Claims against Approved Inspectors what's the latest?

Claims against Approved Inspectors what's the latest?

AIs must be registered with the Construction Industry Council Approved Inspectors Register (CICAIR), be re-approved every 5 years and must have appropriate insurance cover. The Building Act 1984 is the primary legislation which governs AIs with secondary legislation such as the Building Regulations and the Building (Approved Inspectors etc.) Regulations 2010 providing further guidance.

An Approved Inspector (“AI”) is an individual or organisation that privately and independently verifies that the Building Regulations have been complied with in a building project. This verification used to be conducted by the Building Control departments of Local Authorities only.

Unlike Public Authorities, AIs are appointed contractually to provide services that they will provide to the client and are required to have PI insurance to cover the economic loss arising out of negligence. AIs are often appointed for this reason instead of the Local Authority. Where it has been deemed that the building has not complied with the Building Regulations, the AI may be responsible to some extent for the loss resulting from the non-compliance.

Beale & Co - Joanna Lewis and Jason Bird comment:

"The Technology and Construction Court (“TCC”) has passed down two judgments in recent months which consider the particular roles, responsibilities and potential liabilities of AIs, in tort.

Zagora Management Ltd and others v Zurich Insurance plc and others and Lessees [2019] EWHC 140 (TCC) The freeholder and the leaseholders of two blocks in Manchester claimed against the AI after the flats were found to have serious defects in relation to fire related defects.

In his judgement, Judge Stephen Davies made clear that the claim against the AI were pleaded in fraudulent misrepresentation. It was claimed that the AI was aware that the statements it made in the Final Certificates were not true, or knew that there was no reasonable grounds to believe they were true, or were reckless as to their truth. Judge Stephen Davies held that deceit was proven, but essentially the claim failed because the AI had not intended the freeholder to rely on its certificates and in turn, the leaseholders could not prove that the false certificates had induced them to purchase the flats.

Management Company of Herons Court v Heronslea Ltd and others [2018] EWHC 3309 (TCC)

The lessees and management company of a block of twelve flats in Hertfordshire claimed against the AI after the flats were found to have inadequate fire and water resistance measures.

The claimants intended to sidestep the difficulties with a claim in negligence or the requirement to prove deceit by claiming that the AI had issued certificates that allegedly breached the Building Regulations, rendering it unfit for habitation under section 1(1) of the Defective Premises Act 1972. Waksman J considered the House of Lords judgement from Murphy in which it was decided that section 1(1) of the Defective Presmises Act 1972 did not apply to Local Authorities. Although Waksman J felt that it could apply to AIs “in isolation” in this instance Waksman J held that an AI and Local Authority should be treated the same way and so struck out the claim."

"These decisions are likely to disappoint property owners as they highlight the historic, high hurdles claimants must surmount to bring a successful claim in tort against AIs. In contrast, AIs and their insurers are most probably relieved with the recent judgments from the TCC.

These cases leave little scope for claims against AIs from building owners/occupiers which is surprising given they are required to maintain professional indemnity insurance which should be there to protect freeholders, leaseholders and occupiers who are affected by the AI’s negligence.

Unless AI’s are willing to give collateral warranties to building owners, it remains difficult to see how parties who have no contractual remedy will be able to claim against AI’s as it is now apparent that any route which might have been available through deceit/fraudulent representation and the Defective Premises Act 1972 has been cut off."

Reference: International Construction and Insurance Law Specialists www.beale-law.com