Zagora Management Ltd & Others v Zurich Insurance Plc

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeStephen Davies
Judgment Date07 February 2019
Neutral Citation[2019] EWHC 205 (TCC)
Docket NumberCase No: B50MA033
Date07 February 2019

[2019] EWHC 205 (TCC)




Manchester Civil Justice Centre,

1 Bridge Street West, Manchester M60 9DJ




Case No: B50MA033

Zagora Management Limited & Others
(1) Zurich Insurance Plc
(2) Zurich Building Control Services Limited
(3) East West Insurance Company Limited

Jonathan Selby QC & Charlie Thompson (instructed by Walker Morris, Leeds) for the Claimants

Nicholas Baatz QC & Nicholas Maciolek (instructed by Kennedys, Birmingham) for the First & Third Defendant

Hearing date: 30 January 2019


I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

His Honour Judge Stephen Davies


This judgment is supplemental to my principal judgment (“ the judgment”) handed down on 30 January 2019 and addresses the claim by the individual leaseholders (who for ease of reference I shall refer to as the claimants, which term thus excludes the first claimant and freeholder, Zagora Management Ltd (“ Zagora”), whose claim failed) for interest on the sums awarded to them under that judgment. It is contested by the third defendant, as successor to the first defendant and against whom those sums are awarded (but who for ease of reference I shall simply refer to as ZIP) on two grounds:

(1) First, that it is not open to the claimants to pursue a claim for interest given that no claim for interest along the lines now advanced was claimed until the claimants had received the draft judgment.

(2) Second, that the claimants have not demonstrated any legitimate basis for claiming interest at all, let alone over the period and at the rate claimed (which are also disputed).


The claim for interest was fully argued by counsel for the claimants and for ZIP in their written notes and oral submissions at the hearing and I am grateful to them all. Given the nature and complexity of the arguments raised and value of the claim for interest as advanced by the claimants I decided to reserve judgment at the end of the hearing.

The relevant facts


I shall need to begin by recording the relevant facts on the basis that anyone who needs to know more about the facts underlying the substantive litigation can do so by referring to the judgment [2019] EWHC 140 (TCC) and in particular section 1 which contains an introduction and a summary of my decision.


First, the claim by the individual leaseholders under the building warranties issued by ZIP was always advanced on the basis that they were entitled to claim against ZIP the full cost of the remedial works which the claimants asserted were required, said to amount to £10.9 million plus VAT. Importantly, these costs were always – from the date of service of the Particulars of Claim all the way through to trial and closing submissions – said to include an allowance for inflation up to and including the time when the claimants expected to obtain judgment and payment thereunder and then to be in a position to fund and thus undertake those remedial works. Furthermore, and equally importantly, ZIP did not dispute the proposition that any recovery should include an appropriate allowance for inflation which, in the end, was agreed on a subject to liability basis by the quantity surveying (“ QS”) experts. Indeed, this approach was consistent with one of the major defences advanced by ZIP which was that on a proper construction of the policy the claimants were only entitled to recover if they had already undertaken the remedial works or at the very least could establish that the works would be carried out.


It was in those circumstances that although the Particulars of Claim contained a general and unparticularised claim for interest under statute (s.35A Senior Courts Act (“ SCA”) 1981) it did not, as required by Civil Procedure Rule (“ CPR”) 16.4(2) in relation to claims for a specified amount of money, either state the percentage rate claimed or the date from which it was claimed. Unsurprisingly, therefore, ZIP did not respond to the claim for interest in its Defence other than simply to put the claimants to proof of their alleged entitlement to interest.


One of the other major defences advanced by ZIP was a defence based on a maximum liability provision (“ MLP”) in the building warranties which limited the maximum liability payable under each policy to the declared purchase price of each flat. I concluded in the judgment that the MLP applied and was effective to limit each of the individual leaseholder's claims to the declared purchase price of their flat. The result was that although otherwise the individual leaseholders would have succeeded in a much more substantial sum (said by the claimants to be in excess of £9.7 million plus VAT) in fact the total judgment was limited to £3.634 million (“ the ML cap”).


In their Reply the claimants advanced various arguments as to why, on its true construction, the MLP did not have this dramatic effect, which I considered and rejected in the judgment. The claimant did not in their Reply or at any time subsequently until receipt of the draft judgment advance a positive case to the effect that if, contrary to their case, the MLP did apply they were entitled to interest on the ML capped sum at a specified rate and from a specified date. In particular, although the claimants gave evidence in their witness statements as to their general circumstances (which were – as I said in the judgment – that of the 26 individual leaseholders all but two were buy-to-let investors, some based overseas but the majority being UK residents, with the other two buying flats for their student offspring to live in whilst studying at Manchester) they did not purport to give evidence as to their financial circumstances with a view to advancing a claim for interest either at all or in the event that, contrary to their case, the MLP limited their claims to the declared purchase price.


