Under a typical PFI contract, the cost of any damage to the property is normally the responsibility of Project Co. There are only limited circumstances where this is not the case, i.e. the Authority is liable.
In the majority of cases, if Project Co claim that the Authority is responsible for any damage, then it should be able to evidence that the damage has occurred due to a “breach of an express provision” of the Project Agreement or a “deliberate act or omission” by the Authority or any Authority Party. This means that an individual or individuals did so with the intention or knowledge that the damage would be caused by their act.
You should also check the definition of Authority Party within Schedule 1. For example, in a hospital, it is often the case that patients and visitors do not fall under the definition of Trust Party, so even if they did cause damage deliberately, the Trust are still not liable for the costs of rectification.
We are seeing frequent cases where Project Cos are billing Authorities for damage where these requirements have not been met. Such requests do not need to be paid unless Project Co has provided evidence that the above conditions have been satisfied. Any payments made without the required evidence may be recoverable by the Authority. P2G can review the Authority's entitlement to getting that money back.
If the cost of rectification is above the insurance excess (typically £5,000), even if the Authority is liable for the costs of rectification, their maximum liability will typically be for the excess amount only.
The diagram below simplifies the process of deciding liability in the event of damages and highlights where the financial responsibility falls.
In the majority of cases, if Project Co claim that the Authority is responsible for any damage, then it should be able to evidence that the damage has occurred due to a “breach of an express provision” of the Project Agreement or a “deliberate act or omission” by the Authority or any Authority Party. This means that an individual or individuals did so with the intention or knowledge that the damage would be caused by their act.
You should also check the definition of Authority Party within Schedule 1. For example, in a hospital, it is often the case that patients and visitors do not fall under the definition of Trust Party, so even if they did cause damage deliberately, the Trust are still not liable for the costs of rectification.
We are seeing frequent cases where Project Cos are billing Authorities for damage where these requirements have not been met. Such requests do not need to be paid unless Project Co has provided evidence that the above conditions have been satisfied. Any payments made without the required evidence may be recoverable by the Authority. P2G can review the Authority's entitlement to getting that money back.
If the cost of rectification is above the insurance excess (typically £5,000), even if the Authority is liable for the costs of rectification, their maximum liability will typically be for the excess amount only.
The diagram below simplifies the process of deciding liability in the event of damages and highlights where the financial responsibility falls.
If you think that the Project Co operating and maintaining your building may be wrongly charging you for the reasons outlined above, please do not hesitate to contact us for further advice.
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