Overview

From 1 April 2022, a new tax will be levied on profits from certain residential development in the UK. The policy was announced in February 2021 and HMRC has undertaken two consultations with relevant stakeholders over the following months.

The policy objective is to raise money from large-scale housebuilders to fund remedial work to cladding up and down the country which the Government will be underwriting. The intention is to raise around £2bn of revenue within a ten-year life span of the tax.

The tax will be levied at 4% on profits of such developers above an annual nil-rate allowance of £25m (split between entities in a corporate group).

Which entities are in the crosshairs?

The new tax will only apply to large residential developers. These entities must be companies that hold the land or property in question on a trading account (though non-UK resident companies are also within the scope of the new tax). Investors and those using the build-to-rent business model are excluded.

Interestingly, the tax also applies to companies that are not already in the charge to UK corporation tax (although the vast majority of affected companies would be). If such a ‘non-taxable’ company has either on its own or with other group companies a holding of at least around 10% in another company that is or is within a group of companies carrying on residential development activity for the purposes of the new tax, then any profits attributed to that non-taxable company are also caught.

The developer in question must have or have had an interest in the land from which profits are derived. Once this condition is met, however, the ambit of what counts as residential property development is wide – it includes trading or dealing in land, construction, applying for planning permission, adaptation, marketing and management.

Key exemptions are for non-for-profit outfits with a charitable purpose of providing affordable and social housing, such as housing associations and social landlords. Charities that develop residential property to raise funds to further their causes are subject to the new tax (and their taxable subsidiaries may not apply gift aid income against profits subject to the tax, as they can with corporation tax).

What counts as residential property is broadly similar to the stamp duty land tax (SDLT) regime (designed or adapted for use as a dwelling) and this includes where planning permission for land is secured or is being sought. Despite this, there are a number of exclusions such as for hotels, certain purpose-built student accommodation and care homes / sites that offer personal care. Retirement properties or sites offering no such care are within the scope of the tax.

Calculation of profits and losses and administrative details

Profits and losses are calculated in the same way as one would calculate regular taxable profits for corporation tax, though there are some notable differences.

Only profits from the relevant development activity are included (profits from other ventures such as letting of surplus real estate are not). No capital allowances are possible and no loss relief is possible except for losses arising from the relevant development activity only (which therefore means that interest expenses will be denied). Such losses arising in a prior year can be carried forward to the current year, while it is possible to surrender such losses to fellow group companies for the current year or carry forward for such group members against their profits arising from the residential development in future accounting periods.

Tax will be paid using the same return as for corporation tax, on the same dates and under the quarterly-instalment regime as currently applies for large corporates paying corporation tax on annual profits over £20m.

Comment

Although the specifics of the rules have been drawn more narrowly in the publishing of the most recent version of the Finance Bill for 2022, companies should nonetheless consider whether and how the new residential developer tax affects their business and how best to manage the additional administration.

This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.

The First Tier Tax Tribunal has ruled in CHF PIP! v HMRC (2021) that the issue of shares to investors purportedly under the EIS scheme did not qualify for tax relief. Although the Company was a trading company, the trade was in the circumstances not being undertaken on a commercial basis with a view to profit.

The Company traded in the field of animation production and had acquired intellectual property rights to exploit an animation concept aimed at toddlers and small children. From this IP was derived the children’s TV show Pip Ahoy! and it was further intended that saleable merchandise based on the TV programme would be sold.  The Company had outsourced the production and licensing of the IP to companies controlled by its shareholders and directors.

Following earlier successful fundraising under the EIS scheme, the Company sought additional EIS-qualifying funding in 2018, but HMRC declined to authorise the Company to issue EIS compliance certificates to the investors for tax relief purposes. This was on the basis that at the time the shares were issued they were not satisfied that the company carried on a trade with a view to profit and there was a genuine risk to the investors’ capital.

