The Rugby Football Union v Clark Smith Partnership Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eyre |
| Judgment Date | 29 April 2022 |
| Neutral Citation | [2022] EWHC 956 (TCC) |
| Docket Number | Case No: HT-2021-000075 |
| Year | 2022 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 956 (TCC)
Mr Justice Eyre
Case No: HT-2021-000075
Claim no: HT-2021-000101
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
7 Rolls Building, Fetter Lane,
London, EC4A 1NL
Paul Reed QC and Simon Kerry (instructed by Plexus Law) for the Claimant and the Part 8 Defendants
Michael Wheater and Catherine Piercy (instructed by Keoghs LLP) for the First Defendant
Karim Ghaly QC and Ruth Keating (instructed by Clyde & Co LLP) for the Second Defendant/Part 8 Claimant
Hearing dates: 21 st, 22 nd and 23 rd March 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HON. Mr Justice Eyre
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on 29 April 2022
The 2015 Rugby World Cup took place at the Twickenham stadium. In 2012 the Rugby Football Union (“the RFU”) was undertaking substantial works of demolition, construction, and upgrading (“the Project”) to prepare the stadium for the World Cup. The RFU engaged a number of contractors to perform the necessary works through a series of separate works packages or sub-projects.
The necessary works included the installation of High Voltage power cables in buried ductwork. The installation of the ductwork was to be undertaken pursuant to works package A07.1 and the pulling of the cables through the ductwork pursuant to works package A07.2. The current dispute is concerned with the former of those packages in respect of which the RFU engaged Clark Smith Partnership Ltd (“Clark Smith”) to design the ductwork and FM Conway Ltd (“Conway”) to install it. Neither of those was involved in the subsequent exercise of pulling the cables through the ductwork.
There were a number of pre-meetings and discussions between those acting for the RFU and for Conway the content of which I will return to below. On 19 th June 2012 the RFU sent Conway a letter (“the Letter of Intent”) the terms of which I will also consider below. Conway began to prepare to undertake the work then or shortly thereafter commencing on site in early July 2012. On about 17 th July 2012 the RFU entered an all-risks insurance policy (“the Policy”) which provided cover with effect from 16 th July 2012. Royal & Sun Alliance Plc (“RSA”) was the principal underwriter of the Policy. The operation and effect of the Policy are at the heart of the issues I have to consider. The Letter of Intent had envisaged that the RFU and Conway would enter into a contract adopting with amendments the terms of the JCT Standard Building Contract without Quantities 2011 (“the Contract”) and they did so on 19 th October 2012.
The RFU contends that there were defects in the ductwork which caused damage to the cables when they were pulled through it. It says that it has suffered loss in the sum of £4,440,909.45 made up of £3,334,405.26 being the cost of replacing the damaged cables and related sums and £1,106,504.19 as the cost of rectifying the ductwork itself. The RFU has been indemnified by RSA under the terms of the Policy in respect of the replacement and related costs of £3,334,405.26.
The RFU says that Clark Smith and Conway are liable for those losses. The former on the footing of defects in its design of the ductwork and the latter by reason of deficiencies in its workmanship. Those allegations are disputed by Clark Smith and Conway and will have to be resolved at trial.
There is also dispute as to the effect of the Policy. On 19 th March 2021 Conway commenced Part 8 proceedings against the RFU and RSA. In those proceedings it sought declarations to the effect that it was a co-insured with the RFU under the Policy; that it had the benefit of the cover under the Policy to the same extent as the RFU; that as a consequence the RFU could not claim against it in respect of those alleged losses which were covered by the Policy; and that RSA was not able to make a subrogated claim against it in respect of the sum of £3,334,405.26.
On 1 st March 2021 the RFU had issued a Part 7 Claim Form against Clark Smith and Conway. That was followed by amended Particulars of Claim asserting the breaches and claiming damages for the losses I have already mentioned.
