Construction Law Update: Defective Cladding

By Lawrence Isaac, Construction Law Paralegal

Following the ruling of LDC (Portfolio One) Ltd v George Downing Construction Ltd and another [2022] EWHC 3356 (TCC), we are now beginning to see more successful claims against contractors and sub-contractors in relation to cladding.

The decision is the second judgment of its kind following the Grenfell Tower fire in 2017, and is set to impact claimers, claimants and even insurers, as the potential for successful claims may now begin to shift.

The case

LDC (Portfolio One) Ltd, the freeholder, initially pursued both George Downing Construction Ltd, the contractor, and European Sheeting Ltd, the sub-contractor, to recover the costs it had incurred in replacing combustible external cladding in a high-rise residential development.

The cladding had to be removed for two reasons:

1. The cladding used was not compliant with Building Regulations in place at the time of construction.
2. Defects in the composite cladding elevations caused water ingress in the building and deterioration of structural insulated panels (SIPs.)

Both the contractor and the sub-contractor had been engaged on a design and build basis, using amended JCT (Joints Contracts Tribunal) forms of contract, with the freeholder obtaining the benefit of a collateral warranty from each of them.

What is a JCT contract?

The JCT, or Joints Contracts Tribunal, is a body that represents those in the construction and building industries. The JCT produces a suite of contracts that covers most of what’s needed in the construction sector, including standard forms, contracts and general guidance.

In the above case, the contractor and sub-contractor were engaged through amended JCT contracts – meaning the typical, standard contracts were amended when put in place.

The result

Veronique Buerhlen KC, sitting as a deputy High Court Judge in the Technology and Construction Court (TCC) found European Sheeting Ltd (ESL), the sub-contractor, liable in respect of water ingress and fire safety defects caused by the defective cladding.

ESL had failed to implement reasonable care and skill into the design of the building, using unsafe, unfit-for-purpose cladding. What’s more, the cladding failed to comply with Building Regulation standards, leaving them liable for defective cladding.

What does this mean?

This is only the second judgement of its kind relating to building safety following the Grenfell Tower fire in 2017 and is set to become a landmark decision.

The judge’s decision heavily relied on the contractor and subcontractors’ amended form of JCT design and build contract, which included an unqualified design and specification duty. Additionally, it contained reasonable skill and care provisions, which the contractor had also breached.

The judge refused to accept the argument ‘everyone else was doing it’ as a way to mitigate the contractor’s liability. Instead, the judge found breaches relating to both specification and installation when examining factors such as reasonableness, mitigation, betterment and remoteness of loss.

The significance of this case will create a new precedent for future claimants and defendants, with the courts now looking at the specifics of the case and not just the market standard at that point in time. This means the argument ‘everyone else was doing it’ can no longer act as a get out of jail free card.

This case will also undoubtedly have an impact on insurers, as the potential for successful claims may now begin to shift.

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If you want to find out more about this decision, or have any questions about the case, get in touch with one of our expert construction lawyers today.