Aspen Insurance UK Ltd & 2 Ors v Pectel Ltd
| Jurisdiction | England & Wales |
| Judge | MR.JUSTICE TEARE |
| Judgment Date | 18 November 2008 |
| Neutral Citation | [2008] EWHC 2804 (Comm) |
| Docket Number | Case No: 2008 FOLIO NO.24 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 November 2008 |
[2008] EWHC 2804 (Comm)
Mr.Justice Teare
Case No: 2008 FOLIO NO.24
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Neil Calver QC (instructed by Clyde & Co.) for the Claimants
David Lord (instructed by DLA Piper UK LLP) for the Defendant
Hearing dates: 20–23 October 2008
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr. Justice Teare:
Introduction
The Defendant is a specialised construction contractor with experience of and expertise in the removal of asbestos from commercial and government property, in particular from major underground facilities worldwide. In 2004 the Defendant was engaged as a sub-contractor to AMEC who had been contracted by BT to work on BT's Deep Level Tunnel Facility in Manchester. The Defendant commenced work on the South Tunnel on 9 February 2004 and preparatory work on the North Tunnel was commenced on Monday 22 March 2004 in the crossover section where both tunnels meet. Work did not continue over the weekend of 27 and 28 March 2004. It is not disputed that the Defendant's employees (of whom there were seven) were asked to suspend their preparatory work in the crossover section because there had been no “pre-start” meeting for the work in the north tunnel. Thus no employee of the Defendant was present in the crossover section over the weekend. On the morning of Monday 29 March 2004 there was a fire in the cross over section of the tunnels.
On 6 March 2007 AMEC sent to the Defendant a copy of a letter from BT's solicitor in which it was alleged that AMEC, by reason of the actions of its sub-contractor, the Defendant, was liable for the fire. It was said that the source of ignition was a fluorescent light fitting, or the cable leading to it, which had been damaged during the preparatory work on the north tunnel. Further, it was said that the materials used by the Defendant in the preparatory work were easily ignitable and did not meet the required specification. Damages in an approximate sum of £15m. were claimed.
The Defendant had liability insurance cover with the Claimants. On 22 March 2007 the Defendant's broker, Stephen Watts of Holgate Insurance, met the Claimants' agent, Brian Dale of Miles Smith. He informed him of the claim and handed over a copy of the letter from BT's solicitors.
The terms of the policy provided, by clause 4(a) of the “Conditions”, that the assured shall give Miles Smith “immediate written notice with full particulars of any occurrence which may give rise to indemnity under this insurance”. The Claimants say that the Defendant failed to comply with this obligation and seek a declaration that they have no liability under the policy.
This is not the trial of the action but of certain preliminary issues as to whether the Defendant complied with condition 4(a) and whether condition 4(a) was a condition precedent to the Claimants being liable to indemnify the Defendant in respect of its liability arising out of the fire. There was in addition an issue as to whether the fact that work on the Manchester tunnel facility commenced on 9 February 2004 precluded a claim on the grounds that the policy period commenced on 11 February 2004.
The insurance policy
From August 2003 to August 2004 the Defendant's insurance policy was underwritten by CIC Insurance Company. In early 2004 the Financial Services Authority investigated an allegation that CIC did not have authorisation to underwrite UK insurance business and the Defendant's broker Holgate was advised by CIC that its cover should be replaced with immediate effect. On 11 February 2004 Holgate obtained for the Defendant the policy with which this action is concerned. When advised as to the additional premium for having the policy commence retroactively from an earlier date (which is usual with policies concerning asbestos) the Defendant chose not to have any retroactive cover. Mr. Watts explained that in February 2004 he thought that there might still be some recourse on the CIC policy.
