Legal

Carillion’s Beetham Tower: Sealed without a kiss

3 April 2019 | By Theresa Mohammed, Tamsin Lim

The Beetham Tower, Manchester, contains a Hilton hotel with luxury flats above

Failings with the glazing sealant bond on Manchester’s Beetham Tower caused the tenant and freeholder to end up in court, after original contractor Carillion went into liquidation. Theresa Mohammed and Tamsin Lim examine the case.

Theresa Mohammed

Beetham Tower in central Manchester was the tallest building in Britain outside London when it was completed in 2006 by main contractor Carillion. But the collapse of the contractor last year led to a legal wrangle between landlord and tenant over outstanding facade repairs.

The tower is a building of two halves. A cantilever divides the Hilton hotel from the luxury flats above. The facade is seamless glass curtain walling, its panels, a mix of double-glazed vision units and single-glazed shadow box units, attached to their frames with structural sealant.

In 2014, Carillion discovered that the sealant bond was failing and that over 150 of the shadow box units were potentially affected. The contractor effected a short-term solution, fitting stitch pressure plates to the units to hold them in place. Carillion then began investigating a permanent remedy but went into liquidation in January 2018 before this could be implemented.

Tamsin Lim

Subsequently, the leasehold owner of the Hilton, Blue Manchester, brought a claim in the Technology & Construction Court (TCC) against the freehold owner of the tower, North West Ground Rents. The claimant highlighted the landlord’s repairing covenant in clause 7.2 of the lease and demanded a permanent solution. It also raised concerns about the safety of the shadow box units and the adverse effect of the stitch plates on the appearance of the tower.

The court considered what works the landlord was liable for under the terms of lease. It held that the tenant could compel the landlord to undertake a permanent remedial scheme and was entitled to damages.

The judge, Stephen Davies, also considered whether the existing state of the shadow box units placed the landlord within breach of clause 7.2, where it had covenanted to “keep in good and substantial repair and when necessary as part of repair to reinstate, replace and renew where appropriate the retained property and the common parts”.

The judge referred to Gibson Invest-ments v Chesterton [2002], where Judge Neuberger said: “Good and substantial repair means more than just that the building must be capable of occupation. It means… the building must be in a state of repair which is appropriate for a high-class office building in a prime office location.”

Judge Davies said the disrepair did not necessarily have to render the property non-functional to breach the covenant. He referred to Hunt v Optima (Cambridge) [2013], where a similarly broad repairing covenant “obliged the landlord to make good any design, workmanship or material deficiency within the building as a whole, for which it was responsible to… a number of long leasehold tenants”.

The judge noted that Beetham Tower was likewise divided into multiple leasehold interests and it was desirable for one person to be responsible for making good disrepair in the common parts, even if this was due to inherent defects or defective design or workmanship, which potentially required works going beyond mere repair.

Aesthetic considerations

He then considered solely aesthetic considerations in relation to remedial works and referred to Ruxley Construction v Forsyth [1996], where the client took the contractor to court for building a swimming pool nine inches shallower than the seven feet and nine inches specified in the contract. However, Forsyth failed to obtain the cost of removal and reinstatement.

Judge Davies said there would be cases where it was unreasonable for a tenant to insist on contractual obligations which reflected solely aesthetic considerations, but that sometimes tenants could insist on remediation to their own aesthetic standards.

“The judge held that the landlord was in breach of its repairing covenant and was required to install an alternative glazed facade.”

He concluded that as a significant number of shadow box units were at risk of failure on the Beetham Tower, so a repair scheme covering all of the units was required. Without the stitch plates, the affected units would be in disrepair, causing the landlord to breach clause 7.2.

Judge Davies said that the stitch plates were expressly adopted as a temporary solution to last no more than three years; on this basis, they could not be regarded as structurally safe or “in good or substantial repair”. The judge held that the landlord was in breach of its repairing covenant and was required to install an alternative glazed facade.

He added that damages in lieu of an acceptable remedial scheme would not be adequate or fair. The judge also said that a detailed schedule of works was “not necessary” as long as North West Ground Rents was ordered to achieve a “clearly specified result” and could be “protected against the risk of unforeseen circumstances which render it impossible or impracticable to comply”.

The judge required the landlord to “remove the stitch plates… and remove and reinstate or replace the shadow box units and their frames… so that they are securely affixed to the structure of the building”, providing the same external appearance as at the date of the lease. 

North West Ground Rents was allowed 18 months to implement the works. The judge noted that although this seemed generous, it was a reasonable period designed to ensure compliance on the basis that non-compliance could result in contempt of court.

Finally, Judge Davies acknowledged that there was a question mark over whether the landlord could recover costs from the tenant, under the lease’s service charge provisions, or from the leasehold owners of the flats above the hotel. These are queries to be raised in a separate case.

Theresa Mohammed is a partner and Tamsin Lim is a trainee solicitor at Trowers & Hamlins

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