Council files £130m claim against PFI contractor for post-Grenfell estate costs

London Borough of Camden is suing a former PFI partner and its main subcontractors for £130m for costs relating to the evacuation of one of its housing estates the week after the Grenfell Tower tragedy.

Inspections carried out by the council and London Fire Brigade in June 2017 led to residents from four out of five towers on the Chalcots Estate in Swiss Cottage being temporarily rehoused.

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March 25th, 2020, Manchester
Council treasury investment & borrowing

The authority is now seeking to recover the cost of rehousing the tenants, removing and replacing flammable cladding from the buildings and undertaking other fire safety measures.

A spokesperson for the council said: “The cost of supporting residents during the evacuation and level of work required at the Chalcots made a major impact on our reserves.

“Clearly, it would not be right for residents and, by extension, the public purse, to foot the bill for what has been a private contractor failure.”

The council has launched a High Court claim against PFIC, a special purpose vehicle which signed a contract in 2006 to carry out the refurbishment and maintenance of the estate.

The other defendants named in the claim are construction firm Rydon Construction, maintenance company Rydon Maintenance, construction firm United Living and project management firm Faithful+Gould.

Camden is claiming damages against the firms for breach of obligations arising under the PFI project agreement and warranties given in connection with it.

Court documents list a litany of alleged breaches by the defendants, including numerous breaches of building regulations.

These include the claim that the buildings’ cladding was “combustible, promoted the spread of fire and/or provided a medium for fire spread which was likely to be a risk to health and safety”.

In addition, the council said that glazing facades were installed while leaving the original glazing system in place, which “made it impossible to provide an effective fire-stop, and the firestopping that was installed was in any event inadequate”.

In addition, the court papers make a number of claims about internal fire safety measures, including inadequate firestopping measures and missing or wrongly placed fire exit signs.

Many fire doors did not meet the required fire-rating or resistance, did not fit the frames and/or lacked self-closing mechanisms, according to the claim.

The council has already received £80m from the government to fund the replacement of cladding.

A spokesperson for the council had not responded to Room151’s query on what will happen to this cash if the court claim is successful.

The council’s £130m claim is made up of:

Evacuation costs

£2.8m on hotels;
£1.4m on reimbursement to residents for temporary accommodation and other costs;
£1.3m for a one-off support cost payment plus an allowance of £20 per day for additional items;
£0.8m on miscellaneous costs such as transport, furniture for residents in temporary accommodation, catering during the evacuation and communications spending.

Phase one works

£12.4m remedial works to internal fire safety;
£12.5m costs of removing cladding.

Phase two works

£3.9m costs of remedial works to fire doors.

Phase three works

£22.3m for replacement cladding;
£33.5m for replacement cladding;
£26.3m for other costs associated with these works;
£5m for other costs and professional fees relating to these works.

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