Sun Alliance (Bahamas) Ltd and another v Scandi Enterprises Ltd (Bahamas)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Sumption |
| Judgment Date | 08 May 2017 |
| Neutral Citation | [2017] UKPC 10 |
| Docket Number | Appeal No 0092 of 2015 |
| Court | Privy Council |
| Date | 08 May 2017 |
[2017] UKPC 10
Privy Council
From the Court of Appeal of the Commonwealth of the Bahamas
Lord Mance
Lord Kerr
Lord Clarke
Lord Sumption
Lord Toulson
Appeal No 0092 of 2015
Appellants
Gail Lockhart Charles
Rhyan Elliott
(Instructed by Harcus Sinclair)
Respondent
(Not participating)
Heard on 10 November 2016
In about 1990 the Respondent, Scandi Enterprises, acquired a dilapidated two-storey building with 12 apartments on King's Road, Freeport, Grand Bahama with a view to improving and re-letting it. The planned improvements involved putting the building and the individual units into good repair, refurbishing the interiors and adding an extra storey. In July 1992, Mr Risse, a Vice-President and part-owner of the company, approached Mr Donald Ward of Insurance Management (Bahamas) Ltd which acted as local agents of the Appellant insurers. Mr Ward's evidence, which the trial judge accepted, was that Mr Risse wanted to insure the building against the usual physical risks, but Mr Ward refused to insure the building because it was by then unoccupied. Instead, he suggested that Scandi should insure the proposed works under a Contractors All Risks ("CAR") policy. Mr Risse accepted that advice and a CAR policy was duly issued to Scandi on 31 July 1992 for a period of a year from 27 July 1992 for an insured value of B$700,000. On 3 December 1992, the building was extensively damaged by fire.
In February 1997, more than four years after the fire, this action was begun in support of a claim for B$700,000 on the policy. The basis of the claim was that the policy insured Scandi against all risks of loss or damage to the building, that the policy was a valued policy at B$700,000 and that the building had become a total loss. There are two subsisting issues before the Board. The first is whether the building (as opposed to the works) was insured. The trial judge (Evans J) held that it was not. The second issue was whether the policy was a valued policy. The judge held that it was not, so that the insured were required to prove their actual loss. Since they had not sought to do so, the claim would have failed even if the buildings had been insured. The Court of Appeal (John, Conteh and Adderley JJA) reversed him on both points.
The policy is unusual in one respect. Scandi was the sole insured, there being in effect no contractor since Scandi proposed to carry out the works by employing small firms and individual workmen under their direct control. That apart, the terms are characteristic of standard forms of CAR policy. The "contract" is described as "Renovations to a 12 unit apartment building constructed of concrete blocks with cement tile roof." The property insured was then defined as follows:
" Property Insured
Item 1
The Contract Works (which term shall include Temporary Works) and all materials belonging to the insured or for which they are responsible, all situate on the Contract Site in connection with the performance of the contract, but excluding Constructional Plant Equipment and Temporary Buildings.
Item 2
Constructional Plant Equipment and Temporary Buildings (all in accordance with an inventory submitted to and agreed with the Insurers) belonging to the Insured or for which they are responsible, whilst on the Contract Site in connection with the performance of the Contract.
Item 3
Costs and Expenses necessarily incurred by the Insured with the consent of the Insurers in removing debris of the portion or portions of the Property Insured under Items 1 and 2 above destroyed or damaged by any peril hereby insured against."
The "sum insured" was expressed to be B$700,000, all of it attributable to Item 1. Against Items 2 and 3, the sum insured was stated to be "NIL". Exception 9 excluded:
"9. Loss of or damage to the permanent works or any part thereof
a) which has been taken into use or occupation by the employer;
b) in respect of which a Certificate of Completion has been issued unless such loss or damage be occasioned
i) during the period of maintenance arising from a cause occurring prior to the commencement of the Period of Maintenance;
ii) by the contractor in the course of any operations carried out by him for the purpose of complying with his obligations under the Maintenance Clause(s) of the Contract."
Finally, it is necessary to draw attention to clause 5 of the general conditions:
"5. On the happening of any loss or damage, the Insured shall forthwith give notice thereof to the Insurers and shall as soon as possible thereafter deliver to the Insurers;
a) a claim in writing for the loss and damage, setting forth all the several articles or items of property damaged or destroyed and of the amount of the loss and damage thereto respectively not including profit of any kind;"
The property insured under this policy was the "Contract...
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