Zagora Management Ltd & Ors v Zurich Insurance Plc & Ors

Zagora Management Ltd & Ors v Zurich Insurance Plc & Ors

The individual leaseholder claimants succeed against ZIP/EWIC for serious defects covered by the building warranty policies, but recovery is limited to the total declared purchase prices of their flats (£3,634,074) due to the policy's maximum liability clause. Zagora fails against ZIP/EWIC as it was not an insured and no binding agreement to rectify was concluded. Both Zagora and the individual leaseholder claimants fail against ZBC for deceit, as the judge found no sufficient reliance on the building control certificates and/or no intention by ZBC for claimants to rely. The leases require the management company to undertake and recover the cost of remedial works to common parts, but do...

Parties
Claimants: Zagora Management Limited & Others; First Defendant: Zurich Insurance plc (ZIP); Second Defendant: Zurich Building Control Services Limited (ZBC); Third Defendant: East West Insurance Company Limited (EWIC)
Jurisdiction
England and Wales
Judgment Date
30 January 2019
Procedural Posture
Civil (tcc, Uk) / Final Judgment After Full Trial
Outcome
Partially allowed: Leaseholder claims against ZIP/EWIC succeed within policy limits; all other claims dismissed.
Legal Topics
Building Warranty Insurance, Building Regulations Compliance, Deceit (fraudulent Misrepresentation), Policy Interpretation, Limitation of Liability, Service Charge and Lease Obligations
Insurance Law Construction Law Tort Law Contract Law Building Warranty Insurance Building Regulations Compliance Deceit (fraudulent Misrepresentation) Policy Interpretation +2 more

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Parties

Zagora Management Limited & Others

Claimants

Zurich Insurance plc (ZIP)

First Defendant

Zurich Building Control Services Limited (ZBC)

Second Defendant

East West Insurance Company Limited (EWIC)

Third Defendant

Procedural Posture

Civil (tcc, Uk) / Final Judgment After Full Trial

Legal Issues

  1. 1 Whether the claimants are entitled to recover under building warranty insurance policies for serious defects in a residential development.
  2. 2 Whether the freeholder (Zagora) can claim under the policy or under an alleged agreement to rectify with the insurer.
  3. 3 Whether the individual leaseholders can recover the full cost of remedial works or are limited by policy caps and proportionate share provisions.

Ratio Decidendi

The individual leaseholder claimants succeed against ZIP/EWIC for serious defects covered by the building warranty policies, but recovery is limited to the total declared purchase prices of their flats (£3,634,074) due to the policy's maximum liability clause. Zagora fails against ZIP/EWIC as it was not an insured and no binding agreement to rectify was concluded. Both Zagora and the individual leaseholder claimants fail against ZBC for deceit, as the judge found no sufficient reliance on the building control certificates and/or no intention by ZBC for claimants to rely. The leases require the management company to undertake and recover the cost of remedial works to common parts, but do...

Court Disposition

Partially allowed: Leaseholder claims against ZIP/EWIC succeed within policy limits; all other claims dismissed.

Orders

  • Judgment for individual leaseholder claimants against ZIP/EWIC for £3,634,074 (aggregate of declared purchase prices), subject to policy excesses and deductions.
  • Claim by Zagora against ZIP/EWIC dismissed.