GD Construction (St Albans) Ltd and Scottish & Newcastle Plc
Jurisdiction | England & Wales |
Judge | Mr Justice Aikens,Lord Justice Longmore,Lord Justice Ward |
Judgment Date | 22 January 2003 |
Neutral Citation | [2003] EWCA Civ 16 |
Date | 22 January 2003 |
Docket Number | Case No: A1/2001/0882 |
Court | Court of Appeal (Civil Division) |
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Ward
Lord Justice Longmore
and
Mr Justice Aikens
Case No: A1/2001/0882
Graham Eklund QC and (instructed by Hill Dickinson) for the Appellants Marcus Taverner QC (instructed by Vizards Staples & Bannister) for the Respondents
This is an appeal from a decision of HHJ Seymour QC, sitting as a judge of the Technology and Construction Court, on a preliminary issue of law. The decision of Judge Seymour is reported at 80 ConLR 76. Permission to appeal was refused by the judge but granted by Dyson LJ. The case arises out of a building contract on a standard form published by the Joint Contracts Tribunal of the Standard Form of Building Contracts, known as "IFC 84". The contract, which was concluded on 30 September 1996, concerned refurbishment work to a public house in Reading. The terms of the contract provided that the Employer, who is the Claimant in this case, should take out an insurance policy in the joint names of both the Employer and the Contractor. This policy should have insured against any damage to the existing structure caused by a number of specified perils, including "fire". In fact the Employer failed to take out the policy. During the refurbishment there was a fire which damaged the existing building of the public house. For the purposes of the preliminary issue it has been assumed that this fire was caused by the negligence of sub – contractors when they were doing work on the roof of the public house. The Employer has sued the Contractor for damages, including the cost of rebuilding the existing structure. The Employer relies principally, if not exclusively, on a liability and indemnity clause in the Contract to recover its loss and damage. This is Clause 6.1.2 of the standard IFC 84 terms. The Contractor relies on the same liability and indemnity clause in the contract to exempt it from this liability. It says that it has no liability for any loss or damage that would have been covered by the insurance policy that the Employer should have taken out.
The preliminary issue before the judge and this Court is, briefly, whether liability for damage to identified property which results from a negligently caused fire is excluded, because the parties have agreed that a clause defining the Contractor's liability and obligation to indemnify the Employer excludes loss or damage to the identified property which is required to be insured by the Employer against specified perils, one of which is "Fire". The identified property here was the existing structure of the public house. The judge held that the Contractor's liability for such damage was not excluded by the terms of the contract. The Contractor now appeals. The outcome depends ultimately on the correct construction of three principal clauses in the contract: clause 6.1.2; clause 6.3C.1 and clause 8.3, together with some ancillary clauses.
The relevant Contract Terms
The Contract identified the works to be undertaken in the first recital of the Contract. The works are:
"Refurbishment of an existing public house, The Thatchers, Fairwater Drive, Woodley, Reading, to create family inn including mechanical and electrical works".
As I have said, the Contract was in the standard Intermediate Form of Building Contract for works of simple content, known as IFC 84. It is one of many forms published by the Joint Contracts Tribunal for the Standard Form of Building Contract. The Contract incorporated standard amendments 1 to 7 and 9 and amendment 10, which amended Clause 6.1.2 itself and also Clause 8.3, which defines a "Joint Names Policy". The contract contained an Appendix, which gave information about the date of possession of the site by the Contractor, the rate for liquidated damages and the agreed limit of insurance cover for any one occurrence or series of occurrences arising out of one event. That was set at £2 million. The Appendix also provided that Clause 6.3C should apply to this contract.
The wordings of the relevant terms of the contract provide as follows:
(1) The Preliminaries. A general note at the start of these provides that the "Standard Preliminaries/General Terms" will form part of the Contract Documents. The Preliminaries then itemise the Conditions that are to form the contract terms. Clause 6.3C is identified. Also in relation to Clause 6.3.1 the Preliminaries stipulate that "the alternative which applies is: 6.3C (Existing structures; sole risk of Employer)".
