A subcontractor that had worked on a new Manchester cinema, which had to close down for over a month following the collapse of a ceiling only two days after its opening, has lost its appeal that its insurance policy should cover any claim the cinema may issue for income lost as a result of having shut the entire complex.
Horbury Building Systems Ltd had been hired to provide partition walls and suspended ceilings to all 16 auditoria and other areas. It decided to take pre-emptive legal action to establish the extent of its insurance cover after cinema operators AMC closed down the entire facility for a month in December 2001, following the collapse of the ceiling in auditorium six while it was empty.
However, the Court of Appeal backed a High Court ruling that Horbury’s policy with Hampden Insurance NV would not cover the cost of shutting the entire cinema, should AMC, or the main contractor for the complex, Galliford Northern, mount a damages claim against it.
Keene LJ said: “What this policy does cover is liability for the physical consequences of the collapse of cinema six and such economic losses as were caused by that physical damage. That does not embrace the losses resulting from the wider closure”.
He said that, at last month’s hearing, no proceedings had been begun against Horbury by either AMC or Galliford, but that he had heard that a claim by AMC against Galliford had been settled.
Horbury Building Systems Ltd v Hampden Insurance NV Court of Appeal (Peter Gibson, Mance and Keene LJJ) 7 April 2004.
References: EGi Legal News 07/04/04
