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A judge has ruled in favour of media group Sky in its multimillion pound High Court case over a leaking roof at its headquarters in West London against a group of insurers, including one controlled by Warren Buffett’s Berkshire Hathaway.
In a long-running case that dates back to the building of the vast shed-like offices, Sky has argued that damage caused by the leaky roof should be paid for by the insurers given the structure’s “widespread failure”.
Insurers named in the suit include legacy insurer RiverStone International, Berkshire Hathaway International Insurance, UK insurer RSA and a unit of Germany’s Munich Re. They had underwritten a so-called construction all risks policy, intended to pay out for loss suffered from structural defects.
The £220mn building was completed in 2016 and is Sky’s flagship office space, housing between 3,500 and 4,000 employees under one of the largest timber flat roofs in Europe, at 16,000 sq m. But there had been problems during the construction process and by early 2015 water was found to have got in at multiple points, according to Monday’s ruling, ultimately triggering a protracted dispute.
Despite finding in Sky’s favour, Judge Mark Pelling decided not to give a figure on how much should be paid under the case, which could still leave the UK broadcaster disappointed about its outcome.
He said: “In my judgment in principle Sky is entitled to recover from the defendants the correctly quantified costs” of carrying out remedial work. The parties were then directed to agree the sum but the judge said that if one could not be reached, there would have to be a further hearing followed by a further judgment.
The judge said the “true cost on the defendants’ case of remediating the damage for which they maintain they are liable is between about £29mn and £38.3mn whereas [the Sky proposal] will cost in excess of £100mn”. The claim was jointly brought with construction group Mace.
Sky said it was “not able to comment until further judgment has been handed down”.
The court heard disputes between the parties concerning the scope and effect of the insurance policy, the technical reasons for the failure of the roof, and the scope and cost of the work necessary to remedy the failure.
The insurers had maintained that any payout should be limited to remediating the damage that was proved to have occurred during the period of the policy, and that any payments were further reduced by a £150,000 deductible.
They argued this deductible, an amount which is subtracted from claims, should be applied separately to multiple points of damage, which the court said would “drastically reduce” the sums that could be recovered. The judge rejected this argument and said a single £150,000 retention applied.
RiverStone and RSA declined to comment. Japan’s MS Amlin, which had underwritten the policy before passing it to RiverStone, declined to comment. The other insurers did not immediately respond to requests for comment or were not available for comment.
