Amec Civil Engineering Ltd. v Norwich Union Fire Insurance Society Ltd. [2003] EWHC 1341 (TCC) (12 June 2003)

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Cite as: [2003] EWHC 1341 (TCC)

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		Neutral Citation Number: [2003] EWHC 1341 (TCC)
		Case No: HT-02- 384

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

St. Dunstan's House,
133-137, Fetter Lane,
London, EC4A 1HD

12 June 2003

B e f o r e :

HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.
____________________

	AMEC CIVIL ENGINEERING LIMITED	Claimant
	- and -
	NORWICH UNION FIRE INSURANCE SOCIETY LIMITED	Defendant

____________________

N. D. P. Mendoza (instructed by Kennedys for the Claimant)
Nicholas Vineall (instructed by Beachcroft Wansbroughs for the Defendant)
____________________

HTML VERSION OF JUDGMENT: APPROVED BY THE COURT FOR
____________________

HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)

H.H. Judge Richard Seymour Q. C. :

Introduction

The Claimant in this action, AMEC Civil Engineering Ltd. ("AMEC"), is one of the country's leading civil engineering contractors. The Defendant, Norwich Union Fire Insurance Society Ltd. ("Norwich Union") is one of the country's leading insurance companies. This action arises out of a claim made by AMEC under a Contractors All Risks policy of insurance ("the Policy") written by Norwich Union, which claim Norwich Union rejected.

The Policy

The Policy was numbered 9343A40112 and was dated 23 May 1994. It was in a fairly standard form. The person named as "Principal Insured" in the definition of the expression "the Insured" in the Schedule to the Policy was AMEC Plc and subsidiary and associated companies, of which AMEC was one. The period of insurance stated in the Schedule was 1 March 1993 to 28 February 1994. The principal insuring provision was in these terms:-

"The Insurer will, subject to the terms contained herein or endorsed hereon, indemnify the Insured in respect of loss of or damage to the Insured Property whilst at the Insured Location in connection with the Business of the Principal Insured occurring during the Period of Insurance arising from any cause whatsoever except as hereinafter provided."

The expression "Insured Property" was defined for the purposes of the Policy in a section entitled "Definitions" as meaning, so far as is presently material:-

"The Insured Property being property belonging to the Insured or for which the Insured is responsible or is required or has agreed to insure is defined as follows:-

Item A the permanent and/or temporary works, materials including free issue materials , goods, property, machinery, supplies and spares intended for use in connection with a contract or private development….

whilst at any Insured Location…"

In the "Definitions" section of the Policy it was also provided that, for the purposes of the Policy, so far as is currently relevant, the expression "Insured Location":-

"Means lands and other places on, under, in or through which works are to be executed…."

In the Schedule to the Policy the expression "Business of Principal Insured" was defined as meaning:-

"Contractors, Engineers, Suppliers, Manufacturers, Property Owners, Developers and related activities."

In clause 1 of an "Extensions" section of the Policy provision was made that:-

"This insurance extends to include:-

(a) PROFESSIONAL FEES

architects', surveyors', consulting engineers' and other professional fees necessarily incurred in connection with the reinstatement of loss or damage insured hereunder but not for the preparing any claim hereunder."

The Policy was subject to an excess of £5,000 any one claim in respect of claims relating to Item A in the definition of the expression "Insured Property".

The "Exclusions" section in the Policy included:-

"The Insurers shall not indemnify the Insured except as otherwise provided herein in respect of:-

3. DEFECTS

loss of or damage to and the costs necessary to replace, repair or rectify that part of the permanent or temporary works which is in a defective condition due to a negligent design, plan, specification, materials or workmanship but this exclusion shall not apply to the remainder of the Insured Property which is free from such defective condition but is lost or damaged as a consequence thereof.

4. WEAR AND TEAR

the cost of rectifying wear, tear or gradual deterioration but this exclusion shall be limited to the part or parts immediately affected and shall not apply to loss of or damage to other Insured Property not suffering from such wear, tear or gradual deterioration as a consequence thereof."

In this judgment I shall refer to the exclusion in the paragraph numbered 3 in the "Exclusions" section of the Policy as "Exclusion 3" and to the exclusion in the paragraph numbered 4 as "Exclusion 4".

The "Conditions" to which the Policy was subject included:-

"5. REASONABLE PRECAUTIONS

The Insured shall take all reasonable precautions to prevent loss or damage and the Insurer's representatives shall have access at all reasonable times to any contract site and the Insured Property."

The events giving rise to the claim

By an agreement ("the Contract") confirmed by a letter dated 6 July 1993 and made between the States of Jersey ("Jersey"), that is to say, the Government of the island of Jersey, and AMEC, AMEC agreed to undertake for Jersey land reclamation works ("the Works") known as "West of Albert Phase II". The Contract incorporated a Project Specification ("the Specification").

As part of the Works AMEC was to construct and to place on the seaward side of the land to be reclaimed a number of reinforced concrete blocks. The project seems to have involved the need to produce reinforced concrete blocks of a number of different types. Some were referred to as "H" blocks, others were called "culvert blocks". The type of blocks which are relevant to the claim which has given rise to this action were called "terrace blocks" or "terrace units". In this judgment I shall refer to "terrace blocks" as "Blocks" and to other types of block, where material, by the designation which they bore for the purposes of the project.

The Blocks were intended to be used to construct a curved sea defence wall ("the Wall") which sloped upwards from the seaward side. The front faces of the Blocks were intended to be convex and to be so positioned that, when above the level of the sea for the time being, they could provide seating as an amenity for those visiting the seafront. The Wall, on the other hand, was intended to be concave. In very general terms the seating at low tide was to have the appearance of an ancient Greek theatre. The shape of the Blocks was determined by the Public Services Department of Jersey ("PSD"). The design of the reinforcement to be incorporated within each Block was also undertaken by PSD, as was the design of the Wall. Because of the anticipated amenity use of Blocks by the public after they had been placed in the Wall aesthetic considerations entered into the quality of the concrete desired by PSD on the exposed faces of the Blocks and also the colour of the concrete. It was intended to add a pigment to the concrete in order to achieve the desired shade.

The casting of the Blocks was undertaken by use of moulds ("Moulds"). The Moulds were designed and manufactured by a specialist producer of formwork, Newton Formwork Design ("NFD") and were made out of stainless steel. Mr. Tony Heron was selected by AMEC as Contracts Manager for the undertaking of the Works and performed that role until about mid-June 1994. He gave evidence before me. In paragraph 6 of his witness statement dated 1 November 2002, in a passage which was not really challenged, and which in any event I accept, he said of the design of NFD of the Moulds:-

"Newton Formwork Design designed a proposal for the mould for casting the terrace units, and recommended that the units be cast upside down. This would have 3 advantages. Firstly, it would be more efficient, in terms of manpower, as less panels would need to be removed in order to remove the cast unit from the mould. Secondly, it would give better finishes to the cast units, and thirdly more consistency in the assembly of the moulds to facilitate casting of the units within the required tolerances. The only disadvantage was that the specification required what was the final top face, as placed, to be hand-finished. However, casting the terrace units upside down meant that the top faces would have a dense formed finish that would be superior to the specified finish. "

The use of the Moulds involved placing them in such a manner that the opening through which concrete was placed was a metre or so above ground level. As I have explained, when so placed what was intended to be the top of the Block in operational use in the Wall was at the bottom of the Mould. Mr. Christian Sampson was appointed by PSD to act as Assistant Resident Engineer for the purposes of the Works. Mr. Sampson also gave evidence before me. He agreed with the view that the best surface finish for any face of a Block would be achieved by casting it against a stainless steel plate, such as was incorporated in one of the Moulds. In other words, it was common ground that an advantage of casting Blocks upside down was that that course would best ensure that the quality of finish required by PSD on the exposed faces of a Block was realised.

Once a Mould had been placed in position to receive a filling of concrete in due course a steel reinforcement cage (a "Cage"), weighing some 160 kilogrammes, was placed in the Mould. That Cage had to be supported in position in the Mould such that concrete, when placed, could surround it to the appropriate thickness, or "cover". A means of providing such support was by the use of asbestos spacer blocks. Such blocks if placed, for example, at the bottom of a Mould, would ensure that the Cage was at a distance equal to the width of the spacer block from the bottom of the Mould at the time the placing of concrete commenced. About 3 cubic metres of concrete was placed around the Cage in any Mould. Each resultant Block weighed about 7 tonnes.

By paragraph 3.4.25 of the Specification it was provided, in relation to reinforced concrete structures to be manufactured for the purposes of the Works, so far as is presently material, that:-

"The concrete cover shall not be less than the specified cover."

By note 3 to drawing 538/262 the cover specified for Blocks was a minimum of 75 millimetres. However, there was a tolerance of plus or minus 5 millimetres in relation to that requirement. In practical terms, therefore, the cover to be provided was a minimum of 70 millimetres.

In August 1993, after the Moulds had been designed and, it seems, constructed, by NFD, the Resident Engineer appointed by PSD for the purposes of the Works, Mr. Nicholas Wragge-Morley, instructed that spacer blocks were not to be used in any exposed concrete face of Blocks. That instruction was confirmed in writing to Mr. Wragge-Morley by Mr. Heron in a site instruction acknowledgement dated 11 August 1993. It was subsequently confirmed by Mr. Wragge-Morley himself in a site instruction numbered 006 and dated 7 September 1993. The reason for the giving of the instruction, according to the evidence of Mr. Sampson, which I accept, was that Mr. Wragge-Morley wished to avoid the outline of spacer blocks being visible on the surface of Blocks once placed in the Wall. The problem anticipated was that the asbestos from standard spacer blocks would discolour the pigment to be introduced during the manufacture of the concrete to be used in Blocks. On the evidence given before me, the use of spacer blocks to perform the function which I have described is, and was in 1993, a common feature of pre-cast concrete construction, and the instruction that they should not be used was unusual. The problem which that instruction presented to AMEC in relation to the Works was how else to support a Cage in a Mould during the pouring of concrete into the Mould.

The casting of Blocks and other types of pre-cast concrete required for use in the Works was undertaken in what was called a pre-cast yard ("the Yard") in the vicinity in which the concrete was finally to be installed. AMEC selected Mr. Simon Smith, who had graduated from Portsmouth Polytechnic in 1990 with a Master's degree in Civil Engineering and who was, in September 1993, 25 years of age, as its Site Engineer for the purposes of the activities of the Yard. Mr. Smith was called as a witness in the trial before me. He told me, and there was no dispute about it, that he took up his duties in the Yard in September 1993.

