Subcontractor liable for cladding problems on student blocks

A collapsed roofing subcontractor has been found liable for cladding issues on student accommodation in Manchester, the High Court has ruled.

The outcome of the case, relating to Wrexham-headquartered European Sheeting Ltd (ESL) and its work on three high-rise blocks at Parkway Gate in Manchester (pictured), shows contractors will find it hard to challenge costs on remediation projects even if they disagree with the approach taken, a legal expert said.

“Several defects” were found on the blocks, which all had elements of composite cladding on them. The owner, Unite Students, found fire-barrier and fire-stopping issues on all the sites, as well as instances of water ingress which caused damage to the building’s frame.

The blocks were built by main contractor George Downing Construction, which appointed ESL as cladding subcontractor in 2008.

The December judgment ruled on Unite Students’ claims from ESL for £16.5m for the defects and remediation costs, and a £4.7m add-on to cover loss of income.

Unite was unable to consult ESL on the remediation plan as the firm entered liquidation in May 2022. Instead it took advice from civil engineering firm Thomason Partnership, which recommended it replace the damaged frame with one made from steel.

The judge found that this course of action was “not unreasonable” and found ESL liable for those remediation costs too.

George Downing Construction had already paid Unite £17.7m for the defects in a separate out-of-court settlement.

ESL was ordered to reimburse George Downing for the damages it paid Unite out of court, as well as George Downing’s legal fees.

Eric Johnstone, a senior associate at law firm Brodies, told Construction News that the ruling suggests courts will be unlikely to criticise clients for taking on remedial solutions. “This will apply even where the defendants do not necessarily agree with the chosen approach,” he said. “When the original works have been shown to be non-compliant, contractors are likely to struggle to successfully challenge the costs of a remedial solution which has been implemented.”

He added this would “particularly be the case” when the decision was made following expert advice.

The case is also significant as it confirmed that subcontractors are liable for defects when not complying with Building Regulations as specified in contracts, he said. It is not enough for subcontractors to argue that they carried out the work as another cladding contractor would have done.

“It wasn’t sufficient to say their approach was reasonable in that situation,” Johnstone said. “They were held to be liable because the works failed to comply with Building Regulations.”

It is unclear how much of the £38.9m Unite and George Downing will get from ESL, as the firm is in liquidation. According to the most recent update on the liquidation process, there are no assets available to pay off ESL’s preferential creditors. Court fees and charges are registered as unsecured creditor claims, which are paid out only after preferential creditor claims are settled.

CN has approached ESL’s liquidator Bridgestones for an update on the process.

A spokesperson for George Downing said the firm was “pleased” to hear the verdict that ESL was “entirely responsible” for the defects at Parkway Gate.

“GDCL [George Downing Construction Ltd] continues to explore all avenues of recovery in line with the decision and is unable to comment further on ongoing legal action,” they added.

This article first appeared in Construction News.