Bouygues S A And Others v Red Sea Insurance Ltd

CourtCourt of Appeal (Hong Kong)
Judgment Date24 Jul 1992
Citation[1993] HKLR 161
Judgement NumberCACV3/1992
SubjectCivil Appeal
CACV000003A/1992 BOUYGUES S A AND OTHERS v. RED SEA INSURANCE LTD.

CACV000003A/1992

IN THE COURT OF APPEAL

1992, No 3
(Civil)

BETWEEN

BOUYGUES S A

1st Plaintiff/
Respondent

BLOUNT, INC

2nd Plaintiff/
Respondent

BLOUNT INTERNATIONAL, LTD

3rd Plaintiff/
Respondent

LOCHER & CIE AG

4th Plaintiff/
Respondent

UNIVERSAL ENGINEERING AG

5th Plaintiff/
Respondent

FRUTIGER SOEHNE AG

6th Plaintiff/
Respondent

AG HEINRICH HATT-HALLER

7th Plaintiff/
Respondent

PREISWERK & CIE AG

8th Plaintiff/
Respondent

AG CORAD ZSCHOKKE

9th Plaintiff/
Respondent

ED ZUEBLIN AG

10th Plaintiff/
Respondent

WAYSS & FREYTAG AG

11th Plaintiff/
Respondent

WALTER THOSTI BOSWAU

12th Plaintiff/
Respondent

ED ZUEBLIN & CIE AE

13th Plaintiff/
Respondent

HELLMUTH, OBATA & KASSABAUM INC

14th Plaintiff/
Respondent

CRS SIRRINE INC
(Formerly known as Caudill Rowlett Scott)

15th Plaintiff/
Respondent

SYSKA & HENNESSY INC

16th Plaintiff/
Respondent

DAMES & MOORE INC

17th Plaintiff/
Respondent

W R HEADLEY

18th Plaintiff/
Respondent

B J MAYES

19th Plaintiff/
Respondent

A W SMITH

20th Plaintiff/
Respondent

J C RYDER RICHARDSON

21st Plaintiff/
Respondent

N L F SOUTHAM

22nd Plaintiff/
Respondent

A I G GREGSON

23rd Plaintiff/
Respondent

AND

RED SEA INSURANCE LTD

Defendant/
Appellant

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Coram: Hon Sir Derek Cons, VP, Power & Nazareth, JJA

Date of hearing: 1st, 2nd, 3rd & 7th July 1992

Date of handing down judgment: 24th July 1992

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J U D G M E N T

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Sir Derek Cons, VP:

1. The forensic battle lines in the court below are somewhat curiously drawn. The plaintiffs, who are numerous and come exclusively from jurisdictions other than Hong Kong, fall conveniently into three groups. The first comprises three parties to a joint venture formed for the construction of the academic area of a new university in Riyadh in the Kingdom of Saudi Arabia ("the Contractors"). The second group form a consortium ("the Precast Construction Group") which supplied the precast prime building units required for the project. The remaining 10 plaintiffs were the architectural and engineering consultants and form a consortium known, for some reason, as "the HOK + 4 Consortium".

2. The plaintiffs' claim is based on an All Risks insurance policy taken out in 1981 with the defendants, the Red Sea Insurance Company Ltd, a company incorporated in Hong Kong although they are said to have their head office in Saudi Arabia.

3. The statement of claim alleges that during the currency of the policy structural damage occurred to the property insured, being made manifest over the period May 1983 to May 1984. The damage was made good by the plaintiffs at a cost of a little under US$6 million, but the defendants refuse to indemnify.

4. The defence in general is that the costs incurred by the plaintiffs were for correcting bad design or workmanship, risks specifically excluded from the policy. A particular defence against the Precast Construction Group is that those plaintiffs were not covered by the policy, or alternatively, by refusing to pay the premium, they are estopped from relying on the policy. The pleader then refers to various other matters, such as the failure of the Precast Construction Group to notify the defendants of the damage or to cooperate with them and the need of the other plaintiffs to give credit for monies received and so on. He finally adds a counterclaim. This is directed only against the Precast Construction Group, alleging breach of a duty of care owed by that group to the other plaintiffs in the design and manufacture of the particular elements of the building, which breaches caused the damage complained of and for which the defendants are entitled to recover "by way of subrogation" of the other plaintiffs' rights. The prayer is for an order that the defendants recover from the Precast Construction Group whatever they may be found liable to pay to the other plaintiffs, or a declaration to similar effect.

5. On the 18th April last year the Precast Construction Group took out a summons to strike out the counterclaim as disclosing no reasonable cause of action; on the 28th October the defendants sought leave to amend the counterclaim by adding a new paragraph:

"24. The Defendant will contend in relation to the Counterclaim herein:

(a) that the law governing:

(i) relations between the Precast Construction Group and the Contractors and/or the HOK + 4 Consortium; and

(ii)the claim by the Defendant herein against the Precast Construction Group is the law of and applied in Saudi Arabia;

(b)that by the law of and applied in Saudi Arabia, the Defendant is entitled to and does stand in the shoes of the Contractors and/or the HOK + 4 Consortium insofar as, which is denied, there is any liability by the Defendant to make payments under the claim herein to the Contractors and/or the HOK + 4 Consortium or any of them."

(We have interpolated the names we are using.)

6. The two summonses were heard together before Jones, J. In a reasoned judgment handed down on the 21st November he struck out the counterclaim and dismissed the application to amend. By this appeal this...

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