Suspended judgement

Only two days after the 16-screen cinema in Manchester's Great Northern Warehouse opened, the ceiling in Screen 6 collapsed, damaging seats, carpets and decorations. The owners, AMC Europe, closed the whole complex for checks and repairs on December 21, 2001. After investigation and repairs, the cinema re-opened on January 25 2002.

Suspended ceiling and partitioning subcontractor Horbury had used the wrong washers on the ceiling's hangers which also carried electrical distribution trays and A/C ducting. This allowed individual hangers to disconnect, increasing the load on the adjacent ones. The ceilings in Screens 4, 10, 12 and 15 would have probably collapsed as well but the other 11 were fine. Galliford Northern, the main contractor, notified Horbury that it intended to pass on claims from AMC.

AMC declared it would be claiming for physical repairs, loss of revenue and additional marketing costs. Horbury sought a declaration in court that its insurers, Hampden, would pick up the tab when the formal claim was made. The court held that the costs of repairs to the floor, walls and seats and down time of Screen 6 were covered (but not the ceiling repair itself). However, Hampden would not be liable for the costs of closing the whole complex where no damage had actually occurred.

Moral: Insurance may not cover your liability

Case: Horbury Building Systems versus Hampden Insurance NV. Commercial Court, September 9 2003