Technip Saudi Arabia Limited v The Mediterranean & Gulf Insurance and Reinsurance Co
[2024] EWCA Civ 481
FM Conway Limited v The Rugby Football Union & Ors.
19 April 2023
[2023] EWCA Civ 418
Court of Appeal
A company (Conway) installed faulty ductwork, causing damage. The building owner's insurance covered the damage, but the insurer tried to recover the cost from Conway. The court said Conway wasn't covered for damage caused by their own mistakes, even though they were part of the insurance policy, because the contract didn't say so. The court also said a clause protecting against lawsuits didn't help Conway because it only applied to the types of damage they were actually insured for.
Key Facts
- •FM Conway Limited (Conway) installed ductwork at Twickenham Stadium.
- •Defective ductwork caused damage to cables, resulting in £4,440,909.45 loss for the Rugby Football Union (RFU).
- •RSA Insurance paid £3,334,405.26 to RFU under a co-insurance policy.
- •Conway argued that the co-insurance policy prevented RFU from claiming against them.
- •The policy named both RFU and Conway as insureds.
- •The RFU's building contract with Conway (based on the JCT Standard Form 2011, Option C) specified insurance cover but did not extend to rectifying damages caused by Conway's own negligence.
- •There was an initial understanding between project manager (Higgs) and Conway's director (Morris) that the insurance would be comprehensive.
Legal Principles
In co-insurance, the mere presence of both parties under the same policy doesn't preclude claims between them. The extent of each party's cover depends on their respective rights and interests.
General Accident Fire and Life Assurance Corporation Limited & Anr v Midland Bank Limited [1940] 2KB 388; Gard Marine Energy Limited v China National Chartering Co Limited & Anr [2017] UKSC 35
To determine if insurance procured by one party covers another, analyze the underlying contract for authority and intention.
National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582; Co-operative Retail Services Limited v Taylor Young Partnership Limited & Ors [2002] UKHL 17; Tyco Fire & Integrated Solutions (UK) Limited v Rolls-Royce Motor Cars Limited [2008] EWCA Civ 286
The underlying contract is the 'most obvious source of authority' for determining the extent of insurance cover.
National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582
A waiver of subrogation clause only applies to losses for which the party is insured.
National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582
Outcomes
Conway's appeal was dismissed.
The judge correctly applied the legal principles by focusing on the underlying contract (Letter of Intent and building contract) to determine authority and intention. The initial understanding between Higgs and Morris was not legally binding as it was superseded by the subsequent, formal contractual arrangements. Conway was not insured against losses caused by their own defective work.