Upon appeal, the First Tier Tax Tribunal (FTT) was satisfied that the Company was carrying on a trade (and not an excluded activity) for EIS purposes, this being the creating and exploiting of its intellectual property and monetisation of this by licensing to broadcasters and sale of merchandise.  It did not matter that the vast majority of this work was outsourced to companies in the CHF PIP group (and that the Company had no employees). However, the FTT was not persuaded that the trade was carried on commercially with a view to profit in the circumstances. The Company had made losses each year from 2012 to 2018. Although there was a plan to revamp the programming operations and improve profitability, the profit forecasts were described as “spectacularly optimistic to the extent of being total pie in the sky”.  Subjectively there was no likelihood of the ‘wholly unrealistic’ profit forecasts being met and there was no genuine intention of a profit being made.

In addition, the FTT was also not satisfied that there was a requisite risk to capital as, when viewed in the context of the Company’s poor trading performance and wildly optimistic projections, it could not be reasonably concluded that the Company had objectives to grow and develop its trade in the long term.

For early-stage companies seeking EIS funding (and prospective investors), the case serves as a reminder of the need for a genuine trading operation carried on with a view to profit and having genuinely attainable financial targets. Notable also is that the same requirement will also apply to even earlier-stage companies and start-ups seeking SEIS funding.

In addition, companies that are successful in qualifying for EIS and SEIS fundraising should not assume that such qualification will automatically apply to the next round of funding they seek to secure. The requirements for SEIS and EIS qualification (both specifically with respect to genuine trading/risk to capital and generally) must be met on each funding round, so companies must consider each funding round on its own merits and in the context of the company at the time the new fundraising is sought.

This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.

The requirements to provide an energy performance certificate (‘EPC’) on the sale or letting of a property and the requirement to commission an EPC before a property is marketed are well known. In addition to these requirements, minimum level of energy efficiency standards (“MEES”) will come into effect for both non domestic private rented properties and domestic private rented properties in 2018. These rules include restrictions on letting of properties with energy efficiency standards which fall below the prescribed standard.

In relation to all these requirements there appears to be an exemption for listed buildings. A quick read of the relevant legislation may give the mistaken impression that listed buildings are automatically exempt. In fact the position is more complicated and requires a building by building assessment against a backdrop of inconsistent guidance. This ambiguity can lead to arguments between buyers and sellers, landlords and tenants and possibly enforcement action, if the relevant authorities disagree with the assessment made.

The law

Section 5 of The Energy Performance of Buildings (England and Wales) Regulations 2012 (“2012 Regulations”), provides an exemption from the EPC requirements for buildings defined as:

“buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance;”

Guidance on both the Government and Historic England websites on the EPC requirements indicates that listed buildings are exempt from the EPC requirements, although the Government website does state that advice should be sought from the relevant local authority conservation officer if the work would alter the building’s character.

A strict interpretation of the 2012 regulations would first require an assessment as to whether or not compliance with EPC requirements would “unacceptably alter the character or appearance” of a building. Only if the requirements would alter the character or appearance in this way will the building be exempt from the EPC obligations.

The regulations governing the new MEES are the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 as amended (“MEES Regulation”). These regulations impose restrictions and obligations on the owners of certain properties, which include a restriction on leasing a property with less than a prescribed minimum EPC rating (unless the landlord registers an exemption). However, as the properties affected by these regulations are those which are required to have an EPC, effectively the same exclusions apply under both EPC and MEES regulations.

What is a listed building?

The legal definition of a listed building is contained within section 1(5) of the Planning (Listed Buildings and Conservation Areas) Act 1990 as “a building which is included in a list compiled or approved by the Secretary of State”. Historic England has published numerous guides concerning the different classes of historical buildings and their determining criteria on its website. Historic England states in its guidance that:

“a listing is not a preservation order, preventing change. It does not freeze a building in time, it simply means that listed building consent must be applied for in order to make any changes to that building which might affect its special interest.”  

From this explanation it is clear that alterations to listed buildings are envisaged. It is simply that listed building consent must first be obtained to any proposed changes.

What does this mean?