Nothing was said about interest in either of the opening submissions, written or oral, and nothing was said about interest during the course of the trial. There was no cross-examination by Mr Baatz QC of the individual leaseholders as to their financial circumstances insofar as material to the claim for interest. In their closing written submissions the claimants said that: “Given that their claim is for future costs, the claimants accept that they cannot claim interest from ZIP on their damages up to the date of judgment. Of course, if there is any delay in satisfying the Court's judgment, interest on judgment monies will accrue in the usual way under section 17 of the Judgments Act 1838. In its closing submissions ZIP simply said that: “There is no claim for actual expenditure and so the claim for interest is a nullity”. Nothing was said by Mr Selby QC or by Mr Baatz QC in oral closing submissions about interest.


In their written note for this hearing the claimants asserted that the submission made in relation to interest in their closing submissions was not directed to the eventuality which has materialised whereby the claim has been held to be limited to the ML capped amount. At the hearing I expressed my provisional view that the reason why nothing specific had been said by the claimants or their legal representatives in relation to making any claim for interest on the ML capped amount at any stage up to receipt of the draft judgment was that the claimants and their lawyers had simply not applied their minds to this issue. Mr Selby acknowledged that this was the case. In his submissions Mr Baatz suggested that that was not a conclusion which I could safely draw in the absence of express evidence to that effect. Whilst he was right to draw my attention to the absence of express evidence on the point I have no doubt, given my direct knowledge of this case from the first substantive case management conference through all of the numerous contested interlocutory hearings down to the trial itself, that this is indeed the explanation. I have no doubt whatsoever that if the claimants' legal representatives had applied their minds to this issue they would have made it clear that the claimants would indeed be advancing a claim for interest on the ML capped amount if the MLP was held to apply in the judgment. In short, I am completely satisfied that there was no deliberate intention or decision not to advance a claim for interest in the event that the claimants were held to the ML capped amount and that the failure to qualify the acceptance in closing submissions was due to inadvertence by the claimants.


When I produced my draft judgment I addressed interest by recording that it had been agreed that interest should be left over until the draft judgment had been produced. On receipt of the draft judgment ZIP alerted me to the fact that this agreement had in fact only been reached as between the claimants and the Second Defendant, ZBC, and that – not surprisingly given the circumstances referred to above – there had been no reference at all made in oral closing submissions to interest in relation to the claim against ZIP. The claimants accepted that this was the case but, by letter dated 11 January 2019, notified ZIP that they intended to seek interest on the claim at 4.5% above base from a date in March or in April 2013. ZIP's response was to object that it was not open to the claimants to advance such a claim at this stage and, when this dispute was brought to my attention, I amended the judgment so that as handed down it simply recorded that I had not addressed interest and that the claimants were now seeking interest notwithstanding what was said...

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2 cases
  • Manchikalapati & Others v Zurich Insurance Plc (t/a Zurich Building Guarantee & Zurich Municipal) and East West Insurance Company Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 5 December 2019
    ...appeal of ZIP and East West (collectively “ZIP”) from the learned judge's judgment of 7 February 2019 (“the Interest Judgment”) ( [2019] EWHC 205 (TCC)) which deals with the claimants' claims to interest on the total principal sums of £3,634,074.65, as limited by the MLC which the judge fo......
  • Zagora Management Ltd & Others v Zurich Insurance Plc
    • United Kingdom
    • Queen's Bench Division (Technology and Construction Court)
    • 15 February 2019
    ...judgment on 30 January 2019 [2019] EWHC 140 (TCC) and of my supplemental judgment in relation to interest on 7 February 2019 [2019] EWHC 205 (TCC). 2 In very brief summary of those decisions, all of the claimants (“ the ZBC claimants”) who sued the Second Defendant (“ ZBC”) lost their cla......
1 firm's commentaries
  • Zagora Management v Zurich Insurance: Timing in Property Insurance Claims
    • United Kingdom
    • Mondaq UK
    • 28 March 2019
    ...[2019] EWHC 205 (TCC) Judge considers how long insurer has to consider a property insurance A property insurer was ordered to provide an indemnity under its policy. In this case, the judge considered various costs issues, one of which was the date from which interest should be awarded. The ......

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