Is it worth trying to claim the costs of fire safety remedial work?
We all know that addressing fire safety defects is a top priority for social housing providers, whatever the cost. If it is possible to recover some or all of those costs from a contractor or consultant, all well and good. However, contractors and professional indemnity lawyers are unlikely to pay up without a fight, so is it even worth trying?
A recently reported case throws new light on this dilemma. We successfully acted for social housing landlord Lewisham Homes, in the enforcement by the court of an adjudication decision which provided that the contractor should pay £2.7 million plus VAT for the replacement of fire doors. The case was a significant success for Lewisham Homes and highlights an option for swift recovery of remedial costs for fire safety defects.
Much of the case focussed on legal arguments by the contractor as to why the adjudication decision should not be enforced and why those arguments were not accepted by the court. However, the case is an important example of how the recovery of damages in relation to a contractor’s failure to meet fire safety regulations, can be achieved swiftly and without the need for protracted and costly legal proceedings.
What were the facts?
Breyer had contracted to carry out improvement works to some 4,000 residential properties managed by Lewisham Homes for Lewisham Council; including installing new door sets. It later came to light that some of the doors did not comply with relevant fire safety regulations and requirements. We advised Lewisham Homes to address these issues through adjudication as this is a quick and cost-effective route to resolve construction issues. An earlier adjudication decided that the door sets were defective and that Breyer was liable for the defects. The adjudicator considered that payment on account was not appropriate at that time as the defects liability period had not yet commenced (the term of the contract was still running) and Breyer was still engaged on-site and had expressed a willingness to propose remedial works. The contract expressly provided for Breyer to remedy defects at no cost.
By the time of the subsequent adjudication on quantum, Breyer had not agreed any particular remedial scheme to include the replacement of the doors – their proposals involved works to the existing doors in an attempt to bring them up to the required fire safety standards, rather than replacement. Such proposals were unacceptable to Lewisham Homes and their fire safety expert, resulting in them instructing another contractor to replace the door sets. Lewisham Homes issued a further notice of adjudication and sought a decision that Breyer should pay the cost of replacing the doors, plus fees and expenses.
The adjudicator determined that Breyer’s proposed remedial scheme was only suitable for certain types of door sets, and agreed that it was not appropriate for other sets. As a result, it was decided that Lewisham Homes should be paid circa £2.7 million plus VAT for the remedial costs.
Breyer refused to pay and Lewisham Homes sought enforcement of this decision through the Technology and Construction Court (TCC). A significant question for the court was whether the adjudicator lacked jurisdiction in the second adjudication, due to similar issues having been considered in the first adjudication.
What was the outcome?
The TCC held that the disputes were not substantially the same; the first decision had concerned the issue of liability and the appropriateness of an interim payment on account against a backdrop of Breyer not having yet proposed remedial works. The second decision concerned the suitability of the proposed remedial scheme and a final award of damages for the replacement of the doors. The judge commented that even if the interim payment had been awarded to Lewisham Homes, that would have been a provisional decision and would have been subject to a final determination to be made at some future date.
Breyer was ordered to pay the £2.7 million plus VAT and the costs incurred by Lewisham Homes in bringing the proceedings. They sought to argue that the timescale for payment should be extended and that they ought to be able to pay by way of instalments over a 10-month period. However, the court did not consider that there were any exceptional circumstances to warrant such an extension. It, therefore, ordered Breyer to make payment within 14 days.
Key learning points
This case shows how the recovery of remedial costs for defective works, can be dealt with swiftly and does not have to take months and months of expensive and time-consuming litigation. The whole process for Lewisham Homes from the start of the second adjudication to payment took just six months.
It is important to take legal advice at an early stage as to your position to ensure that limitation dates do not expire; which would prevent recovery action. In addition, the appropriate technical expert advice should be obtained early on to evidence the defects and the most appropriate remedial solutions. Any proposals from contractors should not be accepted without scrutiny and independent advice.
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