NHS Trust claim almost twice the value of the original contract sum for defective new hospital

The litigation is over the £75m Cramlington East hospital in Northumberland, built in 2015 by Lendlease which is said to require substantial remedial works . The defects are claimed to be so pervasive* throughout the hospital complex that rectifying them requires the ‘decanting’ of hospital staff and patients into a temporary four-storey replacement building to ensure the hospital can continue its vital function whilst repairs are carried out. The cost of this temporary structure is almost equivalent to the original build coming in at an eyewatering £73m, which is over half of the total claim value of approx. £140m.

The 210-bed hospital was completed under a PFI deal in 2015, with Lendlease having won the job in 2012 to construct a facility capable of supplying emergency care consultants and a range of specialists available 24/7.

The trust claims that a broad range of defects have been found at the hospital including problems with floor slabs, pipework, fire protection, drainage, the roof and the hospital’s helipad. The main outstanding claims include; fire protection defects (remedial costs of £1.5m), external walls, (£11m) and (internal partitions and door frames (£11m). The number of areas in this dispute requiring expert evidence and opinion has only added to the complexity of this case, which has involved over 120 separate annexes to the main statements of case and responses to request for further information (a common tactic in litigation to draw out facts from the other side that might affect their position and to encourage a settlement).

The final showdown is scheduled for next month in the High Court. However, Lendlease have not gone quietly up to the gallows, bearing their teeth and issuing a slew of Part 20 claims, roping in 9 of their sub-contractors and suppliers into the claim as fellow defendants. M&E specialist Balfour Beatty Kilpatrick, civils firm MPB Structures, architect Keppie design, roofing specialist Briggs Amasco, manufacturer IKO UK, drylining and external wall render specialist Horbury Building Systems and fire door specialist Horbury Joinery are some of those called to answer this claim.

Most of the claims against sub-contractors have been settled or agreed in principal in anticipation of the final judgment.

If the trust has collateral warranties in place with the sub-contractors for their works, they would also be able to bring claims against them directly, stopping them from hiding behind the main contractor, Lendlease. Thus, highlighting the importance to developers of the need to have robust collateral warranties in place on any complex construction project.

A spokesperson for Lendlease said: “Work on Cramlington Hospital was completed in 2015; and we’ve remained on site and continued to work with Northumbria NHS Trust since that time in order to address any defects that have emerged, during which time the hospital has remained open and fully operational. As this matter is currently subject to legal proceedings it would not be appropriate for us to comment further”.**

*Gayne, D., 2022. £140m bust-up between NHS trust and Lendlease heads for High Court trial this autumn. [online] Building. Available at: https://www.building.co.uk/news/140m-bust-up-between-nhs-trust-and-lendlease-heads-for-high-court-trial-this-autumn/5117673.article

**Morby, A., 2022. Lendlease £140m hospital claim to hit High Court. [online] Construction Enquirer. Available at: https://www.constructionenquirer.com/2022/05/26/lendlease-140m-hospital-claim-to-hit-high-court/