It seems retrofit is set to be the construction industry's next 'buzzword', with an ever increasing national and global focus on making existing buildings more energy efficient and sustainable, rather than relying on more waste-generating and carbon-intensive demolition and new build projects.
The retrofit world presents some thought-provoking issues from a legal perspective, as stakeholders seek to ensure that their interests and liabilities are accurately recorded in a written contract. Key drafting conundrums are likely to include the following:
- Fitness for purpose: A retrofit project’s ‘raison d'être’ is to see that the building in question achieves a desired level of thermal efficiency, carbon output and/or whole-life cost. It is perhaps inevitable, therefore, that many retrofit contracts will be peppered with (potentially uninsurable) ‘fitness for purpose’ obligations, which impose absolute duties on the Contractor to meet certain performance specification requirements. Contractors should undertake careful due diligence on both the legal T&Cs and the technical schedules, to ensure that all such design obligations are diluted by reference to a requirement to exercise reasonable skill and care. The case of MT Højgaard v E.ON [2017] UKSC 59 BLR 477 remains a salutary reminder of the dangers of failing to do this.
- Design liability matrix: Retrofitting involves a careful balancing of different components of a building and their impact on overall performance, with a beneficial change to one part quite easily causing detriment to another. For example, insulating a roof without also ventilating it could cause the timber frame to decay. In short, bespoke (and often complex) design solutions are often essential, in place of standardised solutions that may not have been properly thought through. Employers will naturally want a single point of design responsibility if issues arise later, but it may not always be feasible for a Contractor to take such a risk profile on if multiple third party designers have contributed to the solution in practice.
- Intellectual property: Due to the relative newness of retrofit, and the innovative and bespoke design solutions it is generating, both Employers and Contractors will naturally want a slice of the pie when it comes to IP ownership. The Employer may, for example, have an extensive housing portfolio that it wishes to roll the solution out to with other contracting partners. On the flip side, the Contractor is likely to be investing significant time, resource and expertise in creating that solution, which arguably warrants IP ownership vesting with them. This is a key commercial negotiation point, which should be thrashed out early between the parties so that everyone is clear how the designs will be utilised beyond the individual project in question.
