5th February 2020
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Following the recent decisions in Zagora Management Limited & Others v Zurich Insurance Plc & Others  EWHC 140 (TCC) and Manchikalapati & Others v Zurich Insurance PLC  EWCA Civ 2163 (the previous proceedings), HHJ Stephen Davies (the Judge) has handed down a further judgment in connection with a 104 flat residential development at New Lawrence House, Manchester. This relates to claims of deceit and conspiracy against Zurich Insurance PLC (ZIP) and East West Insurance Company Limited (EWIC) arising out of the issue of alleged fraudulent insurance cover notes by ZIP’s surveyors under the Zurich Standard 10 New Home Structural Defects Insurance Policy (the Policy).
ZIP and EWIC made an application to strike out the claims, arguing that bringing the claims was an abuse of process.
The Judge decided that the proceedings were not in fact an abuse of process and the application of ZIP and EWIC was dismissed, meaning that the central claim of fraud in the issue of the cover notes now falls to be tried by the Court.
The claim is for damages and declaratory relief arising out of the alleged deceit on the part of ZIP and/or conspiracy involving ZIP and others, in connection with the issue of insurance cover notes. The cover notes were issued by ZIP under the Policy to the Claimants and others in connection with the purchase of their flats.
ZIP and EWIC applied to strike out the proceedings as an abuse of process, on the grounds (inter alia) that the Claimants could and should have litigated the points now raised in the claims in the previous proceedings. ZIP’s primary case was that there was “no fundamental difference between the deceit claim which was advanced against ZBC (this being Zurich Building Control Ltd (ZBC), a legally distinct company who acted as the Approved Inspector) in the original action and the deceit and conspiracy claims which are now sought to be advanced in the current action, so that there is no good reason why the current claims could not and should not have been advanced in the earlier action” (paragraph 6).
The Judge applied the approach set out by the House of Lords in Johnson v Gore Wood & Co  2 AC 1, namely that the crucial question is not whether a claimant could have raised the claim in earlier proceedings but whether he should have done so. Further, having considered the decisions in Stuart v Goldberg & Linde  EWCA Civ 2 and Playboy Club London Limited v Banca Nazionale Del Lavora SpA  EWCA Civ 2025, the Judge agreed with Mr Thomas Grant Q.C. (Claimants’ Counsel) that “it is apparent from the approach taken in the Stuart and the Playboy Club cases that the court needs to consider whether or not the claim advanced in the second action could and should have been advanced in the earlier action, not in the abstract, but by reference to what the claimant knew (or, if relevant, should have known) at such time as would have enabled him to advance that claim in the earlier action to enable it to have been determined in that action” (paragraph 21).
The main points of note in the Judgment are:
Any individual with a new home warranty issued by ZIP (or another insurer) should read this decision carefully and obtain legal advice promptly in connection with the insurance cover note issued by ZIP and/or in relation to claims made against ZIP, where indemnity has been refused, and/or where defects remain present at their property.
If you have had a building warranty claim rejected and would like some advice on whether you are able to make a claim, please call 0800 0353276 or email email@example.com. Alternatively, contact Paul Hargreaves, or Martin Scott (details below).