Horbury Building Systems Ltd v Hampden Insurance NV
| Jurisdiction | England & Wales |
| Judge | Lord Justice Keene,Lord Justice Mance,Lord Justice Peter Gibson |
| Judgment Date | 07 April 2004 |
| Neutral Citation | [2004] EWCA Civ 418 |
| Docket Number | Case No: 2003/2093A3 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 April 2004 |
[2004] EWCA Civ 418
Lord Justice Peter Gibson
Lord Justice Mance
Lord Justice Keene
Case No: 2003/2093A3
2002 Folio 853
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISON
COMMERCIAL COURT
Mr IAN GLICK QC
(sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Nicholas Davidson QC (instructed by DLA) for the Appellant
Graham Charkham (instructed by Davies Arnold Cooper, London EC4Y 8DD) for the Respondent
This is a claimant's appeal against a decision of Mr Ian Glick QC, sitting as a Deputy High Court Judge in the Commercial Court, that decision being dated 9 September 2003.
The claimant had sought a number of declarations as to the meaning and effect of an All Risks Insurance Policy issued by the defendant. That policy was in force from 11 June 2001 until 16 May 200Despite its name, it was in fact a policy of liability insurance, providing cover for various forms of legal liability to third persons under the headings of Public Liability, Products Liability and Employers' Liability. Under this policy the defendant agreed to indemnify the claimant against its liability at law for damages, as well as claimants' costs and expenses, in certain circumstances. I shall return to the detailed terms of the policy in due course.
The proceedings arose out of the collapse of a ceiling in a cinema complex in Manchester. The complex had been built for AMC Europe SA or an associated company or companies ("AMC") and it was to be operated by AMC. As eventually constructed, it contained 16 cinema auditoria. The main contractors for the building work were Galliford Northern or a company in the Galliford group ("Galliford"). The claimant was sub-contracted to Galliford to provide partition walls and ceilings to all auditoria, public areas and back of house areas at the complex. The ceilings in the cinema auditoria were to be suspended ones, as were most of the ceilings to the foyer and box office, though these were of a different construction from those in the cinema auditoria. In the latter, the ceilings were to be suspended from the roof structure by hangers. The complex opened on about 19 December 2001. However, during the early hours of 21 December 2001, when the complex was empty, the ceiling of auditorium 6 collapsed. The reason for the collapse was not at first known. AMC immediately closed the whole complex; and it stayed closed until about 25 January 2002. It was common ground between the parties to these proceedings that the damage caused by the collapse of the ceiling did not physically prevent the use of the rest of the complex. Access to the rest of the complex was not obstructed nor did the collapse of the ceiling in auditorium 6 cause physical damage elsewhere in the complex.
On 17 June 2002 solicitors acting for AMC wrote to Galliford, indicating its intention to claim for loss of revenue, the cost of physical repair, and additional marketing and advertising costs. The loss of revenue specified related to the whole complex. Galliford by that date had already written to the claimant to say that it intended to pass on to it claims made by AMC. On 22 August 2002 the claimant issued the claim form against the defendant, because the latter had indicated that it did not accept that the policy covered the extent of the losses set out in correspondence.
It is to be observed that at the time of the hearing in the Commercial Court no proceedings had begun against the claimant by either AMC or Galliford. That remains the present position, although we were told that a claim by AMC against Galliford has been settled. Far less has the extent or the basis of liability of the claimant been established or the detailed factual basis of any such liability been found or agreed. Thus it was that the Deputy Judge was asked by the claimant to assume a number of facts beyond those which were in effect agreed.
These included the following:
'6. The cinema premises obtained from Manchester City Council a licence under the Cinemas Act 1985. The licensing system allowed the Council time to evaluate the premises before deciding whether to grant the licence. At all material times the practice of the Council was to obtain reports from the City Architects, the Building Control Department, the Environmental Health Department, and the Police and Fire authorities, before deciding whether to grant the licence.
7. The licence contained the following (among other) provisions:
'1. The licensed premises shall not be open for the purposes for which this Licence is granted on any occasion when the Licensing Authority may signify their desire in writing to the occupier or other person having at the time the care and management of such premises that the same should not be open.
