Construction Industry Update April 2010
Government respond to Donaghy Report
The Donaghy Report was commissioned by the Government in August 2008 and undertaken by Rita Donaghy (a former chair of the government conciliation service ACAS) as a way of highlighting and making recommendations for improving the health & safety of the construction industry. We examined the content of the Report in our e-bulletin of August 2009.
The Government’s response (following a long consultation with construction bodies and unions about the findings of the Report) was published on 30 March 2010 by the Department for Work and Pensions. The response approved some of the Report’s proposals such as:
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common Minimum Standards for public building projects;
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the promotion of common specific criteria for prequalification schemes (such as safety passport arrangements); and
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the proposed new compulsory duty for company directors (which would make company directors individually responsible if an employee was killed as a result of breaches of health & safety practice).
The response did however reject many of the main recommendations forwarded by the Report including:
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appointment of a full time construction minister (as the post of Chief Construction Adviser has recently been created and Paul Morrell OBE appointed to undertake this role);
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extension of the gangmaster’s licensing regime to building sites (on the basis that the CDM Regulations place a duty on principal contractors to safeguard all site workers regardless of their employment status); and
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extending the Building Regulations so that health & safety processes are included when considering building control applications/building warrants (as many of the works associated with fatalities are not subject to building regulations).
The Government is currently reviewing how best to implement the agreed recommendations. Rita Donaghy has welcomed the response but stands by all the recommendations contained in the Report. It will be interesting in particular to see how the explicit duty on company directors will be implemented. Directors can already be held individually responsible if a health and safety offence committed by a company was with their consent or connivance. This new duty would presumably go further and potentially include directors who are not involved within the day to day running of the business.
The Report can be viewed at: www.lexisurl.com/hsw357
The Government’s response to the Report can be viewed at:
www.dwp.gov.uk/docs/one-death-is-too-many-response.pdf
New guidance on asbestos
Until 1999 (when the use of asbestos was banned) large amounts of asbestos-containing materials (ACMs) were used for a wide range of construction purposes in new and refurbished buildings. This extensive use means that there are still many buildings in the UK which contain asbestos. Where asbestos materials are in good condition and unlikely to be disturbed, they do not present a risk. However, where the materials are in poor condition or are disturbed or damaged, asbestos fibres are released into the air, which, if inhaled, can cause serious lung diseases, including various forms of cancer.
In January of this year The Health and Safety Executive (HSE) published guidance entitled ‘Asbestos: The survey guide’ which provides guidance on asbestos surveys and includes information for those who have a duty to ensure the building is free from asbestos, as well as how they can adequately use the survey information.
The guidance is aimed at helping to prepare those responsible for managing the risks from asbestos and best protect those workers who may disturb it as well as those who commission asbestos surveys, the surveyors who carry them out and those who use the surveys, such as architects and demolition or removal contractors. Those responsible for managing the risk will be the ‘appointed person’ under the guidance and that person will have entire responsibility for the management of the asbestos. The appointed person under the guidance is identified as an individual (and in some cases a deputy) within their organisation who will be responsible for that management. Part of their responsibilities will include managing the survey, including contractual and reporting arrangements, quality and subsequent use of the data.
As a reminder, the Control of Asbestos Regulations 2006 implement a ban on the importation, supply and use of any form of asbestos (as well as the use of asbestos in secondary forms such as in cement sheets, tiles etc).
The guidance can be viewed at http://www.hse.gov.uk/pubns/priced/hsg264.pdf.
Tower cranes - what do you mean you forgot to register?
On 6 April 2010, new regulations came in requiring employers on construction sites to register tower cranes with the Health and Safety Executive (HSE). The Regulations apply to all conventional tower cranes, whether put on site before or after 6 April 2010. For those already on site, registration must be done by 4 May 2010. This can be done by way of paper registration to the HSE or via the internet at www.craneregister.org.uk. These new rules are set out in the Notification of Conventional Tower Cranes Regulations 2010.
Although the Regulations introduce a statutory register for tower cranes, there has been a voluntary register in place since last year.
The Regulations will mainly affect principal contractors or sub contractors who are responsible for the operation of the tower crane, but could in some cases also affect developers or landlords.
Self erected cranes are specifically excluded from the regulations. The justification for this appears to be that the conventional tower cranes tend to remain on construction sites for a substantial period of time and are commonly involved in the types of accident that the HSE are trying to avoid (as previously referred to in our e-bulletin article entitled “Crane Sailing”). Self erected cranes are mobile and can be driven on and off construction sites without the use of other equipment.
The regulations only apply to tower cranes on ‘construction sites’. This is defined in the regulations as:
“any place where construction work is being carried out or to which workers have access, but does not include a workplace within [the site] which is set aside for purposes other than construction work”.
Registration must be carried out by an employer of any persons in use of the crane and any persons who have control of the use of the crane. The scope of this section can even extend to include developers and landlords as the duty to ensure that HSE is notified applies to any person who has “to any extent, control of the use of such cranes or the way in which they are used, including anyone who uses them or who supervises or manages their use”. Only one person has to register and this will predominantly be the person in charge of safety on the site.