Clark Smith accompanied its Defence denying breach with a Contribution Notice served on Conway. In that Notice Clark Smith sought a contribution under the Civil Liability (Contribution) Act 1978 (“the 1978 Act”) on the footing that it and Conway are liable to the RFU for the same damage. For its part Conway also served a Contribution Notice on Clark Smith. In its Defence as well as denying liability on the merits Conway repeated its contention that the losses for which the RFU had been indemnified by RSA were not recoverable from it. In addition it now contends that as it has no liability in respect of those losses to the RFU then Clark Smith is not entitled to seek contribution under the 1978 Act.
Conway's case was put thus at [95] – [101] and [109] of its Defence:
“95. During the tender phase in Spring 2012, Mr. Ian Higgs, then employed by RLF, acting on behalf of the RFU, told Mr. Brian Morris of FMC that the RFU would obtain a project insurance policy in respect of the upgrade works at the Twickenham Stadium, of which the A07.1 works formed part for the benefit of all involved in those upgrade works.
96. Conway authorised the RFU to procure project insurance for both itself and the RFU, on such terms as the RFU considered appropriate, provided that the cover was at least as comprehensive as necessitated by the intended contract terms.
97. In respect of paragraph 96 above, FMC will rely (without limitation) on the following facts and matters:
97.1 FMC made no allowance in its tender for insurance cover in respect of any loss or damage arising out of the A07.1 works.
97.2 FMC did not procure any insurance cover in respect of any loss or damage arising out of the A07.1 works.
97.3 FMC and the RFU continued to participate in the tender process and/or FMC commenced the A07.1 works on 16 July 2012 pursuant to the Letter of Intent and/or FMC continued with the A07.1 works.
98. Accordingly, FMC authorised the RFU to procure a project policy of insurance, and the RFU intended to do so, on the basis that, if FMC was awarded the contract for the A07.1 works, FMC would be jointly insured alongside the RFU.
99. At the pre-start meeting which took place on 4 July 2012 and was attended by representatives of Conway, the RFU and RLF (amongst others), it was again confirmed by or on behalf of the RFU that the RFU intended to and would be procuring a project policy for the benefit of Conway (as reflected at paragraph 2.4 of the minutes).
100. As explained further below, an insurance policy was procured by the RFU in respect of the upgrade works at the Twickenham Stadium, which made no distinction between the extent of insurance cover enjoyed by the RFU on the one hand and by FMC on the other hand.
101. FMC will rely on the facts and matters contained in paragraph 99 and 100 above in support of the fact that the RFU procured insurance cover for FMC on the same terms as the RFU
…
109. FMC has the benefit of insurance cover under the project policy on the same terms as the RFU because:
109.1 The RFU had the necessary authority to procure and did procure the project policy on the basis that FMC would be jointly insured alongside the RFU to the same extent as the RFU; and/or
109.2 The project policy and the JCT contract read together establish that FMC is jointly insured to the same extent as the RFU.”
The RFU served Replies to those Defences and it was in the light of those pleadings that HH Judge Kramer ordered the trial of the following preliminary issues:
First, “whether the insured losses said by the RFU and RSA to be in the sum of £3,334,405.26 are irrecoverable because RSA cannot exercise subrogation rights and/or because on a proper interpretation of the project policy and/or the project policy and the JCT contract the RFU and/or RSA are not entitled to claim the insured losses”.
Second, “if the answer to Question 1 is that the RFU cannot recover its insured losses from Conway, does this prevent CSP from claiming a contribution from Conway under the Civil Liability (Contribution) Act 1978 in respect of any liability CSP may have to the RFU in respect of the insured losses”.
This judgment follows the trial of those preliminary issues.
The Contractual Documents .
The Letter of Intent was dated 19 th June 2012. It referred back to Conway's tender and to the parties' “subsequent meetings, discussions and correspondence”. At [2] the letter said that the RFU intended to accept Conway's tender and to enter into a contract with Conway. It then stated:
“3. It is intended that the form of the Contract will be based upon the document produced by Forsters LLP incorporating the JCT Standard Building Contract Without Quantities 2011 (DOC ID: 3202342 6).”
At [4] the letter authorised and instructed Conway to engage in site mobilisation, set up and related works. The letter continued:
“5. Although the Contract has not yet been entered into, all the terms and conditions of the Contract will apply to any work carried out by you pursuant to the instructions contained in this letter.
…
“10. Within 7 days of the date of this letter and as a...
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