Historic cladding case against Balfour Beatty to proceed

A judge has ruled against Balfour Beatty’s attempt to dismiss from court a cost claim made against it for cladding remediation on a residential scheme in Dorset.

The High Court’s Technology and Construction Court judge Justice Morris ruled that Orchard Plaza Management had a right to claim costs for issues relating to a 1970s office block that was converted into 115 residential units more than 15 years ago.

Although the ruling does not decide the claim for costs itself, it will allow the case to proceed at a later date. The value of the claim has not been disclosed.

Balfour Beatty saw itself engaged in the court battle with Orchard Plaza over the cost of remediating rainscreen cladding at the property in Poole, which was built in 2007 and 2008. Balfour designed and constructed the development, but the cost of the remediation works is not known.

The project was built by Balfour Beatty under the Mansell Construction Services branding, which was retired in 2014. 

In 2015, the claimant in the case became aware of possible defects in the cladding, but it didn’t carry out any remedial work. However, in 2020, Bournemouth, Christchurch and Poole councils issued an improvement notice to the claimant, which mandated the replacement of the cladding. 

Orchard Plaza has claimed the cost of replacing this from Balfour Beatty, which has failed in its attempt to have the cost claim thrown out. The contractor argued that the case should be dismissed due to the fact that a collateral warranty was entered into in 2007.

Justice Morris said: “In my judgement, loss in the form of the cost of repairs incurred by the claimant was within the reasonable contemplation of the defendant as being a serious possibility at the time that the collateral warranty was ‘too remote’ to recover.”

A court can award damages for claims that would reasonably be considered a risk when parties enter into a contract, such as Balfour did when constructing the Poole scheme. However, courts can also deem that losses should not be claimed if the claim is “too remote” – as in not realistically connected to the original contract to be binding. 

Morris continued: “In any event, such loss incurred by the funder, AIB, was within the reasonable contemplation of the defendant at that time as being ‘a serious possibility’. Accordingly, the loss now claimed by the claimant is not too remote. For these reasons, the defendant’s remoteness defence in paragraph 58.2 of the defence fails.”

Balfour Beatty said it couldn’t comment on an active legal case.

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