TCC Awards £34m for Systemic MEP Defects at One Hyde Park

In One Hyde Park Ltd v Laing O’Rourke Construction South Ltd, the Technology and Construction Court (TCC), the court delivered a judgment addressing systemic building safety and workmanship failures discovered in one of the UK’s most high-profile residential developments.
The decision, handed down on 2 February 2026, followed the striking out of the contractor’s defence after Laing O’Rourke Construction South Ltd (“LOR”) unexpectedly withdrew from the litigation on the eve of trial. The court required the claimant, One Hyde Park Ltd (“OHP”), to prove its case notwithstanding the defendant’s absence, but the unchallenged expert evidence resulted in findings of extensive contractual breaches under both the main JCT Design and Build, style contract and the collateral warranty.

The court found that LOR was responsible for pervasive corrosion to the chilled water (“CHW”) pipework, widespread failures in butterfly valves across several water systems, defective soldered joints and a non-functional pantograph cradle intended for facade access. The remedial works were held to require near-total replacement of the CHW pipe network at a cost exceeding £34m, alongside additional damages exceeding £700,000 for the other defects.

The judgment is of considerable importance to the construction industry, particularly relating to workmanship standards, material selection, mechanical and electrical installation practices, the evidential weight of expert joint statements, and the obligations owed under collateral warranties in multi-layered ownership structures. It also highlights the significant exposure contractors may face decades after completion where latent defects emerge in core building systems.

Factual Background

One Hyde Park in Knightsbridge was completed in 2011 as one of the world’s most valuable luxury residential developments. LOR had been engaged by the original developer, Project Grande (Guernsey) Ltd, under a JCT Standard Form of Building Contract with Contractor’s Design (1998 edition). OHP subsequently became the freeholder and, under a 2010 collateral warranty, LOR owed it the same duties of design, workmanship and material quality as under the main contract.

From late 2014 onwards, OHP identified serious defects in the building services. Corrosion in the CHW pipework emerged first, followed by widespread failure of butterfly valves across domestic hot water (“DHW”), softened boosted cold water (“SBCWS”) and low-temperature hot water (“LTHW”) systems. Numerous soldered joints began leaking, and the pantograph cradle system used for cleaning and inspecting the penthouse facades had never operated properly since practical completion.

Between 2016 and 2024, joint investigations established that corrosion was pervasive in the CHW system, in some areas penetrating up to 87% of the pipe wall thickness. Butterfly valves showed extensive de-alloying and seal degradation, and soldered joints exhibited multiple workmanship failures.

Negotiations over several years produced no meaningful progress and in 2021 proceedings were issued. The case was fully prepared for trial, with extensive fact and expert evidence exchanged and joint experts’ statements produced. However, in February 2025, shortly before trial, LOR announced it was unable to continue funding its defence because it was to be placed into creditors’ voluntary liquidation. The Court struck out the defence under CPR 39.3 and required OHP to prove its case, relying solely on its own factual and expert witnesses.

OHP advanced contractual claims under both the main contract and the collateral warranty. It alleged widespread and serious breaches arising from defective design, workmanship and material selection. The principal claims concerned the CHW pipework (over £34 million), the butterfly valves (£313,753), soldered joints (£179,392), and the pantograph cradle (£215,957).

OHP contended that the CHW corrosion arose from systemic failures to install phenolic foam insulation with an effective vapour barrier. Gaps, poorly sealed joints and exposed insulation cores allowed water vapour ingress, resulting in condensation on the copper pipework. Experts agreed that this would not have occurred if the vapour barrier had been correctly installed and maintained, and that the corrosion was irreversible. The manufacturer’s instructions required proper sealing of insulation at joints, tees, bends, valves and other locations, and OHP’s experts found multiple breaches of these requirements. OHP argued that these failures amounted to breaches of the contractor’s obligations under clauses 2.1, 2.5 and 8.1 of the JCT contract and of the equivalent obligations under the collateral warranty.

Regarding the butterfly valves, OHP alleged that failures were caused by improper material selection and manufacturing defects. The aluminium-bronze discs exhibited de-alloying due to inadequate control of the microstructure, whilst elastomeric seats had degraded due to corrosive by-products. For the LTHW valves, dimensional inaccuracies meant the discs were not properly sealed. OHP contended that these defects amounted to breaches of LOR’s obligations to design, supply and install materials of satisfactory quality and fitness for purpose. The soldered joints were said to fail due to inadequate preparation and incorrect heating procedures, again amounting to breaches of the workmanship obligations.

