Insurer loses appeal against waste firm fire payout

The Court of Appeal has ordered Zurich Insurance to pay waste firm Niramax’s claim for more than £500,000 following a blaze that destroyed expensive and brand new waste sorting machinery.

The insurer had long sought to avoid making any payout, following an original claim from Niramax for £4.8m

It cited concerns that the terms of its contract were not met when the fire broke out at its premises in Hartlepool in 2015. Zurich also argued that Niramax had failed to disclose certain material factors, notably that it had a “shadow director”, Shaun Morfitt. He was jailed, alongside his brother Adrian and two other men, for a machete attack in 2010. Shaun was handed an 18 year jail sentence for conspiracy to supply drugs in 2017.

The Morfitts are the nephews of Niramax’s majority owner Neil Elliott, who was jailed for manslaughter last year. He resigned his directorship once he started his 15 year sentence.

Zurich also cited undisclosed fines for running a “fly-infested” waste site and illegally storing tyres, a previous fire, enforcement notices from the Health and Safety Executive and a former director receiving a small fine for a waste offence.

Although the precise terms of what fire suppression systems should have been in place were unclear, Mrs Justice Cockerill ruled last year that Niramax had “a somewhat lackadaisical approach” to the issue. She instructed Zurich to pay back a £32,783 premium, £419,500 for destroyed machines and £82,350 for hired equipment. The amount excluded a new machine supplied by Eggersmann Recycling Technology that had also been lost.

The judgment in Zurich’s appeal was handed down on Friday, following a hearing the week before.

Lord Justice Popplewell dismissed an argument that Niramax’s actions led to Zurich charging a premium that was unduly low, at £23,714 per year. It was a mistake by one of Zurich’s staff, “not a failure by Niramax to disclose matters relevant to its attitude to risk management, which was the sole cause of the policy being written more cheaply than it would have been,” he wrote. Lady Justice Elisabeth Laing and Lord Justice David Richards agreed.

A further ground of appeal was that Zurich would not simply have increased the premium but would have refused to renew the policy, had the appropriate information been made available. This was refused, the court being reluctant to overturn a finding of fact by a trial judge and the argument proffered falling “well short” of meeting the threshold to do so, says the ruling.

A Zurich spokesperson said: “Zurich defended this case to trial in the interests of the wider pool of policyholders whose representations are fair and accurate. In 2020, the court ruled in Zurich’s favour on the substantive point that material non-disclosure had occurred, which led to the majority of the claim being dismissedWe acknowledge the Court of Appeal judgement on the points that Zurich pursued and will not be taking any further action.”

Niramax was asked to comment.

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