Japanese contractor Kajima sues over failed housing project

The Underwriter Insurance Company is facing a £5.7m lawsuit in a row over a housing project in Leeds.

Design and build company Kajima UK Engineering is suing The Underwriter, which went into run-off in 2003, after the insurer refused to indemnify Kajima when serious problems arose with the project.

The company designed and built 46 one-bedroom apartments in Leeds, a project called Caspar 11 for the Joseph Rowntree Foundation.

But problems started to arise in February 2001, when Kajima discovered the accommodation pods were settling and moving.

After establishing that the building was not safe and beyond economic repair, the residents were moved out in January 2006.

The Joseph Rowntree Foundation claimed that Kajima, as the design and build contractor, was responsible for the defects.

Kajima decided to buy Caspar 11 from the foundation, and did so in September 2006, according to court papers.

It says it kept its insurer, The Underwriter, informed of its plans, but was advised to act "as if a prudent uninsured", it is claimed.

The Japanese company is asking the High Court to rule that the insurer is liable to cover it for the cost of a £5.7m settlement with the trustees of the Joseph Rowntree Foundation.

It claims the underwriter refused to indemnify Kajima against its losses in breach of contract.

The Underwriter refused to comment. But, according to its website, the directors have decided that the run off will be solvent and that "the company anticipates that it will continue to meet in full all valid claims".

Kajima declined to comment.