Where a contractor carries out work and causes damages, the employer would expect to be able to bring a claim against the contractor for that damage.
Unfortunately, the position may not be as straightforward as it seems, as demonstrated in the case of United Marine Aggregates v GM Welding.
GM was contracted to carry out “hot work” at UMA’s aggregate processing plant using oxy-propane cutting tools as part of some maintenance and repair works. Unfortunately a serious fire broke out.
The Court had to decide:
- Whether the fire was caused by GM’s works or by works being undertaken by UMA operatives in an adjoining part of the plant
- If the fire was caused by GM’s works, whether it was the result of a breach of duty by GM
- Whether GM could seek indemnity from its public liability insurers or whether GM was in breach of the hot work warranty conditions set out in the policy
The Court carried out a detailed analysis of witness evidence and concluded that the fire was caused as a result of GM’s “hot works”.
There was also a lengthy consideration of the method of working documents which governed GM’s works and whether UMA had waived strict compliance with its own hot works procedures.
It was accepted that GM owed UMA a duty to carry out its works with reasonable skill and care. UMA argued that either GM’s works procedures were inadequate or were not followed, and in either case GM had been negligent.
The Court was persuaded that GM had used the same works procedures for many years without incident and it was these procedures which had been agreed by UMA. It therefore decided that GM had exercised reasonable skill and care and was not negligent in failing to take additional precautions against the events which, in all probability, were the cause of the fire and which were not reasonably foreseeable.
Although the insurance point did not therefore arise, the Court commented that GM had been in breach of the hot works warranty provisions and so would not have been covered had it been held liable.
Comment: The decision demonstrates that just because a contractor has “caused” damage, it does not necessarily follow that it will be held liable for the consequences. Liability will turn on whether there has been a breach of contract or breach of duty – the extent of which will be dependant on the context of the works.
The decision also highlights the importance of complying with all insurance requirements to prevent cover being avoided.
Author: James Coppinger, Head of Construction and Engineering.
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