11 December 2023
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PFI Handback – How to handle potential disputes

To The Point
(2 min read)

Hundreds of the UKs operational PFI/PPP projects are set to expire soon – schools, health facilities and more. Our specialists have been speaking to key players at a series of events around the UK to find out what is keeping them awake at night as contracts run out and examine the practical realities of the handback process. In this series of articles, we use the intelligence gathered to shine a light on the key issues that 'Handback' is likely to throw up … and what to do about them. This article looks at what the experts speaking at our events raised as key matters when it came to potential disputes.

At our most recent PFI Handback event, the audience was asked what aspect of handback was most important to them, and the answers were revealing: 17% said the condition of assets; 16% said information & data gathering; 13% said managing liabilities; 4% said relationship management; and 0% picked continuity of services. The remaining 50% said … all of the above!

These results show how complex this area can be, and there is not a one size fits all solution. Some of the main issues raised are covered by these categories, about which you can find out more in our series of articles.

Our events heard from KCs experienced in dealing with disputes in this field, and preparing for a potential stream of work to come when concessions start to run out. 

Simon Hargreaves KC addressed attendees in Manchester and highlighted how different contracts contain widely differing provisions regarding handback obligations – including in terms of which party is responsible for which actions, how much time is available to complete inspections and carry out works, and which party is responsible for costs. 

As the contractual provisions are not always practicable (with some timeframes being unrealistic and unachievable), the 'reset' suggested by the White Fraiser Report would provide a good opportunity for parties to step back, take a holistic view, and work together to achieve realistic and attainable goals and reach agreement on liability for costs. 

While there is currently limited case law to guide parties on the courts' likely interpretation of the new law, SHKC gave an overview of three recent cases which may give an indication of how matters may be decided in future. 

  1. URS Corp Ltd v BDW Trading Ltd [2023] EWCA Civ 772 – first case in court of appeal regarding a defective premises claim pursuant to Building Safety Act.
  2. Kajima Construction Europe (UK) Ltd v Children's Ark Partnership Ltd [2023] 207 Con Lr 10 [CA] – this concerned the enforceability of DRPs in contracts (such as the requirement to have a meeting of the liaison committee before commencing dispute).
  3. Sheffield Teaching Hospitals NHS Foundation Trust v Hadfield Healthcare partnerships Ltd [2023] EWHC 1364 (TCC). Here the court refused to give a declaration that the building contractor doesn't owe a tortious duty of care.

Lawyers and contracting parties will be keenly following any cases brought as a result of the introduction of the Building Safety Act.

Robert Howie KC, addressed our event in Edinburgh, and his key message was for parties to get their houses in order ahead of expiry. In his experience cases go "belly up" because people have not done their work in advance in terms of the information and data they need to gather.

There has been no handback litigation in the Scottish courts so far, but only because concessions are just about to start running out and it was his opinion that, sooner or later, the courts will become more involved. 

When it comes to disputes, it was made clear that kicking issues down the line is never a good strategy, and that if something you are made aware of is going to be an issue so it is best to deal with it up front to crystallise any problem.

To the Point 

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