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JPMorgan Chase has launched a £21.5m lawsuit against a small UK construction company over building defects at an east London warehouse the US lender uses to store precious metals.
According to court documents reviewed by the Financial Times, the Wall Street bank is suing Marbank Construction, which was contracted to design and build the warehouse, in London’s High Court for “massive damages” as a result of alleged errors. “Loss” was faced.
Better known for occupying skyscrapers in financial districts, lenders like JPMorgan use out-of-town storage units to hold precious metals as part of their commodities business.
However, details of these premises are often kept under wraps for security reasons and JPMorgan has not yet made public its ownership of the property in Belvedere, east London. The bank has similar premises in New York and Singapore, as well as a vault in central London.
In documents submitted to the High Court, the bank alleged that a third-party inspection in 2019 revealed cracks in the warehouse’s concrete service yard. Defects were also found in the warehouse’s underground water tanks, according to the lawsuit.
The bank claimed that these defects forced it to demolish parts of the premises and find alternative storage facilities, causing it to incur “massive losses”.
Marbank, a Surrey company specializing in the design and construction of commercial and industrial buildings, acknowledged there were some problems with the warehouse but denied responsibility for JPMorgan’s alleged losses.
The bank is seeking £11mn to cover remedial works at the London warehouse and a further £10.5mn to recover costs arising from the use of alternative storage facilities.
In its defense filing, Marbank claimed that because JPMorgan was using the premises to store heavy goods, the structure required a “substantial increase” in load, meaning the premises required “better specification”. was The warehouse was originally built for drinks company Diageo.
Marbank also said it had offered JPMorgan to carry out remedial work at the premises at no cost, adding that the bank had asked Marbank to hire another contractor to carry out the demolition work. Refused to allow inspection or investigation. JP Morgan said Marbank had been invited to the premises for an inspection.
Marbank added that the claim appeared to be “allegedly exaggerated and substantially in excess of the reasonable costs of the works necessary to remedy the alleged defects”.
The company also alleged that BWB, an engineering consultancy that acted as the project’s structural engineer, was negligent, and added that it would seek damages from BWB if JPMorgan’s case was successful. BWB denied that Marbank was entitled to indemnification or contribution to its potential liability to JPMorgan in its own court filings and denied that it breached its contract.
Marbank reported a pre-tax profit of £438,000 on turnover of £66.8mn for the year to the end of July 2023, according to its latest accounts lodged at Companies House.
The Wall Street lender’s metals trading activities have previously come under scrutiny in the US. Two former JPMorgan precious metals traders were sentenced to prison last year on charges of fraud, attempted price manipulation and “faking” orders.
The bank agreed to pay $920 million in fines to authorities in 2020 after admitting to manipulating the precious metals futures and US government bond markets over eight years.
JP Morgan, Marbank Construction and BWB declined to comment on the lawsuit.