It was, I think, common ground before me that, other than by complete destruction of a pre-cast reinforced concrete item, there are only two ways, and were only two ways in 1993, of ascertaining the degree of concrete cover of the reinforcement contained within the item before it has been placed in its intended final position, namely by drilling a hole, or a number of holes, into the item until reinforcing steel is encountered or by using a device called a covermeter. A covermeter is an electrical device which generates an electromagnetic field through what is called a search head. The search head is attached to a meter which indicates by digital or analogue means the consequences of the electromagnetic field being passed through the concrete. In operation the search head is held to the surface of the concrete item to be tested and when a metal object, such as a reinforcing bar, lies within the electromagnetic field the lines of force become distorted and a local change in field strength is detected by the search head and indicated on the meter. The orientation and proximity of the metal to the search head affect the meter reading and it is thus possible, at least in theory, to locate the depth and orientation of the metal which causes the disturbance.

While it is not necessary for the purposes of this judgment to go into enormous detail as to the characteristics and qualities of covermeters, it is material to note that they can be used both to seek to detect the depth of metal beneath the surface of concrete as an absolute value and to sound an alarm if metal is detected at above an indicated depth. They also need to be calibrated at intervals in order to ensure that they are operating correctly. However, a particular practical difficulty with the use of covermeters is that, as it were, they are easily confused. They seem to be ideal for detecting a single metal object, but prone to give false results if more than one metal object is present in close proximity to another in the concrete being tested. In those circumstances the covermeter seems to be led to translate what is in fact the presence of multiple metal at a lower depth into a reading of a single piece of undifferentiated metal at a shallower depth, in other words to indicate that the cover is less than it actually is. This known problem is referred to in British Standard 1881: Part 204: 1988 "Testing concrete. Recommendations on the use of electromagnetic covermeters" ("BS 1881") at Section 9 "Influence of test conditions". That section includes:-

"9.1 General

Potential loss of accuracy (which may be minimized by the experienced operator) is due to many extraneous factors affecting the magnetic field within the range of the covermeter and to other physical influences.

9.2 Steel

…

9.2.4 Multiple bars. Closely spaced bars may have a significant effect on the measurements made. The manufacturer's recommendations should be followed in the case of closely packed perpendicular or parallel bar assemblies.

It is essential that measurements under these conditions are carried out by experienced operators.

In the case of parallel bars, the cover at which the reinforcement detail becomes significant depends on several factors including the sensitivity of the device and the search head dimensions. As a general rule the accuracy of indicated cover measurements will be influenced whenever there is more than one bar within the detection range of the search head.

As the distance between parallel bars decreases a point is reached at which it is impossible to locate individual bars. Special probes may be available to improve the accuracy of indicated cover measurements and differentiation between individual bars in such cases.

In the case of bundled or lapped bars, it is recommended that separate calibration is carried out as described in clause7. "

A manufacturer of covermeters in 1993 was a company called Kolectric Ltd. ("Kolectric"). One of the covermeters which Kolectric manufactured at that time was the "Micro" covermeter. I shall refer to that make and type of covermeter in this judgment as "the Covermeter".

On the evidence given before me it seems that it was relatively unusual in 1993 and 1994 for a civil engineering contractor to use covermeters routinely in order to check the depth of cover over the reinforcement in reinforced concrete. However, it was the standard practice of AMEC to do so and it had adopted the Covermeter as its preferred device for this purpose. Coincidentally PSD had also adopted the Covermeter.

A Covermeter calibrated by Kolectric in its factory on 7 October 1993 was provided to Mr. Smith for use in the Yard. Although BS 1881 recommended that any covermeter be calibrated on site before use, the Covermeter provided to Mr. Smith was not re-calibrated in the Yard. Mr. Smith told me in his evidence that he had not before this occasion when he was working in the Yard used a covermeter. However, he made himself familiar with the manufacturer's instructions for the Covermeter. He did not read BS 1881 or the AMEC company guidance on the use of Covermeters. That guidance was contained in section A6.0 of AMEC document referenced "ACEL-ENG-001/BO" entitled "Concrete Sampling and Testing Technical Manual".

AMEC in fact had a well-developed set of written quality assurance procedure documents in 1993. They included a document referenced "ACEL-QA-307" entitled "Control of Reinforcement" issued in November 1993. The document so referenced superseded one referenced "FCEL-QA-307" issued in February 1991. In the form in which it was issued as revised in November 1993 it was not a particularly long document and much of what it contained seems to me simply to be a writing down of the blindingly obvious. Under the heading "Fix and Inspection" it did say, amongst other things:-

"4.1 Fix reinforcement in accordance with drawings, bending schedules and specification.

4.2 Check fixed reinforcement for position, size, cover with Steelfixer Foreman, when satisfied complete Pre-concrete Inspection Record and pass to Section Agent for his action.

4.3 Carry out additional checks at the prescribed frequency (see Guidance notes for concrete cover to reinforcement ACEL-ENG-001)…

4.5 Carry out Cover Meter checks as required as soon as formwork stripped and record e.g. by completing reference on Post Concrete Inspection Record."

It seems from the evidence given before me that in 1993 and 1994 method statements were not as prominent a feature of the undertaking of civil engineering operations as they have since become. Again, however, it seems that AMEC was one of the leaders of the field in the use of method statements. For the purposes of the Works some 45 method statements were produced. Those method statements included one relating to trial assembly of Blocks and one for the placing and bedding of Blocks, but not one in respect of the actual casting of Blocks. The method statements in relation to trial assembly of Blocks and in relation to the placing and bedding of Blocks to which I have referred were short documents and again largely represented a written statement of the obvious.

In October 1993 at least two trial Blocks were manufactured in the Yard. Mr. Smith's diary extracts of which were put in evidence, contained records of the dates of trial pours of Blocks being 13 and 23 October 1993.

At paragraph 11 of his witness statement dated 31 October 2002 Mr. Smith set out his recollection, as to which there was no dispute, that AMEC did undertake trials with the use of spacer blocks made out of the same concrete as the Blocks to support a Cage. His memory was that the outline of the spacer blocks could be seen on the finished surfaces of Blocks, although the colour and texture were identical to those of the rest of a Block, and so Mr. Wragge-Morley would not accept the use of such spacers. Mr. Sampson's recollection was that the problem was that the high quality of the spacer blocks initially produced in AMEC's site laboratory, which was acceptable, was not replicated in production of spacer blocks in the Yard out of left over concrete and that it was this feature which made the use of such spacer blocks unacceptable. It does not seem to me to matter, for the purposes of anything which I have to decide, which of these recollections is correct. It appears that in fact it was Mr. Sampson whose memory was the more accurate. In a site instruction acknowledgement numbered 038 dated 9 December 1993 AMEC confirmed to Mr. Sampson his agreement to the use of site made pigmented concrete cover blocks on the top surface of Blocks, and Mr. Sampson confirmed that back in site instruction 0058 dated 16 December 1993. Yet in a letter to Mr. Sampson dated 22 December 1993 Mr. Heron referred to the use of such cover blocks as having "apparently yielded an unacceptable result". Mr. Wragge-Morley responded in a letter dated 10 January 1994 that the Blocks produced using site made spacer blocks could be used in the bottom row of terrace construction. In the event, although other possible approaches were tried by AMEC from time to time to see whether they were superior, the method of supporting the front of a Cage adopted by Amec for production Blocks was conical void formers with lips, together with a Hy-ten reinforcement support chair onto the cast-in bolts at the back of a Block to provide extra support to the rear of the Cage.

According to the evidence of Mr. Sampson, as to which there was no dispute on this point, production in the Yard commenced with the type of blocks of which the greatest number were required for the purposes of the Works, which were H blocks. It seems that production of culvert blocks began shortly thereafter.

PSD appointed Mr. Lawrence Bailey, known as Les, to be Clerk of Works with particular responsibility for the production of the Yard. Mr. Bailey gave evidence before me. He is a man of great experience of construction projects, including fifteen years service in the Royal Engineers and ten years spent working in the Middle East, principally on port works. Not only is he very experienced, but having seen and heard him give evidence I am satisfied that he is conscientious and careful in carrying out any tasks assigned to him. However, his detailed recollection of matters with which I am concerned did not seem to be very good. This is no criticism of him. The events which have given rise to this action all occurred nine or more years ago. As he told me, after his involvement with the Works, which came to an end in about June 1994, Mr. Bailey was transferred by PSD to act as Clerk of Works on a marina project in Jersey which, save with regard to the use of Blocks, employed similar materials to those used in the Works, so he had some difficulty at this remove in time in disentangling his recollections of the Works from his recollections of the other project which followed it.

Although he himself had no recollection of it, it appears that Mr. Bailey was involved with Mr. Smith in investigating the accuracy of readings produced by the Covermeter in respect of H blocks and culvert blocks on or about 10 November 1993. It seems that readings made of production H blocks and culvert blocks had suggested that the requisite of cover was not being obtained. This prompted Mr. Smith and Mr. Bailey to test one H block, numbered H22, and one culvert block, numbered C3, on 10 November 1993 first with the Covermeter and then by drilling into each block to see at what depth reinforcing steel was actually found. Mr. Smith's notes of the tests were put in evidence. Four holes were drilled in H22 to check readings made with the Covermeter. All showed that the Covermeter indicated the depth of cover as less than it actually was, but the extent of the error was not consistent. One test showed a difference between the Covermeter reading and the actual cover of 8 millimetres, one showed 9 millimetres, one showed 10 millimetres and the last showed 11 millimetres. Only one hole was drilled in C3. That showed that cover at the point sampled was 78 millimetres, while, depending upon the size of bar to detect which the machine was set, the Covermeter showed metal at a depth of either 52 millimetres or 57 millimetres. These results were sent to Mr. Sampson by Mr. Tim Nixon, AMEC's Sub-Agent, under cover of a technical query dated 11 November 1993 in which he said:-

"Please find attached the results of a joint cover meter survey carried out on a culvert unit and a "H" unit. The covers indicated by the meter were subsequently checked by breaking out to uncover the steel. The results show consistent under-measurement by the meter. Please consider, in order that acceptance criteria and necessity for future cover checks may be discussed and agreed. Please also confirm that units cast to date are acceptable."

Mr. Sampson replied the following day. The detail of his reply is not material to any issue in this action. What is material is that it is plain that at least some joint surveys using the Covermeter were undertaken and that these indicated what Mr. Bailey told me he already knew from his previous experience of using covermeters, namely that the Covermeter underestimated the actual depth of cover. Mr. Bailey told me, and I accept, that he had considerable experience of using covermeters before his involvement with the Works.

