Is a crane a superstructure? Are its foundations a product?

05/03/15

Aspen Insurance UK Ltd. v. Adana Construction Ltd. [2015] EWCA Civ 176

The Court of Appeal has ruled on the proper construction of wording which is in widespread use in contractors’ liability insurance, in particular the definitions of “Product” and “superstructure”.

In proceedings for a declaration of non-liability brought by insurers following the collapse of a tower crane in Liverpool causing significant personal injury and property damage, it became necessary to determine whether the structural link between piles sunk into the ground and the crane constituted a “Product” (as defined in the policy) and whether the crane was a “superstructure” (and if so, whether its loss arose from the failure of the foundation works to perform their intended function).

“Product” was defined in the policy as: “any product or goods manufactured, constructed, installed, altered, repaired, serviced, processed, treated, sold, leased, supplied or distributed by or on behalf of the Insured from or within Great Britain ... (including any advice, design, consultancy, plan, specification, formulae, labelling, packing or instructions for use given in connection therewith) but only after such item has left the Insured’s care, custody or control.”

The Court of Appeal held that it did not necessarily follow that an item which was produced or which left the insured’s control in one of the ways specified in the above definition was, on that account alone, a Product. Whilst the word “product” can be given a very wide meaning (e.g. anything which is the result of any process of manufacture or construction), the intention of parties to an insurance contract of the relevant kind as to whether the word should bear that meaning had to be considered. The fact that the wide definition led to an exclusion from public liability cover was relevant. The hallmark of a “product” in this context was whether it was something which was, at least originally, a tangible and moveable item which could be transferred from one person to another, and not something which only came into existence to form part of the land on which it was created.

The Court of Appeal held that a crane could be a “superstructure”, overturning the judge’s decision that “superstructure” means a building. The court also held that the loss of the crane arose from the failure of the foundation works to perform their intended function, thereby allowing the appeal in part.

The judgment is here.