One Hyde Park Limited v Laing O’Rourke Construction South Limited

This case arises from serious alleged defects in the property at One Hyde Park in Knightsbridge, a development of luxury flats which was completed in 2011 (“the Property”). The trial of the action was listed to commence on 27 February 2025. As set out below, shortly before trial, the defendant’s solicitors (who remained on the record) stated that the defendant was entering liquidation and no longer intended to participate in the trial. The trial, therefore, consisted of a hearing at which the claimant’s opened its case and adduced evidence to prove its case.

The defendant, Laing O’Rourke Construction South Limited (“LOR”), is a subsidiary of Laing O’Rourke plc.

In 2007, LOR entered into a contract (“the Main Contract”) with the freeholder and developer of the property, Project Grande (Guernsey) Limited (“PGGL”). The contract was for the demolition of Bowater House which then stood on the site and the construction of One Hyde Park.

The freehold was transferred from PGGL to the claimant, which will be referred to as OHP, on 11 June 2014. Previously, on 8 September 2010, LOR had entered into a Collateral Warranty with OHP pursuant to which it warranted its performance of the Main Contract in accordance with its terms.

The residential portion of the Property is demised to 1 HP (Guernsey) LLC (“1HP”) and the individual apartments are held by tenants under 999 year underleases. OHP’s case is that, under the leasehold arrangements set out further below, it manages the Property for the tenants.

In or about November 2014, corrosion was discovered in the chilled water pipework (“the CHW pipework”). Subsequently it was discovered that butterfly valves in various pipework systems were failing and soldered joints were leaking. Further, since practical completion, the pantograph cradle for cleaning facades has not worked properly.

Extensive investigations of the pipework were subsequently conducted (on a joint basis by experts appointed by OHP and LOR) and revealed that: (a) the CHW Pipework is subject to pervasive and very serious corrosion (with some lengths of pipework being corroded to a depth of 87%); (b) a large number of butterfly valves have suffered from corrosion and/or will not close; (c) it is likely that a significant number of additional soldered joints will leak over the next 10 years or so.

Together with the defective pantograph cradle, these are, in summary, the defects that formed, in due course, the subject matter of this claim.

It is OHP’s case that from 2016 onwards, OHP and LOR conducted negotiations with a view to settlement of the claims. The negotiations were conducted by directors of the Laing O’Rourke group and Laing O’Rourke plc. Although LOR made offers to carry out remedial works, very little was in fact done and no settlement was reached. OHP came to the view that LOR was simply seeking to delay the inevitable and in 2021 these proceedings were commenced.

OHP’s position is that LOR continued to seek to delay matters and raise meritless arguments. It is not necessary for the purposes of this judgment to express any view on LOR’s conduct. However, what was never in issue was that LOR was participating in the proceedings and, in due course, preparing for trial. LOR served factual and expert evidence, its experts participated in joint meetings and signed joint statements, and LOR attended the PTR on 13 December 2024 when directions including “Trial timetable and logistics” were made.

Prior to the PTR, by letter dated 24 November 2024, the claimant had asked Laing O’Rourke plc to confirm that it (and the group) was continuing to provide the defendant with financial support such that the defendant would be able to satisfy a judgment against it. Although the defendant’s solicitors, Pinsent Masons, responded they did not provide the confirmation sought. That said, since the defendant then attended the PTR and engaged with directions for trial, the obvious inference was that financial support continued.

It, therefore, came as a complete surprise to the claimant and to the court when on 12 February 2025, the defendant’s solicitors, Pinsent Masons, wrote to the court stating that they acted for the defendant but that:

“We confirm that the Defendant is unable to continue financing the defence of the proceedings. Accordingly, we write to inform you that the Defendant does not intend to participate in the trial of the proceedings which is to commence on 24 February 2025.”

Subsequently on 21 February 2025, Pinsent Masons wrote to the court still stating that they acted on behalf of the defendant and recording that the sole shareholder in the defendant, Laing O’Rourke plc, had, on 20 February 2025, passed a written resolution to place the defendant into creditors’ voluntary liquidation and that a creditors’ meeting to vote on the identity of the liquidators would be held in due course.

Mr Rigney KC described the claimant’s reaction to this news as one of shock and dismay. As he submitted, it was obvious that the Laing O’Rourke group could continue to fund the litigation and meet any judgment in damages. Publicly available information disclosed pre-exceptional group revenue for 2024 of £4 billion and a “record order book” of £10.8 billion. There was no evidence before the Court of any financial difficulty of Laing O’Rourke plc or the group as a whole. Mr Rigney submitted that the only credible reason for the group withdrawing support from the defendant was that it had formed the view that OHP was likely to succeed and obtain a substantial award of damages and that Laing O’Rourke plc, in my words not his, had decided to pull the plug on the defendant rather than honour its contractual obligations. He described such conduct as commercially amoral and I agree, not least against the background of protracted negotiations and full participation in the litigation virtually to the door of the court.

CPR Part 39.3 provides

“(1)

The court may proceed with a trial in the absence of a party but –

…..

(c)

if a defendant does not attend, it may strike out his defence or counterclaim (or both).”

OHP accepts that whether to strike out the Defence is a matter for the court’s discretion but invited the court to strike out the Defence in light of the decision to withdraw funding support and the matters set out above. I accepted that submission and struck out the Defence.

