Background
Vivid Housing Limited owns a 72-flat block in Portsmouth and is effectively the insured under a housing warranty policy issued by Building LifePlans Ltd under authority from Allianz Global Corporate & Specialty SE. The policy covered repair, replacement, or strengthening costs where a defect becoming manifest and notified during the insurance period caused destruction, physical damage, or a threat of imminent destruction or physical damage requiring immediate remedial measures to prevent such harm during the policy period.
Shortly before the policy expired in May 2020, Vivid notified defects involving combustible cladding, missing or defective cavity barriers, and debris in building cavities. For Allianz’s summary-judgment application, the alleged conditions were assumed to be “Defects” under the policy, and Allianz did not rely on the policy’s fire-related exclusion. Jefford J rejected most of Allianz’s application, holding that Vivid had a real prospect of showing at trial that the defects created the relevant threat and required immediate remedial measures. Allianz appealed.
The Court’s Holding
The Court of Appeal unanimously dismissed Allianz’s appeal. It held that the judge had applied the correct meaning of “imminent”: the objective question was whether the relevant damage was sufficiently likely to happen sufficiently soon, a fact-sensitive inquiry incorporating both probability and time. The judge had not held that fire damage was invariably imminent; she had permissibly concluded only that Vivid had a real prospect of proving at trial that a reasonable observer would have identified a serious risk of fire and consequent destruction or damage sufficiently soon.
The court also upheld the judge’s refusal to decide summarily whether immediate remedial measures were required. The severity of the risk, CBRE’s classification of compartmentation defects as critical, the possible risk-reducing role of a waking watch, and the evidence concerning other remedial work were matters properly resolved at trial. Because Allianz’s challenge failed, the court did not decide the alternative constructions advanced in Vivid’s respondent’s notice.
Key Takeaways
- Under this policy wording, “imminent” asks whether destruction or physical damage was sufficiently likely to occur sufficiently soon; the answer is one of fact and degree.
- The Court of Appeal did not determine that Vivid’s claim was covered, only that its case had a real prospect of success and should proceed to trial.
- Whether defects required immediate remedial measures may depend on the seriousness of the risk, expert prioritisation, interim precautions such as a waking watch, and evidence about the timing of permanent repairs.
Why It Matters
The decision limits the use of summary judgment to dispose of latent-defects insurance claims involving passive fire-safety defects. Even without evidence that a fire was about to ignite, an insured may be able to establish a triable case that defects created a threat of sufficiently likely and sufficiently near-term fire damage.
The ruling is procedural rather than a final coverage determination. The scope of cover, the factual level of fire risk, and the need for immediate remedial measures remain to be determined at trial.