It is not clear from the 2012 Regulations who should make the assessment as to the alteration of the character or appearance of the listed building mentioned in the exemption. If it is the owner of the building who can make that assessment and if they decide that an alteration would affect the character of the building and they rely on the exemption in the 2012 regulations, then what happens if, subsequently, the assessment is challenged and it is found that the owner was not entitled to rely on the exemption?

The ambiguity of the section 5 exemption coupled with the lack of clarity in the accompanying guidance, could lead to disputes between sellers and buyers or landlords and tenants over the question as to whether compliance with the 2012 regulations and the MEES is required on a particular transaction.

Any failure to comply with the regulations could also lead to enforcement action against the owner by the appropriate authority.

Enforcement

The 2012 Regulations provide that a trading standards officer has the power to request a copy of the EPC for inspection from the landowner. If requested, the EPC must be produced within seven days, failing which, a penalty charge notice could be issued.

The penalty charge for a breach of duty under S6 of the 2012 Regulations (the duty to produce an EPC on sale or letting of a building) where the building is a dwelling is £200. Where the building is not a dwelling, it is calculated by 12.5% of the rateable value of the building. Additional penalties apply under the MEES regulation.

It is worth noting that under section 43(1) of the 2012 Regulations, a person who obstructs an officer of an enforcement authority acting in pursuance of enforcement is guilty of an offence, punishable by an unlimited fine.

Conclusion

The current position regarding listed buildings is ambiguous and leaves parties to both sales and lettings of listed buildings vulnerable to challenge both between themselves and by the relevant authorities. Landowners contemplating the sale, purchase or lease of a listed building would be well advised to seek detailed advice on this issue in light of the nature of the building, its listing category and the likely outcome of an assessment under section 5 of the 2012 regulations. A report could be commissioned from an appropriately qualified surveyor or other professional to support the landowner’s position and provide evidence of an assessment. If the outcome remains uncertain, it may be prudent in the long term for the landowner to take steps to comply with the various regulations or to seek an opinion from the relevant listed building officer, rather than rely on an ambiguous exemption.

Earlier this year in Andrew Green v Petfre (Gibraltar) Limited (trading as Betfred) the High Court heralded a warning to businesses with consumer clients about the need to be even-handed when dealing with their customers and to ensure that any onerous terms are clearly brought to their attention. Please see our full analysis (here).

The recent case of Blu-Sky Solutions Ltd v Be Caring Ltd [2021] now provides an example of the courts’ approach with regard to business to business contracts. Though less regulated than consumer contracts, businesses operating in this space should be mindful that any potentially onerous clauses should be clearly signposted to their counterparty before they enter the contract. Failure to do so runs the risk of such clauses being found unenforceable (i.e. not incorporated into the contract).

The case

As with the Betfred case, this ruling is fact specific, but the underlying legal principles remain highly relevant to companies contracting with other businesses.

Be Caring Limited (Be Caring) a provider of social care services entered negotiations with Blu-Sky Solutions Limited (Blu Sky), a telecommunications supplier, to receive their mobile network offering. As part of this process, Be Caring completed an order form which sought to incorporate Blu Sky’s terms and conditions as hosted on their website (but not included on the order form itself). When Be Caring wished to move to another supplier, they were informed by Blu Sky of expensive cancellation costs for them to do so and as outlined in the terms and conditions.

Be Caring was found by the trial judge to have entered a contract with Blu Sky despite them purportedly being unaware that the form they were signing was a binding agreement rather than heads of terms. The terms and conditions that the agreement referred to were also found to be binding, as they were accessible on Blu Sky’s website.

Despite the terms and conditions being seemingly incorporated into the agreement between the parties, the cancellation costs clauses were found not to be enforceable by the judge.

Onerous clauses

It is a well-established legal principle that any “onerous or unusual” conditions in a contract (including terms and conditions) will not be incorporated unless they have been brought to the counterparty’s attention. Lawyers often refer to a “sliding scale” of how much notice needs be given. Where the clause is more burdensome or unusual there will equally be a greater obligation of notice.

