Imminent Damage Under Latent Defects Insurance: Fire-Safety Claims May Require Trial

1. Introduction

This appeal concerned the circumstances in which fire-safety defects may engage insurance against the threat of imminent destruction or physical damage. The central question was whether the insured’s claim could properly be rejected without a trial because the alleged defects did not demonstrate sufficiently imminent damage or a need for immediate remedial measures.

The Court of Appeal unanimously dismissed Allianz’s appeal against the refusal of summary judgment. It confirmed that “imminent” retains both a likelihood requirement and a temporal requirement: the threatened damage must be sufficiently likely to happen sufficiently soon. However, applying that test to the alleged defects, available risk evidence and protective measures involved factual questions that could not properly be resolved summarily.

The decision is therefore important but limited. It does not establish that fire-safety defects automatically constitute an insured threat, or that Vivid was entitled to an indemnity. It establishes that this claim remained sufficiently arguable to proceed to trial under the ordinary meaning of the policy wording.

2. Background and Policy Wording

Vivid Housing Limited owned the freehold of a block of 72 flats in Portsmouth. It was, in effect, the insured under a housing warranty policy issued by Building LifePlans Ltd as cover-holder for Allianz Global Corporate & Specialty SE.

The insurance period ran from 22 May 2008 to 21 May 2020. Vivid notified its claim on or about 19 May 2020, shortly before expiry.

Clause 3(a) covered the cost of repairing, replacing or strengthening the premises following a qualifying defect that became manifest and was notified during the insurance period, causing one of three events:

1. destruction of the premises;
2. physical damage to the premises; or

3. “the threat of imminent destruction or physical damage to the Premises which requires immediate remedial measures for the prevention of destruction or physical damage within the Period of Insurance.”

The third category was the focus of the appeal. Unlike the first two, it potentially responds before destruction or physical damage has occurred, but only where its additional conditions are satisfied.

The alleged defects

Four of the five notified defects were relevant to the appeal:

• Cladding: allegedly combustible panels and insulation in an untested arrangement on a building over 18 metres high, together with defective or absent barriers and combustible cavity debris.
• Vertical cavity barriers: allegedly missing barriers allowing fire and smoke to spread through concealed spaces.
• Horizontal cavity barriers: allegedly missing or defective barriers at relevant interfaces and openings.
• Building debris: material allegedly capable of providing an ignition source or facilitating fire spread. The pleaded allegation also included a water-bridging mechanism.

For the summary judgment application alone, Allianz asked the court to assume that the allegations concerned “Defects” within the policy definition. That assumption was not a final determination that the defects existed or qualified for cover.

Equally importantly, Allianz did not rely, for this application, on an exclusion which on its face addressed threatened destruction or damage arising from or consequent upon fire. The appeal therefore did not determine the effect of that exclusion.

3. The Evidence and First-Instance Decision

A CBRE façade fire risk assessment supplied the principal technical evidence. It classified the cladding and workmanship issues as orange-priority matters, while the absence of compartmentation received the highest, red-priority classification. The report identified the increased risk of fire spreading through the façade cavity where compartmentation was absent.

Vivid had also implemented a “waking watch”: personnel monitoring the building for fire-related danger. Its notification form nevertheless answered “N/A” when asked to identify urgent repairs and estimate their cost.

Jefford J refused Allianz’s application for summary judgment in respect of the four disputed defects. She accepted that imminence involved a temporal element and asked whether a reasonable observer would consider the risk sufficiently serious and likely to materialise sufficiently soon.

Her conclusion was not that cover had been established. It was that Vivid had a realistic prospect of establishing the relevant threat and need for remedial measures at trial. Allianz appealed, arguing that her reasoning effectively stripped “imminent” and “immediate” of their ordinary meaning.

4. Summary of the Court of Appeal’s Decision

Lord Justice Stuart-Smith gave the substantive judgment, with which Lord Justice Phillips and Lord Justice Peter Jackson agreed. The appeal was dismissed.

