(Queens Bench Division - Judge Mackie QC - 20/06/2013)
On the correct interpretation of a building services combined contractors' liability insurance policy, the claimant Insurer was not entitled to declarations that it was not liable to indemnify the defendant ground works contractor for any liability to which it might be subject arising out of the collapse of a tower crane at a construction site.
The claimant insurer (C) sought a declaration that it was not liable to the defendant ground works contractor (D) under a building services combined contractors' liability insurance policy, and D counterclaimed for declarations that it was entitled to be indemnified under the policy and to its defence costs.
D had agreed to supply concrete and drainage works to the Main Contractor at a site in Liverpool, including the installation of pile caps or crane bases for the tower cranes to be erected on site to facilitate the building work. The pile caps were designed by structural engineers. Creating the pile caps involved drilling four holes into each of four piles. Dowels were then fixed in the holes with epoxy resin. The pile cap was then formed by pouring concrete into a shuttered area on top of the piles and dowels. A tower crane erected on the pile cap had collapsed due to failure of the connection between the pile cap and the piles. The pile cap had come away from the piles in one piece together with the dowels which had pulled out of the holes. There was expert evidence that under maximum load the pile connection would have failed as a result of overloading regardless of any workmanship issues on D's part. However, D had been joined in an action brought by the injured crane driver against the Main Contractor and the structural engineers. C accepted that it was unlikely that D would be held liable for the collapse, given that the engineers' design for the pile cap and the connections was seriously deficient. However, it was alleged in the action that the ability of the connection actually installed by D to resist tensile pull-out load was compromised by inadequacy in D's work. C sought a declaration that the pile cap and/or its constituent parts were a "product" and any liability would be caused by that product failing to fulfil its intended function; that it was not liable generally and if there was any liability it was partly excluded by the foundation clause as "loss of or damage to any superstructure arising from the failure of the Assured's foundation works to perform their intended function". HELD: (1) The structural engineers had designed a structural link in reinforced concrete which D contracted to effect between the foundation anchors of the crane and the four piles installed by others. D's contract was for work and materials rather than for the supply of a product. The base was created by pouring concrete in situ after which it came into existence as a lump of concrete. That was not a product for the purposes of the policy. It was not one of D's range of products; it could not be bought; it was created at the site not at a factory. The pile cap had no component parts. The dowels were perhaps component parts of the piles once placed and secured within them. They were not part of a wider product. As products on their own they were not D's. Likewise the resin or bonding. The pile cap or crane base, the connection and the piles were three different things not one product. None of the items individually or together was a product (see paras 39-42 of judgment). (2) The intended purpose of the base was to transfer the loads on the crane down into the piles. On the evidence, it achieved that purpose. It was the connection between the dowels and the piles which failed. If the conclusion that there was no product was wrong then, whatever it was, it neither failed to fulfil its intended function nor caused the loss and damage. C seemed to have formed the view that once a project has been handed over, public liability cover ended and a claim was product liability or nothing, but that was not what the policy provided, perhaps rightly, because otherwise there would be a gap in the cover which reasonable business people would expect to have taken out (paras 44-47). (3) Liability for the crane superstructure was not excluded by the foundation clause. The clause was concerned with construction works. Superstructure in its construction sense connoted a building above the ground. Foundations were permanent features which supported the building. Those expressions, particularly superstructure, did not apply to a temporary crane (paras 48-52). (4) C's application for a declaration was refused because the underlying claims in the action would not succeed. The Court was in principle prepared to grant a declaration to D as to its rights under the policy, but the terms would need careful consideration given the limitations of the litigation. The issue of defence costs did not arise given the conclusion that, on the evidence available, D was covered by the policy (paras 53-55). Judgment for defendant