Court of Appeal issues reminder to use clear words for negligence in limitation of liability and indemnity clauses – Jose v MacSalvors, Court of Appeal

Brush hired a crane from MacSalvors using the Construction Plant Hire Association’s Model Conditions for Plant Hire. Along with the crane, Mr Thomas Jose, the crane operator, was also provided for hire. Mr Jose was injured while preparing the crane for Brush’s use. He claimed for negligence against MacSalvors, a claim which was settled. MacSalvors in turn brought proceedings against Brush for the indemnity under the Conditions. Clause 8 of the Conditions said that an operator provided by the Owner would be under the Hirer’s control; that person should for all purposes connected with their employment be regarded as servants of the Hirer who shall also be responsible for all claims arising in connection with operation of the plant by that person. Clause 13 provided that the Hirer would fully and completely indemnify the Owner in respect of all claims by anyone whatsoever for personal injury caused by or in connection with use of the plant.

The High Court and Court of Appeal rejected MacSalvors’ claim against Brush. Usually, the Owner would be vicariously liable for the operator’s actions. (Vicarious liability means liability of an employer for anything done by the employee in the course of their employment.) Clause 8 was intended to make the hirer responsible for the operator’s negligence for claims brought by third parties; it did not seek to make the hirer liable for a claim out of the owner’s negligence.

As to clause 13, the main issue was whether it denied the owner an indemnity in respect of its own negligence. At issue was whether the Conditions satisfied the Alderslade principle (named after the Alderslade v Hendon case of 1945). The Alderslade principle effectively says that for an exclusion of liability provision to be wide enough to exclude liability for negligence, the wording must be absolutely clear. Without clear wording, the court must decide whether the wording is wide enough and if there is any doubt then negligence should not be deemed to be excluded. In seeking an indemnity from the other party, this amounted to an exclusion of liability by the owner for its own negligence. The Court of Appeal ruled in this case that the wording of the Conditions was not sufficiently clear to exclude the owner’s liability for its own negligence and so the hirer was not indemnifying the owner for the owner’s negligence.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case does not break new legal ground. However, it is a timely reminder that limitation of liability clauses would be interpreted against the person relying on them, particularly if it involves negligence. Liability clauses need very careful drafting to work legally.’