The court’s principal conclusions were:

1. The correct imminence test had been adopted. Jefford J had expressly considered both the likelihood of the threatened event and whether it would occur sufficiently soon.
2. Her reasons did not establish that fire damage is always imminent. Read as a whole, the judgment preserved the temporal requirement and left the ultimate assessment open.
3. Immediate remedial measures required factual investigation. The significance of the risk assessment, waking watch and timing of other works could not fairly be determined on the existing material.
4. The notification form was not decisive. Its reference to “urgent repairs” could not determine the construction or application of the policy.
5. Vivid’s alternative constructions remained undecided. The court did not need to address the formulations advanced in its Respondent’s Notice.

The outcome preserved the claim for trial; it did not finally resolve coverage or liability.

5. Precedents Cited

Gerling General Insurance Co and others v Canary Wharf plc [2003] EWHC 2234 (Comm)

This was the principal interpretative authority. Christopher Clarke J explained that whether damage is imminent should, initially, be assessed prospectively and objectively. The question is whether, on the information available at the relevant time, a reasonable person would regard the damage as:

“sufficiently likely to happen sufficiently soon that it should be described as imminent.”

The assessment is one of fact and degree and must be made in the context of the policy’s structure and provisions.

The Court of Appeal treated this formulation as the common ground between the parties and the test actually adopted below. Although Gerling General Insurance Co and others v Canary Wharf plc concerned different wording in a different form of contract, its explanation captured the ordinary meaning of imminence relevant here.

Its influence was decisive in two respects. First, it prevented “imminent” from being reduced to the mere possibility of eventual damage. Secondly, its emphasis on fact and degree supported the conclusion that applying the test could require a trial. The appellate court rejected Allianz’s contention that the judge had failed to apply this formulation: her reasoning expressly addressed both seriousness and timing.

Zagora Management Ltd v Zurich Insurance plc [2019] EWHC 257 (TCC)

Jefford J also considered the judgment of HHJ Stephen Davies in this case before examining Allianz’s argument about whether an actual fire was necessary to establish the relevant threat.

The supplied appellate judgment does not reproduce that decision’s material wording, facts or detailed reasoning. Its role should therefore not be overstated. It formed part of the first-instance analysis, but the Court of Appeal did not derive a separate governing rule from it. The appellate decision rested on the ordinary-meaning test articulated in Gerling General Insurance Co and others v Canary Wharf plc and on the limits of summary determination.

6. Analysis of the Legal Reasoning

A. Imminence requires likelihood and temporal proximity

The court preserved substantive meaning for “imminent”. A dangerous condition is not necessarily an imminent threat merely because damage could occur at some future point. The assessment must address both how likely the threatened damage is and how soon it may occur.

However, the judgment did not prescribe a fixed probability, number of days or universal threshold. The inquiry remains contextual and objective. Nor did it decide that every serious fire risk satisfies the policy.

This distinction explains why the court upheld Jefford J’s approach. At paragraph 18, it recognised that her conclusion concerned the prospect of a reasonable observer finding a serious fire risk and consequent threatened damage sufficiently soon. That was a finding she was entitled to make for the limited purpose of resisting summary judgment.

B. The insured threat is damage, not fire in the abstract

The Court of Appeal expressly acknowledged that the insured peril was not simply the threat of fire. The wording required a qualifying defect to cause the threat of imminent destruction or physical damage to the premises.

That causal structure matters. A building may face the ordinary possibility of a fire without satisfying the clause. The insured must connect the alleged defect with the threatened damaging consequences and establish the required imminence.

Conversely, the court did not accept that the claim had to fail summarily because Vivid had not identified a particular imminent ignition event. Jefford J was entitled to examine the practical consequences of Allianz’s proposed approach and the evidence bearing on fire occurrence and spread. This was not a categorical ruling that ignition evidence is irrelevant; it was a refusal to treat the existing evidential position as fatal without trial.

C. The judgment below had to be read as a whole

Allianz relied heavily on passages discussing the constant threat of fire and the apparent force of Vivid’s submissions. Read in isolation, those passages might suggest that ordinary fire risk automatically establishes imminence.

The Court of Appeal rejected that interpretation. Jefford J had identified the potential objection that Vivid’s argument could remove the temporal requirement, but she had not adopted that consequence. Her operative analysis retained the question whether the threatened damage was sufficiently likely to occur sufficiently soon.

The appellate reasoning therefore distinguishes a judge’s discussion of competing arguments from the legal conclusion ultimately reached.

