COVID-19 UPDATE #WEREINTHISTOGETHER

Covid 19 - Construction Contracts, Force Majeure and Health & Safety

Covid 19, Construction Contracts, Force Majeure and Health & Safety

 Construction work is definitely work that can’t be undertaken from home. Is it essential? Should contractors shut up sites? What are the contractual consequences?

Construction workers are not defined as “key workers” whose children can continue to be educated at schools. And on Monday night, after the Prime Minister’s lockdown announcement, the Secretary of State for Housing, Communities & Local Government (Robert Jenrick) tweeted:

“Advice for housing, construction & building maintenance industries:

  • If you can work from home, do so
  • If you are working on site, you can continue to do so. But follow Public Health England guidance on social distancing
  • Outside of work, remember to StayHomeSaveLives”

The Construction Leadership Council has published new Site Operating Procedures – available here: https://builduk.org/wp-content/uploads/2020/03/Site-Operating-Procedures-23-March-2020.pdf

However, the same day, the First Minister in Scotland advised that building sites should close, so the guidance in Scotland and England has diverged.

What is the contractual position? It depends on the exact words of your contract, which you should check. The relevant clauses are often heavily negotiated. Let’s look at a well-known standard form. The JCT (SBCC in Scotland) Design & Build contract doesn’t specifically deal with “pandemic”. However, “force majeure” is a Relevant Event (i.e., a matter that entitles a contractor to an extension of time). Force majeure is a matter beyond the control of the parties that prevents performance of a contract, but you usually define specific events, rather than just say “force majeure”. The JCT is strange in this respect.

In the JCT, some of the “Relevant Events” (strikes, lock-outs, terrorism, exceptionally adverse weather conditions) look like typical force majeure events. “Force majeure” is an extra category. So it is reasonable to interpret this is a matter in the same vein as the others.

It seems obvious to me – the Covid-19 pandemic is force majeure. But the Secretary of State’s guidance seems to suggest that construction work can continue, provided social distancing measures can be maintained. So contractors are left with a difficult question – should they keep going and risk the health and safety of their workforce or shut up the site and risk liquidated damages?

A contractor has a statutory responsibility for the health and safety of the workplace. Exposing staff to an unnecessary risk of exposure to Covid-19 in the face of Government advice is potentially a breach of health and safety law. Contractors are required under the JCT to carry out the works in accordance with Statutory Requirements, which includes health and safety law.

A court or an adjudicator might take a different view, but it seems to me that if a site cannot be safely worked, implementing appropriate social distancing and hygiene standards, then Covid-19 is a force majeure event, and the contractor would be entitled to an extension of time. If a site can be safely worked then Covid-19 is not a force majeure event and the contractor would not be entitled to an extension of time.

It depends on the exact circumstances, and this is where pragmatism is required from contractors and developers. And it is only one consideration among many – what do self-employed workers do when they are sent home? The Government is yet to say.

This might be academic shortly – the Government’s exercise of statutory powers that directly affects the Works is a Relevant Event itself. This would entitle the contractor to an extension of time. The Government is acquiring new powers through Parliament as I write: hopefully never required, but an enforceable legal order to close would put matters beyond doubt.

This note is for information only and does not constitute legal advice.

If you would like to speak to Andrew, then please contact afleetwood@gilsongray.co.uk, 0131 516 5365.

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.

 

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