The policy taken out on 11 February 2004 was described as a Combined Liability Policy No.04028974 dated June 2004. It was issued by Miles Smith on behalf of the Claimants. The policy provided for the assured to be indemnified in respect of employers' liability (section 1), public liability (section 2) and products liability (section 3). Cover was also extended to liability under the Consumer Protection Act, the Defective Premises Act and the Data Protection Act. The schedule to the policy stated the limits of the cover (£10,000,000 any one occurrence for employers' liability, £5,000,000 any one occurrence for public liability and £5,000,000 in all for products liability), the excess (the first £50,000) and the premium (£608,488.53). The period of insurance was from 11 February 2004 to 10 February 2005. There were a number of exclusions from the cover provided by the various sections of the policy. There were, finally, 13 Conditions. The most relevant were the following:
“1) Asbestos Warranty
When the Assured is engaged with materials containing Asbestos, the following are warranted:-
(a) that all conditions set out strictly in accordance with the Control of Asbestos at Work Regulations 1987 (as amended), the Asbestos (Licensing) Regulations 1983 and the approved Code of Practice;
(b) that all Codes of Practice and Guidance Notes issued by the Health and Safety Executive must be understood and followed;
(c) that the MILES SMITH MEDICAL QUESTIONNAIRE (Ref. BH101) is to be implemented at the Employer's expense. All Employees so examined and approved must be approved by Underwriters. In accordance with (b) above, this examination is to be undertaken every two years;
(d) that the Assured must be aware and observe all current legislation and ensure that his Supervisor and operatives are appropriately trained annually in accordance with his legal requirement. This training to be updated as significant changes to current practices occur.
In the event of a breach of this warranty, the Assured shall be liable to refund Underwriters any sums which they have paid to any Employee of the Assured.
………….
4) Claims Procedure
(a) The Assured shall give to Miles Smith of Birchin Court, 20 Birchin Lane, London, EC3V 9DU immediate written notice with full particulars of:-
(i) any occurrence which may give rise to indemnity under this insurance.
(ii) any injury or disease related absence in respect of any Employee (and arising out of his employment) of more than three working days.
(iii) any impending prosecution, coroner's inquest, or fatal accident enquiry in connection with such occurrence, injury or disease.
(b) Every letter, Claim, writ, summons and process in connection with any occurrence which may form the subject of indemnity hereunder shall be notified or forwarded to Underwriters immediately upon receipt.
(c) The Assured shall neither admit liability for nor agree to settle or repudiate any Claim without the written consent of Underwriters. Underwriters shall be entitled to conduct the defence of any Claim in the name of the Assured and to prosecute in the Assured's name for Underwriters' benefit any Claim for indemnity or damage or otherwise against any third party and shall have full discretion in the conduct of any negotiations and proceedings and settlement of any Claim.
(d) The Assured shall give to Underwriters all such information and assistance as Underwriters may require.
(e) Underwriters may at any time pay to the Assured the Limit of Indemnity (after deducting any sums already paid) or any less amount for which any Claim(s) can be settled and thereafter Underwriters shall have no further liability under this insurance in connection with such Claim(s) except for Defence Costs incurred under Sections 2 and 3 prior to the date of payment.
……………
8) Excess
Underwriters may require the Excess to be paid at any time during the investigation defence or settlement of any Claim. Notwithstanding this Excess the Assured shall comply with Condition (4) “Claims Procedure” as if no Excess applied.
……………
10) Disputes
Any dispute concerning the interpretation of the terms of this insurance is to be subject to English Law.
…………….
13) Observance
The liability of Underwriters shall be conditional on:-
(i) The Assured paying in full the premium demanded and observing the terms and conditions of this insurance.”
There were then four endorsements, all of which formed part of the original policy. The first endorsement related to burning welding and cutting and provided that “it is a condition precedent to liability under this Policy” that certain specified precautions were taken when burning, welding or cutting.
There was no dispute as to the meaning of condition 4. It was common ground that “immediate” meant “with all reasonable speed considering the circumstances of the case”; see Re Coleman's Depositories [1907] 2 KB 798 at 807 per Fletcher Moulton LJ. It was also common ground that “any occurrence which may give rise to indemnity under this insurance” meant that there must be a real as opposed to a fanciful risk of the underwriters having to indemnify the assured and that in determining whether there was such a risk the court applied an objective test, taking into account the knowledge that the assured possessed in order to determine the extent to which the assured was aware of, and hence capable of notifying, occurrences which may give...
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