D. “Immediate remedial measures” required evidence, not assumptions

The policy’s additional requirement for immediate remedial measures also remained operative. The Court of Appeal observed an obvious relationship between the severity of a risk and the urgency of remedial action, but did not collapse these into an automatic rule.

Several matters required fuller examination:

• CBRE’s highest-priority classification of the compartmentation defects;
• the effect and purpose of the waking watch;
• steps taken towards other remedial works; and
• the reasons for the timetable on which those works were implemented.

The court considered it at least tenable that a waking watch was a remedial step because it reduced the risk of fire spreading. It did not finally decide that the measure satisfied the policy, that its cost was recoverable, or that permanent repairs were unnecessary.

Similarly, the answer “N/A” to a question about urgent repairs was relevant evidence, not a conclusive concession. The policy referred to “immediate remedial measures”, and its application could not be determined solely by the wording of the notification form.

E. Procedural prospects must not be confused with the coverage threshold

A particularly important distinction concerns two different questions:

The substantive insurance question

Did a qualifying defect cause the specified imminent threat requiring immediate remedial measures?

The summary judgment question

Did Vivid have a real prospect of proving that case at trial?

Vivid succeeded on the second question. That does not establish the answer to the first.

This distinction also explains the treatment of the Respondent’s Notice. Vivid proposed alternative constructions based on a realistic prospect of damage within the insurance period, or a serious risk amounting to a real likelihood of such damage. The court expressly declined to decide either formulation. The judgment therefore cannot be cited as adopting a “more than fanciful” possibility as the substantive meaning of imminence.

F. The insurance period remained material

The clause linked immediate measures to preventing destruction or damage within the insurance period. Timely notification alone did not settle whether that condition was met.

The first-instance reasoning recognised that the clause would not respond where the threatened damage was unlikely to occur, or would not occur within the relevant period. The appeal did not remove that limitation or transform the policy into general cover for defects discovered before expiry.

7. Impact and Practical Significance

For insured building owners, the decision confirms that the absence of an existing fire or completed damage need not itself defeat a claim under preventive cover. Nevertheless, evidence must address the particular defects, the threatened consequences, their likely timing and the need for immediate action. General concern about fire safety is not a substitute for those elements.

For insurers, the decision illustrates the difficulty of obtaining summary judgment where policy application depends on expert risk assessment and disputed facts. A challenge framed as contractual interpretation may still require a trial if the parties substantially agree on the governing test but dispute its application.

For evidence and claims handling, contemporaneous risk classifications, mitigation records and explanations for repair programmes may be particularly important. The court regarded CBRE’s prioritisation as more informative than the notification form’s brief answer about urgent repairs.

For future litigation, the precedent is closely tied to the wording and procedural posture. It does not establish universal coverage for passive fire-safety defects, disapply fire exclusions, or decide that every waking watch constitutes an insured remedial measure. Allianz’s expressly reserved exclusion argument remains a significant limitation on what can be inferred from the result.

8. Complex Concepts Simplified

Latent defects insurance

Insurance addressing specified consequences of defects in a building, subject to its definitions, triggers and exclusions. It is not necessarily a guarantee that every construction defect will be repaired.

Imminent damage

Damage sufficiently likely to happen sufficiently soon, assessed objectively in context—not merely damage that could happen eventually.

Passive fire protection

Features such as cavity barriers and compartmentation that restrict the spread of fire or smoke, rather than preventing every possible ignition.

Waking watch

A monitoring arrangement intended to identify fire danger and support a prompt response. Whether it satisfies particular insurance wording depends on the evidence and policy.

Summary judgment

A decision without a full trial. Here, the insurer needed to establish that the disputed claim had no real prospect of succeeding; the court held that the relevant factual questions required trial.

Prospective, objective assessment

Asking what a reasonable observer would have concluded from the information available at the relevant time, rather than judging the risk solely with hindsight.

9. Conclusion

The Court of Appeal preserved the ordinary meaning of imminence while rejecting an attempt to determine this fire-safety claim without trial. The decisive point was not that fire damage is always imminent, but that the likelihood, timing and urgency of the alleged threat presented factual questions on which Vivid had a real prospect of success.

The judgment’s broader significance lies in maintaining the boundary between an arguable insurance claim and an established entitlement to cover. The former survived; the latter, including the effect of any applicable exclusion, remained undecided.