Construction Matters – March 2015
Print newsletter31/03/2015

New CDM Regulations: what is changing (and what do you need to do)?
The draft Construction (Design and Management) Regulations 2015 (“the Regulations”) are in the process of […]
The draft Construction (Design and Management) Regulations 2015 (“the Regulations”) are in the process of being approved by Parliament. They are set to come into force on 6 April 2015. Transitional arrangements are in place which will run for the first 6 months until 6 October 2015.
Some of the key changes are as follows:
- the CDM co-ordinator role will be removed and replaced with a ‘Principal Designer’ who will be appointed during the pre-construction phase. The Principal Designer must plan, manage, monitor and coordinate health and safety in the pre-construction phase of a project, which includes identifying, eliminating or controlling foreseeable risks and ensuring that the design team carry out their duties;
- if the project involves more than one contractor, a ‘Principal Contractor’ will also need to be appointed during the construction phase. The Principal Contractor is responsible for the management and monitoring of the construction phase of the project which includes liaising with the client and the Principal Designer, organising cooperation between contractors and coordinating their work. For example, they must ensure that suitable site inductions are provided, that reasonable steps are taken to prevent unauthorised access, and that welfare facilities are available. A sub-contractor counts as a second contractor and therefore nearly all projects will require a Principal Contractor role;
- there is now greater responsibility on the Client for health and safety. For example:
– in the 2007 Regulations, it was the CDM Co-ordinator’s responsibility to notify the HSE with the details of the project. Under the 2015 Regulations, this responsibility will fall on the Client;
– under the 2007 Regulations, the client was only responsible for providing information relating to health and safety to the CDM co-ordinator. Under the 2015 Regulations, the client has an absolute obligation to ensure the Health and Safety File is prepared; and
– under the 2015 Regulations, the Client has an absolute obligation to ensure a Construction Phase Plan is in place before any works commence (including site set-up);
- the Regulations now also apply to domestic projects. Domestic clients may delegate the majority of their duties to the Principal Designer or Principal Contractor. This could impact on contract prices for smaller domestic jobs;
- the existing requirements on competency will be replaced by a more general system which requires those who are instructing others to ensure that they have the appropriate training and information. The competency of industry professionals will be the responsibility of the relevant professional bodies and institutions; and
- the Approved Code of Practice set out in the 2007 Regulations, which has been heavily criticised, will also be replaced with shorter guidance.
If you would like any more information on the new CDM Regulations, please get in touch.

New Higher Court Fees: How can you minimise the sting?
Dramatic increases in the fees payable to the court when issuing a claim came into […]
Dramatic increases in the fees payable to the court when issuing a claim came into force on Monday 9 March 2015.
The increases affect the fee to commence court proceedings for the recovery of money on claims worth £10,000 or more. The new fee is 5% of the value of the claim capped at a maximum fee of £10,000. For example, a party wishing to commence a claim with a value of £190,000 will now be required to pay a fee of £9,500, an increase of a massive 622% from the previous fee of £1,315.
There is concern amongst legal professionals that the fees will deter parties from commencing court proceedings, which could lead to smaller businesses in particular being forced to write off debts, endangering their own financial position.
Parties wishing to minimise the sting of paying such a large fee may wish to consider one of the options below.
1. Don’t inflate your claim
The lower the amount of money being claimed, the lower the fee. Parties should be honest when assessing the likely value of their claim and should ensure that they are not claiming for additional sums that will never be recoverable.
2. Is Court the only option?
Before issuing a claim, parties should consider whether there could be an alternative method of resolving the dispute such as adjudication or mediation.
3. Standstill
Claims can only be commenced within a certain time period, (for example 6 years from the date of the breach in a claim for breach of contract). A common reason for issuing proceedings is that the limitation period on the claim is about to expire. In such circumstances, parties should consider attempting to agree a standstill agreement with the proposed Defendant, which will stop time running on the claim, and will allow additional time for the parties to attempt to settle the dispute before proceedings are issued.
4. Winding up
In proceedings to recover undisputed debts, if the amount claimed is £750 or more, winding up or bankruptcy proceedings might be more appropriate as they attract a significantly lower court fee.
The Government hopes that the changes will generate £120m in additional income per year. It remains to be seen whether the new fees will in fact deter parties from bringing their disputes to Court at all.

