High Court Protects Policyholders In Supply Chain Spat – Ruling Could Set Precedent

Policyholders are safe from being sued by insurers’ supply chains following a ruling at the High Court.

In the case, AJ Building and Plastering Ltd v Turner & Ors, Camarthen property policyholders Samantha Turner, Sheila Munday and Martin Dalling were all insured by Zurich, and made claims for flood and storm damage to their homes in 2009 and 2010.

Zurich appointed contractor Rok Building to carry out the repairs, and Rok subcontracted to local builders AJ Building and Plastering.

The insurer paid Rok for the work, but Rok went into administration in November 2010 and did not pay AJ Building.

AJ Building went to the High Court to claim that the three householders should be held personally liable to pay for the work carried out on their homes. It pointed to “mandates” signed by each of the home owners which, it claimed, put them under a direct contractual duty to make payment in full.

But Judge Andrew Keyser QC dismissed AJ Building’s case. He said the company had been the third and final link in a contractual chain and it would be wrong to make the householders bear the risk of the money paid by Zurich “disappearing in Rok’s hands”.

The judge absolved the policyholders of all liability.