Tesco has failed to overturn a legal ruling in favour of its insurer in a dispute over the 2005 rail tunnel roof collapse at Gerrards Cross, Buckinghamshire.
The Court of Appeal dismissed Tesco’s appeal against a preliminary high court ruling that Tesco’s public liability insurance policy did not cover the settlement of a claim brought against it by Chiltern Railways for disruption to its service.
The settlement, concluded on confidential terms earlier last year, included substantial damages for the decrease in passenger revenue following the incident.
In 2003, Tesco began to enclose a railway cutting at Gerrards Cross in order to build a supermarket on top.
The rail regulator required Tesco to take out public liability insurance cover of £155m for the project “in respect of legal liability that may be incurred by [Tesco] in respect of death or bodily injury to any person and loss or damage to property arising from activities”.
Prior to the start of the project, Tesco also entered into an agreement (the deed) with Chiltern that required it to pay Chiltern “on demand such sums as shall from time to time fairly compensate them for all and any costs, losses or expenses arising out of or resulting (directly or indirectly) from… the carrying out of the works… on its existing and/or future railway passenger business”.
On 30 June 2005, a section of the tunnel collapsed onto the railway lines below, closing the railway line between
After the settlement of Chiltern’s resulting legal claim, Tesco claimed that it was entitled to claim back the settlement payment from its excess public liability insurers.
The claim only concerned those insurers who had provided layers of cover up to £30m. The insurers of the layers above that level were not involved.
However, the insurers argued that the public liability section of the policy did not permit Tesco to make such a claim.
On 14 September 2007, the court agreed with the insurer, finding that, on settled legal principles, Tesco was not entitled to claim in respect of the losses claimed by Chiltern under the deed.
Tesco appealed alleging that the court had attached too much importance to the fact that the case involved public liability insurance.
Dismissing the appeal, Lord Justice Tuckey said that the court was right to say that the fact that it was public liability insurance was important and that such policies did not generally cover the losses claimed by Chiltern.
