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Birmingham’s Grand Central redevelopment was hailed as one of the landmarks of UK urban regeneration. But now the project is deep into an escalating tangle of legal actions and a hefty, £20M-plus claim for compensation.
The looming legal fight comes on top of John Lewis' June 2020 decision to close the 247K SF anchor department store at the centre.
A long-running dispute about the shopping centre’s car park has now spiralled into a series of disputes about defects. The legal standoff is between Birmingham City Council, which built it in 2011, and Hammerson and Canadian Pension Plan Investment Board, which bought the 500K SF centre in 2016 for a reported £335M.
The dispute is now heading into “costly and complex” legal action, city councillors have been told. A growing chain of counter-actions is adding to the bill, including a series of new claims for defects.
Not so long ago it all felt very different. Grand Central swept the board at the 2016 RICS awards, was Construction News project of the year and was nominated for the highly prized people’s award at the MIPIM property convention in Cannes.
The disputes revolve around the 467-space car park, operated by NCP and attached to the shopping centre. Bisnow first revealed the cause of the dispute in 2018. It revolves around ramps at the car park that ground some cars.
Now the city council is defending itself against a claim from Grand Central’s owners, and including in the proceedings Network Rail, which was the council’s development partner when the Pallisades shopping centre was rebuilt as Grand Central.
The dispute begins in 2011 when the council agreed a lease with NCP for the car park, and used a 2009 agreement with Network Rail to procure the building work. By 2015 work was complete but allegedly defective, so NCP refused to enter into the lease.
In the meantime the council sold its interests in the centre, agreeing in the sale to remedy any defects in the car park. The council entered into another agreement with Network Rail to do this. But it is alleged that these works failed to rectify the outstanding defects.
Grand Central's new owners sought compensation as a result. More recent agreements, dating from 2018, were supposed to govern how the problem was solved, but Grand Central owners said the council failed to act in a timely way and are now seeking £20M to put the building right, along with an indemnity for further rents and other damages.
The city council filed its response on 1 June, along with claims against Network Rail.
“It is anticipated proceedings will be complex and costly,” a report to councillors said. The main cost is legal fees, because the council hope to pass on any potential building liabilities to Network Rail.
But the story doesn’t end there. In addition to the original claims, Grand Central’s owners have alleged further defects and associated claims with respect to Grand Central. “It is possible that these matters may also be litigated at some point in the future,” the report said.
As part of the remedial plan, the car park will close on 1 July and reopen next summer.
Bisnow approached Hammerson for comment.
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