It was common ground that production of Blocks commenced on 18 November 1993. The first block produced was designated 7, which suggests that there had been more than just two trial Blocks produced, but apart from the inference to be drawn from the numbering of the first production Block, and rather general evidence as to the trial of various methods of supporting a Cage, there was no definite evidence that more than two trial Blocks were made. It is obviously possible that, for whatever reason, Blocks numbered 1 to 6 inclusive, intended as production Blocks, were simply rejected as below specification. Mr. Sampson told me, and again his evidence on this point was not in issue, that, while there was no trial period as such, initial production of Blocks was treated as to a degree a trial, but with any Block considered of production standard being accepted for incorporation in the Wall. An agreed schedule which set out dates of manufacture of Blocks, how each was designated, where each was placed and the date of placement was put before me. That indicated that 2 Blocks were cast on 18 November 1993, then no more until one on 24 November 1993. Thereafter production speeded up, with 2 Blocks being cast on each of 26 November 1993, 29 November 1993 and 1 December 1993. 18 November 1993 was a Thursday, so the production up to and including 1 December 1993 covered the 10 working days starting with the date of the first day of production.

The initial production of Blocks was undertaken with concrete being introduced into Moulds by means of a concrete pump. As described by Mr. Bailey, this brought concrete from the batching plant via a steel pipe of some six inches diameter to a flexible hose from which the concrete was disgorged into the Mould. It was common ground between all of the witnesses who gave evidence before me of having practical experience of the use of concrete pumps that the use of a pump in this way was slow and, in relation to filling a mould through an opening a metre or so off the ground, difficult and dangerous. The mass of the concrete going through a small opening, according to the evidence of Mr. Bailey, which I accept on this point, meant that it would not penetrate to the bottom of the Mould without assistance. That assistance was provided by means of an electrical vibrator, also referred to in the evidence as a poker. The orthodox use of such a vibrator is to assist in compaction by eliminating air from concrete poured into a mould. However, Mr. Bailey told me that it is also commonly used for the purpose which I have described.

The initial foreman employed by AMEC in the Yard was a Mr. Fields. However, he was replaced by Mr. Bartholomew Sullivan, known as Ginger, as from, so it appears from the terms of minute 10.1 of the minutes of Weekly Progress Meeting No. 11 held on 12 November 1993, of which a copy was put before me, 22 November 1993. Mr. Sullivan gave evidence before me. His recollection was that he started in the Yard in October 1993. I find that he was in error in that recollection, insofar as it may matter, both because of the terms of the minute to which I have referred and because his arrival seems to have been associated with a change in the method of loading concrete into Moulds. Instead of placing concrete by pump Mr. Sullivan adopted a system of placing either from a crane-held concrete skip, or, more generally, from a mixer truck by means of a chute. Again, it was common ground amongst those who had practical experience of placing concrete that, contrary to what the uninitiated might suppose, placement of concrete by means of a chute from a mixer truck actually enabled a high degree of control to be exercised over the speed and consistency of placement because, as Mr. Nicholas Daines, who was employed by AMEC at the material time as a Senior Contracts Manager told me, the speed at which concrete leaves the truck is entirely a function of the speed at which the drum rotates and that can be controlled very precisely. The change in the method of placement of concrete to which I have referred took place in early December 1993. Mr. Sullivan, Mr. Smith and Mr. Bailey agreed that, when the concrete was placed by means of a chute from a mixer truck the filling of a Mould took something of the order of half an hour to an hour.

It may be that Mr. Sullivan's nickname became attached to him as a result of his physical colouring at some point in the past. If so, there was no lingering visible sign of what the original justification for the nickname may have been. That comment is not intended in any way unkindly, but rather to emphasise that Mr. Sullivan is a man of some maturity, and, as he told me, enormous experience (my description, not his) in the casting of reinforced concrete in all manner of shapes and sizes. I found him to be a very impressive witness. I am confident, having seen and heard him give evidence, that he is thoroughly knowledgeable in all of the practical aspects of the production of pre-cast concrete, diligent and cautious.

Between November 1993 and June 1994 AMEC manufactured and laid 617 Blocks as part of the Works. Mr. Sullivan gave evidence, which I accept, that he checked the placement of the Cage in each Mould before the pouring of concrete began and that he observed at least part of the process of pouring. He told me, and again I accept, that he never noticed any movement of a Cage in a Mould during or at the conclusion of concrete pouring. Mr. Bailey also told me that he observed the pouring of concrete into most, but not all, of the Moulds whilst it was happening and also noticed nothing untoward so far as movement of a Cage was concerned.

In his witness statement Mr. Smith, whom I find is a scrupulous and careful engineer, and a reliable witness, save in one respect, in relation to the passage which I am about to quote, said:-

"21. Finished units were lifted out of the casting area by a crane and placed into a stockpile. They would then be subjected to post-concrete checks. I would inspect each individual unit to ensure it was within the allowable dimensional tolerances, using a tape measure, and the surface finish by visual inspection. In this I was sometimes assisted by the Foreman, Bartholomew Sullivan.

22. My recollection is that the practices employed by AMEC in the pre-cast yard, before, during and after casting on this project were its usual, careful practices. I did not work in a slapdash or careless fashion; nor did I see anyone else doing so, or attempting to do so.

23. In addition, AMEC's own quality assurance procedure required a concrete cover check of approximately 1 in 10 units, chosen at random from those in the stockpile. I undertook random concrete cover checks of all the different types of units using AMEC's Ko-lectric Micro Covermeter. I generally undertook these checks unaccompanied, although I was occasionally accompanied by our Foreman.

24. The covermeter was straightforward to use, and I had no difficulties in performing cover checks on the terrace or other pre-cast units…

27. Before using the cover meter for the first time on any unit, I would set the instrument to detect for high yield steel bars of the diameter known to be below the face of the unit being investigated and zero set it by holding the instrument away from any reinforcement and pressing the CAL button, in accordance with the instruction booklet supplied by the manufacturer. I initially tried using both the large and small search heads, but later realised that the small search head was the one recommended by Ko-lectric for reinforcement depths of up to 120mm. On the terrace units I took readings of the concrete cover across the front curved face, then across the front part of the upper surface of the unit as placed. I then set the covermeter to read for the larger diameter bars at the back of the upper surface as placed, and the outer sides of the legs of the units. I again zero set the covermeter and took readings in those areas. On some of the terrace units, I may have checked other faces at random.

28. Les Bailey would carry out a check of all the individual units, and would sign a quality assurance sheet in respect of each one before it could be placed into the works. He retained one copy for the client's own reference, and AMEC was supplied with a copy. He checked dimensional accuracy and concrete cover with the Engineer's cover meter….

30. When I began randomly checking the cover of the pre-cast terrace units, the covermeter showed readings of 50mm to 55mm. I was concerned that these readings suggested that the concrete cover fell short of the cover required by the specification, being 75mm. I therefore advised Les Bailey of my concerns, and showed him the terrace units in the stockpile which were giving low readings on the meter. He fetched the covermeter he had in his office, which was also a Ko-lectric Micro Covermeter, and we proceeded to double check the cover of those terrace units, using both our covermeters, and comparing the results. In respect of each unit where my covermeter showed a low reading, his covermeter gave the same or a similar reading.

31. The only way to verify the true depth of concrete cover was to undertake test drilling into the units, and measure it for ourselves, in much the same way as I had done for the H units. Les Bailey, Bartholomew Sullivan and I drilled into several terrace units, and measured the actual depth of the concrete covering the reinforcement cages. We drilled approximately 10 to 12 holes into various faces of two units, and a further 1 or 2 holes into eight or ten units in the top faces. The measurements were between 70mm and 80mm depth, and therefore within the tolerances allowed for by the specification.

32. I was therefore satisfied that the pre-cast units were within specification, as were Bartholomew, and Les Bailey, on behalf of the client.

33. We had no reason to think that concrete cover on the terrace units was unacceptable, and continued casting them on this basis. I continued to carry out cover checks on approximately 10% of the units, but took a reading of between 50mm and 55mm on the covermeter to equate to approximately 75mm of actual concrete cover, believing that the discrepancy between the readings and actual cover to be a constant. Les Bailey was aware that I was carrying out cover checks on this basis, and was satisfied with the method of working. In addition, when he carried out his own cover checks, he took a reading of 50mm to 55mm of cover on his covermeter to equate to actual concrete cover of approximately 75mm."

The one respect in which I consider that Mr. Smith was in error in what he said in that passage was in his suggestion that Mr. Bailey routinely checked Blocks with the Covermeter. For the reasons which I set out later in this judgment I think that Mr. Smith was mistaken in that belief.

Mr. Bailey told me that he did not routinely seek to check the depth of concrete cover over reinforcement with the Covermeter during the initial production of Blocks. He said that he had no recollection of his involvement in drilling Blocks in the manner described by Mr. Smith in the period prior to about March 1994. I shall come to the significance of that date. He also told me that his recollection was that it was only as a result of what he discovered in about March 1994 that he obtained from PSD's office, in fact from the Architects Section, a Covermeter. Mr. Sullivan, on the other hand, told me that he did recall such drilling as Mr. Smith described. Mr. Bailey did, however, seem to accept that checks had been made by use of the Covermeter on the depth of cover of Blocks by Mr. Smith. When confronted with the reference to joint surveys in the AMEC technical query dated 11 November 1993 he appeared disposed to accept that it must have been him who had been involved in such surveys on behalf of PSD.

I was urged by Mr. Nicholas Vineall, who appeared on behalf of Norwich Union, to approach with caution the evidence of Mr. Smith and Mr. Sullivan as to the making of checks of the depth of cover of Blocks with the Covermeter and in particular their evidence as to the making of test drillings in Blocks after checks with the Covermeter seemed to reveal lack of adequate cover. The principal reason for circumspection in relation to that evidence which he urged upon me was, I think, that there was no documentary evidence to support it. There were, for example, no surviving records of the results of any testing by the use of the Covermeter and no records of any drilling. Mr. Smith told me that there had once been records, but they had been lost. I accept that evidence. It was borne out, at least so far as the undertaking of testing of Blocks using the Covermeter and the involvement of PSD in that testing was concerned, by a number of contemporaneous documents copies of which were put in evidence before me. However, although at times Mr. Vineall seemed to come close to suggesting that I should not accept the evidence of Mr. Smith and Mr. Sullivan that there had been any testing at all, I think that ultimately his position was that, absent copies of the relevant test records, one could not tell what results had been obtained, and the results of later testing, to which I shall come, indicated, submitted Mr. Vineall, that the initial testing was not carried out with appropriate care. So far as drilling into Blocks was concerned, Mr. Vineall in the end submitted that I should regard Mr. Smith and Mr. Sullivan as mistaken as to when it had happened and I should conclude, in the light of the evidence of Mr. Bailey, that it had taken place in March 1994.