In this case, the cancellation clauses were found to be particularly onerous because, amongst other factors, the costs incurred bore very little relation to and were out of proportion to the actual costs that would be incurred by Blu Sky for Be Caring’s cancellation. Therefore, Blu Sky should have taken care to ensure that these clauses were clearly flagged to Be Caring. However, instead the judge found that the onerous clauses had been “cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover and extricate”. The clauses were consequentially found not to be incorporated.

Therefore, it is important that businesses review their terms and conditions (especially where these are incorporated by reference) to ensure that clauses that impose significant burdens on the counterparty are adequately emphasised.

Best practice tips when drafting B2B terms and conditions:

1. Set out any terms and conditions in clear, plain language that can be clearly understood by non-legal readers.
2. Ensure that all terms and conditions are formatted in a way that can be easily read by another user. For instance consider font, spacing, text size, optical character recognition and appropriate use of typographical emphasis (i.e. bold and italics).
3. Clearly mark and signpost any onerous terms (i.e. terms that would cause the counterparty to incur significant financial or other liability). For example by inserting “the customer’s attention is particularly drawn to clause x.” at the start of the terms.

If you require any assistance with developing your terms and conditions or even a simple health check please contact Tom Torkar or another member of the commercial team.

On 15 November 2021, it was reported that Dr Salman Butt had received an apology, significant compensation and payment of his legal costs in his long-running legal action for defamation against the Home Secretary.

Dr Butt, the chief editor of the Islam21C website, brought a case of defamation against the Home Secretary after he was named in a press release on the government’s Prevent policy in September 2015. The policy is aimed at reducing extremism in academic settings.

Entitled, ‘PM’s Extremism Taskforce: tackling extremism in universities and colleges top of the agenda’, the release referred to a finding by the government’s Extremism Analysis Unit that in the previous year there had been at least 70 events on campuses featuring hate speakers. It went on to identify Dr Butt, in a section headed ‘Note to editors’, as one of a number of named individuals “on record as expressing views contrary to British values”.

Defamation claims and the requirement of serious harm

The Defamation Act 2013 (the Act) introduced a requirement of serious harm for defamation claims. A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the complainant. It would not, for example, be sufficient to allege injury to feelings. Here, Dr Butt alleged that the publication did indeed cause serious harm to his reputation and, within the one year limitation period for the commencement of such claims, launched proceedings against the Secretary of State for the Home Department.

In his claim, Dr Butt asserted that the natural and ordinary meaning of the words in the press release meant and were understood to mean that Dr Butt “is an extremist hate speaker who legitimises terrorism, is likely to radicalise students and from whose poisonous and pernicious influence students should be protected”.

‘Honest opinion’ under The Defamation Act

In her defence, the Home Secretary argued that the natural and ordinary meaning of the words in the press release meant and were understood to mean that Dr Butt “is someone who has expressed views contrary to British values”. She did not admit that the words did, or were likely to, cause Dr Butt serious harm and, accordingly, did not admit that they were defamatory of him. As an alternative position, the Home Secretary relied upon one of the defences available under the Act, namely that of ‘honest opinion’. For this defence to succeed, she would have to satisfy the court in three respects: (i) that the statement complained of was a statement of opinion, (ii) that the statement complained of indicated in general or specific terms the basis of the opinion, and (iii) that an honest person could have held the opinion.

The Act identifies a number of other statutory defences, including:

• truth (where the imputation conveyed by the statement is substantially true)
• publication on a matter of public interest (where the statement complained of was, or formed part of, a statement on a matter of public interest and the defendant reasonably believed that publishing the statement was in the public interest)
• a defence for operators of websites, where the operator can show that it was not the operator who posted the statement
• where the statement is a peer-reviewed statement in a scientific or academic journal
• reports protected by privilege

At a trial of a preliminary issue before Mr Justice Nicol in October 2017 [Dr Salman Butt v The Secretary of State for the Home Department [2017] EWHC 2619 (QB)], the Court had to determine: (i) the natural and ordinary meaning of the words at the centre of the complaint, (ii) whether the statement complained of was a statement of opinion, and (iii) if opinion, whether the statement complained of indicated in general or specific terms the basis of the opinion. If the Home Secretary was successful in (ii) and (iii) she would have a defence to the claim of defamation.

