Aspen Insurance UK Ltd v Adana Construction Ltd

In construing a combined contractors’ liability policy, the dowels were Products, but the concrete crane base, including the dowels, was not. Public liability cover applied before and after handover. The foundation works included constructing the crane base, installing dowel bars and applying bonding material. Their intended function was to transfer tensile load into the piles so that the crane would not topple. That function failed, so liability for crane damage was excluded under the foundation clause. It was unnecessary to decide whether the Product had failed because the liability was not caused by the dowels.

Aspen Insurance UK Limited v Adana Construction Limited concerned an insurer’s appeal from the Commercial Court decision of HHJ Mackie QC, reported as [2013] EWHC 1568 (Comm). The dispute involved the construction of a Combined Contractors’ Liability Insurance Policy following an accident involving a crane base, dowel bars and piles. The Court of Appeal considered whether there was a relevant Product, whether it failed its intended function, whether the crane was a superstructure, whether the foundation works failed their intended function, and whether public liability cover continued after handover.

The court stated that its declarations should be confined to matters decided by way of ratio and that declarations should not be made in respect of obiter observations.

1. Public liability cover. Section B of the policy applied before, and continued to apply after, the respondent handed over the crane base.
2. Products. On the proper construction of the policy, the dowels were Products. The concrete base, including the dowels, was not a Product. It was unnecessary to decide whether the Product had failed to fulfil its intended function because the respondent’s liability was not caused by the dowels.
3. Superstructure and foundation works. The crane was a superstructure. The respondent’s construction of the crane base, installation of the dowel bars and application of bonding material constituted foundation works within the policy. Their intended function was to transfer the tensile load into the piles so that the crane did not topple. That function was not fulfilled.
4. Exclusion. Any liability established against the respondent for damage to the crane itself was excluded under the foundation clause because the foundation works failed to perform their intended function.
5. Disposition and costs. The appeal was allowed only to the extent that the answers differed from those given below. Paragraphs 1 to 6 of the first-instance order were set aside and replaced. The respondent received 85% of its appeal and first-instance costs. The appellant paid the costs of the market-understanding expert evidence, while the respondent paid the costs of the unsuccessful stay application. Costs were on the standard basis, with an interim payment of £90,000 on account.

1. Court of Appeal (Civil Division): The appeal was allowed only to the extent that the answers differed from those given below, and the first-instance order was replaced: [2015] EWCA Civ 177.
2. High Court of Justice, Commercial Court: Appeal from the decision of HHJ Mackie QC: [2013] EWHC 1568 (Comm).