HT-2023-000311 - [2024] EWHC 3449 (TCC)

With that introduction as to the legal position, I turn to the facts of this case, and I start with the correspondence in 2018.

On 20 December 2018, Willmott Dixon wrote to KCA referring to discussions that had taken place between their representatives in October 2018 in connection with the brickwork on Bridport House. The letter acknowledged KCA’s confirmation that they would be able to provide architectural support in resolving these issues and that there would be a further meeting. The letter said:

“However, as was explained at our meeting, there are a number of issues with the brickwork and the exact cause and extent of these issues is being investigated by us, the Employer and third party consultants. At this stage, it is not possible to determine the exact causes, however, in connection with your Deed of Appointment you were responsible for the design and specification of the external wall construction and details.

There is therefore a possibility that these defects in the brickwork result in failings in your design…”

The letter went on to advise KCA to notify their professional indemnity insurers.

That is a convenient point to observe, as Mr Bury emphasised, that KCA’s appointment as designers for the design and build contract was one in which they undertook to provide a detailed and lengthy list of services in terms of design, which undoubtedly covered brickwork, and that they undertook the usual obligations to exercise reasonable care and skill. They also gave particular warranties in respect of compliance with the Building Regulations and an indemnity in respect of any breach of the building contract. I emphasise that, in saying that, I am not making any decision in respect of the meaning of the contract or any potential liability of KCA, but rather indicating the scope. as it would appear on the face of their appointment, of their design obligations.

That issue in relation to the brickwork having been raised, KCA responded on 17 January 2019. They started by saying that their insurance was not in place to cover poor workmanship on site and they referred to reports of poor workmanship on site. But KCA concluded by saying that that they were keen to work with Willmott Dixon and LBH to resolve these issues swiftly in everybody’s interests. However, KCA also made a threat to pursue a claim for defamation if Willmott Dixon in any way suggested that KCA’s work had been deficient on this project. They said that they would, in those circumstances, take appropriate steps to defend themselves and their reputation, including making such a claim for defamation. There was a little further correspondence, but otherwise there matters rested for a little while.

By a letter dated 29 March 2019, Devonshires, solicitors representing LBH, wrote to Willmott Dixon – they referred to a report of the architects, Bickerdike Allen, and said that they had subsequently instructed Mr McLean of Probyn Miers to inspect the property and provide comments in relation to Bickerdike Allen’s proposals for cosmetic remedial works. The letter continued:

“Mr McLean attended Property on Friday 22 March, along with representatives from Bickerdike Allen and yourselves. …

However, Mr McLean’s inspection has raised further urgent concerns which we need to raise with you and which may render our previous discussions redundant. Mr McLean’s inspection has identified that the insulation at Bridport House (which is a tall building for the purposes of the Building Regulations) is a phenolic foam which is not a material of limited combustibility. It is, therefore, not in accordance with the requirements of Approved Document B. Further, there appear to be inadequacies in the cavity barriers at Bridport House.

Our client’s primary concern is the safety of its residents. We have, therefore, instructed a fire engineer to attend...”

The letter went on to indicate that LBH would expect proposals to protect the safety of residents and to ask for documentary information from Willmott Dixon.

On 3 April 2019, Willmott Dixon then wrote to KCA referring to a recent discussion with Willmott Dixon’s representative in which it was said that Mr Karakusevic had declined an invitation to attend a meeting to discuss the various issues that had been raised by LBH in respect of the external wall construction. Willmott Dixon pointed out that, in addition to what had been raised in December 2018, new issues concerning combustible materials used within the external wall construction had now been raised and that, following an inspection by independent experts, Willmott Dixon was:

“… of the impression that the insulation within the external wall is a phenolic foam which is not classified as a material of limited combustibility.”

Additionally, they said that KCA would be aware that the structural frame and inner wall panels of the external walls of the building consisted of cross-laminated timbers. Further, they passed on to KCA the request for documentary information which had been made by LBH.

