Cavity Wall & Loft Insulation – a Scandal and a Disgrace!
Cavity Wall Insulation (CWI) has proved to be an ongoing scandal affecting literally millions of people in the UK. An estimated 4 million homes had work done which was below standard and the extraction of inappropriate or badly injected insulation has in many cases resulted in further problems created by the very people who were supposed to be remedying the situation. A sympathetic ear from members of Parliament has resulted in no effective action. Companies have been restructured and/or liquidated make it harder if at all possible to bring to book those responsible and many families remain living in miserable conditions years after the problem first manifested itself. Ralli Solicitors LLP are now investigating potential ways forward so that those affected may at last be compensated for having to endure unhealthy damp conditions, wallpaper hanging off walls, crumbling plaster and in some cases marriage breakups caused by the shear stress and frustration of trying to get things put right.
In this article the team at Ralli Solicitors LLP look at what is happening now and what historically has occurred. It should not be forgotten that Government Initiatives, European policy on carbon credits and the actions of some substantial UK quoted companies have contributed to the journey which has lead far too many British citizens along the ‘Road to Hell.
- Funding Claims
There are ongoing problems with the funding of claims and here we look at some of the alternative ways of funding and problems being met by some clients.
The clients, who are funding their own claims, find that they are able to make quicker progress than where outside funding is sought and/ or is relied upon. Those who can raise or have the funds available are able to instruct surveyors barristers and solicitors and pay substantial court fees plus if necessary pay for experts barristers and their legal teams to attend court for interim applications and a trial should it be necessary .Preparation can be detailed and corners are not cut. There are certain downsides which will apply and these are referred to in more detail below. The biggest problem is that judges may only award costs which they consider to be proportionate to the amount of money recovered as distinct to being proportionate to the years of living in appalling conditions and having the frustration of being stonewalled when seeking compensation. Costs awarded may be substantially below costs expended meaning that there is a net loss position and insufficient funds to put right the defects.
Some clients have the benefit of insurance funding for example as part of their household insurance or credit card agreements. This type of insurance is known as ‘before the event insurance’ in that it was taken out before problems were discovered. Cover is often £50,000 but is sometimes £100000 or more. The cover is intended to fund taking the action, and if unsuccessful, costs of the opposing party. If there is not enough then additional ‘after the event’ insurance may be available or the claimant must make up the balance. One disadvantage is that clients cannot choose which lawyer to instruct for the part of the case conducted prior to actually issuing proceedings in the court. A ’panel solicitor’ may be working at a very low rate or on a fixed low price and may not be experienced in the complexities of conducting cavity wall cases. Sometimes the firm’s expertise has been built in high-volume personal injury cases. Furthermore lack of knowledge can result in their advising that there is no claim, or that pursuing a claim is unviable on economic grounds and therefore not something which the insurance company will support. The advantage of insurance funding is that the claimant may not have to pay a percentage of the claim to the lawyer as part of the lawyer’s fees. Be aware however that the ‘no-win no fee’ arrangements quoted may not in fact apply to anything other than the personal injury part of a claim and if you do win there will be a fee. Furthermore a substantial part of the insurance funds available may be dissipated quickly prior to proceedings being commenced The insurer will take its own view upon settlement offers and may refuse to provide further funding if an offer is not accepted even if that offer is too low to remedy the work.
If a claimant does not have available funding to pay for the case themselves or ‘before the event’ insurance they modern alternative is a range of ‘no-win no fee’ style agreements. These are certainly not all the same and the alternatives can be bewildering. There are’ conditional fee agreements’ damages based agreements’,’ no-win low fee agreements’ or various hybrid arrangements. Almost all of these involve some kind of insurance backing where funders will pay the legal costs of running the case in return for a premium. This can work well but from the client’s point of view on smaller claims the cost of the insurance cover which used to be, but is no longer, recoverable as part of the damages, may be too high and such as to leave a successful claimant with insufficient funds to put right the shoddy workmanship and redecorate. From the point of view of the funder the risk v reward in these types of claims is unattractive. There may well be a point during such a claim, if funding can be found, where the funder threatens to withdraw funding if an offer of settlement is not accepted albeit that that offer is too low in the view of the claimant and their solicitor. The current marketplace is that ‘after the event’ insurance funding for cavity wall insulation claims is proving very difficult to obtain at prices which make it financially viable for claimants to proceed on this basis. Separate disbursement funding (fees paid out such as barristers fees court fees surveyors fees travelling costs etc.) and insurance against adverse costs (paying the defendants legal costs if the claimant loses and a costs order is made against them) are available in the market as separate policies and for this reason we find the preferred way forward is for claimants to lodge a sum of money with lawyers to pay for the disbursements and if necessary at some later stage apply for third-party insurance funding, packaged in an appropriate way. In return law firms often request 25% of the damages in addition to such legal fees as may be recovered from defendants. Separate periods are identified i.e. before issuing proceedings and after issuing proceedings and separate agreements may cover these two stages.
- The Claim Itself
Not all claims relating to cavity wall insulation or loft insulation will be the same. The starting point for most claims will be that a claimant should be put back into the position in which they were before they sought out, or were offered the insulation. However where the contract made was just to provide insulation which would achieve a certain saving over period of time it is arguable that a claimant can make a claim for specific performance of that contract i.e. the cost of doing what the contractors said they would do as distinct from merely being put back into the position from which the claimant started. Additionally there will be claims for repair inconvenience hotel expenses and other damage. In some cases there will be personal injury claims either on the basis that a new condition ( e.g. breathing difficulties) was caused by the faulty installation or an existing condition was made worse. These claims can prove difficult because one has to show causation i.e. that the medical problem was caused by the poor workmanship rather than other issues. There is a three-year limitation period in which to bring the claims for personal injury and claimants must decide whether to bring personal injury claims as part of one set of proceedings or separate proceedings as different protocols may apply. A personal injury claim can be brought by people other than just the property owner.
