Fire Safety; Risk Of Amending Appended Schedules To Contracts And Delaying Remediation

• Published date: 27 January 2023
• Subject Matter: Real Estate and Construction, Construction & Planning
• Law Firm: Birketts
• Author: Ms Rebecca Childs

Following the Grenfell Tower disaster of 2017 there has been a steady stream of cases concerning liability for remediation of fire safety defects. Judgment in the latest case; St James Oncology SPC Ltd v. (1) Lendlease Construction (Europe) Limited and (2) Lendlease Construction (Holdings) Limited [2022] was handed down on 12 October 2022.

The case, which concerned fire safety and electrical engineering defects in the basement power plant of the Oncology Centre at St James University Hospital, Leeds, provides useful guidance as to how damages for fire defects will be assessed. In particular, having regard to the intention to reinstate and whether a claimant is required to undertake remedial works before pursuing a contractor for the costs of doing so.

There are also some important points in relation to the risks of amending schedules which are appended to the main contract during the course of the works.

Background

On 15 October 2004 St James Oncology SPC Limited ("the Claimant") was appointed by Leeds University Hospital Trust ("the Trust") to deliver the design, construction, operation and ongoing maintenance of the proposed new Oncology Centre under a PFI Contract. The agreement between the two parties, referred to in the judgment as "the Project Agreement", set out the Trust's construction requirements for the Oncology Centre, which required them to comply with, or offer a design superior to that required by the Health Technical Memorandum 81 ("HTM 81"). HTM 81 sets out guidance on the design of fire precautions in new hospitals / extensions to existing hospitals.

Simultaneously with the Project Agreement, the Claimant appointed Lendlease Construction (Europe) Limited ("Lendlease") under a JCT Design and Build Contract ("the D & B Contract") to design and construct the Oncology Centre. In addition to repeating certain key provisions of the Project Agreement, the D & B Contract required Lendlease to comply with the terms of the Project Agreement, and not to put the Claimant in breach of its obligations under that agreement.

Works commenced in 2004 and practical completion was achieved on 14 December 2007, but deficiencies relating to fire stopping were not discovered until 2014 following risk assessments and other work. At this point the Claimant obtained an initial report, which led to approximately 250 defects being identified. These defects were rectified by Lendlease between 2015 and 2017 but, in doing so, additional concerns were raised around the lack of fire compartmentation within Plant Room 2, the central mechanical and electrical hub for the Oncology Centre.

The Claimant subsequently obtained another report in 2017 which recommended further remedial works due to defects identified in the adopted fire...