In the present case, Mr Rigney did not urge the court to determine whether it could or should enter judgment in default and accepted that the claimant should prove its case. That would necessarily involve submissions to the court on any contractual matters and matters of law which the court might wish, of its own motion, to interrogate. Further it would involve calling the claimant’s evidence both factual and expert to prove the claimant’s case and the court could, if it wished to do so, raise any issues on that evidence. However, that engagement of the court would necessarily be limited. As Foxton J said in Nitron Group BV (in liquidation)v Barington Alliance LLP [2020] EWHC 1244 (Comm) at [13]:

“… if the Defendant chooses not to participate in the trial, the Court is not in a position to conduct a cross-examination of the witnesses by reference to the contemporaneous documents, and its ability to test the evidence is heavily constrained. Unless the witness statement is internally inconsistent or manifestly incredible on its face, the Court can only consider whether the evidence adduced is sufficient to make out the claimant’s case, on the basis of that evidence and the inferences which can properly be drawn from it.”

Mr Rigney further accepted that he had a duty of fair presentation albeit one that was less extensive than would be the case on a without notice application.

In adopting this position, the claimant followed the approach taken by Sean O’Sullivan KC, sitting as a Deputy High Court Judge, in AMNS Middle East FZEv LIQS PTW Ltd. [2025] EWHC 150 (Comm). At [22] the judge observed that CPR Part 39.3(1) did not make clear what the effect of striking out the Defence would be. The claimant in that case had asked for judgment in default to be entered. Mr O’Sullivan KC considered that it was also far from clear that that was what the rules envisaged. He noted that in Collem v Collem [2015] EWHC 2184 (Ch), Asplin J, having struck out the Defence, had nonetheless required the claimants to prove their case. I note that in her subsequent judgment in the same case ([2015] EWHC 2258 (Ch), Asplin J recorded that the witnesses who were present at court had verified their statements on oath or affirmation and that she had given permission for hearsay notices in respect of all further witnesses, both witnesses of fact and experts.

Mr Rigney referred also to the decision of Freedman J in Payroller (in liquidation) v Little Panda [2020] EWHC 391. Freedman J considered whether the consequence of striking out the Defence should then be that it was appropriate for the court to enter judgment in default or to proceed to trial and require the claimant to prove its case. The judge noted at [13] that the White Book commentary suggested that, rather than be entitled to judgment in default, the claimant would still have to prove its case, but he observed that that commentary was made by reference to PD39A which was removed in April 2019. He noted further at [21] that an issue had been raised, which he did not have to resolve, as to whether judgment in default was available following the removal of the Practice Direction. In the circumstances of that case, he decided that the defence should be struck out with the result that the defendant could not rely on the matters in its Defence.

In the AMNS case, the judge similarly declined to enter judgment in default and drew a distinction between the claimant not attending trial so that there was no claim presented and nothing for the court to decide and the defendant not attending. Then at [32], Mr Sullivan KC continued:

“For the avoidance of doubt, since D has not attended, and did not call the witnesses from whom statements were served, nor make any application for that evidence to be taken into account as hearsay, I have not read those statements or relied upon them in any way when deciding the issues. I take the view that they have no evidential status. CPR 32.5(1) is perfectly clear: the witness “must” be called to give oral evidence unless the court orders otherwise or the statement is put in as hearsay evidence. Neither or those things has happened. In Williams v Hinton [[2012] C.P. Rep 3 (2011)], the Court of Appeal made clear that the effect is that the statements do not become evidence at the trial (per Gross LJ at [43]) …..”

I agree with that summary of the position and I take the same approach in this case in having no regard to the Defence which has been struck out or the factual evidence which was not called at trial. Subject to the points made below, I take the same approach to the defendant’s served expert evidence that was not called at trial. I do so for two reasons. Firstly, there are no pleaded issues to which that evidence could relate. Secondly, if the evidence was not called, it was simply not evidence in the trial.

I make the second point because, in written submissions and in fairness to the defendant, Mr Rigney suggested at least that, in relation to the expert evidence, there might be a distinction between the position where (i) the court struck out the Defence and (ii) where the Defence was not struck out but the trial proceeded in the absence of the defendant. In the latter case, it was suggested that the court would still be entitled to treat the expert reports served by the defendant as evidence in the case but subject to important considerations as to the weight to be attached to them. Those considerations would include the facts that the experts had not verified their opinions on oath or affirmation and that the claimant had had no opportunity to cross-examine.

The only authority cited that arguably supported the treatment of the experts’ reports in this way was Leeson v McPherson [2024] EWHC 976. In my judgment that decision does not decide that that is, in all cases, the proper approach to the expert evidence and it is not a decision that in any sense binds me to take that approach in this case.

In the Leeson case, the defendant did not attend trial. The claimant proceeded to call factual evidence. The defendant had served expert evidence of a pathologist, Dr Shepherd. The claimant argued that, since Dr Shepherd would not be called and his evidence could not be tested, his (written) evidence should not be admitted. At [20], Richard Smith J said this:

“… the procedural position was that expert evidence was directed, including in the field of pathology, with the parties each having permission to rely on the written report of an expert in that discipline. At the pre-trial review in March 2024, the parties were also given permission to call oral evidence from their pathology experts. As such, it seems to me that the written report of Dr Shepherd already forms part of the evidence that falls to be considered at trial, whether or not the Defendant chooses to exercise the right subsequently granted to him to call his expert. It does not seem to me that the Defendant’s absence from trial alters that position.”

