Replacement of defective property

The Court of Appeal has, in Seele Austria GmbH & Co KG v Tokio Marine Europe Insurance Ltd [2008] EWCA Civ 441, reversed the decision of the trial judge, Mr Justice Field, reported in the November 2007 issue of Insurance Law Monthly, and has decided that the wording of a property insurance policy – although scarcely a model of clarity – covered the costs incurred by the assured contractor in ripping out and replacing defective products installed in the main works.

Seele: the facts

Seele, whose principal business was the design and installation of glass façades and glass roofs, entered into a contact with BLS in January 2002 with respect to the roof and wall glazing for a major construction project in Paternoster Square, London. Part of the contract required Seele to supply and install ‘punched windows in the second and fourth floors of the building, in spaces between stone and brick cladding. The key features of those windows were that they were pre-assembled, consisting of an aluminium frame with glass and stone fixed to the frame and, once inserted, were sealed with a waterproof membrane.