Beale and Company legal review 2011  

2011 saw recession driven claims against valuers, accountants and solicitors but not as yet in droves in the construction industry; perhaps preoccupied with the Olympics and financial woes. Our experience of construction disputes last year was that generally those with genuine claims and the funds to do so pushed ahead with litigation or arbitration with mediation (in the past the shining example of ADR) often unsuccessful in such cases. Perhaps 2012 will herald claimants dusting off their claims as they refocus their priorities.

2011 also saw the scope of adjudication widened to include oral contracts and revisions to the payment regime under the Construction Act. Adjudication remained a popular method of dispute resolution in 2011 with many decisions reviewed by the courts who continued on the whole to resist interfering with adjudicators’ findings. It is ironic however that a regime that was meant to provide a quicker, cheaper means of resolving disputes has represented around 18% of the workload of the Technology and Construction Court since 2006.

The first conviction under the Corporate Manslaughter and Corporate Homicide Act 2007 happened in 2011 with the courts imposing a high sentence in this case. Alongside this we have David Cameron’s recent promise that the year 2012 will see a reduction in the burden businesses have to bear in relation to health and safety laws. His comments seem to indicate that a dramatic shift is afoot for the health and safety landscape in this country. How this fits with the introduction over the last decade of tough new requirements on businesses remains to be seen. The current unsatisfactory situation leaves businesses even more unclear as to how the plethora of regulations affecting their industries will be interpreted by the prosecuting authorities and the courts.

As the construction industry looked overseas for work contracts were commonly drafted to provide for ICC arbitration rather than relying on the laws and courts in unfamiliar territories. The ICC updated its Rules to provide for more case management and to allow multi-party, multi contract disputes for the first time. This in our view is the ICC getting ready for the magnitude of disputes we see heading its way arising out of cross border participation in projects. We have seen an international flavour to many of the disputes we have handled over the course of 2011 and this is certain to continue in 2012.

BIM became the buzzword of 2011 with the Government, construction industry, insurers and lawyers jumping on the BIM bandwagon. With the Government’s commitment to making the use of BIM mandatory in all public sector construction projects, it is clear that BIM will need to be embraced by companies in order to remain competitive. However the insurance and contractual regimes that envelop the industry must catch up with the technological advancements to ensure the issues arising out of the use of BIM such as IPR and design responsibility have been considered and accounted for. Otherwise we will have a situation in 2012 of the courts applying laws not drafted with BIM in mind with more than likely unsatisfactory consequences.

Against surveyors and the financial professions we saw the courts on the whole making it difficult for claimants to succeed. Whether this continues into 2012 we shall have to wait and see. Developer claims as well as bank driven claims are now being seen and we may see a second wave of recession driven claims against these professions this year as property prices stagnate and banks are faced with having to recognise irrecoverable loans in their balance sheets.

With the worsening economic outlook across Europe and the delayed implementation of the rules on ABS, we in 2012 likely to see continuing consolidation of legal practices and with Coop law entering the legal market small firms are certain to be under threat.

2012 looks set to be another tough year of consolidation in the construction and insurance industries and the legal market that serves them. What is clear from the cases highlighted in our Legal Review is that our courts will continue to deliver careful and considered judgments in the cases that come before it recession driven or otherwise.

22 Jan 2012

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