Customers who bought 'toxic' sofas from Land of Leather will not receive compensation, the High Court ruled last week.
The Chinese-manufactured sofas, also sold by Walmsley Furnishing and Argos, contained the chemical DMF, which caused skin allergies, rashes and burns on more than 4,000 people.

More than 300 of those purchased the products from Land of Leather, which went bust in January 2009.

They took the company's insurer, Zurich, to the High Court to sue for up to £3m in compensation, but Mr Justice Teare has ruled they are not entitled to any money.

Despite all three retailers previously admitting liability, in March last year Zurich announced they would not provide insurance cover for Land of Leather as the company had breached its terms of policy with them.

The retailer had struck a deal with one manufacturer which they claimed breached a condition of the policy and this claim has now been upheld by the courts.

Richard Langton, senior litigation partner at Russell Jones & Walker, is leading the group litigation against the three retailers.

He said: "This is a devastating blow for victims who purchased their sofas from Land of Leather, all of whom believed for almost 12 months that Zurich were going to pay out. A group of over 300 innocent people who sustained in many cases severe injuries, due to an admittedly faulty product, will receive no compensation.

"Consumers must beware that buying products made in China is potentially dangerous and if something goes wrong they have less chance of redress. Zurich's delay in notifying us added insult to injury by making our clients believe they would be paid. Unless this decision is overturned on appeal by the Court of Appeal a great injustice will have been done."

The case continues for the several thousand customers where insurance cover remains in place.