Case Details

Tesco Stores v D A Constable & Others

EWCA Civ 362

This claim arose out the collapse of a tunnel which was being constructed by Tesco over the railway at Gerrards Cross. Tesco's plan was to build a supermarket over the tunnel. One fine day in June 2005 a vigilant train driver stopped his train short of the tunnel mouth after seeing some falling debris. Seconds later hundreds of tonnes of tunnel had collapsed, closing the railway for 51 days. Thanks to the driver's intervention, no-one was injured. However, the economic losses, to Chiltern Railways in particular, were very substantial. Chiltern recovered its losses from Tesco, relying on the terms of a deed which Tesco had agreed prior to works commencing.

Tesco claimed an indemnity from its public liability insurers in respect of Chiltern's claim, relying on the general insuring clause and a "contractual liability" extension. On 16 April 2008 the Court of Appeal upheld the first instance ruling by Field J that Tesco's liabilities to Chiltern Railway under the deed were not covered by the public liability policy. The Court held that the wording of the policy could be construed to cover contractual liability co-extensive with the liability in tort, but not to cover a liability in contract arising solely under a contract of indemnity - to do so would change the nature of the policy, which the Court held would require clear wording to achieve.