It is apparent from that paragraph that the judge regarded the permission given to rely on a written report as permission to rely on that report at trial without more and to treat the permission to call oral evidence as supplemental. That position takes account of the difference between the Civil Procedure Rules in respect of factual witness evidence and experts. CPR Part 32.5(1) provides expressly that a party who serves a witness statement must call the witness to give evidence at trial unless the court orders otherwise or the evidence is admitted as hearsay. CPR Part 35.4 provides that no party may call an expert or put in evidence an expert’s report without the permission of the court but contains no provision equivalent to Part 32.5(1). It seems to me, firstly, however, that that is covered by Part 35.4 as no party may call an expert without permission. “Calling” an expert must mean calling them to give evidence and not simply relying on a written report. Relying on a written report may be covered by the second part of the rule which provides for putting a report in evidence. That caters for smaller cases where calling the expert to give oral evidence is disproportionate. This is patently not such a case.

In the present case, the order made by Joanna Smith J at the Case Management Conference on 16 June 2023 gave permission to the parties “to call” the named experts on the issues identified. To my mind it follows that if the expert was not called, his/her report was not in evidence and had no evidential status.

As I have said, there will inevitably be cases where it is not anticipated that expert witnesses will give their evidence orally but that would rarely be the case in proceedings of this nature in the TCC. In the absence of a clear order to a different effect, I cannot see that this sort of permission to call expert evidence can have the effect that the written report is in evidence without the expert being called to verify on oath or affirmation that the opinions expressed remain his/her true and full opinions. It follows that, in this respect, it makes little or no difference whether the Defence is struck out or the trial simply proceeds in the absence of the defendant.

There is a gloss to be placed on that proposition. In the TCC the established practice, reflected in the TCC Users Guide at paragraph 13.5.4 is for experts’ reports to be served after the experts have met without prejudice and produced a joint statement. The purpose of this sequence is twofold. Firstly, the experts have the opportunity to discuss their opinions on a without prejudice basis and before they have openly committed themselves to writing. They are, therefore, the more likely to feel able to modify their opinions or accept the views of others without the difficulty or inhibition of departing from views already expressed in open reports. Secondly, it enables them to focus their reports on the matters that remain unagreed and the direction given is often formulated in terms that their reports should be limited to matters not agreed.

Two things flow from this and, indeed, would similarly flow if the joint statement followed the reports. The first is that the joint statement(s) will include opinions on matters that are agreed and, to that extent, the defendant’s experts’ evidence will be evidence before the court not because it is the defendant’s evidence but because the claimant’s experts are able to verify the matters agreed. Secondly, an expert’s duty is to the court and an expert is required to inform the court where there is a range of opinion and the basis on which that expert has reached his/her opinion. An expert on behalf of a claimant will, therefore, inevitably have had regard to the defendant’s pleaded case and the views expressed by the defendant’s expert whether in a written report or a without prejudice meeting. To that extent the defendant’s case on such matters will be before the court both in the matters not agreed in the joint statement and in the claimant’s expert report addressing such matters. That may inform any questions that are put by the court to the expert and may be material to the court’s assessment of the evidence, but the only evidence is that of the expert actually called.

These matters were canvassed at the commencement of the hearing and, consistently with the views I have expressed above, the case then proceeded with Mr Rigney (i) opening his case fully including setting out for the court reasons for accepting the evidence of the claimant’s expert witnesses and (ii) calling his factual and expert evidence.

As summarised above, there are four main aspects to OHP’s claim.

The figures that appear in brackets are the sums claimed by way of damages. The figures are derived from the evidence of James Thomas, the claimant’s quantum expert. Although the pleaded claim value is approximately £53.6 million, OHP confines its claim to Mr Thomas’ most recent assessments.

I note that LOR had denied liability in respect of each of these categories of defect. LOR denied both the allegations of breach and causation. Further and in any event, for the reasons canvassed below, LOR had contended that OHP was not responsible for the maintenance or repair or replacement of these items and, in respect of the apartments and common parts, had suffered no loss. LOR had admitted that OHP was responsible only for the pipes in the common parts “which do not exclusively serve the apartments”.

The fourth defect related to the Pantograph Cradle (£215,957.44). The Property comprises four “pavilions” (designated A to D) and five cores variously containing stairs, lifts and services. Since practical completion, the pantograph cradle, which is fixed to Pavilion A, has failed to operate properly, with the result that OHP has been unable to use it to access the facades of the Penthouses on Pavilions B, C and D to carry out cleaning, inspection, maintenance and repair. LOR admitted liability in respect of this defect. Mr Rigney rightly drew the court’s attention to apparent inconsistency in LOR’s case in that, in relation to the pantograph cradle, LOR took no issue with OHP’s responsibility for repair and maintenance. However, given the nature of LOR’s argument on responsibility for the pipework, I am not persuaded that there is necessarily any such inconsistency.

OHP called one witness of fact, Peter Caddy, Director of Engineering at OHP. His evidence covered each of the defects including the joint inspections in 2016-2017 and 2023-2024; past and future remedial works and the practicalities of carrying out these works within the occupied property. In relation to the CHW pipework his evidence addressed the operation of the system. His second and third statements addressed a number of issues that had been raised by LOR.

OHP called the following expert witnesses:

There was no cross-examination. Such questions as I had following pre-reading of the written opening submissions and the experts’ reports as referred to therein were raised with counsel in submissions and answered to my satisfaction by reference to the reports.

