The defendant, Canary Wharf took out a project insurance policy with the claimant insurance company, Gerling for the construction of several buildings at Canary Wharf. During construction there was a serious accident involving a collapsed tower crane. Following the accident, Canary Wharf decided to use a different method to erect two cranes, which resulted in delay and additional costs to the project.
Under the policy, if damage to the insured property was "imminent", Gerling was required to cover Canary Wharf for any additional costs necessarily and reasonably spent by Canary Wharf to prevent delay to the works resulting from that imminent damage.
Canary Wharf argued that under their project insurance policy, Gerling should cover Canary Wharf for the additional costs incurred. Gerling disagreed and brought an action to establish that the loss suffered by Canary Wharf was not covered by their insurance policy.
Did Canary Wharf's decision to change the crane erection procedure amount to action to prevent delay to the works resulting from "imminent" damage?
Reference
Mr Justice Christopher Clarke decided that the question of whether damage was "imminent" had to be considered prospectively and objectively. In other words, whether a reasonable person at the time would consider that damage was likely to happen soon.
On these facts, once the original crane had collapsed, there was a strong possibility that the same thing would happen if the same procedure were used. However, there was no evidence that damage was "imminent" when, at the time Canary Wharf made the decision to change the procedure, construction of the two cranes had not even begun and they were never going to be constructed in the same negligent way. Additionally, the judge considered that Canary Wharf's actions were precautions required under the policy to prevent the collapse of any crane becoming imminent. Gerling was therefore not liable to Canary Wharf under the policy.
*Full case details
Gerling General Insurance Company and Others vs Canary Wharf Group PLC, High Court of Justice (Queens Bench Division), Mr Justice Christopher Clark [2005] EWHC 2234 (Comm)
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Postscript
This decision provides a useful discussion of "imminent" damage. A distinction was clearly made between taking steps to prevent imminent damage (as in a wall that has already been built and is about to collapse onto insured property) and actions to prevent damage becoming imminent (for example, changing the design of the wall prior to building it in order to avoid that risk). In the judge's view, for loss or damage to be imminent it must be virtually certain to happen soon.
