JCT DB 2024: Loss and expense

In this blog, we explore the changes to the provisions covering loss and expense, including relevant matters.

Relevant matters

The JCT Design and Build 2024 has expanded the list of relevant matters. By way of reminder, these are issues for which the employer is responsible and that can affect the progress of the works, potentially entitling the contractor to claim direct loss and/or expense. 

The expanded list includes two new contemporary issues:

1. Epidemics (clause 4.21.6): This clause reflects the impact that global health crises, such as the Covid-19 pandemic, can have on construction projects. It covers both new epidemics occurring after the base date and known epidemics whose effects change after the base date.
   
   
2. Changes in law or guidance after the base date (clause 4.21.7): This clause addresses changes in law or the publication of statutory guidance that first occur either after the base date, or those that first occur before the base date but whose effects change the base date. It's important to note that this clause is somewhat vague and wide-ranging, covering both government and Construction Leadership Council guidance, potentially exposing the employer to claims for additional time and money due to a broad array of regulatory changes.

Additionally, there is a minor change to the relevant event at clause 4.21.3 which deals with the contractor’s compliance in respect of antiquities (clause 3.15). This has been expanded to address the discovery of asbestos or contaminated material, except where such material has been identified in the contract documents or brought onto the site by the contractor.

However, please note that although both clauses 4.21.6 and 4.21.7 are automatically considered relevant events (entitling the contractor to additional time and relief from liquidated damages, but not money), they are only deemed relevant matters if selected in the contract particulars. Therefore, parties should carefully consider and decide whether the ability for the contractor to claim direct loss and/or expense for epidemics, changes in law and guidance should be included.

Loss and expense generally and conditions precedent

As with the JCT 2016 series, the contractor is still required to notify the employer of any relevant matters as soon as possible, detailing the likely impact on progress and the nature and extent of the loss and expense (clause 4.20).

Following the case of FES Limited v HFD Construction Group Limited [2024] CSIH 37, heard in the Inner House of the Court of Session in Scotland, there is an ongoing discussion as to whether such notification requirements are a condition precedent. Therefore, meaning that a failure to comply could prevent a contractor from claiming loss and expense.

In this case, the Scottish courts found that these notification provisions are a condition precedent to being paid. It has been confirmed that the JCT 2024 series did not take the opportunity to clarify this position as the series was published prior to the judgment being handed down. Although the decision is not binding on the courts in England and Wales, nonetheless, this ruling is likely to be considered by those courts when interpreting such provisions.

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