The Contractor’s Obligations - Building Contract - page 110

would have been to prevent the insurers from using the name of the employer to sue the co-
assured contractor for damages on account of the negligence of its sub-contractors. (See Co-
operative Retail Services Ltd v. Taylor Young Partnership Ltd ( Carillion Construction Ltd , Part
20 defendants) (2002) 82 ConLR 1 at [65], [2002] 1 WLR 1419, per Lord Hope of Craighead.
Lords Bingham of Cornhill, Mackay of Clashfern and Steyn agreed with Lord Hope on this
point.) I discuss this case more fully below. The point to note here is that the contractors had
to take out an 'all risks' policy against loss or damage in relation to a new construction site.
Both the contractor and employer were named as joint assureds. Lord Hope concluded that
the very existence of such a policy in joint names would prevent it being contended that the
contractor was liable to the employer for damage resulting from a fire caused by the negligence
of the contractor. The present case is even stronger, because of the existence of the 'no right
of recourse' provision in clause 6.3.2 of the contract.
28. In this case the employer failed to take out the policy it should have done. But that
cannot detract from the conclusion that I reach on the proper construction of these clauses.
This is that the whole scheme of clauses 6.1.2; 6.3.2; 6.3C1, the provisions defining a 'Joint
Names Policy' and 'Specified Perils' was to divide and allocate the risk of loss and damage to
different types of property to the employer and the contractor. In my view, by the wording of
those clauses the parties allocated to the employer the risk of loss and damage to existing
structures by a fire which was caused by the negligence of a sub-contractor. The employer's
losses were to be covered by the joint names insurance policy that the employer was contractu-
ally bound to take out and maintain. If the employer had fulfilled its obligations, then it would
have obtained the insurance proceeds because, under clause 6.3C1, the contractor was obliged
to authorise the insurer to pay the insurance proceeds of a claim to the employer.
JCT 98 clause 22C does not impose on the employer a duty to insure in respect of consequential
loss such as loss of profits.
Kruger Tissue (Industrial) Ltd v Frank Galliers Ltd
QUEEN's BENCH DIVISION
(1998) 57 Con LR 1
JUDGE JOHN HICKS QC:
Clause 22C
23. The issue here is whether an obligation to insure the existing structures and their contents
'for the full cost of reinstatement, repair or replacement of loss or damage' includes an obliga-
tion to cover loss of profit from and increased cost of working in a business carried on in those
structures. On the natural and ordinary meaning of words the answer is in my view plainly
'no'. The expression 'cost of reinstatement, repair or replacement' is wholly apt in relation to
buildings, fixtures, fittings and goods, but wholly inapt in relation to economic loss.
24. Is there anything in the documentary context or the factual setting to displace or
confirm the natural meaning? [Counsel for defendant's] arguments for a wider construction
which would include economic loss and thus produce the former result rested, I believe, on
the implicit but fallacious assumption that the sole, or at least primary, purpose of clause 22C.1
is to serve as a qualification to clause 20.2, and that it must be interpreted as if it were a kind
of proviso to the latter. On that basis it might well be right to entertain and give some weight
to general policy considerations such as whether there should be a wider or narrower exception