High court rules on how much AJ Insurance must pay former client following fire
A devastating fire at the Sugar Hut nightclub – where The Only Way is Essex (TOWIE) phenomenon really took off – led to a titanic High Court struggle and a million-pound damages payout today.
The nightclub, in Brentwood, was described by its boss, Michael Norcross, as ‘a beautiful place teeming with beautiful people’.
But it went up in flames on the night of September 13, 2009, in what fire investigators concluded might well have been an arson attack.
The ‘ornate and extravagant’ venue, famed for its Thai artefacts, velvet drapes and exotic flowers, was shut for almost a year.
And Sugar Hut Group has ever since been embroiled in bitter litigation – which on Monday culminated in a £1,090,021 award against insurance brokers AJ Insurance.
The so-called ‘TOWIE effect’ had a central part to play in the case as lawyers debated the value of profits lost by Sugar Hut as a result of the fire.
The group had initially launched a claim against its insurers after they refused to pay out under the ‘all risks’ property damage and business interruption policy.
But that was dismissed in 2010 after the insurers said there had been breaches of warranty and a failure to disclose relevant facts before the policy came into effect.
Sugar Hut then changed its focus to its brokers, who it accused of giving negligent advice that rendered the policy worthless.
Justice Eder said the brokers had admitted some, but not all, of the negligence allegations and had resisted Sugar Hut’s claim.
AJ Insurance eventually agreed to cover 65% of the group’s proven losses.
The brokers had already paid £813,000 to Sugar Hut, but the group went to court, saying that was nowhere near enough.
Sugar Hut’s legal team said it was due more than £870,000 for business interruption. However, the brokers put that figure at just over £250,000.
In what was a mixed result for Sugar Hut, the group argued without success that loss of customer records and the damage to its ‘flagship’ club had caused business levels at its other venues in Fulham and Hertfordshire to fall off a cliff.
In the end, Justice Eder calculated the group’s business interruption claim at just under £370,000.
The value of most of the other losses was agreed and, with interest, Sugar Hut was awarded £277,021 over and above the £813,000 it had already received.
Earlier, Norcross had described queues of punters standing in line to get into the ‘extremely successful’ club.
The fire broke out the year before ‘The Only Way is Essex’ hit the airwaves.
But Sugar Hut argued that the venue was attracting ‘big spenders’ and on an upward trajectory even without the ‘TOWIE effect’.
Richard Slade QC, for the group, said that the blaze – which destroyed a wing of the club, part of which has medieval origins - “may well have been deliberate”.
An un-named man had been picked out by police analysing CCTV footage after the inferno, said the barrister, who noticed him “near the place where the fire started”.
“He was arrested and bailed but the charges were dropped,” he told the court.
“So, if the fire was arson, we don’t know whether it was a vandal or some disgruntled customer perhaps.”