PKS specified composite panels with a combustible core in parts of a factory owned by Sahib Foods in 1994. The plant was destroyed by fire in 1998, costing its insurer, Norwich Union, £17m. Norwich Union's solicitor, Greenwoods, successfully argued that PKS should not have used the combustible composite panels in a kitchen area, where the fire started.
Richard Houseago, partner in Greenwoods, said he knew of similar cases coming to court shortly that may trigger a spate of compensation claims against architects. "There has to be a significant exposure out there if you consider the amount of material that carries a degree of risk," said Houseago.
Houseago added that the use of combustible composite panels was significant because of the large losses that can occur in the event of a fire.
The RIBA Insurance Agency Scheme, which provides indemnity insurance for RIBA members, said professional indemnity premiums could rise as a result of the claim. "A big claim will always have an effect on the market," said claims director Gary Haylett.
However, Haylett added that despite the finding, the RIBA insurance scheme would not exclude combustible composite panels from professional indemnity. He said: "The knee-jerk reaction would be to exclude these panels; smaller, non-specialist insurers may take this view. We will continue to underwrite them but will be asking more questions to ensure best practice is followed."
The finding by Judge Peter Bowsher at the TCC stated: "The architect should have properly taken regard to that risk as to the cost-effective availability by 1994 of non-combustible core panels in cooking areas."
Paskin Kyriakides Sands was refused right to challenge the finding in the High Court and is now taking the case to the Court of Appeal.
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