Encia Remediation Ltd v Canopius Managing Agents Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CRESSWELL |
| Judgment Date | 24 April 2007 |
| Neutral Citation | [2007] EWHC 916 (Comm) |
| Docket Number | Case No: 2006 FOLIO 474 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 April 2007 |
[2007] EWHC 916 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Justice Cresswell
Case No: 2006 FOLIO 474
Miss Siobán Healy and Mr Michael Holmes (instructed by Addleshaw Goddard) for the Claimant
Mr Jason Evans-Tovey (instructed by Watson Burton) for the Defendant
Hearing dates:
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.
INTRODUCTION
STATEMENT OF FACTS
LIST OF PRINCIPAL ISSUES TO BE DETERMINED AT TRIAL
THE WITNESSES
THE SUBMISSIONS OF THE PARTIES
THE RELEVANT LEGAL PRINCIPLES
ANALYSIS AND CONCLUSIONS
Mr. Justice Cresswell:
INTRODUCTION
This is a trial of preliminary issues in a dispute as to the extent of insurance coverage under an Environmental Consultants Professional Indemnity policy. The relevant terms of the policy are set out at para 101. The claim in question (the Shepherd Homes claim) is set out at paras 107 to 113. The preliminary issues for decision (as refined in the course of the hearing) are set out at para 114.
STATEMENT OF FACTS
The following statement of background facts (paras 2 to 113) was most helpfully agreed by the parties.
The Parties
Encia Remediation Ltd (“Encia”) is a company engaged in the business of civil and environmental engineering. Until a management buyout (“MBO”) on 12 December 2002, Encia was known as AIG Remediation Ltd and was part of a group of UK companies within the AIG Engineering Group.
A corporate brochure provided by the AIG Engineering Group to Creamer Group Plc (“Creamer”) on 10 October, 2001, stated that the group's activities involved “Remediation and Reclamation, Engineering Design, environmental and engineering consultancy, environmental management consultancy and brownfield property acquisition and investment.”
Between 1998 and 2003 the following AIG Engineering Group companies were insured in respect of professional indemnity risks: AIG Remediation Ltd, AIG Consultants Limited, AIG Consultants Holdings Ltd (which became AIG Engineering Group Ltd in 2000) and Robinson Fletcher Environmental Consultants Ltd. At various times the group also included AIG Risk Engineering and AIG Property, but these companies were not insured under the professional indemnity policies.
The corporate brochure provided to Creamer on 10 October 2001 stated that AIG Consultants carried on business as a specialist environmental, engineering and risk consultancy. According to its annual accounts the principal activities of AIG Consultants “were those of consultants, environmental scientists and geologists, and in providing consultancy services relating to waste management, contaminated land, training and other environmental matters.”
The same corporate brochure stated that AIG Remediation Ltd provided services including, “demolition, site clearance, earthworks, ground engineering, remediation, reclamation and civil engineering contracting, provision of contractor services…” AIG Remediation Ltd's annual accounts for year ending 30/11/99 describe the principal activity of AIG Remediation Ltd as, “that of land reclamation and remediation contractors.”
At all times Creamer have been producing brokers in respect of AIG/Encia's professional indemnity insurance. Creamer have acted variously by Pam Burrows, Graham Smerdon and Steve Critchlow.
Heath Lambert (“Heaths”) or a division of Heaths known as APIA (standing for Architects & Professional Indemnity Agencies Ltd), who were instructed by Creamer, have been placing brokers at Lloyd's in relation to Encia/AIG's professional indemnity insurance. Heaths have acted variously by account managers Edward Lloyd, John Lund and Adam Burton.
Among the brokers employed by Heaths, who were responsible for taking the proposals into the market, were James Russell and Janos Tokok.
The 1998/1999 AIG Group Policy
This AIG Group policy has not been disclosed but it contained an exclusion clause forming part of the EC3 96/12 policy wording which provided:
“This Policy does not cover any liability whatsoever arising out of: … Any contract where the Assured acts as a Contractor whether in conjunction with their Business as stated in the Schedule or not.”
The wording of this exclusion caused concern at AIG, who wrote to Creamer on 29 June 1999 pointing out that it would cause problems since AIG Remediation Ltd was a “Contaminated land clean up contracting company”.
