Lendlease settles £140m Northumberland hospital dispute

A legal dispute between an NHS trust and Lendlease over allegations of defective work on a hospital in Northumberland has been settled out of court.

According to the Northumbria Healthcare NHS Trust, the specialist emergency care hospital in Cramlington, just north of Newcastle, required so much repair work that a temporary four-storey hospital, costing £73m, needs to be built while it is fixed.

The bust-up had been set to be heard at the High Court last October, but the trust and Lendlease confirmed today that a settlement had been reached.

The terms of the agreement remain under wraps, but Northumbria Healthcare NHS Trust claims it allows it to “ensure the continued ongoing safety for patients, staff and visitors” of the hospital.

In a statement, Lendlease said: “Northumbria Healthcare NHS Foundation Trust (the Trust) and Lendlease can confirm that a settlement has been reached in respect of its litigation with Lendlease. The terms of the settlement remain confidential but the Trust can confirm that the settlement allows the Trust to ensure the continued ongoing safety for patients, staff and visitors of Northumbria Emergency Specialist Care Hospital.”

The trust and its co-claimant Northumbria Healthcare Facilities Management had sought total damages of £140m, much of that relating to the cost of the “decant scheme”.

By May 2022, several claims had already been settled, with matters still in dispute including an £11m claim over external walls, £1.5m of fire protection defects and a further £11m in disputes over internal partitions and door frames.

Lendlease’s latest interim accounts, published earlier this week, showed that operating profit at its construction arm had been hit by a claim on a “past non-residential project in the UK dating back to 2015”, dropping from AUS$84m (£48m) in the six months to December 2021 to AUS$68m (£39m) in the same period last year.

The project is not identified but is thought to be the Cramlington scheme.

Other firms that had been dragged into the row included architect Keppie Design and roofing company Briggs Amasco, as well as M&E giant Balfour Beatty Kilpatrick, which told Building it had reached an agreement with Lendlease in relation to the case.

The claim was issued by the NHS trust just before Christmas 2019, claiming a range of defects – including problems with floor slabs, pipework, fire protection, drainage, the roof and the hospital’s helipad – had been found.

Lendlease issued Part 20 claims against a total of nine firms the following year.

The 210-bed hospital was completed under a PFI deal in 2015, with Lendlease having won the £70m job in 2012. The facility has emergency care consultants on duty 24/7 and a range of specialists available seven days a week.

Announcing Lendlease’s appointment, the trust said at the time: “The pioneering new hospital will, for the first time in the country, have specialists working around the clock. It will mean a step change in the way emergency patients are treated.”