OHP further asserted that, as freeholder, it bore the repairing obligations under the superior lease and the underleases and therefore suffered the loss. The CHW system was a single, continuous, centralised system serving the entire building, not a set of discrete installations forming part of individual apartments. Even if the court found that tenants were responsible for the apartment portions, OHP advanced an alternative basis of recovery under the narrow ground in St Martin’s Property Corporation Ltd. v Sir Robert McAlpine Ltd. [1994] 1 AC 85, arguing that the collateral warranty was intended to allow OHP to recover on behalf of apartment lessees.

Before its defence was struck out, LOR denied liability on all heads of claim. It suggested that corrosion may have arisen from post-installation damage or from water chemistry issues such as iron deposits, excessive chlorine dioxide dosing, stagnation or microbial activity. It contended that workmanship had generally been to a good standard, relying heavily on witness statements from subcontractors. LOR also disputed that OHP bore the repair obligations for pipework within apartments, asserting that such pipework constituted ‘conducting media serving exclusively the apartment’ and was therefore the responsibility of underlessees.

LOR further contended that remedial works would not require wholesale replacement and challenged the duration and costings of OHP’s proposed programme. Nonetheless, after the defence was struck out, none of this evidence could be relied upon, and the court had no basis to test OHP’s expert evidence.

Legal points considered by the court

A key procedural issue concerned the consequences of striking out a defence under CPR 39.3. The Court declined to treat this as giving rise to judgment in default. Consistent with the TCC’s approach in AMNS Middle East v LIQS PTW and other authorities, Jefford J required the claimant to prove its case, albeit recognising that the absence of cross-examination limited the court’s ability to interrogate the evidence. Expert evidence served by the defendant but not called was held to have no evidential value, given the explicit requirement that experts be called to verify their reports unless the court orders otherwise.

A substantive legal issue concerned responsibility for repairing the CHW pipework. The court carefully reviewed the lease structure and agreed with OHP that the system was a common service. The CHW system was a single, sealed, pressurised circuit distributing centrally chilled water throughout the building. It could not sensibly be considered part of an individual apartment’s demise, even if isolation valves existed, because the system required continuous circulation to prevent water stagnation and contamination. The experts’ joint statement confirmed the unitary nature of the system. Therefore, under the superior lease, the freeholder had the repairing obligation, and OHP had suffered the loss.

Even if the court found otherwise, it indicated that OHP would have recovered under the St Martin’s Property Corporation Ltd. v Sir Robert McAlpine Ltd. [1994] 1 AC 85 exception, as the collateral warranty was plainly intended to protect future apartment lessees.

The technical findings on liability drew heavily on the unchallenged expert evidence. The court accepted the metallurgical and building services evidence that the corrosion, valve failures and joint leaks were all caused by breaches of contractual workmanship and material standards. The defects were systemic, irreversible and entirely inconsistent with the standards required in a high-value residential development.

The court also accepted the quantum evidence in full. The remedial works were exceptionally complex and required decanting affected apartments and sequentially opening ceilings and service routes. A 10.46-year programme was held reasonable. The court accepted Mr Thomas’s (claimant’s quantum expert) costing methodology as careful, independent and appropriately detailed.

Court’s decision

The court held, agreeing with OHP on all heads of claims, that the defects stemmed from widespread and systemic failures in installation and material selection, amounting to breaches of both the main contract and the collateral warranty. OHP had proven its responsibility for the relevant repair obligations and therefore the losses flowed directly from LOR’s breaches.

Implications for the UK construction and infrastructure industry

This judgment carries important lessons for contractors, designers and building services installers across the UK.

First, the court’s findings demonstrate the severe long-term consequences of failures in seemingly minor aspects of MEP installation, such as vapour barrier sealing or soldering technique. In high-value, high-complexity projects, systemic workmanship failures can result in catastrophic latent defects years after completion, requiring wholesale replacement of core building systems. Contractors must ensure rigorous installation quality assurance and robust supervision, particularly in concealed spaces.

Secondly, the case highlights the technical responsibilities arising when selecting materials for building services systems. The de-alloying of butterfly valve discs underscores that even reputable products must be assessed for suitability in the specific water chemistry and operating conditions of a development. Fitness for purpose obligations remain stringent, especially under design and build procurement routes.

Thirdly, the decision reinforces the legal exposure contractors retain long after practical completion. Latent defect claims based on collateral warranties remain a powerful mechanism for freeholders, landlords and institutional owners, particularly in multi-tenure buildings. The court’s analysis of repairing obligations also signals that developers and contractors should expect freeholders to recover losses for centralised systems serving whole developments.

Finally, the case serves as a warning regarding litigation conduct. Contractors cannot avoid liability by withdrawing support for subsidiaries at the point of trial. The court was plainly concerned at the manner of LOR’s withdrawal and demonstrated its willingness to proceed robustly in the absence of a defendant, particularly where systemic building safety issues are at stake.

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