The Main Contract between LOR and PGGL was entered into on or about 15 June 2007. The Main Contract was made on the JCT Standard Form of Building Contract with Contractor’s Design, 1998 edition, incorporating amendments 1 to 5 and bespoke amendments including amendments to clauses 2 and 8.

By clause 2.1 of the Main Contract LOR was obliged to carry out and complete the Works as defined and including those set out in the Employer’s Requirements and to complete the design of the Works.

By clause 2.5.1, in summary and so far as material, LOR undertook and warranted to the Employer that it would carry out the design with the reasonable skill, care and diligence to be expected of a properly qualified architect or other appropriate designer; that the Works when completed would comply with the Employer’s Requirements; that the Works when completed would be suitable in every respect of the purposes made known by the Employer’s Requirements; and that the Works would comprise only materials that were of sound and satisfactory quality and workmanship, manufacture and/or fabrication to standards consistent with the requirements of the contract.

Clause 8.1.1 provided that all material and goods should be of the kinds and standards described in the Employer’s Requirements or Contractor’s Proposals and clause 8.1.2 made similar provision in respect of workmanship or, where no standard was set out in the Employer’s Requirements, provided that the workmanship should be if a standard sufficient to comply with clause 2.5. Clause 8.1.3 further provided that all work should be carried out in a proper and workmanlike manner.

There were additionally five Deeds of Amendment to the Main Contract. The first was dated 11 February 2008 and the second 7 February 2009. It is sufficient to say that the terms of these first two Deeds of Amendment were relevant to and relied on in OHP’s pleaded case in respect of the pantograph cradle.

A Collateral Warranty was made between LOR and OHP dated 8 September 2010. By clause 1.1 LOR warranted to OHP that “it has complied and will continue to comply with the terms of the [Main Contract]”. The clause continued:

“….. without prejudice to the generality of the foregoing, [LOR] further warrants to [OHP] that:

(a)

all the reasonable skill, care and diligence to be expected of a properly qualified and competent architect or other appropriate designer who is experienced in preparing design in relation to works of a similar size, scope, nature, complexity and value to the Works has been and shall continue to be exercised in relation to the preparation and completion of the Contractor’s Design;

(b)

all materials and goods supplied and to be supplied for incorporation into the Works are and shall be in accordance with the Contract and will be and will remain of satisfactory quality and shall be suitable in every respect for the purposes made known or reasonably capable of being inferred from the Contract;

(c)

all workmanship, manufacture and fabrication shall be in accordance with the Contract; …..”

Although the Defence had been struck out, it was appropriate for OHP in proving its case to establish that it had the maintenance and repair responsibilities relied on as causing it to suffer substantial loss.

OHP adduced the evidence of Dr Arnold which did not seek to argue an issue of law but rather to set out the background which would inform the court’s decision on the meaning of the terms of the leases. In summary, Dr Arnold explained the following. At the Property, chilled water is generated by centralised water chillers after being dosed with chemicals from a dosing pot. It is then distributed around the Property to both the common parts and the apartments on a flow and return basis via the CHW vertical distribution pipes in the risers in the cores. The water travels through horizontal pipework in the ceilings in the corridors of the common parts before entering the ceiling cavity of each apartment. The flow to each apartment can be stopped by closing the relevant isolation valve in the common parts. There is no such isolation valve in the apartments and the only isolation valves in the apartments are for specific pieces of equipment. In the apartments, the chilled water principally supplies the air cooling equipment, including air handling units, the fan coil units and the CHW manifold.

The Property is the subject of a Superior Lease dated 30 November 2006 with a 999 year term. The Superior Lease was amended by a Deed of Variation dated 26 October 2015. As set out above, the present position is that OHP is now the freeholder and Landlord under the Superior Lease and 1HP is the Tenant.

OHP’s covenants as Landlord include, at clause 7.4(a):

“Subject to where the same is the Tenant’s responsibility under clause 6.6 the Landlord shall keep the Premises in good repair and condition and shall use reasonable endeavours to provide the services set out in Schedule 4 …”

The Premises are defined in terms which encompass the whole of the Property including the individual apartments.

The services in Schedule 4 Part 2A include “Items of general maintenance expenditure” and, at clause 2:

“The maintenance, repairing and replacement of all ventilation ducts, water pipes and sewage pipes providing common services to the Complex….”

On its face, therefore, that covenant in clause 7.4(a) captures the CHW and other pipes that are the subject matter of this action and imposes a relevant repairing obligation on OHP. The Tenant’s covenants to which OHP’s obligations are subject are to repair and maintain the “Permitted Parts” which are, in short, the apartments.

The Underleases for each apartment are in substantially the same terms. The definition of Landlord is in terms that have the effect that the Landlord is 1HP and the definition of Superior Landlord captures OHP. One sample Underlease was relied upon at trial and what follows refers to that Underlease but on the basis that others are in the same terms so far as relevant to this action.

Clause 6.6 (under the heading of Landlord’s covenants) requires the Landlord to use its reasonable endeavours to procure that the Superior Landlord provides the Services set out in Part 2 of Schedule 4 but, if the Superior Landlord fails to provide the Services, the Landlord shall perform the obligations. The Landlord’s Services under Schedule 4 Part 2A of the Underlease are in the same terms as the Services in the Schedule 4 Part 2A of the Superior Lease. The effect of these provisions is that OHP is, so to speak, the first port of call for the performance of these Services.

