Cases - Co-operative Retail Services Ltd v Taylor Young Partnership
Record details
- Name
- Co-operative Retail Services Ltd v Taylor Young Partnership
- Date
- [2002]
- Citation
- HL 25
- Legislation
- Keywords
- Insurance - loss claims
- Summary
-
The surprise decision in this case reveals a severe flaw in the Joint Contracts Tribunal (JCT) insurance regime, whereby if a consultant is partly (even marginally) to blame for an insurable event under the joint names policy, then the insurer will be able to recover 100% of the loss from the consultant's PI insurance.
In this case, Co-operative Retail Services Ltd (CRS) appointed Wimpey Construction Limited (Wimpey) to build a new headquarters office building for it in Rochdale. Taylor Young Partnership (TYP) was appointed by CRS as part of the design team. Towards the end of construction, during commissioning of the generator, a fire occurred on site, which extensively damaged the building. Losses of over £1m were incurred, which were covered in part by the contractor's all-risks insurance policy (in the joint names of the contractor, the employer and the sub-contractors) and in part by the employer's business interruption insurance policy.
CRS claimed the full amount of this loss from TYP (which was assumed to be partly to blame for the fire), which in turn sought a contribution from Wimpey and its sub-contractor under the provisions of the Civil Liability (Contribution) Act 1978.
The House of Lords found that under the JCT insurance regime, Wimpey and its sub-contractor were not liable to the employer for the loss caused, as the JCT insurance regime excluded their liability for any such loss. The JCT insurance regime is based on the notion that if the loss is not covered by the insurance, then it should lie where it falls.
As Wimpey and its sub-contractor were not liable to the employer, there could be no contribution under the Civil Liability (Contribution) Act, as this only applies to apportion loss as between parties liable in respect of the same damage.
As TYP was liable to CRS for 100% of the loss under the established principles of joint and several liability, and could not obtain a contribution from the other defaulting parties, it ended up paying for the entire loss.