CBI Constructors Pty Ltd & Anor v Chevron Australia Pty Ltd

The High Court of Australia considered a dispute between CBI Constructors Pty Ltd and its insurer, CGU Insurance Limited (the appellants), and Chevron Australia Pty Ltd (the respondent). The core of the dispute concerned the interpretation of an indemnity clause within a construction contract, specifically whether it extended to cover the respondent's liability for loss and damage arising from the appellants' negligence. The appellants sought to recover from the respondent certain costs and expenses incurred in defending proceedings brought against them by the respondent, which they argued were covered by the indemnity.

The central legal issue before the High Court was whether the indemnity clause in the contract was sufficiently clear and unambiguous to operate as an indemnity against the respondent's own negligence. The appellants contended that the clause, when read in its full context, provided an indemnity for all liabilities, including those arising from the respondent's negligence. The respondent argued that the clause did not extend to indemnifying it against its own negligence, as such an intention must be expressed with exceptional clarity.

The High Court, in a joint judgment, affirmed the established legal principle that an indemnity clause will not be construed to cover the indemnitee's own negligence unless the language used is so clear and unambiguous as to leave no room for doubt. Applying this principle, their Honours found that the indemnity clause in question, despite its broad wording, did not meet the high threshold required to indemnify the respondent against its own negligence. The Court reasoned that while the clause purported to cover a wide range of liabilities, it did not contain express words or a necessary implication that clearly indicated an intention to indemnify the respondent for its own wrongdoing. The Court therefore held that the appellants were not entitled to recover the costs and expenses they sought under the indemnity.