Land of Leather invalidated claims by breaching contract terms, High Court ruled
Zurich has won a ruling meaning it does not have to pay compensation to hundreds of customers who suffered burns from toxic sofas.
A High Court judge ruled Land of Leather had breached the terms of its insurance contract, invalidating its claims.
Zurich’s lawyers argued that Land of Leather, now in administration, made unauthorised third-party agreements with the manufacturer to gain favourable trading terms. They concluded that, by making this agreement, Land of Leather had fundamentally breached the terms of its policy.
Mr Justice Teare agreed and therefore Zurich was entitled to decline the claims. The same ruling applied to the failed furniture retailer’s former customers, who had claimed under the Third Party (Rights Against Insurers) Act.
A Zurich spokesman said: “Today’s High Court judgment confirms that Land of Leather breached fundamental terms of its insurance policy with Zurich. Consequently, the policy does not provide an indemnity in respect of claims by customers who unfortunately suffered allergic reactions to leather sofas manufactured by the Chinese company Linkwise containing the mould inhibitor DMF [dimethyl fumarate].
“Zurich remains committed, wherever possible, to the prompt resolution of personal injury claims unaffected by today’s ruling.”
Up to 4,000 people suffered skin burns, and in some cases serious injury, from DMF, which is a banned and highly sensitising chemical.