Mr Justice Nicol found that the natural and ordinary meaning of the words at the centre of the complaint were understood to mean that Dr Butt is an extremist hate speaker who legitimises terrorism, is likely to radicalise students and from whose poisonous and pernicious influence students should be protected.

The Judge went on to find that these words were a statement of opinion and reflected the views of Dr Butt in the public domain. These findings enabled the Home Secretary to maintain a defence of ‘honest opinion’ (under section 3 of the Act).

The findings were upheld during an appeal in June 2019.

Disclosure of documents in defamation cases

Following the appeal however, documents came to light that revealed it was a mistake to include Dr Butt’s name in the press release.

Obligations of disclosure of documents arise at various stages of court proceedings. The obligation extends to documents which adversely affect a party’s own case or support another party’s case (usually, at the stage of standard disclosure under CPR 31.6). The disclosing party may not be aware of the existence of such a document until required to undertake a search and searches may not uncover every document that would, if discovered, be required to be disclosed. This appears to be one such case, where a document which revealed that Dr Butt’s name was included in the press release in error, and that the government did not intend to allege that he was an extremist hate speaker, was not uncovered or disclosed during the currency of the proceedings.

Where a document fatally undermines a defence, as appears to be the case here, it is critical that its existence and its impact on the merits of the claim or defence is recognised as early as possible. It can be costly, and damaging, to fail to take it into account when deciding your litigation strategy.

In this week’s statement in open court, it was said on behalf of the Home Secretary that “The government accepts that it was wholly false to allege that Dr Butt is an extremist hate preacher who legitimises terrorism and therefore someone from whose influence students should be protected. It is sorry for the harm caused to him and in particular for the fact that the allegation was made and maintained for so long.”

It is reported that the settlement of the claim includes removing Dr Butt’s name from the press release.

After nearly two years the Environment Bill has finally made it onto the statute books as the Environment Act 2021. Its enactment, presumably timed to coincide with the end of COP 26 in Glasgow, heralds the introduction of some fairly wide-ranging and significant changes, which will affect rural land owners and businesses for years to come.

In a series of articles, we will consider how this new legislation will impact rural land ownership and where the opportunities for rural businesses lie. We start with an overview of the new Act and focus on its scope and when rural measures will come into force.

New rural and agricultural framework

The arrival of the Environment Act 2021 comes a year after the enactment of the Agriculture Act 2020 and, together, they create a statutory framework for a completely new direction for rural and agricultural policy across the UK.

Certain measures within both pieces of legislation comprise devolved matters and we are already seeing considerable divergence in policy between the four home countries of the United Kingdom. This will only increase as devolved governments make choices which reflect their own political priorities and landscape.

Overview of new measures

So, what does the new Environment Act do? The Act is long (278 pages) and wide ranging, including various different parts as follows:

• Environmental governance: the setting of targets, improvement plans, monitoring and the creation of a statutory “Office for Environmental Protection”.

• Waste and resource efficiency: targeting producers with responsibility for costs of waste disposal; addressing waste management, enforcement and regulation.

• Air quality and environmental recall: updated requirements regarding air quality and the recall of vehicles.

• Water: updated requirements for water resources and drainage and sewerage management plans and water quality; reducing storm overflow sewerage discharges; modification of water abstraction licences and valuation of land (including agricultural land and buildings) in a drainage district.

• Nature and biodiversity: Biodiversity gain in planning, local nature recovery strategies, conservation strategies, habitats regulation, tree felling and planting and restrictions on use of commodities in commercial activity, which place forest at risk.

• Conservation covenants: A new enforceable legal structure which will allow land owners to give long term commitments, regarding the use and management of land, which are enforceable by a responsible body.

• Specific governance measures for Northern Ireland

Measures affecting rural land owners and businesses

Although virtually all of these measures affect rural land owners and businesses in some capacity or other, we are already finding that the nature, biodiversity and conservation covenants sections are raising the most issues and that these also tie in closely with provisions in the Agriculture Act 2020.