After the discovery in March 1994 to which I shall come Amec was requested to give an account of its actions concerning production and testing of Blocks. That account was in fact given in a paper called "Report into the Reinforcement Cover of the Precast Concrete Terrace Blocks JUNE 1994" ("the Lunn Report") prepared by Mr. M. S. Lunn, Regional Engineering Director of AMEC Marine. In section 4.2 of the Lunn Report, which was entitled "Cover Meter Surveys", Mr. Lunn wrote that:-

"(iv) Between 2^nd December 1993 and 15^th April 1994, 56No. random cover checks were recorded. Of these, 41 No. showed units with less than 55mm meter readings. Having said this there are a large number with readings of between 50 and 55mm and in the circumstances it is perhaps not surprising that no action was taken on these readings. However, there are at least three readings which should have "triggered" an investigation.

(v) The Site Engineers [that is, Mr. Smith] advise that these results were passed to the Section Agent [Mr. Tim Nixon] for consideration. The Section Agent has now left the Company and is currently travelling in Europe and unfortunately not available for comment. The Site Manager [Mr. Heron] cannot specifically recall being advised of these results but acknowledges he was probably advised and cannot understand why no action was taken."

In Section 4.1 (vi) of the Lunn Report Mr. Lunn referred to the fact that "cover meter records were kept separately".

The copy of the Lunn Report which was put in evidence seems to be a copy of a version provided by AMEC to PSD, for it contained a number of manuscript observations indicating dissent from what had been written, or at least a desire to qualify what had been written. In two places the manuscript comment was "to be altered by AMEC". Those observations support the explanation of the production of the document provided to me by Mr. Daines, which I accept. That explanation was that the document was produced at a time when AMEC was seeking to agree with PSD a way forward in relation to the problem to which I am about to come and was essentially an exercise in client relations. The idea was that AMEC would accept responsibility for what had happened, or at least not seek to implicate PSD, in the hope of inducing Jersey to agree to a pragmatic, but sound, engineering solution to the problem, rather than Jersey seeking to rely upon its strict contractual rights.

Mr. Tristen Dodd is a civil engineer employed by PSD. He was appointed to act as Materials Engineer/Assistant Resident Engineer for the purposes of the Works. Following the identification of the problem which I have mentioned he was entrusted with the task of undertaking some investigations as to what had happened. In the course of that work he prepared a document entitled "Comments on AMEC Marine Report into the Reinforcement Cover of the Precast Concrete Terrace Blocks"("the Dodd Comments"). Included within that document were these observations:-

"Of the 70 (approx) surveyed for cover only 6 (approx) were terrace units.

There was no period of extensive joint cover meter surveys. A joint survey was carried out for one day only on all unit types.

AMEC appear to have maintained a period of extensive cover meter surveys until the beginning of February….

Cover meter surveys were kept by AMEC and were not seen by PSD…."

Although there were set out in the Dodd Comments points in relation to various of the subparagraphs of Section 4.2 of the Lunn Report, there were no observations upon subparagraphs (iv) or (v).

The person appointed to act as the Engineer for the purposes of the Works was Mr. Les Winton. Mr. Wragge-Morley prepared a note for Mr. Winton in May 1994 entitled "Terrace Blocks Briefing for Les Winton" ("the Wragge-Morley Note"). The Wragge-Morley Note included:-

"1.3.1 Supervision was carried out as described in 1.2.1) and 1.2.2) above. In addition periodic cover meter surveys were carried out jointly with the Contractor.

1.3.2 As described above Cover metering was carried out on the [sic] all of the precast yards production for the first 10 days of operation and for 1-2 days production every 6-8 weeks thereafter….

2.2.1 Having obtained AMEC's internal cover meters survey record, they were as follows:…

However of the 56 cover meter surveys of terrace blocks carried out, only 20 were equal or better than the Specification, 30 had more than 55mm minimum cover and 6 had less than 55mm minimum cover."

The comments in the two preceding paragraphs which I have quoted from the Dodd Comments and the Wragge-Morley Note are to a degree ambiguous as to exactly how much of the testing of Blocks by use of the Covermeter was undertaken jointly between AMEC and PSD, although they do firmly support the evidence of Mr. Smith and Mr. Sullivan that AMEC itself undertook fairly extensive testing. That ambiguity was apparently noted by Mr. Winton when he considered the two documents, for in a memorandum to Mr. Winton dated 9 June 1994 Mr. Wragge-Morley wrote, in relation to the Lunn Report:-

"2. The actual extent of joint cover meter surveys of precast blocks is given in my briefing notes to you (paragraph 1.3.2).

The joint monitoring of initial precast block output included only 6 Terrace units of which none were indicated to have low cover."

A report of the production of the Yard up to 14 April 1994 of which a copy was put in evidence recorded that the production of Blocks to that point numbered 393 units. In the light of the documentary evidence to which I have referred which bears upon the question of the testing of Blocks by use of the Covermeter up to 15 April 1994, and which supports the evidence of the witnesses on this issue which I have already mentioned, I find that Mr. Smith checked by use of the Covermeter 56 out of 393 Blocks in the period between 2 December 1993 and 15 April 1994, that is some 14.25% - his own estimate in his witness statement of 10% and in his oral evidence of 1 in 8 thus being slight under-estimates, and that 6 Blocks were tested by use of the Covermeter by Mr. Smith and Mr. Bailey jointly. Given his reaction to finding that the Covermeter under-estimated the depth of cover on H blocks and culvert blocks, it is overwhelmingly probable, in my judgment, that Mr. Smith's response to a similar discovery in respect of Blocks would be, as he said it was, similar, that is to say, to undertake a check jointly with Mr. Bailey to ascertain to what extent it appeared that the readings were inaccurate by investigating that in the only practicable way, by drilling. As it appears that Mr. Bailey did not routinely test the depth of cover in Blocks by use of the Covermeter, it seems appropriate to conclude that something triggered the 6 joint tests recorded by Mr. Wragge-Morley and Mr. Dodd almost contemporaneously. I find that that trigger was what Mr. Smith said it was, namely the discovery that the Covermeter indicated that the depth of cover in Blocks was less than the specified 75 millimetres. The emphasis in the Dodd Comments on the point that the joint testing took place on only one day again, as it seems to me, supports the evidence of Mr. Smith and Mr. Sullivan as to the undertaking of drilling with Mr. Bailey to confirm the extent of the under-reading of the depth of cover in Blocks by the Covermeter.

As to the extent of the under-reading, both the Lunn Report and the Wragge-Morley Note in the passages which I have quoted respectively from each focus on the figure 55 millimetres as of significance. I think that can only be because, to the knowledge of both AMEC and PSD, the working hypothesis at the time was that the extent of the under-reading was 20 millimetres in relation to the reinforcement in Blocks. The reference in the Lunn Report to the number of readings in the range 50 – 55 millimetres seems to indicate that the 5 millimetre tolerance was considered to be on top of the 20 millimetre under-reading. Thus this evidence supports the evidence of Mr. Smith as to what was established by the drilling into Blocks following the noting of under-readings with the Covermeter. However, the evidence as to the likely working hypothesis is somewhat confused. Section 4.2 of the Lunn Report also included:-

"(iii) It appears that a general correction factor of 15mm was established for meter readings at an early stage and this, coupled with a reasonable tolerance resulted in a meter reading of 55mm being regarded as reflecting adequate cover."

Section 2.2 of the Wragge-Morley Note, on the other hand, included, immediately before the comment upon the results of AMEC's tests:-

"The cover meter does not give accurate cover data.

Calibration tests prior to the survey suggest the following accuracy:

Under-measurement of cover 5 – 10 mm

Orientation of meter to reinforcement bars 0 - 5mm

The data recorded was always the minimum value obtainable so that, typically, adding the 5mm variance allowed by the Specification, 15mm should be added to the meter readings to obtain true cover."

How the figure of 15 millimetres was arrived at is unclear. The addition of the highest figure for each element in the calculation, 10 millimetres, 5 millimetres and 5 millimetres, produces 20 millimetres. If the lowest figure for each element were taken, the figures would be 5 millimetres, zero, and 5 millimetres, to produce 10 millimetres. The justification for taking some combination other than all of the highest figures or all of the smallest figures is obscure. Then again, at minute 4 of a meeting held on 6 May 1994 "to discover cover to reinforcement in terrace units" recorded:-

"Some doubt was expressed as to the accuracy of the cover metre [sic] readings, AMEC suggested that the metre was under-reading by some 10mm."

Doing the best I can it seems to me that the contemporaneous evidence does support the evidence of Mr. Smith before me that actually a reading of between 50 millimetres and 55 millimetres was taken as equivalent to 75 millimetres, including allowance for the permitted tolerance. A further curious feature about the analysis of Mr. Wragge-Morley leading to the suggestion that 15 millimetres should be added to Mr. Smith's actual readings to determine the true level of cover is that it preceded a statement that " of the 56 cover meter surveys of terrace blocks carried out, only 20 were equal or better than the Specification, 30 had more than 55mm minimum cover and 6 had less than 55mm minimum cover". If the allowance in fact to be made to convert Covermeter readings to actual was thought to be 15 millimetres, the magic number would be 60 millimetres, not 55. The latter number would be of no significance. Again, so far as the Lunn Report is concerned, it is difficult to see why the number of readings in the area 50 to 55 millimetres was of significance unless the 5 millimetre tolerance was treated as being in addition to a 20 millimetre allowance for under-reading. Most puzzling of all, however, is that Mr. Lunn's interpretation and Mr. Wragge-Morley's interpretation of what Mr. Smith's 56 records of testing with the Covermeter showed seem totally irreconcilable. Mr. Lunn had only 15 readings in excess of 55 millimetres, with "a large number" (?all bar three) of the remaining 41 between 50 and 55 millimetres. Mr. Wragge-Morley had 20 of the 56 readings equal to or better than the Specification, that is to say, 75 millimetres or over, 30 in excess of 55 millimetres and 6 less than 55 millimetres. The reason for the difference cannot be that Mr. Wragge-Morley's figures have been adjusted by adding 15 millimetres, while Mr. Lunn's are raw readings as recorded, for if that were the explanation Mr. Wragge-Morley's figures when converted back to "raw" would be 20 in excess of 60 millimetres, 30 in excess of 40 millimetres and 6 less than 40 millimetres, which still would not represent what Mr. Lunn set out. Whilst not able to reconcile the difference in interpretations of the data, I am satisfied that the interpretation put forward by Mr. Lunn, which seems less favourable to AMEC than that put forward by Mr. Wragge-Morley, is likely not to be exaggerated, not least because PSD was in possession of copies of the results summarised by the time it received its copy of the Lunn Report. Those copies seem to have been transmitted to PSD under cover of an AMEC transmittal note dated 17 May 1994 and stamped as received by PSD on 18 May 1994. Neither the Dodd Comments nor Mr. Wragge-Morley's memorandum dated 9 June 1994 to Mr. Winton contain any adverse observation upon Mr. Lunn's interpretation of the results, but the Dodd Comments did contain the interesting statement that:-

"A figure of 55mm was discussed internally by PSD as the meter reading relating to in specification reinforcement (the date was around 17^th May 94)"

According to paragraph 2.1 of the Wragge-Morley Note,

"At the beginning of March 1994 the C.O.W. [Mr. Bailey] observed rust staining on two of the installed terrace units and kept note of any subsequent deterioration."

