Property Losses – Latest Developments

Two recent cases have dealt with different aspects of damage to property and have provided clarification of the approach the courts will take.

In the first case, a man whose home was destroyed by fire claimed under his insurance policy. The policy gave the insurer the right to reinstate the property rather than to pay a cash sum to the insured. The insurer opted to undertake reinstatement and required the insured to enter a standard form JCT Minor Building Works (1998) contract with a builder.

The builder’s performance was not satisfactory to the homeowner and he therefore withheld progress payments that were due to the builder under the contract. The builder then sought an adjudication (as provided for in the contract terms) to confirm his entitlement to the payments. The adjudicator ruled in favour of the builder and the homeowner appealed the decision. The Technology and overturned the decision on the basis that the contract had been imposed on the man by the insurer and the wording of the withholding clause was unfair under consumer law.

In another case, the court had to deal with the common situation in which the cause of a fire was uncertain. In this case, a fire occurred after work had been undertaken by electricians. They had finished their work and left, but before the owner of the house had returned, it caught fire and burned.

The owner was able to demonstrate that the work done by the electricians had been negligent, but the expert evidence did not categorically demonstrate that their negligence had caused the fire. The court ruled that the probable cause of the fire was the negligence of the electricians and that they were therefore liable. This approach was backed by the Court of Appeal. The inability of the electricians to show with a reasonable degree of probability that something else, for which they were not responsible, could have caused the fire was fatal to their defence.

These cases show that the courts are willing to protect the end user. In the first instance, consumer law was applied to protect the insured and in the second instance, the application of a ‘balance of probabilities’ approach to (rather than a strict requirement to prove) the causation of the fire was applied.