QBE Insurance won a ground-breaking case defending one of its clients and we believe it is something you should pay particular heed to.

 

The case harks back to 2002 when Hall Fire Protected Ltd was contracted by Goodlife Foods Ltd to install a fire suppression system at a cost of £7,490. A decade later, on 25th May 2012 a fire took hold round a multi-purpose fryer, resulting in a loss of around £6.6 Million. The loss was covered by Goodlife’s insurers who sought to claim the money back from Hall Fire’s insurers, alleging negligence in the supply and installation of the fire suppression system.

 

Goodlife’s claim for negligence was denied in the first instance because Clause 11 of Hall Fire Protection Ltd.’s Terms & Conditions adequately excluded liability for negligence.

 

(Clause 11)

We exclude all liability, loss, damage or expense consequential or otherwise caused to your property, goods, personas, and the like, directly or indirectly resulting from our negligence or delay or failure or malfunction of the systems or components provided by Hall Fire Protection Ltd. for whatsoever reason.

 

In the case of faulty components, we include only for the replacement, free of charge, of those defective parts.

 

As an alternative to our basic tender, we can provide insurance to cover the above risks. Please ask for the extra cost of the provision of this cover if required.

 

Goodlife Foods appealed this on grounds of the exclusion clause not being incorporated into the contract and its “reasonableness” within the meaning of the Unfair Contract terms Act 1977. On June 18th 2018, the Court of Appeal passed judgement and dismissed the appeal.

 

The lesson here are that contractors undertaking work similar to Hall Fire Protection Ltd may be able to exclude or limit their liability by using well phrased (and fair) Terms & Conditions. The likes of clause (11) could become a new risk management tool. If Hall Fire had not incorporated Clause (11) into their Terms & Conditions, their claims history would have been sullied to the extent of some £7.5 Million and, had they only £5 Million Public Liability in force, this could ultimately have led to the dissolution of the entire business as it struggled to meet the debt.

 

16th October 2018