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Blog: Deleterious materials in construction contracts

Jonathan Hyndman

Jonathan Hyndman

Jonathan Hyndman, partner at Rosling King LLP, discusses the key legal issues that parties to a construction contract must consider when negotiating provisions as to prohibited materials.

The inclusion of deleterious or prohibited material clauses in both building contracts and professional appointment documents is widespread within the construction industry. Whilst the form of these clauses will vary from contract to contract, their common purpose is to prohibit the use of unsuitable or dangerous materials in construction projects.

Deleterious materials are those materials which are capable of causing damage or harm to the individual, the environment or to buildings and infrastructure. Whilst some legislative prohibitions are in place to limit or prevent the use of known hazardous materials, it is inevitable that further legislation will need to be enacted as new deleterious materials are discovered. Sometimes, at the point in time when the materials are used, they are not known to be problematic and it is only later that the harmful effects of their use become known, like the fatal use of asbestos in building projects or the use of polyethylene cores in cladding products.

However, a material does not in itself have to be deleterious to warrant its prohibition in a project. Often concerns over a material’s sustainability or reliability may also factor into the decision to exclude its use in a particular project.

It is important therefore, that both developers and consultants and contractors consider the specific circumstances of the individual project when negotiating the scope of the obligation not to specify or use prohibited materials.

There are a number of key legal issues that parties to a construction contract must consider when negotiating provisions as to prohibited materials.

The first important point to consider is the extent of the definition of prohibited materials in the construction contract. There is no standardised industry form and the contracting parties are free to define the scope as broadly or as narrowly as they see fit having due regard to the nature and circumstances of the project.

Options include defining prohibited materials by reference to a detailed list, to specific official standards or by reference to independent publications on the selection and use of materials, the most popular being the “Good Practice in the Selection of Construction Materials”, or a combination of the two. Each of the above will usually be supplemented by an express general obligation to exercise an appropriate standard of care not to specify for use, or use, materials which are generally suspected within the construction industry as being deleterious at either the time the material is specified and/or the time the material is used.

The extent of the obligation is a common point of contention between the parties – the issue here is whether the obligation on the contractor or the consultant not to specify or use deleterious materials should be an absolute obligation or whether the obligation should be caveated by the contractor or consultant exercising reasonable skill and care. Whilst developers will obviously prefer an absolute obligation, this is invariably resisted by contractors and consultants whose professional indemnity insurance may not provide cover in circumstances where the contractor or consultant is found to be in breach of such an absolute obligation.

The second important issue parties must bear in mind, is the point in time as to when a material is deemed to be deleterious. Parties will inevitably differ in opinion on whether the relevant time as to when a material is deemed deleterious extends to both the circumstances at the time the material was specified and the circumstances at the time the material was used in the project. Whilst contractors, who are the party actually using the materials, should be prepared to the relevant time as being the time of use, consultants will be concerned that a significant amount of time can pass between the specification of a material and that material’s actual use in the project.

Again, developers will prefer that the trigger point as to when a material becomes deleterious extends to the point in time when the materials are actually; whilst contractors should be prepared to accept this, consultants particularly those with no ongoing monitoring responsibility, should be very reluctant to agree.

Blog: Copyright infringement now top priority for property developers following landmark judgement

Jonathan Hyndman

Jonathan Hyndman

Jonathan Hyndman reviews the findings in the High Court case of Signature Realty Ltd v Fortis Developments Ltd and proposes some steps which property developers can take to avoid infringing copyright law.

As property developers know all too well, the acquisition of a new site is just the first step on a long road to the disposal of the developed asset and there is usually an extensive list of issues to be addressed both pre-commencement on site and during the construction phase. Now, following a recent judgment in the High Court, in the case of Signature Realty Ltd v Fortis Developments Ltd, the Court has confirmed that an architect’s drawings, which were used to obtain planning permission, qualified for copyright protection and that use of those drawings without permission could constitute copyright infringement.

In the case, the claimant developer exchanged contracts to acquire office buildings in Sheffield, with the intention of converting them into student accommodation. The claimant developer instructed an architect to prepare design drawings and planning permission was subsequently obtained. As is usual practice, the planning permission stipulated that the development was to be constructed in accordance with the architect’s drawings.

The claimant developer was unable to complete on the acquisition of the site which was ultimately acquired and developed by the defendant. The defendant subsequently instructed   their own architects and carried out and completed the development in accordance with the planning permission, subject to two minor material amendments. The claimant, who had obtained an assignment of the benefit of the copyright in the original architect’s drawings, then brought a claim against the defendant for copyright infringement in connection with the defendant’s marketing of the site, development and construction of the site in accordance with the planning permission.

A key requirement for something to be protected by copyright is “originality” and this requires that the work in question is created through the author’s / designer’s own skill, judgment and effort. The defendant was found to have used the original architect’s drawings but maintained that the drawings did not fulfil the “originality” requirement. This argument was quickly dismissed by the Court and the defendant was reminded that the bar for “originality” is a low one.

The defendant also argued that because it had paid a premium to acquire a site with planning consent, there was an implied licence in place to use the original architect’s drawings. The Court also dismissed this argument: the claimant, in whom the benefit of copyright was vested, never acquired the site and the grant of a copyright licence by what was essentially a third party, could not be implied.

On the issue of infringement itself, the Court compared the original architect’s drawings to those prepared by the defendant’s architects and looked at whether they were sufficiently similar and / or whether a substantial part of the original architect’s drawings was reproduced in the new drawings. Whilst not all the new drawings were deemed to have infringed the copyright in the original architect’s drawings, the claimant was largely successful and the Court held that where there existed sufficient similarities between the two sets of drawings to constitute “copying” and there was therefore an infringement.

Purchasers of sites which benefit from planning permission should not assume that, on completion of their acquisition, they have a right to develop the site in accordance with existing plans. This case highlights the need to be particularly careful where the seller of the site is not the party who instructed the existing plans to be drawn up. If the claimant in this case had in fact acquired the site and subsequently sold it to the defendant, the defendant’s submissions in relation to the grant of an implied copyright licence would have been much more persuasive before the Court.

Property developers should ensure that they check the copyright position on any pre-existing plans prior to purchasing a site which benefits from planning permission to avoid a risk of copyright infringement if the intention is to use the pre-existing plans to develop the site. Developers must also remember that remedies for copyright infringement include injunctive relief which could bring development works either temporarily or, in the worst-case scenario, permanently, to a halt.

Rather than rely on the possibility of an implied licence to use any pre-existing plans or have completely new plans drawn up, developers should consider obtaining an assignment of the benefit of copyright from the author of the pre-existing plans, an express licence from the author of the pre-existing plans granting the right to use the copyrighted material for permitted purposes or a transfer from the seller of the site of an existing express licence granted by the author of the pre-existing plans in favour of the seller.

The availability of an assignment, an express licence or a transfer of an existing express licence will ultimately depend on the parties involved and the specific circumstances of the site acquisition. Dealing with copyright issues at an early stage during the site acquisition due diligence will help ensure that developers protect themselves from future copyright infringement claims and allow them to focus on commencing and completing the development works.

  • Jonathan Hyndman is partner at solicitors Rosling King