Case Study: Defective Construction Works and Property Valuation
Simon Cook of Roger Hannah & Co was asked to act as an expert for insurers representing a major construction company, in a construction dispute which involved a significant claim for a diminution in a property’s valuation caused by the defective construction works.
The construction company had built a 300,000 sq. ft industrial building in Wardle, Cheshire, but did not adequately address ground conditions as part of the construction works. This resulted in floor movement which reduced the floor load bearing capacity to 25kN and damage to the mobile racking.
The building was built for an owner occupier distribution company who now had to operate with a partially defective racking system and a reduced floor loading capacity. An expert representing the distribution company claimed that the valuation loss suffered amounted to a loss of around £6 million.
A detailed expert witness report was prepared by Simon Cook which demonstrating that the extra over cost associated with providing the load bearing floor capacity outweighed any valuation issue caused. Once account was taken of the extra over cost then this wiped out any diminution in value caused by a reduced level of floor loading capacity. The result was that the occupier had suffered no valuation loss resulting from the defective construction works.
The case was settled at mediation with the occupier accepting that no valuation loss had been suffered, but accepting a settlement under other heads of claim.
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