High Court Battles for Ocado

By James Russell In News & Current Affairs No comments

Reports in the press this week suggest that Ocado are in the midst of a protracted saga suing Carillion in the High Court over defects in a distribution centre.  The amount at stake is reported to be £1.2m and the dispute has been ongoing since defects were first discovered, two years after completion, in 2004. 

According to the claim “The slab has continued to crack and the existing cracks have continued to deteriorate.  As a result the slab is at risk of structural failure as a consequence of the cracking permitting water ingress to the sub-base.”  The claim alleged that Carillion failed to properly reinforce the slab using steel mesh and instead substituted “synthetic polypropylene fibres” that it argued were unsuitable for such large bays.

Ocado claim to have minimised losses by continuing to use the property whilst carrying out patch repairs.

Carillion are yet to mount their defence but the whole case is a classic example of how the existing warranty system appears to provide end users with protection but in practice results in costly litigation and lengthy practical problems. 

As specialists in defects insurance we are aware that this form of construction of floor slabs has been used in the past and is known to create problems.  As a result, distribution centres and properties using sizeable reinforced floor slabs must be subjected to close scrutiny at the construction stage. 

Defects insurance cover is designed to engineer these risks during construction, but should the problem arise, the insurers step in to carry out repairs and minimise disruption.  The problem of funding a claim, investing management time and litigating against the contractor can be passed to the insurer whilst the occupier gets on with their day to day business.

Ocado may be lucky and get what they claim, but you rarely get what you want when you go through the courts.  Latent Defects insurance could have made life a whole lot easier for Ocado.