So far as the Tenant is concerned, clause 9.3 provides:

“The Tenant must observe and perform the covenants and conditions on the part of the tenant contained in the Superior Lease (save for the payment of rent) so far as they relate to the Apartment except in so far as the Landlord expressly covenants in this lease to perform them …”

The Tenant under the Underlease therefore takes on the obligations of 1HP in clause 6.6 of the Superior Lease.

Further, clause 5 (headed Tenant’s Covenants) provides that the Tenant shall:

“…. keep the Apartment … and drainage water and air handling and processing and electrical apparatus …. serving solely the Apartment in good and substantial repair decoration and condition …”

The definition of the Apartment (in Schedule 1 of the Underlease) includes “all Conducting Media … which are situated in any part of the Building and serve exclusively the Apartment”. The definition conversely excludes Conducting Media that do not serve exclusively the Apartment. “Conducting Media” are defined as “all drains pipes gullies …. and other conducting media of whatever nature.”

It follows that OHP is obliged to maintain the CHW pipework as water pipes providing common services. The argument that had arisen, however, was that the CHW within the Apartments formed part of the Apartment as Conducting Media serving exclusively the Apartment and thus within the underlessees’ repairing obligations not those of the Landlord/OHP.

Although the Defence to that effect has been struck out, Mr Rigney was right to address the court on that issue as part of his duty of fair presentation and, indeed, as I have indicated, it was the issue addressed by Dr Arnold in his report.

Relying on Dr Arnold’s evidence, OHP’s case is that that argument is wrong because the CHW pipework in the ceiling of an apartment does not serve that apartment exclusively but rather forms part of a single, continuous distribution system for the entire complex of properties at this location. The same chilled water runs through the whole system on a flow and return basis and is supplied by centralised equipment maintained and repaired by OHP. This was not in issue. I made some observations above as to reliance on the joint statements of experts. The joint statement dated 23 August 2024 agreed between Dr Arnold and David Rollason, instructed by the defendant, set out the following issue:

“What is the general layout and purpose of the CHW pipework distribution system in the Property?”

The “Matters Agreed” started as follows:

“The CHW pipework distribution system is a single, sealed pressurized containment system, containing a single recirculating volume of CHW distributing cooling throughout the Property.”

The “Matters Agreed” further set out agreement as to the circulation of CHW by primary and secondary pumped circuits and the route of circulation; the dosing of the water and the need to avoid stagnation by regular circulation of treated CHW; that the central plant located in the basement provided all the plant and equipment for the CHW in the Property; and the location of the pipework within the apartments, connecting to the AHUs and then the fan coil units.

As described in the joint statement, the chilled water system, in my view, would obviously be a common service and the pipework which distributes it falls within Schedule 4 Part 2A.

The only matters not agreed in response to this issue were, in essence, whether there was any isolation valve on the return pipe within the apartments. The experts’ respective positions on this were expanded upon in their disagreement as to whether the CHW pipework within the apartments exclusively serves the apartments.

The principal argument to the contrary appeared to be that the isolation valves meant that the pipework could be isolated from the rest of the system. Dr Arnold placed reliance on the fact that the valves were in the common parts, so within the Landlord’s demise. Mr Rollason asserted that there were isolation valves within the apartments. That latter evidence was not before the court and the court has no reason not to accept the evidence of Dr Wadsworth. But it does not seem to me that the issue would turn on whether an apartment could be isolated from within the apartment or only externally. Rather it turns on the manner in which the system is intended to operate.

Dr Arnold’s evidence was that the system is intended to be operated with the valves open and that there is a practical and important reason for this. If the pipework within an apartment is isolated for a protracted period, there is a risk that the stagnant water within that part of the system would develop a harmful bacterial infestation which, when the valves were opened, would spread into the rest of the system. That evidence is consistent with the system being a single system that provides a common service. Further, it seems to me that the presence of valves to isolate an individual apartment, if for example, work needs to be done within that apartment, supports the view that the pipework does not exclusively serve that apartment rather than the opposite. I say that because it makes it clear that, in the normal course, the pipework is part of a complete system and it is only when the valve is closed that the pipework temporarily serves only that apartment and does so without supplying chilled water.

Dr Arnold also gave evidence that from the schematic drawings that he had seen and his own inspections of the system, there was no intention to enable the CHW in each apartment to be maintained independently from the landlord’s chilled water distribution. He concluded (at paragraph 3.61 of this report):

“In my opinion, had there been any intention by the system designer, LOR, that the apartment owner would be responsible for repair and maintenance of the section of chilled water circulating through its apartment, it would have included facilities for the owner to maintain the quality of chilled water in its apartment. But there are none.”

In short, therefore, in my judgment, OHP has made out its case that it is responsible for the maintenance and repair of the CHW pipework and that it is OHP which has suffered and will suffer loss in repairing/ replacing the corroded pipework, the defective butterfly valves and the defective soldered joints.