33. All parts of the premises and fittings and apparatus therein, including the seating, door fastenings and notices, and the lighting, electrical heating, ventilating, mechanical and other installations, shall be maintained at all times in good order and condition."
8. The licence was subject to the proviso that
'… subject to the provisions of the said regulations", [The Cinematographic (Safety) Regulations 1955 (as amended)] "made by the Secretary of State, such licence shall be liable to be suspended by the said Council in the event of any failure on the part of the licensee to carry out the said Regulations, or of the building becoming otherwise, unsafe, or of any material alteration being made in the building or enclosure without consent of the said Council."
…
11. Some of Horbury's work had been carried out unskilfully and not in conformity with contract, in that:
11.1 In the following locations the wrong washers had been used throughout or effectively throughout Horbury's work:
Auditorium 6
Auditorium 10
Auditorium 12
Auditorium 15
11.2 In Auditorium 4 approximately half the hangers had the wrong washers and half had the correct ones.
…
16. AMC's closure of the complex was a voluntary decision. AMC provided assurances to Manchester City Council that the complex would not be re-opened until such time as the problem had been fully investigated and a programme of remedial works implemented, satisfactory to Manchester City Council.
18. The City Council's officers considered the situation so dangerous that they would not allow Council staff onto the premises until satisfied with temporary protective measures.
19. The cause of the collapse of the ceiling of auditorium 6 was identified as being and was the use of the wrong washers.
20. The effect of the use of the wrong washers was that individual hangers disconnected. Each disconnection (1) removed or significantly reduced the support which that hanger had provided to the suspended ceilings (2) increased the load on adjacent hangers and (3) removed or significantly reduced the support which that hanger had provided for the ductwork.
21. All other auditoria were checked. Of these, 11 were discovered to be virtually free from defect. However, it was discovered that the wrong washers had been used almost throughout auditorium 10, 12 and 15, and in about half of auditorium 4. In each of these auditoria some individual hangers had disconnected.
22. Had remedial measures not been taken it is probable that some or all of the ceilings in auditoria 4, 10, 12 and 15 would have collapsed in due course either in part or in the same way as that of auditorium 6."
Two alternative bases were then put before the judge by the claimant as assumptions. These were:
'23 Alternative A
No damage had occurred to any part of auditoria 4, 10, 12 and 15 (as distinct from damage to the complex as a whole).
Alternative B
One or more or all of those auditoria were damaged in whole or in part in that the electrical ductwork and therefore the wiring which it contained was no longer securely fixed in position within the meaning of regulation 22(2) of the Cinematographic Act (Safety) Regulations 1955. The fixing was insecure because of the loss of support from some hangers and the risk of disconnection of others."
The assumed facts then continued:
'24. Auditorium 6 was cleared, reconstructed and refurbished.
25. The suspension systems in auditoria 4, 10, 12 and 15 were reconnected.
26. When but only when satisfied that the licensing officers were themselves satisfied with the state of affairs did AMC re-open the complex to the public."
The policy of insurance contains a Definitions section. Amongst the definitions are the following:
'7. Products
7.1 Any goods or products (including containers labelling instructions or advice provided therewith) sold supplied erected repaired altered treated or installed or work carried out by or on behalf of the Insured in the course of the Business from or in Great Britain Northern Ireland the Channel Islands and the Isle of Man.
8. Property
8.1. Material property."
The schedule to the policy defines "The Business" as including
"Dry lining, Partitioning and Suspended Ceiling Contractors and Fire Proofing and Plant Hirers."
The Products Liability section of the policy includes the following relevant terms:
'4. Insurance Cover
4.1 Indemnity
The Company will indemnify the Insured against liability at law for damages and claimants costs and expenses in respect of Injury to any person and loss of or damage to Property occurring within the Territorial Limits during the period of insurance and caused by any Products after they have ceased to be in the custody or under the control of the Insured.
…
Exceptions to Part B
5 The Company will...
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