Taxpayer may foot £73m repair bill for Glasgow QEUH as health board accused of contract breach

It is a blow for the health board which wants the contractors rather than taxpayers to foot the £70m plus repair bill.

Scots legal precedent is being used to argue that health board claim resulting from problems within the Queen Elizabeth University Hospital and the linked Royal Hospital for Children is a breach of contract and invalid.

The health board has set out where its requirements were "not met in either design, commissioning or building stages" in 11 specific areas since the contract to build was signed in December, 2009.

These include the water system, ventilation, toughened glazing, doors and an atrium roof.

Those fighting the action claim the health board began court action urgently on January 2020 indicating it had not acted swiftly enough to comply with the terms of the contract.

The health board has faced criticism over its infection control procedures after the deaths of two children at the city's largest hospital complex four years ago.

It is understood that first issues with the building were found between June, 2015 and November, 2015, involving a pneumatic tube system, doors, and ventilation in two wards.

READ MORE: Glasgow health board won't consider removing Grenfell material from superhospital despite safety "deceit"

An alleged link between infections and the hospital water supply was under investigation by April, 2018 and it is understood by the end of the year £1.5m was allocated to deal with the issue.

Former health secretary Jeane Freeman was facing calls to put the health board into special measures following the deaths of two children in 2017. Both were treated in a ward in the hospital which was later closed because of problems with the water supply.

Three-year-old Mason Djemat, who was being treated for a rare genetic disease at the Royal Hospital for Children, died on 9 August 2017.

Milly Main, 10, died at the same hospital three weeks later while recovering from leukaemia treatment.

Both children were patients on a ward affected by water contamination, with their deaths emerging after Labour MSP Anas Sarwar was contacted by a whistleblower.

An official probe published by Health Protection Scotland focussing on the water system found “widespread contamination” in the water supply in both the adult and children's hospitals and 23 children contracted bloodstream infections in the cancer wards between January and September 2018.

It also stated that a high level of indicators of hygiene issues in the water supply were found prior to the handover of the hospital from the contractor to the health board.

In January, 2020, the health board was finally put into special measures with Ms Freeman saying “urgent action” was needed to address a series of issues discovered after the health board was subjected to closer monitoring.

READ MORE: Health chiefs tried to remove 'safe' Grenfell insulation from Queen Elizabeth University Hospital three years ago

She said the areas of concern included its handling of scheduled and unscheduled care, GP out-of-hours services and its “management capability” and capacity.

The health board is suing the contractors Multiplex Construction Europe Limited, performance guarantors BPY Holdings, project supervisors Capita Property and Infrastructure Ltd and lead consultants Currie and Brown UK for losses and damages incurred through the technical issues including water contamination.

Multiplex and BPY Holdings say that the first time it knew that there was going to be court proceedings was through media coverage at the end of December, 2019.

Those contesting the claim over multiple problems since the QEUH complex opened in 2015 say the health board was contractually barred from making the claim.

A judge is currently considering an application to boot the claim out.

Gavin MacColl QC for Multiplex and BPY Holdings said that was because the health board failed to meet its contractual obligations in trying to resolve the dispute by going to an independent adjudicator first.

"The action is contractually barred and consequently it should be dismissed," he told the Court of Session.

"[The health board] should not be permitted in such circumstances to benefit from its own deliberate breach of contract, which is what it seeks to do."

"It is an action that is incompetent."

Those fighting the health board's action are referencing a previous case dismissed by Lady Wolffe in January when Fraserburgh Harbour Commissioners sought £7m over a defects in a project to deepen part of the harbour.

Commissioners chose not to refer the dispute with contractors McLaughlin and Harvey to adjudication but instead instigated court proceedings in October 2020.

In January, judge Lady Wolffe found in favour of the contractors and dismissed the action. She held that independent adjudication was a mandatory first step that must be taken before bringing any further proceedings in the courts.

The court heard action for damages was a means of preventing the claim being time-barred due to length of time it had taken to investigate the extent of the claim.

At the centre of that dispute and the health board action is a clause in the NEC Engineering and Construction Contract (ECC), relating to the dispute resolution procedure that applies under the UK Housing Grants, Construction and Regeneration Act 1996.

Boats in Fraserburgh Harbour. Pic: Stewart Attwood.

The clause states: "A party does not refer any dispute under or in connection with this contract to the tribunal [a court] unless it has first been decided by the adjudicator in accordance with this contract.

"If, after the adjudicator makes a decision, a party is dissatisfied, that party may notify the other party of the matter which is disputed and state that it intends to refer the disputed matter to the tribunal. The dispute may not be referred to the tribunal unless this notification is given within four weeks of being informed of the adjudicator’s decision."

Roisin Higgins for Capita Property said that the action was "not curable" and pointed out that supervisors were not clear what they had even done wrong.

Roddy Dunlop QC for the health board at the Court of Session has opposed the contract breach claim saying there were limitations to using the adjudication process.

Mr Dunlop said that if the judge found that "any problem is simply incurable, then subject to any higher decision, there's no point in adjudicating or in spending the huge amounts of money. That would be entailed and doing so."

When asked by Lord Tyre why adjudication had not started when and after defects began to emerge, Mr Dunlop said he did not know.

He added: "We were in a situation where the action was at severe risk without of prescribing [which prevents the raising of court proceedings or litigation].

Lord Tyre said: "On your argument you could have done both, you could have started adjudication proceedings, keeping an eye on the clock, raise the present action if time was running out and the adjudications hadn't been concluded."

The official opening ceremony of the new hospitals, by Her Majesty The Queen in July, 2015

Mr Dunlop also said only one dispute can be submitted to adjudication and that there were issues with making subcontractor claims.

"Those limitations mean that the disputes framed in these proceedings are simply not fit to be adjudicated," he said.

Lord Tyre asked: "Why not individually. I mean you might have 20 different adjudications but it's not unheard of."

Mr Dunlop said: "Your lordship says why can't you have 22 adjudications, you could. But the question is not whether it would have been possible to do so, it is whether or not it would have been appropriate to do so.

Lord Tyre said: "Mr McColl would say the question is whether that's what the parties have contractually bound themselves to do."

Mr Dunlop added: "And the reason why I put it the way I do, is that parties are not deemed to have contracted to do that which is inappropriate.

"And what would not have been possible to adjudicate would have been that which is sought to be decided here, which is the joint and several liabilities of each of the various defenders."

The repair bill included £26.5m for the water system, £10.9m on doors, £7m on the heating system, £6.9m on ventilation in two wards, £6.7m on an internal fabric moisture ingress, £5.7m on toughened glazing and £5.4m on standard isolation rooms ventilation and £1.3m on a roof.