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Leaseholders at unsafe Manchester block entitled to £10.8m after insurance claim court appeal

A group of owners at a Manchester tower block deemed unsafe have won their appeal in a legal battle with the building’s insurers, with the insurer now expected to pay more than £10m to cover costs.

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Picture: Getty
Picture: Getty
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A court has ruled that insurers of a block found to have structural deficiencies must pay £10.8m #ukhousing

Leaseholders of a block in Manchester will see more than £10m paid to them to cover “structural deficiencies” on the block they bought homes in #ukhousing

The 103-flat New Lawrence House in Hulme was found by fire officers to have multiple “structural deficiencies” after an inspection in the wake of the Grenfell Tower fire in 2017. As a result, residents were banned from living at the five-storey development. Serious defects had first been identified as early as 2012.

Among the allegations regarding New Lawrence House were that its steel structure did not have a flame-retardant treatment, which meant it was a “present or imminent danger to the physical health and safety of the occupants”.

A court ruling earlier this year said that the owners were entitled to recover a total of only £3.6m because of the insurance policy’s maximum liability clause.


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However appeal court judges ruled in a judgement published last week that this should be increased to £10.8m.

The original insurance policy was through Zurich Insurance, but the group sold its former building guarantee book of business last year to East West Insurance, which is part of Bermuda-based firm Armour Risk.

This means East West is liable for the £10.8m pay-out, the court ruled.

Martin Scott, partner at law firm Walker Morris – which represented the freeholder of the building, Zagora, and 30 of the owners – said: “This is a landmark in a long, hard-fought battle, which has caused considerable stress and worry to our clients.”

In an emailed statement to Inside Housing, a Zurich spokesperson said: “We note the outcome of the recent Court of Appeal case arising out of a dispute between East West and the leaseholders of New Lawrence House.

“The proceedings relate to Zurich’s former building guarantee book of business, which East West purchased in 2018. As such, it is East West, not Zurich, which is responsible for the court award.

“We recognise that the leaseholders of New Lawrence House have faced a long and difficult journey to obtain a resolution, and hope that the recent judgement against East West brings some certainty to them.”

Armour Risk has yet to respond to a request for comment.

The case comes amid an insurance crisis for the sector, which it has been claimed is putting thousands of projects at risk.

Inside Housing reported in July that ‘approved inspectors’ – private firms qualified to inspect construction work for compliance with building regulations – are struggling to find the necessary insurance to work as the cladding crisis and the potential associated liability drives insurers away.

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