125 OBS (Nominees1) and Another v Lend Lease Construction (Europe) Ltd and Another
|England & Wales
|Mr Justice Stuart-Smith
|14 July 2017
| EWHC 25 (TCC)
|Queen's Bench Division (Technology and Construction Court)
|Case No: HT2015.00104
|14 July 2017
 EWHC 25 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Stuart-Smith
Case No: HT2015.00104
Anneliese Day QC & Calum Lamont (instructed by Reynolds Porter Chamberlain LLP) for the Claimants
Adam Constable QC & Sarah Williams (instructed by Charles Russell Speechlys LLP) for the Defendants
Hearing dates: 23–31 March, 6 April 2017
125 Old Broad Street ("125 OBS") once housed the London Stock Exchange. It stands on a prime site of 0.6 hectares in the heart of the City of London, flanked by Throgmorton Street to the north, Bartholomew Lane to the west and Threadneedle Street and Old Broad Street to the south. Between about 2006 and 2008 the First Defendant carried out an extensive redevelopment of the building under a design and build contract for the Claimants. The end result was intended to be a highly prestigious building with a 26 storey tower and a lower-level podium building that together would provide approximately 320,000ft 2 of Category A office space and 6,400ft 2 of retail space. Category A is reserved for the most prestigious buildings competing for premier office users with rents above average for the area. An integral part of the renovation was that the podium and tower were to be clad with a curtain walling system of storey-height framed glass panes.
Between 2008 and 2012 there were 17 spontaneous failures of glass panes on the building. The failures occurred without prior warning and, although on some occasions the shattered glass was retained in its frame until it could be removed, on others the glass was ejected away from the building and down towards street level. Early in the sequence of failures, and with the involvement and agreement of the District Surveyor, scaffolding was erected around the building to protect people from falling glass. In places it extended right across the road, pavement or walkway around the building and abutted (or almost abutted) other prestigious buildings such as Drapers Hall. Fortunately, no one was seriously injured by falling glass; but the disastrous nature of the failures is well illustrated by the obvious need for the protective but disfiguring scaffolding and the fact that the problems made waves in the national press.
In due course, the decision was taken to replace the outer skin of the glass curtain walling. That was done between 2012 and 2013. Half of the removed glass was placed in storage, where a further 4 failures occurred.
By this action the Claimants claim damages from the Defendants, including the cost of re-cladding the building. The parties have identified a number of Disputed Issues, to which I will refer in the course of this judgment. In briefest summary, the Defendants' case is that the only effective obligation under the design and build contract was to install glass that had been heat soaked in accordance with the relevant European Standard (but with a holding period of four hours); that they complied with that obligation; and that the risk of the failures that happened had been accepted under the contract by the Claimants.
The primary facts and the relevant provisions of the contract are largely not in dispute. The major disputes on liability at trial have been about contractual responsibility and the expert evidence that has been led on the science and properties of properly heat-soaked toughened non-laminated glass. Quantum is in dispute though there has been extensive agreement on figures.
For the reasons set out in this judgment, I find that the Claimants succeed on liability and are entitled to recover £14,753,195.16 in damages as a result. Interest remains to be calculated.
The Witness Evidence
The Claimants' lay witnesses all contributed useful evidence. Each of them came to assist the Court and each was impressive in his own way. The Defendants called no live witnesses. The evidence of Mr Kirchner was admitted without him being called by the Defendants.
There was a marked contrast between the liability experts called for the Claimants and the Defendants respectively. Mr Colvin was called on behalf of the Claimants. He is one of the leading experts in the world on the manufacture of glass, and is qualified both intellectually and by experience to give expert evidence on the issues that arose in the case. He is a mathematician and as such has great clarity of vision, conviction and expression. Sometimes this clarity of thought puts him outside the general consensus of his profession; but his views always commanded respect by being based on the application of rigorous logic allied to his expertise.
