Local Democracy, Economic Development and Construction Bill [HL]

My Lords, I shall also speak to Amendments 169A to 169D. These amendments take us to the part of the Bill that deals with construction contracts. I am grateful to my noble friend Lord Tope for dealing with the matter in Committee; I was unable to be there and am sorry to have missed it. Taking the amendments a little out of order, I will first address Amendment 169A, which is in the same form as the amendment that was tabled in Committee and came to us from the RICS. A long letter from the Minister picked up a variety of points that were raised in Committee and reference was made to this amendment. He pointed out that since the RICS briefing to support the amendment in Committee there had been a High Court judgment in the Linnett v Halliwells case, which spells out—I am dealing with adjudicators’ costs—that it is not just the referring party to whom the adjudicator can look for payment of his fees and expenses. The RICS feels that the matter needs to be addressed by tweaking the legislation, if I can put it that way. It makes the point that the High Court judgment is a first-instance judgment, which is subject to appeal, and that it may not apply in Scotland, when it would be desirable for there to be consistency across England, Wales and Scotland. The provision in the Bill, which I seek to amend, concerns the parties to a dispute. The Linnett v Halliwells case is about the adjudicator. As drafted, there would be no power to allocate fees and the provision in the Bill, as a consequence, bans positive cost clauses allowing the adjudicator to allocate costs fairly, which the RICS says is a matter of contract and not primary legislation. The RICS has referred me to the Scheme for Construction Contracts (England and Wales) Regulations 1998, which apply in default and have the same effect as the amendment would have. It is concerned that, where a contract has adopted that scheme, it would be knocked out under the current Section 108A. It also says that the case has already had an adverse effect, with injunctions being sought in order to avoid the issue, which overloads the courts and is not desirable. It is not only the RICS that has concerns about the situation. I hope that the Minister will be able to give me some assurances about how the Government intend to address those concerns. The other amendments were all drawn to our attention by the Law Society of Scotland. I will deal with them perhaps so briefly as to be telegraphic. These are such technical areas that one would need to write quite an essay in order for them to be clearer to those who are listening than I probably will be in my casual way. Amendment 169ZA would delete the word "remove" and insert the word "correct" in Clause 136, which provides for a new provision in the 1996 Act to allow for the correction of a, ""decision so as to remove a clerical … error"." The Law Society of Scotland was concerned that that might mean that the error was removed and a gap left. Amendment 169B would delete subsection (4) of new Section 110B to be inserted into the 1996 Act under Clause 139. This measure deals with interim payments under building contracts. I understand that the practice is for cumulative applications for interim payments and that the effect of the new provision is that a failure by the potential payer every month to redispute the item would mean that it would be due if the payee issued a notice. The Law Society of Scotland says that the introduction of a payee notice system in default of the payer’s notice may be desirable, which is what is provided, but that new subsection (4) goes too far. Therefore, the society seeks its removal. Amendment 169C deals with a withholding made by a payee. The amendment would ensure that a payer may issue a notice only on the grounds that would be available under Section 111 of the 1996 Act. It could not be used by the payer to change the sum otherwise due—for instance, where the payer misses the timescale for the issue of a payer notice. Finally, Amendment 169D would ensure that the entitlement of a party exercising a right to suspend performance for non-payment to recover reasonable costs and expenses was treated as an implied term. That would be achieved by inserting two additional subsections. I appreciate the work that has gone into getting the changes to the 1996 legislation to this point and I know that the Government have undertaken considerable consultation. Clearly, that is not the end of the process. There would have to be a change to the scheme to which I referred and it will take a little while for these changes to come into effect even if work starts next month. It might be helpful if the Minister could give the House some idea of how long that is likely to take and what will follow from the primary legislative changes. This will not be the end of the discussion and there will be further opportunities for all those concerned in the industry to ensure that the practical arrangements are those that they feel they can operate, as well as to pick up some of the points of principle to which I have referred. I beg to move.