Some claimants will have contracted under different schemes. Some would have believed they were receiving a grant when in fact they were receiving a loan repayable by an extra loading upon their utility bills. Some may have bought a property upon which’ grant’ work had been carried out and the utility bills loaded without ever realising this and without their conveyancing solicitor having asked the right questions or advised that there was a 90 day period for the purchaser to refuse to take over the liabilities leaving the vendors rather than the purchaser to pay any outstanding balance on the loan. For the purpose of this guide we will treat claims, as distinct from who the claim is to be made against, as being the same whenever the work was carried out, save that it must be remembered that there is a six year period in which to claim in contract cases or for negligence other than personal injury where the three-year period. The time period will start running when the defect became apparent i.e. patent rather than latent. Where property is owned by somebody of limited mental capacity or was under 18 years of age the starting date for the period will need to be considered.
- Against Whom Is The Claim Made?
Generally when cavity wall insulation was carried out customers were given or purchased a guarantee e.g. with The Cavity Insulation Guarantee Agency (CIGA), a company limited by guarantee generally funded by the cavity wall insulation industry. These guarantees are for 25 years and require claimants to go to arbitration and had limits of £10,000, £15,000, or £20,000 depending upon when the guarantee was taken out. The amount of cover often is inadequate and includes the cost of arbitration. An approach to the contractor is required first and there is a two month period in which to claim. Claimants report that the CIGA’ surveyors who eventually came round to view their premises were not chartered surveyors and appeared to find every excuse under the sun not to relate the problems to workmanship covered by the guarantee.
The Companies and/or their insurers
Companies which carried out the work have in some cases gone into administration or liquidation. Others are currently trading but are of differing financial strength.
Under current legislation which dates back to 1930 litigants would have to reinstate defunct companies then sue them and then look to insurers to meet those judgements. Although an Act received the royal assent as long ago as May 2010 by which third parties would be able to go directly to insurers, that act has not been brought into effect as yet by the government. Our current understanding is that it will now come into force on the 1st August 2016 but there have been false starts in the past! The problem for claimants is that they do not know at the outset of proceedings whether or not insurers will repudiate and refuse to pay out. There are strategies to help litigators which Ralli adopt in order to mitigate/or avoid this risk and expense.
Some companies which carried out work have been taken over but claimants have to be careful and ascertain whether the whole company was purchased or only its assets. Will the new company which acquired the one that out the work is able to meet payments should numerous court judgements be obtained against them. Where directors of limited companies which have gone into voluntary liquidation have attested that the company is solvent when in fact the company was not solvent, those directors may be personally liable. Even if this is the case an assessment must be made of their ability to actually pay. Ralli has information from looking at claims in volume but the picture can change very quickly. Again the cost of pursuing such directors must be carefully taken into account. Proportionality will again be relevant. In extreme circumstances a police or private prosecution can also be launched against individual directors.
A claimant dealt with one company but the work was carried out by a subcontractor we have found arguments as to who actually contracted with the claimant. There have been occasions where telephone calls have been made by intermediaries or claims companies who gave the impression on purpose that they were representing one entity when in fact they were merely gathering in claims to pass on to contractors. In other cases larger companies have sought to distance themselves from the actual contractors and government bodies have sought to argue that they merely handle the funding not the work. What seems clear is that contractors are not lining up to pay householders who have been caught up in this scenario of appalling injustice.
The Sting !
It is coming to light that the very same individuals who were behind the companies, individuals, firms or call centres which carried out the fault ridden work in the first place, have used their customer lists to offer their services in a new guise to extract the cavity fill and then do the work as it should have been done by the original company. The householder is persuaded that this is a proper quality company unlike the old one and of course has no idea that they are dealing with the same or similar people and are about to be ripped off again! From frying pan to fire via a new loan added to the mix! We have seen examples of three attempts to extract the original fill by contractors as slapdash and incompetent as those who created the problem in the first place! And no independent guarantee provided. You have been warned!
Many householders feel that they have been let down even misled by the Government. They feel let down and abandoned by Ofgem (who approved documentation to be signed off by the installers), the ‘Green Deal’ providers and those operating under ECO (Energy Company Obligation) 1 or 2 prior to that date. They feel that these and other similar bodies who promoted the various schemes and initiatives should be held responsible for a lack of adequate policing and supervision. They accused these and others of concentrating on financial promotions, encouraged by the European legislators under schemes such as CERO (The Carbon Emission Reduction Obligation) and CSCO ( The Carbon Savings Community Obligation), to provide carbon credits to large energy suppliers rather than help householders get decent workmanship and genuine efficiency improvement to their homes. Who was told that it would take years to make a difference? Or that property on a high elevation near the coast was fundamentally unsuitable for cavity wall insulation? Who discussed with homeowners the reason why cavity walls were created in the first place? How much of taxpayers (also known as voters) money was spent on this venture which is so often now described as shambolic? Those affected are however very well aware that these entities have very deep pockets and a host of arguments as to why they should not be considered legally (or perhaps even morally) responsible.
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