Bank Notes

I - Interpretation (guarantees and indemnities)

11/7/14

GREENWICH MILLENNIUM VILLAGE LTD v (1) ESSEX SERVICES GROUP PLC [2014] EWCA Civ 960

The rule in Canada Steamship v R (that an indemnity is not to be construed to include the consequences of negligence of the party indemnified unless this is stipulated expressly or by necessary implication) is a rule of presumed intention. In the case of a construction contract, a failure by the party indemnified to spot defects perpetrated by its contractor or sub-contractor should not ordinarily defeat the operation of an indemnity clause, even if that clause fails expressly to encompass damage caused by the negligence of the party indemnified. So an indemnity covered loss caused by a sub-contractor in respect of workmanship defects that led to a flood, even though the defects should have detected on an inspection by the indemnified party. In any event, the sub-contractor was liable in negligence.