Brokerage lands in court after client disaster

In a recent court case, a brokerage faced severe accusations from former clients.

Commercial firm Eurokey Recyclng Ltd, who experienced a substantial fire at its main property in Endersby, Leicestershire, brought a negligence claim against its former insurance broker alleging a breach of contract. Eurokey claims that it was under-insured because the broker negligently advised it.

The brokerage provides a collection of services including that concerning commercial real estate and landlords.

Giles Insurance Brokers Ltd, defending, had arranged a commercial insurance policy for the claimants from Paladin Underwriting Agency. This was in place during the period of 13 April 2010 to 12 April 2011.

Amongst other aspects, the policy covered a total of £2.5 million for business interruption purposes.

After the fire thoroughly damaged Eurokey's premises, the judgment clarifies the premises was not rebuilt.  It was then stated: “There followed extensive activity by loss adjustors for the insurers and for Eurokey.”

In the case which tackled the concerns for the property insurers, the broker denied all allegations of negligence, stating arrangements were made on “specific instructions received from Eurokey."

It also stated that Eurokey cannot prove causation and could not have obtained cover on the basis it contends should have been arranged, also that any damages must be substantially reduced for contributory negligence.

Also, the broker challenged the validity and accuracy of evidence given by Eurokey’s Commercial Director.

The presiding Justice Blair of London's High Court, commercial section, opposed this claim: "I do not accept that Mr Bisland came to court to give dishonest evidence, and I generally consider that he sought to assist the court with his evidence as best he could," he writes.

The case also saw claims that the broker dealt with incorrect figures for the firm.

In his closing remarks the judge stated that the case advanced by Eurokey asserting that inadequate advice as to business interruption cover was given by the brokerage via Mr Evans was of some credibility.

In relation to the brokerage’s conduct the judge continues: “However, whilst I do not think that Mr Bisland can be criticised for failing to read in detail the documentation provided to him by Giles, the fact is that Eurokey had the numbers which are now complained of. Further, Eurokey must take responsibility for the fact that the wrong turnover figures were given to Giles.”

Consequently, the court heard: "Eurokey's case in relation to business interruption cover fails,". Then the judge dismissed the claims against Giles completely.

Both parties have been unavailable for comment at the time of writing. Should they get back, this article will be updated with their comments.