Construction contracts ruling
A ruling by The High Court in Rabilizirov v A2 Dominion London Ltd 2019 has upheld an earlier County Court ruling and should serve as a warning to sub-contractors and their potential liability to others, including liability for loss of rental income caused by defects in the work they carry out.
In this case A2 Dominion London Ltd are property developers who own the freehold of a building and they employed the contractor Durkan to carry out work. A2 had also sold a lease to the claimant Rabilizirov.
Durkan employed a sub-contractor (GCL) to carry out the work and in both the contract and the subcontract there was an indemnity clause in favour of the employer and the contractor.
The Court upheld the earlier decision that the contract and sub-contract indemnity clauses covered liability incurred by GCL to Durkan and in turn Durkan to A2 Dominion.
This once again highlights the need to have a contract in place with all parties when carrying out any building works and the importance of an indemnity clause, which allocates risk for claims for loss or damage and costs between all of the contracted parties.
It is important for sub-contractors to understand the level of indemnity they may be providing as these clauses are becoming very detailed in JCT standard contracts and for their employer to ensure that an indemnity clause is included and defines the full extent of losses covered.
It is therefore always sensible to take legal advice before signing any construction contract to understand your future liability or if you need to make sure specific provisions are included and worded accordingly.