Appeal judge rules insurer liable for fire safety failings

A Court of Appeal judge has found in favour of leaseholders and freeholders suing their insurer to recover the cost of fire remediation work, in a case that could have significant implications for buildings identified as having unsafe cladding since the Grenfell fire.

Lord Justice Jackson ruled that the insurer of two blocks of flats in Manchester, New Lawrence House, must pay the full cost of repairing fire safety failings that forced residents out of the buildings in 2017.

The court decision comes at a critical time for many occupants of private sector tower blocks now considered unsafe following the Grenfell Tower fire, who are being asked to foot the bill for hugely expensive remediation work without which their properties are rendered unsellable.

Insurer Zurich had provided a warranty on the properties to cover the costs of “major physical damage” and “present or imminent danger to the physical health and safety of the occupants”. It later sold this policy on to provider East West Insurance Company.

The appeal court decision follows a previous court case in which His Honour Judge Stephen Davies ruled that Zurich was liable for the cost of undertaking the work but only up to a maximum of £3.6m, less than one-third of the total remediation cost. Following this appeal, residents and freeholders are entitled to the full £11.6m, and crucially can claim the cost up-front, rather than having to pay for repairs first before claiming from the insurer.

Paul Hargreaves partner at construction solicitors Walker Morris, which represented the claimants, said the decision would have “implications for a lot of people in a similar situation”, allowing them to seek recourse more easily from insurers. “Any leaseholder facing this situation is now going to get some comfort,” he said.

Problems with New Lawrence House emerged before the Grenfell fire but cover many of the same issues – notably the ability of the building structure to contain the spread of fire – as those faced by other tower block residents given the change to the interpretation of Building Regulations since Grenfell.

Such problems faced by leaseholders since the Grenfell scandal are credited by some with slowing the sales market for new apartment buildings, with purchasers concerned about resale values. In October the Times reported that up to 500,000 flat-owners may now be unable to get a mortgage.