Civil Engineering Reference
In-Depth Information
'The insured property' is defined as -
Item No. 1. The works and temporary works erected . . . in performance of the insured
contract and the materials . . . for use in connection therewith belonging to the insured or
for which they are responsible brought on to the contract site for the purpose of the said
contract . . .
Item No. 2. Constructional plant comprising plant and equipment . . . if and insofar as
not otherwise insured belonging to the insured and for which they are responsible brought
on to the contract site for the purpose of the insured contract.
'The insured contract' is defined as 'Construction erection and testing of an extension to the
Lindsey Oil Refinery at South Humberside'.
By an indorsement dated 23 April 1978 the policy was extended to include -
The erection operation and subsequent dismantlement of the following items of plant
which are being used on the Greenham (Plant Hire) Ltd sub-contract for the erection of
eight large vessels: (1) . . . £600,000; (2) . . . £250,000; (3) Hydrajack system £2,150,000
giving a total of £3,000,000. The minimum premium was increased by £9,000.
The policy also provides in section 3, third party liability cover in standard terms, whereby
the insurers agree to indemnify the insured -
Against all sums for which the insured shall become legally liable to pay as damages con-
sequent upon (a) Accidental bodily injury to or illness or disease of any person (b) Accidental
loss of or damage to property occurring . . . as a result of and solely due to the performance
of the insured contract happening on or in the immediate vicinity of the contract site.
There is an exception to the third party liability cover which excludes property forming the
subject of the insured contract.
The first point taken by the insurers is that the defendants are not 'sub-contractors' within
the meaning of the policy, and are therefore not insured at all. If they are right about that,
then none of the other points arise. At an early stage of the argument counsel for the plaintiffs
very properly accepted, though he never formally conceded, that the first defendants,
Magnaload, must be sub-contractors; but he maintained the argument in relation to the
second defendants, Mammoet.
The facts are that in the initial stages of the negotiations it was contemplated that Mommoet
would enter into a contract with Greenhams for carrying out the specialist lifting operation
with their hydrajack. At the end of June there was a change of direction. At a meeting which
took place between Magnaload and Mammoet on 27 June 1978 it was agreed that, for admin-
istrative reasons, the contract would be in the name of Magnaload, not Mammoet. Mammoet
would, however, remain responsible for the operation itself. The reasons for this change do
not matter. The sub-contract price had already been agreed between Greenhams and Mammoet
at £185,000. It was agreed that Mammoet would reimburse Magnaload out of that sum for
any services which Magnaload performed or any costs which they incurred. On 13 July 1978
there was a meeting between Magnaload, Mammoet and Greenhams at which Greenhams
agreed that the contract would be with Magnaload provided they received '100 per cent
support' from Mammoet. On 24 July Greenhams sent a telex to Magnaload as follows:
