Furniture hire company loses case against insurer
A furniture hire company devastated by a mystery warehouse blaze in Leicestershire will go without a penny from insurers after a judge’s ruling.
Mr Justice Jay said he had nothing but sympathy for Ashby-de-la-Zouch businessman Michael Hyams, whose life had been “shattered” by the April 2005 fire that destroyed hundreds of thousands of pounds worth of stock owned by his company, Milton Furniture Ltd.
The judge said it gave him ‘no pleasure’ to find that insurers were entitled to avoid liability for the fire – because Milton Furniture had, for more than six months, failed to pay the company tasked with monitoring the warehouse’s burglar alarm system.
Milton Furniture lost almost its entire stock, which it rented out for exhibitions and trade shows, when fire tore through Tournament House, in Smisby Road, Ashby-de-la-Zouch, shortly before 1am on the night of 9 April, 2005.
Graham Eklund QC, for the company, earlier told London’s High Court that no one knew when, how or by whom the fire was actually set.
“Someone was either hiding in the building or somebody with internal knowledge or internal access made his way into the building and then out,” he said.
It was never suggested that the owners or managers of the business had anything to do with the fire, but insurers, Brit Insurance, nevertheless argued that it was entitled to avoid liability under the policy.
The judge said that the policy had obliged Milton Furniture to ensure that the warehouse’s burglar alarm was monitored externally by a company called SECOM. But it had failed to pay SECOM’s bills for more than six months before the blaze.
The alarm was in fact still monitored when the fire broke out, but Milton Furniture had been ‘reckless’ as to the risk that it might be cut off at any time and had “rather buried its head in the metaphorical sand as regards this issue”.
The judge said: “That risk was escalating all the time as the months wore on. Milton Furniture was clearly under pressure form its creditors; maybe it was hoping, or praying, that SECOM would hold its hand.
“But the fact remains that, by early 2005, Milton Furniture had taken this issue far too close to the wire and should have resolved it.
“Milton Furniture made no attempt to resolve the dispute or to pay the outstanding charges. Instead it recklessly preferred to attempt to string matters out and to send the maintenance engineer packing.”
The judge valued the stock destroyed in the blaze at almost £150,000 and said Milton Furniture had lost revenue of £560,000.
But, dismissing the company’s claim, he ruled that it had breached a ‘condition precedent’ in the insurance policy.
He concluded: “I have reached this outcome with reluctance and no pleasure.
“Towards the end of the trial, I remarked that Mr Hyams has been shattered by this fire and its aftermath and is not the man he was”.
Hyams felt had been “poorly treated” by the insurance company, but the judge said it had “not acted improperly” in standing on its legal rights.
He told Hyams and his wife, Anna: “They must understand that, regardless of their financial difficulties in early 2005, they were running too great a risk by failing to pay the SECOM monitoring charges.
“Harsh as it might seem, Brit Insurance was entitled to take this point.”
The court heard that employees had finished working by 8.30pm and a security guard had done his rounds, checking that everything was locked up. The fire alarm went off shortly after midnight, but the blaze had already taken hold and almost 99% of the stock was destroyed.