Clissold Leisure Centre

Update March 2004

1. Introduction by Jules Pipe, the Mayor of Hackney

This document aims to provide detailed information about Hackney Council’s current legal action regarding Clissold Leisure Centre as well as to give an update on the preliminary work that needs to be undertaken to reopen the Centre.  The Council believes that it is in the public interest to make as much information as possible available to the public regarding events which led to the massive cost increase and overrunning of this project, as well as about its current closure. At the moment it is not anticipated that the Centre will open within the next year and this document sets out the reasons why it is not yet possible to fix a date for its reopening. The Council wishes to apologise for the inconvenience that this is causing residents and users.  The report aims to give a detailed overview of the action we are taking to recover money lost and restore the centre to public use.

The extent of the defects in the Centre has been investigated and once the remedial works have been specified and costed, a bid against the Council’s capital programme budget will be made.  Capital funds are, of course, not limitless, but the Council does not have the financial problems experienced a few years ago.  Remedial works within reason, therefore, can be undertaken as part of the regular capital programme.  Their commissioning and progress have never relied on first achieving outside funds through litigation or otherwise.  The Council, however, will ultimately be seeking to minimise the effect on the capital budget (and local taxpayers) through legal action against those responsible for cost overruns and faults, and is also approaching potential external funders. Details of this action are listed in this report.

Nothing with regard to the funding issues is delaying progress on addressing the faults.  The requisite reports and tender processes are simply a matter of due process that the Council has to follow.

Hackney Council fully understands the frustrations of Hackney residents who have waited so long for Clissold Leisure Centre to open, only to see it be constantly plagued with problem after problem.  Both the Council and Leisure Connection Ltd, the company who manage the borough’s leisure centres, are keen to see the centre reopen as soon as possible, as it is a valuable asset to the community when fully functional.

2. Our current position

The London Borough of Hackney has two broad types of complaint about the Clissold Leisure Centre project.  The first is that the centre was completed late and cost too much.  The second is that there are defects in the Centre. The first complaint is being addressed by the current legal action in the High Court, in which Hackney is seeking damages based on cost overruns and delays. The defendants in this action are Hodder Associates, the architects, and Davis Langton and Everest, the cost consultants.  

The second is not yet the subject of legal action, but Hackney has now commissioned investigations from relevant professional experts.

3. The cost overrun – a £20 million centre costing £31 million to build

Hackney originally contemplated replacing the old Clissold Baths in the early 1990s.  This project was developed over the decade and in 1996 a team of professional consultants was appointed to develop the project, including the current defendants – Hodder Associates (architect) and Davis Langton and Everest (cost consultant).  A design was created in 1997 and tenders were sought in August 1997. Lottery funding of approximately £10 million was obtained from Sport England.  After negotiations and an increase in funding, the contractor started on site in December 1997.  By this stage the project was intended to cost approximately £11.3 million and to be ready in approximately two years.

In fact, the building did not receive a certificate of Practical Completion until late March 2001 (approximately 95 weeks late) and was not ready to be used until approximately March 2002.  The final outturn cost to Hackney was £27.55 million paid to the contractor plus a number of other sums for additional professional fees, further works to the Centre done by the contractor over and above the £27.55 million and other items, giving an outturn cost which is estimated at £31 million in total.

In addition to the direct cost, Hackney has suffered loss of use of the Centre for the period by which it was late and finance losses representing the loss of its capital invested in the Centre but producing no useful service until the Centre opened.

The expenditure by Hackney over and above the original contract sum was not all wasted. The original contract sum was not a reliable guide to the outturn costs, because it relied upon costings for a building that was not fully designed for the tender stage and it contained many provisional sums.  The building that has been built would always have cost in the region of £20 million and it is hard to make a successful legal argument that Hackney has suffered a loss in relation to this expenditure.  On the other hand, in addition to these amounts the Council paid its contractor a large sum arising from the delays and disruption amounting to some £7.052 million.

Hackney has therefore investigated this cost overrun and delay. The Council has been advised by Counsel and external solicitors that on the basis of the reports by independent experts, the professionals who advised Hackney and who designed the Centre were at fault in certain respects.

Accordingly Hackney has taken legal action against Hodder Associates (architect) and Davis Langdon and Everest (cost consultant).

4. Approximate amounts

5.Independent Expert Investigation

Hackney has instructed various investigations into the causes of the extra costs and delays and has received detailed independent advice.

This began in November 1998 when a report was commissioned from an independent construction industry consultant who recommended further investigation and legal action.

Further investigation took the shape, in part, of a report produced by Northcrofts Management Services Limited in April 2000.  This document then formed the basis for some further independent expert work.  Thereafter in February 2003 Hackney commissioned independent experts to produce a report on each of the potential professional Defendants.  

