Flat owners in Wales' tallest building take Zurich to High Court

Flat owners in Wales’ tallest building take Zurich Insurance to High Court after firm ‘issued fraudulent documents without inspecting tower blocks’ that are now plagued by damp and fire safety problems

Residents are challenging Zurich’s actions over Swansea’s Meridian Quay
They claim the insurer failed to carry out safety checks before issuing policies
Complaints at 29-storey Meridian Tower range from serious damp to fire safety
Warranties on the policies were also sold to smaller insurer that went bust

A leading insurer is facing allegations of recklessness and deceit over its work at Wales’ tallest building – which has been plagued by damp and fire safety problems.

Zurich Insurance is facing a High Court claim from flat owners of Swansea’s Meridian Quay development, who have accused it of failing to properly carry out checks before issuing insurance policies for properties and then selling their warranties to a firm that went bust.

Lawyers acting for the residents claim that Zurich was either reckless or dishonest in issuing insurance ‘cover notes’ to certify that the building complied with regulations when no proper final inspection had been carried out.

Residents have suffered serious damp and fire safety problems since buying flats in the 123-apartment Meridian Tower and the neighbouring 168-flat six storey blocks known as Bay and Wharf apartments over a decade ago.

They say they have struggled to sell their properties and some are saddled with significant debts.

The lawyers say that ‘as a result of the wrongs perpetrated by Zurich, each of the claimants acquired leasehold interests which were considerably less valuable than they understood them to be and the price they paid for them’.

They say that work to repair the damage will take until 2026/27.

In a response to WalesOnline, Zurich said that their checks were carried out solely to decide whether to insure the developments against future faults. It said they were not full statutory building regulations inspections which would have been carried out by Swansea council.

The papers filed to the High Court by lawyers Walker Morris claim that Zurich did not employ enough surveyors to allow the ‘inspection process to be properly carried out’.

Because they were ‘massively overburdened’, the residents say they were incapable of properly inspecting the building in accordance with surveyor guidelines.

Residents have said they have felt trapped, with the outside building covered in scaffolding as work continues to solve some of the safety issues

They say site logs show Zurich did not visit the site at all between October 2007 and March 2008, two months before it issued its first cover note.

They say the inspectors then bypassed Zurich’s computer system to provide manual cover notes not for individual apartments but for groups of them.

Zurich is also being accused of selling off 10-year warranties to a smaller insurance company, East West, which was not able to cope with the financial burden and later went bust.

Liability was then transferred to the statutory safety net, the Financial Service’s Compensation Scheme (FSCS).

In its response to WalesOnline, the Zurich spokesman said the company had approved and ensured East West could cope with paying all valid claims under the warranties.

Angela Curtiss, 52, purchased a property in the Bay as an investment for a family member, but now she believes it is worthless.

Angela Curtiss, 52, purchased a property in the Bay as an investment for a family member, but now she believes it is worthless

She said: ‘I put it on the market 18 months ago by Dawson’s Estate Agent in the Marina, and did not have one viewing. I purchased the property on an interest only mortgage and now have a huge debt hanging over my head and unable to sleep at night with the worry of how I am going to pay the Halifax back.’

‘Who signed off on this in the first place?’

Sian Jones, 63, bought her apartment in the Bay building in 2014 after her husband passed away. She said she rents out the flat and saw it as an investment so she could continue to have money coming in to support her daughter.

She said: ‘I started to become aware of the various defects in the blocks in around 2016 and, importantly, then about fire safety issues.

Sian with daughter Rhiannon

‘You realise that you have lots of problems both externally and then internally, like the compartmentation, the wrong materials, the lack of materials being used and the leaking. Then you have to think: “hang on, who signed off on this in the first place?”.

‘At the moment the internal work on my one-bedroom flat has been completed but the flat is surrounded by scaffolding. They have said it can be lived in again, but that is ridiculous as there is no natural light coming in at all due to the scaffolding.

‘At the moment I have been provided alternative accommodation. My main concern is how long this will go on for.’

She said that one of her main concerns had been not knowing the full scale of the work needed on the Quay. She said this had caused stressed for owners and residents for a number of years and they they still cannot see an end in sight.

‘Myself and the residents are terrified, some purchasing rope ladders as an escape route in the event of a fire. What was sold as a luxury sea view apartment now feels like a prison.

‘I have been tempted to hand the keys back to the Halifax, however if I did I would still owe what I paid for the apartment. I have found myself in a living nightmare for no fault of my own.

