Legal developments in construction law: July 2025

1. Unfit for habitation under the DPA? How does the court work out the damages?

The Defective Premises Act may be 53 years old but it has received particular attention in recent years, notably following its makeover by the Building Safety Act and, most recently, by the Supreme Court.  One question, however, the Act does not answer.  If a dwelling is unfit for habitation under the Act, how do you measure the damages?

In Wilson v HB (SWA) Ltd the court noted the case law on this issue and that, although the duty under section 1 of the Act is construed as a duty to achieve the outcome that the dwelling is fit for habitation, a constituent element of the duty is to see that the work undertaken is done in a professional manner. Where the defendant has failed to see that the work is done in a professional manner and the dwelling is consequently not fit for habitation, there is nothing in the Act to limit the damages recoverable in respect of the failure to see that the work is done in a professional manner to the minimum necessary to put the dwelling into a habitable condition. The damages should more naturally reflect the failure to see that the work was done in a professional manner.

The court also noted the textbook summary of the law in Keating on Construction Contracts (12^th edition), which submits that all reasonably foreseeable losses that are the natural consequence of the breach of the Act are recoverable, which may include economic loss, as now understood, as well as consequential economic loss.  It adds, however, that general damages for loss of use of capital whilst the property is uninhabitable are not, it would seem, recoverable.

Wilson & Ors v HB (SWA) Ltd [2025] EWHC 1315

2. Good faith obligation? What does it mean?

Since the case of Yam Seng in 2013, that might be said to have ignited a debate about contractual duties of good faith, a number of judgments have had to rule on the existence, meaning and effect of such a duty.  In Matiere SAS v ABM Precast Solutions Ltd the court had to decide on its meaning in an express good faith clause.  So how should "good faith" be interpreted?

The court noted that the core meaning of a duty of good faith is to act honestly but bad faith may include conduct which would be regarded as commercially unacceptable to reasonable and honest people, even if not necessarily dishonest.  The content of the duty is, however, heavily conditioned by its context and the Court of Appeal has warned that, where a contract makes specific provision for eventualities, care must be taken not to construe potentially open-ended obligations, such as to use good faith, in a manner which cuts across those specific provisions.

The court also noted the Court of Appeal guidance in Re Compound Photonics Group Ltd ([2022] EWCA Civ 1371), summarised by the defendant in Matiere as:

• When considering the interpretation of an express good faith clause in context, cases from other areas of law and commerce, turning on their own particular facts, may be of limited value and should be treated with considerable caution;
• an obligation of good faith might comprehend fidelity to the bargain between the parties or adherence to the spirit of the agreement, where the common purpose and aims of the parties could be objectively ascertained from the express or implied terms of the contract;
• in such cases, the essence of the concept might be captured by reference to the prohibition of "cynical resort to the black letter" or the prohibition of conduct which "undermines the bargain entered or the substance of the contractual benefit bargained for".

The court also noted that, in circumstances where fidelity to the bargain, or adherence to the spirit of the agreement, falls within the ambit of the good faith obligation, a relevant consideration may be whether the action complained of might, at the time, be expected to render the contract worthless or less valuable. 

Matiere SAS v ABM Precast Solutions Ltd [2025] EWHC 1434

3. Valid application for payment (under the Construction Act)? And the test is?

Making sure a payment application is valid and compliant with the Construction Act's requirements, is rather important.  In 1st Formations Ltd v Lapp Industries Ltd the court, which had to check on an application's validity, reviewed what is needed.

The amended provisions of the Act, which came into force in 2011, began to be utilised by payees in the mid-2010s, giving rise to numerous "smash and grab" adjudications, in which payees had served the requisite notices, but payers had not responded in time with a valid Payment Notice or Pay Less Notice.  The court noted that the modified regime is rigorous, with potentially "draconian" consequences for paying parties, and that it led to a number of decided cases in the Technology and Construction Court, in which the judges were anxious to ensure that payees should not take unfair advantage of these provisions.

The case law says that an application for interim payment must be sufficiently clear and unambiguous in form, substance and intent, so that the parties have notice of the application made.  An interim application must be obviously identifiable as such and it must set out, as a minimum, the sum claimed as due and the basis on which such sum is calculated.

The parties are, however, free to agree additional requirements as to the form, content and substantiation of the application, provided that they do not conflict with the statutory regime.

The relevant principles were set out in more detail in Advance JV v Enisca Ltd (see June 2022 update at Legal developments in construction law) to which the court in 1st Formations added two footnotes, that, on the facts of a particular case, the court may find that a payee's notice is inadequate because it is provisional, and that the "notified sum" regime has now been in place for a decade or more, and is well known. 

On the facts in 1st Formations the court ruled that the payment documents were obviously identifiable as an interim application and set out the sum claimed as due and the basis on which such sum was calculated.

1st Formations Ltd v Lapp Industries Ltd [2025] EWHC 1526

4. Building Assessment Certificates – HSE update

The HSE reports that, in 2024 to 2025, it directed more than 1,400 Principal Accountable Persons to apply for a Building Assessment Certificate.

The first certificate was issued in January 2025 and the HSE says it is now looking to carry out additional assessments on buildings:

• over 30 to 49.99 metres high with more than 11 residential units; and
• 18 to 29.99 metres high with more than 378 residential units.

See: Building Assessment Certificates for higher-risk buildings - Making Buildings Safer

5. HSE Guidance to local authorities on providing help to MDTs

The HSE has published guidance for local authorities, explaining how they can work with the Building Safety Regulator in multi-disciplinary teams, what the BSR can request and what experience and level of competence the authorities should provide, and when.

See:  Provision of assistance to a multi-disciplinary team - Building safety - HSE

6. JCT updates practice note on choosing a JCT contract

JCT has issued an update to its practice note, ‘Deciding on the appropriate JCT contract’, to reflect the JCT 2024 Edition, including the JCT Target Cost Contract.

The guidance documents, covering main and sub-contracts within the JCT 2024 Edition, as well as an update concerning the use of BIM with JCT contracts, include:

• Deciding on the appropriate JCT contract 2024;
• Guide to selecting the appropriate JCT main contract 2024;
• Guide to selecting the appropriate JCT sub-contract 2024;
• Practice Note: BIM and JCT Contracts 2024.

The note highlights the risks of amending standard form contracts.

See: Updated JCT Contracts Practice Note Highlights Risks of Amending Standard Forms – The Joint Contracts Tribunal

7. Government issues 10 year infrastructure strategy

The government has published its 10 year infrastructure strategy, setting out its plan for economic, housing and social infrastructure.

See: UK Infrastructure: A 10 Year Strategy - GOV.UK

8. CMA launches review of road and rail civil engineering

The Competition and Markets Authority has launched a new market study into the design, planning and delivery of road and railway infrastructure across the country.

The market study will examine whether there are opportunities to improve how the public sector and industry work together, for example through improvements to public procurement, so that more cost-effective infrastructure can be built in support of the government’s growth mission. The market study is likely to result in recommendations to government and does not give the CMA the power directly to intervene in the market.

Once the CMA has carried out the necessary analysis, it will consider potential options for improving how the market operates and expects to publish an interim report setting out initial findings in November.