Tate Gallery (Board of Trustees of) v Duffy Construction Ltd & Anor (No. 2)

A conventional reasonable-precautions clause in a liability or property insurance policy is not breached by mere negligence. The required standard is recklessness by the insured. The relevant recklessness must be attributable to the insured itself, ordinarily through persons of sufficient seniority, rather than being established merely by the conduct of junior employees or subcontractors. Clear wording would be required to impose a substantially wider obligation or to remove a core part of the expected insurance cover. Whether conduct is attributable to a company may require evidence and trial. Wide-ranging allegations unrelated to the insured loss may be struck out where they are disproportionate and obstruct the just disposal of the proceedings.

The Trustees brought proceedings against Duffy and SSEL arising from a flood at the Tate Gallery. The Trustees served a reply alleging that Duffy had breached general condition 4(a) of an insurance policy by failing to take, or cause to be taken, reasonable precautions concerning a pipe connection and by retaining incompetent personnel.

Duffy applied under CPR r 3.4(2) to strike out the reply and an accompanying appendix, and sought summary judgment under CPR r 24.2 on the issue whether it had breached the policy condition. The central issues were the construction of general condition 4(a), the meaning of recklessness, attribution of employees’ conduct to Duffy, and whether the appendix disclosed a relevant and proportionate case.

1. Construction of the policy condition. General condition 4(a), although containing the words “take and cause to be taken”, was a conventional reasonable-precautions clause. It did not impose an obligation on every employee and subcontractor. Clear words would have been required to impose that substantially more onerous obligation or to cut down the cover reasonably expected under the policy.
2. Applicable standard. The authorities established that mere negligence does not breach a conventional reasonable-precautions clause. The insured must have acted recklessly. The relevant recklessness is that of the insured itself, not simply that of an employee. The authorities also recognised that these principles are canons of construction, so sufficiently clear drafting could produce a different result.
3. Attribution. The pleaded allegations concerning the employees dealing with the pipe connection might amount to negligence and might amount to recklessness. Whether that recklessness could be attributed to Duffy depended on the organisation of the company and the roles and seniority of the individuals concerned. That issue required evidence at trial. The material before the court did not justify summary determination, although the claimants’ prospects appeared bleak.
4. Appendix. The appendix contained diffuse allegations concerning management, delay, documentation, design, instructions, health and safety, damage, staffing and communication. They did not provide a pleaded basis for concluding that Duffy had acted recklessly in retaining the relevant personnel. They were also disproportionate, would require extensive disclosure and evidence, and were unrelated to the April 2000 flood. The appendix was therefore struck out under CPR r 3.4(2)(b) as an abuse of process or as likely to obstruct the just disposal of the proceedings.
5. The reply itself was not struck out. Summary judgment was refused. The remainder of Duffy’s application was dismissed.

The judgment states that it was a sequel to the court’s earlier judgment in The Board of Trustees of The Tate Gallery v Duffy Construction Limited, [2007] EWHC 361 (TCC). No appeal history is stated.