The concept of natural capital has become familiar to rural land owners over the past decade and the current moves to redirect agricultural subsidies towards schemes, which protect and enhance natural capital assets for wider environmental benefit, are starting to give these assets a greater financial significance.

The new biodiversity gain measures in the Environment Act take that process a giant step forward and when coupled together with the legal structure of a conservation covenant, we have a practical way to turn natural capital into significant income producing assets.

Biodiversity gain

Certain pilot local planning authorities have informally been imposing a 10% biodiversity gain on planning consents for some time. The requirement has also been included in General Development Orders for large infrastructure projects, but part 6 of the Environment Act is the first time we have seen this obligation included as a blanket  statutory obligation.

The Secretary of State has power to set up a register of biodiversity gain sites and can control eligibility criteria for registration of a site and for the identity of applicants. The Act also provides for the creation of a system of statutory biodiversity credits, which can be bought and sold by parties involved in the development of land.

In relation to England only, schedule 14 imposes a new mandatory obligation to meet a biodiversity gain objective on the grant of any new planning permission for development; that objective is met by a 10% increase in biodiversity value pre and post-development, either in the onsite habitat, in any registered offsite biodiversity gain allocated to the development or in statutory biodiversity credits purchased for the development.

A new biodiversity condition will be imposed in every planning permission, which will prohibit the starting of any development until a biodiversity gain plan has been submitted and been approved by the planning authority. The plan must specify various matters, including how the development is going to minimise the adverse effect of the development on the biodiversity of the onsite habitat, how the biodiversity values are calculated and how the biodiversity gain will be met.

Local nature recovery strategies

The Environment Act requires local nature recovery strategies to be created to cover the whole of England. These strategies will include a statement of biodiversity priorities for the relevant area and a local habitat map or maps for the whole strategy area. The statement will include a description of opportunities for recovering or enhancing biodiversity and the priorities for the strategy area.

Once created these strategies are likely to impact on the value and use of land; they will no doubt tie in with the awarding of agreements under the Local Nature Recovery and Landscape Recovery tiers of the new Environmental Land Management Scheme (ELMS), providing an income stream for the relevant land. Beyond subsidies, we may also find that such strategic areas of land become a focus for natural capital schemes and biodiversity gain sites, which may attract considerable capital sums.

Tree felling and planting

The Environment Act strengthens the existing protection for trees set out in the Forestry Act 1967, in particular for situations in which woodland changes hands and required restocking has not been carried out by the previous owner.

Regions affected and date for introduction

The biodiversity and conservation covenants parts of the Act apply to both England and Wales and will come into force on a date to be appointed by the Secretary of State in specific regulations. In the Government’s response in July 2019 to the consultation on biodiversity gain, it indicated that it would make provision in the Bill for a transition period of two years from the date on which the Bill received Royal Assent. In fact, this appears to have been left open with the biodiversity provisions in Part 6 due to come into effect “on such day as the Secretary of State may by regulations appoint”.

Like the Agriculture Act 2020, the Environment Act 2021 creates a framework on which new policy can be developed. In some areas the Act goes into considerable detail, however in others, the specifics are left for consultations further down the line.

Reflecting back on the last 5 years which have elapsed since the Brexit vote in 2016, what is striking is the length of the journey the country has made in a fairly short space of time. A decade ago most of the new measures included in this new Act would have been unthinkable, yet many have made it through consultations and Parliament with few fundamental objections.

If you require more information on this article, please contact Ben Sharples. 

The Commercial Development team has a client portfolio including many regional and national leading developers.

These include Eagle One, Midas Construction, St Modwen Developments and Vinci Group.

With the support of the largest Commercial Property department in the South West, our Commercial Devlopment Solicitors have dealt with some of the biggest developments in recent years, from inception through planning, land acquisition and site assembly, through to funding and disposal/letting.

Public law is the law which governs our relationship with the government, and public organisations. It includes administrative and constitutional law, and those public organisations include housing associations, county councils, and utility or transport companies.