The response to that letter from KCA was made on 9 April 2019. KCA said that they would not be sending files, drawings, specifications or records to Willmott Dixon and that their drawings and notes showed the correct insulation, firestopping and wall build up. KCA dismissed the concerns regarding the use of combustible materials and alleged poor workmanship and monitoring on the part of Willmott Dixon. They reiterated their position that, if they heard anyone blaming them for failings in Bridport House, they would not hesitate to start defamation proceedings. There was a response from Willmott Dixon on 11 April 2019 and a further letter on 30 April 2019, but there matters then again rested for some time.

By a letter dated 11 November 2019, Simmons & Simmons, then acting for Willmott Dixon, wrote to KCA and referred to previous letters in December 2018 and April 2019. They said:

“In those letters, WPHV has outlined a number of alleged issues with the design of the Development which have been raised with WPHV by LBH. These include (by way of illustration only) alleged issues in relation to matters such as the brickwork; and the specification of phenolic-board insulation (the Kingspan “K12” product) in the external wall, and of high pressure laminate panels on the roof parapets. For your information, we enclose a copy of a publicly available PRP Report relating to the Development dated July 2019 which outlines various issues said to have been identified by PRP as at that date.”

Simmons and Simmons said that they understood KCA’s position to be to deny liability but that they were giving KCA an opportunity to decide whether they wished to be involved in any further investigations or negotiations. The PRP Report referred to was attached and provided brief descriptions of defects in brickwork, insulation, cavity barriers, windows, copper clad bay windows, glass reinforced concrete panels, plasterboard, internal linings and other items.

So far as I was taken to the correspondence in the course of the application, there appears to have been no response to that letter. As between Willmott Dixon and KCA, matters rested there until 12 May 2020, when Simmons & Simmons wrote to Beale & Co. (representing KCA). They referred to previous correspondence, again including the matters I have already referred to. They expressly said that this letter was not intended to raise a formal pre-action claim against KCA but that they wished to give KCA an opportunity to provide information or comment on anything that they considered would assist in the defence of LBH’s allegations:

“… bearing in mind that it is, of course, equally in KCA’s interest that WPHV is able to successfully defend the claim made by LBH and thus avoid any claim being passed down by WPHV to KCA.”

They also passed on a request for further documents. That letter annexed a letter from Devonshires, on behalf of LBH, to Simmons & Simmons. That letter was dated 17 April 2020 and was a Pre-Action Protocol Letter of Claim against Willmott Dixon. It contained a level of detail as to the nature of the allegations that were made against Willmott Dixon in respect of the fire safety issues.

As between Willmott Dixon and KCA, matters again rested there until 2021. Summarising, in 2021, there were some issues raised by LBH in relation to further defects. There was an opportunity to inspect, which was passed on to KCA, who again did not wish to engage. Then matters rested again until November 2022.

On 24 November 2022, Devonshires wrote to Willmott Dixon referring to previous correspondence and asking for various information. They concluded by saying that they had some drawings in relation to fire strategy, but only some, and asked for cooperation in that respect. That was followed by a letter on 12 December 2022 from Devonshires to Willmott Dixon, which said that they were now instructed that the following defects had been identified at the property, some of which would be available to be viewed when they were on site. Those defects were set out in that letter. I do not propose to quote them but they are a series of defects which had largely been identified, and referred to, in the previous correspondence. Those exchanges did not involve KCA.

Before I come to what happened in 2023, there was a submission made by Ms McCarthy that that correspondence demonstrated that there was, in effect, a gap of nearly three years in which there was no correspondence between Willmott Dixon and KCA since the first intimation of a claim relating to fire safety matters. It will be apparent from what I have said that that is not entirely correct but is largely correct. Mr Bury’s response to that was to say that it was hardly surprising, given that KCA’s approach was that it did not wish to engage with any provision of information or participation in investigations and had taken the rather remarkable stance that it would sue for defamation if anyone suggested that they might be to blame for any defects.

