St James’s Oncology SPC Ltd v (1) Lendlease Construction (Europe) Limited (2) Lendlease Construction Holdings (Europe) Limited
Citation: [2022] EWHC 2504 (TCC)
Summary of the Facts
St James’s Oncology Centre, in Leeds (the “Oncology Centre”), is the largest oncology centre in the north of England. The Claimant (“Project Co”) was appointed by Leeds Teaching Hospitals NHS Trust to finance, design and construct the Oncology Centre. The First Defendant (“Lendlease”) was appointed by Project Co to design and build the Oncology Centre. The Second Defendant (the “Parent Company”) gave a guarantee to Project Co in respect of Lendlease’s work.
Plant Room 2 is the central electrical and mechanical hub for the Oncology Centre, and contains a number of electrical plant rooms which provide the electricity supply for all of the medical equipment and facilities in the Oncology Centre.
Project Co claimed that there were numerous, serious, fire safety and electrical engineering defects within Plant Room 2 which meant that a single fire or fault could take out both the primary and secondary power supplies to all medical equipment and facilities in the Oncology Centre, in breach of numerous provisions of Health Technical Memoranda (“HTMs”). Project Co also sought various declarations in respect of its potential future liability for unavailability deductions pursuant to certain indemnities in its contract with Lendlease.
Lendlease denied liability on the basis that the construction complied with a fire strategy that had been signed off by all parties, and argued that Project Co had no intention to actually reinstate and that a more limited remedial scheme was appropriate.
Summary of the Judgment
The Judgment of Mrs Justice Joanna Smith DBE contains a helpful review of the authorities on:
- the measure of damages in defective work cases and the relevance of intention to reinstate (paras 335-339);
- the circumstances in which a claimant is entitled to wait until judgment before deciding to implement a remedial scheme (paras 341-342 and 347-349);
- how the court will decide between rival remedial schemes (paras 315-316); and
- collateral benefit/res inter alios acta, in determining whether a PFI project company’s right to claim against a maintenance contractor for certain defects should be considered a collateral benefit/res inter alios acta (paras 329-333).
The Judge considered the nature and purpose of fire strategies and fire-engineering in the PFI context, along with evidence on Project Co’s intentions and the appropriate remedial scheme, and decided that:
- Lendlease’s case that the parties’ agreement of a fire strategy was a defence to the existence of design defects, should be rejected;
- The issue of the certificate of practical completion and the Building Control final certificate was no defence either;
- All defects asserted by Project Co were made out;
- Project Co did intend to carry out remedial works;
- Project Co’s claimed remedial scheme was not unreasonable, awarding just over £5 million for the costs of the same; and
- Project Co’s claims for declarations should be dismissed, on the basis that they should be determined if and when any deductions were levied.
Counsel for Project Co: Jonathan Selby KC and Charlie Thompson
Counsel for Lendlease: Alexander Hickey KC
