Latham made 30 key recommendations in his report, of which only one – adjudication pursuant to the Housing Grants Construction Regeneration Act 1996 – has been implemented. This suggests that the CIB failed to fulfil its mission of reforming construction legislation, and also raises the question of what happened to the remainder of the Latham report.
Latham's other recommendations covered a wide range of issues from tendering to trust funds. Looking at Latham's recommendations in relation to liability law and latent defects, it becomes obvious that the passage of time has done nothing to change the working practices and adversarial relationships in the industry – the things that Latham considered were causing poor performance and needed to be changed to improve productivity and competition.
Joint and several liability
Latham recommended that joint and several liability be replaced by proportionate liability. Indeed, a CIB working group examined and developed the whole package presented by the Latham report, and there was broad industry support for the reforms it proposed.
Despite these efforts, in January 1999, after a review of the Law Commission's Feasibility Investigation of Joint and Several Liability, the then secretary of state for trade and industry Peter Mandelson, decided that "no sufficient basis had been identified … for a fundamental review of the law affecting professional liability".
This view was unsurprisingly endorsed by the British Property Federation, which would only contemplate the abolition of joint and several liability in conjunction with a wider package of reform in the construction sector.
In the absence of reform in this area, consultants, contractors and certain professional indemnity insurers have continued to insist upon the inclusion of net contribution clauses. This is an attempt to contractually provide for proportionate liability, on the grounds that it is the client that should take the insolvency risk in respect of members of the construction team. Clients continue to resist this, and until such time as the courts decide upon the effectiveness of these clauses, lawyers will continue to argue over whether such clauses should be included.
Latent defect insurance
Latham recommended that legislation should provide for compulsory latent defect insurance for 10 years from practical completion for all future new commercial developments.
Although Latham advocated the introduction of a system comparable to that operated in France, clients have not embraced the concept of compulsory latent defect insurance. This is partly because the insurance market does not offer comprehensive policies – particularly in relation to M&E works – and partly on the grounds of cost. The British Property Federation and the Association of British Insurers have been working together to promote a broader range of latent defect insurance policies for clients, but both are opposed to the introduction of a compulsory regime as recommended by Latham. However, unless such insurance is made compulsory, clients are likely to continue to rely upon contractors' balance sheets, as they remain a more attractive (and cheaper) alternative.
In the place of the CIB we now have Egan's strategic forum. But it is questionable whether the forum will have on its agenda the implementation of the Latham report. As a result, the problems Latham identified in the industry persist and the potential for disputes in relation to construction contracts – one of the areas Latham was most keen to see improved – is as strong as ever. However, the burden of resolving such disputes has to a certain extent been shifted away from the courts to adjudicators. This is arguably the significant success story of the Constructing the Team and the CIB's work over the past six years.
Christopher Hill is managing partner of solicitor Norton Rose's construction and engineering group.