(2) Item 260 of the Preliminaries: obligations of the Contractor in relation to fire etc
"The Contractor must take all necessary precautions to avoid the outbreak of fire and prevent personal injury, death and damage to work or other property from fire, particularly in work involving the use of naked flames. Before any works of maintenance, adaptation or extension to existing buildings or services are carried out or connections to services within existing buildings are made, the Contractor must discuss his proposals with the Contract Administrator to ensure that the extent of any fire hazards in the Works are known fully to both the Contractor and the Employer. The Contractor must comply with the Joint Code of Practice "Fire Prevention on Construction Sites" 1992 published by BEC. The Contractor must drawn [sic] the attention of all his workmen and those of Sub-Contractors to the dangers involved in the careless disposal of matches, cigarettes, tobacco ash etc. Smoking must not be permitted in ceiling spaces or crawlways…"
(3) Clause 1 of IFC 84: general obligations of the Contractor.
"The Contractor shall carry out and complete the Works in a proper and workmanlike manner and in accordance with the Contract Documents identified in the 2nd recital: provided that where and to the extent that approval of the quality of materials or of the standards of workmanship is a matter for the opinion of the Architect/the Contract Administrator such quality and standards shall be to the reasonable satisfaction of the Architect/the Contract Administrator."
(4) Clause 6.1.2 of IFC 84: Contractor's liability and obligation to indemnify in respect of certain loss and damage
"6.1.2 The Contractor shall be liable for, and shall indemnify the Employer against, any expense, liability, loss, claim or proceedings in respect of any loss, injury or damage whatsoever to any property real or personal in so far as such loss, injury or damage arises out of or in the course of or by reason of the carrying out of the Works and to the extent that the same is due to any negligence, breach of statutory duty, omission or default of the Contractor, his servants or agents or of any person employed upon or engaged upon or in connection with the Works or any part thereof, his servants or agents or of any other person who may properly be on the site upon or in connection with the Works or any part thereof, his servants or agents, other than the Employer or any person employed, engaged or authorised by him or by any local authority or statutory undertaker executing work solely in pursuance of its statutory rights or obligations. This liability and indemnity is subject to clause 6.1.3 and, where clause 6.3C.1 is applicable, excludes loss or damage to any property required to be insured thereunder caused by a Specified Peril".
(5) Clause 6.1.3 of IFC 84: definitions of "property real or personal" in Clause 6.1.2
"6.1.3 The reference in clause 6.1.2 to "property real or personal" does not include the Works, work executed and/or Site Materials up to and including the date of issue of the certificate of Practical Completion or up to and including the date of determination of the employment of the Contractor…..
(6) Clause 6.3.2 of IFC 84: further definitions
"6.3.2 In clauses 6.3A, 6.3B, 6.3C and, so far as relevant, in other clauses of the Conditions the following phrases shall have the meaning given below.
"Joint Names Policy" means a policy of insurance which includes the Employer and the Contractor as the insured and under which the insurers have no right of recourse against any person named as an insured, or, pursuant to clause 6.3.3 recognised as an insured thereunder".
(7) Clause 6.3C.1 of IFC 84: obligation of Employer to take out and maintain insurance
"6.3C.1 The Employer shall take out and maintain a Joint Names Policy in respect of the existing structures together with the contents thereof owned by him or for which he is responsible, for the full cost of reinstatement, repair or replacement of loss or damage due to one or more of the Specified Perils up to and including the date of issue of the certificate of Practical Completion or up to and including the date of the determination of the employment of the Contractor… The Contractor, for himself and for all sub-contractors referred to in clause 3.3 who are, pursuant to clause 6.3.3, recognised as an insured under the Joint Names Policy referred to in clause 6.3C.1 or clause 6.3C.3, shall authorise the insurers to pay all monies from such insurance in respect loss or damage to the Employer.
(8) Clause 8.3 of IFC 84: definition of "Specified Perils" for the purposes of Clause 6.3C1 of the IFC 84
"8.3 Unless the context otherwise requires or the Articles or the Conditions or an item or entry in the Appendix specifically otherwise provides, the following words and phrases in the Articles of Agreement, the Conditions, the Supplemental Conditions and the Appendix shall...
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