IMPOSITION OF OBLIGATION TO INSURE INSUFFICIENT TO EXCLUDE LIABILITY FOR CONTRACTOR’S NEGLIGENCE

Casson v Ostley PJ Ltd [2001] EWCA Civ 1013 (unreported, 29 June 2001)

The Court of Appeal in Casson v Ostley PJ Ltd [2001] EWCA Civ 1013 (unreported, 29 June 2001) allowed an appeal from the decision of Lord Brennan QC ( [2000] BLR 126, discussed in our October 2000 issue, pp.1–4) and held that a clause which allocated to the employer the risk of damage by fire and which also imposed on the employer an obligation to insure the property on which the work was carried out, did not have the effect of exempting the defendant contractor from liability for any negligence on its part which resulted in fire damage to the property. The case underlines the need to use clear words when seeking to exclude liability for a contracting party’s negligence. A clause which imposes on one party an obligation to insure against loss may well not pass this test because it is not phrased as an exemption clause and so may not bring home to the other party the fact that the aim of the clause is said to be to exempt one party from the consequences of his own negligence.