Constable has considered general principles, derived from case law, that apply to notice requirements said to be conditions precedent affecting entitlement.

He noted that the overriding principle is that, of course, each contract is to be construed according to its own particular terms.  Clauses, or parts of clauses, which look similar but which are set in different contractual matrices may have a different effect.  Any attempt to articulate an exhaustive checklist of factors to consider when considering whether a particular clause in a particular contract is a condition precedent will inevitably be futile, but he distilled these principles, from the case law, considered as matters obviously relevant to the case in question, when deciding whether certain clauses should be construed as a condition precedent:

• whether it is necessary for a party to comply with one or more stated requirements in order to be entitled to make a claim for money or relief will ultimately turn on the precise words used, set within their contractual context;
• there is nothing, as a matter of principle, which prevents parties freely agreeing that the exercise of a particular right to payment or relief is dependent on compliance with a stated procedure, but parties will not be taken to have done so without having expressed that intention clearly;
• the language of obligation in relation to procedure to be complied with (e.g. ‘shall’) is necessary, but not sufficient;
• the absence of the phrase ‘condition precedent’ or of an explicit warning as to the consequence of non-compliance is not determinative against construing the regime as one of condition precedent;
• however, the absence of any language which expresses a clear intention that the right in question is conditional upon compliance with a particular requirement is likely to be, at the very least, a powerful indicator that the parties did not intend the clause to operate as a condition precedent;
• the requisite ‘conditionality’ may be achieved in a number of different ways using different words and phrases when construed in their ordinary and natural meaning;
• the clearer the articulation, purpose and feasibility of the requirement to be complied with (in terms of substance and/or timing), the more consistent it will be with the conclusion that, depending on the rest of the language used, the requirement forms part of a condition precedent regime.

Tata Consultancy Services Ltd v Disclosure and Barring Service [2024] EWHC 1185

3.  Management company not liable in tort for negligence of independent contractor

Complex contract arrangements are frequently put in place in construction projects but, while it is common to find concurrent duties in contract and tort, it is far less common to find a duty of care in tort that is inconsistent with the contractual scheme.  Complex contract arrangements, though not in a construction project, were also the background to a claim in negligence by a tenant against a management company in respect of a burglary at a block of flats. The management company, which was the lessor of the flat leases, was obliged under its head lease to contract with a specified agent to provide management services, which included porterage services. The porters employed by the agent, and who held keys, apparently provided the tenant's keys to the burglars and the tenant made a claim in respect of stolen jewellery and other property, said to be worth around £7m, against the management company, with whom she had no contract, alleging it owed her a duty of care in tort. 

The Court of Appeal dismissed the appeal against the original dismissal of the claim and Lord Justice Underhill noted that the agent was plainly an independent contractor and the management company could not, on established legal principles, be vicariously liable for any negligence on the agent's part.  Recent developments in the law of vicarious liability had not undermined the "classic" distinction between liability for the acts of an employee (or someone in an analogous relationship) and liability for the acts of an independent contractor.   Lord Justice Underhill could see no justification for the tenant's attempt to sidestep that well-established distinction by seeking to apply the threefold test for a duty of care in Caparo Industries plc v Dickman or by relying on a supposed assumption of responsibility for the careful provision of services which it was the agent's job to provide.

Shamsan v 44-49 Lowndes Square Management Company Ltd (Rev1) [2024] EWCA Civ 436

4.  Technology and Construction Court 2022-2023 report

The Technology and Construction Court has published its annual report for 2022-2023.  Included in its findings and notes are that: 

• the settlement rate fell from 84% to 81%;
• most cases that go to fully contested trials are resolved in less than about 12-18 months from issue to final judgment, subject to the scale of the dispute, the needs of the parties and judicial resources;
• expedited trials can be accommodated, where justified, within as little as a few weeks;
• adjudication business continues to be dealt with swiftly and to a highly abridged timetable;
• following the Grenfell Tower fire and the Building Safety Act 2022, there has been a notable increase in cases concerning combustible cladding and other materials, together with more general fire protection issues;
• the introduction of building liability orders, together with the potential extension of corporate liability to include associated companies and corporate officers, and the increase in limitation periods of up to 30 years, have opened up the possibility of expansive litigation in respect of historic developments. The Court is still in the early stages of dealing with these claims. Moving forward, as common issues emerge, it is likely that new, bespoke procedures will be required to provide effective case management;
• greater awareness of environmental issues, climate change and the availability of third party funding has seen an increase in the number of environmental pollution class action claims in the TCC.

See: Annual Report of the Technology and Construction Court 2022-2023 (judiciary.uk)

5.  ABCA Contracts for Appointment of Building Control Approver

The two new first editions of the ABCA Contract for the Appointment of a Building Control Approver are downloadable from the Resources page of the ABCA website and are:

• the Contract for the Appointment of a Building Control Approver; and
• the Short Form Contract for the Appointment of a Building Control Approver (intended to be used for domestic clients and for projects where the project value is less than £500,000).

See: https://abca.uk/resources/

6.  National Infrastructure Commission design guidance for major infrastructure projects

The National Infrastructure Commission’s Design Group has published guidance on developing and implementing design principles for major infrastructure projects.

The guidance, which includes case studies of projects which have adopted design principles from an early stage, including the Lower Thames Crossing, Tideway and Sizewell C, lists issues which project leaders might consider, including under each of the four design principles for national infrastructure, from climate resilience to how the scheme will work with local partners to unlock additional value beyond the site boundary.

NIC-Design-Principles-Handbook-Digital-PDF.pdf

 

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