Citation: [2025] EWHC 3315 (TCC)
The TCC refused to grant summary judgment in favour of an insurer in a claim under an insurance policy for defects linked to fire risk, finding there was a real prospect that the insured could show that the risk of fire-related damage was sufficiently serious and imminent to fall within the insurance policy.
Background
This was an application by the Defendant insurer (“Allianz”) for summary judgment.
The claimant (“Vivid”) is the freehold owner of a block of 82 flats at Collins Place, Hampshire and the Insured under a Housing Warranty Insurance Policy issued in respect of the development. The insurance policy was issued by Building LifePlans Ltd (“BLP”) acting as the cover-holder under a binding authority granted by the defendant, Allianz.
The operative clause of the policy (“Clause 3(a) Operative Clause”) indemnifies the Insured for the cost of repairing, replacing and/or strengthening the premises following and consequent upon a Defect which becomes manifest and is notified during the Period of Insurance, where the Defect causes (i) destruction, (ii) physical damage or (iii) the threat of imminent destruction or physical damage which requires immediate remedial measures for prevention within the Period of Insurance. The Period of Insurance was 12 years from the Date of Inception. A Policy Inception Endorsement dated 23 May 2008 confirmed that the Date of Inception was 22 May 2008.
Vivid alleged five categories of defects:
- Rockpanel cladding (“Defect 1”): Vivid alleged that combustible RP cladding panels had been installed on a building over 18m high in an untested arrangement in conjunction with combustible foam insulation, absent carrier barriers or with defective barriers, and with combustible debris in the cavities, which provided a vehicle for the spread of fire and/or smoke around the entire external envelope of the building.
- Vertical cavity barriers (“Defect 2”): Vivid claimed that no vertical cavity barriers were installed at the required locations (for example between the outer cladding and inner cavity and between floors) which provided a route for fire and/or smoke to spread unseen and uninhibited around the development.
- Horizontal cavity barriers (“Defect 3”): Vivid alleged missing or defectively installed cavity barriers at party walls, slab edges and window openings as a result of which fire and smoke could spread unseen and uninhibited around the development.
- Rockclad bracketry (“Defect 4”): Vivid alleged that the RP cladding panels were inadequately fixed to the vertical cladding rail with bracketry which was, in some locations, inadequately supported and/or overstressed causing a risk of detachment of the cladding panels and/or physical damage.
- Building debris (“Defect 5”): Vivid alleged that debris was left within building cavities providing an ignition source for fire and/or permitting the spread of fire and, additionally, that the debris provided a bridge for water into the flats causing consequent or additional damage.
Allianz argued that none of the Defects fell within the scope of cover. It was Allianz’s position that Clause 3(a)(iii) indemnified the Insured only for Defects that posed a real and imminent threat of destruction or physical damage to the premises, requiring immediate remedial action to prevent such damage within the Period of Insurance. Leading Counsel for Allianz submitted that the threat had to be sufficiently likely to happen sufficiently soon in order to be described as imminent, and that the clause did not cover risks that would only materialise after events that did not require immediate intervention. Allianz argued that the matters raised a short point of construction which could be determined on a summary basis, relying on assumed facts.
Decision (Jefford J)
Application for summary judgment in relation to Defects 1, 2, 3 and 5 refused. Application for summary judgment in relation to Defect 4 granted.
- Defects 1, 2, 3 and 5: In the case of Defects 1, 2, 3 and 5, the only pleaded circumstances in which the Defects could actually cause destruction or damage would be in the event of fire. To determine whether there was a threat of imminent damage or destruction involved asking whether, in August 2019, when the claim under the Policy was made, the risk of fire was sufficiently serious and would occur sufficiently soon. The judge concluded that there was a realistic prospect of establishing that a reasonable observer in August 2019 would have formed the view that there was a serious risk of fire and the consequent threat of destruction or damage sufficiently soon. On that basis, the case on the construction of the policy clause and whether the policy responded had a real prospect of success in relation to these defects, and the application for summary judgment was refused.
- Defect 4: Vivid argued that Defect 4 posed a threat of imminent damage due to the risk that the bracketry could fail, causing the cladding to detach. They argued that, unlike fire-related defects, nothing further needed to occur for the risk to be considered imminent. Jefford J rejected this argument, noting that there was no realistic prospect of success for Vivid on this Defect in so far as it related to evidence of the risk of imminent damage rather than any case that may be advanced as to actual damage having occurred by way of the overstressed cladding bracketry.
Representation
Rachel Ansell KC (4 Pump Court) for the Defendant/Applicant, instructed by Clyde & Co LLP.
Charlie Thompson (Keating Chambers) for the Claimant/Respondent, instructed by Capsticks Solicitors LLP.
The judgment can be found here.
