Tyco Fire v Rolls-Royce Motor Cars
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Keene,Master of the Rolls |
| Judgment Date | 02 April 2008 |
| Neutral Citation | [2008] EWCA Civ 286 |
| Docket Number | Case No: A1/2007/1629/QBENF |
| Court | Court of Appeal (Civil Division) |
| Date | 02 April 2008 |
[2008] EWCA Civ 286
Master of the Rolls
Lord Justice Rix and
Lord Justice Keene
Case No: A1/2007/1629/QBENF
TCC 127/067
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
HIS HONOUR JUDGE GILLILAND QC
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Antony Edwards-Stuart QC and Mr Digby Jess (instructed by Messrs Weightmans LLP) for the Respondent/Claimant
Mr David Thomas QC and Krista Lee (instructed by Messrs Shadbolt & Co LLP) for the Appellant/Defendant
Hearing dates : Monday 18th February 2008
The new owners of Rolls-Royce Motor Cars Limited (“Rolls-Royce”) have built a green-field-site new manufacturing plant near Goodwood in West Sussex. Tyco Fire & Integrated Solutions (UK) Ltd (“Tyco”) was one of the contractors at the site, providing fire protection services including a sprinkler system (the “Works”). It did so under a package contract dated 14 November 2002 (the “contract”) with Rolls-Royce. Unfortunately, one of the mains supply pipes burst and caused an escape of water (the “flood”), damaging both the Works and other parts of the plant. For present purposes it is assumed that that occurred by reason of Tyco's negligence. The issue which has arisen is whether Tyco is liable to Rolls-Royce with respect to the damage to “existing structures” other than to the Works. As for the damage to the Works, Tyco has repaired that and no issue arises. As for the damage to other parts of the development, Tyco says that, because the contract provided for joint named insurance under Rolls-Royce's employer's policy, it is relieved of liability for its negligence. The judge, HH Judge Gilliland QC, sitting as a deputy High Court Judge in the Technology and Construction Court, agreed with Tyco and entered judgment against Rolls-Royce in the sum of £433,428.08 (by way of repayment of sums paid after an adjudication in Rolls-Royce's favour). He granted Rolls-Royce permission to appeal.
The critical clause in the contract on which Tyco relies is clause 13.5, the opening words of which provide as follows:
“The Employer shall maintain, in the joint names of the Employer, the Construction Manager and others including, but not limited to, contractors, insurance of existing structures…against the risks covered by the Employer's insurance policy referred to in Schedule 2 (i.e. the Specified Perils) subject to the terms, conditions, exclusions and excesses (uninsured amounts) of the said policy.”
Rolls-Royce had not in fact taken out any insurance in the joint names of Tyco and itself, but it was common ground that the issue between the parties had to be resolved just as if it had. The Schedule 2 Specified Perils included “bursting or overflowing of water tanks, apparatus or pipes” and it is common ground for these purposes that the flood was caused by such Specified Perils. Tyco submits that it is axiomatic that one joint named insured cannot recover from another joint named insured in respect of the same loss.
The critical terms on which Rolls-Royce, on the other hand, rely are clauses 2.3, 3.3, 9 and 18:
“ 2. Contractor's Obligations
The Contractor shall: -
…
2.3 indemnify the Employer against any damage, expense, or loss whatsoever suffered by the Employer or incurred to any third party to the extent that the same arises out of or in connection with any breach of this Contract or any negligence or breach of statutory duty on the part of the Contractor or any sub-contractor or supplier of his or any tier.
3. Construction Manager's Instructions
…
3.3 Notwithstanding any other provision of this contract the Contractor shall no[t] be entitled to an increase in the Contract Price and/or to a change in the Completion Date to the extent that any Instruction for a Variation results from or is necessary in order to overcome the adverse effects of any lack of performance or error or omission or negligent act or default or breach of contract on the part of the Contractor or any supplier of his or any tier.
