Building owner fails in £4.5 million cladding claim

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Shepherd Construction has seen-off a £4.5 million cladding claim from Aviva Investors Ground Rent Group after the judge ruled against the case. Aviva wanted to claim the cost of repairs to a student block in Cambridge.

Shepherd had built the block in 2009 for the original owner, Camstead, which subsequently sold the block to the Hotbed group of companies. Hotbed in turn sold the block to Aviva in 2012.

Following the Grenfell fire, Aviva started investigations into the block and discovered faults with the cladding and compartmentation, amongst other issues. It started a claim for damages against Shepherd under the terms of clause 7.2 of the JCT Design and Build contract 2005. This permits the original owner to assign the right to bring proceedings in the owner’s name to a purchaser of the building.

The claim was the first time that Clause 7.2 had been considered in court and the judge held that Aviva’s claim failed on two counts. Firstly, Aviva had brought the claim in its own name – rather than that of Camstead, the original owner. Secondly, the judge decided that while the wording in Clause 7.2 permitted the original owner to assign the right of action to a purchaser, it did not allow the new owner to transfer the right to subsequent owners.

Justice Jefford said there was no case pleaded that Shepherd owed a duty of care to future owners of the property.

James Burgoyne of Brunel Professions says the ruling provides comfort to contractors that clause 7.2 is given a natural interpretation. “What was perhaps surprising was that Aviva were relying on clause 7.2 of the JCT D&B 2005, and did not have a stronger link with Shepherd, such as a collateral warranty.”

Reports about the case have been published by Construction News, Construction Manager, Pump Court and RPC.

Professionalindemnity.com is owned by Brunel Professions, which is a leading professional indemnity insurance broker in the UK. Click here to get a quote or call 0345 450 1074 to speak to a broker.

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