Home > Bache & Others v Zurich Insurance PLC [2014] EWHC 2430 (TCC)


Bache & Others v Zurich Insurance PLC [2014] EWHC 2430 (TCC)




Mr Justice Akenhead considered the circumstances in which purchasers were able to claim the return of their deposits under the Zurich Standard 10, New Home Structural Insurance Policy (‘the Policy’) on the trial of two preliminary issues.  The purchasers had paid deposits to a developer (company) to purchase flats ‘off-plan’ under Agreements for Lease.  The developer subsequently failed to complete the flats.   On 16.02.10, the purchasers’ solicitors wrote to the developer purporting to accept their failure to complete the construction as repudiation of the Agreements for Lease and sought the return of the deposits (incurred by Zurich under the Policy).  The developer was subsequently placed in administration on 08.04.11 and dissolved in January 2013.  Zurich refused to meet the purchasers’ claim for reimbursement of their deposits and proceedings were commenced.

Section 1 of the Policy provided:

 What we will pay before the new home is completed:

1.            We will pay where, due to the developer’s bankruptcy, liquidation or fraud, the developer fails to complete the construction of the new home in accordance with the requirements and the buyer loses a deposit paid to the developer under the terms of the purchase contract for the new home, we will at our option:

(a)          Pay the reasonable cost of completing the home to the original specification; or

(b)          Pay to the buyer the amount of any such lost deposit.”

The insurers refused to meet the purchasers’ claim.  Zurich eventually conceded that dissolution of the developer would, as a matter of definition come within the word “liquidation” in the Policy referred to above.

The reformulated preliminary issues to be determined were:

“1.          Are the [purchasers] entitled to claim under the Policy if:

a)            They accept the repudiatory breach on the part of the developer (in that the developer had failed to start or complete the development within a reasonable time); and

b)            Following such acceptance the developer enters liquidation or dissolution; and

c)            At the date of the acceptance [of the repudiation], the developer was as a matter of fact insolvent and such insolvency is the reason why it had not started or completed the development?

2.            Is the answer different if at the time of the acceptance the developer is not insolvent?”

The determination made by the Judge was as follows:

“(a)        The fact that the insured purchasers have accepted a repudiation on the part of the developer vendors is not in any way a bar to recovery under the policy.

(b)          The fact that following such acceptance the developer enters liquidation or is dissolved is not in any way a bar to recovery under the policy.  Liquidation or dissolution of the developer vendors represents the time at which the policy is engaged.

(c)           Technically, the fact that at the date of the acceptance of the repudiation the developer was as a matter of fact insolvent and/or such insolvency is the reason why it had not started or completed the development is not in itself a bar to recovery under the policy.

(d)          The answer is the same whether or not the developer is insolvent at the time of the acceptance of the repudiation.”

The consequence was that, subject to any other defences that Zurich may have and to proof of the assumed facts, the purchasers were entitled to claim under the Policy.  The trial of the action is now listed for December 15, 2014.

Mr Nicholas Yell was instructed by Alison’s Legal Practice on behalf of the purchasers and was led by Mr Terence Mowschenson QC.