In the event that I had decided differently, OHP advanced an alternative case, that they would be entitled to recover even if the tenants were responsible for the CHW pipework within the apartments. That case was set out in the Amended Particulars of Claim at paragraph 61. In summary, OHP averred that when the Collateral Warranty was entered into, it was in the contemplation of LOR and OHP that the apartments would be let to individual lessees/owners who would suffer loss in the event of breach of the Main Contract and Collateral Warranty. Accordingly, OHP and LOR were to be treated as having entered into the Collateral Warranty with the common intention that OHP would be entitled to enforce its rights under the Collateral Warranty for the benefit of the lessees. Mr Rigney relied principally on what is commonly referred to as the narrow ground in St Martin’s Property Corporation Ltd. v Sir Robert McAlpine Ltd. [1994] 1 AC 85 and, although there are differences between that case and the present, I would have found that OHP was entitled to recover on this basishad I reached a different conclusion on OHP’s primary case. The pleaded case also extended to the broader ground in St Martin’s but it would not, in any case, have been necessary for OHP to rely on that rather more contentious position.

The CHW pipework at the Property is made from steel and copper. The steel pipework is generally insulated with mineral rockwool insulation.

The claim, however, relates to the copper pipework. The copper pipework is generally insulated with phenolic foam insulation fitted with an aluminium foil sheath to reflect radiant heat. This form of phenolic insulation was installed on the copper pipework in the voids above ceilings in all the apartments, in the horizontal runs in the ceiling voids in the common parts, the local pipework serving the fan coil units, and in some parts of the leisure area, management suite and basement. Where this form of insulation was used discontinuities in the aluminium foil sheath should have been sealed with self-adhesive aluminium tape which was intended to act as a vapour barrier. That much was agreed by the experts in the joint statement of Dr Wadsworth and Mr Edwards for OHP and Dr Adrian Wright and Mr Rollason for LOR.

It was also common ground between the parties that the copper pipework had experienced formicary corrosion also known as “ants’ nest corrosion” because of its appearance, namely, jagged pits forming convoluted tunnels in the pipework. The experts further agreed in the Joint Statement that:

“The observed corrosion of the copper pipework would not have occurred had water ingress been prevented, as intended.

The CHW pipework was designed and installed with the intention that no external corrosion should have occurred during its service life.

The observed corrosion is irreversible.”

The evidence of Dr Wadsworth, which was, in the event, unchallenged, was that this form of corrosion was the result of leaching of corrosive chemicals from the phenolic foam insulation caused by contact with water vapour in the atmosphere which had breached the vapour barrier and condensed on the pipes. Put simply, the foam itself is largely impermeable so that the route for water vapour to reach the pipes would be through gaps in the vapour barrier provided by the aluminium sheath. The experts agreed that:

“Any defects in the seal of the vapour barrier surrounding the insulation, in this case aluminium foil and aluminium tape at joints etc, will allow water vapour to enter and to condense on the pipe work surface, causing the pipe to become wet, if the temperature of the pipe surface is below the dew point.”

Corrosion was first discovered in November 2014. Joint inspections were carried out in 2016 and 2017 when it was found that the pipework was corroded in almost all locations inspected in both the common parts and apartments. In the joint statement, the experts recorded their agreement as to the extent of corrosion and further that the majority of the sections of pipe inspected were found to be wet or damp and that active corrosion was occurring and would continue to occur in wet or damp areas.

Laboratory investigations between November 2016 and April 2024 identified significant pit depths, the deepest of which was 87% of the thickness of the pipe wall. In Dr Wadsworth’s opinion it is highly likely that deeper pits exist in the remainder of the pipework system; that perforation of the pipework is inevitable; that the most severe pits will first result in leaks occurring. Mr Edwards’ view further is that it is highly likely that leaks will occur due to corrosion pinholes within a short period of time.

As to LOR’s liability, OHP’s case in summary was that the cause was widespread breaches of vapour barrier permitting vapour to reach and condense on the foam and that was the consequence of LOR’s failure, in breach of contract, properly to install the phenolic insulation particularly around joints, tees, bends, valves and other devices. In particular, OHP alleged that, in breach of section Y50/3010 of the Specification, LOR failed neatly to finish joints, corners, edges and overlaps in the phenolic foam insulation and/or failed to ensure that overlaps were neat and even and parallel to circumferential and longitudinal joints.

That case is supported by the evidence of both Dr Wadsworth and Mr Edwards both as to the cause of the corrosion and the poor workmanship of LOR. In Mr Edwards’ opinion the primary cause of the pipework corrosion was the failure of LOR to comply with the manufacturer’s installation guidelines and to carry out the works in a proper and workmanlike manner so as to ensure the integrity of the vapour barrier.

In Appendix 5 to his report, Mr Edwards identified the following defects:

I note that in his written submissions, for the assistance of the court, Mr Rigney set out LOR’s pleaded Defence and denial of breach. He drew attention to the fact that, in his report, Mr Rollason (i) accepted that there were breaches of the vapour barrier where adhesive tape was absent and accepted that damage to and/or discontinuities in the vapour barrier might have occurred but (ii) did not concede that the standard of LOR’s workmanship was poor. On the basis of his own observations, Mr Rollason said, in the Joint Statement, that the standard of workmanship was generally good and that he would be surprised if the breaches in the vapour barrier which the experts had observed had been present at the time of installation. He placed considerable reliance on the factual evidence that had been served by LOR in witness statements of Gavin Body (of Crown House Technologies Ltd, the MEP sub-contractors for the shell and core) and John Reilly (of Imtech Meica Ltd., the MEP sub-contractors for Pavilion B). No other mechanism for such widespread corrosion was offered.

In the event, none of this material whether factual or expert was in evidence and OHP’s evidence was unchallenged and it is neither necessary nor appropriate for the court to address a case that was not advanced or supported by evidence at trial.

