EXCLUSION OF LIABILITY FOR NEGLIGENCE AND THE ALLOCATION OF OBLIGATIONS TO INSURE

GD Construction (St Albans) Limited v Scottish & Newcastle plc [2003] EWCA Civ 16 (unreported, 22 January 2003)

The Court of Appeal in GD Construction (St Albans) Limited v Scottish & Newcastle plc [2003] EWCA Civ 16 (unreported, 22 January 2003) held that the defendant contractors were not liable to the claimant employers for damage to the works by a fire which was caused by the assumed negligence of the defendants or those for whom they were responsible. In so concluding the Court of Appeal stressed the need to view the contract between the parties as a whole and also emphasised the importance of a link between the exclusion of the contractor’s liability for fire caused by the negligence of the contractor and the employer’s obligation to insure against damage to the property by fire. Where the two are expressly linked together the court is more likely to conclude, as in the present case, that the effect of the contract structure is to exempt the contractor from liability for the consequences of a fire caused by its negligence. Conversely, where there is no link between the exclusion clause and the clause imposing an obligation upon the employer to insure the property, the court is more likely to conclude that the effect of the exclusion clause is not to exempt the contractor from the consequences of its negligence.