How the seaside flats dream turned into an ‘insurance’ nightmare
ONE of the world’s leading insurers is facing allegations of recklessness and deceit over its work at Swansea’s high-profile Meridian Quay development, which has been plagued by damp and fire safety problems.
Zurich Insurance is facing a High Court claim from residents of Wales’ tallest building, who have accused the firm of failing to properly carry out checks before issuing insurance policies for flats at the 29-storey tower and neighbouring blocks and then selling their warranties to a firm called East West 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 building regulations when they say no proper final inspection had been carried out and the lawyers say the building was “stricken with a concatenation of serious defects”.
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 Meridian Bay and Meridian Wharf 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 Wales Online, Zurich said that its 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 Martin Scott, of 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.
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 Wales Online, the Zurich spokesman said it had been independently verified before the sale took place that East West could cope with paying all valid claims under warranties.
Its statement said: “Zurich agreed in 2016 to sell its building guarantee policies to East West, which was backed by a multi-billion-dollar insurance group and major institutional investors.
“The sale was fully approved by the Irish High Court and the UK and Irish regulators. Prior to this, the transfer was reviewed in detail by an independent actuary who concluded that East West was sufficiently capitalised to pay all valid claims under the policies.”
One elderly resident said she felt so excited when she bought her apartment on the 16th floor of the Meridian Tower 10 years ago, completely unaware of the defects. She 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 not want to be named.
“This was supposed to be my retirement place. It’s the first flat I could afford to buy without a mortgage in my life and I was so thrilled with it.
“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 had to set up makeshift solutions to carry on living in what, for a number of people, is their only home. She said this has been an issue for her since she moved in and is still currently ongoing.
“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.
“We’ve got various things to put down to try and lessen it, like puppy training pads and these red pads you can put on the carpet to stop it soaking through.
“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 so when it’s dry out I keep my patio door open as much as I can just to make sure it’s as dry as possible with little or no condensation.”
The developer of Meridian Quay, Carillion, went into liquidation in 2018, meaning it cannot be held to answer for the way in which it was built.
And if that wasn’t enough stress, the elderly resident said she has at times feared for her life as a result of the internal and external fire defects.
It is understood that the internal fire defects in the Tower have now been remedied. All buildings of the Quay are still awaiting fire defect work on their exteriors to be completed, meaning there has been scaffolding up for a number of months and safety fears continue. The 74-year-old woman said: “Before the fire defects in the Tower were sorted, it was absolutely frightening. Usually we had a lot of students living here before Covid, the place was mostly students. Students are young and they don’t always think what they’re doing and that frightened me, it really, really frightened me.
“But they’ve put everything they can in place to protect us now in the event of a fire so they can get us out as quickly as possible, though it is still very stressful.”
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.
She said: “I started to become aware of the various defects in the blocks around 2016 and, importantly, then about fire safety issues. 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 concern is how long this will go on.”
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 stress for owners and residents for a number of years.
Angela Curtiss, 52, purchased a property from new within the Bay as an investment for a family member. However, it is now worthless, she said.
She was the first to contact solicitors Walker Morris after overhearing solicitor Martin Scott discussing a similar case in Manchester on the radio.
Following on from that, a group of owners and residents came together determined to form a case. She said: “I put it on the market 18 months ago with 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 am unable to sleep at night with the worry of how I am going to pay the Halifax back.”
Miss Curtiss said she and many other owners and residents felt they had been living in a “prison” as their minds are filled with worries.
She said: “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 seaview 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.”
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. 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.”
A spokesman from Swansea council said the local authority was not a party to the High Court proceedings. It said: “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 management company at Meridian Quay, CRM Limited, said: “CRM, as managing agents for the leaseholders management company, Meridian Quay Management Company Limited (MQMC), is working with relevant experts and all stakeholders to implement the repairs required to the development.”
Zurich is expected to present its defence to the High Court today.