Dispute over remedial work at Dalston Square has resulted in legal action between the developer and contractor Jessella
Barratt is set to appoint a new contractor to carry out cladding remediation works on a 650-home residential development in east London after falling out with the original appointee earlier this year.
Scaffolding has been in place at the Dalston Square development in Hackney for more than two years, but work is currently on pause after contractor Jessella was removed from the project in January.
Delays to completing the work have seen the job brought up in parliament by local MP Diane Abbott, and Building understands that the two parties are now engaged in a legal dispute over the matter.
Building envelope specialist Jessella was originally appointed to replace all cladding and louvres with non-combustible material and to create new fire breaks around windows and at floor level.
On 13 December last year, Barratt’s managing director for East London, Stephen Thompson, wrote to Dalston Square residents apologising for a “slowdown in communication” from Jessella, then again on 22 December, referencing a “slowdown in activity on site from our contractor”.
“We had hoped that this matter would have been resolved prior to Christmas but this now looks unlikely,” he wrote.
Residents then received a letter from Jessella on 4 January, in which the contractor claimed that “from the outset” of its work on scheme, it had “raised concerns relating to what we perceived as breaches of the building regulations and concerns relating to health & safety”.
The specifics of these concerns were not explained in the letter, but the contractor said that “the works required to resolve these issues led to a number of delays” to its original contracted scope of works.
“Barratt Developments have reasonably accepted the principle of the delay events but have failed to make payments to Jessella for works properly executed,” it continued.
“During this time Jessella has funded the cost of the contract delays in Barratt Development’s place, to ensure the project could continue – this exceeds a value of circa £3.5m”.
The contractor alleged that in mid-December 2022 it had reached an “in principle without prejudice agreement” with Barratt on the amount that Jessella would be reimbursed for the delay, but that on 23 December, the last working day before Christmas, Barratt had “assigned an entirely unexpected and unreasonable set of terms to the agreement”.
This allegedly included the condition that Jessella would not be paid until the works were completed, which the contractor said left it with “no choice but to pursue its claim for payment through adjudication”.
The following day, 5 January, Barratt informed residents that it had decided to terminate its contract with Jessella, adding that it refuted the claims made in the contractor’s letter.
Barratt told Building it could not comment on the details of the dispute due to ongoing legal action.
Since the removal of Jessella from the project, Barratt has kept residents updated about progress on the procurement of a new contractor, with the latest communication suggesting an appointment would be made by the end of May.
Speaking to Building last Friday a Barratt spokesperson said: “We are on track to appoint a replacement contractor by [end of May] to finish the outstanding remedial work at the development as soon as is possible.
“Our first priority is the safety of our buildings and the people that live in them. We have always maintained that leaseholders should not have to pay for necessary remediation to fix building safety issues caused in the original construction of their buildings.”
Building understands that a contractor has now been selected, with residents set to be informed towards the end of next week.
Work on a significant portion of the development has already been completed, with Collins Tower, Sledge Tower, Abraham House, Marley House and Joplin House all receiving compliant EWS1 forms.
Other parts of the site, including Gaumont Tower, Dunbar Tower, Raddon Tower and Labyrinth Tower on Dalston Lane South, and Ocean House, Dekker House, Burke House, Thomas Tower, Ruffin House and Wonder House at Dalston Junction Interchange are yet to be remediated.
Residents were informed on Friday last week that work will restart on site in late June and is expected to take nine months to complete.
Jessella went into administration on 27 February, with an administrators’ report citing “a significant working capital shortfall towards the end of 2022 following a major client withholding payment on a number of contracts which were close to completion”.
According to administrators Steven Ross and Allan Kelly’s report, Jessella directors negotiated a settlement with “a major client” before Christmas, which would have allowed it “to discharge a substantial proportion of its liabilities and continue to service its ongoing contracts”, but the client advised the business it would not be progressing with the settlement and was terminating the contracts.
It is unclear whether the client in question was Barratt.
The administrators report continued: “Further dialogue was entered into and the clients made a revised offer to the company on 18 January 2023 to recommence the contracts, however this was subject to any payments being made at the end of the contract.
“The directors considered the company could not fulfil the working capital requirements to complete the contracts nor service its existing liabilities without repayment of existing debt.
“In addition, the directors considered there remained a risk of non-payment on completion”.
Regen Facades Ltd purchased the firm on 24 March this year.
Jessella directors were approached for comment but had not responded at the time of publication.
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