England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
OFFICIAL REFEREE'S BUSINESS

		Royal Courts of Justice Strand London WC2
		17th December 1996

LORD JUSTICE NOURSE: I will ask Lord Justice Saville to deliver the first judgment.

LORD JUSTICE SAVILLE: In 1989 a temporary roof was erected on scaffolding over Upark Manor House in West Sussex, a National Trust property, in order to facilitate repairs to fire damage that had previously occurred to that house.

On 25th January 1990 a storm blew off the temporary roof. Two workmen died and there was substantial damage. Two years later the National Trust brought proceedings in respect of losses allegedly suffered from this incident against Arnall Structures Limited, who had contracted with them to erect the scaffolding and temporary roof. This company had in turn subcontracted with Eynon Day Scaffolding to supply and fit the temporary roof, which this firm had done with components supplied by Layher Limited. The latter were insured at Lloyd's under a Certificate of Insurance which provided cover on the terms of the Lloyd's Commercial Industrial and Contractors Combined Liability form against, among other things, public and products liability.

There is a section of this Certificate which is entitled "General Conditions attaching to this Insurance" and which, immediately below this title, stipulates that "all Conditions are Precedent to Liability under this Insurance." Condition 13 is the last of these conditions. It is entitled "Claims Procedure" and its second paragraph provides as follows:

"The Assured shall give immediate notice in writing, with full particulars, of the happening of any occurrence likely to give rise to a claim under this Certificate, of the receipt of the Assured of notice of any claim and of the institution of any proceedings against the Assured, together with the Certificate number to:

R.H. Lister and Others ..."

In June 1992 Layher Limited did give notice to R.H. Lister of a possible claim on them by Eynon Day Scaffolding based on the allegedly defective design of wedges securing the roof to the scaffolding, and they further gave notice when they were in due course joined in the National Trust litigation as fourth parties after Eynon Day had been made third parties. In the event, the proceedings were compromised after the trial had started, but Layher Limited now advance a claim under their insurance for their own litigation costs and expenses, which under that compromise they bore themselves. Underwriters have repudiated liability for this claim, on the grounds that the incident itself was an "occurrence likely to give rise to a claim" within the meaning of Condition 13, so that although Layher Limited had given due notice of a possible claim and of the proceedings against them, they had given no immediate notice of this occurrence, so that there was no liability under the insurance. In consequence of the stance taken by Underwriters, Layher Limited brought these proceedings against them.

The proceedings came before His Honour Judge Thornton QC in the Official Referees Court. The Judge dealt with three main submissions, namely whether compliance with Clause 13 was a condition precedent to liability (which he held it was); whether the fact that Eynon Day Scaffolding had the same Underwriters and had informed them of the incident more or less straight away could be called in aid by Layher Limited (which he held it could not); and whether the incident was an occurrence likely to give rise to a claim under the Certificate (which he held it was not). Underwriters now appeal from the third of these holdings, while Layher Limited seek to reverse only the first, having decided (in my view wisely) not to pursue an attack on the second.

On behalf of Underwriters, Mr. Mawrey QC first submitted that the test to be applied to a provision of the kind in question was an objective one, and that what the insured knew or should have known was irrelevant, since the provision does not expressly limit the obligation to give notices of occurrences which fall within the actual or constructive knowledge of the insured, nor are there, in his submission, any legitimate grounds for implying any such qualification. For the purpose of the argument I am prepared to assume the correctness of this submission, without deciding whether or not it is indeed well founded.

On the basis of this assumption it seems to me therefore that the question that must be asked is whether, looking at the matter objectively, there was an occurrence likely to give rise to a claim under the Certificate. The occurrence upon which Mr. Mawrey relies, in the context of this argument, is, of course, the incident on 25th January 1990. Since the Condition requires immediate notice to be given, it seems to me to follow that the question must be answered by reference to the state of affairs as it existed immediately after the incident. That indeed was the view taken by the Judge.

As I understood him, Mr. Mawrey did not, at least in the context of this his first main submission, dissent from that proposition. He submitted, however, that since a claim had eventually been made, albeit two years later, this established by itself that, as of 25th or 26th January 1990, the occurrence was one that was likely to give rise to a claim under the Certificate.

I cannot accept this submission. To my mind the proposition contains a complete non sequitur. The fact that a claim is made at a later date does not begin to establish or show that at an earlier date it was likely to be made.

Mr. Mawrey was pressed to give us the facts and matters upon which he relied to show that in the immediate aftermath of the accident it was likely that a claim would be made under the Certificate. He accepted, in my view correctly, that "likely" meant at least a 50% chance of such a claim. What in my view he was quite unable to do was to show that a claim was likely. Layher Limited had not designed or built the scaffolding or the roof, but had merely supplied components for the latter, including securing wedges. There is nothing in the material before the Judge, let alone in his findings, which begins, to my mind, to demonstrate that at the relevant time there was anything to suggest that the incident had resulted from any fault or defect in what Layher Limited had supplied. I readily accept that in this litigious age it might be said, at the time in question, that a claim was possible either by the National Trust or by the contractors, Eynon Day Scaffolding, in their own right or by way of seeking to pass on the claim made on them, or indeed by others; but the Condition uses the expression "likely", not the expression "possible".

In short, I am wholly unpersuaded that Underwriters have, on this their principal argument, brought themselves within the wording of Clause 13, even making the assumption I have made in their favour. In other words, I respectfully agree with the Judge when, at page 28 of the transcript, he said this:

"In the light of those considerations was the occurrence likely to give rise to a claim? I do not believe that the occurrence was of that kind. No one appears to have thought it at the time and any objective consideration of the circumstances of the occurrence, of the type that I have outlined, points away from the plaintiff's component parts, particularly the wedges, as being a potential cause of the occurrence."

After the short adjournment Mr. Mawrey sought to develop a quite different argument, when he submitted that an occurrence within the meaning of the Clause only becomes an occurrence likely to give rise to a claim when, and if, later events show that a claim is likely; and he submitted in that regard that, in the circumstances of the present case, some time in July 1990 there were facts and matters which indicated that at that stage Layher Limited perceived the possibility, if not the likelihood, of a claim against them.

Again I regret that I cannot accept this submission. The incident took place on 25th January 1990. The fact that at a later stage a claim may be said to have become likely cannot to my mind, without doing irretrievable damage to the ordinary words used in the Clause, mean that an occurrence likely to give rise to a claim occurred at a later stage; for, in truth, there was no occurrence other than that which took place on 25th January.

In these circumstances it is not, to my mind, necessary to consider whether, as Mr. Mawrey submitted, the Judge erred in effect by construing the Clause as requiring the insured to have actual or constructive knowledge that the occurrence was likely to give rise to a claim before coming under an obligation to give a notice, for I have assumed this point in his favour. It is also not necessary to consider the other criticisms made of the judgment for precisely the same reason; nor indeed whether, as the respondents contend, Condition 13 was not a condition precedent at all.

For the reasons I have given, therefore, I would dismiss this appeal, since in my judgment the arguments put forward on behalf of Underwriters cannot be sustained on the facts of this case.

LORD JUSTICE BROOKE: I agree.

LORD JUSTICE NOURSE: I also agree.

Order: appeal dismissed with costs.