Civil Engineering Reference
In-Depth Information
insured under the policy. It must also provide that the insurers can have no right of recourse
against any person named as an assured. Clause 6.3C1 also provides that if there is a claim
under the 'Joint Names Policy' then the contractor must authorise the insurer to pay all the
insurance proceeds to the employer.
24. The 'Specified Perils' include 'fire'. As a matter of fact a fire can, of course, be caused by
accident, inadvertence, negligence and a deliberate act of the assured or of third parties. So
can some of the other perils identified as specified perils, such as 'bursting of water tanks'. But
yet other specified perils, such as 'earthquake' or 'lightning', can have no element of human
act or omission in their cause or creation.
The link between clause 6.1.2; clause 6.3C1 and the 'Specified Perils' in cases when clause
6.3C1 applies
25. In my view clauses 6.1.2; 6.3C1 and the definition of 'Specified Perils' and 'Joint Names
Policy' are intended together to define the whole scope of the liability of the contractor to the
employers for negligent acts and defaults when clause 6.3C1 applies. None of the clauses can
be looked at in isolation. So the extent of the exclusion of the liability of the contractor and
its obligation to indemnify the employer must depend on what the parties intended should
be insured under the joint names policy. That depends in turn on what the parties intended
should be included within the definitions of the 'Specified Perils' that are identified.
What is meant by 'Fire' in the 'Specified Perils' clause?
26. The clause listing the 'Specified Perils' identifies the particular perils that are to be covered
by an insurance policy that has to be taken out by the employer. To my mind the parties must
have intended that the words or phrases identified as specified perils be given the meaning
that is normally given to them when they are used to identify a peril covered by an insurance
policy. If the parties had intended otherwise, then I think that they would have said so. For
nearly two hundred years when the word 'fire' has been used in an insurance policy to describe
one of the perils covered by the policy, the meaning of the word 'fire' has been clear. Unless
qualified by other words or a warranty in the policy, the peril 'fire' covers loss proximately
caused by a fire, whether the fire was started by accident, was caused by the negligence of the
assured or any third party or was caused by the deliberate act of a third party. (See e.g.
Busk
v.
Royal Exchange Assurance Co
(1818) 2 B & Ald 73;
Shaw
v.
Robberds
(1837) 6 Ad & El 75;
Mark Rowlands Ltd
v.
Berni Inns Ltd
[1985] 3 All ER 473 at 484, [1986] QB 211 at 232, per
Kerr LJ and [1985] 3 All ER 473 at 486, [1986] QB 211 at 232 at 234, per Glidewell LJ.) If 'fire'
is an insured peril in the policy, then a loss that is proximately caused by 'fire' is covered by
the policy. It is irrelevant that the fire was itself caused by negligence or even the deliberate
act of a third party. But, in the absence of express words in the policy, the parties would not
have intended to cover losses by fire when that fire was caused by the deliberate act of the
insured itself.
27. Under clause 6.3C1 of the contract, the employer had a contractual obligation to take
out and maintain a joint names policy in respect of the existing structures which would pay
for the full cost of reinstatement, repair or replacement of loss or damage due to the specified
peril (amongst others) of fire. If the employer had fulfilled that obligation, then in my view
that policy would have paid on a loss of the existing structure of the public house which was
caused by a fire that was the result of the negligence of the contractor's sub-contractors.
Moreover, if the employer had fulfilled its contractual obligation under clause 6.3.1 of IFC 84,
the insurance policy would have contained a clause that stated that the insurer had no right
to use the name of the employer to sue (by subrogation) the contractor, who would also be
named as an assured under the policy. The effect of this 'no recourse' provision in clause 6.3.1