When will the Court agree to stay the enforcement of an adjudication decision?
Since the case of Wimbledon Construction Company 2000 Ltd v Vago [2005], the Courts have […]
Since the case of Wimbledon Construction Company 2000 Ltd v Vago [2005], the Courts have usually been willing to stay the enforcement of an adjudicator’s decision if the unpaid party would be unable to repay the sum received in the event that the decision were reversed by later arbitration or litigation proceedings.
In February, in the case of Galliford Try Building Ltd v Estura Ltd [2015], the Court for the first time granted a partial stay due to the paying party’s financial difficulties.
The Court stated that enforcing the decision would cause “manifest injustice” to the paying party.
The Court considered this to be a rare case and it suggested that it would not come to the same decision in future unless the facts were exceptional. However, it is likely that we will now see parties seeking to persuade the Court that their circumstances also merit a partial stay.
The Facts
- Galliford Try (“GT”), the Contractor was engaged by Estura, the Employer under the JCT Design and Build Contract 2011.
- GT issued its interim application 60 (“IA 60”) which stated an anticipated final account of £12.66 million and that the value of the work as at the date of IA 60 was only about £4,000 less than the amount of the anticipated final account.
- Estura failed to serve a payment notice or a pay less notice.
- As such, the amount stated in IA 60 of £3,928,227 plus VAT and interest became the notified sum. The adjudicator ordered GT to pay this sum to Estura.
- Estura failed to pay and GT commenced enforcement proceedings in the TCC.
Nothing unusual so far, but this is where things started to get interesting.
The Amount Due
Before the enforcement proceedings commenced in the TCC, Estura challenged IA 60 in a second adjudication. They asked the adjudicator to decide the true value of the works, and argued that the amount stated in IA 60 should have been much lower. The adjudicator in the second adjudication declined to proceed because he did not consider that he had jurisdiction to revisit the question of the value of the works at the time of IA 60. The amount stated in IA 60 was the notified sum because Estura had failed to serve either a payment notice or a pay less notice.
In the enforcement proceedings of the first adjudicator’s decision, the TCC Judge, Mr Justice Edwards Stuart referred to his previous decision in ISG Construction Ltd v Seevic College [2014] in which he held that the lack of a pay less notice meant that the employer had agreed to the value of the works claimed in an interim certificate. The employer was therefore bound to pay the amount stated in the interim certificate. However, the value of the works could be reconsidered in a subsequent interim application or in the final account, which would allow the employer to ‘correct’ any previous over payment to the contractor.
The Court therefore enforced the adjudicator’s decision that the amount due was the sum claimed in IA 60.
Stay of Enforcement
Estura argued that this case involved exceptional circumstances which would prevent them from revisiting the amount due to GT in a future interim application or in the final account, as envisaged by ISG v Seevic as follows:
- the contract wording did not allow for a negative valuation;
- the amount stated in IA 60 was extraordinarily high, almost the same sum that GT’s final account would be;
- IA 60 was the last interim application;
- there was no incentive for GT to now submit a final account; and
- Estura lacked the funds to pay the amount ordered by the adjudicator or to pay for litigation to ensure a proper valuation of GT’s final account.
Estura therefore asked the Court to order a stay of execution of the adjudicator’s decision. They argued that enforcing the decision would amount to ‘manifest injustice’ contrary to the purpose of the Construction Act 1996.
Decision
Edwards Stuart J was persuaded by Estura’s ‘manifest injustice’ arguments and stated that it would not be fair to Estura to enforce the judgment in full. The Judge commented that he was “concerned to ensure that [GT] had the necessary incentive to achieve practical completion and submit its Final Statement’.
The Court granted summary judgment for £3.928 million (plus VAT and interest) and stayed enforcement of the judgment above the sum of £1.5 million.
Evidence of financial difficulty
Parties considering raising similar arguments to secure a stay in enforcement should note that the Court required detailed evidence of Estura’s financial difficulties before it would order a stay.
Comment
It remains to be seen whether this decision will undermine the Court’s usual robust enforcement policy with regards to adjudicators’ decisions.
The Court noted that GT had not done anything wrong however this must have offered little comfort to GT given that they are now out of pocket to the tune of over £2 million.