Sky UK Limited & Anor v Riverstone Managing Agency Limited & Ors

On remittal after an appellate ruling has altered the scope of insured loss, the court should ordinarily resume the case on the evidence available at the end of trial and apply the appellate conclusions to that evidence. A party should not use the remittal to advance a new case on issues it could and should have addressed at trial. Proxy evidence prepared solely on the basis of a rejected construction may lose its forensic purpose once that construction is displaced. Where the remaining issues can fairly be resolved from the trial materials, the court may direct a single further round of submissions and an oral hearing, with further evidence requiring leave.

Sky UK Limited and Mace Limited brought claims against Riverstone Managing Agency Limited and other insurers under a construction all risks policy concerning extensive water damage to the roof of Sky’s headquarters.

After a five-week trial, the court held that the insurers were liable to indemnify Sky but confined recovery by reference to damage occurring during the insurance period and limited Mace’s recovery to damage existing at practical completion. The Court of Appeal upheld the court’s definition of damage but rejected those limitations and remitted the claims for assessment in accordance with its conclusions.

The CMC concerned the procedure for determining the remaining factual and quantum issues, including whether further expert evidence and a further remedial scheme should be permitted.

1. Disposition. The court rejected the defendants’ proposed two-stage process involving additional expert evidence. The remaining issues were to be resolved through one further process of written submissions followed by an oral hearing.
2. The proper approach was to return to the evidence as it stood at the end of trial and apply the Court of Appeal’s conclusions as if the court were resuming the closing-submissions stage of the trial. The procedure should replicate as closely as possible what would have occurred had the correct scope of cover been adopted initially.
3. The defendants’ proxy and hybrid schemes had been advanced solely to assess loss on the assumption that recoverable damage was confined to the insurance period. Once that construction had been rejected, there was no principled basis for further examining those schemes.
4. Permitting the defendants to develop a new case concerning damage within the scope of cover would be impermissible. They could and should have advanced that case at trial. A remittal was not an opportunity to obtain a second attempt to present a case that could previously have been run.
5. If the Mace and Sky schemes were shown to exceed what was reasonable, that issue could be addressed in the conventional broad-axe manner by applying the principles previously summarised by the court. No further evidence was to be admitted without leave.
6. The proceedings were referred to facilitative mediation. If unresolved, the parties were directed to exchange sequential, substantially freestanding written submissions and attend a further hearing of two to three days addressing the remaining factual issues and quantification of both claims. Costs were reserved.

• Court of Appeal: The court overturned the first-instance conclusions limiting Sky’s recoverable loss to damage during the insurance period and limiting Mace’s recovery to damage existing at practical completion. The claims were remitted for assessment in accordance with the appellate analysis.
• High Court (Commercial Court): On remittal, the court directed a single further process based principally on the trial evidence, with no further evidence without leave.