Tate Gallery (Board of Trustees of) v Duffy Construction Ltd & Anor

Words such as “flood” and “burst” in an insurance policy or related construction contract do not have fixed meanings applicable in every context. Their meaning depends on the contractual language and the circumstances. Whether water constitutes a flood is a question of degree, involving factors such as its source, quantity, manner of arrival, the affected property and whether the event was abnormal. Whether a pipe or apparatus has burst depends principally on internal pressure, a break in its integrity and the suddenness or violence of the event. Contractual wording should not be rewritten merely because a different construction appears more commercially attractive. A co-insurance defence does not assist a defendant whose breach has deprived it of any right to claim under the policy.

The trustees brought a subrogated claim against Duffy arising from extensive water damage during the Tate Gallery Centenary Development. The trial concerned agreed preliminary issues on pleaded facts. The issues included whether the escape of water constituted the specified perils of bursting or overflowing of water apparatus or pipes, or flood; whether clause 14.4 of the trade contract relieved Duffy from liability for damage beyond its own works; and whether assumed breaches of the insurance and contract obligations affected Duffy’s contractual or co-insurance defences.

1. Specified perils. Earlier decisions supplied valuable guidance but did not establish universal definitions. The court must consider the contractual context and all relevant circumstances. For flood, relevant factors included the natural or artificial source, externality, quantity, manner of arrival, area and character of the property, and abnormality. For bursting, relevant factors included internal pressure, whether the integrity of the pipe or apparatus was broken, and whether the event was sudden and violent.
2. The water main, coupling and reducer collectively constituted a pipe. Internal water pressure caused the coupling to move and created an aperture through which water escaped. The integrity of the composite pipe was therefore broken, and the incident constituted bursting. The large volume, extensive inundation, abnormality and entry of water into the Gallery also made the event a flood. The answers to issues 1(A) and 1(B) were Yes.
3. The effective cause of the damage was the bursting and resulting flood, rather than the earlier failure to restrain the coupling. The court relied on the causation reasoning in PUKSamuel & Co. Ltd. v. Dumas [1924] AC 431, Commonwealth Smelting Ltd. v. Guardian Royal Exchange Assurance Ltd. [1986] 1 Lloyd’s Rep. 121 and Scottish Special Housing Association v. Wimpey Construction (UK) Ltd. [1986] 1 WLR 995.
4. Clause 14.4 referred to Duffy’s own external hard-landscaping works, not the project as a whole. The policy’s wider cover and commercial context did not justify rewriting the natural contractual language. The answer to issue 2(B) was No and the answer to issue 3 was Yes.
5. On the assumed breach of clause 14.5 and general condition 4, Duffy could not claim under the policy for its own losses. General condition 6 preserved the trustees’ cover. The implied co-insurance term did not extend to a defendant whose breach made it impermissible to claim under the policy. The answers to issues 4 and 5 were Yes. The parties were directed to draw up an order recording all six answers.