Understanding risk management and responsibility in construction

This article will review three significant construction law cases from 2025, each of which has direct implications for building surveyors.

Each decision clarifies how the courts are applying statutory regimes and contractual frameworks, which in turn shape risk management, client advice and dispute avoidance strategies.

Lapp Industries was engaged to refurbish premises in London. As the contract lacked adequate payment provisions, the Scheme for Construction Contracts (England and Wales) Regulations 1998 applied. In April 2023, Lapp submitted an interim application seeking £100,000 on account, with supporting valuations.

1st Formations did not issue any payment notice or pay less notice. When Lapp enforced payment via adjudication and summary judgment, 1st Formations argued in subsequent Civil Procedure Rules Part 8 – the alternative procedure for claims used to seek declarations on legal issues only – that the application was invalid due to being based on provisional figures and seeking a partial on account sum.

The Technology and Construction Court (TCC) rejected those arguments on the following grounds.

1. The application was clear and unambiguous in setting out a sum due and the basis for that sum.
2. Labels like provisional valuation or payment on account did not undermine validity.
3. Errors in payment dates were immaterial; the statutory scheme's dates prevailed.
4. The adjudicator's decision and earlier judgment stood.

The court reiterated the statutory regime's strict consequences: if a valid payment application is made and no responsive notice is issued, the notified sum becomes due, regardless of disputes over valuation.

There are several implications arising from this case for building surveyors.

1. Substance over form: focus on clarity and intent, not perfect wording or formatting.
2. Respond promptly: missing the window to issue a payment or pay less notice can leave a client liable for the full applied amount.
3. Robust systems: implement clear internal processes for logging applications and issuing timely notices.
4. Valuation discipline: maintain contemporaneous evidence of progress and valuation to support or contest applications effectively.

This case reinforces that the courts will adopt a practical, objective approach, prioritising commercial common sense over technical nitpicking.

A dispute arose in 2024 and RBH applied for £663,000. The James' responded with a letter stating that £0 was payable, providing short bullet-point reasons. Adjudication followed, with RBH awarded the claimed sum and adjudicator's fees.

When RBH sought to enforce, the James' resisted, arguing they were residential occupiers under section 106 of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA), ousting statutory adjudication, and that their pay less notice was valid.

The TCC dealt with three key issues.

1. Residential occupier exception: the court found the James' had a real prospect of establishing residential occupier status, meaning the adjudicator may have lacked jurisdiction. Evidence supporting this included selling their prior home, living on site, GP registration, electoral roll entry and the bespoke design of the property. Commercial loan documents suggesting a development purpose were relevant but not determinative. Summary judgment to enforce the award was therefore refused.

2. Pay less notice validity: the court adopted a commonsense, objective approach, rejecting overly technical arguments. The notice, while brief, made clear the reasons for withholding payment and provided enough context for a reasonable recipient to understand the basis for the £0 payment. Arithmetic precision or a detailed schedule was not required.

3. Adjudicator's fees: the court could not overturn the adjudicator's decision on fees, even though the substantive award was unenforceable. This followed consistent case law that treats fee decisions as final and ancillary.

There are several implications for building surveyors.

1. Identify residential occupier risk early: for high-value domestic projects, assess whether statutory adjudication applies and advise clients accordingly.
2. Draft clear payment notices: when acting for employers or contractors, ensure notices explain the basis for payment or withholding payment – even brief bullet points can suffice if linked to the claim.
3. Manage adjudication costs: be aware that adjudicator's fees are typically irrecoverable, even if the substantive decision is later overturned and factor this into advice and dispute strategy.
4. Evidence matters: keep detailed, contemporaneous records of intent and usage when working on domestic projects, as factual disputes often determine jurisdiction.

Permission to appeal to the Court of Appeal was granted on 7 October 2025 and is due to be heard by 30 September 2026.

At the East Village estate in Stratford – the former Olympic Village – serious fire safety defects were discovered in five residential blocks. Triathlon Homes, a social housing leaseholder, sought RCOs under section 124 of the BSA against the original developer (SVDP) and its associate (Get Living plc).

The First-tier Tribunal granted the RCOs, including for costs incurred before the Act came into force. The developers appealed.

Adriatic Land 5 Ltd v Hippersley Point, clarified that Schedule 8 of the BSA shields leaseholders from service charges but does not enable recovery of sums already paid – RCOs are the route for that.

The Court of Appeal dismissed the Triathlon Homes appeal, providing landmark guidance.

1. Developers' primary responsibility: the BSA's purpose is to place financial responsibility on developers and associated companies for historic and future remediation costs. Public funding, such as the UK government's Building Safety Fund, is a last resort.

2. Retrospectivity of RCOs: Section 124 of the BSA applies to costs incurred before June 2022. Retrospective effect was a deliberate legislative choice, prioritising accountability and leaseholder protection over potential unfairness to developers.

3. 'Just and equitable' test: the discretionary nature of RCOs acts as a safeguard, allowing the Tribunal to consider fairness in individual cases. Factors such as ownership changes, funding agreements, or parallel proceedings do not negate liability.

There are several implications for building surveyors.

• Cost recovery opportunities: surveyors advising landlords, leaseholders or managing agents should explore RCOs as a route for recovering historic and future remediation costs.
• Documentation discipline: records of historic works, costs and defects are now critical for supporting applications.
• Funding applications: the judgment reinforces that public funding is secondary; applications to the Building Safety Fund should be accompanied by parallel recovery efforts against developers and associates.
• Risk advice for developers: for clients in development or asset management, the judgment underscores the need for proactive risk assessment and budgeting for potential RCO exposure.
• Wider leaseholder protection: building managers and surveyors must understand that service charge recovery for safety defects is heavily restricted where the landlord is the developer or its associate.

For building surveyors, these cases provide a roadmap for better risk management and more informed advice to clients, whether on valuation processes, domestic project disputes or navigating the complex obligations of the BSA.