Individuals and businesses can take legal action against the government or public organisations in order to protect or assert rights which are taken away from them or restricted. Often that legal action takes the form of an application for Judicial Review of a particular decision or outcome, but it is often the case that other sorts of claim can be pursued

Michelmores act for and against different government or public organisations in a range of matters.

The Construction Leadership Council (CLC) published its new guidance on the 21 October 2021, entitled “COVID-19 Contractual Guidance”. The purpose of this guidance is to provide a suite of documents which show contractual best practice and record keeping to achieve collaborative settlements. It also provides guidance and suitable drafting which can be used in contracts in respect of future projects. In effect, this guidance has updated and pulled together the information and resources previously published on the basis that the consequences of the pandemic and COVID-19 are ongoing.

The guidance strongly recommends that the construction sector approaches the difficulties arising from the pandemic in a constructive and collaborative manner and that risks are proportionately shared.

For those involved in the formation and agreement of contracts for future projects, the CLC’s ‘Template 3’ is of particular interest. This was first published in July 2021 but has now been updated. The Template is relevant for both the JCT and NEC suite of contracts. The Template provides a number of options and draft clauses to choose from. The choice of which option is chosen is dependent upon the risk profile agreed between the parties. For example, Option 1 only allows for an extension of time whereas option 4 allows an extension of time and compensation if the circumstances in respect of COVID-19 change from those as at the ‘base date’.  There is also a clause which allows the parties to terminate the contract if the works are suspended beyond a specified period.

As with all pre-drafted clauses, it is important to review them in some detail and to apply a number a practical scenarios in order to establish whether the clauses properly address the issues. For example, what are the contractual consequences if there is an outbreak of COVID-19 on site which has the effect of reducing or entirely excluding the workforce on-site? Is this a risk which the contractor is in a better position to manage and therefore, should it be treated as a ‘contractor risk’?

If, in the example above, the contractor is entitled to make a claim then it is important that there is sufficient evidence available to show that the delay was actually caused by COVID-19. CLC’s third updated guidance entitled “Record Keeping” addresses this point. It refers to the Society for Construction Law’s Delay and Disruption Protocol (2^nd edition) which emphasises the importance of proper and accurate record keeping. The guidance states that record keeping should be proportionate and in the context of the agreed COVID-19 clauses. Within this context, CLC’s fourth guidance entitled “COVID-19 Impact Assessment Toolkit” provides a construction business with a methodology to demonstrate that COVID-19 has had an adverse impact on its overall business, rather than each specific project. The purpose of methodology is not to replace the strict evidential requirements under the construction contract but to provide technical evidence that COVID-19 has had an impact and can be used in a collaborative negotiation situation.

The CLC has been the source of a number of invaluable resources during the pandemic. For those of us who were involved in advising during the early stages of the outbreak, the guidance and publications were essential; setting the tone of how the construction sector should work through the pandemic. This latest guidance has updated and brought together the information needed when considering how the subject of COVID-19 should be approached now in respect of both ongoing and future projects.

A copy of the guidance can be found here.

The 19th Michelmores Property Awards were held on Thursday 4 November with a glittering awards ceremony and gala dinner at Sandy Park Conference Centre in Exeter. The evening was hosted by former Exeter Chiefs rugby player, Chris Bentley and celebrated outstanding property and construction projects in Bristol, Cornwall, Devon and Wiltshire across ten categories.

The Box in Plymouth took home the coveted Building of the Year award as well as the prize for Leisure and Tourism Project of the year. The exciting and much-lauded project restored and transformed three listed buildings in Plymouth to provide an innovative visitor attraction and a sustainable home for at risk collections and artefacts. Its inspirational and accessible exhibitions successfully connect the people of Plymouth with their world-class heritage.

Market Hall, also in Plymouth won Heritage Project of the Year. The highly successful project saw the part-restoration, part-new development of an abandoned building in Devonport. The scheme embraces the old and the cutting edge whilst keeping the needs of the community at its heart. Alongside co-working spaces, the Hall is home to a 15-metre diameter immersive technology dome – the first of its kind in Europe.

