Took insurer Aviva to court over surety bond
North London theatre the Hackney Empire has won its High Court battle with Aviva over the insurer’s refusal to pay up on a £1.1m surety bond.
Hackney Empire took the insurer to court after contractor Sunley Turriff, which was carrying out an £11m refurbishment of the historic venue, went into administration.
Mr Justice Edwards-Stuart rejected Aviva’s main defence that payments made by Hackney Empire of £750,000 to the contractor to help with cashflow problems in the months before it failed had invalidated the bond.
The judgment will come as a relief to the many contractors and clients that rely on bonds for security on projects, but experts warned that this ruling could result in a tightening of bond conditions and higher premiums.
The court did not order payment as the case was restricted to issues of liability rather than quantum, meaning another court case on the level of payment due to Hackney Empire is likely.
The judge ruled against Hackney Empire on the minor matter of whether Aviva was liable to pay additionally for the £750,000 lost when the theatre made payments to help the contractor continue work.
Hackney Empire will now argue for payment of the £1.1m bond plus an unspecified amount for eight years’ interest and legal costs.
Christopher Hill, partner in law firm Norton Rose, said: “It’s good for the industry that bondsmen are being held to their surety as too often they try to duck this.”
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