Kendall wins groundbreaking insurance case for Lumbermens

Kendall Freeman has secured a landmark result in the High Court for insurance client Lumbermens Mutual Casualty Company.

The decision, handed down by Mr Justice Colman on 5 October, means insurers could escape making any payment if their client settles a case without specifying with the claimant which elements of the case are covered by the insurer.

Lumbermens claimed that it was not liable to pay the losses of its client Bovis following a dispute between Bovis and property developer Braehead Glasgow. The dispute concerned the sums due for a retail and leisure centre building contract in Glasgow.

Bovis claimed £37m from Braehead, prompting a £103m counterclaim. Litigation was settled in 2002 through a global settlement in which Braehead agreed to pay Bovis £15m.

However, it was not clear under the terms of the settlement which elements of the claim and counterclaim had been taken into account in calculating the £15m settlement. Lumbermens said the settlement did not impose any identifiable loss on Bovis and so refused to pay.

In his judgment Judge Colman agreed, saying that where a global settlement is not broken down between claims covered by an insurance policy and claims not covered, the insurer is not liable.

Kendall Freeman head of construction David Johnson instructed 7 Kings Bench Walk QC Gavin Kealey for Lumbermens. Mike Hopkins, a Masons construction litigation partner, instructed Roger Stewart QC of Four New Square for Bovis.