The new Deaf Academy, built on the site of a former educational facility in Exmouth was awarded Project of the Year (over £5m). It was applauded for successfully meeting the complex needs of its occupants. The project has regenerated and revitalised part of the town, creating jobs and re-energising an abandoned building. The judges commented on the team’s ability to create an accessible and welcoming space with demanding user interpretations to create a building of merit.

Langarth Garden Village on the edge of Truro in Cornwall won in the Masterplanning for the Future category. The scheme was praised for its ambitious, place-making vision to create a brand-new community of 10,000 people in a vibrant and inclusive environment.

Sandpit Road in Calne, impressed with its highly commendable ‘hub’ house approach which gives residents the freedom to adapt their home over time, to suit their changing needs. The internal layout of the homes facilitates this whilst retaining formal and informal entrances and adaptable storage. Praise was also given for the scheme’s bespoke nature and the finish of the external design.

This year’s John Laurence Special Contribution Award, which recognises and celebrates outstanding property and construction professionals and organisations in the region, was given to Andrew Maynard for his instrumental role in championing the commercial and residential property sectors, in Exeter, the SW and beyond. Andrew is widely regarded in the business community as being a tour de force for the sector. He has led the way with his commitment, energy and ambition for all things property, as well as being an exemplar in bringing people together, fostering and nurturing relationships through networking, and providing excellent client care.

The other winning projects for 2021 include: the Digital and Data Centre at Exeter College in Devon – Education Project of the Year; Sideshore in Exmouth, Devon – Project of the Year (under £5m); and Wapping Wharf Living (Phase 2) in Bristol – Residential Project of the Year (36 units and over).

Of this year’s Awards, Emma Honey, Head of Property at Michelmores LLP said:

“It was fantastic to bring together members of the South West property and construction industry to celebrate the winners of the Michelmores Property Awards 2021. Despite challenging conditions, the sector has continued to thrive and shown itself to be a robust and innovative part of the region’s economy. My congratulations to our winners on their Awards which are thoroughly well deserved. My thanks to our panel of esteemed judges for their ongoing support and to our sponsors without whom, this event would not happen.”

This year’s winning projects:

Specially Commended Projects

NHS Nightingale Hospital Bristol – submitted by Kier Regional Building

NHS Nightingale Hospital Exeter – submitted by BAM Construction

Plymouth Lighthouse Labs – Kier Regional Building and University Hospitals Plymouth NHS Trust

True partnership

Led by Ben Hogan and key partner David Cave, our award-winning Projects & Infrastructure team is ranked Band 1 nationally by Chambers & Partners. Our team consists of lawyers who are experts in the establishment, management and termination/handback of infrastructure projects in a broad variety of sectors. In addition, our team has vast experience of project finance transactions, facilities management services and large-scale governmental and commercial projects.

Our team draws on the expertise of specialist lawyers from other teams within the firm, including procurement, construction, real estate, employment, corporate and banking, who have significant experience of working on infrastructure project transactions. This is key to us providing the seamless and first class service our clients expect.

We are renowned for building strong and lasting relationships with our clients and commence every client relationship with the goal of becoming and remaining a trusted adviser throughout the life cycle of the relevant project.

Sustainable solutions for sustainable infrastructure

Having acted for a wide range of procuring authorities, sponsors, service providers and lenders, we understand the many challenges facing project stakeholders in ensuring that social and economic infrastructure projects deliver the service outcomes required by the procuring entity, as well as projected returns to lenders, investors and subcontractors.

However, we also understand the wider societal and environmental context in which our clients operate and are committed to helping our clients to find ways to deliver truly sustainable infrastructure assets that achieve their social or economic purpose, are energy efficient, resilient and are fully integrated with related systems and networks.

Despite attempts at simplification by government, navigating the planning system remains a potentially time consuming and costly process. Our planning solicitors are experienced at helping clients through this process, whether at the strategic level as the first steps are made towards having a site allocated, helping to shape planning applications, negotiating planning obligation agreements or advising in relation to appeals and legal challenges at the decision making stage.

Our clients include national and regional house builders, commercial developers, government bodies, planning authorities, private sector companies and landed estates.