Are Public Bodies able to continue to pay contractors (and their supply chains) at risk as a result of Covid-19?

The Government acknowledges that there may need to be some flexibility to enable developers to meet any existing s106 obligations, in particular financial contributions, during the current health crisis and in recent guidance it encourages Councils “to consider whether it would be appropriate to allow the developer to defer delivery”. However, the Government considers that the existing arrangements for varying a section 106 agreement by way of a deed are sufficient and will not be legislating for any additional temporary mechanisms.

In the absence of any formal variation, the Government does however advise Councils to take a “pragmatic and proportionate approach” to enforcement of planning obligations at the current time.

The Government’s advice does not refer to concerns over the quantum of any planning obligations but is concerned only with the timing for delivery. However, the viability behind many sites is likely to change as a result of temporary site closures, or the availability of construction materials and labour once sites can re-open. Where there is already a s106 agreement in place, a developer may wish to renegotiate their position on the basis that certain planning obligations are no longer affordable.

Where a s106 agreement was entered into longer than 5 years ago, an application can be made to the Council to formally vary a planning obligation that is now “without purpose”. Any refusals can be appealed to the Secretary of State.
Where a s106 agreement was entered into within the last 5 years, the agreement can only be modified with the agreement of the Council. The ability to renegotiate a s106 agreement will therefore come down to the willingness of the Council to accept the revised viability position. Where Councils are willing to consider this, a robust viability assessment agreed with the Council is likely to be needed.

Under CBILS, for the purposes of calculating the applicant’s annual turnover, approved lenders have been aggregating turnover across the whole of the private equity investor’s portfolio meaning they failed to qualify for the scheme as they were deemed to exceed the £45 million threshold.

For private equity-backed businesses, the removal of the upper limit on annual turnover criteria for CLBILS seemingly avoids the issue of turnover aggregation across investment portfolios seen with the CBILS, potentially enabling more private equity sponsor portfolio companies to be able to access the CLBILS funding.

The Chief Coroner supports the position, communicated by NHS England and the Chief Medical Officer that Covid-19 is an acceptable direct or underlying cause of death for the purposes of completing the Medical Certificate of Cause of Death (MCCD) and is considered a naturally occurring disease. This cause of death alone is not a reason to refer a death to a coroner under CJA 2009.

If the cause of death is believed to be due to confirmed Covid-19 infection, there is unlikely to be any need for a post mortem to be conducted and the MCCD should be issued, and guidance is given on how this is delivered to the Registrar in the event of the next of kin/informant being in self-isolation. 

In a hospital setting the MCCD process should be straightforward because of diagnosis and treatment in life. This may be more complex in a community setting. The Coronavirus Act 2020 however expanded the window for last medical review from 14 to 28 days. Outside of this, the death will need to be reported to the coroner.

Although Covid-19 is a naturally occurring disease, there may be additional factors around the death which mean it should be reported to the coroner; for example, the cause of death is unclear, or where there are other relevant factors. Guidance is given to coroners on how to manage such reported deaths, particularly where post mortem examinations may not be readily availability.

Many policies will only provide business interruption cover if it arises from property damage. The FCA has acknowledged that insurers are entitled to reject claims in relation to such policies, notwithstanding the success of the FCA’s test case in the Supreme Court, and which was generally favourable to policyholders [Insert a link here to our update on the test case]. In other cases the policy wording will be less clear and businesses may legitimately feel that their insurer is wrongly withholding payment.

One route of challenge to an insurer’s decision is via one of the well-publicised class actions. Another route of challenge is by a complaint to the Financial Ombudsman Service (FOS). This service is open to consumers and small and medium-sized businesses, ‘micro-enterprises’, charities and trusts. The service will be an attractive option for many businesses, as it is free and relatively quick (although it remains to be seen how the service keeps up with an increase in demand as a result of the pandemic). You will need to have complained to your insurer before bringing a complaint with the FOS.

Further details can be found here.

The Flexible Furlough Scheme was introduced from 1 July 2020 and is due to come to an end on 30 September 2021.