Camstar Herb Ltd, the world’s largest producer of dried parsley outside China, has secured at least £2.38 million in court-ordered payments.
London law firm Edwin Coe successfully represented Camstar in a professional negligence claim against Advisory Insurance Brokers Limited, trading as Morgan Law Insurance Brokers.
The High Court awarded Camstar the full £1.249 million claimed in damages, with interest, an additional award and an interim payment towards legal costs bringing the current total to £2.38 million.
Camstar won the payout after a major fire severely disrupted production at one of its plants, which handled around 60% of its harvested parsley, exposing serious failings in its insurance cover and highlighting the wider risks facing British manufacturers.
Although the producer was able to recover substantial sums from its insurers, it was unable to recover payments it continued making to growers and its harvesting contractor.
The company claimed these payments were essential to maintaining the supply relationships on which its future operations depended.
The dispute arose after Camstar’s broker recommended switching from a gross revenue business interruption policy to a cheaper insured profit (also known as a gross profit) policy in 2018.
The change saved just over £7,000 in annual premiums but subsequently left the company without cover for these ongoing payments.
In his judgment, His Honour Judge Bird found the broker had breached its duty to Camstar by recommending unsuitable insurance without explaining the difference in cover.
The court also rejected the argument that the payments could have been recovered under the policy as an increased cost of working.
The ruling raises wider questions about brokers’ duties when recommending cheaper insurance policies, particularly for food manufacturers dependent on seasonal production, specialist suppliers and long-term contracts.
It also exposes the potential consequences for Britain’s food supply chains when insurance fails to reflect the commercial realities of keeping production going after a major disruption.
Oliver Pannell, partner in the Insurance Disputes team at Edwin Coe, said: “This case should be a wake-up call for British manufacturers. A factory fire can stop production overnight, but it doesn’t mean a business can simply stop paying its suppliers and contractors. Those relationships may be essential to its survival.”
“Camstar continued paying its growers and harvesting contractor because it had no commercial option other than to make the payments. Yet the insurance its broker had recommended didn’t cover those payments.”
He added: “Manufacturers need to know that their insurance reflects the financial realities of their operations. Camstar saved around £7,000 a year by switching policies, but that decision left it facing losses of more than £1.2 million. Brokers have a responsibility to understand those risks, what the key differences are when recommending alternative policies, and recommend appropriate protection.”
“We’re very pleased to have recovered the full amount claimed in damages for Camstar. The judgment is an important reminder that businesses and their brokers need to understand exactly what their insurance will cover if something goes wrong.”
The court also ordered £360,492 in interest, an additional £75,000 following Camstar’s successful Part 36 offer and an interim payment of £700,000 towards legal costs.
Further sums may become payable once outstanding interest and costs are determined. The High Court refused the defendant permission to appeal.
Edward Starke, chief executive and managing director at Camstar, commented: “After experiencing such a devastating fire, the last thing we expected was to discover that payments to some of our most important suppliers and harvesters weren’t covered by our insurance. These are relationships that are fundamental to our business, and we felt incredibly let down by the broker we had trusted to make sure we were properly protected.”
“As a family business this has been a hugely difficult and frustrating experience, not to mention having to take the matter all the way to trial. We’re relieved to have finally secured this outcome, which means a great deal to us, our suppliers and the wider community that depends on our business.”