OHP invited the court to find that the widespread corrosion experienced by the CHW pipework was caused by LOR’s systemic failure properly to install the phenolic foam insulation as alleged by OHP. That amounted to a breach of the Main Contract and thus of the Collateral Warranty. On the basis of the evidence adduced by OHP, I make that finding.

The evidence referred to above as to the extent of corrosion, the fact that it is not reversible, and the likelihood of progressive leaks underlies OHP’s case that the appropriate remedial works are the wholescale removal and replacement of the CHW pipework except in the Excluded Areas identified in the Amended Particulars of Claim. That is supported by the unchallenged evidence of both Dr Wadsworth and Mr Edwards.

OHP, therefore, again invited the court to find that the remedial works required to rectify the defects in the CHW Pipework for which LOR is contractually responsible comprise the removal and replacement of the entirety of the CHW pipework except for in the Excluded Areas. On the basis of the evidence adduced by OHP, I make that finding.

By his report, Mr Edwards’ gave evidence as to the scope, sequence and programme of remedial works. This unchallenged evidence is then relied upon by Mr Thomas as the basis for his assessment of the cost of carrying out the works.

In summary, the remedial works will involve:

Mr Edwards’ evidence is that:

I note that the duration of the works originated with LOR’s estimate and that it reflected the evidence of Mr Caddy as to the difficulty in gaining access to apartments and providing welfare, storage and other facilities on site. In oral submissions, the court was taken through the calculation and, disappointingly long though the period is, I am satisfied that OHP has made out its case on this matter.

Mr Edwards and Mr Rollason signed a joint statement in relation to “CHW Replacement”. There was a large measure of agreement between them about the scope and sequence of remedial works and that gives yet further weight to Mr Edwards’ evidence. There was a discrete issue between these experts about the necessary extent of replacement of vent pipes but in the circumstances that the defendant called no evidence at trial, I say no more about it and, as OHP again invites the court to do, I accept the evidence of Mr Edwards as to the scope, sequence and duration of remedial works.

As I have said, OHP confines its claim for damages to the quantum assessed by its expert, James Thomas. Assessments of the reasonable cost of the remedial works summarised above were provided in the Joint Statement, Mr Thomas’ report dated 20 December 2024 and his supplemental report dated 12 February 2025. Not only is Mr Thomas’ evidence unchallenged, but Mr Rigney also emphasised that Mr Thomas’ experience is particularly apt because, as set out in this report, his involvement in disputes and experience of assessing costs of remedial works has focussed on the London prime and super prime markets including super prime residential properties in Kensington and Chelsea, Knightsbridge, Belgravia and Mayfair.

OHP also relies on the approach that Mr Thomas has taken to his assessment as supportive of its invitation to accept Mr Thomas’s evidence and adopt his assessment.

Mr Thomas’s first assessment was set out in a document – a large spreadsheet - entitled “Order of Costs Estimate” dated March 2022. This formed the basis for OHP’s pleaded case on quantum and was cross-referenced to the Amended Scott Schedule. The total assessment was £52,035,743 (for all remedial works not only those relating to the CHW pipework).

This assessment formed the basis of discussion for the experts’ without prejudice meetings and the preparation of the joint statement dated 28 November 2024 and signed by Mr Thomas and Angela Austin, the defendant’s expert. As noted in paragraph 19 of the Joint Statement, the scope of the proposed work had changed – the number of apartments requiring remedial works had reduced and the scope of work in the corridors had been modified. Following from their meetings and prior to conclusion of their joint statement, Mr Thomas and Ms Austin also put a number of questions to Mr Edwards and Mr Rollason which were responded to by those experts in their Joint Statement dated 23 August 2024 and Supplemental Joint Statement dated 8 November 2024.

Both quantum experts then carried out a primary and secondary assessment. In Mr Thomas’ case, his primary assessment was based on the cost of carrying out the scope of remedial works identified by Mr Edwards, with the duration of 10.46 years, and his secondary assessment was based on the scope of works in Mr Rollason’s report. Since the latter is not in evidence, it is only Mr Thomas’ primary assessment which the court is concerned with.

It is not necessary to set out how those assessments and figures progressed. It is sufficient to say that Mr Thomas’ primary assessment set out in the joint statement was a lesser figure than that pleaded and his assessment in his reports slightly less again. In each case, Mr Thomas followed the structure of his original Order of Costs estimate. In his first report, he offered detailed explanation of the derivation and build up of his figures. At the PTR, the court then gave directions for the service of supplemental reports. Only Mr Thomas served a supplemental report. He followed the same structured approach as before but again revisited his assessments resulting in a further reduction in the total sum claimed.

I record that at the hearing, my attention was drawn to the following particular aspects of Mr Thomas’ reports including the joint statement which set out much of his evidence:

Having seen his reports, I take the view that Mr Thomas’ approach is consistent with his adopting both a careful and an independent approach to the assessment of costs of remedial works and being prepared to take into account both matters that challenged his assessments as well as those that supported them.

Mr Thomas’ revised assessment of the cost the remedial works to the CHW Pipework is £34,437,122.60. I accept his unchallenged evidence of this assessment and will give judgment for the claimant in this amount.

OHP’s case is that a number of butterfly valves have failed and cannot be used to close off the water supply within the various systems, for example, for the purpose of carrying out maintenance. That failure has been caused by a breach of the Main Contract (and consequently the Collateral Warranty) in that LOR failed to design, supply and install butterfly valves in accordance with the requirements of the Main Contract and thatwere of good and/or satisfactory quality and/or fitfor purpose.

