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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Sky UK Ltd v Riverstone Managing Agency Ltd & Ors [2025] EWHC 1720 (Comm) (27 June 2025) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2025/1720.html Cite as: [2025] EWHC 1720 (Comm)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		27 June 2025

HH Judge Pelling KC:

Introduction

1. This is my judgment in relation to the issues argued at a CMC listed on 27 June 2025. The listing followed a decision by the Court of Appeal to overrule my conclusion that the claimants were confined to claiming under the policy that is the subject of this claim for losses that occurred during the period of insurance. The Court of Appeal remitted the claims back to me to determine the losses within the scope of the policy applying its analysis of what losses occurred that were within the scope of the policy as the Court of Appeal defined that scope and then to reach conclusions as to the sum that the claimants should recover.
2. Given the absence of any apparent cooperation between the parties at any stage in these proceedings, it should be unsurprising that the parties were not able to agree on how I should proceed to resolve the remitted issues. The argument between the parties took 2½ hours. I was unable to give judgment at the time because there was no time available to do so given that I had a following case listed also to last 2½ hours. This situation was the result of a failure to list the CMC with a realistic time estimate. At the hand down of this judgment, I will consider what if any costs sanctions ought to be imposed on the parties for that failure.
3. At the end of the hearing, I directed that the parties attempt to resolve what remains of this dispute by NDR and fixed a window for that exercise. It follows that the directions I set out below will take effect from the closure of that window.

Background

4. Following a 5-week trial in January-February 2023, I declared that Insurers are liable to indemnify Sky under a construction all risks insurance policy ("the Policy") in respect of extensive water damage to the roof of Sky's global headquarters building ("the Roof"). Of the large number of issues that had to be resolved at the trial, one included what was meant by damage and the other concerned the scope of the cover provided. The Court of Appeal considered my definition of what constitutes damage was correct but that I was wrong to confine Sky's recovery to such damage occurring during the Period of Insurance as the defendants had contended was the correct construction of the Policy and that I was wrong to limit Mace to recovering only in respect of damage occurring down to the period of practical completion.
5. This has an impact on how damage is to be assessed because Sky and Mace's remedial schemes for which an indemnity was sought assumed that the defendants were responsible for the whole of the damage to the roof and Mace had neither pleaded nor proved loss solely for the period down to practical completion. The defendants maintained that loss was to be assessed by reference to a scheme that addressed only what was contended to be the reasonable cost of repairing the damage that had occurred down to the end of the Period of Insurance. It was not intended that this scheme would be constructed and it was put forward as a proxy scheme for the purpose of calculating the sum to which Sky and Mace were entitled to recover under the Policy. It is for that reason that this scheme has been referred to as a "proxy" scheme.
6. Since that proxy scheme was the only one that addressed damage occurring solely during the Period of Insurance, I adopted that scheme in principle but held that in certain defined respects that scheme did not adequately compensate Sky for even damage that had occurred during the Period of Insurance. I had directed further evidence and submissions from Sky and the defendants (not Mace) by reference to those issues but that was stayed once permission to appeal was granted. Given that the Court of Appeal decided that (a) damage after the end of the Period of Insurance was within the scope of the Policy and (b) that Mace was entitled to be indemnified under the Policy not merely for the amount of damage at practical completion but for "… the cost of remedying the development and deterioration damage to which it gave rise..." it follows that my reasons for adopting the proxy scheme as a starting point for assessing the sum which Sky was entitled to recover cease to apply. In addition, my reasons for not awarding Mace any sum (that it has not pleaded and proved loss solely down to Practical Completion) can no longer be maintained. Mace maintains that in consequence it is entitled it to recover its "… (1) investigation costs, (2) temporary emergency works, (3) Mace's remedial costs, (4) managing drying out, and (5) roof monitoring and maintenance…", which it quantifies at about £10m. Critically this issue was (or should have been) fully addressed by the evidence adduced at trial.
7. In relation to the main issue, Mace supports Sky in its primary submission but submits in the alternative that if in principle I accept the approach advocated by the defendants then Mace's submissions as to the process to be adopted are to be preferred over those contended for by the defendants.
