Case Studies: Fire Damage

Restaurant fire

Our client was accused of negligently starting the £1 million fire which broke out in the extraction system of their award-winning Lebanese restaurant in SW London at the end of lunchtime service.

Fire had ignited grease deposits and spread backward through the rear of the building and upward through to the first floor flats, with smoke damage to the remainder of the four buildings in the block. All the other owners and tenants alleged the restaurant had failed to clean and maintain the extraction system and hoods.

The various insurers appointed forensic investigators as well as loss adjusters, and liability for the loss and damage soon became an issue. With the additional loss of business revenue and profits the restaurant’s very survival was in doubt.

We defended the restaurant from the onslaught of allegations and criticism, and were able to demonstrate that our client had complied with all health and safety legislation, and all cleaning and maintenance warranties. The extraction ducting had in fact been cleaned by independent specialist contractors only five months earlier, well within the recommended timescale.

We persuaded both buildings and contents insurers to accept the claims, which involved a mass of complexity and detail, and co-ordination with a number of parties. Our client’s proportion of the overall claims was settled at in excess of £400,000, and the restaurant has re-opened and is once again flourishing.

We like to think we were also the friend in their time of need, as well as the salvagers of their misfortune.

House fires

Quite extraordinarily, in a period of less than 3 months, our London-based property investor client suffered major fires at two of her houses in the Greater Manchester area.

Suspicious as that might have appeared to the insurers it was in fact quite separate negligent acts by her tenants which started the fires. The major issue was that the extent of damage was so severe in both cases that the cost of repairs, although adequately insured, amounted to about twice the properties’ individual market values.

Each was a mid-terrace house and those either side could not be left unsupported and subjected to persistent water penetration. One way or another the repairs had to be done. We agreed settlements for each in the region of £100,000, and our client also found a local partner to share the costs and responsibility for the rebuilding projects.

Whilst not profiting from the claim itself, events worked on this occasion to create a benefit to the client.

Fire in clothing warehouse

Fire engulfed a part of our public company client’s Essex clothing warehouse, but early containment prevented a greater disaster.

Nevertheless, the spread of carbon contaminated the stocks throughout the warehouse complex, even though each garment had been individually wrapped in polythene. The adjusters argued that these garments, with a retail value of £3.5 million, could be cleaned, or at least sold for a reduced price through their multiple retail outlets or through salvage dealers.

Our client, a household name, was naturally concerned that their new season designer stocks should not make their debut on a market stall, or create a charcoal aroma in their classy shops. We persuaded the adjusters as to the serious long-term damage which our client would suffer if we followed their proposals, and so the claim was settled in full, plus half a million profit loss on sales they would have generated but for the fire.

Insurers are obliged to take account of all the circumstances resulting from a commercial loss, not just those which suit them best.

Fire in furniture factory

It was the spread of chemical vapours which caused more damage than the fire to our client’s metal furniture factory in Bedfordshire.

The insurers fought long and hard arguing that the contamination damage was not covered by the terms of the policy, bringing in all manner of forensic experts to support their case.

They eventually agreed to pay for the damage to all the plant, machinery, stock and office equipment; temporary relocation, and the business interruption profit loss. However, they did not agree that our client’s almost new factory required reconstruction, and considered professional cleaning and limited repairs would suffice, despite evidence that corrosive contamination had penetrated behind the fixed wall cladding.

We engaged eminent City lawyers, but the insurers settled just before trial – better in their view to take a punch on the nose than perhaps create a legal precedent which would cost them many more millions with the cases yet to come.

The client’s factory was then rebuilt from scratch. The corrosive effects of deep-seated contamination will reduce the life of a modern factory, and the value in your balance sheet.