The relevance, however, of that seems to me principally to be to the overarching question of whether, by the end of this process and before the Claim Form was issued, Willmott Dixon knew the essence of its claim, had grounds to make a claim and was able to do the minimum necessary to set out its claim, even in the most rudimentary way. It is relevant to that issue if it informs what the position was at the time the Claim Form was issued in the general terms in which it was.

That brings me to 2023. On 12 June 2023, Willmott Dixon wrote again to KCA. By that time, the evidence is that LBH had already started to carry out remedial works at its own cost and that, in the course of carrying out those remedial works, it had either discovered further defects or discovered more about the defects already alleged. Willmott Dixon’s letter to KCA of 12 June said this:

“We refer to previous correspondence relating to the above project during 2018 to 2020 between KCA and Willmott Partnership Homes Limited, now WPHV Limited (“WPHV”).

In this correspondence, WPHV drew your attention to issues that had been identified by London Borough of Hackney in relation to the design of the Project including that relating to the brickwork and external façade design. …

We write now to provide a further update. LBH has commenced the remedial works to the façade including addressing the design issues with the brickwork and external façade. Investigations into the issues with the CLT frame are progressing in parallel and the cause of those issues is yet to be identified. Most recently LBH has indicated that there may be issues with internal firestopping and fire protection, drylining and the mechanical and electrical installation. You will be aware that our letter of 3 December 2021 specifically requested information on drylining products and whilst you declined to provide that information, we would reiterate that it is undoubtedly in the interests of all parties for you to reconsider your position on that point.”

The letter went on to say that LBH had indicated that an updated Letter of Claim would be issued in June or July of that year.

On 12 June, KCA, by Mr Karakusevic, responded to that letter. He said:

“Unfortunately, your team and consultants admitted full responsibility for installing the shelf angles, brickwork and movement joints poorly, ie not tightening the shelf angles and faking the movement joints throughout. They also admitted to not installing the Fire Stops correctly and not following the insulation specifications amongst many other issues.

Any subsequent damage to the building and any repairs and corrective action will be resting fully on WD’s shoulders. Recently I have heard from several other client groups that similar errors and poor workmanship by WD are leading to major claims from Housing Associations, this would suggest that there was a toxic culture in the organisation at the time.

WD should finally take responsibility for this era, learn from their mistakes and move on and build with integrity and pride.”

That was followed by a letter on 23 June 2023 from Pinsent Masons, now representing Willmott Dixon, to KCA. Essentially, that repeated the position that LBH had identified defects and was intending to pursue claims against Willmott Dixon to recover its losses and that Willmott Dixon might consequently pursue a claim against KCA for any losses which it incurred. I note, and I will come back to, the fact that that was expressed in terms that Willmott Dixon might pursue a claim against KCA for any losses that it incurred. The letter suggested that it would be appropriate for KCA and Willmott Dixon to enter into a standstill agreement while the parties investigated the allegations in more detail, determined the extent of remedial works, and assessed quantum.

There was a follow-up to that request for a standstill agreement on 4 July 2023. In short, the initial response from KCA was to decline to enter into a standstill agreement and, subsequently, by its solicitors, to indicate that the intention was to be reasonable and to provide Willmott Dixon with an opportunity properly to explain its position.

What Willmott Dixon was, therefore, invited to do, in an email dated 11 July 2023, was to provide “full particularisation of the allegations that your client proposes to present against our client”, which it was said Willmott Dixon was required to do as part of any Pre-Action Protocol Letter of Claim. The email went on to ask various questions and, in effect, to require the provision of a detailed particularisation of the claim potentially being made against KCA and substantial evidence in relation to that claim. It is certainly arguable that that went well beyond what is required by the Protocol.

In any event, that, quite simply, did not happen. The standstill agreement requested was also not entered into and, at the end of August, for the reasons I have already indicated, the claim was issued in the general terms in which it was. Then on 15 September 2023, LBH itself issued a claim against Willmott Dixon.

Both Willmott Dixon and LBH made applications to the court to stay the proceedings, Stays were granted in both sets of proceedings and, in the case of Willmott Dixon, that had the effect of staying the proceedings, to all intents and purposes, for a further year.