‘Initially I thought all would be okay as somehow it would resolve itself, I did not realise the extent of the work. It was when I was given a bill for £27,000 as part of the repair work with more bills to come I thought this is not right and needed to take action.’

One elderly resident spoke of excitement as buying her 16th floor apartment in the Meridian Tower 10 years ago, completely unaware of the defects, but said her dream retirement home quickly turned into a living nightmare.

‘We bought defective flats unknowingly that we cannot sell, cannot get mortgages on and we are trapped here. I’ve tried and tried to leave, but I can’t sell my flat,’ said the 74-year-old who did want to be named.

‘I knew nothing about the defects in this building until I actually moved in, then it became apparent that the water ingress was quite bad. I had a survey before I bought it and there was no water ingress brought up.’

The woman said the leakage was so bad that she and others like her have had to set up make-shift solutions so they can carry on living in what, for a number of people, is their only home.

‘It’s not pleasant, it’s a health issue and it has been dreadful. It’s been running down the walls from above the patio doors and windows and soaking the carpets,’ she said.

‘The lounge is the worst in my flat, but it also happens in my bedroom. I’ve had chest infections here, but I try and keep it dry as possible.’

The developers of the Quay, construction company Carillion, went into liquidation in 2018 meaning they cannot be held to answer for the way in which the it was built.

A group of owners and residents at the Quay believe they should be receiving government support, rather than being the ones picking up the financial burden of what has happened.

One of them is Phil Lake, head leaseholder of the entire Meridian Quay development. He said he feels completely let down by every party.

The Swansea business owner, 65, has lived in the development he bought in an auction following the collapse of Carillion, and said it was difficult to hear of the suffering of other owners and residents living in the block.

He said: ‘Nobody can sell on an apartment because no bank will provide a mortgage now. The management fees have doubled and the residents have paid a million pounds more than they should have because the insurance premiums are so high.

‘As a result, some people have experienced some serious financial difficulties. People are paying £3500 a year in management fees for a two bedroom apartment – it’s crazy.’

‘It’s not pleasant, it’s a health issue and it has been dreadful. It (water) has been running down the walls from above the patio doors and windows and soaking the carpets,’ she said.

A spokesman for Zurich said: ‘We are sorry to hear of the difficulties some leaseholders have faced due to faults that have arisen in their properties at Meridian Quay.

‘While we no longer manage these claims, the insurance policies are responding as intended and have paid or are paying out in full for any necessary repairs.

‘The allegations about how Zurich ran this business are simply not true and mischaracterise our role. Zurich carried out checks for the sole purpose of deciding whether to insure the building against future faults.

‘Zurich did not carry out the detailed full statutory inspections to assess or certify compliance with building regulations, which were conducted by the local authority. To say Zurich’s insurance inspections were fraudulent is wrong.’

The insurer added that the wording of the policies ‘did not confirm or imply that the new home was or would be free of defects or damage’.

They added that sale of the warranties to East West had been fully approved by regulators and the Irish High Court, and that the company was ‘backed by a multi-billion-dollar insurance group’.

A spokesman from Swansea Council said the local authority is not a party to the High Court proceedings and so could not comment on the matter.

The management company at Meridian Quay, CRM Limited, said: ‘CRM is working with relevant experts and all stakeholders to implement the necessary repairs required to the development.

‘As reported by WalesOnline in January 2020, MQMC and CRM, on behalf of the Leaseholders they represented, secured a significant claim under the Build Warranty Policy where the Insurer confirmed its liability to pay for the repairs relating to the fire safety defects.

‘This puts leaseholders at Meridian Quay in a far better position than many other leaseholders across the country who are faced with similar defects at their developments.

‘The repair programme, being paid for by the Insurer, commenced 18 months ago and Phase one will be completed this summer.

‘CRM and MQMC’s remit is restricted to the management, maintenance and repair of the development and cannot therefore provide comment on individual claims for compensation against the original build warranty insurer.’

When approached about funding, a spokesman from the Welsh Government said: ‘CRM, the Meridian Quay Management Agents, has advised that all works in relation to compartmentation and cladding issues for the whole development (including Meridian Tower) will be covered by the Financial Services Compensation Scheme.

‘Residents that paid the additional service charges, issued in 2019, have been refunded and additional charges for building safety remediation issues have been dismissed for those who had yet to pay.’

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