COVID-19 UPDATE

30.03.2020

We are living through unusual times.  The issues arising from Covid-19 will no doubt spark some interesting litigation in years to come as companies adjust to the economic fall-out of the Government measures – many of which have been loosely phrased and not written into law (excepting those elements set out in the Coronavirus Act 2020 and the Health protection Regulations). 

The Government, in its daily briefings and through its published notices, has implemented far-reaching restrictions on the daily lives of individuals and businesses.  Whilst it has indicated that it would like to see construction activity maintained (not including construction on the list of those businesses that must close for the time-being), it has maintained the obligation on those engaging in construction activities to ensure they can do so safely, without risk to their employees or members of the public and has therefore, effectively left that responsibility with the contractors, sub-contractors and employers to determine whether, and if so how, the works can continue.

Those working in the construction sector need to consider their rights and obligations pursuant to the contracts they are working under – and, in the absence of any contract, consider the application of the statutory provisions to the works being undertaken.  Employers, advisers and contractors will each need to ensure they comply not only with the contractual obligations but also with Health and Safety at Work legislation, the CDM Regulations, their insurance obligations as well as the Public Health England requirements, to name a few.

Depending on the terms of your contract, Covid-19 is likely to be a force majeure event – but usually that will only give a contractor time, not money.  Whilst release from LADs for failing to complete on time is no doubt helpful, it doesn’t assist with your on-going prelim costs or your staffing issues. 

If you can continue working on site, it will likely have to be in a severely restricted manner – extending the programme and your costs on site.  Can you be recompensed for that extra delay and disruption to your works?

What are your CDM obligations?  A contractor has an obvious obligation to check that CDM can be complied with and to consider the application of the PHE rules to its site (and indeed, to the mode of transport of its workers safely to the site). 

What though of the client/employer?  Can an employer with a contractor appointed for the CDM aspects, leave it all to the contractor to ensure compliance with the rules and the PHE obligations?  Can you shut your eyes to what might take place on site or do you retain some liability?  Clients have a continuing obligation under the CDM Regulations 2015 to “ensure” that the work can be carried out safely – so far as reasonably practicable.  You need to consider how that applies to you and your site.

It could be that your contract does not provide for force majeure events, or for Covid-19 as a force majeure event.  What other rights do you have to extend the completion date or suspend performance? 

Do you want to consider the termination of the works – whether as the contractor or employer?  Whether you can terminate and if so, how, are important questions to consider – get the process wrong and you could find yourself at the receiving end of a claim for damages for breach of contract.

Do you value your staff and want to retain their skills but reduce your financial commitments?  Operating the Government’s furlough scheme may be the answer but you need to take steps to ensure you carry it out appropriately.

Are you preparing or reviewing Risk Assessments and Method Statements that need to encompass the issues raised by Covid-19?

Are you concerned with an appropriate update to your Business Continuity Plan?

As a contractor, subcontractor, client or funder, how should you deal with liquidated and Ascertained Damages for late contract completion?

​​Are you facing an end of Defects Liability Period, release of retention issue?