It is not now possible to say precisely which were the two Blocks upon which Mr. Bailey observed signs of rust in March 1994. However, during surveys, using the Covermeter, of each of the Blocks which had been installed and was accessible made during May 1994 by Mr. Smith and Mr. Dodd jointly it was noted that only six Blocks exhibited signs of rusting, namely Blocks numbered 16, 100, 131, 142, 157 and 263. It was felt that the signs of rusting on Block 16 might be attributable to deterioration of wire used to tie reinforcement in place in a Cage rather than to rusting of the Cage itself.

By about 20 May 1994 617 Blocks had been manufactured, and 348 installed in the Wall. The investigation by Mr. Smith and Mr. Dodd jointly by use of the Covermeter of the 348 Blocks indicated that a large number had cover of concrete over reinforcement, as recorded, of less than the specified 75 millimetres. As summarised at minute 10.1 of the minutes of Weekly Progress Meeting No. 31 held on 20 May 1994 the results of the survey were:-

"Of the units surveyed 30 units required no attention, 170 units had covermeter readings of 40 mm or below, 70 of these units having low cover on visible faces."

Mr. Vineall relied heavily upon those reported results as indicating that Mr. Smith could not have undertaken his initial testing using the Covermeter on Blocks with proper care. Self-evidently, he submitted, on retesting half of the Blocks were shown to have Covermeter readings of at least 35 millimetres below the concrete cover required for Blocks. If Mr. Smith had picked that up, Mr. Vineall contended, he must have brought it to someone's notice, as the passage from the Lunn Report quoted above indicated that he did, and that someone ought to have done something about it. The failure of AMEC to do anything, submitted Mr. Vineall, indicated as a real possibility that in fact Mr. Smith had failed to detect what was there to be detected.

Mr. Smith and Mr. Dodd made records of the results of their tests with the Covermeter on each Block in the form of marking the readings obtained upon a plan of a Block. The records which survive relate to rows 18 to 51 inclusive only. Of the Blocks upon which signs of rusting were noted, that which showed the greatest depth of cover in an area noted as showing signs of rust was Block 157, the relevant depth being 18 millimetres. Mr. Neil Mendoza, who appeared on behalf of AMEC, undertook an analysis of the other test records to identify all Blocks for which there are surviving records which show a depth of cover of 18 millimetres or less. He found 27 cases.

Subsequent to the testing of all installed Blocks with the Covermeter Mr. Smith sought to make an assessment of just how inaccurate readings of the cover of concrete over reinforcement in a Block were by taking a Cage and a number of 75 millimetre concrete spacer blocks and taking readings with the Covermeter of the reinforcement through the spacer blocks in a variety of different locations. The results were plotted on a plan of a Block. Readings were taken at 87 points. At the front of the Cage the 10 readings were all either 66 millimetres or 67 millimetres – that is to say, divergent from the correct position by 8 or 9 millimetres. In other places the range of readings was between a high of 73 millimetres and a low of 44 millimetres. The readings clustered in the area 45 millimetres to 54 millimetres in the centre of the Cage, with the higher readings around the periphery.

In order to try and carry forward an assessment of the technical implications of the apparent lack of cover revealed by the testing of all accessible installed Blocks using the Covermeter, given the unreliability of the Covermeter readings, a sub-surface radar examination of the Wall was undertaken by Structural Testing Services Ltd. ("STS"). That survey revealed that some 70 Blocks had cover of 70 millimetres or more and a further 209 had cover in excess of 60 millimetres. Of the remaining Blocks, 235 had cover of more than 45 millimetres, but less than 55 millimetres, while 93 had less than 45 millimetres of cover. Technical advice as to the significance, in terms of anticipated service life, of the depth of cover was provided by Dr. Philip Bamforth of Taywood Engineering Ltd. Following the receipt of that advice and negotiations between Amec and Jersey Jersey agreed to accept Blocks which had a minimum of 50 millimetres of concrete cover over the reinforcement. However, 104 Blocks were identified as having less than 50 millimetres of cover. Jersey required Amec to break out and to replace those 104 Blocks. That Amec did. The immediate cost of replacing the Blocks in question was agreed for the purposes of this action at £507,029.

For reasons which did not emerge during the evidence only three of the six Blocks which had been noted as showing signs of rust by Mr. Smith and Mr. Dodd in May 1994 were in the event replaced. Those were the Blocks numbered 131, 157 and 263. The only sensible inference to draw from the fact that the other Blocks noted as having signs of rust staining were not required to be replaced is that it was not the question of signs of rust which was material to the decision, but the depth of cover of concrete over the reinforcement in the Block in question.

It was not in dispute before me that the immediate cause of the lack of the specified cover over the reinforcement in Blocks which were found to be defective was that the Cage placed in the relevant Mould had moved during the process of the adding of concrete so as to be closer to a surface of the Block than the original placing of the Cage in the Mould envisaged. The precise mechanism of movement could not be established, but in absolute terms it must have been small – 75 millimetres is only 3 inches – and it may well not have been the same in all cases. Moreover, it was, I think, accepted by all those who expressed a view about it in evidence, and I certainly find, that the movement in question could have been of part of a Cage, for example by rotation (that is to say, twisting) or deformation (bending). At all events whatever the mechanism in any particular case, each of Mr. Smith, Mr. Sullivan and Mr. Bailey told me that he had not noticed any movement in any Block which was approved for use in the construction of the Wall. I accept that evidence. Mr. Bailey told me, and I accept, that on occasion he checked the Cage for movement by using a spirit level before and after concrete had been poured. It was common ground, and is obvious, that once a Mould was shut and concrete was being poured into it one could not observe what was happening inside. Mr. Vineall suggested that the use of electric vibrators in Moulds could have caused movement of a Cage. That is possible, but not, as it seems to me, relevant unless the movement could have been visible from outside the Mould. The use of vibrators to assist in the compaction of concrete in a mould was, on the evidence, a standard procedure. It certainly seems in this instance to have assisted in the production of high quality concrete. There was no suggestion that, other than in relation to the depth of cover, each of the Blocks incorporated in the Wall originally was not of good quality.

By a claim form dated 5 July 1994 submitted to Norwich Union AMEC sought to claim under the Policy in relation to the need to replace the 104 Blocks. The "Brief description of loss damage to contract works, plant and equipment or temporary buildings" set out in that claim form was:-

"Precast Terrace Blocks failed to meet specification due to inadequate cover to reinforcement."

In a letter dated 4 January 1999 to Mr. David Askwith of AMEC Insurance Mr. N. F. Swindells of GAB Robins UK Ltd., loss adjusters acting on behalf of Norwich Union, rejected the claim. The stated ground of rejection was that:-

"Norwich Union remain of the opinion that Exclusion 3 operates to preclude any recovery under the policy. I concur."

The liability issues in this action

Although the principal focus of the disputes as to liability in this action, as foreshadowed in the letter dated 4 January 1999 written by Mr. Swindells to Mr. Askwith, has been the contention that the cause of the loss sustained by AMEC as a result of the need to replace some 104 Blocks was occasioned by those Blocks being "in a defective condition due to a negligent defect in design, plan, specification, materials or workmanship", the contention has also been advanced on behalf of Norwich Union, as expounded in the written opening of Mr. Vineall that:-

"44. The Defendant contends that its liability under the policy only arises where there is loss of, or physical damage to, insured property.

45. The terrace unit blocks are insured property, but they were not damaged or lost, they were simply badly built. There was no damage to any other property, either belonging to the insured or to third parties."

The issue as to the scope of the cover provided under the Policy was squarely raised in the Defence served on behalf of Norwich Union in this action. Mr. Mendoza sought in his written opening to answer it in this way:-

"14. AMEC contends that there was clearly loss and damage within the meaning of the Policy. Some of the terrace blocks had already exhibited rust marks at the time of the survey by STS in May 1994. 6 blocks were noticed as being so marked at that time, although out of those 6, only 3 terrace blocks were replaced… It is by reference to this information that Norwich Union contends that if it has any liability it is only in respect of these 3 blocks.

15. However, AMEC contends that although 3 of the terrace blocks that were subsequently replaced exhibited rust marks in May 1994, it is likely that rust marks were appearing in more blocks as the replacement works were carried out over the following months.

16. Further or alternatively, in respect of the inadequately covered blocks that were ultimately replaced, on a balance of probabilities corrosion had already commenced within the reinforcement, albeit that rust marks had not yet become visible on the surface. If there was corrosion of the steel reinforcement, that is clearly a change in condition that would constitute damage.

17. In any event, the terrace blocks that were broken out and replaced became lost and/or damaged by reason of the breaking out process itself. Although at first sight this might seem a surprising suggestion given that AMEC itself carried out this work, it is not illogical when viewed against AMEC's obligations under the policy. If AMEC maliciously damaged the blocks, or removed them for no good reason, then cover would be excluded by reason of breach of Condition 5 …

18. However, given that AMEC carried out the breaking out and replacement process pursuant to its contractual obligations to Jersey it was not in breach of the Condition. In other words, it did not fail to take reasonable precautions to prevent the breaking out, since this was something that it had to do in order properly to perform the contract.