Mr Josey, who was called by the Defendants, suffers by contrast with Mr Colvin in almost every respect. He does not have Mr Colvin's accumulated practical and first-hand experience; nor, in my assessment, does he have the intellectual expertise and rigour that Mr Colvin brings to his opinions. None of this would matter particularly, though it would contribute to my conclusion that, in general, I preferred Mr Colvin's evidence and normally agreed with Mr Colvin's conclusions when they differed from those of Mr Josey. What matters much more from the perspective of the court is the failure by Mr Josey to follow the implications of what he knew. It is sufficient for the purposes of this judgment to say that I do not understand how the Defendants could maintain to trial the assertion that the documentation from the supply chain proved that the glass with which the action is concerned had been heat-soaked when they should have appreciated that it showed no such thing. That does not necessarily implicate Mr Josey, but by the end of the trial it also remained quite unclear how he could, consistently with his duties to the Court, have failed to make plain his clear understanding that some of the documentation was fabricated and that, whatever else it showed, the documentation as a whole (on which he commented extensively) did not support his clients' case.
Both Quantum experts provided some useful material. Each succumbed to the temptation on occasions to express opinions about matters outside their expertise. The tendency was more prevalent in the evidence of Mr Morley, who was called for the Defendants, than in the evidence of Mr King, who was called for the Claimants; but both were attempting to assist the court and both gave some useful evidence.
Glass as initially manufactured in bulk from its constituent materials is known as annealed glass. Annealed glass is the weakest form of glass and breaks into large, pointed, sharp-edged shards. It is glass without internal stresses caused by heat treatment. Toughened glass is a type of safety glass created from annealed glass that has been heated to approximately 600°C before being rapidly cooled, which results in a permanent surface compressive stress. Toughened glass is usually five times as strong as annealed glass and will break into small fragments known as "dice" or "nuggets", which can knit together to form clumps.
Toughened glass is susceptible to spontaneous failure caused by Nickel Sulphide ("NiS") inclusions within the glass. The experts are agreed that NiS inclusions are formed when tiny particles of steel wear from the machinery that is used to grind the raw materials and find their way into the materials (known as frit) that are melted to form glass. NiS is immiscible with glass and so remains as small "droplets" in the molten glass, solidifying as small balls when the glass is formed and known as inclusions.
NiS is a complex material which experiences phase change (or "transformation") when heated. At ambient temperatures, NiS inclusions are described as being β phase, which is stable below about 380°C. When heated, the NiS transforms to the α phase, which is stable at higher temperature and has a smaller volume than when NiS is in the β phase. The heating of glass to toughen it therefore causes the transformation of NiS inclusions from the β phase to the smaller α phase. The process of transformation is reversible. Accordingly, when the toughened glass is cooled the process of re-transformation to the β phase begins, with potential increase in the volume of the inclusion of c. 2–4%. But the cooling process is too rapid to enable the re-transformation to be completed. As a result, the initiated re-transformation continues in the cooled toughened glass. The NiS inclusion will be critical and spontaneous breakage of the glass may occur if (a) the inclusion is more than 40–50 microns in diameter, (b) the inclusion occurs in the central tensile stress zone of the toughened glass, and (c) the chemical composition of the inclusion is within a certain range (of which more later). At this point it is only necessary to mention that inclusions that may be described as being highly sulphur rich are not critical because their transformation back to the β phase at ambient temperatures is so slow that it will not cause the glass to break within any realistic design life.
The experts agree that the risk of NiS inclusion induced breakage changes with time. In the first 6–12 months breakages are rare. Thereafter, depending on temperature, the failure rate tends to peak after 4–5 years from the date of production. The failure rate then tails off but breakages can occur up to 20 years after the date of production. Represented graphically, the typical rate of breakage follows an S-curve, with a shallow (slow) start, steeper (faster) middle, and progressively flatter (tailing off) end period. I accept Figures 22 and 23 of Mr Colvin's first report as reasonable representations of a general...
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