London Borough of Barking & Dagenham v Stamford Asphalt Company Ltd & Ors
Citation: C.L.C. 929; 82 B.L.R. 25; 54 Con. L.R. 1
Nature of case:
The London Borough of Barking & Dagenham (LBBD) had engaged Stamford Asphalt to complete building works under the October 1988 version of the JCT, the relevant provisions of which were 6.2 and 6.3B. The first of these provisions provided that Stamford Asphalt would be liable for damage “due to any negligence, breach of statutory duty, omission or default of the Contractor upon or in connection with the Works or any part thereof, his servants or agents”. The second of these provisions required the LBBD to ensure against loss or damage caused by, amongst others, “fire, lightning, explosion, storm, tempest, flood” etc.
In the event, LBBD did not take out insurance, in breach of 6.3B. Subsequently, a fire broke out, and it was agreed for the purposes of the hearing that it was caused by the negligence of one of Stamford Asphalt’s subcontractors. LBBD claimed for the damage caused under clause 6.2. Stamford Asphalt argued that, as the damage was caused by fire, which LBBD was required to insure itself against, and so the amount recoverable should be reduced by the amount that would have been paid out under the 6.3B insurance if it had been effected.
The Court of Appeal held that clauses 6.2 and 6.3B were intended to cover mutual exclusive types of damage; 6.2 covered damage for which Stamford Asphalt was culpable, and 6.3B covered damage for which they were not culpable. It would therefore have been in compliance with clause 6.3B for LBBD to have taken out insurance specifically exempting damage for which Stamford Asphalt was liable under 6.2. In light of that ruling, no reduction to the recoverable damages would be made.