19. However, it does not follow from this proposition that wherever a contractor destroys works as part of the remedial process there would be insurance cover. In such circumstances (as here) the insurer would be protected against a claim in respect of remedial works made necessary as a result of negligent design, plan, specification, materials or workmanship … The crucial issue is, therefore, whether the problems arose as a result of AMEC's negligence. "

In his written opening Mr. Vineall responded to the points made in the passage from Mr. Mendoza's written opening quoted in the preceding paragraph as follows:-

"47. The Defendant does not accept that rusting is loss and damage within the meaning of the policy. The policy excludes wear and tear or gradual deterioration…

48. Even if that is wrong, only three blocks exhibited any rust staining.

49. The Claimant's answers to this point (none of them pleaded) seem to be

49.1 firstly, that more blocks must have been in the process of exhibiting surface rusting and/or

49.2 secondly, that other blocks must have been rusting inside

49.3 thirdly, that the blocks that were broken out and replaced were, by that process, damaged.

50. As to the first point, there is no evidence to support this unpleaded allegation;

51. As to the second point, there is no evidence to support this unpleaded allegation and in any event this is plainly gradual deterioration;

52. As to the third point, this is an absurd construction of the policy and it runs counter to the rule that an all risks policy can only insure a fortuity: the deliberate action of the insured in breaking out and replacing the defective goods cannot be the event which triggers the all risks policy liability. See generally, Clarke on Insurance at 17-3A-3 and in particular The Wondrous, Ikerigi CN SA v. Palmer [1991] 1 Lloyd's Rep 400 @ 416 (affirmed 1992 Lloyd's Rep 566).

53. If the Claimant is right about the policy interpretation, the Defendant insurers have in effect become guarantors for every non-negligent mistake made in Amec's work. Every item of rework done by Amec as a result of non-negligent oversight, whether or not there was any physical damage at all, is for their all risk insurer's account."

It is certainly correct that it had not been contended on behalf of Amec prior to the preparation by Mr. Mendoza of his written opening that its claim was based upon any contention other than that the defects in the Blocks which were replaced constituted loss and damage for the purposes of the Policy. This was articulated in paragraph 7 of the Reply, responding to the averment in paragraph 20 of the Defence that "the blocks were not damaged: they were, simply, always defective", as follows:-

"… the Claimant avers that defects to the Blocks did constitute loss and damage within the meaning of the Policy and that the loss claimed is within the scope of the Policy."

Mr. Mendoza's first response to Mr. Vineall's submission that any rust damage to a Block fell within Exclusion 4 was that that point had not been pleaded. That also is correct, but Mr. Vineall's answer that he cannot be criticised for not pleading an answer to a basis of claim itself not pleaded must be right. As the trial has proceeded Mr. Vineall has not sought to maintain a pleading objection to Mr. Mendoza's attempt to rely upon rust as damage falling within the scope of the Policy, provided he could rely upon Exclusion 4 and upon his contention that there was no evidence to support the contention that AMEC had sustained any loss or damage as a result of any rust staining demonstrated on the evidence. That seems to me to be a realistic course and one which has not caused prejudice to either party. Mr. Mendoza's answer to the attempt to rely upon Exclusion 4 was that damage caused by rust was not "gradual deterioration" because of the speed with which such damage became manifest in the six affected Blocks and the other Blocks which he invited me to infer had also been affected.

By the time he came to make his closing submissions Mr. Mendoza had abandoned the original basis of claim advanced on behalf of AMEC, namely that the 104 Blocks which had to be replaced had sustained loss or damage as a result of being defectively manufactured. He had also abandoned the suggestions that I should draw the inferences that Blocks other than the six which I have identified had manifested rust staining prior to being replaced or had been affected by corrosion. What had been the third of his three alternative cases that the damage in respect of which AMEC sought to claim fell within the scope of the cover provided by the Policy, if his main case failed, now became AMEC's principal case. As Mr. Mendoza put it in his written closing submissions:-

"The Claimant's primary position is that the destruction of the blocks during the process of their replacement constitutes the loss and damage that gives rise to the claim."

The only alternative case maintained was that based upon damage to the three rust-stained Blocks which were actually replaced.

Pursuant to an order made by H.H. Judge John Toulmin C.M.G., Q.C. the parties to this action agreed a list of issues. Those relating to the applicability of clause 3 of the "Exclusions" section of the Policy were formulated in this way:-

"4. If and insofar as there is loss of or damage to insured property, within the meaning of the policy, did it arise as a result of a "negligent defect in design, plan, specifications [sic], materials or workmanship" within the meaning of the policy. In particular, was Amec negligent in any or all of the following respects, either taken alone or together.

(1) Before production casting

4.1 Failing adequately to design the terrace unit moulds (including reinforced cages), with the result that

4.1.1 Movement of the cage could not be detected during pouring

4.1.2 The cage was insufficiently rigid to resist movement during concrete pouring

4.1.3 The cage was insufficiently secured to resist movement during concrete pouring

4.1.4 The cage was likely to rotate within the frame

4.1.5 The pouring of the concrete was, because of the design of the cast, awkward

4.2 Failing adequately to test trial castings from the terrace unit moulds

4.3 Failing to institute any or any adequate site control procedures

(2) During production casting

4.4 Failing adequately to support the reinforcement during the concrete pouring

4.5 Failing properly to plan control execute or inspect the pouring of concrete, in particular pouring it too fast, and/or unevenly

4.6 Failing to institute any or any adequate site control procedures

(3) After casting

4.7 Failing properly to monitor the depth of concrete cover post pouring, in particular:

4.7.1 relying on an insufficiently experienced employee to perform the monitoring

4.7.2 relying on covermeter readings which were known to suggest insufficient cover;

4.7.3 failing to carry out tests on opposing faces of the blocks, in particular the central plate of the cast units, from both above and below, to check that at least the covermeter readings were consistent (even if wrong) from above and below;

4.7.4 failing to use a skilled operator to carry out covermeter checks;

4.7.5 failing to use the correct covermeter head (ie the smaller one) until at least 7 June 1994;

4.8 Failing to institute any or any adequate site control procedures"

As a separate issue, but conditioned by the resolution of the issues set out at paragraph 4 of the agreed list of issues, issue 5 was:-

"In the light of the answers to 4, did Amec take reasonable precautions to prevent loss of or damage to insured property."

The expert evidence

In the course of explaining the circumstances giving rise to the claim under the Policy I have indicated my principal findings of fact which are relevant to the issues which I have to decide. As appears from my narration of the relevant circumstances, actually there was little dispute as to the material facts. Such differences as there were between the evidence of witnesses who testified as to the same matters were plainly attributable to deficiencies in recollection of events now nine or more years ago exacerbated by the loss of certain documents which might have prompted memories. I am entirely satisfied that each witness as to facts who gave evidence before me was doing his best to assist me. I found each in his own way an impressive individual, not only as a witness but as a person. All of the evidence of fact which I heard was really directed to the question whether the defects in the Blocks in respect of which AMEC claimed under the Policy were caused by negligence on the part of AMEC. Because that issue arose each party also called before me expert evidence. The expert evidence called on behalf of AMEC was that of Mr. Michael Leeming, a distinguished consultant civil engineer of great experience who is currently with the well-known company Mouchel Consulting Ltd. On behalf of Norwich Union Mr. Bernard Jones was called to give evidence. He too is a distinguished civil engineer of great experience and is currently Technical Director of the Civil Engineering Division of Parkman Ltd.

H.H. Judge Toulmin C.M.G., Q.C. gave permission for each party to this action to adduce expert evidence from an engineer without defining more precisely what sort of expert evidence might be appropriate. He was no doubt confident that he could rely upon the good sense of the parties in that regard.

Both Mr. Leeming and Mr. Jones have plainly put a great deal of effort into considering the technical issues in this action from their point of view as professional civil engineers. Each has prepared a thorough report which has been put in evidence and they have jointly produced two careful and comprehensive statements as to the matters concerning which they agree and concerning which they do not agree. However, through no fault on their part I have not found their evidence to be particularly helpful. The reason is quite simply that it is plain, in my judgment, that in considering the applicability or otherwise of Exclusion 3 the negligence which is material in considering whether a "defect" is a "negligent defect" is that of the insured, that is to say, AMEC, in relation to the activities which are the subject of the cover provided by the Policy, in this case carrying on business as "Contractors, Engineers, Suppliers, Manufacturers, Property Owners, Developers and related activities". Put shortly, what is relevant is the standard of care to be expected of the ordinarily competent civil engineering contractor. Mr. Vineall did at one point suggest that the standard which was relevant in this case was that of a specialist marine engineering contractor because it was in fact the Marine Division of AMEC which undertook the Works. However, that point rather disappeared when it became apparent that the activity of casting pre-cast concrete blocks for use in a marine environment did not require skills different from those of the ordinary civil engineering contractor. Essentially what had to be done was to take reasonable care to cast Blocks which had the requisite degree of concrete cover. In principle that required the same skills as casting any other sort of reinforced concrete block.

Mr. Leeming recognised that the expert evidence which was really relevant was that of a competent civil engineering contractor. Seeking to assist the Court, he consulted another of the country's leading civil engineering companies, John Mowlem Construction Plc ("Mowlem"). His report contained numerous statements of the views which he had obtained from Mowlem, as well as his own views. Mr. Vineall objected during the trial to me having any regard to the passages in Mr. Leeming's report in which he set out the views which he had obtained from Mowlem. His objections were really two-fold. The first was that the various statements were hearsay and not such as an expert like Mr. Leeming should be permitted to include in his evidence. The proper scope of expert evidence, submitted Mr. Vineall, relying on Civil Evidence Act 1995 s. 3(1), was limited to the opinions of the expert himself. He also objected that Mr. Leeming did not attribute the views which he recorded as those of Mowlem to any individual or individuals. I upheld Mr. Vineall's objection, but the consequence is that I was left with no evidence, other than that of the AMEC witnesses themselves, as to the standards of a reasonably competent civil engineering contractor in relation to a task such as casting Blocks. It could be said that, technically, insofar as that was expert evidence, permission to adduce it had not been given before trial and was not sought at trial.

Mr. Jones gave his evidence, as it seemed to me, very fairly and properly from his perspective, but he readily accepted that his experience of work on site was limited. It also emerged quite soon in the trial that his views concerning such matters as the ease of use of a concrete pump did not command any agreement from anyone who did have site experience. Indeed, in closing his case Mr. Vineall abandoned reliance upon the views of Mr. Jones on that question. The focus of Mr. Jones's evidence was what else than what AMEC in fact did might have been done, rather than whether it could be said that in doing what it did AMEC fell below the standard of the reasonably competent civil engineering contractor.

