Swansea flat owners claim Zurich made homes 'worthless'

Ceridwen and Brian Jones moved to Meridian Quay thinking it would be "an ideal place to live"

Flat owners in Swansea have claimed one of the world's biggest insurance firms have made their homes worthless after surveyors issued fraudulent documents.

The group from Meridian Quay in the marina claim Zurich surveyors bypassed the company's electronic system to issue hand-written cover notes as proof of their insurance policy.

It is claimed surveyors did not visit the development to carry out their inspections to issue the document.

Zurich said they "strongly disagree".

The Swiss insurance firm said their checks "were solely for the purpose of deciding whether to insure the flats against future faults".

Residents at the Meridian Quay development - which includes Wales' tallest building - said if they had realised their cover notes were fraudulent, they would not have completed the purchase of their apartments.

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The documents are needed by lenders to approve mortgages.

Solicitors representing the claimants said they were aware that Zurich reduced the number of surveyors it employed in 2008 following its decision to leave the building guarantee market.

Apartments at the Meridian Quay development in Swansea went on sale in 2009

They claim to have "strong evidence" to suggest "no inspections took place at the development by Zurich surveyors from a very early stage".

In documents submitted to the court, they say "Zurich over-allocated developments to those surveyors it did employ, and Zurich knew (or at least ought to have known), no reasonable surveyor could properly perform the inspection process in accordance with the surveyor guidance".

It is also alleged that cover notes "were not issued on an individual basis but on a compendious basis taking in multiple departments in the development".

Martin Scott, senior construction partner at Walker Morris solicitors, said: "At the time, Zurich was one of a handful of home warranty insurers in the market and one of the leading insurers for high rise, multi-occupancy developments.

'Imprisoned'

"All the protocols and all the systems they had in place, everything they told the consumer about what their product was and what they would do is rendered to nought because they simply didn't inspect at all.

"With the defects that have been identified, it effectively means occupants are simply imprisoned where they can't sell, they can't re-mortgage, they can't do anything other than deal with the defects at a massive cost. Without pursuing this claim for deceit, they have a future which looks pretty grim."

Ceridwen and Brian Jones bought their ground floor apartment using money from their retirement.

They had hoped to live a happy, peaceful life near the seafront in Swansea, but they say the extensive fire safety defects and other building problems have caused significant anxiety and worry for several years.

The Meridian Quay tower in Swansea Marina is Wales' tallest building

Mrs Jones said: "Our flat hasn't been put right yet. We're still waiting for that. But the dampness is coming through the walls in the hallway and all the plaster is flaking off around the windows. We've also learned that there have been short cuts on the fire retardant which is supposed to be keeping us safe, you know."

They are one of about 90 flat owners who are part of the deceit claim against Zurich.

"It's been really worrying for us," Mrs Jones said. "Our family is worried about us and it's really taken its toll. We retired to come here thinking it would be an ideal place to live.

"The shops are just down the road and everything is easy to walk with us getting older. But all of this has come on us and it's really, really serious."

'Traumatic stress'

She added: "No work has been carried out at our apartment so far. We're getting damp on our walls, but we still don't know what the issues are above our ceiling yet to make sure we're safe if there's a fire."

Mrs Jones said, in the past, they have been asked to contribute £21,000 towards fire safety defects and other construction improvement work.

The managing director of Meridian Quay Limited, the head leaseholder of the development, said it had caused "traumatic stress" for residents knowing their apartments are worthless.

"Financially, the management fees have doubled," said Phil Lake.

"The residents have paid £1,000,000 in excess in insurance premiums as a result of the fire defects.."

Mr Lake alleges Zurich has acted recklessly and fraudulently.

He said: "We have the evidence to show they didn't actually send surveyors here to properly inspect the development.

"We hope to be able to claim £25m to cover the fact when people bought these apartments, they were actually worth nothing. We're also claiming for £5m in punitive damages.

"At the end of the day people have been living here in danger."

Phil Lake, the managing director of the head leaseholder of Meridian Quay, hopes the group can claim £25m

An additional claim has been filed against insurance firm East West by flat owners at Meridian Quay over the 10-year new home warranty.

It was designed so any structural defects or fire safety problems would be rectified by the developer within the first two years of the policy or by Zurich during the remainder of the term.

Zurich Insurance Limited transferred the liabilities to East West in 2018 and by October 2020 East West had gone into administration.

Remediation work

They allege "aggressive claims handling practises" applied to leaseholder claims suggest Zurich and East West must have known the indemnity limit was insufficient to cover all claims.

With 29-storeys, the Meridian Quay tower is visible across Swansea

It is understood negotiations are on-going so the Financial Services Compensation Scheme covers 100% of the remediation work to improve construction and fire safety defects identified across the development.

Remediation work on the tower building has already been carried out by Carillion - the construction firm behind the development - which went bust in 2018.

Zurich said they are "sorry to hear of the difficulties leaseholders are experiencing" but said they "strongly disagree with the allegations being brought against us."

"The local authority was responsible for ensuring the development complied with building regulations," said a Zurich spokesperson.

"Zurich's own checks were solely for the purpose of deciding whether to insure the flats against future faults.

"Zurich's policy clearly stated that the insurance checks did not confirm or imply that the new home was or would be free of defects or damage.

"The purpose of the policy was to provide insurance in case such defects materialised. We are sorry to hear of the difficulties the leaseholders are experiencing.

"While we no longer manage these claims, the insurance policy is responding in full and repairs are being carried out."

A spokesperson for Swansea Council said: "The council is not a party to the High Court proceedings referred to. The council is unable to comment on the issues raised as these are matters for the parties to the proceedings and the court to resolve."

The case will be heard before a High Court judge at the Technology and Construction Court in Cardiff later this year.