Here’s an everyday story of a new home, its disgruntled owners, their worried insurer, its unhappy builder and a legal case that didn’t go the way it was supposed to

Zurich Insurance operates one of these homeowner building guarantee schemes. You simply buy a new home, as Mr Haskins did at Belmont Hill SW13, find the defects and plug it in.

I bet you think I’m going to tell you it all went wrong. Truth is, it seems to have gone reasonably well between Mr Haskins and Zurich. Yes, yes, Mr Haskins and his partner did become a tad aerated during the adventure, but Zurich got all the defects fixed. The rigmarole only started when Zurich went to Gearcross, the builder, to recover the costs of repairing its defects. It demanded the money, didn’t get it, and sued for summary judgment – “summary” because it was supposedly an open and shut case.

Zurich has a list of registered builders, who promise to build each new home to Zurich’s requirements. Fair enough. The builder then promises the new homebuyer it will comply with Zurich standards and be liable for and repair any damages or defects during the guarantee period. Zurich tells the homeowner it will oblige the builder to put right the defects or instruct another builder asap. Fair enough again. The pre-agreed deal is that Zurich can recover the costs from the first builder. I pause – can we have this system in commercial contracts too please?

Mr Haskins, the buyer, spotted damp and other items soon after moving in. He reported his findings to the builder and Zurich. Zurich immediately sent in a surveyor.

Gearcross, the builder, got on with some of the items but soon an unpleasant atmosphere developed. Mr Haskins and his partner grew difficult about allowing the builder access, said the judge. His correspondence took on a rather overwrought tone and allegations of verbal abuse were made. The builder became less active and Mr Haskins instructed a solicitor.

The list of defects winged its way between the various folk. The builder wouldn’t set foot in Mr Haskins’ home, and one surveyor claimed that when he tried to go in, he was pushed out again.

Credit: Simone Lia

The bill was a whopping £149,000. Zurich boobed. The original all-important ‘notice’ by Zurich to Gearcross was for £36,538

Zurich employed another builder. Gearcross held up its hands to the list of defects it was notified of. Then Zurich sent the bill. It was a whopping £149,000. Zurich sent a demand for payment and then applied for summary judgment.

This involved a short hearing before a construction industry judge, as it was believed there was no real defence. His Honour Judge Peter Coulson helpfully explained that five things needed to be established:

  • The work was defective
  • Zurich had properly notified the builder what work was necessary
  • The builder did not do the repairs
  • Zurich reasonably engaged another builder
  • The sum claimed by Zurich was for the work done in the notice.

Zurich boobed, it seems. The original, all-important “notice” by Zurich to Gearcross was for £36,538. It was argued that the zoom towards the final bill was in some way owed to an expert report about damp. A little fanciful, said the judge.

Apparently, the mismatch between the £36k and £149k was to do with Zurich agreeing to relocate spot lights, unspecified work on a terrace and more to a balcony, plumbing works, new WCs and systems. The judge ordered the £36k to be paid now and sent the balance to be tried some time in the future.

These types of problems create an internal difficulty. Zurich’s surveyor happily agreed that the homeowner’s long list of complaints were down to the original builder.

Zurich’s surveyor had some difficulty. If he challenged the homeowner he’d be accused of playing hardball. On the other hand, Zurich got into all sorts of quarrels with the builder by being co-operative with the homeowner.

The answer is easier said than done: the surveyor should have taken a strictly professional approach and made an objective assessment about the extent of defects. But even then he would not be believed.