With the introductory comments which I have set out concerning the expert evidence led before me in mind, I did find helpful, in the sense that not even professional consultant civil engineers with presumably higher standards than those to be expected of a reasonably competent civil engineering contractor were critical, the following matters agreed between Mr. Leeming and Mr. Jones in their second joint statement:-

"2.1.2 It was agreed that seeking the advice of the formwork manufacture[r] in this decision [whether to cast Blocks upside down] was a valid course of action by Amec…

2.1.3 In the absence of relevant documents, there is no contemporary evidence either way as to whether the balance of the advantages against the disadvantages of casting upside down did or did not initially favour casting upside down.

2.1.4 It was agreed that, although a matter which should properly have been considered, the maintenance of correct cover would not be a major part of the decision to cast upside down, it being assumed that this would be accomplished by proper design of spacers, or other means of fixing the reinforcement.

2.1.5 Having been committed to upside down casting, we would not have expected the contractor to make a fundamental change to the design of the formwork, on receipt of the Resident Engineer's instruction precluding the use of spacer blocks on the exposed faces of the terrace units….

2.1.8 It was agreed that, under normal circumstances, where reinforcement was visible during concreting, it should be possible to detect significant movement above say 20 mm, especially in the vicinity of the sides of the mould/formwork, where the formwork would provided [sic] a fixed visual reference point. Once the reinforcement is covered with concrete it is not possible to detect visually movement of the cage…

2.2.1 It was agreed that the limitation of no spacers in exposed faces was not explicit in the specification and was a ruling that could not have been readily foreseen for this particular contract…

2.2.2 It was agreed that, as a result of the limitation on the use of spacers, the method for fixing the reinforcement would have been more difficult and it would have required careful thought but it was a problem that the Contractor would expect to be able to solve in the normal course of events….

2.2.4 It was agreed that the fixing of the reinforcement presented a normal construction problem that an average, suitably experienced contractor's engineer would feel he could solve, albeit with advice from colleagues…

2.2.5 Accepting that the fixing of reinforcement is a matter of judgment not calculation, it was agreed that the combination of upside down casting and subsequent limitation on spacers would introduce a need for careful thought. Such circumstances were unlikely to have been experienced before by an average site engineer…

2.2.7 It was agreed that the reinforcement fixing system was not so grossly inadequate as to be immediately recognised as such by an average engineer, such as the Resident Engineer's staff, or the steel fixers…

2.3.8 It was agreed that pouring the concrete from a mixer truck was a method that needed normal care and was not an unacceptable way of introducing concrete to the moulds…

3.1.2 It was agreed that there was no other [than use of a covermeter] suitable non-destructive method of measuring the cover that AMEC should have used…

3.1.5 It was agreed that post-concreting covermeter checks were not customary at the time for normal civil engineering construction…"

The scope of the cover afforded by the Policy

In my judgment it is quite plain on proper construction of principal insuring clause in the Policy that it did not extend to providing to AMEC an indemnity in respect of the cost of replacing items manufactured by AMEC which are defective. Items which have been produced by AMEC during the course of its business which are merely not up to the standard required by a particular contract, as was the case with the Blocks which AMEC replaced, cannot be said to have been lost and cannot in any meaningful sense be said to have been damaged. Each of the replaced Blocks was, at least until positioned in the Wall, intact and possessing the qualities it had when originally produced. It may actually have been fit for any number of purposes, had, for example, Jersey decided to replicate the Wall on dry land. The only quality which it did not possess which AMEC wanted it to possess was that of complying with the Specification for the Works. The belated abandonment on behalf of AMEC of its original case was thus, as it seems to me, a tardy recognition of reality.

A small number of Blocks, six on the evidence, after placement in the Wall, showed signs of rusting of the metal within. I should not have been prepared to draw the inference which Mr. Mendoza initially invited me to draw that any Block shown by the joint Covermeter survey undertaken by Mr. Smith and Mr. Dodd in May 1994 to have at any point cover recorded at 18 millimetres or less had also sustained some corrosion to the metal within, still less that some unidentified Block or Blocks had manifested unrecorded rust staining by the time it came to be replaced. Those would not be logical inferences in the circumstances. That one Block with cover as recorded in the Covermeter survey of 18 millimetres had shown signs of rust staining, whilst others with similar cover had not seemed to me to negative the inference for which Mr. Mendoza contended, rather than to support it. There is no obvious reason why, if a Block had actually developed rust within because the cover as recorded in the Covermeter survey was 18 millimetres, there should have been no signs of that when there were signs in another case. The illogicality is increased when one appreciates, as is the fact, that Blocks with cover as recorded in the survey of considerably less than 18 millimetres, for example Block 150 with a lowest recorded cover of 11 millimetres, were not recorded as showing any signs of rust staining. None of the 27 Blocks which Mr. Mendoza identified in his exercise to which I have referred were recorded as showing any signs of rust staining, yet many of them had cover values recorded at considerably less than 18 millimetres. However, quite apart from the issue of the number of Blocks within which rusting of metal had occurred, what is perfectly obvious from the fact that three of the Blocks which had shown signs of rust staining were not required to be replaced is that whether or not rusting of reinforcement could be said to amount to damage to a Block, it was not damage which caused AMEC any financial loss. What caused a requirement for a Block to be replaced, as I have already said, was not, considered alone, whether it showed signs of rust staining, but, regardless of whether it showed signs of rust staining, whether it was determined in the STS radar survey as having concrete cover of less than 50 millimetres over the reinforcement.

The obvious answer, as it seems to me, to Mr. Mendoza's late thought that the damage sustained by the 104 Blocks which were required to be replaced during the course of removal was damage which fell within the scope of the Policy, is that, assuming any such damage was in fact suffered, it was not that damage which caused any financial loss to AMEC, but the installation of the defective Block in the Wall in the first place. No doubt as a reflection of the fact that the analysis which Mr. Mendoza put forward finally as AMEC's main case represented a late development, there was not actually any evidence that any Block sustained any damage during the course of removal from the Wall. However, on the assumption that there was in fact damage caused at that point, any financial loss was clearly caused at the point at which the need to remove the Block subsequently arose, namely when it was incorporated in the Wall. The damage which Mr. Mendoza ultimately put forward as AMEC's main case was quite simply not damage in respect of which there can be any liability to indemnify under the Policy because that damage itself caused no financial loss. When I enquired of Mr. Mendoza during his closing submissions what was the value to AMEC of the 104 Blocks removed at the time they sustained damage during the removal process, he was unable to answer other than in terms of the cost to AMEC of performing properly its contractual obligations to Jersey.

I have already referred to the submission of Mr. Vineall that the Policy should not be construed as providing cover to AMEC in respect of its own voluntary actions. He relied in support of that submission upon a passage from the judgment of Hobhouse J in The Wondrous [1991] 1 Lloyd's Rep 400 at page 415-416:-

"But it was still necessary for the plaintiff to show that the detention was fortuitous. How to characterise the element of fortuity in this context is not easy. If the owners had asked themselves at the time of placing the cover or at the time of making the charter-party whether detention for any substantial period after loading a cargo at Bandar Abbas was to be anticipated or likely to occur in the ordinary course, they would have correctly answered that it was not. But on the other hand, where a situation comes about as a result of the voluntary conduct of the assured, it would not normally be described as fortuitous. It did not happen by chance but by the choice of the assured. Put another way, it would be in the ordinary course that, if the owners of a vessel do not pay the port dues for which they are liable to the port authority in respect of the stay of the vessel in that port (or provide acceptable security), the vessel will not be cleared. For the purposes of the law of insurance, in the absence of an express agreement to the contrary, a policy should not be construed as covering the ordinary consequences of voluntary conduct of the assured arising out of the ordinary incidents of trading; it is not a risk."

Mr. Mendoza did not dispute the proposition enunciated in the passage from the judgment of Hobhouse J which I have quoted in the preceding paragraph. I respectfully consider that that proposition is correct. It would indeed be a bizarre result if AMEC could fail to perform its obligations to Jersey under the Contract by manufacturing and installing defective Blocks, an ordinary commercial risk of the type run by civil engineering companies in the course of their business every day, and then claim the cost of necessary rectification work under a Contractor's All Risks policy on the ground that the removal of the defective work so that it could be replaced with work of the quality required by the Contract involved "damage" to the defective work. For the reasons which I have given I am entirely satisfied that on proper construction the Policy does not have that result in the circumstances of this case.

Consequently I conclude that on no view did any of the Blocks sustain loss or damage falling within the scope of the cover afforded by the Policy in respect of which AMEC is entitled to recover. This action therefore fails and is dismissed.

Exclusion 4

Had I been persuaded that AMEC had sustained financial loss as a result of the rusting of reinforcement within those Blocks which showed signs of it and were required to be replaced, it would have been necessary to consider the application of Exclusion 4. I do not consider that I need explicit expert evidence to support the conclusion, based upon the common experience of mankind, that the action of water upon unprotected iron or steel produces a progressive oxidation which, unless interrupted, will lead to the eventual erosion of the iron or steel. In my judgment, the proper construction of the expression "gradual deterioration" in the phrase "wear, tear or gradual deterioration" in Exclusion 4 is that it means a deterioration which is progressive by degrees, as opposed to sudden and catastrophic. Mr. Mendoza submitted that "gradual" meant "slow", and that the speed at which signs of rust staining appeared on the Blocks affected was not slow, so that the occurrence of rust damage could not in this case be described as "gradual deterioration". It is implicit in that submission that the extent of the rusting at the time signs were noticed was such that there was at that point a need to replace the affected Blocks. The understanding of the word "slow" in any particular context necessitates a comparison with that which is said in the context not to be slow. In the present context all that can be said is that in the affected Blocks the progression of rusting had been sufficient to cause manifestations upon the surface of the concrete. That does not mean that any reinforcement must have rusted through, or, indeed, that erosion must have reached any particular stage. If, contrary to my finding, a decision to replace those Blocks which showed signs of rust staining which were replaced was based upon the appearance of those signs and nothing else, then in the absence of any evidence that any reinforcement had actually failed, the decision could only have been made on the basis of the risk of failure in the future. In other words, the decision would have been an attempt to forestall the anticipated progressive effects of erosion over time, or "gradual deterioration". Thus, had it been necessary, I should have held that Norwich Union was entitled to resist a claim for indemnity under the Policy in respect of Blocks showing signs of rust staining by relying on Exclusion 4.