Detailed expert reports were limited to the cost overrun and delay issues and focussed on the negligence of Hackney's professional advisers, principally Hodder Associates (architects). After reviewing these in detail, the advice of Counsel was sought in June 2003.  The then Head of Law approved the instruction of Counsel specialising in construction matters.

The thrust of Counsel's advice on 19th June 2003 based upon the expert reports then received was that Hackney should pursue recovery of its losses by finalising its expert reports to show and confirm the linkage between the breaches of duty by Hodder Associates and Davis Langdon & Everest and Hackney's additional expenditure and that if necessary Hackney should take legal action.  

Expert reports were provided to the Defendants in the High Court Action in December 2003 on the performance of Hodder Associates as architect, on the performance of Davis Langdon & Everest as cost consultant and on the consequential losses arising from the delay in opening the centre.

6.The Current High Court Action

On Counsel's advice the current High Court action now focuses on Hodder Associates (Hackney's architect) and Davis Langdon & Everest (Hackney's cost consultant).  A Pre-Action Protocol letter detailing Hackney's claims was sent to each of Hodder Associates and Davis Langdon & Everest in December 2003.  A first Court hearing was held on 19th January 2004 at the Technology and Construction Court in London before His Honour Judge Havery QC and the next Case Management Conference was fixed for April 2nd. Any trial is unlikely to take place before 2005.

7. The Way Forward For Cost Overrun/Negligence Claims

This is complex, heavy commercial litigation.  The defendants are (it is understood) backed by insurers.  The aim must be to secure the most advantageous commercial settlement.  The best way to do this is for Hackney to prepare a commercially formidable and convincing case and to pursue it by formal means.

Once the time is right, commercial negotiations can be commenced, or a further invitation can be made to the Defendants to mediate these disputes.  Only if these are unsuccessful will Hackney have to choose whether to take these matters forward to trial.

8. The way forward on defects at the Centre

There are numerous defects throughout the building from the detail we are aware of to date. The Council has commissioned a further technical report to establish the cost of repairing these defects to make the building fully operational as soon as possible. It is however clear from the knowledge we have to date that this may take a significant period of time. The Council anticipates that the initial report specifying the remedial work and its estimated cost will not be available until summer 2004.

These defects are thought to be in the design, and possibly the construction of the Centre. The ongoing investigative works will determine this and allocate responsibility, to inform the Council’s current litigation about defects.

Council officers had been aware for about twelve months (prior to closure) that the Centre suffered from defects and were seeking to manage the situation, with Leisure Connection, with the aim of minimising inconvenience to customers and keeping the Centre safely open.

Until very recently, the problems with the Centre were not felt to warrant its closure. Gradually, however, other matters have come to the notice of the Council and users (as set out below), culminating in a flood in the basement electrical plant rooms creating a Health & Safety risk.  This latter incident led to the current closure of the Centre.

Below is a list of the main defects of which the Council is currently aware:

Missing waterproof membrane to ground floor construction under wet areas
Leakages through the upper floor changing area
Cracking of Squash Court walls
Cracking of internal and external wall render finish
No waterproof finish to plant area within Health Suite
Gap at curved roof eaves
Defective installation of Vapour Control Layer
Failed double glazed units
Water slide structure prevents safe use of the spa pool at its base
Introduction to water area has falls too steep for toddlers
Gutter movement restraint leading to splitting
Failed sealant junction
Blocked symphonic drainage outlets
No stop ends to gutters
Defects to main roof perimeter flashings
Condensation on steelwork to vertical roof glazing
Condensation on curved steelwork and inclined roof glazing
Cuts in Vapour Control Layer
Open junction internally at side of flat roofs
Fixing holes through Vapour Control Layer
Failed sealant to head of inclined curved roof glazing
Backfall to membrane covered flat roof
Loose and inadequate fixing of plant room roof parapets
Possible inadequate drainage of plant room roof
Defective plant room gutter bolts
Condensation to underside of the Plant Room roof
Inadequate access to Plant Room sub-floor void
Condensation within the Plant Room sub-floor void
Inadequate waterproofing of perimeter pool water drainage channels
Water leakage through inclined roof level ventilation grilles to Sports Hall
Water damage to storeroom doors
Water damage to Sports Hall floor
Leakage into Sports Hall by North West Fire Escape
Missing infill panels to handrails along glazed wall to Sports Hall
Ground floor broken Double Glazed units
Inadequate privacy to female changing rooms
Inadequate cleaning regime and plant leakage
Low staircase casting to the basement
Panels to underside of roof canopy

The next step for the Council will be to procure specialists to put right all of the identified problems and defects and make the building fit for purpose. This process will require us to follow European Union procurement processes as required by law.  It is expected that we will know the full extent of putting these right by the summer, at which point detailed specifications and tenders will be prepared. As well as providing a figure for cost, these tenders will indicate the length of time the contractors will take to do the work and the leisure centre re-open. As soon as we have more detailed information we will let the public and interested parties know.