Taxpayers pay John Holland $38 million to settle children’s hospital dispute

Taxpayers have been slogged $38 million to settle a long-running legal stoush with construction company John Holland.

Last week the government revealed it had reached a settlement with the Chinese-owned construction giant in the $300 million lawsuit but did not detail the payment because of strict gag orders in place.

John Holland claimed $300 million from the state government over the Perth Children’s Hospital project. Credit: Stefan Gosatti

In parliament on Tuesday Finance Minister Tony Buti said the settlement cost the state was $38 million, but he claimed that it had avoided an extra $27 million in legal costs.

“Following recent mediation, the state, John Holland and [parent company] CIMIC have agreed on a full and final settlement of all claims, which will see John Holland pay CIMIC $340,000 and the state pay John Holland a sum of $38 million,” he said.

“A 16-week trial was scheduled to begin late March 2023, then allowing time for judgement decisions and appeals on this complex matter, it is possible there wouldn’t have been a resolution until late 2025.

“The future projected direct costs of a 16-week trial and associated likely appeals were estimated at an additional $27 million, which the state has now avoided.”

John Holland dragged the state government to the Supreme Court back in November 2019, detailing its $300 million compensation claim for the construction of Perth Children’s Hospital across a 1000-page writ.

The state had twice attempted to settle the action, which centred around who should foot the bill for cost overruns on the $1.2 billion project, which opened almost three years later than anticipated and after a series of controversies.

The project was plagued by challenges, including the discovery of asbestos in the cladding, lead in the hospital’s water supply and the installation of hundreds of uncertified fire doors.

The contractor insisted the state government should be held accountable for the delays, claiming it had made thousands of variations to the contract long after it was issued which led to increased costs.

At the time, Premier Mark McGowan vowed to fight the claim and stand up to the company.

Buti laid the blame for the hospital issue on the former Barnett government, who started work on the project in 2013.

“The McGowan government has once again cleaned up a mess created by the Liberal Party, in successfully negotiating this settlement with John Holland,” he said.

Liberal leader David Honey said the government had failed to recover money for taxpayers.

“When the premier initially announced the legal actions that they were embarking upon their view was they were going to recover very substantial sums of money for the state and they’ve failed once again,” he said.

“Clearly the premier’s optimism was unfounded.”

Honey also criticised the government’s decision to wait a week before announcing the settlement figure.

“They were dragged kicking and screaming to be transparent about this,” he said.

“When we asked them they refused to release it said the good old catch-all of commercial in confidence.”

Buti said although the terms of the settlement were confidential there was a clause in it for him to make the disclosure to Parliament.

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