In relation to the butterfly valves in the DHW and SBCWS systems, OHP’s case is as follows:

Dr Wadsworth’s evidence was that, having considered the cause of the de-alloying, including alternative propositions advanced by Dr Wright, he concluded that the de-alloying was the result of the fact that the microstructure of the grade of aluminium butterfly valve discs was not properly controlled during manufacture which rendered them susceptible to de-alloying and unsuitable for use in the domestic water supplies at the Property.

Although, for the reasons I have given, I have no regard to the expert evidence served but not called on behalf of the defendant, it is I think relevant to take into account that Dr Wadsworth’s evidence addressed the alternative possibilities advanced by LOR as to the cause of the de-alloying. These included the propositions that the cause was (i) settlement on the discs of iron deposits from other parts of the domestic water supply; (ii) excessive chlorine dioxide as a result of OHP failing properly to control and monitor water quality; (iii) the impact of low flow or stagnant water; (iv) the influence of microbial presence. The parties, therefore, instructed experts to investigate the water quality. These experts, Dr Pamela Simpson for OHPand Mr Timothy White for LOR agreed that there was no evidence of elevated levels of iron and copper, that appropriate chlorine dioxide levels were not exceeded, that there was no evidence of stagnation, and that there was no microbial activity capable of causing corrosion. That agreement was recorded in their joint statement and in the Order made on the PTR the judge recited that the parties had agreed that neither Dr Simpson not Mr White would be required to give oral evidence at trial.There was some discussion at trial as to whether I should interpret that agreement and recital as meaning that the joint statement was to be treated as in evidence or not. Since the Defence had been struck out, there was no longer any issue to which this evidence was material.

Despite that, it seems to me that it is both right and convenient to have some regard to that evidence because it was relied on by, or at least relevant to the evidence of, Dr Wadsworth. In this report at paragraph 7.2.2.29 he said:

“However, given that the Valve discs have corroded and that there is no evidence whatsoever to indicate that the water chemistry was anything other than what is typical in DWS’s, I am inexorably drawn to the view that the microstructure of these Valve discs was not properly controlled and rendered them susceptible to corrosion.”

I would have accepted the unchallenged evidence of Dr Wadsworth in any event but the agreed evidence about water quality adds further weight to his opinions that the possible alternative causes of de-alloying can be disregarded.

In relation to the butterfly valves in the LTHW pipework which have failed, Dr Wadsworth’s opinion is that the cause of the failure was a manufacturing defect. The valves were either manufactured with excessive diameters or the seats were too small, especially near the spindle. In either case, the valve discs could not rotate sufficiently to seal against the valve seat leaving a gap through which water could pass. Four of six valves inspected suffered from this defect and OHP infers, therefore, that a significant number will required removal and replacement.

As to the scope of remedial works:

This evidence was unchallenged and there is nothing inherently unreasonable about the estimates given and it follows that I accept Mr Edwards’ estimates as to the likelihood of defective valves being identified and requiring replacement.

Mr Thomas assesses the reasonable cost of these remedial works – that is removing, inspecting and replacing the affected butterfly valves – at £313,753.00. For the reasons given above, I accept Mr Thomas’ unchallenged evidence and will give judgment for OHP in this sum.

A number of soldered joints, mainly within the LTHW pipework system, have leaked. The detail of OHP’s case as to the leaks is set out in Dr Wadsworth’s report. Both Dr Wadsworth and Mr Edwards address the causes of the leaks and have identified (i) improper preparation of the joints prior to soldering and/or (ii) insufficient heat applied during soldering and/or (iii) excessive heat applied during soldering. Each of these is a failure in workmanship and a breach of LOR’s obligations under the Main Contract and Collateral Warranty.

Mr Edwards noted that there had been 46 leaks in the period from 2017 to 2022 and further leaks identified in more recent investigation surveys. In his opinion it would be reasonable to expect a further 10 soldered joints to leak each year for the next 10 years and require repair. That evidence was unchallenged and is not inherently improbable and I accept Mr Edwards’ estimate.

Based on Mr Edwards’ estimate, Mr Thomas assesses the reasonable cost of remedial works as £179,392 and, for the reasons already given, I accept Mr Thomas’ evidence and I will give judgment for OHP in this amount.

Each of the Pavilions has a flat roof on which is a building maintenance unit of crane and cradle machinery running the length of the roof on tracks and intended to be able to drop the cradles down the four main faces of the Pavilions for window cleaning. In addition there is a pantograph cradle which is intended to swing into the reveals of the penthouse facades for access to these sections of the façade. The pantograph cradle allows access for inspection, cleaning, maintenance and repair of the facades of the penthouses of the Pavilions. It was intended that this cradle would be shared and moved amongst the Pavilions. It is OHP’s case that the cradle fell within LOR’s design and/or build obligations; that it has never operated properly since practical completion; and that it has not been available for use to access the facades of the penthouses of pavilions B, C and D. In particular, it cannot safely or practically be moved from one Pavilion to another.

LOR admitted liability and had stated that it was developing a methodology to rectify the issue. On the day before the PTR, LOR provided some documents relating to proposed remedial works. Mr Thomas has assessed the cost of those remedial works as £215,957.44 and I will give judgment in OHP’s favour for that amount.