Sky UK Ltd v Riverstone Managing Agency Ltd
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 22 May 2023 |
| Neutral Citation | [2023] EWHC 1207 (Comm) |
| Docket Number | Case Nos: CL-2020-705 and CL-2021-536 |
| Court | King's Bench Division (Commercial Court) |
[2023] EWHC 1207 (Comm)
HIS HONOUR JUDGE Pelling KC
SITTING AS A JUDGE OF THE HIGH COURT
Case Nos: CL-2020-705 and CL-2021-536
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Anneliese Day KC, Crispin Winser KC and Simon Kerr (instructed by Herbert Smith Freehills LLP) for the Claimant in the 705 Claim
Paul Reed KC, Ebony Alleyne and James Shaw (instructed by Clyde & Co LLP) for the Claimant in the 536 Claim
Andrew Rigney KC, Simon Goldstone and Patrick Maxwell (instructed by DAC Beachcroft LLP) for the Defendants
Hearing dates: 16, 17, 18, 19. 23, 24, 25, 26, 30 and 31 January, 1, 2, 6, 7, 8, and 9 February 2023 (Evidence), 15 and 16 February 2023 (Closing oral submissions) and 23 February, 9 March and 19 May 2023 (Additional written submissions).
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.
HIS HONOUR JUDGE Pelling KC SITTING AS A JUDGE OF THE HIGH COURT.
HH Judge Pelling KC:
Introduction
This is the trial of claims by Sky UK Limited (“Sky”) and Mace Limited (“Mace”) against the underwriters of a syndicated construction all risks (“CAR”) policy (“Policy”) in relation to loss and damage allegedly suffered as the result of what is now the widespread failure of the roof of Sky's global headquarters building, known as “Sky Central”, which is located on the Sky Campus in Hounslow in West London. There are disputes between the parties concerning the scope and effect of the Policy, as to the technical reasons for the failure of the roof, the scope and cost of the work necessary to remedy the failure and the date at, or date range within, which that is to be assessed.
In reality, although most of the trial and all of the evidence has been taken up with the causes of failure of the Sky Central roof, what remedial work needs (or needed) to be carried out for any damage to which the Policy responds and the quantum associated with that work, in reality the determination of this dispute turns principally on the true meaning and effect of the Policy. In retrospect at least, it is unfortunate that these issues were not considered by the parties to be appropriate for preliminary determination since it is likely that such a determination would have been completed in no more than 3–4 days and reduced significantly the scope of the trial relating to technical cause and effect, remedy and remedial scheme cost and may even have enabled these issues to be resolved by settlement. It is equally unfortunate that the liability and causation issues were not separated for trial from the quantum issues since unless I conclude that one or other remedial scheme ought reasonably to be adopted in its entirety, quantum cannot be resolved, although the applicable principles can be.
Sky Central has a total floor area of about 41,000 square metres set out on three floors and is the hub of Sky's business activity. Between 3500 and 4000 Sky employees are based in the building, which houses Sky News, Sky's Consumer Services, Legal, Finance and Technology Groups, together with Sky's technical support and one of its key datacentres. It consists of open plan office space, a major events space, an innovation space, a cinema, meeting centre suite, multiple catering outlets, a high-volume catering kitchen, a Waitrose convenience store and a glass-walled news studio in the atrium, suspended between the first floor and mezzanine. The large number of employees who work in the building and its central importance to Sky's business activities are reasons why it contends that its remedial scheme is the one that should be adopted, rather than that proposed by Mace, because its scheme will take less time to complete, will be less disruptive as well as costing less, although (as is common ground) in material respects it does not involve like for like replacement or repair of the defective parts of the roof structure.
Sky Central's roof (“Roof”) covers an area of about 16,000 square metres and is said to be the largest timber flat roof in Europe. The aerial view of Sky Central reproduced below shows the roof with the south-western end at the upper left side and the northeastern end at lower right side.