9. Early occupation of the Works.
The Employer may upon written notice from the Construction Manager to the Contractor take occupation of any part of the Works or any area within such part prior to practical completion of the Project in which event the Employer shall assume responsibility for risk in relation to such part or area within such part of the Works (notwithstanding Clause 13.1) and (except to the extent otherwise instructed by the Construction Manager) protection of the Works (notwithstanding Clause 13.2) and may at his discretion ensure early release to the Contractor of any unpaid balance of the Contract Sum provided that the Contractor shall and hereby agrees to give its Employer a full indemnity for latent defects appearing in the Works arising at any time following such occupation being taken.
18. Liability
The rights and liabilities conferred upon the Employer by this Deed are in addition to any other rights and remedies it may have against the Contractor including without prejudice to the generality of the foregoing any remedies in negligence.”
The relevance of clause 9 was that Rolls-Royce had taken early occupation of Tyco's Works where the burst pipe occurred. Rolls-Royce submits that clause 13.5 did not expressly, and therefore could not impliedly, exclude liability which otherwise fell on Tyco under the contract.
The background facts
The escape of water had occurred on 30 July 2003 in one of the buildings on the site known as B50. Rolls-Royce had already taken early occupation of the relevant part of B50 prior to the flood, but Tyco does not suggest that the provisions about risk in clause 9 modify its responsibilities. Following the flood, Tyco repaired and made good the damage to the sprinkler system and to its Works and no issue arises for present purposes about that. This action concerns only the liability if any of Tyco for other loss and damage which Rolls-Royce claims to have suffered as a result of the flood to parts of the development not forming part of Tyco's Works, and also to goods, stock and contents and in respect of clean-up costs (Rolls-Royce's “loss and damage”).
Practical completion of Tyco's Works occurred on 26 November 2003, and practical completion of the whole assembly plant occurred on 31 May 2004.
On 1 March 2005 Rolls-Royce referred its claims for its loss and damage to adjudication under Part II of the Housing Grants, Construction and Regeneration Act 1996, and by a decision dated 7 April 2005 the adjudicator directed Tyco to pay £393,562.14 plus interest of £39,765.95 and costs of £100 to Rolls-Royce. It was the total of those sums which the judge ordered Rolls-Royce to repay to Tyco in these proceedings. So, the financial risk and consequences of the flood in the relevant respect have at present fallen on Rolls-Royce. An adjudication under the 1996 Act, unless accepted by the parties as determinative, is without prejudice to ultimate liability as finally determined by legal proceedings, and on this basis acts only as a speedy means to adjust cash flow between disputing parties to a construction contract.
On 15 December 2006 Tyco issued its claim form to recover the sums paid to Rolls-Royce pursuant to the adjudication. The claim form stated that for the purposes of these proceedings but not otherwise Tyco accepted that the flood was caused by its negligence in failing properly to connect or fasten a joint in the main supply pipe, and that it had in turn caused Rolls-Royce its loss and damage. It claimed a declaration “in accordance with the judgment of the House of Lords in Co-operative Retail Services Limited v. Taylor Young Partnership Limited” that Rolls-Royce was not entitled to recover any compensation from it in respect of the loss and damage caused by the flood, and repayment of what it had paid to Rolls-Royce pursuant to the adjudication.
Co-operative Retail Services Limited v. Taylor Young Partnership Limited (“CRS”)
It is not, I think, disputed that, subject to clause 13.5 and CRS [2002] UKHL 17, [2002] 1 WLR 1419, Tyco would be liable to Rolls-Royce for the negligence which is acknowledged for the purpose of these proceedings. It is accepted by both parties that ultimately each dispute under a contract has to be decided on that contract's own terms: but, as expressed in Tyco's claim form itself, it founds itself on the analysis to be found in CRS, and on this appeal Mr Antony Edwards-Stuart QC submits that CRS sets out a rule in relation to joint names insurance which at one time he described as a “rule of law” or overriding rule, and which even to the end of his submissions he was saying was at least a rule of construction which could only be escaped by the plainest of contractual language. So, although it might make sense to begin with an analysis of the contract between the parties in this case, as the judge perfectly properly did, I think that it is perhaps more helpful, at any rate against the background of the clauses already cited above and the prima facie position in which a negligent contractor would stand, subject to clause 13.5, to begin with CRS itself and the doctrine of joint names insurance.
CRS concerned the construction of new office premises. Before practical completion there was a fire on site. The contractor reinstated the works in accordance with its contract, using the funds provided by a joint...
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