Negligence on the part of AMEC

In the light of the conclusions which I have already expressed it is unnecessary to reach any conclusions as to whether, in its approach to the casting of Blocks and monitoring the quality of Blocks produced, AMEC fell below the standard to be expected of a reasonably competent civil engineering contractor. However, as I have said, virtually all of the evidence led at the trial was relevant only to that issue and certainly the expert evidence went to nothing else. In fairness to those criticised, specifically Mr. Smith, Mr. Sullivan and, to a degree, Mr. Heron, as well as in fairness to one of this country's leading civil engineering contractors, it seems to me that I should indicate my conclusions concerning the criticisms made.

The enthusiasm of insurers for paying promptly and in full any claim falling within the scope of the relevant policy is legendary. In the present case, as I have found, Norwich Union was entirely justified in rejecting the claim of AMEC as one not falling within the scope of the cover provided under the Policy. The point on which liability turned was short, and, as it seemed to me, straightforward. It is the sort of point which could properly have been raised on an application to strike out the claim form and Particulars of Claim in this action. It is, therefore, baffling why the course which Norwich Union, no doubt on advice, elected to take was to concentrate on reliance upon Exclusion 3. That reliance was not, in my judgment, based upon any dispassionate consideration of the facts and circumstances of the case insofar as they were revealed in the documents put before me, but rather upon an examination ex post facto which was intended to identify any and every possible criticism which could conceivably be made with the benefit of hindsight of what AMEC did. The approach adopted is amply illustrated by the catalogue of issues in the agreed list from which I have quoted which are said to indicate want of care on the part of AMEC. A particularly telling detail, as it seems to me, is that no consideration appears to have been given to whether any of the alleged criticisms were actually causative of anything.

In opening Norwich Union's case Mr. Vineall really contended that, so far as the negligence of AMEC was concerned, the matter spoke for itself. How could so many of the Blocks incorporated in the Wall have been so much below the standard required by the Specification in relation to concrete cover to reinforcement unless AMEC had been negligent? That approach has the convenience of avoiding the need to consider at all critically what AMEC actually did and to compare it with what any reasonably competent civil engineering contractor would have done, but otherwise, as it seems to me, has nothing to commend it.

In his written closing submissions Mr. Vineall gave a lot of attention to the issue of the alleged negligence of AMEC. He set out over 25 paragraphs on four pages "Criticisms of AMEC's overall system". If the issue had been relevant, it seems to me that there were just two questions which sensibly arose, namely whether the means by which the Cage was secured within a Mould before the pouring of concrete into the Mould was one which no reasonably competent civil engineering contractor could have adopted and, second, if the answer to the first question was negative because the decision as to how to secure the Cage was one which a reasonably competent civil engineering contractor could have taken, whether a reasonably competent civil engineering contractor would have detected earlier than AMEC (or rather Mr. Bailey) did that the means of securing the Cage was not satisfactory. The latter question is really whether AMEC, by Mr. Smith, used the Covermeter as a reasonably competent civil engineering contractor would have, took reasonable steps to verify results considered suspect, and, in the light of the steps taken to verify the results in fact obtained by use of the Covermeter, interpreted those results as a reasonably competent civil engineering contractor could have. In the section of his closing submissions entitled "Why AMEC should be found to have been negligent", which was considerably more brief than the "Criticisms of AMEC's overall system" section, Mr. Vineall concentrated his attention upon the two questions which I have identified.

In considering the two questions which I have identified in the preceding paragraph it is perhaps helpful first to reflect that there is no reason to suppose that AMEC was not trying to produce Blocks of the standard required by the Specification. The starting point, therefore, in considering the means adopted for securing the Cage in a Mould, must be that AMEC must at the time have thought that the means adopted would work. As I have already recorded, the task of supporting the Cage was made more difficult by the instruction not to use spacer blocks on visible surfaces, and a number of alternative solutions were tried. Although in many instances the cover on Blocks produced was less than that required by the Specification, in a significant number of cases, about 11.5% of the total, the requisite amount of cover was obtained. Thus the method of securing the Cage adopted was capable in principle of providing the necessary support to the Cage. No specific criticism was made of the means of securing the Cage initially adopted save that it did not achieve its desired aim in a large number of cases. On analysis all the criticism seemed to amount to was pointing out that when AMEC appreciated that the method of securing a Cage which it had adopted up to that point did not prevent movement of the Cage within the Mould, AMEC was able to come up with an alternative which seems to have worked in the production of replacement Blocks satisfactorily. That seems to me to be a hopeless foundation for any suggestion that the adoption of the means of fixing used at first was negligent. The reality, in my judgment, is that AMEC faced a difficult problem in devising a method of securing the Cage in a Mould, it addressed that problem carefully and considered that it had solved the problem. As matters turned out, the solution arrived at was not satisfactory. When AMEC appreciated that it came up with an alternative which seems to have worked.

In testing with the Covermeter a sample of Blocks produced AMEC was taking a step to verify the quality of concrete cover which on the evidence was one in advance of the ordinary run of civil engineering contractors at the time. It was known, and was mentioned in BS 1881, that covermeters gave misleadingly shallow readings over multiple reinforcement bars, such as incorporated into a Cage. Drilling as a method of confirming the depth of concrete cover was not sensibly available on a regular basis because of the risks of enhancement of vulnerability to water ingress to which it exposed a Block and the aesthetic damage which resulted. In other words, one could either test with a covermeter and do one's best to interpret the results, having tested by drilling in a limited number of cases to try to establish the degree of error in readings, or do nothing but trust to luck. AMEC, by Mr. Smith and Mr. Sullivan, in conjunction with Mr. Bailey, who had a great deal of experience of using covermeters, considered the appropriate allowance to make for false readings, and determined upon 20 – 25 millimetres. It is now clear that different allowances would have been appropriate over different parts of a Block. However, the need to make different allowances over different parts of a structure was not a possibility canvassed in BS 1881 or in the Kolectric handbook for the Covermeter, and it was not suggested by Mr. Bailey in the light of his experience of using covermeters. It is striking that once the existence of the problem of inadequate cover was identified and AMEC disclosed to PSD what results it had obtained from testing Blocks with the Covermeter and how it had interpreted them, no one suggested that it was obvious that no one single correction factor should have been used. The focus of the debate, insofar as there was one, was what the single correction factor should have been. There was no evidence that Mr. Smith did not use the Covermeter in accordance with the manufacturer's instructions.

In the result I am entirely satisfied that AMEC, through the site team engaged upon the Works, in particular Mr. Smith and Mr. Sullivan, set about the task of casting Blocks which complied with the Specification not merely with the care and skill to be expected of a reasonably competent civil engineering contractor, but to its own, usual and high, standards.

Before leaving the matter of the alleged negligence of AMEC I should return to the Lunn Report. In opening Norwich Union's case Mr. Vineall placed heavy reliance upon the conclusions of the Lunn Report. By the conclusion of the trial those conclusions seemed to play a less prominent role, but they were still relied upon. Those conclusions were:-

"(i) If the Company Quality System had been properly implemented there would have been adequate safeguards in place to identify the problem at an early stage.

(ii) There was a major omission in the Contract Quality Plan in that ACEL-QA-307, The Control of Reinforcement, was not identified as a control document in the Quality Control Schedules.

(iii) A specific Quality Control Schedule should have been produced dealing with all aspects of the production of precast units not just concrete production and unit placing.

(iv) Individual responsibilities contained in the Contract Quality Plan should have been communicated more effectively to those concerned.

(v) In the early stages of the precast production there appears to have been an acceptance that we were following the Engineer's instructions and consequently it was "not our problem".

(vi) At this stage there is no satisfactory explanation why units shown by the random surveys between mid-January and early/mid-April to be clearly outwith the Specification were allowed to be incorporated into the Works.

(vii) Once 100% testing was introduced in early/mid-April 1994 the acceptance criteria should have been clarified and confirmed in writing.

(viii) Clear understandings on acceptance criteria at different stages were not effectively communicated to all concerned."

The first four of Mr. Lunn's conclusions really relate to the issue of giving proper consideration to the means by which the Cage was to be secured in a Mould. It is obviously very sensible for an organisation like AMEC to have procedures which are designed to ensure that proper care is taken in relation to all aspects of its business. However, on my findings whatever deficiency there may have been in this case in adhering to internal procedures did not in fact mean that the issue of the design of the method of securing the Cage within a Mould was not addressed with the care and skill to be expected of a reasonably competent civil engineering contractor. The remaining conclusions relate to the murky issue of acceptance criteria. I describe the issue as "murky" because it does not seem to me that it really arises at all in this case. The Specification was clear as to the amount of concrete cover to be provided over reinforcement in Blocks. What the Specification required should have been the "acceptance criteria". In raising the matter of "acceptance criteria" at all Mr. Lunn really seems to have been venturing into the area of how test results obtained by use of the Covermeter should have been interpreted. His only conclusion on that matter which could be relevant to anything which I have to decide is (vi). That is ambiguously phrased, no doubt with an eye on the real purpose behind the production of the Lunn Report. It does not obviously relate to any comment made earlier in the report. In particular it is difficult to reconcile with Section 4.2(iv), the sense of which was that there were at least three readings which should have "triggered" an investigation, not that it was obvious that some particular Block or Blocks had less concrete cover over reinforcement than the Specification required. It may have been Mr. Lunn's view with the benefit of hindsight that some particular result or results ought to have been interpreted as indicating that the desired degree of concrete cover had not been obtained, although I have my doubts as to whether that really was his opinion. It that was his view, it is impossible for me to reach any conclusion as to whether that opinion was justified without knowing what it was about the particular results which Mr. Lunn considered should have led to that conclusion. As I have mentioned, Mr. Wragge-Morley's interpretation of the same results in the Wragge-Morley Note seems to have been rather different from that of Mr. Lunn.

Conclusion

For the reasons which I have given this action fails and is dismissed. However, for the reasons which I have also given it seems to me that it may be appropriate to consider carefully by which party the costs of this action, or at any rate the bulk of them, should be paid, bearing in mind that AMEC has been successful in vindicating its reputation as a civil engineering contractor in the face of a sustained, but wholly groundless, attack with which virtually the whole of the action and the trial have been concerned.

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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Amec Civil Engineering Ltd. v Norwich Union Fire Insurance Society Ltd. [2003] EWHC 1341 (TCC) (12 June 2003) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2003/1341.html Cite as: [2003] EWHC 1341 (TCC)

		St. Dunstan's House, 133-137, Fetter Lane, London, EC4A 1HD
		12 June 2003