Camden Council is facing questions after settling a £130m lawsuit for £19m.
The authority accepted an out-of-court payment from companies that worked on the Chalcots estate between 2006 and 2009.
A 2017 inspection uncovered serious fire safety failings.
None of the companies have accepted any blame.
Labour council leader Georgia Gould said the settlement cleared the way for a public inquiry into the fire safety issues.
But opposition members said the settlement – worth less than 15% of the council’s intended pay-out – left key questions unanswered, including the extent of Camden’s own culpability.
“There is an element of surprise, from such a high starting point, that the settlement ends up being so low,” said Conservative leader Gio Spinella.
“That might suggest that some of the initial claims by Camden were not as strong as they thought they were.
“With the public inquiry, one thing we need to ascertain is areas of responsibility, with no wriggle room, to stop any buck-passing.”
Lawsuit
Between 2006 and 2009, Chalcots was refurbished under a “private finance initiative” (PFI) agreement between Camden – then run by a Conservative/Lib Dem coalition – and a consortium called PFIC (Partners for Improvement in Camden).
In 2017, firefighters inspected Chalcots estate in light of the Grenfell Tower tragedy. and found fire safety problems so severe that 2,000 residents were evacuated.
Camden said it had to pay to remove flammable cladding, replace inadequate fire doors and fire stopping, and hire fire marshals and security staff.
In a statement issued at the time, it said the costs had “a major impact on our reserves”.
In 2019, it announced that it had filed a £130m lawsuit against PFIC and others for “serious deficiencies in the work and materials used by our contractors”.
“Clearly, it would not be right for residents and, by extension, the public purse, to foot the bill for what has been a private contractor failure,” it said at the time.
Response
PFIC has been in liquidation since 2018.
In 2020, liquidator Begbies Traynor filed papers with Companies House saying PFIC was “not only not liable in respect of such claim but, in fact, had a cross-claim against [Camden Council] in the sum of circa £36m”.
The report did not explain the alleged grounds for such a counter-suit.
The liquidators tried to “secure third-party funding” to mount a defence and file the counter-suit, the report said, but without success.
They had “no option” but to abandon any challenge to Camden’s lawsuit and “take no further substantive steps in the proceedings”, as they could not afford “extensive and costly High Court litigation”.
Settlement
Camden last week settled with PFIC and four “principle contractors” – Rydon Construction Ltd, Rydon Maintenance Ltd, United Living South Limited, and Faithful + Gould Ltd – for £19m.
The council has also claimed more than £80m from the government for the cladding removal and replacement.
A council statement said: “Whilst there are differing opinions about responsibility under the PFI arrangement, the parties have agreed to end this litigation as it carries costs and risks for all involved. This litigation will end without any admission of liability on the side of any of the parties.
“There was a risk that the parties would not have sufficient funds to satisfy any judgment. The parties have therefore agreed a settlement of £19m. Further details of the settlement will remain confidential.”
Cllr Gould said she was “pleased” to announce the settlement and proceed with the inquiry.
“It will be completely impartial and chaired by someone separate from the council who will be able to speak to officers, members, and residents as part of their report, which will be made publicly available in full once it is complete,” she said.
Lib Dem leader Tom Simon said he would ask for the settlement to be justified to councillors.
“It is obviously a bit disappointing,” he said. “I do think that there’s a case for councillors to look more closely at this.
“Hopefully we will be briefed on the legal advice received and the reasons which led to the council settling.”
Begbies Traynor and the contactors did not respond to requests for comment.
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