The 1999/2000 AIG Group proposal and policy
In October 1999 the AIG Engineering Group sought professional indemnity cover for the following year, 1999/2000. The renewal package sent by Creamer to Mr Edward Lloyd of Heaths included a covering letter from AIG, completed proposal form, a brochure for AIG Consultants Ltd, a brochure for AIG Remediation Ltd and three copies of capability statements.
The proposal form was a professional indemnity insurance proposal form for environmental consultants. It was completed by AIG's Mr Paul Stevenson and in it, in answer to a question asking for full details of those activities for which cover was required, he said: “environmental and general engineering consultancy: specialising in waste management, contaminated land assessment, environmental impact assessment, remediation strategy coordination, geotechnical engineering, training, planning consultancy, architectural design”. In that proposal form Mr Stevenson did not identify AIG Remediation Ltd as a firm to be insured, but he did identify the firm as a subsidiary of AIG Consultants Holdings Ltd. By the time the policy was issued the company was included among the insured.
Further, in answer to question 8, which sought an approximate breakdown of the firm's work undertaken in the last financial year, Mr Stevenson provided figures for the AIG Group totalling 100% – as the question required – none of which made express reference to “contracting” or “piling” works. Mr Stevenson did state under “Other Non-Environmental Work” that 4% of the firm's work was civil engineering and 2% was structural engineering. Gross fees to 1999 were given as £1.55m.
In answer to question 9(a) on the proposal form, asking for details of the five largest contracts undertaken during the last five years, Mr Stevenson included for the AIG Group references to the design, planning, project management and supervision of reclamation and remediation schemes.
By the proposal form Heaths had asked for the firm's brochure or other promotional literature. A capability statement, entitled “Brownfield Redevelopment Capability Statement” sent by Creamer to Heaths by a memo of 6 October 1999 with a proposal form, covering letter and brochures for AIG Consultants Ltd and AIG Remediation Ltd, stated that “AIGC [AIG Consultants] often works in association with AIG Remediation to provide fixed price re-development solutions on a design and construct basis.”
The proposal form did not expressly mention “contracting works” or the “construction or installation of piles”. As set out above, it did state that work undertaken by the companies related to non-environmental, civil engineering, structural engineering and also made clear that they had project managed landfill reclamation contracts.
The resulting environmental consultants' policy for the AIG Group was on the terms of the EC3 96/12 form and included the exclusion set out above.
The policy schedule provided the definition of AIG Group's business as “Environmental Consultancy specialising in Waste Management, Geotechnics, Contamination and Training and as more fully declared in the proposal form(s) referred to below and any accompanying information submitted with the proposal form(s)”.
None of the Insurers in this case subscribed to the 1999/2000 policy.
The 2000/2001 AIG Group proposal and policy
In October 2000, the AIG Engineering Group sought cover for the coming year, 2000/2001. Disclosure has not produced a letter from AIG to Creamer.
Creamer forwarded to Heaths under cover of a fax dated 10 October 2000 a proposal form for the AIG Group which they referred to as the “renewal proposal form” signed by Mr Stevenson. The fax was said to consist of 29 pages and appears to have included the proposal form and AIG Engineering Group's corporate brochure.
The proposal form was a professional indemnity insurance proposal form for environmental consultants. In the 2000/2001 proposal form, and for each of the subsequent years, AIG Remediation Ltd was specifically identified as one of the firms to be insured.
At Question 2 of the proposal form dated October 2000, which requested full details of those activities for which cover is required, Mr Stevenson stated in terms he would repeat for the following years until the year at issue “Please refer to attached Statement of Capability for AIG Engineering Group”. He also wrote “Please note that only a small percentage (approximately 2.5%) of AIGR turnover relates to design or advice given to clients. The remaining 97.5% relates to site contracting works”.
The description of AIG Remediation Ltd in the AIG Engineering Group Brochure was as follows:
“By combining the consultancy services of AIGC with the contracting facilities of AIG Remediation and the leading environmental insurance expertise of the AIG Group we are able to offer a complete environmental risk management package. ….
AIG Remediation Limited
Key Services Provided:
demolition, site clearance, earthworks, ground engineering
remediation, reclamation and civil engineering contracting
provision of contractor services for both civil based reclamation...
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