Landlords line up for HK$200m Sars payout

PUBLISHED : Thursday, 11 January, 2007, 12:00am
UPDATED : Thursday, 11 January, 2007, 12:00am

Writ claims insurers liable for far more than compensation cash already paid

Some of Hong Kong's major hotels and developers are among claimants seeking HK$200 million in compensation from insurance companies for losses during the Sars outbreak of 2003.

Ten firms jointly filed a writ on Tuesday that claims six insurance companies were liable to pay a total of HK$200 million for damages as a result of two policies taken out in 2002 to insure various properties in Wan Chai and Tsim Sha Tsui.

The insured locations included a number of companies that were operating hotel buildings, offices, apartment buildings, private clubs, shopping arcades, gardens, car parks and saunas.

According to the writ, the policies were extended to insure losses resulting from various causes, including human infectious or contagious diseases that might lead to closure of the premises.

The outbreak of Severe Acute Respiratory Syndrome in early February 2003 led to a drastic decline in travel to Hong Kong which resulted in the cancellation or postponement of events, and commercial activities such as visits to shopping malls fell sharply, the writ stated.

The insurance covered the Hong Kong Convention and Exhibition Centre complex in Wan Chai as well as the New World Centre complex, the Palace Mall and the Salisbury Gardens pedestrian subways in Salisbury Road, Tsim Sha Tsui, the writ stated.

On March 15, 2003, the World Health Organisation issued a global alert for travel to Hong Kong. As a result many countries, including Thailand, Singapore and Taiwan, advised their citizens not to travel to the city. The WHO declared the city Sars-free 100 days later. During the outbreak, 299 people died of the disease in Hong Kong.

The plaintiffs - New World Harbourview Hotel Co, the Dynasty Club, Island Sauna Co, Grand Hyatt Hong Kong Co, Urban Parking, Polytown Co, Hong Kong Island Development, New World Hotel Co, Hong Kong New World Department Store Co and Kiu Lok Service Management Co - claimed that they had suffered severe reductions in revenue as a result of the Sars outbreak.

They said that although the insurers had made interim payments totalling HK$100 million between November 2004 and January 2005, they were still entitled to HK$200 million compensation for business losses.

The claim covered the period from February 2003 to June 2003, when the WHO removed Hong Kong from the list of areas that had experienced recent local transmission of Sars and declared the city Sars-free.

In October 2003, the Mandarin Oriental Hotel received HK$125 million in compensation from insurance companies for business losses during the Sars epidemic.

The six insurers are Ace Insurance, AXA General Insurance (Hong Kong), Falcon Insurance Co (Hong Kong), Liberty International Insurance, Tugu Insurance Co and XL Insurance Co.