8. In essence Sky maintains that I should assess Sky's entitlement under the Policy as being the cost of carrying into effect its proposed scheme on the basis that whilst it involves replacing the wooden flat roof with a roof of a different construction, it is cheaper than repairing the existing roof, which is the scheme that Mace maintains represents the principled assessment of what the insureds under the Policy are entitled to recover. At trial it had always been Mace and Sky's case that the Sky scheme should be adopted for that reason. Both Mace and Sky submit the only reason that scheme was not in principle adopted was because I accepted the defendants' submissions as to the scope of cover under the Policy. This has led to a divergent approach as to how I should proceed to resolve the remaining issues.
9. Sky and Mace's approach starts with the proposition that what should happen should replicate as closely as possible what would have happened at the conclusion of the trial if I had not concluded that the indemnity under the Policy only reflected the damage to the Roof as at the end of the Period of Insurance on 15 July 2017. It was only that conclusion that led me to accept the defendants' proxy scheme subject to the points that led to the development of the hybrid scheme. Had I concluded that the scope of the Policy was as found by the Court of Appeal then I would have concluded that the Mace scheme correctly reflected what needed to be done in order to repair the existing damaged roof and then to adopt the Sky scheme because it was cheaper though different.
10. Sky contends that it would not have been open to the defendants to contend that their schemes remained relevant, that further evidence should not be admitted whether relevant to the proxy scheme or at all, and that there should not be any further substantive hearings. This was so because the defendants' scheme was put forward exclusively as a proxy for calculating what Sky was entitled to recover on the assumption that recovery was limited to damage during the Period of Insurance. Sky submits (and Mace adopts Sky's submission that) "… the only schemes that seek to remediate the totality of the insured damage are the Mace and Sky Schemes. The Mace Scheme provides the only measure of the cost of repairing the insured damage, and the Sky Scheme is a more cost-effective way of effecting full and effective repair by replacement…" and that following the Court of Appeal's decision, "… only the Mace Scheme and the Sky Scheme are relevant."
11. All this led Sky to submit that I should direct that (a) the parties should file and serve written submissions addressing the further findings of fact that I should make and the conclusions I should reach as to the quantum of damages to which Sky and Mace are entitled in light of the conclusions in the CA Judgment, cross-referring to the written and oral closing submissions made at the conclusion of the trial in February 2023 and the evidence using Opus references; and (b) there should then be a second round of written submissions in response, again cross-referring to the written and oral closing submissions made at the conclusion of the trial in February 2023 and the evidence using Opus references. It is then suggested that I should be left to make the findings and reach the conclusions the parties respectively contend for based on this material alone.
12. Whilst Sky and Mace may be correct on the issues of principle they identify and they may be correct to submit that the issues that remain should be resolved without any additional evidence being adduced, I consider the manner in which they propose the issues that remain should be resolved to be unworkable and impractical. Firstly, I do not accept that it is at all helpful to prepare written submissions that are then mutually exchanged followed by a second round of submissions also mutually exchanged. I consider that is a process that will maximise the prospect of confusion and misunderstanding, particularly if there were no further oral submissions. Secondly, I consider that written submissions that cross refer to other written submissions inevitably quoting particular paragraphs out of sequence and out of context will likewise create a foreseeable risk of confusion and misunderstanding. Finally I consider the notion that this process should be adopted unaccompanied by any oral submissions will serve only to enhance those risks. In that regard I accept Mr Lockey KC's submission that a hearing will be essential because of the passage of time that has elapsed since the trial as well as the complexity of the issues that remain. In the result, I reject Sky's procedural approach.
13. It is now necessary to turn to the defendants' proposed approach. They submit that what remains to be decided should be resolved in two stages with stage 1 being an oral hearing of 2 days' duration to determine the extent of insured damage and the appropriate remedial response to such damage (without any further evidence) and stage 2 being reserved for the determination of outstanding quantum issues (with any further evidence that may be required). In relation to stage 1, the defendants maintain that exercise will include an assessment of:

