The Technology and Construction Court (TCC) has dismissed a claim that a director of a building contractor fraudulently misrepresented he would obtain £2 million of National House Building Council (NHBC) cover, rather than a standard £1 million.
C E Gilbert (Building Contractors) was appointed by Mr and Mrs Griffiths to build them a new home with a contract price of £2 million. After practical completion a dispute arose about defective works and asbestos contamination of the surrounding land.
The Griffiths won substantial damages against C E Gilbert (Building Contractors) at arbitration, but the contractor was unable to pay and went into administration. The couple successfully recovered £1 million under the NHBC warranty and pursued court proceedings against the director of the contractor, Mr Gilbert, for fraudulent misrepresentation. They alleged he agreed to take out £2 million of NHBC cover, instead of £1 million.
The TCC ruled in Mr Gilbert’s favour. Critically, Mr Griffiths had signed a document accepting £1 million worth of cover without raising any objections. The judge also accepted an entry written in a notebook some months after the event, that £1 million of cover was agreed, as genuine recollections of a meeting. The judge concluded there was no misrepresentation at the pre-contract meeting between the parties.
James Burgoyne of Brunel Professions said, “Claimants faced with shortfalls and insolvent defendants do not accept such situations meekly. Claims can be pursued against individuals, and can also include allegations of dishonest behaviour to avoid limitation issues. It is for this reason that the defence costs cover under Professional Indemnity and Directors & Officers insurance is important, even where there is the protection of a limited company. It was noteworthy in the present case that the proceedings were commenced against Mr Gilbert in 2014, and he had this matter hanging over him for 8 years.”
Reports about the case have been published by Fenchurch Law, Fenwick Elliott and Charles Russell Speechlys.
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