Building Law Monthly

The long-awaited amendments to the Housing Grants, Construction and Regeneration Act 1996 (hereafter ‘the 1996 Act’), enacted in ss138 to 145 of the Local Democracy, Economic Development and Construction Act 2009 (hereafter ‘the 2009 Act’) came into force on 1 October 2011 in England and Wales and on 1 November 2011 in Scotland. The changes made to the construction adjudication scheme give to the Secretary of State a broad power to disapply the adjudication provisions, abolish the requirement that construction contracts be in writing, introduce a ‘slip rule’ to permit adjudicators to correct clerical errors in their decisions and give a limited right to adjudicators to allocate certain costs of adjudication. In relation to payment provisions the changes made are to introduce a new, two-stage notice provision, abolish the withholding notice and replace it with a notice of the payer’s intention to pay less than the notified sum, make some changes relating to the giving of notice to an insolvent contractor and widen the prohibition on pay-when-paid clauses to encompass pay-when-certified clauses. Consequential changes have been made to the Scheme for Construction Contracts for England and Wales (see, in particular, SI 2011/1715, SI 2011/2333) and similar changes are under consideration in Scotland.

In Jet2.com v Blackpool Airport Ltd [2011] EWHC 1529 (Comm), [2011] All ER (D) 06 (Jul) Judge Mackie affirmed that there is no difference between an obligation to use ‘all reasonable endeavours’ and one to use ‘best endeavours.’ The extent of the obligation imposed by these words does depend very much upon the facts of the individual case, although, as the present case demonstrates, a contracting party who takes a sudden, unilateral decision may face difficulty in proving that it has used ‘all reasonable’ or ‘best’ endeavours.

In Costello v Macdonald [2011] EWCA Civ 930, [2011] All ER (D) 40 (Aug) the Court of Appeal held that the claimant builders were not entitled to bring an unjust enrichment claim against the defendants in respect of work done pursuant to a construction contract concluded between the claimants and a company which was owned and controlled by the defendants. In so far as the claimants had a claim in respect of the work which they had carried out, it was a claim against the company with which they had contracted. They could not subvert the contractual structure which had been set up by bringing a direct unjust enrichment claim against the defendants.

In Woodford Land Ltd v Persimmon Homes Ltd [2011] EWHC 984 (Ch), [2011] All ER (D) 205 (May) Mr Justice Henderson, having adopted a particular interpretation of the contract which was favourable to the claimants, held that the claimants were not entitled to the remedy of rectification.