CA-2024-002563 - [2025] EWCA Civ 932

The Judgment

Having set out the background facts and the policy, the judge’s judgment ([2024] EWHC 2063 (TCC)) next contained a lengthy section entitled ‘The Scope of the Application’. The judge called NHBC’s argument that the cause of action accrued on 29 June 2016 “the insolvency point”. He described it as a discrete point of law and construction. The judge said that the half day estimate given by NHBC to deal with the application on that basis was “demanding but not unreasonable”.

The complication that the judge went on to identify was that Mr London had included in his witness statement a good deal of elaboration on Peabody’s case that the claim did not accrue until Peabody incurred the extra costs of completing the homes. As the judge pointed out at [20], Mr London put forward three alternative ways of ascertaining when that was. The judge described them as follows:

“20…Mr London put forward three alternative ways, in principle, of ascertaining the point in time when Peabody "had to pay" extra costs. The first would be to conduct a deductive exercise from the dates of final accounts (the earliest of which is July 2017); Peabody alleges that this has always been NHBC's position, that it could not finalise what it had to pay until final accounts were prepared. The second would be to analyse cumulative costs over time as the work progressed. The third would be to instruct an independent expert quantity surveyor to retrospectively analyse the letting of the individual works contracts packages, and individual interim applications for payment, and compare the outputs of those analyses with a hypothetical analysis where Vantage did not enter insolvency.

21.

Mr London's essential point is that, at the time of insolvency, only some £1.5m had been paid to Vantage, and that there was approximately £8.8m left in the tank, as it were, before the Contract Price for the units (c. £10.3m) would be exceeded. And that it is at the least realistically arguable that, depending on what approach is taken, the moment of "having to pay more" did not arise before March 2020, alternatively June 2020, alternatively certainly not prior to July 2017 (being six years prior to the Claim Form).”

The judge noted at [22] that, in response to this evidence, the NHBC had developed an alternative case that, even if they were wrong on the insolvency point, the claim was still statute-barred. That was based on Ms Alabi’s second statement: that, even if the relevant cause of action accrued when Peabody ‘have to pay more’ as a result of the insolvency, that was either coterminous with the insolvency or, in the alternative, when the reasonable extra cost of completing the homes was capable of assessment. The NHBC said that was when the work went out to competitive tender, so that by February 2017 at the latest, the claim was still statute-barred.

The judge concluded that this alternative case was not capable of being determined during the half day hearing, and that he would therefore only address the insolvency point. He said at [32] that he was not prepared to determine either the “complex issues raised by the alternative argument”, or the question as to precisely when Peabody “have to pay more”, whether in principle or on the facts. He indicated at [33] that “the correct answer to the alternative case does not appear obvious”.

Starting at [41], therefore, the judge addressed the insolvency point. He concluded that, for a variety of reasons arising out of the language of Option 1, NHBC were wrong to say that time ran from the insolvency of Vantage. The kernel of the judge’s construction can be found at [57] in these terms:

“57.

In my judgment, Option 1 cover does not apply (i.e. is not triggered) if the insured did not "have to pay more to complete" the units, or if the insured did not lose any money paid to the contractor, despite the contractor going insolvent. The event insured against is not the insolvency (or fraud of the contractor) per se, but rather the insured being required to pay more above the contract price to complete. The requirement to pay more must have been caused by the insolvency (or fraud) of the contractor, but the insolvency (or fraud) itself is not the risk which is covered. Peabody is correct therefore in its submission that the insured losses (the extra costs, or lost payments) are an essential and definitional part of the insuring clause itself [B], and not matters which simply go to the delineation of quantum [D]. It would have been easy enough to draft [B] to make clear that the claim arose on insolvency itself, regardless of whether any extra expense (or lost payment) was caused by it, if that had been intended.”

Separately, the judge dealt with the site security costs issue from [63] onwards. NHBC’s argument had been that, since the claim for those costs was statute-barred, the entire claim under Option 1 was also statute-barred because there was just one unitary cause of action. The judge rejected that submission on the basis that the claim for site security costs under D1 of the policy was additional to, and comprised separate cover from, the main Option 1 claims: see [65]. He declined to decide when that cause of action arose in the absence of any specific evidence on the point.

For these reasons, the judge dismissed NHBC’s application to strike out at [69], finding that time did not start running on the insolvency of Vantage on 29 June 2016 but at a time (to be determined at trial) when Peabody “have to pay more to complete the units, as a result of that insolvency”.