Factual and Procedural Background
This appeal arises from a decision given by His Honour Judge Richard Seymour QC in the Technology and Construction Court on 4 November 2002 concerning ten preliminary issues in a dispute between the parties. The issues were ordered for trial at a case management conference on 19 July 2002, presided over by His Honour Judge Richard Havery QC. The appeal focuses on the judge’s conclusions on Issues 1 to 4, with a respondent’s notice challenging the conclusion on Issue 5.
The underlying action concerns the collapse on 21 May 2000 of a tower crane ("TC3") at the construction site of a new headquarters building in The City. TC3 was one of five cranes hired by the first claimant (referred to as "Yarm") from the defendant (referred to as "Hewden"). The second claimant claimed as assignee of certain rights of Yarm, but the assignment issue is not part of this appeal.
The crane collapsed during a process called "climbing," an operation to increase the crane's height by adding sections to the tower. This process is relatively uncommon in the UK and necessary for very tall buildings. The collapse caused three fatalities, serious injuries, extensive property damage, and significant construction delays. The claim against Hewden was initially under £8 million but now amounts to approximately £16.6 million.
The contract between Yarm and Hewden incorporated multiple documents, including an Order with standard terms, the KCB Terms, the CPA Conditions (model conditions for plant hire), the Scope of Works, a Site Safety Plan, and Health and Safety Information for Contractors. Key contractual provisions addressed indemnity, plant hire conditions, responsibilities for loss and damage, and safety procedures.
Legal Issues Presented
- Whether the climbing operation on 21 May 2000 fell within the meaning of "erection of any plant" in clause 13(c)(ii) of the CPA Conditions.
- Whether the climbing operation was under the exclusive control of Hewden or its agent.
- Whether the individuals undertaking the climbing were under the direction and control of Yarm and/or deemed servants or agents of Yarm under clause 8 of the CPA Conditions.
- Whether Hewden was entitled to indemnification by Yarm pursuant to clauses 8 and/or 13(b) of the CPA Conditions in relation to the crane collapse.
- Whether clause 11 of Yarm’s standard terms and conditions was a term of the contract between the parties.
Arguments of the Parties
Appellant's Arguments
- Clause 13(c)(ii) of the CPA Conditions limits the owner's liability to specific stages at the beginning and end of the hire period (delivery, erection, dismantling, removal), excluding mid-hire adaptations such as climbing.
- "Erection" should be interpreted temporally and does not include the climbing operation, which is an adaptation rather than initial erection.
- The preparatory work for climbing, including fixing ties, was integral to the climb and involved Yarm’s operatives exercising discretion, thus the climb was not under Hewden’s exclusive control.
- Clause 5(a) suggests that "erection" refers to the initial erection because inspection periods would otherwise be unreasonably extended if climbing was included.
- Clause 8’s provision that the driver supplied by the owner is under hirer’s direction does not establish that the driver was an employee of Yarm or that Yarm had control over the climbing operation.
- Yarm’s rights under health and safety provisions to reject method statements or stop operations do not negate Hewden’s exclusive control during climbing if those rights were not exercised.
- Clause 11 of KCB Terms does not prevail over the CPA Conditions as the latter are specifically incorporated and more specific to plant hire.
Respondent's Arguments
- The climbing operation falls within "erection of any plant" in clause 13(c)(ii), encompassing both initial erection and subsequent modifications such as climbing.
- The climbing operation was under the exclusive control of Hewden from the time Yarm completed preparatory work and handed over control for climbing.
- The preparatory work and climbing should be treated as separate stages, with climbing under Hewden’s exclusive control.
- The driver supplied by Hewden was under Yarm’s direction and control as per clause 8, making the operatives effectively Yarm’s servants or agents.
- Clause 11 of the KCB Terms should prevail as it was expressly agreed and printed on the Order, while CPA Conditions were incorporated by reference.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Skanska Construction UK Limited [2002] EWCA Civ (18 December 2002) |
Reluctance of appellate courts to interfere with factual findings of the Technology and Construction Court, especially where technical evidence and specialist expertise are involved. |
Cited to support the general principle of deference to the trial judge’s findings, but the court distinguished this principle in relation to the question of whether preparatory work was integral to climbing, as that was a factual question not requiring specialist expertise. |
| Modern Building Wales Limited [1975] 1 WLR 1281 |
Where contract terms incorporate other documents, expressly agreed terms prevail over inconsistent imported terms. |
Applied to reject the argument that clause 11 of KCB Terms should prevail over CPA Conditions, as the conditions could be read consistently and the specific CPA Conditions took precedence over the general indemnity clause. |
| Yien Yiah Commercial Bank [1989] 2 HKLR 639 |
Principle that general contractual provisions do not derogate from specific provisions (Generalia non specialibus derogant). |
Applied to support the interpretation that the specific CPA Conditions clause 13 overrides the general indemnity clause 11 in the KCB Terms. |
Court's Reasoning and Analysis
The court closely examined the contractual provisions, particularly clause 13 of the CPA Conditions, which allocates liability between the owner and the hirer. Clause 13(b) establishes the general rule that the hirer indemnifies the owner for claims arising during the hire period, while clause 13(c) sets out exceptions where the owner assumes liability at specific stages: transit, erection, dismantling, and removal.
The court considered whether the "climbing" operation constituted "erection" under clause 13(c)(ii). While one judge dissented, concluding the climb was not erection but an adaptation, the majority held that climbing is part of erection. The court reasoned that the added mast sections required to be "completely erected on site" and that the operation had all characteristics of erection, including preparatory and climbing stages.
Regarding exclusive control, the court analyzed evidence that preparatory work (such as welding ties) was performed by Yarm’s operatives, but the actual climbing operation was under Hewden’s exclusive control from the time the crane was handed over after preparatory work until load testing and handback. The court found it appropriate to separate preparatory work from climbing for the purpose of applying clause 13(c)(ii).
The court rejected the appellant’s argument that Yarm’s contractual rights to reject method statements or stop work on safety grounds deprived Hewden of exclusive control, noting that such rights do not negate exclusive control unless exercised.
The court also addressed the contractual relationship of the driver supplied by Hewden, concluding that clause 8 only confers direction and control rights to the hirer but does not convert the driver into an employee or agent of the hirer for liability purposes.
On the interaction between clause 11 of the KCB Terms and the CPA Conditions, the court applied established principles that specific contractual provisions prevail over general ones and that incorporated terms are subordinate to expressly agreed terms when conflicts arise. The court found the two sets of conditions could be read consistently, with clause 13 governing plant hire liability specifically.
The court noted a linguistic defect in the phrase "damage, loss or injury due to or arising" in clause 13(c) but found it did not affect the outcome of the case.
Holding and Implications
The appeal is allowed in part, with the court concluding that the climbing operation does not fall within the meaning of "erection of any plant" under clause 13(c)(ii) of the CPA Conditions, and that the preparatory work is integral to the climb and not under the exclusive control of Hewden. Consequently, Hewden is entitled to indemnification by Yarm pursuant to clause 13(b).
The cross-appeal is dismissed, with the court rejecting the argument that clause 11 of the KCB Terms should prevail over the CPA Conditions.
The direct effect is that liability for the crane collapse rests with Yarm under the general indemnity clause. No new precedent is established beyond the specific contractual interpretation and allocation of risk in this case.