The HSE should be notified within 14 calendar days from the date of any thorough examination of the conventional tower crane required by LOLER (Lifting Operations and Lifting Equipment Regulations 1998). That is:
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following the crane’s installation and before being put into use for the first time on a particular site;
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when the crane is reconfigured on site, e.g. when the height of the mast is altered;
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when the crane stays on-site long enough for the existing thorough examination to expire;
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if exceptional circumstances liable to jeopardise the safety of the crane have occurred.
In the case of a conventional tower crane which is already installed on a construction site, and which has already been thoroughly examined when the Regulations came into force (6 April 2010), the relevant information about the crane needs to notified to HSE within 28 days of that date. The HSE should also be notified when the crane is dismantled and removed from site. This is what is called an “updated notification” on the same form which is used to notify the HSE that a crane will be used on site. When informing the HSE of a crane on site, the expected removal date should also be intimated, using the aforementioned form.
The guidance can be found at: http://www.hse.gov.uk/pubns/indg437.pdf
Strict compliance is key in construction claims
In the construction industry, claims are common in respect of delays and increased costs. It is now also common for contracts to contain condition precedents which state that claims have to be made within a specified time frame or using a certain procedure or both. The issue of compliance with a complicated condition precedent was the subject of a recent case: Education 4 Ayrshire Limited (EAL) v. South Ayrshire Council 2009 (SAC).
As part of a PPP scheme, SAC engaged EAL to undertake construction work on a school. EAL subcontracted the entire works to a main contractor. The contract stated that in order for a claim for an extension of time to be granted, notice to the authority of any delay (specifying the reason and giving an estimate of the likely delay) had to be given as soon as reasonably practicable and in any event within 20 days of EAL becoming aware of a delay or likely delay. The same timescales applied for compensation in the case of a works compensation event to be notified to the authority by first class post, fax or by hand to the chief executive of the authority at his council office address.
EAL discovered asbestos whilst working on the site and claimed for a 16 week delay and payment of £815,792. Intimation was made by way of letter to the authority’s chief executive.
The judge held that the Contractor had not in fact complied with clause 17 (the requirement to give notice for an extension of time). He explained that once it is accepted that compliance with the notice clause is a condition precedent (and both parties agreed that it was), the question is simply, “what does the clause require?” In this case the clause required the Contractor to give notice of its claim. What the Contractor’s letter to the Authority about the delay actually said was “We will submit our full claim in accordance with clause 17.6…”. This was held not to be valid notice under clause 17.6. In all other respects, EAL had a valid claim.
This case highlights the potential unfairness of a condition precedent. All parties knew of the additional asbestos (a defined works compensation event) and of the associated consequences. However, SAC was able to avoid liability for them owing to EAL’s failure to issue a compliant notice under the relevant clause. It was stated that a specific notice was required. A notice couldn’t be inferred from the correspondence as that would lead to uncertainty as to whether a claim may be made. This may also result in EAL being liable for liquidated damages for a delay for which it was not responsible.
Separately, the Judge noted that compliance with notice provisions should not cause any difficulty and that no allowance should be made for the fact that the notices would be drafted by businessmen rather than lawyers!
Follow the leader in carbon capture and storage
On 1 May 2009, the Scottish Government launched the report “Opportunities for CO2 Storage around Scotland” which demonstrated the significant potential that Scotland has for the development of Carbon Capture and Storage (CCS). At the launch of the report, the Scottish Government stated that they would soon publish a roadmap for CCS.
CCS is a 3 step process which involves capturing the CO2 from power plants and other industrial and energy-related sources, transporting it to storage points and then storing it safely in offshore depleted oil and gas fields, deep saline aquifers as well as possible sites onshore.
The roadmap was issued on 10 March 2010 and is a comprehensive set of actions to put Scotland at the forefront of CCS development and the timelines for doing so. These include:
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Setting out a vision for CCS in Scotland including aiming to develop a number of demonstration projects. The Government hopes to secure funding from sources such as the UK Government or the EU in the near future for at least one, and ideally two, of the eight CCS demonstration plants sought by the European Commission;
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Developing of an offshore carbon licensing regime. The Scottish Government has contributed £75,000 towards a Scottish Centre for Carbon Storage study to identify potential sites in the North Sea where carbon dioxide can be stored safely;
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Identification of the skills and training needs to match industry demand. This will involve the setting up industry advisory groups including the thermal generation and CCS advisory groups; and
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Maximising EU and UK support for Scotland's ambitions.
Scotland was identified as a leading contender for this plan due to its capacity – the North Sea alone has enough capacity to store emissions from industrial coal-fired plants for the next 200 years which is a greater capacity than the Netherlands, Denmark and Germany combined. It is also clear that Scotland is participating in the fight against climate change. Indeed, figures from the International Energy Agency suggest that CCS could reduce global emissions by 20%.
The EU plans to have twelve CCS plants operating by 2015 whilst the Scottish Government has set a target of one, preferably two, demonstration projects to be established in Scotland by this date. The current emphasis is on demonstrating that CCS is feasible on a large commercial scale, and demonstration projects are key to that aim.
The matters covered in this ebulletin are intended as a general overview and discussion of the subjects dealt with. They are not intended, and should not be used, as a substitute for taking legal advice in any specific situation. Semple Fraser LLP will accept no responsibility for any actions taken or not taken on the basis of this publication.
FOR FURTHER INFORMATION PLEASE CONTACT: KIRSTEEN MILNE