"(2) The reasonable approach to rectifying insured damage as determined in accordance with (1) above; to include consideration of:

(a) whether any of the remedial schemes before the Court at trial represent a reasonable response to the insured damage;

(b) whether it would be reasonable to incur the costs of 'lifting the lid' in order to determine how to remediate insured damage; and,

(c) whether the remedial scheme found to be appropriate at paragraph 220 of the Trial Judgment should be adjusted to take account of any damage at upslope areas, plenums, insulation and soft spots.

(3) What (if any) further evidence is required to determine the quantum of damages."

It is submitted by the defendants that the hearing should be preceded by a sequence of written submissions addressing the stage 1 issues with the claimants going first followed by the defendants and then the claimants in reply. In principle I agree with the defendants firstly that there should be an oral hearing; secondly that it should be preceded by a sequence of written submissions in the order they propose and thirdly, I consider that any order should make clear that those written submissions should as far as possible be free-standing documents that set out comprehensively all the submissions that each of the parties wish to rely on with cross referencing only to the evidence relied on to support the findings sought.

14. The issue that remains is whether the process should be a two stage process as suggested by the defendants or a single stage process as Sky contends should be the case and Mace endorses at any rate as its preferred solution. This involves an issue of principle, which is whether the defendants should be permitted to adduce additional expert evidence for the purpose of adjusting the hybrid scheme so as to take account of any additional damage for which Sky is entitled to be indemnified in light of the Court of Appeal's conclusions as to the scope of cover.
15. In my judgment the defendants' position is unprincipled and one that I must reject. I agree with both Sky and Mace that in principle the issues that remain to be resolved must be resolved on the evidence as it was at the end of the trial. This is so because, as Mr Reed KC put it in his written submissions, the "… orthodox, principled and correct result is that the Commercial Court returns to the evidence it has heard, including the parties' trial remedial schemes, and applies the findings of the Court of Appeal in determining the Remitted Issues as if it were doing so after the parties' closing submissions..." and because, as Mr Winser KC put it in his written submissions, as a matter of principle the procedure that follows should "… replicate as closely as possible what would have happened …" had I concluded that the scope of cover was as defined by the Court of Appeal. There is no principled basis for examining further either of the defendants' schemes because they were only ever put forward by the defendants as a proxy for assessing loss on the basis that they were correct in their submissions confining the loss for which an indemnity was available to damage occurring during the Period of Insurance.
16. There is equally no basis for considering further the hybrid scheme because that was again only a proxy for assessing the loss recoverable for damage occurring during the Period of Insurance. It took as its starting point the defendants' 2018 proxy scheme and then sought to correct it for those parts of it that I held to be unsustainable. There is no need or justification for resorting to the proxy schemes now because their only purpose was to address damage occurring exclusively during the Period of Insurance. Once that has dropped away the forensic basis for the defendants' reliance on their proxy schemes disappears entirely as well.
17. In my judgment what the defendants are seeking to do is to run a new case in relation to the damage the Court of Appeal has held is within the scope of loss covered by the Policy. That is impermissible – had the defendants wished to run such a case they could and should have done so during the trial. They chose not to do so and indeed not to engage with the quantum issues at all until a very late stage and then only on the limited basis of putting forward the proxy schemes. They could have sought to have resolved all issues of construction ahead of the trial of the factual issues but they didn't. Instead, they insisted on the trial proceeding as a unitary trial of all issues. In those circumstances, as Mr Rigney KC (then acting for the defendants) submitted after hand down of my first and main judgment, "… Courts do not (and, in order to do justice between the parties, should not) try to rescue claimants by affording them a second attempt to bring the right case (here, a case that Sky could have run from the outset but chose to disparage)." Substituting "defendants" for the reference to "claimants" and "Sky", this principle applies with equal and perhaps more force to the defendants given their approach to the quantum issues before and during the trial – see paragraph 10 of my 17 July 2023 judgment. In those circumstances, to the extent it is shown that the Mace and therefore the Sky schemes are in excess of what is reasonable then that will have to be addressed in the conventional "broad axe" manner applying the principles I summarised in paragraphs 13-14 of my 17 July 2023 judgment.
18. In those circumstances, I consider there should be a single further process consisting of a conventional exchange of written submissions meeting the requirements set out above followed by a hearing of between 2 and 3 days for the purpose of concluding these proceedings as contended for by Sky and supported by Mace. There will be no additional evidence without leave because in principle what follows should be the resumption of the closing submissions part of the trial but proceeding on the basis of the Court of Appeal's conclusions as to what is within the scope of the Policy. There will be a sequence of written submissions in the order set out above because that maximises the chances of avoiding confusion and misunderstanding and there will be an oral hearing for the reasons given earlier. It goes without saying that my conclusions concerning the filing of additional evidence apply to all parties.
19. In those circumstances, provisionally, I consider the following directions are appropriate:

a. These proceedings will be referred to NDR by facilitative mediation which is to be completed by no later than 18 August 2025; and if the dispute is not resolved then the following directions are to apply:

i. By 4pm 4 weeks before the hearing, Sky shall file and serve its written submissions relating to the Issues as defined below and Mace will file its written submission strictly limited to those Issues exclusively relevant to Mace's claim for an indemnity under the Policy;

ii. By 4pm 2 weeks before the hearing, the defendants shall file and serve their written submissions in answer to both Sky's and Mace's written submissions;

iii. By 4pm 1 week before the hearing, (a) the claimants shall file and serve their respective written submissions in reply to the defendants' submissions and (b) the parties will lodge an agreed bundle of authorities for use at the hearing;

iv. By no later than 7 days after the date of this Order the parties will apply to the Commercial Court Listing Office for a hearing of 3 days duration.

v. The issues ("Issues") to be addressed in the written submissions and the oral hearing are (1) the remaining issues of fact that have to be determined in order to give effect to the determination of the Court of Appeal that

1. damage after the end of the Period of Insurance was within the scope of the Policy and

2. Mace was entitled to be indemnified under the Policy not merely for the amount of damage at practical completion but for the cost of remedying the development and deterioration damage to which it gave rise; and

(2) the quantification of Sky's and Mace's claims

vi. No further evidence shall be admitted without further order.

However, I recognise that the parties have not had the opportunity to consider these directions and for that reason the parties are at liberty to submit brief written submissions as to the form of order to be adopted by no later than 4 pm three working days after receipt of this judgment in draft.

20. I direct that the parties use best endeavours to agree a form of order giving effect to the above by no later than 4pm 7 days after delivery of this judgment in draft to the parties. If agreement is reached, the order should be submitted for sealing. In the interests of avoiding the cost of yet another hearing, costs should be reserved and will be determined following hand down of the substantive quantum judgment. At the same time the parties should submit any typographical corrections to the judgment, which can then be handed down remotely and without any attendances. If the parties are unable to agree, a hand down hearing will be fixed on the first available date thereafter at 0930 to be fixed solely for the convenience of the court. That hearing may be in either the first or second week in August.