The Roof consists of a series of glue laminated timber beams (known as “Glulams”) on which have been placed a total of 472 cassettes, each located on a north-western / south-eastern axis. Each cassette measures 10.5 metres in length, 3 metres in breadth and 45 cm in depth. Each weighs about 3.5 metric tons and consists broadly of a softwood timber frame with a base deck made of Oriented Strand Board 3 (“OSB”), which is 10 mm thick and an upper deck made of OSB 4, which is 22 mm thick. Most of the cassettes have a lightwell allowing natural light to enter the building. The lightwells are the oblong shapes appearing outlined in white in the photograph reproduced above. The underside of the cassettes comprises acoustic insulation and a perforated metal liner.
Each cassette contains a layer of material known as the vapour control layer (“VCL”) located below the lower OSB deck. The Roof is a “cold” roof meaning that the upper surface of the cassettes is exposed to the atmosphere. In consequence, but for the VCL, warm moist air rising within the building would come into contact with the cold roof resulting in the formation of condensation leading to the growth of mould. The VCL prevents this from happening. Each of the cells within the cassette is filled with mineral wool insulation. The cassettes are referred to in these proceedings collectively as the “secondary roof structure”.
The secondary roof structure is shown as built on the plan below, which is oriented in the same way as the photograph above with the south-western end at the left side and the north-eastern end at right side.
The secondary roof structure consists of rows of cassettes placed side by side, each joined at its apex end to another cassette. This link is at Rows B, D, F, H and K in the plan above. The roof is drained by a series of valley and parapet gutters. The valley gutters are at rows C, E, G and J on the plan and run on a northeast-southwest axis along the length of the roof between rows 1–19. The parapet gutters run on a similar axis at Rows A 1–19 and L 1–19. The lower end of each cassette forms an integral part of the valley or parapet gutter concerned. The as built location of the valley and parapet gutters are shown in more detail on the photograph below. The photograph shows the section of the roof to the left of the red line that appears on the plan above.
The gutters are drained using a siphonic drainage system. That system requires water to pool in the gutters in order to enable the syphon to form in the drainpipes thereby allowing large quantities of rainwater to drain away at speed through a relatively small number of small diameter drain pipes, located within the building. Once the cassettes had been placed on the Glulam beams, the gutters were designed to be made permanently weatherproof by coating them with a single Derbigum membrane, which was attached to the cassette surfaces by heating the surface of the membrane. The drawings below show typical cassettes. The drawing immediately below shows a cassette designed to form an integral part of one of the valley gutters. The left side drawing shows the typical internal layout of such a cassette and the right side drawing is as the cassette would appear after the membrane has been completed.
The drawing below represents a typical cassette without a rooflight that was designed to drain to one of the perimeter gutters.
The drawings show most of the constituent parts of the cassettes to which it will be necessary to refer in this judgment. As will be apparent from the drawings above, the first and lowest compartment is the gutter, shown at the bottom of each drawing, with each subsequent compartment (known as eaves) moving upwards towards the apex of the cassette, shown at the top of each drawing. As will be apparent from this structure, a gutter cannot operate as such until a complete row of cassettes has been completed and linked to the siphonic drainage system.
Sky Central was constructed in 2014–2015 by Mace under a JCT Design and Build Contract dated 17 March 2014 (“construction contract”). It will be necessary to refer to that contract in more detail below because it is common ground between the parties that it is the sole factual matrix relevant to the true construction of the Policy and for the purpose of ascertaining the intention of the parties in entering into the Policy.
Mace sub-contracted the design, supply and construction of the Sky Central roof to Prater Limited (“Prater”) under an amended JCT Design and Build Sub-Contract dated 21 August 2015. Prater in turn sub-contracted the manufacture, supply and installation of the cassette system within the roof structure to B & K Structures Limited (“BKS”). BKS in turn sub-contracted the manufacture and supply of the cassettes to Rubner Holzbau GmbH (“Rubner”). Following installation of the cassettes, it was necessary as I have explained to permanently seal the roof externally using a waterproof membrane. The...
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