FM Conway installed the ductwork as part of 2012 works to prepare Twickenham for the 2015 Rugby World Cup.
Works included installation of high voltage power cables in buried ductwork. The dispute in the Technology and Construction Court between the RFU and FM Conway and engineering consultant Clark Smith Partnership concerns that ductwork. Clark Smith Partnership designed it and FM Conway installed it.
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Insurance policy
Conway began work in early July 2012 under a letter of intent. On 17 July, RFU entered into an all-risks insurance policy with cover from 16 July with Royal Sun Alliance.
RFU and Conway entered into a contract adopting with amendment the terms of the JCT Standard Building Contract without Quantities 2011 on 19 October 2012.
‘Defects’ and losses
The RFU argued that there were defects in the ductwork which caused damage to the cables when they were pulled through (neither FM Conway nor Clark Smith were involved in exercise to pull the cables through).
The RFU claimed it has suffered losses of £4.4m, made up of £3.3m to replace the damaged cables and £1.1m to rectify the ductwork. The RFU has been indemnified by RSA under the terms of the policy in respect of the replacement and related costs of £3.3m.
Arguments
The RFU says Clark Smith and Conway are liable for the losses. It claimed that there were defects in Clark Smith’s design of the ductwork, while there were defects in FM Conway’s workmanship.
FM Conway argued that it was co-insured with the RFU under the RSA policy and that it had the benefit of cover to the same extent as the RFU and that as a result, the RFU could not claim against it in respect of alleged losses covered by the policy. It also argued that RSA was not able to make a subrogated claim against it in respect of the £3.3m.
Meanwhile, Clark Smith and FM Conway have blamed each other for problems with the ductwork.
Ruling
But judge Mr Justice Eyre rejected FM Conway’s argument that it was party to the insurance policy. He said: “The policy insured both the RFU and Conway but they were not insured to the same extent in respect of the same risk. In particular, they were not co-insured in respect of the losses which the RFU is sad to have suffered by reason of damage to the cables resulting from defects in the ductwork and for which the RFU has been indemnified by the RSA.”
The judge also rejected FM Conway’s argument that even if Conway were not insured against the same risk to the same extent as the RFU, then the policy operated as a waiver of subrogation which stopped RSA from bringing a subrogated claim in respect of RFU’s insured losses.
As a result the RFU can now seek to damages from FM Conway and Clark Smith.
