Civil Engineering Reference
In-Depth Information
The factory was occupied by Reeds Corrugated Cases Ltd, who make corrugated cardboard.
The factory and its site are owned by a statutory corporation called English Industrial Estates
Corporation. The corporation let it on lease to Reeds.
In 1969 Reeds wanted to extend the factory greatly. It was to be three times as large as before.
The Corporation agreed to make the extension and to let the whole to Reeds on a new lease.
But Reeds wanted to continue making their corrugated cardboard all the time whilst the
extension work was being done. In order to make the cardboard they intended to install a
great new machine. It was to be fed with reels of paper weighing over a ton each. The machine
could eat up these reels at such a rate that Reeds needed storage space for hundreds of these
big reels of paper.
On 17 December 1968, George Wimpey & Co Ltd, the big contractors, put in a tender. They
offered to build the extension for £687,860. In making the tender they had before them the
form of agreement, the RIBA conditions, and the bills of quantities. They agreed that, if the
tender was accepted, they would enter into a formal contract on those terms. Their tender was
accepted.
On 7 February 1969, the Corporation and Wimpeys duly entered into articles of agreement.
It was on the standard RIBA form and incorporated the bills of quantities. The most important
provision for present purposes was clause 20A(1) of the RIBA form. It provided that the
contractors, Wimpeys, should insure the works against fire and other perils until they were
practically completed. Wimpeys had a floating policy which covered this.
In 1969 Wimpeys started on the work. By January 1970 they had done a great deal of it.
Reeds had installed their great new machine and started producing corrugated cardboard.
They had stored over 1500 big reels of paper in the new reel warehouse. But the contractors
had not finished their work when on 18 January 1970, there was this disastrous fire. Much
of the new extension was gutted. The loss is said to be £250,000. On whom should this loss
fall? The Corporation say that the works had not been completed: that it was the duty of
Wimpeys to insure: and that the loss should fall on them or their insurance company.
But Wimpeys (or rather, I expect, their insurers) said that the Corporation, through Reeds,
had taken possession of several parts of the works: and that, under clause 16 of the RIBA
form, the risk had passed from Wimpeys to the Corporation so far as those parts were
concerned.
To decide the case, I must set out some parts of the RIBA form, and also of the bills of
quantities.
1. The RIBA form
The most material clauses were as follows:
20A(1) The Contractor shall . . . insure against loss and damage by fire . . . all work executed
and all unfixed materials and goods . . . and shall keep such work, material and
goods so insured until Practical Completion of the Works, and until the employer
shall authorise in writing the cancellation of such insurance.
16
If at any time . . . before Practical Completion of the Works, the Employer, with
the consent of the Contractor, shall take possession of any part or parts of the
same (any such part being hereinafter in this clause referred to as “the relevant
part”) then notwithstanding anything expressed or implied elsewhere in this
Contract . . .
