National Farmers Union sues HSBC over £1m fire payout

National Farmers Union Mutual Insurance (NFU) is suing HSBC Insurance for £1m in the high court in a dispute over who should foot the bill for a blaze at a historic country house.

The owners of Old Hall at Langham in Leicestershire had exchanged contracts to sell the historic property but the deal had not been completed when fire ripped through the grade II* listed building on 27 October 2007.

Owner Robert Abel-Smith had taken out cover with HSBC Insurance. But NFU ended up paying for the claim because it insured the eventual buyers Nicholas Spaull and Jill Armstrong up to a limit of £2m, the writ says. NFU paid £1.85m to the pair.

NFU is claiming 54.2% of the settlement, or £1,002,700 from HSBC, and demanding damages.

The writ says that the payout was made under protest, involuntarily, and without prejudice to its right to seek a contribution from HSBC.

Completion of the purchase was set for 7 November 2007, but was delayed after the blaze, and Old Hall was finally bought on 21 March 2008, the writ says.

Six fire crews battled the blaze but falling masonry and unsupported walls meant that they had to fight the flames from outside the structure.

One 39-year-old man was arrested and bailed by police investigating the fire.

The grade II* listed building, which was built in 1665, was extensively damaged in the blaze. The new owners have vowed to restore it to its former glory, which will cost between £2.6m and £3.1m.

The writ was issued by solicitors Dewey and Leboeuf, ref Adam Blanchard.

A spokeswoman for NFU refused to comment and HSBC Insurance was unavailable for comment.