Treasury and Resources
Ministerial Decision Report
RUE DU MAUPERTUIS ROAD AND foul SEWER COLLAPSE – ex-gratia settlement of an uninsured event
- Purpose of Report
To enable the Minister for Treasury and Resources (T&R) to authorise the Treasurer of the States to make available from the Insurance Deductible Fund (IDF) a maximum sum of £390,000 to allow an ex-gratia settlement to Transport and Technical Services (TTS) and the Parish of St Clement for costs resulting from the Rue du Maupertuis road and foul sewer collapse.
- Background
The sewer in Rue de Maupertuis underwent a complete CCTV survey in 2008 by TTS, which indicated no evidence of deflection, cracking or damage. In 2009 a void appeared in the road at a time when the Parish of St Clement had appointed contractors engaged in road resurfacing.
During the period of Christmas 2009 the engaged engineers investigated movement to the road and boundary wall of an adjacent property which had collapsed. In early 2010, at the request of said engineers, TTS undertook another CCTV survey of the sewer again demonstrating that the sewer was entirely intact with no deformation.
It was not until January 2013 that TTS were again contacted about further movement of the road and asked to undertake another CCTV survey of the sewer. The latest survey indicated that whilst the sewer was conducting foul water, the sewer had dropped over a length of 15 metres. TTS engineers then monitored the nearby pumping station to assess if sediment was being conducted through (indicating that there could be washing away of fines). Sediment was found on 13th February 2013 and consequently an over pumping system was installed by TTS.
After the over pumping was instigated, several surveys indicated progressive deterioration in the condition of the sewer. Level monitoring of pins in the road surface indicated continual settlement throughout. Consequently, as the over pumping was taking place, this was indicative of the road area and the subsoil moving, notwithstanding the removal of the fractured sewer.
- Proposed settlement
Both TTS and the Parish of St Clement contended that each other were responsible for the events that unfolded, with the States insurers confirming that circumstances did not amount to an insurable claim.
By late 2013 the situation reached an impasse, with neither party accepting liability, and the matter being referred to the Treasury.
Without an equitable remedy being reached between both parties involved, there remained a real risk that matters may have escalated to legal recourse – a situation which would benefit no one and only lead to further costs been incurred by all concerned.
If the insurers of both parties had allowed for insurance remedy to be sought, then the likelihood is that the majority of settlement on the claims arising would fall within the self-exposure limits of the respective policies held by each party and would, in fact, result in the use of the Insurance Deductible Fund.
On the 23rd October 2013 the Treasury and Resources Minister and Assistant Minister, made a commitment, as these were exceptional circumstances, to make available a maximum sum of £390,000 to settle costs resulting from the Rue du Maupertuis road and foul sewer collapse. This commitment was made as a matter of goodwill and not a precedent or an admission of liability.
The funds will be released to TTS by way of Treasurer’s Decision when invoices of actual expenditure are submitted to T&R. TTS will then settle costs with the Parish of St Clements directly.
- Recommendation
The Minister is recommended to authorise the Treasurer of the States to make available a maximum sum of £390,000 from the IDF to allow an ex-gratia settlement of costs resulting from the Rue du Maupertuis road and foul sewer collapse. This will be via a cash transfer to TTS who will make an onward payments to the Parish of St Clement.
This ex-gratia payment is one of good will and is not intended to create a precedent, nor is it an admission of liability. The funds will be released by way of Treasurer’s Decision/s to TTS when invoices of actual expenditure are submitted to Treasury and Resources.
- Reason for Decision
Due to exceptional circumstances the Minister for Treasury and Resources authorises the Treasurer to make available from the IDF a maximum sum of £390,000 to allow an ex-gratia settlement of costs resulting from the Rue du Maupertuis road and foul sewer collapse.
- Resource Implications
The IDF has accrued the maximum expenditure of £390,000 in 2013, when the decision to make this payment was made. TTS will have recognised some expenditure in 2013, which will be offset in 2014, once the ex-gratia payment is processed. £90,000 of this amount will be forwarded to the Parish of St Clement to cover their costs. This decision does not change the total amount of expenditure approved by the States for 2013.
Report author : Senior Management Insurance Accountant | Document date : 12/02/2014 |
Quality Assurance / Review : Head of Treasury and Investment Management | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2014-0006 - Ex-gratia settlement of uninsured event - Road & Sewer collapse\WR -Ex-gratia settlemen the La Rue du Maupertuis road and foul sewer collapse.doc |
MD sponsor : Treasurer of the States |
gov.je