OMBUDSMAN’S ADVICE:
CASE STUDIES
The Insured owned a property situated in Plettenberg Bay and filed a claim against his Insurer for damage to a concrete block retaining wall which was damaged “by a landslide caused by excessive rain over a four day period”. The wall in question had been constructed by a company specializing in the construction of retaining walls. The wall was known as a “ terraced
embankment ” and the Insured maintained that the wall had been constructed in accordance with the architectural rules applicable to the estate where his residence was situated. The wall did not require an engineer’s certificate from either the Home Owner’s Association or the local authority, but the input of the consulting engineer responsible for the construction of the
Insured’s house was obtained during the construction of the wall.
The Insurer declined liability for the Insured’s claim on the grounds that “the wall was not built to acceptable standards with respect to stability, drainage and compaction”. The Insurer stated further that in relation to substance, its policy provided that there was no cover for damage caused by “normal settlement, shrinkage or expansion of the soil supporting the structures, or the poor compaction of soil used to fill areas under paving and floors”. More specifically, the policy provided that there was no cover for “damage to retaining walls unless they are
designed and constructed according to structural engineering specifications”.
The Insured’s response to the Insurer’s rejection was that the wall had been damaged by a landslide which was a covered peril and that the wall was never intended to be designed or constructed according to structural engineering specifications “as it is a terraced embankment and was compliant with local municipal regulations”.
Reports were obtained from both the Insured and the Insurer from a number of consulting engineers and experts with the consulting engineers engaged by the Insurer concluding that wall had collapsed due to “poor compaction and lack of geo-textile behind the wall” which caused the backfill to wash away under wet conditions”. The situation was aggravated by the
installation of a sprinkler system at every tier of the wall.
When no resolution to the matter could be obtained, the dispute was referred to the Ombudsman by the Insured. After the issues were canvassed and ventilated in great depth by both the Insured and the Insurer but with no resolution being achieved, the Ombudsman was required to make a formal determination of the Insured’s complaint.
The Ombudsman, in addition to having regard to the reports of the various experts also examined an installation manual published by the Concrete Manufacturer’s Association in relation to concrete retaining block walls. From the manual it was clear that “the layout of curves and corners for CRB walls requires planning by both the design engineer and contractor and that the input of a consulting engineer was considered, if not mandatory, to at least be highly desirable”. The construction manual also specified that “an engineer’s certificate of completion be provided upon completion of the work”. It also provided that a consulting engineer should approve founding conditions prior to casting of concrete and that unless otherwise agreed with the engineer, the contractor was to supply the engineer with results of compaction tests and when applicable, percentage stabilisation tests on the backfill.
The Insurer also obtained the opinion of a Professional Technical Engineer with extensive experience in the construction of concrete block retaining walls who cautioned that “many contractors see these structures as a landscaping solution and do not understand the
geo-technical soil mechanics is the factor that any engineer considers when designing these concrete retaining block walls”. The expert also considered the provisions of the National Building Regulations to be applicable.
The Ombudsman held that the onus rested upon the Insured of establishing that a peril covered by the policy had operated and that he had suffered loss or damages as a result thereof. On the other hand, the Insurer, if it relied upon the terms of an exception as the basis for voiding liability for the Insured’s claim have the onus of establishing that the loss fell within the ambit of the exclusion. The Ombudsman found that the loss indeed fell within the ambit of the
exclusion relied upon by the Insurer and that the various reports obtained highlighted a number of shortcomings in the design and method of construction of the wall. The installation manual of
the Concrete Manufacturer’s Association emphasised the importance of correct design parameters and tolerances as well as the importance of compaction and backfill. The very factors recorded in the manual as being the most common causes of failure of concrete retaining block walls appear to have arisen in this instance, including inadequate storm water
drainage, compaction and external stability which were not taken into account.
The Ombudsman favored the views expressed by the consulting engineers engaged by the Insurer who concluded that “had the wall been correctly designed it should have stood up during the heavy rains”. The policy provisions also made it clear that the Insurer would not be liable for damage to retaining walls unless the wall was designed and constructed according to structural engineering specifications. The clause relied upon by the Insurer did not necessarily imply that the wall must have been designed by a consulting engineer, or constructed under the supervision of a consulting engineer, but at the very least, the wall must have been designed and subsequently constructed, following structural engineering specifications. This requirement had not been complied with and the wall had also not been constructed in accordance with the National Building Regulations. The Insurer was free to determine the
scope of the cover that it was prepared to provide as well as the conditions applicable to its assumption of risk and on the available facts it was clear that the wall in question had not met the requirements stipulated by the policy.
The Ombudsman was satisfied that the wall suffered from serious defects in its design and construction and the Insurer’s rejection of liability was upheld as being both factually and legally sound.
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